Court Opinion

ID: 2963138
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:06:57.895616+00
Date Added: 2024-06-11T11:42:39.034863
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT                                 ____________________        Nos. 93-1503             94-1752                             THOMAS HODGSON & SONS, INC.,                                     Petitioner,                                          v.                        FEDERAL ENERGY REGULATORY COMMISSION,                                     Respondent.                                 ____________________                         ON PETITIONS FOR REVIEW OF ORDERS OF                       THE FEDERAL ENERGY REGULATORY COMMISSION                                 ____________________                                        Before                                Torruella, Chief Judge,
                                           ___________                            Bownes, Senior Circuit Judge,
                                    ____________________                               and Cyr, Circuit Judge.
                                        _____________                                 ____________________            Howard M.  Moffett, with whom  Orr & Reno,  P.A. was  on brief for
            __________________             _________________        petitioner.            Joel  M. Cockrell,  Attorney,  with whom  Susan  Tomasky,  General
            _________________                         ______________        Counsel,  and Jerome  M.  Feit, Solicitor,  Federal Energy  Regulatory
                      ________________        Commission, were on brief for respondent.                                 ____________________                                    March 13, 1995                                 ____________________

                      BOWNES, Senior Circuit Judge.    Petitioner, Thomas
                      BOWNES, Senior Circuit Judge.
                              ____________________            Hodgson and Sons, Inc. (Hodgson), appeals from a second order            by  respondent,  the  Federal  Energy  Regulatory  Commission            (FERC), denying Hodgson a  rehearing, and from FERC's finding            that  the  operation  of Hodgson's  China  Mill hydroelectric            plant (China  Mill) came under the  licensing jurisdiction of            Section 23(b) of  the Federal Power  Act (FPA)21 pursuant  to                                
            ____________________            1.    Section 23(b) of  the original  Federal Power  Act, ch.            285,     23(b), 41  Stat. 1075  (1920)  has been  amended and            codified  under  16 U.S.C.     817(1)  (1988) ("Projects  not            affecting  navigable waters;  necessity for  Federal license,            permit or right-of-way"). It provides:                      Any  person,   association,  corporation,                      State,   or  municipality   intending  to                      construct  a dam  or other  project works                      across, along, over, or in  any stream or                      part thereof, other than those defined in                      this  chapter  as  navigable waters,  and                      over  which   Congress  has  jurisdiction                      under its authority to  regulate commerce                      with  foreign  nations   and  among   the                      several   States    shall   before   such                      construction  file  declaration  of  such                      intention with  the Commission, whereupon                      the  Commission   shall  cause  immediate                      investigation     of    such     proposed                      construction  to be  made,  and  if  upon                      investigation  it  shall  find  that  the                      interests   of   interstate  or   foreign                      commerce  would  be   affected  by   such                      proposed   construction,   such   person,                      association,   corporation,    State   or                      municipality    shall    not   construct,                      maintain,  or operate  such dam  or other                      project works until it shall have applied                      for  and  shall have  received  a license                      under the provisions of this chapter.  If                      the Commission  shall not so find, and if                      no  public  lands  or   reservations  are                      affected,   permission   is  granted   to                      construct such dam or other project works                      in such stream upon compliance with State                                         -2-
                                          2

            FERC's "post-1935  construction" rule.  FERC  claims that for            purposes of  Section  23(b), shutting  down  a  hydroelectric            plant for twelve years after 1935  and powering it back up to            its former specifications constitutes  post-1935 construction            without  more.   Hodgson,  on  the  other hand,  claims  that            operating  China Mill  after  maintaining it  over the  years            until  its use  became profitable,  does not  amount  to such            construction, and that even  if it does, FERC's terms  in the            license were  unreasonable.  After reviewing  the statute and            pertinent  case  law,  we conclude  that  FERC  erred in  its            determination that it had jurisdiction over China Mill.   
                                    I.  BACKGROUND
                                    I.  BACKGROUND
                                        __________                      The  China Mill  dam  was constructed  in the  late            1860's as a grist mill in Merrimack County, New Hampshire, on            the Suncook River, which is not navigable.  The site included            the dam,  diversion canal,  penstocks and turbine  which were            installed  prior  to 1900.    China Mill  was  converted from            hydromechanical  to hydroelectric  power  before 1914.    The            petitioner has owned China Mill since 1970.                        Under   a  succession   of   owners,   China   Mill            continuously produced  electricity until 1969 in  its present            configuration.   Power  generation stopped  for approximately            twelve  years  starting in  1969.   The  parties  dispute the                                
            ____________________                      laws.            We  shall follow  the lead  of the parties  and refer  to the            statute as "Section 23(b)."                                         -3-
                                          3

            nature of the  stoppage.  Petitioner  alleges that a  natural            disaster initially  led to the stoppage.   Respondent asserts            that the natural  disaster was only a log that  got caught in            the project's  machinery and  that  the true  reason for  the            stoppage  was purely  economic.   During the  period of  non-            generation,   the   production   of  power   was   apparently            uneconomical  for  China  Mill.     The  cost  of  purchasing            electricity was low, and no market existed for selling excess            power.   For reasons  to be  stated, the  exact cause  of the            hiatus  in  the production  of  electricity  does not  affect            FERC's jurisdiction.                         With the  federal enactment  of the Public  Utility            Regulatory Policies Act (PURPA)2  and New Hampshire's passage            of  the Limited  Electrical  Energy  Producers Act  (LEEPA),3            Hodgson decided that it would be again profitable  to produce            power at China  Mill.   In 1981 Hodgson  started to  generate            power  at China  Mill and  sold power  to the  Public Service            Company of New Hampshire.  In September of 1989 FERC directed            Hodgson to show why  China Mill should not be  licensed under            the  FPA.  At  first, Hodgson did  not object  to obtaining a            license and  in fact  voluntarily applied  for one  in March,            1990.                                  
            ____________________            2.   16 U.S.C.    824 et seq.
                                  __ ___            3.   N.H. Rev. Stat. Ann.   362-A:3.                                         -4-
                                          4

                      Hodgson's  spirit of  cooperation was  short lived.            In  July, 1992, FERC issued Hodgson a license with conditions            that  included, inter  alia, a  minimum water  flow of  fifty
                            _____  ____            cubic feet per second  (cfs), an historic resource management            plan,  and  aesthetic  improvements  to  the  mill  building.            Thomas Hodgson  and Sons, Inc.,  60 F.E.R.C.    62,071 (1992)
            ______________________________            (Hodgson  I).     Hodgson   objected  to   these  conditions,
             __________            especially  challenging  the fifty  cfs requirement  which it            claims would result in an annual loss of over $68,000.                        Unhappy  with the  terms  of its  license,  Hodgson            withdrew its application4  and sought a  rehearing contesting            both  FERC's  jurisdiction  and  the terms  of  the  license.            Thomas Hodgson  & Sons,  Inc.,  63 F.E.R.C.    61,068  (1993)
            _____________________________            (Hodgson II).   Among its reasons for  denying the rehearing,
             __________            FERC stated  that the generating  capacity of China  Mill had            been increased, but  that even if  the capacity remained  the            same,  the project  had  been abandoned  and, therefore,  the            renewed operation constituted post-1935 construction.  Id. at
                                                                   ___            61,293.  Its determinative findings were as follows:                           Hodgson  does  not dispute  that the                      Suncook   River,   a  tributary   of  the                      Merrimack  River,  is  a Commerce  Clause                      water,  or  that   the  project   affects                      interstate    commerce    due   to    its                      interconnection   with   the   interstate                                
            ____________________            4.    Hodgson claims it has the right to withdraw a voluntary            license  application.  FERC does  not dispute this;  so we do            not address it.                                         -5-
                                          5

                      electric grid.  However, Hodgson disputes                      that the development has  undergone post-                      1935 construction.                           As   noted   above,  the   project's                      generating  capacity  from  1934  through                      1939  was 1,300 kW, but some time between                      1939 and 1942 the generating capacity was                      increased to 1,500 kW.   The installation                      after   1935  of   additional  generating                      capacity       constitutes      post-1935                      construction.                           Even  if  the installed  capacity of                      the  project  were unchanged  after 1935,                      the project would still be required to be                      licensed.   Ordinary maintenance, repair,                      and reconstruction  activity with respect                      to a project constructed before 1935 does                      not constitute post-1935 construction for                      purposes of Section  23(b)(1).   However,                      the   pre-1935   construction   exception                      protects only operating projects.   Where                      a project has been abandoned, there is no                      basis  for  a  claim  that  the  operator                      retains  operating  rights,  even if  the                      operator,   after   1935,  restores   the                      project to a  condition identical to  its                      pre-abandonment status.  As  noted above,
                                               ________________                      the  China Mill Project  was abandoned in
                      _________________________________________                      the  1960s and  was  not  operated  again
                      _________________________________________                      until  1981.   Consequently,  the renewed
                      _________________________________________                      operation      constituted      post-1935
                      _________________________________________                      construction.   In  light of  all of  the
                      _____________                      above, we affirm  the Director's  finding                      that  the  project  is  required   to  be                      licensed.             Id. (emphasis  added; footnotes omitted).   A second petition
            ___            for rehearing followed.                      During this time,  Hodgson, asserting its right  to            decline the  license, petitioned  this court  for a  stay and            review  of  the terms  of the  license.   We  determined that            Hodgson  did not accept the  license but declined  to stay or                                         -6-
                                          6

            further  review  the order  until  FERC  considered Hodgson's            second  petition for rehearing.  Hodgson v. F.E.R.C., No. 93-
                                             _______    ________            1503 (1st Cir. May  14, 1993) (order denying stay  of license            terms).                      In  the  second  petition  for   rehearing,  Thomas
                                                                   ______            Hodgson &  Sons, Inc., 67  F.E.R.C.   61,202  (1994) (Hodgson
            _____________________                                 _______            III), FERC again addressed the challenge to its jurisdiction.
            ___            We set forth FERC's pertinent findings:                           Construction    activity   in    the                      maintenance   and  repair   of  existing,                      continuously operating  projects does not                      constitute post-1935  construction within                      the meaning  of the  FPA, so long  as the                      construction activity does not  result in                      such   things   as  the   enlargement  of                      generating  capacity  or of  the physical                      plant.    However, construction  activity                      such as the  construction or  enlargement                      of   a  dam   or  other   project  works,                      including  the enlargement  of generating                      capacity,      constitutes      post-1935                      construction.                      . . . .                      .  .  .  [T]he   installation  of  a  new                      generator at  the China Mill  Project, of                      itself, did not result in  an increase in                      generating capacity at the project.            Id. at 61,632-33 (footnotes omitted).
            ___                           However, if  a hydroelectric project                      has been  taken  out  of  service  for  a                      number  of years, then the restoration of                      generation   at   the   project  is   the                      equivalent  of   post-1935  construction,                      even   if  the   project  has   not  been                      enlarged, and irrespective of how much or                      little  reconstruction  or  refurbishment                      was involved.                                         -7-
                                          7

            Id. at 61,633 (footnote omitted).
            ___                           In  determining whether  abandonment                      has  occurred  for  purposes  of  section                      23(b)(1),  the  question  is  not  .  . .                      whether  the  site  has   been  literally                      abandoned and left  to fall into  a state                      of  disrepair.    Nor  is the  amount  of                      repair or reconstruction  work needed  to                      put  the  project  back   into  operation                      relevant.    Rather, abandonment  for FPA                      purposes  means  that  the  hydroelectric                      generating  function  of the  project has                      been abandoned.            Id. (footnote omitted).
            ___                           The new business  here is  Hodgson's                      commencement of hydroelectric  generation                      in 1981.  We therefore affirm our finding                      that  the China Mill  Project is required                      to  be  licensed   pursuant  to   section                      23(b)(1) of the FPA.            Id. at 61,634 (footnote omitted).  This appeal followed.
            ___                      We  have  jurisdiction  pursuant  to  16  U.S.C.               825l(b) which allows a party "aggrieved by an order issued by
               _            the Commission  . . . [to]  obtain a review of  such order in            the  United States court  of appeals for  any circuit wherein            the  licensee . .  . is located."   In its  petition, Hodgson            challenges FERC's  jurisdiction and, in the alternative, asks            us to review the propriety of the requirements of the license            which  it claims are unreasonable.  Finding that FERC did not            have  jurisdiction, we do not reach the merits of the license            requirements.                                 II.  STANDARD OF REVIEW
                               II.  STANDARD OF REVIEW
                                    __________________                                         -8-
                                          8

                      We review FERC's findings of  fact for "substantial            evidence," and if so supported, such findings are conclusive.            Northeast Utils.  Serv. Co.  v. F.E.R.C.,  993 F.2d  937, 944
            ___________________________     ________            (1st Cir. 1993).   On  the other hand,  "[p]ure legal  errors            require no deference to agency expertise, and are reviewed de
                                                                       __            novo."  Id.; see also Boston Edison Co. v. F.E.R.C., 856 F.2d
            ____    ___  ___ ____ _________________    ________            361, 363 (1st Cir. 1988).                        FERC asserts that this  court owes deference to its            finding of jurisdiction under Chevron U.S.A., Inc. v. Natural
                                          ____________________    _______            Resources  Defense  Council,  Inc.,  467  U.S.  837   (1984).
            __________________________________            Chevron held: 
            _______                      When   a   challenge    to   an    agency                      construction  of  a statutory  provision,                      fairly conceptualized,  really centers on                      the wisdom of the agency's policy, rather                      than  whether it  is a  reasonable choice                      within a gap  left open by  Congress, the                      challenge must fail.              Id. at 866.  FERC misplaces  its reliance on Chevron for  two
            ___                                          _______            reasons.  First, in Chevron, the Supreme  Court addressed the
                                _______            issue of whether the  Environmental Protection Agency based a            policy on a  reasonable construction  of the  Clean Air  Act.            Id. at  840.  But  here, FERC did  not base  its order on  an
            ___            interpretation  of the  FPA,  but rather  on  its reading  of            judicial  precedent.     Chevron  and  its  progeny   mandate
                                     _______            deference "when a court is reviewing an agency decision based            on  a statutory  interpretation."   National  R.R.  Passenger
                                                _________________________            Corp. v.  Boston & Me. Corp.,  112 S. Ct. 1394,  1401 (1992).
            _____     __________________                                         -9-
                                          9

            Because   FERC  did   not   base  its   jurisdiction  on   an            interpretation  of the statute but looked to case law, we owe            its finding of  jurisdiction no more deference  than we would            any lower court's analysis of law.                        Second,  deference  to agency  interpretations does            not give an agency the final word on statutory meaning.  "The            judiciary  is  the final  authority  on  issues of  statutory            construction  and  must  reject administrative  constructions            which are contrary to  clear congressional intent."  Chevron,
                                                                 _______            467 U.S. at 843  n.9 (citations omitted).  The  Supreme Court            thus set out the rule:                       If a court,  employing traditional  tools                      of  statutory   construction,  ascertains                      that  Congress  had an  intention  on the                      precise question at issue, that intention                      is the law and must be given effect.             Id. 
            ___                                    III.  ANALYSIS
                                    III.  ANALYSIS
                                          ________                              Jurisdiction Under the FPA
                              Jurisdiction Under the FPA
                              __________________________                      The FPA provides FERC with broad but not ubiquitous            power over  hydroelectric facilities.  Originally, Section 23            of  the FPA only provided that persons intending to construct            projects5 on  nonnavigable waters6  could file  a declaration                                
            ____________________            5.   By "project" the FPA "means complete unit of improvement            or  development,  consisting  of  a power  house,  all  water            conduits,  all  dams  and  appurtenant  works  and structures            . . . ." See 16 U.S.C   796(11).
                     ___                                         -10-
                                          10

            of intent at their discretion.  Farmington River Power Co. v.
                                            __________________________            Federal Power  Comm'n, 455 F.2d 86,  88 (2d Cir.  1972).  The
            _____________________            Federal  Power Commission  (FPC),  FERC's predecessor,  could            then require  a license  before  any construction  continued.            Id.   If  a  person  intending  to  construct  a  project  on
            ___            nonnavigable  waters did not file a  declaration, the FPC had            no power to require a license.  Id. at 89.  
                                            ___                      Congress  amended  the FPA  in 1935,  expanding the            FPC's   licensing  jurisdiction   to  require   that  persons            "intending to construct  a dam  or other  project works"7  on
             ______________________            nonnavigable  streams obtain a  license.  16  U.S.C.   817(1)            (emphasis  added).   "These  words quite  clearly indicate  a            prospective view."   Farmington River Power Co.,  455 F.2d at
                                 __________________________            90; Aquenergy  Systs., Inc.  v. F.E.R.C.,  857 F.2d  227, 229
                _______________________     ________            (4th  Cir. 1988) (same); see  also Puget Sound  Power & Light
                                     ___  ____ __________________________            Co.  v. Federal Power Comm'n,  557 F.2d 1311,  1315 (9th Cir.
            ___     ____________________            1977)  ("the statute is to apply only to projects begun after
                                                              _____            the  effective  date  in   1935").    It  is  the   post-1935            construction  of   a  project  that  triggers  the  licensing            jurisdiction of Section 23(b).                                
            ____________________            6.    The  FPA  does  not define  "nonnavigable  waters"  but            "navigable waters," inter alia,  "means those parts of .  . .
                                _____ ____            bodies of  water over  which Congress has  jurisdiction under            its authority to regulate commerce."  See 16 U.S.C   796(8).
                                                  ___            7.    By   "project  works"  the  FPA   "means  the  physical            structures of a project." 16 U.S.C.   796(12).                                         -11-
                                          11

                      All  construction after  1935,  however,  does  not            translate  into  jurisdictional  construction  under  the FPA            merely because it post-dates  the act.  Supplemental building            after  1935 generally  is not  post-1935 construction  if the            work  only maintains  or  restores a  project  to its  former            specifications. Puget  Sound,  557  F.2d  at 1315.    Nor  do
                            ____________            "repairs - even those  of substantial nature  - . . .  confer            jurisdiction  over an  otherwise  exempt facility."   Id.  at
                                                                  ___            1316.                          An exception  to this  rule arises where  a project            has  been abandoned.   After  the  complete abandonment  of a            project,  an  owner  no  longer  retains  pre-1935  operating            rights.  Aquenergy, 857 F.2d at 230.  In Aquenergy, the court
                     _________                       _________            determined  that such  abandonment occurred  after more  than            thirty  years of  disuse  and neglect  which resulted  in the            project works being  reduced to ruin.   Id. at 229.   Because
                                                    ___            the  owner in Aquenergy  abandoned the project,  it no longer
                          _________            retained  its  pre-1935  operating   rights.    Id.  at  230.
                                                            ___            Although Aquenergy  creates an exception to  Puget Sound, the
                     _________                           ___________            court  emphasized the  lack of  licensing jurisdiction  under            Section  23(b)  for  repairs  and  reconstruction  without  a            finding of abandonment.  Citing the general rule for  Section            23(b) the  court stated, "[a]  project is not  brought within            the Commission's  jurisdiction if work  done in  the name  of                                         -12-
                                          12

            repair does  not so alter  the project that  it is  no longer            what was there before 1935."  Aquenergy, 857 F.2d at 229.
                                          _________                      Both  Hodgson  and FERC  rely  on  Puget Sound  and
                                                         ___________            Aquenergy.   The parties do not argue  that either case is in
            _________            error; rather,  they urge  that either  case controls  in the            alternative.  We, however, read Aquenergy to be  an exception
                                            _________            to  Puget Sound rather than an independent rule.  The holding
                ___________            in Aquenergy makes this clear: 
               _________                           Aquenergy  puts great  reliance upon                      Puget Sound,  but it does not  help them,
                      ___________                      for we take no issue with the proposition                      that  the magnitude  of the  work is  not                      controlling  or  even   relevant.     The                      relative magnitude of  the work in  Puget
                                                          _____                      Sound  may have  been comparable  to that
                      _____                      involved  here, but  the owner  had never                      abandoned  the project.    It  had  moved                      rather promptly  to put the  project back                      into  partial  operation   and  in   full                      operation  when  demand  for  its  output                      justified it.                           In great contrast, here, J.P Stevens                      simply abandoned the project.  The entire                      thing was  closed down.  The  turbine was                      apparently removed, but the rest was left                      for  deterioration to  take its  toll and                      nature  to heal  her wounds.   After such                      complete  abandonment  over  a period  of                      more than 30 years, there is no basis for                      a claim that the owner retained operating                      rights.  The statute was designed to keep                      in operation projects  existing in  1935,                      but not to restore abandoned rights.            857  F.2d  at  230.    Accordingly,  unless  the  abandonment            exception applies, FERC has no jurisdiction over China Mill.                       In  Hodgson  II  and  III,  FERC  ruled  that  the
                           ___________       ___            abandonment   of   power   production   alone   and   without                                         -13-
                                          13

            construction  or  physical abandonment  gave  it jurisdiction            under Section 23(a) of  the FPA when a project  resumed power            production.   FERC  stated  its jurisdictional  rationale  as            follows:                      In  determining  whether abandonment  has                      occurred   for    purposes   of   section                      23(b)(1),  the  question  is not  .  .  .                      whether  the  site  has   been  literally                      abandoned and  left to fall into  a state                      of disrepair.    Nor  is  the  amount  of                      repair or reconstruction  work needed  to                      put  the  project  back   into  operation                      relevant.    Rather, abandonment  for FPA
                                           ____________________                      purposes  means  that  the  hydroelectric
                      _________________________________________                      generating  function  of the  project has
                      _________________________________________                      been abandoned.
                      ______________            Hodgson III, 67 F.E.R.C.  at 61,633 (emphasis added; footnote
            ___________            omitted).  We disagree for the following reasons.                      First, FERC completely misunderstands the relevance            of work to  a finding of  post-1935 construction.   Aquenergy
                                                                _________            does state, "the  magnitude of the work is  not controlling,"
                              _________            857 F.2d  at 229 (emphasis  added), but  at no time  does the            court  there espouse  the notion that  the existence  of work
                                                       _________            itself is unnecessary for jurisdiction.   To the contrary the            court states:                      One must  look to the nature  of the work                      and  the purpose  of  the  owner.   Major                      repairs  may  involve  much  construction                      activity,  but the project is not brought                      within the  Commissions's jurisdiction if                      work done in the  name of repair does not                      so alter the project that it is no longer                      what was there before 1935.            Id.
            ___                                         -14-
                                          14

                      Second, FERC's order underestimates  the importance            of  the  physical   act  needed  to  support  a   finding  of            abandonment.   The  heart  of the  error  in Hodgson  II  and
                                                         ___________            Hodgson III is that there was in fact no abandonment  as that
            ___________            word  is generally  understood.   Abandonment  is a  question            wholly separate from the  statutory language of the FPA.   In            no place does  the FPA define or refer  to the term "abandon"            or  "abandonment."  Aquenergy  goes to great  pains to stress
                                _________            the  physical abandonment that occurred in that case.  As the            court observed, "there  was no activity  at the project,  not            even  minimal   maintenance";  "[t]he   powerhouse   .  .   .            disintegrated  or was  torn down";  "trees  had reestablished            themselves"; and  "nothing was done during those  30 years to            impede nature's reclamation of  what had been her own."   857            F.2d  at 229.   Additionally,  in its  two and  one-half page            opinion the  court  in  Aquenergy notes  the  period  of  the
                                    _________            abandonment, "30 years," at least seven times, thus stressing            the  importance   of  physical  desertion  as   a  factor  in            abandonment.  See id. at 229-30. 
                          ___ ___                      The facts show that  China Mill was not "abandoned"            in the  Aquenergy sense.  Workers  performed general cleaning
                    _________            and maintenance  during the shutdown period,  and the project            required only minimal work to  restart.  Moreover, China Mill            still operated in some manner during the shutdown.   Although            not producing its own  power, China Mill was used  to control                                         -15-
                                          15

            and  monitor  external  power  to  the  factory  through  its            generator  control  panel,  and  workers  checked that  panel            monthly.8   FERC does not assert that these or any activities            constituted construction,  and even  if they did,  we believe            that  they show  the  project was  not  abandoned within  the            meaning of Aquenergy.    We  believe  the   facts  here   are
                       _________            analogous to those of Puget Sound, which we find controlling.
                                  ___________            In Puget Sound, a landslide destroyed a pre-1935 project, and
               ___________            when the  owner commenced  the extensive work  to reconstruct            the project, the FPC  claimed it needed a license.   557 F.2d            at 1312.   The court disagreed and found  that reconstruction            did  not give the FPC  jurisdiction.  It  found that, because            the repairs  "merely restored  the [project] to  its original            specifications  and  configuration,"  "[t]here  was   no  new            'construction'."  Id. at 1316.  Even though five years passed
                              ___                                
            ____________________            8.   Hodgson III stated:
                 ___________                      Hodgson submitted the affidavits of three                      men who  worked at China  Mill at various                      times  during  the  1960's,  1970's,  and                      early   1980's.      According   to   the                      affidavits,  mud  and  silt were  removed                      from  the  power  canal;  the  penstocks,                      turbines, and draft tubes  were inspected                      annually;  the gates  at  the  upper  and                      lower end of the power canal were checked                      and cleaned annually;  and the  generator                      control  panel  was   checked  at   least                      monthly because it controlled the voltage                      coming into the  manufacturing mill  from                      the transmission lines of  Public Service                      Company of New Hampshire.             67 F.E.R.C. at 61,633 n.11.                                         -16-
                                          16

            before the defendant repaired and put into service two of the            four preexisting generators, the court found  no jurisdiction            under the FPA.   Id. at 1313.  The court held that repair and
                             ___            maintenance construction on even a large scale do not  amount            to post-1935  construction if the  scope of the  work remains            within the  original specification of  the project.   Id.  at
                                                                  ___            1315.                       Puget Sound applies directly here.  There was "[n]o
                      ___________            project enlargement . . . in capacity, diversion, or physical            plant,"  no reconfiguration  since  1935 of  "[t]he  original            sites for  the power house,  the dam  and the flume,"  and no            change in the electrical generating capacity since 1935.  Id.
                                                                      ___            at  1316.  There was,  therefore, just as  here, no post-1935            construction, and so no jurisdiction in FERC.                      We have reviewed FERC's own  cases addressing post-            1935 construction,  none of  which were subject  to appellate            review,  and  they do  not lend  support  to FERC's  claim of            jurisdiction.   The cases  either  contradict FERC's  current            position, contradict each other  or err for the  same reasons            we have stated.  See McRay Energy Inc.,  57 F.E.R.C.   61,061
                             ___ _________________            (1991) (no jurisdiction over project after six-year period of            "abandonment"   and  reinstallation  of  same  generator  and            minimal   repairs  to  return   to  service   because  actual            construction  is  an  essential  element  of  Section   23(b)            jurisdiction); Yankee  Hydro  Corp.,  52  F.E.R.C.     61,074
                           ____________________                                         -17-
                                          17

            (1990) (ten-year cessation  of generation at flooded  project            where  same  generator was  removed  and  later replaced  was            abandonment and required a license); Theodore A. and Holly S.
                                                 ________________________            Keck,  51 F.E.R.C.    61,018  (1990) (after  owners installed
            ____            generator   of  greater  capacity,   abandonment  of  project            incurred Section  23(b) jurisdiction); North  American Hydro,
                                                   ______________________            Inc., 46 F.E.R.C.    62,175 (1989)  (project brought back  to
            ____            original  capacity  after it  was  unused  for fifteen  years            required license  where  owner surrendered  the  license  and            dismantled  the  facility); Pacific  Power  &  Light Co.,  10
                                        ____________________________            F.E.R.C.   62,209  (1980) (no post-1935  construction despite            replacement  of  wooden  diversion  structure  with  concrete            structure  because Section  23(b) jurisdiction  requires that            "construction must  increase the  project's . .  . generating            capacity  .  .  .   or  otherwise  significantly  modify  the            project's pre-1935 design or operation").9                         We point  out  that the  one case  cited in  FERC's            brief as being contrary to circuit precedent contains, in our            view, a  correct assessment of the commission's jurisdiction.            In McRay Energy  Inc., 57 F.E.R.C.   61,061,  FERC recognized
               __________________            that the resumption of power production at a pre-1935 project                                
            ____________________            9.   Only  one of  FERC's  recent Section  23(b) cases  faced            appellate review,  but that order  was based and  affirmed on            other grounds.  In Habersham Mills v. F.E.R.C., 976 F.2d 1381
                               _______________    ________            (11th Cir. 1992), the Eleventh Circuit  did not address post-            1935  construction  because  the petitioner  only  questioned            FERC's determination  that  the project  affected  interstate            commerce.                                          -18-
                                          18

            did not give rise to Section 23(b) jurisdiction absent actual            physical   construction.    In   reaching  its  holding  FERC            accurately noted,  "actual construction or  reconstruction of            facilities  is  an   essential  element  of   the  'post-1935            construction' prong  of section 23(b) jurisdiction, even when            the  project has  been abandoned  and restarted  after 1935."            Id.  at  61,234.    At  China  Mill  not  only  was  there no
            ___            abandonment,  there was  no  finding of  any construction  by            FERC.                                     IV.  CONCLUSION
                                   IV.  CONCLUSION
                                        __________                      The  order of FERC assuming jurisdiction over China            Mill  is  reversed with  directions  to  dismiss the  license            application.                      Costs awarded to petitioner.                      Concurrence follows.
                      Concurrence follows.                                         -19-
                                          19

                           CYR,  Circuit  Judge  (concurring).    As  the
                           CYR,  Circuit  Judge  (concurring).
                                 ______________            fallacy  in relying on  Puget Sound and  Aquenergy for FERC's
                                    ___________      _________            misinterpretation  of the  statutory  term "[post-1935]  con-            struction" is plainly exposed in the majority opinion, it  is            neither  necessary nor  provident  for the  panel to  embrace            these  decisions as First Circuit precedent,  see supra at p.
                                                          ___ _____            16 ("[W]e  find [Puget Sound] controlling."),  in the context
                             ___________            of this case.                           The  issue  on   appeal  is   straightforward:            whether the plain language  of FPA   23(b)     requiring FERC            licensure  of a  "grandfathered" facility  only in  the event            there  has been  "[post-1935] construct[ion]"     encompasses            circumstances in which no such construction has occurred, and
                                   __ ____ ____________ ___ ________            the owner merely reopens intact physical structures following            a  period of  closure?   If, as  I respectfully  submit, this            question  clearly must  be answered  in the  negative, FERC's            plea for Chevron deference is precluded, see Estey v. Commis-
                     _______                         ___ _____    _______            sioner of Maine  Dep't of  Human Servs., 21  F.3d 1198,  1201
            _______________________________________            (1st Cir. 1994), and the court ought not venture further.                           The majority opinion accedes to FERC's invita-            tion to extend its licensure authority based on the reasoning            in Puget Sound and  Aquenergy.  In Puget Sound,  however, the
               ___________      _________      ___________            putative licensee unquestionably  had "constructed"  physical            structures anew at the "grandfathered" power facility follow-            ing a devastating natural disaster.  Based on its unexplained                                          19

            assumption that  Congress could  not have intended  to divest            innocent owners of their "grandfathered"  power-plant operat-            ing rights merely for restoring to its original configuration            a facility  damaged in a natural disaster,  the Ninth Circuit            resorted to an equitable  exception in interpreting the plain            language  of the  FPA  as precluding  the agency's  licensure            jurisdiction.  See Puget Sound Power & Light Co., 557 F.2d at
                           ___ _____________________________            1315.  The Ninth  Circuit panel pointed to no  statutory lan-            guage  or  legislative  history  remotely  supportive of  its            strained  interpretation of  the statutory  term "construct."            See id.  (merely  noting,  without  citation  to  legislative
            ___ ___            history, "[w]e think Congress intended no such result").                             As if to illustrate  the maxim that hard cases            beget bad  law, the Fourth  Circuit later extended  the error            propounded in Puget Sound.  See Aquenergy Systs., 857 F.2d at
                          ___________   ___ ________________            227.   Aquenergy  Systems'  actions clearly  came under  FERC
                                                _______            jurisdiction for the simple  reason that it had "constructed"            anew, from the ground up, disintegrated structures (including            an entire  powerhouse) following  a voluntary closure  of the            facility lasting thirty years.  Eschewing this plain language            approach, the  Aquenergy court  attempted to  accommodate the
                           _________            Puget Sound rationale by  engaging in an "abandonment" analy-
            ___________            sis which overlooked the  fact that the FPA contains  not one
                                                                  ___ ___            word suggesting that Congress intended FERC licensure to turn
            ____            on the licensee's (or predecessor's) "abandonment" of "grand-                                         -20-
                                          20

            fathered" pre-1935  "operating rights."   Id. at  230 (merely
                                                      ___            concluding, without  citation  to legislative  history,  that            "[t]he  [FPA]  was designed  to  keep  in operation  projects            existing  in 1935,  but  not to  restore abandoned  rights").            Quite  the contrary,  FPA   23(b)  focuses  unambiguously and
                                                        _____________            exclusively  on a  specific  event     the "construction"  of
            ___________            physical structures at the "grandfathered" generating site. 
            ________ __________                           Although I wholeheartedly concur in the result            reached  by the court in  the instant case,  I cannot endorse            its gratuitous adoption of the fallacious position  advocated            by FERC,  that Aquenergy  and Puget Sound  are "controlling."
                           _________      ___________            Although  those decisions  apparently  control  FERC  in  the            Fourth and Ninth Circuits, respectively, neither FERC nor the            majority opinion suggests a sound  reason for reaching out in            obiter dicta to  embrace the problematic FPA  interpretations
            ______ _____            propounded  in  Puget Sound  and  Aquenergy.   Indeed,  it is
                            ___________       _________            particularly  ironic that  we should  strain to  embrace them            even though FERC itself has not seen fit to do so.  See McRay
                                                                ___ _____            Energy, Inc., 57 F.E.R.C.   61,061  (1991) (no FERC jurisdic-
            ____________            tion over  project even  after six-year  "abandonment," where            facility  reopened but  no "construction"  of facilities  oc-            curred).                                         -21-
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