Court Opinion

ID: 201303
Source: CourtListenerOpinion
Date Created: 2011-02-07 05:11:53+00
Date Added: 2024-06-11T09:42:56.881817
License: Public Domain

United States Court of Appeals
                      For the First Circuit

Nos. 00-1909, 01-2025, 03-2055

                       JAMES M. KNOTT, SR.;
               RIVERDALE POWER & ELECTRIC CO., INC.,

                             Petitioners,

                                  v.

               FEDERAL ENERGY REGULATORY COMMISSION,

                             Respondent.

               PETITION FOR REVIEW OF ORDERS OF THE
                FEDERAL ENERGY REGULATORY COMMISSION

                                Before

                       Boudin, Chief Judge,

                       Lynch, Circuit Judge,

               and Schwarzer,* Senior District Judge.

          Jamy Buchanan Madeja, with whom Buchanan & Associates was
on brief, for petitioners.
          Robert H. Solomon, Deputy Solicitor, with whom Cynthia A.
Marlette, General Counsel, and Dennis Lane, Solicitor were on
brief, for respondent.

                           October 25, 2004

     *
      Of the    Northern    District     of   California,   sitting   by
designation.
            SCHWARZER, Senior District Judge.   James M. Knott, Sr.

and the Riverdale Power & Electric Co. (“Knott”) petition for

review of three orders by the Federal Energy Regulatory Commission

(“FERC”).    The orders assert mandatory licensing authority over

Knott’s hydroelectric project, require him to install gages to

measure stream flow at the project, and direct him to submit

project design revisions on microfiche cards.    Knott alleges that

FERC improperly asserted jurisdiction over the project, that the

required compliance would effect a Fifth Amendment taking of his

property, that FERC improperly denied him an evidentiary hearing,

and that FERC unreasonably ordered gages and microfiche cards. For

the reasons stated, we deny Knott’s petition for review.

                 FACTUAL AND PROCEDURAL BACKGROUND

            Originally built in the 19th century, Knott’s Riverdale

Mills Project (“Project”) is located on the Blackstone River in

Worcester County, Massachusetts.   The Project includes a 142-foot-

long, 10-foot-high dam, an 11.8-acre water impoundment, and a 150-

kilowatt generator located within a mill building. Knott purchased

the Project, which had been abandoned since 1976, in 1979. Through

a separate entity, the Riverdale Mills Corporation, Knott uses the

hydropower generated by the Project to produce steel wire for use

in lobster traps.

                                -2-
              The Federal Power Act (“FPA”), 16 U.S.C. §§ 791a–825r,

grants FERC two types of licensing authority over hydroelectric

projects.         Section 4(e) of the Act authorizes FERC to grant

voluntary licenses for any project that develops power in any body

of   water    over    which   Congress     has   Commerce    Clause    authority.

16 U.S.C. § 797(e).           Section 23(b)(1) requires the mandatory

licensing of projects: (1) located on “any of the navigable waters

of the United States;” or (2) located on a body of water over which

Congress has Commerce Clause authority where project construction

occurred on or after August 26, 1935, and the project affects the

interests of interstate or foreign commerce.                16 U.S.C. § 817(1).

              In 1985, Knott applied for and received a voluntary

license to operate the Project, subject to numerous conditions.

Because Knott received a voluntary license, FERC had no occasion to

determine whether it had mandatory licensing jurisdiction over the

Project.

              In early 1999 FERC received letters alleging extreme

fluctuations in the Blackstone River below the Project and noted a

concern      by   state   agencies   and    conservation      groups    that   the

fluctuations might be the result of Knott’s failure to operate his

Project to allow a continuous stream flow.            In a series of letters

FERC repeatedly requested stream flow gaging records, and Knott

repeatedly responded that he had no obligation to install stream

flow gages.          In December 1999 FERC issued a compliance order

                                      -3-
requiring Knott to file a plan for installing stream flow gages at

the Project, in accordance with Article 6 of Knott’s license.1

Knott filed a request for rehearing, which FERC denied on May 22,

2000.

           In November 2000 Knott filed for FERC approval to install

an   unrelated   “flood    flow   modular     gate.”        FERC    approved    the

proposal, but required Knott to file revised drawings of the gate

on aperture cards (3 1/4" x 7") on silver or gelatin 35 mm

microfilm.    Knott sought rehearing of this requirement, which FERC

denied.   FERC noted that its regulations require exhibit drawings

to be microfilmed onto aperture cards, that aperture cards provide

an inexpensive and durable information medium, and that some of

Knott’s paper drawings were inaccurate.              Knott timely petitioned

for review.

             During the course of his earlier proceedings, Knott

contended that FERC had no jurisdiction over the Project and, thus,

could not compel him to comply with either his license or agency

regulations.      In   response,    FERC      instituted     a     proceeding    to

reexamine the basis for its jurisdiction.              In November 2000 FERC

staff prepared a supplemental study of the navigability of the

Blackstone    River.      The   study    described     in   detail    a   four-day

      1
      The terms and conditions of the voluntary license provide
that “[t]he Licensee shall install and thereafter maintain gages
and stream-gaging stations for the purpose of determining the stage
and flow of the stream or streams on which the project is located.”
App. 106.

                                        -4-
expedition      in   September    2000,    organized    by    local    businesses,

environmental        groups,     and     governmental        bodies,      in    which

approximately thirty canoeists traversed the river from Worcester,

past the Project, into Rhode Island and then Narragansett Bay.

Based on this expedition, which was accomplished with a minimum of

overland transport, or “portages,” FERC staff concluded that the

Blackstone River is suitable for interstate use by recreational

boaters and is thus a navigable waterway within the meaning of FPA

§ 3(8).    See 16 U.S.C. § 796(8) (defining “navigable waters”).

FERC therefore        concluded    that    the   Project     is   subject      to   its

mandatory licensing authority, and ordered Knott to abide by its

orders and all license terms and conditions.

               Knott filed a request for rehearing, which FERC denied.

FERC upheld the finding of the staff navigability report and also

found,    as    a    separate    basis    for    jurisdiction,     that     (1)      the

Blackstone River has an effect on interstate commerce; (2) the

Project has an effect on interstate commerce; and (3) Project

construction had occurred since August 1935 because Knott had

substantially rebuilt Project facilities and returned them to

operation after the Project had been abandoned in 1976.                             FERC

additionally rejected Knott’s takings and due process arguments.

Knott timely petitioned for review.

                                         -5-
                                 DISCUSSION

I.   STANDARD OF REVIEW

          “We review FERC’s findings of fact for ‘substantial

evidence,’ and if so supported, such findings are conclusive.”

Thomas Hodgson & Sons v. FERC, 49 F.3d 822, 825 (1st Cir. 1995);

16 U.S.C. § 825l.         We “defer to the agency’s expertise . . . so

long as its decision is supported by ‘substantial evidence’ in the

record and reached by ‘reasoned decisionmaking,’ including an

examination   of    the    relevant   data   and   a   reasoned   explanation

supported by a stated connection between the facts found and the

choice made.”      Northeast Utils. Serv. Co. v. FERC, 993 F.2d 937,

944 (1st Cir. 1993) (citation omitted).

          “‘Pure’ legal errors require no deference to agency

expertise, and are reviewed de novo.” Id. “Questions involving an

interpretation of the FPA involve a de novo determination by the

court of congressional intent; if that intent is ambiguous, FERC’s

conclusion will only be rejected if it is unreasonable.”                  Id.

(citing Chevron USA v. Natural Res. Def. Council, 467 U.S. 837,

842-45 (1984)).

          We review FERC orders under the Administrative Procedure

Act, 5 U.S.C. § 551, and must reverse an agency action that is

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.”         Wis. Valley Improvement Co. v. FERC, 236

F.3d 738, 742 (D.C. Cir. 2001).

                                      -6-
II.   MANDATORY JURISDICTION

           Knott challenges both grounds upon which FERC based its

finding of mandatory jurisdiction:         (1) that the Blackstone River

is navigable; and (2) that Knott’s reconstruction work after a

period of abandonment sufficed to confer jurisdiction.            Because we

hold that FERC properly based its jurisdiction on a finding of

navigability,    we   do   not   reach   the   issues   of   abandonment   and

reconstruction.

           The FPA, adopted in 1920, defines “navigable waters” as:

           [T]hose parts of streams or other bodies of
           water over which Congress has [Commerce
           Clause] jurisdiction . . . and which either in
           their    natural    or   improved    condition
           notwithstanding interruptions between the
           navigable parts of such streams or waters by
           falls, shallows, or rapids compelling land
           carriage, are used or suitable for use for the
           transportation of persons or property in
           interstate or foreign commerce, including
           therein all such interrupting falls, shallows,
           or rapids.

16 U.S.C. § 796(8) (emphases added). Based on this definition, and

case law interpreting it, FERC correctly found that the September

2000 canoe trip demonstrated that the Blackstone River and Project

site were “suitable for use” in interstate commerce notwithstanding

the shallows “compelling land carriage.”

           Knott first argues that FERC’s authority must be limited

to waterways used for actual, ongoing interstate commerce, “not

hypothetical possibilities of unrealized commerce.”            This argument

is unavailing.    The statutory language applies to waters in use or

                                     -7-
“suitable for use” for personal transportation, notwithstanding

interruptions.     Id. The Supreme Court has held that the absence of

actual   commercial       traffic   does     not   bar    “a    conclusion    of

navigability where personal or private use by boats demonstrates

the availability of the stream for the simpler types of commercial

navigation.”     United States v. Appalachian Elec. Power Co., 311

U.S. 377, 416 (1940); see also United States v. Utah, 283 U.S. 64,

82 (1931) (“The extent of existing commerce is not the test.”).

Irregular canoe trips may support a finding of navigability.                  See

FPL Energy Me. Hydro LLC v. FERC, 287 F.3d 1151, 1157 (D.C. Cir.

2002) (upholding a determination of navigability based on three

canoe    trips     made     for     the     purpose      of    litigation).

           Nor does the fact that the Blackstone River required

portages defeat a finding of navigability.            The statute explicitly

contemplates     that   waterways    may    be   navigable     “notwithstanding

interruptions between the navigable parts of such streams or waters

by falls, shallows, or rapids compelling land carriage.” 16 U.S.C.

§ 796(8). “Such interruptions do not render an otherwise navigable

stream non-navigable.” Consol. Hydro, Inc. v. FERC, 968 F.2d 1258,

1262 (D.C. Cir. 1992) (citing cases).2

     2
      Knott’s  selective   citations  do   not  undermine   these
principles. Knott incorrectly relies on Miami Valley Conservancy
Dist. v. Alexander, 692 F.2d 447 (6th Cir. 1982), a case
challenging Army Corps of Engineers jurisdiction under the Rivers
and Harbors Act of 1899, and LeBlanc v. Cleveland, 198 F.3d 353
(2nd Cir. 1999), a personal injury suit arising under general
admiralty law.   Neither case evaluated or applied FPA § 3(8).

                                      -8-
          Given this consensus, FERC’s interpretation of the FPA

concerning the standard for navigability is reasonable and entitled

to deference.   The D.C. Circuit recently explained that:

          As the [FPA] does not define when a waterway
          is “suitable for use . . . in . . . commerce,”
          we assume that Congress intended FERC to
          address the ambiguity in the statute and
          develop an appropriate test.       See United
          States v. Mead Corp., 533 U.S. 218, 229
          (2001). We find that FERC’s interpretation of
          navigability under the FPA, which was based on
          test canoe trips and the Stream’s physical
          characteristics . . . was reasonable and
          entitled to deference.

FPL, 287 F.3d at 1156.     FERC thus applied the proper legal test

required by the plain language of § 3(8) and the relevant case law.

          Substantial     evidence     supports   FERC’s     factual

determination that the Blackstone River is suitable “for the

simpler types of commercial navigation.”    Appalachian Elec. Power

Co., 311 U.S. at 416.    FERC properly relied on the September 2000

canoe expedition, which was accomplished with “few problems,”

“relatively easy” portages, and “a minimum of difficulty.”     Knott

asserts that the river is prone to dry or low flows and has many

natural   and   constructed   obstacles.   However,   the   statutory

Knott also relies on Leonard Murphy, 98 F.E.R.C. 61,302 (2002), but
that decision reaffirmed that “[s]ection 3(8) provides that the
stream may be found navigable if it was, is, or could be made
suitable for such use.     Such suitability may be shown through
non-commercial or recreational uses of the stream.” Id. at 62,295.
Duke Power, 74 F.E.R.C. 61,291 (1996), does not address the
navigability question.    Knott’s remaining citations predate the
Court’s landmark decision in Appalachian Electric Power Co., 311
U.S. 377 (1940), a case Knott does not address.

                                 -9-
definition of navigability explicitly allows for “land carriage”

around “interruptions.”           16 U.S.C. § 796(8).         Knott does not

otherwise      seriously   dispute    that    the   canoeists      successfully

navigated the waterway. He questions the participants’ motivation,

but this is irrelevant; what matters is that the participants

completed the journey, regardless of motivation. See FPL, 287 F.3d

at 1157 (affirming jurisdiction based on canoe trips made for the

purpose of litigation).3

            FERC’s finding that the Blackstone River is navigable, as

defined   by    16   U.S.C.   §   796(8),    is   supported   by   substantial

evidence.      We therefore hold that FERC properly asserted mandatory

jurisdiction over the Project.

III. KNOTT’S CONSTITUTIONAL RIGHTS

            Knott    argues   that   a   finding    of   mandatory   licensing

jurisdiction effects a taking of his private property rights, and

that FERC violated his right to due process by denying him an

evidentiary hearing on the issue of staff bias.

     3
      Knott also asserts that FERC has repeatedly reversed itself
in determining the navigability of the Blackstone River, thus
undermining its most recent order. This argument lacks foundation.
FERC’s 1987 order issuing Knott a voluntary license made no finding
on the navigability issue; FERC’s instant order thus presents no
conflict. FERC did reverse itself with regard to a project located
upstream from Knott’s facility, but only after the September 2000
canoe expedition demonstrated the navigability of the river at both
locations.

                                     -10-
     A.     Fifth Amendment Takings Clause

            Knott   alleges    that    mandatory       FERC    jurisdiction    will

deprive him of all economically viable use of his deeded right to

divert water from the Blackstone River “as he shall see fit.”                   We

lack jurisdiction to hear Knott’s taking claim because the Tucker

Act, 28 U.S.C. § 1491(a)(1), and “Little Tucker Act,” 28 U.S.C.

§ 1346(a)(2), vest exclusive jurisdiction in the Court of Federal

Claims (the district courts have concurrent jurisdiction over

claims for $10,000 or less) to render judgment upon any claim

against the United States for money damages that “is founded upon

the Constitution, or any Act of Congress or any regulation of an

executive department.”        28 U.S.C. § 1491(a)(1).            Although Knott’s

petition     for    review    does     not    specifically        seek   monetary

compensation, the Supreme Court has stated that “taking claims

against the Federal Government are premature until the property

owner has availed itself of the process provided by the Tucker

Act.”      Preseault v.      ICC,    494   U.S.   1,   11     (1990).    See   also

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984) (“Equitable

relief is not available to enjoin an alleged taking of private

property for public use, duly authorized by law, when a suit for

compensation can be brought against the sovereign subsequent to the

taking.”).

            “Accordingly, a claim for just compensation under the

Takings Clause must be brought to the Court of Federal Claims in

                                       -11-
the first instance, unless Congress has withdrawn the Tucker Act

grant of jurisdiction in the relevant statute.”      E. Enters. v.

Apfel, 524 U.S. 498, 520 (1998).       The courts have rejected an

argument that the FPA represents such a withdrawal of jurisdiction.

See Wis. Valley Improvement Co. v. FERC, 236 F.3d 738, 743 (D.C.

Cir. 2001) (holding that while petitioner seeking review of FERC

orders imposing conditions on its license “may be able to advance

a colorable Takings-Clause claim, it is not within our jurisdiction

to adjudicate it”).   Knott may thus file a takings action in the

Court of Federal Claims, but may not pursue it on a petition for

review brought under 16 U.S.C. § 825l.

     B.   Evidentiary hearing

          Knott further alleges that FERC improperly denied him a

“true” evidentiary hearing with regard to his “repeated allegations

of official government witness bias and factual inaccuracy.”    We

recently rejected a similar claim, and explained that:

          The term “hearing” is notoriously malleable,
          but what petitioners got here was not only a
          hearing but a species of evidentiary hearing
          which is now quite common in utility and
          carrier   regulation.       Very   extensive
          evidentiary submissions were made by both
          sides in the form of affidavits from experts
          and others, together with extensive written
          argument . . . .

Cent. Me. Power Co. v. FERC, 252 F.3d 34, 46 (1st Cir. 2001)

(citation omitted). We reconfirmed that a “true” hearing before an

administrative law judge is unnecessary if any genuine issues of

                                -12-
material fact can be “adequately resolved on the written record.”

Id. (citing cases).

          The factual issues Knott sought to raise are not issues

material to the dispute at hand.            The alleged biases of certain

FERC staff are irrelevant to a finding of navigability or an order

to comply with the terms of Knott’s voluntary license.              Knott does

not   dispute    that     the   September   2000    canoeists    successfully

navigated the Blackstone River and Knott’s voluntary license,

explicitly requiring him to install gages, predates the alleged

biased acts and, thus, cannot be their result.               Knott’s arguments

were thus properly addressed by FERC through a paper hearing.

IV.   ORDERS REQUIRING COMPLIANCE WITH LICENSE AND REGULATIONS

           Knott asserts that FERC acted unreasonably in demanding

that he file project drawings on microfilm.              Under the arbitrary

and capricious standard, we consider whether an agency’s decision

is “based on consideration of the relevant factors” and articulates

a “rational connection between the facts found and the choice

made.”   Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc.,

419 U.S. 281, 285 (1974) (citation omitted).             FERC noted that its

regulations     require    exhibit   drawings      to   be   microfilmed   onto

aperture cards, 18 C.F.R. § 4.39, and that “[a]perture cards

provide a durable medium for storing information about hydropower

project features and are relatively inexpensive to produce, costing

about $25-$50 for a set-up fee and one dollar for each original.”

                                     -13-
FERC also noted that Knott had modified his Project, rendering some

of his previous drawings inaccurate. Knott describes the microfilm

requirement as “antiquated” and lobbies for an “[i]nfusion of

modern technology,” but offers nothing further.              FERC’s decision

requiring records to be submitted on microfilm, in conformity with

its existing record-keeping system and because of the medium’s

durability     and   relatively     inexpensive    cost,     is    not    overly

burdensome and cannot be considered arbitrary or capricious.

          Knott also argues that FERC acted arbitrarily in ordering

him to install stream flow gages.        He contends that such gages are

not necessary because other gages exist, and that the license terms

requiring such gages do not apply to his Project.            These arguments

are also unpersuasive. FERC specifically rejected Knott’s argument

that other gages sufficed to address the issue, finding that those

gages were     too   distant   to   measure   impacts     from    the    Project.

Knott’s license explicitly requires him to “install and thereafter

maintain gages and stream-gaging stations for the purpose of

determining the stage and flow of the stream or streams on which

the project is located” and to minimize fluctuations such that

“flow in the Blackstone River, as measured immediately below the

project approximates the instantaneous sum of inflow to the project

reservoir” (emphasis added).        39 F.E.R.C. 62,308.      FERC decided to

enforce these conditions after receiving letters alleging extreme

fluctuations    in   the   Blackstone   River     below   the     Project,   and

                                     -14-
expressions of concern by state agencies and conservation groups

that the fluctuations might be the result of Knott’s failure to

operate his Project to allow a continuous stream flow.     Knott’s

contention that the terms and conditions of the license do not

apply to his Project are without merit; the order issuing the

license explicitly states that the license is subject to such

terms. 39 F.E.R.C. 62,308. FERC’s orders for compliance with these

terms are reasonable.     See Clifton Power Corp. v. FERC, 88 F.3d

1258, 1262 (D.C. Cir. 1996) (“It is simply not unreasonable for

FERC to require [licensee] to install [stream gaging] devices to

determine whether the dam is operating in the mode described in its

license application.”).

                             CONCLUSION

          For the reasons stated, we DENY Knott’s petition for

review.

          PETITION DENIED.

                                -15-