Court Opinion

ID: 3053048
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:45:32.309032+00
Date Added: 2024-06-11T12:12:31.715736
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

FALL RIVER RURAL ELECTRIC           
COOPERATIVE, INC.,
                      Petitioner,
                                    
                                           No. 06-71944
                v.
                                            OPINION
FEDERAL ENERGY REGULATORY
COMMISSION,
                    Respondent.
                                    
         On Petition for Review of Orders of the
         Federal Energy Regulatory Commission

                 Argued and Submitted
        March 11, 2008—San Francisco, California

                Filed September 10, 2008

     Before: Stephen Reinhardt, Melvin Brunetti, and
           Raymond C. Fisher, Circuit Judges.

                Opinion by Judge Brunetti

                         12631
12634        FALL RIVER RURAL ELECTRIC v. FERC

                         COUNSEL

Peter C. Kissel and Paige Bullard, Law Offices of GKRSE,
Washington, D.C.; Ray W. Rigby and Jerry R. Rigby, Rigby,
Thatcher, Andrus, Rigby & Moeller, Rexburg, Idaho, for the
petitioner.

Samuel Soopper and Beth G. Pacella, Federal Energy Regula-
tory Commission, Washington, D.C., for the respondent.

                         OPINION

BRUNETTI, Circuit Judge:

   Fall River Rural Electric Cooperative, Inc. (Fall River)
petitions for review of two Federal Energy Regulatory Com-
mission (FERC) orders. Fall River applied for a license to
construct, operate, and maintain a new hydroelectric power
generating facility at Hebgen Dam on the Madison River in
Gallatin County, Montana. In its orders FERC dismissed Fall
River’s license application and denied Fall River’s request to
hold the proceeding in abeyance, Fall River Rural Elec.
Coop., Inc., 111 ¶ FERC 62,333 (2005), and it denied Fall
River’s request for rehearing, Fall River Rural Elec. Coop.,
Inc., 114 FERC ¶ 61,152 (2006). Fall River timely petitioned
for review of both orders. We have jurisdiction pursuant to 16
U.S.C. § 825l(b), and we deny Fall River’s petition for
review.

I.   Facts and Proceedings Below

  The Missouri-Madison Hydroelectric Project develops
hydropower on a 324-mile stretch of the Madison and
              FALL RIVER RURAL ELECTRIC v. FERC              12635
Missouri Rivers in southwestern Montana. The project is
licensed to Pennsylvania Power and Light Montana, LLC
(PPL) under FERC Project No. 2188. PP&L Montana, LLC,
92 FERC ¶ 61,261 (2000). The project consists of nine hydro-
electric developments, eight of which have power generating
facilities. Id. at 61,830. The Hebgen Development is the one
development without a power generating facility and is
instead used as a water storage and release facility. Releases
from Hebgen Reservoir provide head and flow to the
Missouri-Madison Hydroelectric Project’s eight other down-
stream developments. Id.

   Hebgen Dam is an earth-filled structure with a concrete
core wall and is 721 feet long and 85 feet high. Discharges
from Hebgen Reservoir are controlled by outlet works con-
sisting of an intake tower, a conduit through the dam, and a
conduit outlet. The intake tower includes four openings, two
of which are presently closed with timber stoplogs, while the
other two are used for reservoir discharges. Water passes from
the intake tower through the dam structure in a woodstave-
lined conduit, which has an unreinforced concrete encasement
and is approximately 785 feet long and twelve feet in diame-
ter. The conduit outlet is an irregularly-shaped concrete box
structure at the toe of the dam that directs discharges into the
Madison River. The Hebgen Development also includes a
spillway, which is located on the right abutment of the dam.

   In 2001, FERC granted Fall River a three-year preliminary
permit to conduct investigations and to secure data necessary
to determine the feasibility of a hydroelectric development
project at Hebgen Dam. Symbiotics, LLC, 95 FERC ¶ 62,265,
64,400 (2001).1 PPL did not oppose Fall River’s preliminary
permit application and in fact cooperated with Fall River’s
feasibility studies and engaged in negotiations with Fall River
regarding a possible site use and operations agreement.
  1
   FERC subsequently replaced all references to Symbiotics, LLC with
“Fall River Rural Electric Cooperative, Inc.”
12636        FALL RIVER RURAL ELECTRIC v. FERC
   In May 2004, Fall River filed its Final License Application
for the proposed Hebgen Dam Hydroelectric Project No.
11882. In its application, Fall River proposed several modifi-
cations and additions to the existing Hebgen Development.
First, Fall River proposed constructing a powerhouse with a
single turbine generator unit eighty feet downstream from the
toe of the dam and immediately north of the present conduit
outlet. Discharges would be made through a submerged
concrete-lined draft tube below the surface of the tailwater.
Second, Fall River proposed pressure-grouting and steel-
lining the conduit because it was not designed to withstand
the full reservoir pressure required for power generation.
Third, Fall River proposed bifurcating the conduit approxi-
mately 50 to 60 feet upstream of the current conduit outlet.
Fall River proposed installing a steel penstock ten feet in
diameter to direct the flow from the existing conduit to the
proposed powerhouse. The bifurcation and isolation valves
would be located in a new concrete valve house upstream of
the proposed powerhouse. Fifth, a new power transmission
line would be installed to connect the plant electrical output
to Fall River’s existing Hebgen substation near Grayling,
Montana. Sixth, and finally, Fall River proposed using all four
of the existing intake tower’s openings by removing the tim-
ber stoplogs from the two currently unused openings and
installing intake gates in their place.

   While Fall River’s license application did not propose mod-
ifying the existing spillway, PPL would have to use the spill-
way for all discharges during approximately three months of
the construction period. Once completed, the powerhouse
would operate in “run-of-river mode,” and would utilize flow
releases from Hebgen Dam as determined under PPL’s
license. Fall River would not have access to reservoir storage
for additional power generation.

   In July 2004, FERC informed Fall River by letter that its
license application potentially conflicted with Section 6 of the
                  FALL RIVER RURAL ELECTRIC v. FERC                     12637
Federal Power Act (FPA), 16 U.S.C. § 799.2 Specifically,
FERC stated that it “cannot, without [PPL’s] concurrence,
approve a development proposal that would materially affect
or modify the licensed project. Without PPL’s consent to [Fall
River’s] proposed modifications to Project No. 2188, [Fall
River’s] application would be precluded by the requirements
of FPA Section 6 and therefore would be subject to rejection
under 18 C.F.R. § 4.32 (e) (2).”3 However, because Fall River
was in the process of negotiating a site use and operations
agreement with PPL, FERC stated that it would “continue to
process [Fall River’s] application, conditioned on [Fall River]
filing . . . additional information showing that PPL has not
ruled out an agreement to the modifications to its Project No.
2188.” FERC required Fall River to provide this information
within thirty days and by the end of each subsequent sixty-day
period. Fall River did so, filing five status reports between
August 2004 and May 2005.

   Just before Fall River filed its last status report, however,
PPL sent a letter to Fall River terminating negotiations. The
letter stated that “the negotiations with [Fall River] over an
extended period have not been successful” and that PPL was
“not interested in proceeding any further with negotiations.”
PPL also filed a copy of the letter with FERC.
  2
     Section 799 provides in pertinent part: “Licenses may be revoked only
for the reasons and in the manner prescribed under the provisions of this
chapter, and may be altered or surrendered only upon mutual agreement
between the licensee and the Commission after thirty days’ public notice.”
16 U.S.C. § 799.
   3
     Section 4.32(e)(2) provides in pertinent part:
      If, within 90 days of its filing date, the Director of the Office of
      Energy Projects determines that an application patently fails to
      substantially comply with the requirements of paragraph (a), (b),
      and (c) of this section and of § 4.38 of this part or § 16.8 of this
      chapter, or is for a project that is precluded by law, the applica-
      tion will be rejected as patently deficient with the specification of
      the deficiencies that render the application patently deficient.
18 C.F.R. § 4.32(e)(2).
12638           FALL RIVER RURAL ELECTRIC v. FERC
   In its final status report, after noting PPL’s letter and recog-
nizing that “it appear[ed] that negotiations ha[d] come to a
stalemate,” Fall River declared its “intent to continue it’s [sic]
efforts to resolve there [sic] difference’s [sic] with PPL in the
hopes of coming to an acceptable financial arrangement.” Fall
River further noted that “prior to PPL’s letter of January 17,
2005 there ha[d] been no objection by PPL for the licensing
and development of additional generation at the Hebgen
Dam,” and therefore requested that FERC “continue to move
forward with the licensing of the Hebgen Dam project.” Alter-
natively, if FERC “fe[lt] it [was] unable to proceed with the
licensing” in the absence of PPL’s consent, Fall River
requested that FERC “hold the licensing process in abeyance
until such time that Fall River and PPL have resolved there
[sic] differences.”

   PPL then sent a letter to FERC to “supplement and clarify”
certain issues in Fall River’s status report. PPL stated: “[O]n
April 29, 2005, PPL Montana notified Falls River [sic] that it
was terminating negotiations for a site agreement. As PPL
Montana has already communicated to Falls River [sic] and
NPSI, we do not intend to resume these negotiations for the
installation of additional generation at the Hebgen Develop-
ment by Falls River [sic] or NPSI.”4

   Shortly thereafter, the Director of FERC’s Division of
Hydropower Licensing dismissed Fall River’s license applica-
tion and denied its request to hold the application in abeyance.
Fall River Rural Elec. Coop., Inc., 111 FERC ¶ 62,333 (2005)
(the Dismissal Order). The Director concluded that Fall
River’s proposed project is barred under FPA Section 6
because it “would substantially alter PPL Montana’s licensed
project works” without PPL’s consent. Id. at 64,733. The
Director specifically noted Fall River’s proposals to modify
  4
    “NPSI” refers to Northwest Power Services, Inc., which Fall River des-
ignated as its project liaison for correspondence. Accordingly, most if not
all of Fall River’s correspondence in the record is by or to NPSI.
              FALL RIVER RURAL ELECTRIC v. FERC             12639
the “existing intake structure by inserting new gates and
screens in two presently-closed intake openings,” to bifurcate
the outlet conduit, to install a penstock extending to a new
powerhouse, and that “installation of its valve house to bifur-
cate the Hebgen outlet conduit . . . will require extensive
excavation of the earth fill covering the conduit.” Id. The
Director concluded, “[t]hese are the types of modifications to
a licensed project that the Commission has found require the
licensee’s consent under Section 6 of the FPA.” Id. Therefore,
“[w]ithout PPL Montana’s consent for these alterations, the
application must be dismissed . . . without prejudice to Fall
River re-filing its application, in the event it is able to obtain
PPL Montana’s consent for use of the Hebgen Development.”
Id. The Director further concluded that because of PPL’s
intention not to resume negotiations, “[n]o public purpose
would be served by continuing to process the application or
to hold the application in abeyance.” Id.

   Fall River then filed a request for rehearing, which a panel
of three commissioners denied. Fall River Elec. Coop., Inc.,
114 FERC ¶ 61,152 (2006) (the Rehearing Order). The panel
concluded that “[t]he proposed project requires alterations of
the existing project’s facilities that are much greater than the
kind of physical alterations the Commission has previously
found to be insubstantial.” Id. at 61,509. In reaching this con-
clusion, the panel specifically noted the “installation of new
gates and screens on the intake tower, excavation of a large
area of the dam in order to reconfigure and reline the outlet
conduit, and installation of a valve house and new penstock
at the dam,” and the fact that “[c]onstruction of the proposed
project would also require PPL to enter into an agreement
with Fall River regarding coordination of activities, and
responsibility for operation and maintenance of joint use facil-
ities.” Id. Therefore, the panel concluded, “the physical
changes to the existing structures are not minor” and that such
coordination obligations are not “insubstantial.” Id.

   After explaining that “a substantial alteration may result . . .
from significant alterations to project works” alone, id. at
12640         FALL RIVER RURAL ELECTRIC v. FERC
61,509, the panel also concluded that “the potential for . . .
joint-use operational problems would be a substantial alter-
ation of the existing license,” id. at 61,510, thereby requiring
PPL’s consent. The panel specifically noted that: (1) “PPL’s
ability to meet its flow requirements . . . could be compro-
mised” during the three months of construction when all
flows would be released via the spillway; (2) after construc-
tion, PPL’s ability to maintain appropriate dissolved oxygen
levels could be compromised because under Fall River’s pro-
posal, water would be released below the tailwater surface
rather than dropping into the tailwater as it currently does; and
(3) “it might be necessary to require finer screening at the
intakes” to guard against turbine entrainment mortality of sal-
monid, thereby “potentially compromis[ing] PPL’s ability to
satisfy the flow release requirements of its license.” Id. at
61,509.

   The panel also concluded that FERC’s prior issuance of a
preliminary permit was not inconsistent with its dismissal of
Fall River’s license application, in light of the limited purpose
of the preliminary permit and the intervening breakdown in
negotiations between PPL and Fall River. Id. at 61,510.
Finally, the panel rejected Fall River’s arguments that PPL
either expressly consented to future modifications of its
license by accepting Standard Articles 9 and 10 in its
Missouri-Madison license, or had “impliedly consented” by
expressing no opposition to Fall River’s preliminary permit
application or its final license application, or by cooperating
with Fall River for years before abruptly terminating negotia-
tions. Id. at 61,510-11.

  Fall River timely petitioned for review of both the Dis-
missal Order and the Rehearing Order.

II.   Standards of Review

  Under the Administrative Procedure Act, this court reviews
decisions by FERC to determine whether the agency action
             FALL RIVER RURAL ELECTRIC v. FERC            12641
was arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law. 5 U.S.C. § 706(2); Cal. Dep’t of
Water Res. v. FERC, 489 F.3d 1029, 1035 (9th Cir. 2007).
Under the FPA, FERC’s factual findings are conclusive if
supported by substantial evidence. 16 U.S.C. § 825l(b); Bear
Lake Watch, Inc., v. FERC, 324 F.3d 1071, 1076 (9th Cir.
2003). “Here, as elsewhere, [s]ubstantial evidence constitutes
more than a mere scintilla. It means such relevant evidence as
a reasonable mind might accept as adequate to support a con-
clusion. If the evidence is susceptible of more than one ratio-
nal interpretation, we must uphold [FERC’s] findings.” Id.
(internal quotation marks and citation omitted; alterations in
original). FERC’s interpretation of the FPA is entitled to
Chevron deference. Am. Rivers v. FERC, 201 F.3d 1186, 1194
(9th Cir. 2000).

III.   Discussion

  A.    Substantial Evidence of an “Alteration” Under
        Section 6 of the FPA

  Fall River first argues that because its proposal would not
substantially or materially alter PPL’s project’s configuration,
mode of operations, or power generation, FERC’s orders are
not supported by substantial evidence. We disagree.

   [1] Section 6 of the FPA states that licenses “may be
altered . . . only upon mutual agreement between the licensee
and the Commission . . . .” 16 U.S.C. § 799. The term “al-
tered” is not statutorily defined; however, both parties agree
that in order to violate Section 6, a proposed project must sub-
stantially alter an existing license. As neither party disputes
the relevant standard, for purposes of this appeal we assume
without deciding that in order for Section 6 of the FPA to
apply, a proposed project must substantially alter an existing
license. Cf. Pac. Gas & Elec. Co. v. FERC, 720 F.2d 78, 90
n.36 (D.C. Cir. 1983) (“We do not, however, adopt FERC’s
view that only ‘substantial alterations’ in a license engage
12642         FALL RIVER RURAL ELECTRIC v. FERC
section 6 protections . . . .”). Under this standard, FERC may
authorize “de minimis interferences with the operation of an
existing plant”—i.e., “[s]mall encroachments on a license,
comparable in their adverse impact to variations in conditions
that investors might expect from other causes such as, for
example, annual fluctuations in water supply.” Id. at 90.
FERC may not, however, issue a license which “will signifi-
cantly interfere with operations already licensed, whether the
interference will adversely affect the prior licensee’s physical
plant, its ‘project works,’ or its supplies of water.” Id. at 89
n.31.

   Under FERC precedent, “[w]hat constitutes an ‘alteration’
for Section 6 purposes is primarily a factual issue to be deter-
mined in each case.” Universal Elec. Power Co., 92 FERC
¶ 61,242, 61,768 (2000). Therefore, FERC’s conclusion that
Fall River’s proposed project would substantially alter PPL’s
license is “conclusive” if supported by substantial evidence.
16 U.S.C. § 825l(b).

   In this case, FERC concluded that both Fall River’s pro-
posed physical modifications to the Hebgen Development and
the possible operational impacts to the Missouri-Madison
project constitute “substantial alterations” of PPL’s license.
114 FERC ¶ 61,152, at 61,509; see Gas & Elec. Dep’t of Hol-
yoke, 21 FERC ¶ 61,357, 61,927 (1982) (“[T]here are essen-
tially two types of interference with the licensed project that
we must consider: (1) physical alterations to existing project
works; and (2) impacts on the operation of the project.”).

   FERC first explained in its Rehearing Order that the “pro-
posed project requires alterations of the existing project’s
facilities that are much greater than the kind of physical alter-
ations the Commission has previously found to be insubstan-
tial.” 114 FERC ¶ 61,152, at 61,509. In reaching this
conclusion FERC specifically relied on “the installation of
new gates and screens on the intake tower, excavation of a
large area of the dam in order to reconfigure and reline the
              FALL RIVER RURAL ELECTRIC v. FERC            12643
outlet conduit, and installation of a valve house and a new
penstock at the dam.” Id.

   Fall River first objects to FERC’s finding that its proposal
includes installing screens on the intake tower. Though
screens were mentioned on multiple occasions in the docu-
ments supporting Fall River’s license application, Fall River
is correct that screens were not part of its final license appli-
cation. Nevertheless, Fall River does not dispute that it pro-
poses making physical alterations to the intake tower, namely
removing the timber stoplogs from the two presently-closed
intake openings and installing two new intake gates in their
place.

   Fall River next notes that excavation would be limited to a
relatively small area on the downstream toe of the dam, and
would not amount to the “excavation of a large area of the
dam” described by FERC. Fall River asserts that the excava-
tion would be limited to the hillside over the downstream
sixty feet of the conduit. There is no dispute, however, that
the proposed excavation requires removing approximately
3,100 square feet of soil for construction of the new power-
house and valve house. Fall River simply prefers to character-
ize this as excavating a “relatively small area” rather than a
“large area.”

   Next, while conceding that it proposes relining the conduit,
Fall River objects to FERC’s finding that the outlet conduit
will be “reconfigured.” However, the license application
explicitly proposes bifurcating the outlet conduit, installing a
new penstock, and constructing a new concrete valve house,
in addition to pressure-grouting and steel-lining the conduit.

   After discussing the aforementioned physical alterations,
FERC also concluded that in this case the potential for “joint-
use operational problems would be a substantial alteration of
the existing license.” 114 FERC ¶ 61,152, at 61,509-10. Spe-
cifically, FERC identified: (1) use of the spillway for all dis-
12644         FALL RIVER RURAL ELECTRIC v. FERC
charges during approximately three months of the
construction period as potentially impacting PPL’s ability to
meet its flow requirements; (2) releasing water below the tail-
water’s surface rather than allowing the water to drop into the
tailwater as potentially affecting PPL’s ability to maintain
appropriate dissolved oxygen levels; and (3) the possibility of
having to install finer screening at the intakes as potentially
impacting PPL’s ability to meet its flow requirements. Id.

   Fall River contends that FERC’s conclusion with respect to
PPL’s operations is purely speculative and has no basis in evi-
dence. Again, we disagree. It is undisputed that Fall River’s
license application proposes closing the intake gates and con-
duit during approximately three months of the construction
period, with all discharges being made via the spillway during
this time. It is also undisputed that Fall River proposes dis-
charging water below the tailwater’s surface rather than
allowing the flow to drop into the tailwater, as it currently
does. Finally, in its “official response” to Fall River’s draft
license application, Montana Fish, Wildlife and Parks recom-
mended that Fall River incorporate the following language
into its license: “If future monitoring results indicate that sig-
nificant entrainment is occurring and that screening is a nec-
essary and effective option for reducing entrainment, then
screening the intake may be required at some future date.”
(Emphasis added.)

   [2] Choosing to focus on the impact of each of these pro-
posed modifications individually, Fall River apparently does
not appreciate the cumulative impact of its proposed project.
Fall River proposes doubling the number of intake openings
used and installing new gates on the intake tower, thereby
increasing pressure within the conduit. Fall River proposes
steel-lining and pressure-grouting the conduit because it “was
not designed to withstand the full reservoir pressure which
would be required for power generation.” Rather than using
the existing conduit outlet, Fall River proposes bifurcating the
conduit and installing a new penstock. Rather than having dis-
              FALL RIVER RURAL ELECTRIC v. FERC           12645
charges drop into the tailwater below the conduit outlet as
they currently do, Fall River proposes releasing water below
the tailwater’s surface. During approximately three months of
construction, Fall River proposes making all discharges via
the spillway, which is not ordinarily used for discharges and
has no backup, as it is the backup. Collectively, these alter-
ations fundamentally change the physical characteristics and
operation of the Hebgen Development. Admittedly, FERC
cannot know whether certain operational problems will arise,
but neither can Fall River ensure that they will not. However,
FERC’s ability to accurately predict the future is rather beside
the point. Here, there is much more than a “mere scintilla” of
evidence supporting FERC’s conclusion that Fall River’s pro-
posal would substantially alter PPL’s license; therefore, it is
supported by substantial evidence. In sum, we conclude that
each of FERC’s factual findings with respect to Fall River’s
proposed physical alterations and operational interferences
with PPL’s license are supported by substantial evidence, and
that FERC’s conclusion that Fall River’s proposal would sub-
stantially alter PPL’s existing license is also supported by
substantial evidence.

  B.     FERC Precedent

   Fall River next argues that FERC’s orders are inconsistent
with its precedents and are therefore not entitled to deference.
In its Rehearing Order FERC analyzed Fall River’s proposed
project by applying both cases involving a substantial alter-
ation of an existing license, and cases where it found no sub-
stantial alteration. 114 FERC ¶ 61,152, at 61,508-09. Fall
River challenges FERC’s application of these cases.

    1.    Cases Finding a Substantial Alteration

   [3] In Niagra Mohawk Power Corporation, FERC rejected
a license application that proposed a two-phase modification
of an existing development. 29 FERC ¶ 61,005, 61,010
(1984). The first phase involved modifying an existing head-
12646         FALL RIVER RURAL ELECTRIC v. FERC
gate structure, rehabilitating an existing portion of an abut-
ment, and constructing a powerhouse and penstocks. Id. The
second phase involved preventing all flows from entering the
existing plant, effectively closing down its operation. Id.
FERC concluded that “this amount of construction work
requires fundamental alterations to [the] licensed project
works, and places it in clear violation of Section 6.” Id. Fall
River contends that its proposed modifications to the Hebgen
Development are not remotely similar in scale to the proposed
alterations in Niagra Mohawk. However, as in Niagra
Mohawk, Fall River’s proposal includes more than an insub-
stantial amount of construction, namely building a power-
house, installing a penstock, and excavating around a portion
of PPL’s existing conduit.

   In JDJ Energy Company, FERC rejected a preliminary
license application that proposed modifying approximately 75
feet of an existing dam and modifying an existing powerhouse
to accommodate construction of a new powerhouse. 41 FERC
¶ 61,354 (1987). FERC explained that “JDJ’s proposal would
involve significant structural modifications to the project dam
and to project works in the area immediately adjacent to the
dam.” Id. Fall River notes that it does not propose any modifi-
cations to an existing powerhouse and “very little” modifica-
tions to the existing dam. However, Fall River does propose
constructing a powerhouse, modifying the intake tower and
conduit, and installing a penstock.

   In Green Island Power Authority, FERC rejected a prelimi-
nary license application that proposed constructing a new dam
that would inundate an existing dam, decommissioning vari-
ous other facilities, thereby rendering an existing project inop-
erable. 110 FERC ¶ 61,034, 61,109 (2005). Fall River notes
that its proposed project bears no similarity to the project pro-
posed in Green Island. Admittedly, Fall River’s proposal
would not render PPL’s project inoperable, but that does not
necessarily make FERC’s orders in this case inconsistent with
Green Island. FERC never represented Fall River’s proposal
             FALL RIVER RURAL ELECTRIC v. FERC            12647
to be on all fours with the proposed project in Green Island.
FERC’s citation to Green Island simply illustrates an extreme
example of a substantial alteration.

    2.   Cases Finding No Substantial Alteration

   In Weber Basin Water Conservancy District, FERC granted
a license that proposed installing a penstock underneath an
existing canal. 50 FERC ¶ 61,409, 62,263 (1990). Construc-
tion of the penstock involved making an opencut excavation
through the canal, approximately eight feet wide and eight
feet deep, placing the penstock in the excavation, backfilling
the excavation, and restoring the disturbance to the canal lin-
ing. Id. n.13. In concluding that these proposed modifications
did not amount to a substantial alteration, FERC explained
that “once constructed [the penstock] will not physically inter-
fere with [prior licensees],” and that “construction should take
approximately three to seven days to complete.” Id. As noted,
and unlike in Weber Basin, Fall River’s penstock would phys-
ically interfere with PPL’s license because it would funda-
mentally alter the flow of water through Hebgen Dam.
Furthermore, Fall River’s proposed construction schedule
spans an estimated eight months, not three to seven days.

   In Howard W. Bair, FERC granted a preliminary permit
that proposed utilizing an existing fish water release pipe and
constructing a powerhouse. 20 FERC ¶ 61,092, 61,194
(1982). The only proposed modification to the existing iron
pipe was to extend it by forty feet, id. at App. A, which FERC
noted was only a “small scale development.” By contrast, Fall
River’s proposed modifications to the intake tower and con-
duit are far more extensive than simply extending the existing
conduit by forty feet. Further, Bair involved an application for
a preliminary permit, not a final license. FERC will issue a
preliminary permit unless “it is clear at the preliminary permit
stage” that the license would require an existing licensee’s
permission under Section 6. See Kamargo Corp., 53 FERC
¶ 61,411, 62,439 (1990) (emphasis added).
12648        FALL RIVER RURAL ELECTRIC v. FERC
   Finally, in both PG&E, 720 F.2d at 89, and Fluid Energy
Systems, Inc., 24 FERC ¶ 61,298, 61,615 (1983), FERC con-
cluded that a 0.3% reduction in power generation did not
amount to a substantial alteration of an existing license. Fall
River notes that similar to these cases, its proposed project
will not reduce power generation at the Hebgen Dam. This is
undoubtedly true, as the Hebgen Development currently has
no power generating facilities. However, neither PG&E nor
Fluid Energy Systems involved physical modifications to an
existing project comparable to those now proposed by Fall
River.

   [4] In sum, we disagree with Fall River’s argument that
FERC’s orders are inconsistent with its precedents. In citing
these cases, FERC did not suggest they are on all fours factu-
ally with Fall River’s proposed project. Instead, FERC used
these cases as examples of instances where alterations were
substantial and where they were not. As FERC explained in
its Rehearing Order, “[t]he degree of encroachment that
makes an alteration ‘substantial’ is a case-specific determina-
tion.” 114 FERC ¶ 61,152, at 61,508. These cases served as
guideposts in FERC’s evaluation and analysis of Fall River’s
proposal. Therefore, FERC’s conclusion in this case that Fall
River’s proposed project amounts to a substantial alteration of
PPL’s license under Section 6 of the FPA is entirely consis-
tent with its precedents and is entitled to deference.

  C.    Preliminary Permit

  Fall River next argues that FERC’s orders are inconsistent
with its regulations and with its issuance of a preliminary per-
mit in this case because Fall River’s Preliminary Permit
Application was substantially identical to its Final License
Application. Fall River contends that this change in policy
must be supported by a reasoned explanation. See generally
Flagstaff Med. Ctr., Inc. v. Sullivan, 962 F.2d 879, 886 (9th
Cir. 1992) (explaining that “changes in agency interpretation
must be supported by a ‘reasoned analysis’ ”).
             FALL RIVER RURAL ELECTRIC v. FERC            12649
   [5] FERC’s preliminary permit regulations provide: “The
Commission will not accept an application for a preliminary
permit for project works that . . . [w]ould interfere with a
licensed project in a manner that, absent the licensee’s con-
sent, would be precluded by Section 6 of the Federal Power
Act.” 18 C.F.R. § 4.33(a)(2). FERC’s practice is that “where
it is clear at the preliminary permit application stage that the
development proposed in the permit application would cause
impermissible alterations of an existing license under section
6, the Commission will not grant the permit.” Kamargo
Corp., 53 FERC ¶ 61,411, at 62,439. However, “[w]here it is
not clear at the permit stage that the proposed development
would involve an impermissible alteration of an existing
license, the Commission will issue the permit.” Id. In other
words, “[t]he preliminary permit is actually only a minor
threshold hurdle for the applicant, and the grant of a prelimi-
nary permit is in no respect an indication of the merits of a
license proposal.” Town of Summersville v. FERC, 780 F.2d
1034, 1038-39 (D.C. Cir. 1986). Therefore, “[u]nless a perma-
nent legal barrier precludes FERC from licensing the project,
FERC will issue a preliminary permit.” Id. at 1038.

   [6] We cannot say that it was “clear” at the preliminary per-
mit stage that Fall River’s proposed project would substan-
tially alter PPL’s license, nor can we say that there was a
“permanent legal barrier” to Fall River’s proposed project
when FERC issued the preliminary permit. In fact, Fall River
discussed developing Hebgen Dam with PPL in early 2001,
and at that time PPL agreed that Fall River could and would
make an application for a preliminary permit, and that it
would negotiate a site use agreement with Fall River.

  [7] In granting Fall River’s preliminary permit, FERC
noted Fall River’s representation “that they will not impact
[PPL’s] project.” 95 FERC ¶ 62,265, at 64,400. Had Fall
River and PPL reached a mutually acceptable site use agree-
ment, there is no indication that Fall River’s preliminary per-
mit application would have otherwise been precluded by a
12650        FALL RIVER RURAL ELECTRIC v. FERC
“permanent legal barrier.” When PPL ultimately informed
FERC that it “[did] not intend to resume these negotiations for
the installation of additional generation at the Hebgen devel-
opment,” FERC promptly dismissed Fall River’s license
application. Therefore, we conclude that FERC’s orders are
consistent with both its regulations on issuing preliminary
permits and its prior issuance of a preliminary permit in this
case, and that FERC has not made any change in policy that
requires justification.

  D.    Consent

   Fall River’s final argument is that FERC failed to ade-
quately consider whether PPL impliedly consented to Fall
River’s proposed project by not intervening in, protesting, or
commenting on either the Preliminary Permit Application or
the Final License Application.

   In its Rehearing Order, FERC noted Fall River’s argument
that “PPL has impliedly consented by expressing no opposi-
tion to Fall River’s preliminary permit or filing no comments
in response to its license application proposal.” 114 FERC
¶ 61,152, at 61,510-11. FERC did not, however, include a
separate analysis addressing this argument.

   [8] Nevertheless, Fall River does not cite a single case
requiring FERC’s orders to thoroughly analyze each and
every argument in order to engage in reasoned decision mak-
ing, nor have we found one. We would not expect FERC to
have spent much time addressing Fall River’s implied consent
argument in this case, as Section 6 of the FPA unequivocally
provides that a license “may be altered . . . only upon mutual
agreement between the licensee and the Commission.” Fall
River cites no authority indicating that this agreement may be
implied rather than express, and our research has uncovered
only cases where FERC had an express agreement with the
prior licensees. See, e.g., PG&E, 720 F.2d at 91-92 (explain-
ing that FERC expressly retained broad authority to permit
             FALL RIVER RURAL ELECTRIC v. FERC          12651
future development under existing license). We harbor no
doubt that FERC recognized Fall River’s implied consent
argument and rejected it.

  Finally, because Fall River did not argue its express con-
sent argument specifically and distinctly in its opening brief
we deem it waived. See Diaz v. Eagle Produce Ltd. P’ship,
521 F.3d 1201, 1208 n.3 (9th Cir. 2008).

IV.   Conclusion

   In sum, we conclude that substantial evidence supported
FERC’s conclusion that PPL’s license would be substantially
altered under Section 6 of the FPA by Fall River’s proposed
project, that FERC’s orders were consistent with its prece-
dents and with its issuance of a preliminary permit, and that
PPL did not impliedly consent to Fall River’s proposed modi-
fications. Therefore, Fall River’s petition for review is
DENIED.