On May 15, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a petition for review of FERC’s order determining that the La Grange Hydroelectric Project (“Project”) fell within the mandatory licensing provisions of the Federal Power Act (“FPA”). In doing so, the D.C. Circuit rejected arguments made by the owners of the Project – the Turlock Irrigation District and the Modesto Irrigation District (collectively, the “Districts”) – that FERC’s decision was arbitrary and capricious for asserting jurisdiction over a historical hydro facility that owners contend does not qualify for FPA’s mandatory licensing triggers. The D.C. Circuit also rejected the arguments made by certain conservation groups – including the Tuolumne River Trust (collectively, the “Trust”) – that FERC’s decision was correct, but that FERC should have held that it had jurisdiction over the Project for additional reasons.
The Districts originally constructed the Project between 1891 and 1893 in order to create a reservoir for irrigation purposes. In 1924, the Districts expanded the Project, installing two 500 kilowatt generators and a larger 3750 kilowatt generator, all of which were replaced by new turbines and generating units in 1989. Eventually in June 2011, the National Marine Fisheries Service made an inquiry to FERC concerning the status of the unlicensed Project.
FERC Staff then reviewed the Project to determine whether it was subject to FERC’s mandatory hydro licensing jurisdiction. In December 2012, FERC’s Director of the Division of Hydropower Administration and Compliance issued an order determining that the Project did require licensing. Specifically, the Director concluded that the Project met three of the FPA’s triggering events for mandatory licensing. Namely, the Director found that the project: (1) was located on a navigable water of the United States; (2) occupied public lands of the United States; and (3) even if the stream was not navigable, it was nonetheless one over which Congress had jurisdiction under its authority to regulate commerce. After FERC upheld the decision, the Districts and the Trust appealed to the D.C. Circuit. The Districts argued that each of FERC’s three determinations for jurisdiction were incorrect.
With regard to navigability, the D.C. Circuit affirmed FERC’s finding, quoting the Supreme Court to explain that “personal or private use by boats demonstrates the availability of the stream for the simpler types of commercial navigation.” As a result, the D.C. Circuit also found the waters to be those that are subject to Congress’ Commerce Clause authority. Finally, the D.C. Circuit rejected the Districts’ arguments that the boats needed to be able to go through the Project site, stating that “[t]he FPA does not require FERC to show that the river is navigable [through the Project], only that some part of the project is located on navigable waters.”
In terms of whether the Project occupied public lands, FERC had previously found that the reservoir extended onto federal lands at approximately 5,800 feet upstream of the Project. Meanwhile, the Districts argued that FERC did not appropriately calculate this measurement, concluding that the reservoir ended just short of federal lands. Ultimately, the D.C. Circuit deferred to FERC’s decision, explaining that when orders involve complex technical questions, the court is particularly reluctant to interfere with the agency’s reasoned judgements.
In addition to already finding that the water at issue fell under Congress’ authority to regulate commerce, FERC also noted in its order that it needed to find that the Project affected interstate commerce and that the Project was constructed or enlarged after 1935 in order to meet the third triggering even. FERC found that the Project affected interstate commerce based on its connection to the interstate electrical grid. FERC also concluded that the Project had been “constructed” after 1935 due to the Project’s increased capacity in 1984 when the new turbines and generating units were installed. The Districts challenged FERC’s determination, arguing that FERC did not qualitatively know the actual output of the equipment before or after the change. The D.C. Circuit disagreed, explaining that FERC’s decision based on ratings for the equipment was reasonable, and rejected further arguments that FERC should have declined to assert jurisdiction over a slight increase in generation capacity.
Finally, the Trust believed that the Project fell under FERC’s mandatory licensure jurisdiction for not only the three reasons previously listed, but also because the Project could be viewed as part of the development of a nearby neighboring hydroelectric project that was federally licensed. The D.C. Circuit abstained from making a determination regarding the Trust’s proposed fourth factor, instead finding that the Trust did not suffer an injury in fact because the Trust received the outcome that it sought—the Project was to be licensed. That the Trust indicated that it was also concerned that licensing of the Project separate from its neighboring facility may cause an uncoordinated fish passage between the two was found by the D.C. Circuit to be too speculative to sustain standing.
To view the order, click here.