Fpl Energy Maine Hydro LLC v. F.E.R.C.

• Decision Date: 03 May 2002
• Docket Number: No. 99-1397.,99-1397.
• Citation: 287 F.3d 1151
• Parties: FPL ENERGY MAINE HYDRO LLC, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. American Rivers, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

287 F.3d 1151

FPL ENERGY MAINE HYDRO LLC, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent American Rivers, et al., Intervenors.

No. 99-1397.

United States Court of Appeals, District of Columbia Circuit.

Argued March 14, 2002.

Decided May 3, 2002.

COPYRIGHT MATERIAL OMITTED

On Petition for Review of Orders of the Federal Energy Regulatory Commission.

Catherine R. Connors argued the cause for petitioner. With her on the briefs was Matthew D. Manahan.

Cynthia L. Amara was on the brief for amici curiae Clifton Power Corporation and New England Legal Foundation in support of petitioner.

Laura J. Vallance, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were Cynthia A. Marlette, General Counsel, and Dennis Lane, Solicitor.

Daniel H. Squire and IJay Palansky were on the brief for intervenors American Rivers, et al.

Before: SENTELLE, ROGERS and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

Petitioner FPL Energy Maine Hydro LLC (FPL), a hydroelectric facility, petitions this Court for review of two orders by the Federal Energy Regulatory Commission (FERC), the first determining that FPL is subject to licensing because the Messalonskee Stream on which FPL is located is "navigable" under 16 U.S.C. § 796(8), the second denying FPL's request for rehearing. Because we find that FERC's interpretation of the statute governing navigability is a reasonable one and that its navigability finding was supported by substantial evidence, we deny the petitions.

I. Background

The Messalonskee Stream (Stream) is a tributary of the Kennebec River (Kennebec) located in central Maine. It runs approximately ten miles from the Messalonskee Lake to the Kennebec, with four dams located along its stretch. The southernmost dam is the Union Gas Project, located approximately one mile up the Stream from the confluence of the Stream and the Kennebec. In between the dam and the Kennebec, beginning from the dam and progressing downstream, are two sets of rapids or "rips," a bridge, a third set of rips, and two islands that together span approximately 200 feet downstream with a shallow shoal on the east side of the islands and a narrow and rocky channel on the west side. Below the islands the Stream widens and deepens as it encounters the backwater of the Kennebec. The Kennebec, itself a navigable water, empties into the Atlantic Ocean.

Pursuant to section 23(b)(1) of the Federal Power Act (FPA), 16 U.S.C. § 817(1), a non-federal hydroelectric project must be licensed if it is located on a navigable water of the United States, as defined by 16 U.S.C. § 796(8), or if other criteria not relevant to this case are met. Because the four dams constitute one development unit, if one project requires a license, then they all must be licensed. See Kennebec Water District, 80 FERC ¶ 61,208, 61,828, 1997 WL 438885 (1997). Thus if the Stream between the Union Gas Project and the Kennebec is deemed navigable pursuant to 16 U.S.C. § 796(8), all four projects require a license.

Section 3(8) of the FPA defines navigable waters as

those parts of streams ... 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....

16 U.S.C. § 796(8). This means that, to be navigable for purposes of the FPA, a waterway must form a highway for commerce with other states or with foreign countries, by itself or by connecting with other waters. See The Montello, 87 U.S. (20 Wall.) 430, 439, 22 L.Ed. 391 (1874). Courts have determined a waterway to be navigable if "(1) it presently is being used or is suitable for use, or (2) it has been used or was suitable for use in the past, or (3) it could be made suitable for use in the future by reasonable improvements." Rochester Gas & Electric Corp. v. FPC, 344 F.2d 594, 596 (2d Cir.1965) (emphasis in original), see also Marine Stevedoring Corp. v. Oosting, 398 F.2d 900, 908 n. 15 (4th Cir.1968), rev'd on other grounds, Nacirema Operating Co. v. Johnson, 396 U.S. 212, 90 S.Ct. 347, 24 L.Ed.2d 371 (1969); Sierra Pacific Power Co. v. FERC, 681 F.2d 1134, 1137-38 (9th Cir.1982). Navigability can be established based on any of these three requirements; each alone is sufficient. Rochester Gas, 344 F.2d at 596.

II. Proceedings Below

The Union Gas Project is currently licensed by FPL (as successor in interest to Central Maine Power Company — the original licensee of the project). The original license for the project was issued in 1968 and expired in 1993. Since that time, the project has been operating on annual licenses. As part of a jurisdictional examination of several projects for which licensing might not have been required,¹ the Office of Hydropower Licensing conducted a navigation report on the Stream in 1996. This report indicated that the Stream was not navigable because there was "no evidence of usage of the stream as a water highway, a continuous link for interstate commerce, either commercial or recreational, from above the project sites, past the projects, to the Kennebec River." Following a review of comments to the report, the Acting Director of the Office of Hydropower Licensing issued an order finding that the Union Gas Project was located on a navigable waterway and therefore required a license. See Kennebec Water District, 79 FERC ¶ 62,041, 1997 WL 362917 (Apr. 21, 1997). On rehearing, FERC concluded the evidence submitted was inadequate to support a finding of navigability. See Kennebec Water District, 80 FERC ¶ 61,208, 1997 WL 438885 (Aug. 6, 1997). Following petitions for rehearing on that order, FERC set the issue of navigability for a hearing before an Administrative Law Judge (ALJ) to determine, among other things, the physical characteristics of the Stream, the difficulty associated with navigating the Stream, and the nature and frequency of actual use of the river for recreational boating. See Kennebec Water District, 81 FERC ¶ 61,073, 61,306, 1997 WL 698330 (Oct. 21, 1997). The ALJ, who did not address the physical characteristics of the Stream as they relate to navigability, found that the Stream was not navigable despite three "successful" and two "unsuccessful" canoe trips made for the purpose of litigation. See Kennebec Water District, 82 FERC ¶ 63,004, 1998 WL 9486 (Jan. 14, 1998). The ALJ also held that there was no evidence of "regular and substantial recreational use" to serve as a proxy for the simpler types of commercial navigation as allowed under United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243 (1940). FERC trial staff and several intervenors in the proceeding below filed exceptions to the ALJ's initial decision, which Central Maine Power opposed. Upon review, FERC concluded that the ALJ applied an incorrect legal standard by requiring evidence of "regular and substantial recreational use" for a finding of navigability. It therefore reversed the non-navigability finding and required FPL to obtain a license. See Kennebec Water District, 84 FERC ¶ 61,027, 1998 WL 514602 (July 16, 1998). FERC based its navigability finding on the three "successful" canoe trips taken for purpose of litigation, as well as the physical characteristics of the Stream. Id. at 61,126. FERC denied FPL's rehearing request and these petitions for review followed.

III. Analysis

This case requires us to answer two questions: first, whether FERC's interpretation of "navigability" under the FPA was reasonable; second, if so, whether FERC's navigability finding was supported by substantial evidence. We answer both questions affirmatively.

A. "Navigability" Interpretation

FPL argues that FERC departed from the statutory "suitable for use ... in ... commerce" test set forth at 16 U.S.C. § 796(8) (see also Rochester Gas, 344 F.2d at 596) and instead applied a mere "possibility of passage" test to determine whether the Stream is navigable. FPL contends that FERC conducted its navigability determination by looking only to three non-commercial, non-recreational test canoe trips that indicated it was possible to navigate downstream in unusual conditions, rather than looking to historical and present commercial or recreational use by average canoeists. FPL further contends that, in determining navigability, FERC deviated from its past precedent that requires more than just a showing of specialized, recreational boating where historical evidence of commercial use was lacking. FPL also faults FERC for relying on the flow created when the hydroelectric facility is generating to create navigability, as well as for failing to identify the commercial use to which the Stream could realistically be put.

We reject each of FPL's arguments. Where an administrative agency is tasked with interpreting an ambiguous statute that it administers, a court will defer to that agency's interpretation so long as it is reasonable. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984). As the statute 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, 121 S.Ct. 2164, 2172, 150 L.Ed.2d 292 (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 in the absence of any commercial or recreational use, was reasonable and entitled to deference.

At the outset, we may quickly reject FPL's argument that it was improper for FERC to rely on the flow created when the Union Gas Project is generating to create...