720 F.2d 93 (D.C. Cir. 1983), 82-2022, Friends of the River v. F.E.R.C.

Docket Nº:82-2022.
Citation:720 F.2d 93
Party Name:FRIENDS OF THE RIVER and Dale Meyer, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Northern California Power Agency, Calaveras County Water District, Intervenors.
Case Date:October 11, 1983
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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720 F.2d 93 (D.C. Cir. 1983)

FRIENDS OF THE RIVER and Dale Meyer, Petitioners,

v.

FEDERAL ENERGY REGULATORY COMMISSION, Respondent,

Northern California Power Agency, Calaveras County Water

District, Intervenors.

No. 82-2022.

United States Court of Appeals, District of Columbia Circuit

October 11, 1983

Page 94

[Copyrighted Material Omitted]

Argued April 27, 1983.

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Petition for Review of an Order of the Federal Energy Regulatory commission.

Michael B. Freund, San Francisco, Cal., with whom Michael R. Sherwood, San Francisco, Cal., was on brief, for petitioners.

Joshua Z. Rokach, F.E.R.C., Washington, D.C., with whom Charles A. Moore, Gen. Counsel, and Barbara J. Weller, Deputy Sol., Timothy J. Cooney, Atty., Washington, D.C., were on brief, for respondent.

Clifford W. Schulz, Sacramento, Cal., with whom Christopher D. Williams, Washington, D.C., was on brief, for intervenor Calaveras County Water Dist.

Before GINSBURG and SCALIA, Circuit Judges, and BAZELON, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GINSBURG. [*]

Dissenting opinion filed by Senior Circuit Judge BAZELON.

GINSBURG, Circuit Judge:

The authority of the Federal Energy Regulatory Commission (FERC or Commission 1) to license the construction of a hydroelectric plant on a body of water subject to federal jurisdiction is limited by two federal statutes: the Federal Power Act (FPA), 16 U.S.C. Secs. 791a-823a (1976 & Supp. V 1981), and the National Environmental Policy Act (NEPA), 42 U.S.C. Secs. 4321-4361 (1976). In this petition for review, Friends of the River and Dale Meyer (FOR or petitioners) challenge as inconsonant with both statutes FERC's license to the Calaveras County Water District (CCWD) to operate a hydroelectric plant on the North Fork Stanislaus River in California. We find that in one respect FERC did not attend with due care to NEPA's procedural requirements. Because we conclude that the Commission's decision is in other respects unassailable, and because a remand to cure the procedural lapse would serve no sensible purpose, we affirm the Commission's action.

I. BACKGROUND

In November 1978, CCWD, a California county water district, applied to FERC for a license to construct a hydroelectric plant (the project or the Calaveras project) on the North Fork Stanislaus River in Alpine, Tuolumne,

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and Calaveras Counties, California. 2 The project, as described in CCWD's application, involves the construction of a series of dams, the enlargement of an existing reservoir, and the construction of two new powerhouses. As planned, the project will produce an average annual energy yield of over 500 gigawatt-hours (Gwh), equivalent to the energy produced by roughly one million barrels of oil, and have a total power capacity of about 200 megawatts (MW). 3

The principal ecological effect of the plant will stem from the enlargement of the Spicer River Reservoir, which at its maximum elevation will inundate approximately 1,780 acres of forest, meadow, and riparian habitat. While the reservoir will be moderate in size compared to nearby water projects, the loss of Gabbot Meadow, part of the inundated area, is likely to have a negative effect on deer and other wildlife populations. In its total dimension, the project will mean the loss of about 2,500 acres of wildlife habitat.

The power generated by the project is to be sold to the Northern California Power Agency (NCPA). 4 NCPA is a consortium of twelve small utilities, each responsible for the retail distribution of electrical power within its service area. At the time of the 1978 application, the NCPA utilities did not generate any of the power they supplied to their customers; instead, they relied entirely on power purchased from Pacific Gas and Electric Company (PG & E), the largest electrical utility in California, and from the Central Valley Project (CVP), also located in California, of the federal Western Area

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Power Administration. NCPA, and a number of other utilities, including CVP, are bundled together with PG & E to compose a "PG & E area" for purposes of statewide planning by the California Energy Commission (CEC). Electricity Tomorrow 49. NCPA's relationship with PG & E, however, is purely contractual. PG & E's charter does not place it under a legal obligation to supply power to NCPA or to customers within NCPA's service area. Rather, PG & E's priority charge is to supply customers within its own service area as defined by its charter, an area distinct from NCPA's.

NCPA intervened in the licensing proceedings before FERC immediately after CCWD filed the 1978 application. For NCPA, the project represents an important step towards energy self-sufficiency in the years to come. For CCWD, the project means an increase in the firm yield of water on the North Fork Stanislaus River; in addition, revenue generated by the project can be applied to the cost of the water CCWD provides, and can be used, in the future, to finance additional water projects in the district.

Litigation aimed at stopping the project began soon after CCWD filed the 1978 license application, when FOR filed suit in state court claiming that the environmental impact report filed by CCWD pursuant to the California Environmental Quality Act did not satisfy the requirements of that Act. In 1979, judgment was entered in California Superior Court rejecting all claims made by environmental plaintiffs. 5

FERC commenced its investigation of the desirability of the Calaveras project in 1978. In late 1979, it issued a draft environmental impact statement (EIS) setting forth the environmental impacts of the project. It received extensive comments on the draft EIS from federal and state agencies as well as private parties, and issued a revised, final EIS in 1980. That document accorded only summary attention to the concern--raised before the agency--whether, in lieu of the project, NCPA's power needs could be met by continued reliance on purchases from other utilities. The Commission did state in the EIS that power purchase contracts between NCPA members and PG & E "can be terminated on 6 to 24 months notice and cannot be considered as firm resources," J.A. 187; it further stated that resort to other sources of energy, including purchased power, in preference to licensing the hydroelectric Calaveras project, "would consume nonrenewable fossil-fuel resources." J.A. 328. FERC took testimony commenting on the final EIS at public hearings in Washington, D.C. and Angels Camp, California.

In February 1982, FERC issued an order and opinion granting CCWD a license to construct the Calaveras plant. It denied FOR's petition for rehearing in an opinion issued in July 1982. The July order explained more cogently why the Commission rejected prospects for further reliance on purchased power as a ground for refusing the license. FERC observed that "PG & E's [own] ability to meet load in the future is uncertain," J.A. 960, and cited studies, in Electricity Tomorrow and a later (March 1981) CEC staff report, supporting that conclusion.

Petitioning for our review of the Commission's grant of the license, FOR contends that the Commission has neglected its duties both under the FPA and under NEPA; we consider separately below FOR's challenges under each statute.

II. FPA CLAIMS

Section 10(a) of the Federal Power Act provides that the Commission may issue

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a license for a hydroelectric plant only where

the project ... shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of waterpower development, and for other beneficial public uses, including recreational purposes.

Federal Power Act, 10(a), 16 U.S.C. Sec. 803(a) (1976). Pursuant to this provision, the Commission has a multifaceted obligation to investigate, before approving any license, whether construction of the project is in the public interest. Udall v. FPC, 387 U.S. 428, 87 S.Ct. 1712, 18 L.Ed.2d 869 (1967). Once the Commission makes its investigation, however, its findings may be upset on judicial review only if they are not supported by substantial evidence. 16 U.S.C. Sec. 825l (b) (1976); see Scenic Hudson Preservation Conference v. FPC, 453 F.2d 463, 467-68 (2d Cir.1971) (Udall did not overturn the traditional "substantial evidence" review standard), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972).

FOR asserts the inadequacy of FERC's decisionmaking in multiple respects. Petitioners claim that need for the project has not been demonstrated; FERC, they contend, has overprojected demand for power in NCPA's service area, and underprojected supply. Moreover, petitioners charge that FERC improperly rejected reasonable alternatives, including purchase of power from other utilities, and alternate means of constructing the project. FOR further argues that FERC misconceived the overall negative environmental effects of the project, and misjudged what is in California's "public interest," by overlooking state policy that attaches a low priority to new hydroelectric projects.

Our review securely indicates that only one of FOR's claims warrants discussion--the claim that the project is unnecessary because NCPA can continue to purchase all the power it needs. FOR's other contentions are insubstantial. The administrative record fully supports FERC's appraisal of projected NCPA demand for power, 6 and the Commission's evaluation of future NCPA generating capacity. 7 Substantial

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evidence in the record also supports FERC's rejection of the Utica-Union, Low Spicer Storage Complex alternative to...

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