Am. Rivers v. Fed. Energy Regulatory Comm'n

• Decision Date: 06 July 2018
• Docket Number: C/w 16-1336,No. 16-1195,16-1195
• Citation: 895 F.3d 32
• Parties: AMERICAN RIVERS and Alabama Rivers Alliance, Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION and United States Secretary of the Interior, Respondents Alabama Power Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

895 F.3d 32

AMERICAN RIVERS and Alabama Rivers Alliance, Petitioners

v.FEDERAL ENERGY REGULATORY COMMISSION and United States Secretary of the Interior, Respondents

Alabama Power Company, Intervenor.

No. 16-1195

C/w 16-1336

United States Court of Appeals, District of Columbia Circuit.

Argued January 12, 2018

Decided July 6, 2018

Megan H. Huynh argued the cause for petitioners. On the briefs were Catherine Wannamaker and Sarah Stokes.

Anand Viswanathan, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With him on the brief were David L. Morenoff, General Counsel at the time the brief was filed, and Robert H. Solomon, Solicitor.

Allen M. Brabender, Attorney, U.S. Department of Justice, argued the cause for respondent the Secretary of the Interior. With him on the brief was Eric Grant, Deputy Assistant Attorney General. David C. Shilton and Robert J. Lundman, Attorneys, entered appearances.

James A. Byram Jr., James H. Hancock Jr., Jason B. Tompkins, Peter D. Keisler, and C. Frederick Beckner III were on the brief for intervenor Alabama Power Company.

Before: Srinivasan and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.

Millett, Circuit Judge, and Sentelle, Senior Circuit Judge:

Many portions of Alabama’s and Georgia’s Coosa River ecosystem are in fragile condition after, among other things, decades of power plant operations and development. In 2013, the Federal Energy Regulatory Commission granted the Alabama Power Company a 30-year license to continue power generation on a portion of the Coosa River. A review of the licensed project’s impact on the environment and endangered species documented that the project would cause a 100% take of multiple endangered mussels, a large loss of indigenous fish, and perilously low dissolved oxygen levels for substantial periods of time.

Nevertheless, the Commission concluded that licensing the generation project would have no substantial impact on either the River’s ecological condition or endangered species. In doing so, the Commission declined to factor in the decades of environmental damage already wrought by exploitation of the waterway for power generation and that damage’s continuing ecological effects. Because the Commission’s environmental review and a biological opinion it relied on were unreasoned and unsupported by substantial evidence, the Commission’s issuance of the license was arbitrary and capricious. Accordingly, we dismiss the first petition for review, grant the second petition for review, vacate the licensing decision, and remand for further proceedings consistent with this opinion.

I

A

This case implicates three intersecting statutory schemes, all of which are designed to force federal agencies to carefully assess and address the environmental impacts of large-scale development projects.

1. The Federal Power Act, 16 U.S.C. § 791 et seq. , charges the Federal Energy Regulatory Commission with licensing the development, improvement, and operation of hydroelectric projects along navigable waterways. No license may be issued unless the Commission first determines that the proposed project "will be best adapted to a comprehensive plan for improving or developing" the relevant waterways. Id. § 803(a)(1); see also id. § 797(e). In making that judgment, the Commission must give "equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife (including related spawning grounds and habitat), the protection of recreational opportunities, and the preservation of other aspects of environmental quality."Id. § 797(e).

When an existing license holder seeks to renew its license, "the Commission shall * * * take into consideration * * * (A) [t]he existing licensee’s record of compliance with the terms and conditions of the existing license [and] (B) [t]he actions taken by the existing licensee related to the project which affect the public." 16 U.S.C. § 808(a)(3)(A)–(B). And whether issuing the first license for a project or relicensing an ongoing project, the Commission must equally advance the Federal Power Act’s multifaceted purposes and ensure that the licensed project is the most viable option for developing a waterway. Id. §§ 797(e), 803(a)(1)(2). While a relicensing decision is under review, the Commission also must maintain the power-generation status quo by temporarily extending the expired license on its original terms and conditions. Id. § 808(a)(1).

2. The National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321 et seq. , obligates federal agencies to analyze the environmental consequences of proposed major federal actions and to factor those impacts into its decisionmaking. Under NEPA, agencies may first conduct an Environmental Assessment ("Assessment") to determine whether the proposed federal action will significantly impact the quality of the human environment. 40 C.F.R. §§ 1501.4 ; 1508.9(a). If that Assessment reveals that the environmental consequences of the agency’s proposed action will not be significant, the agency must issue a "[f]inding of no significant impact," explaining why the agency action will not significantly affect the environment. Id. §§ 1508.9; 1508.13. But if the Assessment demonstrates that significant effects could result, the agency must prepare an Environmental Impact Statement, 42 U.S.C. § 4332(C), describing a "range of alternatives" and explaining how the agency’s ultimate decision will comply with environmental laws and policies, 40 C.F.R. § 1502.2.

3. The Endangered Species Act ("ESA"), 16 U.S.C. § 1531 et seq. , broadly protects endangered and threatened animal and plant species as well as their habitats. The Department of the Interior’s Fish and Wildlife Service ("Service") is charged with administering the Act. See 50 C.F.R. § 402.01(b). Once the Service lists a species as threatened or endangered, the Endangered Species Act requires "[e]ach federal agency," in consultation with the Service, to ensure that any action "authorized, funded, or carried out by such agency * * * is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [the] habitat of such species[.]" Id. § 1536(a)(2).

As part of that inter-agency consultation process, the Service will issue a "biological opinion" that explains whether "the action, taken together with cumulative effects, is likely to jeopardize the continued existence of listed species[.]" 50 C.F.R. § 402.14(g)(4). If the Service determines that the agency action is not likely "to jeopardize the continued existence of any species," 16 U.S.C. § 1536(a)(2), but will result in the "incidental taking" of some members of the listed species, the biological opinion must spell out "the impact of such incidental taking on the species," describe "reasonable and prudent measures * * * necessary or appropriate to minimize such impact," and set "the terms and conditions (including, but not limited to, reporting requirements) that must be complied with" for the agency action to go forward, id. § 1536(b)(4)(C) ; see 50 C.F.R. § 402.14(i). The Endangered Species Act defines "take" broadly, meaning "to harass, harm, pursue, hunt, shoot, wound

, kill, trap, capture, or collect" any listed species. 16 U.S.C. § 1532(19).

B

The Coosa River Basin spreads across about 10,161 square miles in Alabama, Georgia, and Tennessee. The Coosa River is formed by the confluence of the Oostanaula and Etowah Rivers near Rome, Georgia, and it flows 267 miles south where it meets with the Tallapoosa River in Alabama. Order Issuing New License , 143 FERC ¶ 61,249 P 8 (2013) ("Licensing Order "). The Coosa River is a highly regulated waterway with nine hydropower and storage developments controlling its flow. Each of those developments is operated by either the Alabama Power Company or the United States Army Corps of Engineers.

Alabama Power operates seven hydroelectric generator and storage developments along waterways located primarily in Alabama. The Company’s developments on the Coosa River ("the Coosa Project") are at the center of this dispute. From upstream to downstream, the developments are: (1) Weiss; (2) H. Neely Henry; (3) Logan Martin; (4) Lay; (5) Mitchell; (6) Jordan; and (7) Bouldin. The Army Corps of Engineers operates an additional five developments along the same waterways and extending into neighboring States, none of which are directly at issue in this case.

The Coosa Project traces its roots back to the 1920s, when the Mitchell and Jordan hydropower plants were licensed and constructed. The Army Corps of Engineers oversaw the projects with the goal of developing the Alabama–Coosa River system to support navigation, flood control, and hydroelectric power generation.

Some three decades later, Congress suspended federal hydropower development of the Coosa River in favor of private development under licenses issued by the federal government. Alabama Power received its first Coosa River license in 1957 and proceeded to construct and operate five additional developments.

Licenses for the original Coosa Project, as well as for Mitchell and Jordan hydropower plants, were all scheduled to expire on July 31, 2007. Two years before that deadline, Alabama Power tendered its application for relicensing of all of its developments, as required by 16 U.S.C. § 808(c)(1). In its application, Alabama Power sought to consolidate all of the projects into a single license. The Commission published a notice of the license application in the Federal Register in June 2008, indicating that "the application was ready for environmental analysis" and soliciting protests, comments, and recommendations. Licensing Order at P 5. A number of public and private conservation and natural resource stakeholders timely intervened, including Alabama Rivers Alliance, American Rivers, Atlanta Regional Commission, American Whitewater, Coosa River Paddling,...