National Wildlife Federation v. F.E.R.C., 88-1697

• Decision Date: 31 July 1990
• Docket Number: No. 88-1697,88-1697
• Citation: 912 F.2d 1471,286 App.D.C. 117
• Parties: , 115 P.U.R.4th 278, 20 Envtl. L. Rep. 21,098 NATIONAL WILDLIFE FEDERATION, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, The City of Fort Smith, Arkansas, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1471

912 F.2d 1471

286 U.S.App.D.C. 117, 115 P.U.R.4th 278,

20 Envtl. L. Rep. 21,098

NATIONAL WILDLIFE FEDERATION, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, The City of Fort Smith, Arkansas, Intervenor.

No. 88-1697.

United States Court of Appeals, District of Columbia Circuit.

Argued May 22, 1989.

Decided July 31, 1990.

S. Elizabeth Birnbaum, for petitioners.

Samuel Soopper, Attorney, F.E.R.C., with whom Catherine C. Cook, Gen. Counsel, Joseph S. Davies, Deputy Sol., F.E.R.C., were on the brief, for respondent.

Don S. Smith, for intervenor.

Before D.H. GINSBURG and SENTELLE, Circuit Judges, and ROBINSON, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

PER CURIAM:

The National Wildlife Federation, et al. ("NWF") petitions for review of orders of the Federal Energy Regulatory Commission ("FERC" or "the Commission") granting to the City of Fort Smith, Arkansas, ("Fort Smith") a license for the construction and operation of a dam on Lee Creek, near the Arkansas-Oklahoma border. Because a small hydroelectric powerhouse was to be built along the dam, FERC jurisdiction attached to the project which was undertaken primarily to satisfy the water-supply needs of Fort Smith. The questions presented for review are whether FERC, in granting the license, failed to comply with certain requirements, involving the consideration of the projected environmental impact of the proposed dam, of the Federal Power Act ("FPA"), 16 U.S.C. Secs. 797(e), 803(a), and 803(j), the Clean Water Act ("CWA"), 33 U.S.C. Sec. 1341, and the National Environmental Policy Act ("NEPA"), 42 U.S.C. Sec. 4332(2)(C). We find no reason to disturb FERC's actions and accordingly deny the petition for review.

I. BACKGROUND

In the late 1970s, Fort Smith, aware that its municipal water supply would not be able to meet the demands of its growing populace, decided to create a reservoir by building a dam on Lee Creek. Lee Creek flows south from Oklahoma into Arkansas, and the proposed dam was to be built in Crawford County, Arkansas, just south of the Oklahoma-Arkansas border. The proposed dam was to enable Fort Smith to construct a reservoir in Arkansas, but it was also going to flood parts of Oklahoma. In November 1983, Fort Smith sought from FERC a license to construct, operate and maintain a small hydroelectric generator at the proposed Lee Creek site.

As envisioned by Fort Smith, the proposed project was to be implemented in two phases. The initial phase ("Phase I") was to allow for an approximately 10 million-gallon-per-day water supply. "Phase II," the eventual extension of Phase I envisioned by Fort Smith, was further to increase substantially Fort Smith's water supply. Phase II was to entail environmental costs over and above those of Phase I because the rise in the height of the dam would increase the total area of lands flooded, and would eliminate part of Lee Creek in Oklahoma, including several miles of an Oklahoma state-designated scenic river.

Because approval of the proposed project would constitute a major federal action "significantly affecting the quality of the human environment" within the meaning of NEPA, 42 U.S.C. Sec. 4332(2)(C), FERC directed its staff to prepare an environmental impact statement ("EIS") relating to the proposed dam. After a public hearing and a meeting with interested parties concerning the projected environmental impact of the proposed dam, FERC issued a draft EIS and solicited comments from interested parties and the public. In February 1987, FERC issued a final EIS in which it addressed many of the comments received in response to its draft EIS.

In March of 1988, although numerous objections to the proposed dam project remained, FERC granted Fort Smith's license application with a few conditions and modifications. Order Issuing License (Minor), 42 FERC p 61,361 (1988). FERC subsequently denied various requests for rehearing and upheld its grant to Fort Smith of a license to undertake the Lee Creek dam project. Order on Rehearing, 44 FERC p 61,160 (1988). The State of Oklahoma and the Oklahoma Water Resources Board (collectively "Oklahoma") petitioned this Court for review of FERC's grant of the license, arguing that FERC had failed to comply with certain FPA and CWA requirements involving consideration of the environmental impact of the dam. NWF also petitioned this Court, raising most of Oklahoma's FPA and CWA contentions, as well as other challenges based on the FPA and NEPA.

During the pendency of this litigation, Oklahoma and Arkansas agreed to a settlement which addressed many of Oklahoma's concerns. Pursuant to Oklahoma's request, this Court dismissed Oklahoma's petition with prejudice. NWF's petition remains, however, and that petition raises substantially the same arguments as did Oklahoma's petition.

First, NWF contends that FERC failed to consider adequately the potential environmental effects of Phase II of the dam project in deciding whether to approve Phase I of that project. FERC's failure to take into account the environmental impacts of Phase II, according to NWF, violated both the FPA and NEPA. Second, NWF argues that FERC violated several other provisions of the FPA by failing to consider adequately and follow the recommendations of various relevant federal and state agencies and by including the water-supply gains from the dam as a benefit of the dam project to be weighed against the costs. Third, NWF argues that FERC violated section 401(a)(2) of the CWA by granting the Fort Smith license without requiring the city to obtain a water-quality certification from Oklahoma. Finally, NWF argues that FERC's EIS did not comply with NEPA because the EIS failed to explore reasonable alternatives to the project and because the EIS was based in part on data compiled by a concededly interested party.

II. FERC'S CONSIDERATION OF PHASE II

Phase I of Fort Smith's original dam proposal was designed to satisfy the municipality's short term anticipated needs of about 10 million gallons per day, which required a reservoir water level of 420 feet above mean sea level. The project was to inundate approximately 3.7 miles of free-flowing stream habitat and approximately 1.5 miles, out of 49 miles, of Lee Creek that was listed in the Nationwide Rivers Inventory.

Fort Smith's initial proposal also contemplated that average daily water consumption in the population served by Fort Smith would increase during the course of ten to fifteen years, requiring an expansion of the reservoir in Phase II. The Phase II expansion of the dam project, which was expected to yield about 70 million gallons per day of water, was to raise the water level to 462 feet above mean sea level, thereby flooding several more miles of Lee Creek, possibly including some river miles designated for protection by the Oklahoma legislature. The Phase II plans for eventual expansion of the reservoir were included in Fort Smith's original dam proposal.

In the hearings before FERC many of the intervenors were not as concerned about Phase I as they were about the contemplated expansion of the reservoir built into Phase II of Fort Smith's plan. In response to various intervenors' concerns, Fort Smith resubmitted a modified license application which incorporated changes addressing some intervenors' concerns and which specifically withdrew Fort Smith's request for approval of its Phase II plans.

The Commission, in its original order granting the license, specifically stated that "[t]he present application does not propose, and we do not approve in this order, construction of Phase II." Order Issuing License (Minor), 42 FERC p 61,362 at 62,051. Following Commission approval of the dam project, then, if Fort Smith wished to implement Phase II by expanding the reservoir it would have to seek Commission approval for its proposed expansion. The Commission consequently adopted an EIS that did not fully consider the environmental impact that might follow from an implementation of Phase II and did not fully consider that impact in granting the license for Phase I.

NWF argues that FERC, in determining whether to issue a license, must, in light of both the plain language of the FPA and any reasonable interpretation thereof, determine not just whether a particular proposal passes statutory and regulatory muster, but whether the "comprehensive plan" submitted is beneficial. According to NWF, FERC acted improperly under the FPA by failing to consider the potential effects of Phase II. Moreover, NWF argues that FERC violated NEPA by failing to adopt an EIS that fully accounted for the possible impact of Phase II.

A. FERC's Failure to Consider Phase II and the FPA

Section 10(a)(1) of the FPA, as amended, provides that the Commission shall have the authority to require the modification of any project before approving that project so that the project adopted is, in the judgment of the Commission,

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 water-power development, for the adequate protection, mitigation, and enhancement of fish and wildlife ... and for other beneficial public uses....

16 U.S.C. Sec. 803(a)(1).

The NWF, relying on this statute and LaFlamme v. FERC, 852 F.2d 389 (9th Cir.1988), argues that prior to approving the proposed dam project FERC should have considered a comprehensive plan for developing the waterway that evaluated the project's effect on present and future projects within the basin. Specifically, NWF argues that FERC should have taken into account Phase II of the project because Phase I paved the way for the subsequent implementation of Phase II. According to NWF, FERC had an obligation to analyze Fort Smith's application in a comprehensive manner, meaning it should have considered both contemplated phases of the dam project before granting...