Alabama Power Co. v. F. E. R. C.

Decision Date17 September 1982
Docket NumberNo. 80-7641,80-7641
PartiesALABAMA POWER COMPANY, Utah Power & Light Company, Pacific Gas & Electric Company, the Montana Power Company, Wisconsin Power & Light Company, and Pacific Power & Light Company, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
CourtU.S. Court of Appeals — Eleventh Circuit

George H. Williams, Jr., FERC, Washington, D. C., for respondent.

Eugene O. Gehl, Madison, Wis., for Wisconsin Power & Light Co.

Richard M. Merriman, Washington, D. C., Robert E. Sullivan, Butte, Mont., for Montana Power Co.

Gerry Levenberg, P.C., R. Keith Guthrie, Van Ness, Feldman, Sutcliffe, Curtis & Levenberg, Washington, D. C., for Utah Power & Light Co.

Joseph C. Swidler, Leva, Symington, Martin & Oppenheimer, Thomas M. Lemberg, William H. Taft, IV, Washington, D. C., Malcolm H. Furbush, Jack F. Fallin, Jr., San Francisco, Cal., for Pacific Gas and Elec. Co.

Hugh Smith, Portland, Or., for Pacific Power and Light.

Frederick T. Searls, William A. Keheo, III, William J. Madden, Jr., Thomas Debevoise, Debevoise & Liberman, Washington, D. C., for Hydroelectric Utility Co. Group and Alabama Power Co.

Daniel Davidson, Robert Bear, Washington, D. C., for City of Santa Clara, Cal.

Kirk Howard Betts, Law Office of Northcutt Ely, Northcutt Ely, Washington, D. C., for American Public Power Assoc.

Stewart L. Udall, Phoenix, Ariz., for City of Bountiful, Utah.

Christopher D. Williams, McCarty, Noone & Williams, Washington, D. C., for Clark Cowlitz Joint Operating Agency.

Petitions for Review of an Order of the Federal Energy Regulatory Commission.

Before RONEY, TJOFLAT and HATCHETT, Circuit Judges.

HATCHETT, Circuit Judge:

We are faced with a purely legal question regarding the statutory construction of section 7(a) of the Federal Power Act (Act), 16 U.S.C.A. § 800(a) (West 1974). We affirm the decision of the Federal Energy Regulatory Commission.


The Federal Power Act, 16 U.S.C.A. § 791a et seq. (West 1974), authorizes the Federal Energy Regulatory Commission (once known as the Federal Power Commission) to license public and private entities for the purpose of developing water power projects. 1 Licensees may develop these projects on waters over which the United States has jurisdiction, and may operate the projects for profit. A license is granted for a term of up to fifty years, at the expiration of which the United States may recover the project for its use or issue a new license to the same or a new entity. If the Commission grants a new entity a license, compensation must be paid to the original licensee for its "net investment" plus "severance damages." 2 This case involves a contest among potential licensees, including the present license holder, for a new license and presents the question of the preference due a municipal applicant.

Section 7(a) of the Act provides in pertinent part: "... in issuing new licenses to new licensees under section 15 hereof the Commission shall give preference to applications therefor by States and municipalities, provided the plans for the same are deemed by the Commission equally well adapted, ...." 3 Section 15(a) also states that: "... the Commission is authorized to issue a new license to the original licensee upon such terms and conditions as may be authorized or required under the then existing laws and regulations, or to issue a new license under said terms and conditions to a new licensee, ...." (Emphasis added.) 4

The petitioners are thirty-eight privately owned utility companies licensed by the Commission to operate water projects. 5 The intervenors are publicly owned utilities that support the Commission's ruling. 6

The competitors in this case are the City of Bountiful, Utah, a municipality, and Utah Power & Light Company, a private utility. Both entities applied for a license to operate the hydroelectric project operated by the private utility (Utah Power & Light) under a license which expired several years ago. The City of Bountiful, during the license contest, asked the Commission for a declaratory ruling clarifying its entitlement to the statutory preference in section 7(a). The Commission consolidated Bountiful's petition with that of another municipality that also sought a declaration of preference and initiated proceedings to resolve the issue.

Since only declaratory relief was requested, the Commission considered, as does this court, the issue to be one of statutory construction. The Commission issued two opinions on this matter. In its opinion and order declaring municipal preference applicable to hydroelectric relicensings, City of Bountiful, Utah (Opinion No. 88), No. EL78-43 (F.E.R.C. June 27, 1980), the Commission held:

(T)he preference of Section 7(a) of the (Act) favoring States and municipalities over citizens and corporations is applicable to all relicensing applications in which States or municipalities, and citizens or corporations, request successor licenses for the same water resources.

The Commission found that the preference to states and municipalities only applied where the plans submitted by the states or municipalities were as "equally well adapted" as the plans submitted by citizens or corporations. In essence, the Commission held that the preference given to states and municipalities by section 7(a) of the Federal Power Act always applies regardless of the identity of the parties competing for reissuance of a license. The Commission stated, however, that a state or municipality would gain the benefits of this preference only in a "tie-breaker" situation. The Commission subsequently denied rehearing, City of Bountiful, Utah (Opinion 88-A), No. EL78-43 (F.E.R.C. June 27, 1980), and petitioners brought this appeal.


At the outset, we are faced with a jurisdictional question. Although all parties to this proceeding urge us to reach the merits, we cannot do so if we lack the power to act because the issue is not ripe for judicial review. Since the Commission only ruled in a declaratory fashion, we must determine whether this case is ripe for review in the absence of a final ruling on a particular license application. The Commission has not granted a license to any of the parties to this proceeding, and since the rule announced by the Commission only applies in a "tie-breaker" situation, it is arguable that the ruling herein may never concretely affect any of these parties. Courts are reluctant to apply declaratory judgments to administrative determinations "unless these arise in the context of a controversy 'ripe' for judicial resolution." Abbott Laboratories v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967). In explaining the ripeness doctrine, the Supreme Court stated that its basic rationale was "to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies ...." 387 U.S. at 148, 87 S.Ct. at 1515. The Court also stated that the ripeness doctrine protects administrative agencies "from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." 387 U.S. at 148-49, 87 S.Ct. at 1515-16. The Abbott Court endorsed a two-step approach for analyzing ripeness which requires that we "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 387 U.S. at 149, 87 S.Ct. at 1515.

The Supreme Court set forth four important factors to be used in making this evaluation. The four factors are:

(1) whether the issues presented are purely legal;

(2) whether the challenged agency action constitutes "final agency action," within the meaning of Section 10 of the Administrative Procedure Act, 5 U.S.C.A. 704 (West 1977);

(3) whether the challenged agency action has or will have a direct and immediate impact upon the petitioners; and

(4) whether resolution of the issues will foster, rather than impede, effective enforcement and administration by the agency.

Pennzoil Co. v. FERC, 645 F.2d 394, 398 (5th Cir. 1981), (quoting Abbott, 387 U.S. at 149-54, 87 S.Ct. at 1515-18). A complete recitation of the factors supporting our conclusion is unnecessary. After full consideration, we find that the issue presented is purely legal, that the challenged agency action will have a direct and immediate impact upon the petitioners, the states, and all potential applicants, as well as the workload of the Commission. We further conclude that resolution of this issue now will foster effective enforcement and administration by the agency. The issue is ripe for judicial review. Having resolved this jurisdictional issue, we turn to the merits.


Petitioners contend that when Congress provided in section 7(a) of the Federal Power Act, 16 U.S.C.A. § 800(a) (West 1974), that the Commission give a relicensing preference to states and municipalities "in issuing licenses to new licensees under section 15 hereof," it intended the preference to be given to "new licensees" as defined in section 15, 16 U.S.C.A. § 808 (West 1974). They further posit that section 15 distinguishes the term "new licensee" from the phrase "original licensee." Because Congress clearly differentiated between the two terms, petitioners argue that it could not have intended the words "new licensee" to include the holder of the expired license. Thus, petitioners assert that the relicensing preference in section 7(a) is inapplicable to original licensees, but applies only to applicants seeking to acquire the project for the first time. The petitioners contend that the Commission clearly erred in interpreting section 7(a) because it necessarily concluded that Congress meant "any" when it said "new" in the Act.

We must determine whether in issuing licenses to new licensees under section 15 of the Act...

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