Alabama Rivers Alliance v. F.E.R.C., 01-1408.

• Decision Date: 11 April 2003
• Docket Number: No. 01-1408.,01-1408.
• Citation: 325 F.3d 290
• Parties: ALABAMA RIVERS ALLIANCE, American Rivers, Inc. and Lake Watch of Lake Martin, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. Alabama Power Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

325 F.3d 290

ALABAMA RIVERS ALLIANCE, American Rivers, Inc. and Lake Watch of Lake Martin, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

Alabama Power Company, Intervenor.

No. 01-1408.

United States Court of Appeals, District of Columbia Circuit.

Argued November 21, 2002.

Decided April 11, 2003.

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

Ronald A. Shems argued the cause for the petitioners.

David K. Mears, Senior Counsel, Attorney General's Office of the State of Washington, argued the cause for amici curiae States of Washington et al. in support of petitioners. With him on the briefs were Christine O. Gregoire, Attorney General, Bill Pryor, Attorney General for the State of Alabama, Bruce M. Botelho, Attorney General for the State of Alaska, Bill Lockyer, Attorney General for the state of California, Ken Salazar, Attorney General for the State of Colorado, Richard Blumenthal, Attorney General for the State of Connecticut, M. Jane Brady, Attorney General for the State of Delaware, G. Steven Rowe, Attorney General for the State of Maine, Tom Reilly, Attorney General for the State of Massachusetts, Jeremiah W. (Jay) Nixon, Attorney General for the State of Missouri, Mike McGrath, Attorney General for the State of Montana, Franki Sue Del Papa, Attorney General for the State of Nevada, Philip T. McLaughlin, Attorney General for the State of New Hampshire, Eliot Spitzer, Attorney General for the State of New York, Roy Cooper, Attorney General for the State of North Carolina, W.A. Drew Edmondson, Attorney General for the State of Oklahoma, Hardy Myers, Attorney General for the State of Oregon, William H. Sorrell, Attorney General for the State of Vermont, Hoke MacMillan, Attorney General for the State of Wyoming, and Robert Tenorio Torres, Attorney General for the N. mariana Islands.

David H. Coffman, Attorney, Federal Energy Regulatory Commission, argued the cause for the respondent. Cynthia A. Marlette, General Counsel, and Dennis Lane, Solicitor, Federal Energy Regulatory Commission, were on brief. Timm L. Abendroth entered an appearance.

James H. Hancock Jr. and P. Stephen Gidiere III were on brief for intervenor Alabama Power Company. Jennifer M. Buettner entered an appearance.

Donald H. Clarke and Henri D. Bartholomot were on brief for amici curiae National Hydropower Association and Edison Electric Institute.

Before: HENDERSON, TATEL and GARLAND, Circuit Judges.

Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge:

Petitioners Alabama Rivers Alliance, American Rivers, Inc. and Lake Watch of Lake Martin seek review of the decision of the Federal Energy Regulatory Commission (FERC or Commission) to amend an existing hydroelectric license issued to Alabama Power Company (Alabama Power). The amended license authorizes Alabama Power to replace three existing turbine generators at its Martin Dam Project on the Tallapoosa River with new, more efficient units. The petitioners contend that the Commission erred in issuing the license amendment without first requiring Alabama Power to obtain water quality certification from the state of Alabama. Because we conclude that an increase in the volume of water passing through the dam's replacement turbines "may result in any discharge into the navigable waters" within the meaning of section 401(a)(1) of the Clean Water Act (CWA), 33 U.S.C. § 1341(a)(1), we grant the petition for review and vacate the Commission's orders.

I. Background

A. The Regulatory Framework

The Federal Power Act (FPA) authorizes FERC to issue licenses "for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient ... for the development, transmission, and utilization of power across, along, from, or in any of the streams or other bodies of water over which Congress has jurisdiction" under the Commerce Clause. 16 U.S.C. § 797(e). These hydroelectric licenses contain certain conditions that FERC deems necessary to improve and utilize the nation's waterways in general and water-power development in particular. Id. § 803(a). Upon "mutual agreement" between the Commission and a licensee, FERC may amend such licenses, which are issued "for a period not exceeding fifty years." Id. § 799.

Although "the FPA represents a congressional intention to establish `a broad federal role in the development and licensing of hydroelectric power,'" the CWA "has diminished [the FPA's] preemptive reach by expressly requiring the Commission to incorporate into its licenses state-imposed water quality conditions." Am. Rivers, Inc. v. FERC, 129 F.3d 99, 111 (2d Cir.1997) (quoting California v. FERC, 495 U.S. 490, 496, 110 S.Ct. 2024, 2028, 109 L.Ed.2d 474 (1990)). FERC's hydroelectric licenses are thus subject to, among other conditions, the requirements of section 401 of the CWA. See Escondido Mut. Water Co. v. La Jolla Indians, 466 U.S. 765, 775, 104 S.Ct. 2105, 2111-12, 80 L.Ed.2d 753 (1984) ("[W]hile Congress intended that the Commission would have exclusive authority to issue all licenses, it wanted the individual Secretaries [i.e., the Secretaries of the Interior, War and Agriculture] to continue to play the major role in determining what conditions would be included in the license in order to protect the resources under their respective jurisdictions.").

Section 401(a)(1) of the CWA provides that "[a]ny applicant for a Federal license or permit to conduct any activity ... which may result in any discharge into the navigable waters, shall provide the licensing or permitting agency a certification from the State in which the discharge originates or will originate." 33 U.S.C. § 1341(a)(1). The required certification must provide that such discharge will comply with the applicable water quality standards of the CWA, as well as with "any other appropriate requirement of state law." Id. § 1341(d).¹ Any limitations included in the state certification become a condition on the federal license. Id. If the "originating" state denies an applicant section 401(a)(1) certification, FERC may not issue that applicant a hydroelectric license. Id. § 1341(a)(1).²

B. The License Amendment Proceedings

Located on the Tallapoosa River in central Alabama, Alabama Power's Martin Dam Project has the capacity to generate 154.2 megawatts (MW) of electric power. The dam project generates electricity by taking in water from the reservoir above the dam, funneling the water through four turbine generators and then releasing the water through four penstocks into the river below the dam. The first three 33-MW turbine generators began commercial operation in 1927. Alabama Power added a fourth, 55.2 MW generator in 1952. Although FERC originally licensed the Martin Dam Project in 1923, it issued a new 40-year license to Alabama Power in 1978.

On December 22, 2000, Alabama Power filed an application with the Commission to amend its license to authorize the replacement of the three 33-MW turbine generators. These units had exhibited serious leakage problems and efforts to repair them had been largely unsuccessful. According to Alabama Power's estimates, the replacement turbines would increase the flow of water into the river below the dam project by approximately 900 cubic feet per second (cfs), an increase of 8.6%, and would increase each generator's capacity by 7 to 10 MW, an increase of roughly 20-30%.

Shortly after the Commission provided public notice of Alabama Power's license amendment application, the petitioners moved to intervene, arguing that section 401(a)(1) of the CWA required Alabama Power to obtain state water quality certification before the Commission could amend its existing license. On May 23, 2001, the Commission issued an order approving Alabama Power's proposed license amendment. Ala. Power Co., Project No. 349-070, Order Amending License, 95 F.E.R.C. ¶ 62,156, 2001 WL 541354 (May 23, 2001) (Order Amending License). In doing so, the Commission rejected the petitioners' argument that the license amendment required state water quality certification under section 401(a)(1), concluding that "[r]eplacing and upgrading the existing turbine-generator units is not an `activity which may result in a discharge' within the meaning of [s]ection 401(a)(1)." Id. at 64,220.

While the Commission recognized that "replacement of the turbine generators would increase the [dam] project's hydraulic capacity, with the result that water would be discharged more quickly [into the river]," it found that "the nature of the discharge would not change," i.e., that "water from the reservoir would continue to be released through the new turbine generators in essentially the same manner as it is now released through the existing turbine generators." Id. Reasoning that section 401(a)(1) requires certification only for "`activities which may result in a discharge,' not activities which may alter an already existing discharge," the Commission held that section 401(a)(1) did not apply to Alabama Power's amended license. Id. (citing North Carolina v. FERC, 112 F.3d 1175, 1188 (D.C.Cir.1997), cert. denied, 522 U.S. 1108, 118 S.Ct. 1036, 140 L.Ed.2d 103 (1998)) (emphasis in original).³

The Commission's Order Amending License likewise rejected the petitioners' argument that 18 C.F.R. § 4.38(f)(7)(iii) required Alabama Power to obtain state water quality certification for its proposed license amendment. Id. Section 4.38(f)(7)(iii) provides that "any application to amend an existing license ... requires a new request for water quality certification ... if the amendment would have a material adverse impact on the water quality in the discharge from the project." 18 C.F.R. § 4.38(f)(7)(iii). Citing its environmental assessment of the proposed license amendment, the Commission concluded that the proposed modifications to the three 33-MW...