Com. of Pa., Dept. of Environmental Resources v. F.E.R.C.

• Citation: 868 F.2d 592
• Decision Date: 23 February 1989
• Docket Number: No. 88-3175,88-3175
• Parties: COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL RESOURCES Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION Respondent.
• Court: U.S. Court of Appeals — Third Circuit

Page 592

868 F.2d 592

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL

RESOURCES Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION Respondent.

No. 88-3175.

United States Court of Appeals, Third Circuit.

Argued Sept. 27, 1988.

Decided Feb. 23, 1989.

Kurt J. Weist (argued), M. Dukes Pepper, Jr., Martin H. Sokolow, Jr., Com. of Pa., Dept. of Environmental Resources, Harrisburg, Pa., for petitioner.

Catherine C. Cook, General Counsel, Jerome M. Feit, Sol., Frank R. Lindh (argued), Samuel Soopper, F.E.R.C., Solicitor's Office, Washington, D.C., for respondent.

Before GIBBONS, Chief Judge, SEITZ, Circuit Judge, and POLLAK, District Judge ^*.

OPINION OF THE COURT

SEITZ, Circuit Judge.

Petitioner, the Department of Environmental Resources of the Commonwealth of Pennsylvania ("D.E.R." or "the Department") petitions this court to set aside an order of the Federal Energy Regulatory Commission ("F.E.R.C." or "the Commission"), Pennsylvania Hydroelectric Development Corporation, 42 F.E.R.C. p 61,070 (1988), denying D.E.R. rehearing in the case of Commission Project No. 9167. The Department asks that we either modify the underlying Order Issuing License for the New Kernsville Dam Project, Pennsylvania Hydroelectric Development Corporation, 36 F.E.R.C. p 62,236 (1986), or direct F.E.R.C. to conduct a de novo review of the license application and/or an evidentiary hearing on the Department's requests for waiver of certain license requirements. We have jurisdiction under Section 313 of the Federal Power Act, 16 U.S.C. Sec. 825l (1982).

I.

This case concerns a license granted to the Pennsylvania Hydroelectric Development Corporation ("P.H.D.C.") to construct, operate and maintain a hydroelectric project on the New Kernsville Dam on the Schuylkill River in Berks County, Pennsylvania. The New Kernsville Dam was constructed in 1949 by the Commonwealth of Pennsylvania as part of the Schuylkill River Pollution Project. The dam, its reservoir, and contiguous lands and facilities are owned and maintained by the petitioner D.E.R.

On April 26, 1985, P.H.D.C. filed an application with the Commission for a license to construct a "minor" water power project at the New Kernsville Dam. ¹ P.H.D.C. supplemented that application on September 23, 1985. The proposed project would utilize an experimental design involving two floating, moored steel barges, one immediately upstream from the dam, the other immediately below the dam, connected by a 100-foot long, approximately seven-foot diameter steel penstock (a conduit) extending over the spillway of the dam. The upstream (or "intake") barge would support an intake structure connected to the penstock. The downstream (or "powerhouse") barge would support a turbine generator. The project would also include the excavation of a 140-foot long, 55-foot wide tailrace and the installation of a 6,000-foot long overhead transmission line.

P.H.D.C.'s application included a water quality certification issued by the Department in 1981, pursuant to the Clean Water Act Sec. 401(a), 33 U.S.C. Sec. 1341 (1982), originally issued in relation to a 1981 application by P.H.D.C. for a license for a similar proposed project on the New Kernsville Dam. In October, 1985, the Department informed the Commission that, although there might be "cumulative impacts" from a series of hydroelectric projects along the Schuylkill "we feel the applicant has adequately addressed these concerns by proposing to monitor and maintain dissolved oxygen levels." In late 1985, the Department and P.H.D.C. entered into lease negotiations concerning the real property and water rights necessary for the project. Most of the Department's technical concerns about the project were resolved during these negotiations.

In November, 1985, the Commission issued notice of application, indicating that comments and interventions should be filed by January 17, 1986. The Department did not intervene before that deadline. On April 10, 1986, the Commission issued a notice stating that it had completed an environmental assessment for the New Kernsville Dam Project, and that, as required by the National Environmental Policy Act of 1969, 42 U.S.C. Secs. 4331, 4335 (1982), it found "no significant impact" on the quality of the human environment.

On May 12, 1986, the Department filed a motion for late intervention, pursuant to 18 C.F.R. Sec. 385.214 (1988). The Department argued that certain "assumptions" in the environmental assessment conflicted with "the requirements necessary to carry out DER's statutory and regulatory duties." It argued that "[a]lthough DER supports the installation of a hydroelectric facility at Kernsville Dam," the Department's "statutory and regulatory requirements mandate intervention at this time to assure input into the licensing process."

On August 22, 1986, the Commission issued an order granting the Department's request for intervention. Six days later, on August 28, the Director of F.E.R.C.'s Office of Hydropower Licensing, pursuant to a delegation of authority to him by the Commission, 18 C.F.R. Sec. 375.314(q)(2)(i) (1988), entered an order issuing P.H.D.C. a 40-year license for the New Kernsville Dam project. Pennsylvania Hydroelectric Development Corporation, 36 F.E.R.C. p 62,236 (1986).

The license was issued subject to 17 standard articles contained in F.E.R.C.'s Form L-15, "Terms and Conditions of License for Unconstructed Minor Project Affecting the Interests of Interstate or Foreign Commerce." ² The license also contained 14 additional articles set forth in the order issuing the license. ³

The Department filed with the Commission a petition for appeal from the Director's order pursuant to 18 C.F.R. Sec. 385.1902 (1988). While the Department's counsel stated in a cover letter that "the Commonwealth of Pennsylvania, Department of Environmental Resources supports the development of this project," in the petition the Department objected to most of the license articles. ⁴ The Department argued that these articles interfered with its property and its mandate under Pennsylvania law to regulate Commonwealth lands and waters. It contended that because these conditions would "apply to and affect the Department's property and resources, the Department's review and approval must be required rather than the Commission's." The Department urged the Commission to waive the conditions pursuant to its authority under Section 10(i) of the Federal Power Act, 16 U.S.C. Sec. 803(i) (1982). In addition, the Department argued that the license provisions it challenged were beyond the Commission's authority to impose under the Federal Power Act.

On September 18, 1987, F.E.R.C. issued an order denying the Department's petition for appeal. Pennsylvania Hydroelectric Development Corporation, 40 F.E.R.C. p 61,282 (1987). The Department filed a petition for rehearing before the Commission under Section 313(a) of the Federal Power Act, 16 U.S.C. Sec. 825 l(a), and 18 C.F.R. Sec. 385.713 (1988). In addition to the contentions already made in its petition for appeal, the Department now argued for the first time that the Director lacked authority to issue the license, that the Commission had not granted the Department an adequate opportunity to be heard, and that the Commission had erred in failing to apply the provisions of the Electric Consumer Protection Act of 1986, P.L. 99-495, 100 Stat. 1243 (1986). The Commission denied the Department's petition for rehearing, Pennsylvania Hydroelectric Development Corporation, 42 F.E.R.C. p 61,070 (1988), and the Department has sought judicial review in this court.

We review these agency actions to determine whether they exceed the Commission's authority or are arbitrary, capricious, an abuse of discretion, or not in accordance with law. 5 U.S.C. Sec. 706(2) (1982). As to factual matters, the findings of the Commission are conclusive if supported by substantial evidence. 16 U.S.C. Sec. 825l (b).

II.

The Commission first challenges our jurisdiction to hear some of the Department's contentions. Each of the objections put forward by the Department was presented first to the Commission in an application for rehearing, in apparent conformity with the requirements of the Federal Power Act Section 313(b), 16 U.S.C. Sec. 825l (b), which reads in relevant part "[n]o objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission in the application for rehearing unless there is reasonable ground for failure so to do." Respondent F.E.R.C. contends that the Department has failed to comply with the statute because some of its arguments were raised for the first time in its petition for rehearing. The Commission does not argue that "new" arguments may not be raised in a petition for rehearing before the Commission. Rather, it contends that because the Department did not seek additional rehearing of such arguments before the Commission, this court cannot hear these arguments.

We decline to conclude that the intent of Congress in enacting Sec. 313(b) was necessarily to afford the Commission two opportunities to consider each argument. The routine and perhaps desirable practice may be, as the Commission suggests, for a party to seek rehearing on an issue raised for the first time in a petition for rehearing. However, the Commission has failed to point to any statute, rule or decision of the Commission to support the proposition that such second petition is required. We find that the procedure followed by the Department here is in compliance with the plain language of the statute. Thus we have jurisdiction to consider all the Department's arguments under 16 U.S.C. Sec. 825l (b).

III.

The Department argues first that the Director of the Office of Hydropower Licensing lacked authority to issue to P.H.D.C. the license for the New Kernsville Dam Project. The Commission has promulgated regulations authorizing the Director to "[t]...