Fall River Rural Elec. Co-Op., Inc. v. F.E.R.C.

• Decision Date: 10 September 2008
• Docket Number: No. 06-71944.,06-71944.
• Citation: 543 F.3d 519
• Parties: FALL RIVER RURAL ELECTRIC COOPERATIVE, INC., Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

543 F.3d 519

FALL RIVER RURAL ELECTRIC COOPERATIVE, INC., Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

No. 06-71944.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 11, 2008.

Filed September 10, 2008.

Peter C. Kissel and Paige Bullard, Law Offices of GKRSE, Washington, DC; Ray W. Rigby and Jerry R. Rigby, Rigby, Thatcher, Andrus, Rigby & Moeller, Rexburg, ID, for petitioner.

Samuel Soopper and Beth G. Pacella, Federal Energy Regulatory Commission, Washington, DC, for respondent.

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

Before: STEPHEN REINHARDT, MELVIN BRUNETTI, and RAYMOND C. FISHER, Circuit Judges.

OPINION

BRUNETTI, Circuit Judge:

Fall River Rural Electric Cooperative, Inc. (Fall River) petitions for review of two Federal Energy Regulatory Commission (FERC) orders. Fall River applied for a license to construct, operate, and maintain a new hydroelectric power generating facility at Hebgen Dam on the Madison River in Gallatin County, Montana. In its orders FERC dismissed Fall River's license application and denied Fall River's request to hold the proceeding in abeyance, Fall River Rural Elec. Coop., Inc., 111 ¶ FERC 62,333 (2005), and it denied Fall River's request for rehearing, Fall River Rural Elec. Coop., Inc., 114 FERC ¶ 61,152 (2006). Fall River timely petitioned for review of both orders. We have jurisdiction pursuant to 16 U.S.C. § 825l(b), and we deny Fall River's petition for review.

I. Facts and Proceedings Below

The Missouri-Madison Hydroelectric Project develops hydropower on a 324-mile stretch of the Madison and Missouri Rivers in southwestern Montana. The project is licensed to Pennsylvania Power and Light Montana, LLC (PPL) under FERC Project No. 2188. PP & L Montana, LLC, 92 FERC ¶ 61,261 (2000). The project consists of nine hydroelectric developments, eight of which have power generating facilities. Id. at 61,830. The Hebgen Development is the one development without a power generating facility and is instead used as a water storage and release facility. Releases from Hebgen Reservoir provide head and flow to the Missouri-Madison Hydroelectric Project's eight other downstream developments. Id.

Hebgen Dam is an earth-filled structure with a concrete core wall and is 721 feet long and 85 feet high. Discharges from Hebgen Reservoir are controlled by outlet works consisting of an intake tower, a conduit through the dam, and a conduit outlet. The intake tower includes four openings, two of which are presently closed with timber stoplogs, while the other two are used for reservoir discharges. Water passes from the intake tower through the dam structure in a woodstavelined conduit, which has an unreinforced concrete encasement and is approximately 785 feet long and twelve feet in diameter. The conduit outlet is an irregularly-shaped concrete box structure at the toe of the dam that directs discharges into the Madison River. The Hebgen Development also includes a spillway, which is located on the right abutment of the dam.

In 2001, FERC granted Fall River a three-year preliminary permit to conduct investigations and to secure data necessary to determine the feasibility of a hydroelectric development project at Hebgen Dam. Symbiotics, LLC, 95 FERC ¶ 62,265, 64,400 (2001).¹ PPL did not oppose Fall River's preliminary permit application and in fact cooperated with Fall River's feasibility studies and engaged in negotiations with Fall River regarding a possible site use and operations agreement.

In May 2004, Fall River filed its Final License Application for the proposed Hebgen Dam Hydroelectric Project No. 11882. In its application, Fall River proposed several modifications and additions to the existing Hebgen Development. First, Fall River proposed constructing a powerhouse with a single turbine generator unit eighty feet downstream from the toe of the dam and immediately north of the present conduit outlet. Discharges would be made through a submerged concrete-lined draft tube below the surface of the tailwater. Second, Fall River proposed pressure-grouting and steel-lining the conduit because it was not designed to withstand the full reservoir pressure required for power generation. Third, Fall River proposed bifurcating the conduit approximately 50 to 60 feet upstream of the current conduit outlet. Fall River proposed installing a steel penstock ten feet in diameter to direct the flow from the existing conduit to the proposed powerhouse. The bifurcation and isolation valves would be located in a new concrete valve house upstream of the proposed powerhouse. Fifth, a new power transmission line would be installed to connect the plant electrical output to Fall River's existing Hebgen substation near Grayling, Montana. Sixth, and finally, Fall River proposed using all four of the existing intake tower's openings by removing the timber stoplogs from the two currently unused openings and installing intake gates in their place.

While Fall River's license application did not propose modifying the existing spillway, PPL would have to use the spillway for all discharges during approximately three months of the construction period. Once completed, the powerhouse would operate in "run-of-river mode," and would utilize flow releases from Hebgen Dam as determined under PPL's license. Fall River would not have access to reservoir storage for additional power generation.

In July 2004, FERC informed Fall River by letter that its license application potentially conflicted with Section 6 of the Federal Power Act (FPA), 16 U.S.C. § 799.² Specifically, FERC stated that it "cannot, without [PPL's] concurrence, approve a development proposal that would materially affect or modify the licensed project. Without PPL's consent to [Fall River's] proposed modifications to Project No. 2188, [Fall River's] application would be precluded by the requirements of FPA Section 6 and therefore would be subject to rejection under 18 C.F.R. § 4.32(e)(2)."³ However, because Fall River was in the process of negotiating a site use and operations agreement with PPL, FERC stated that it would "continue to process [Fall River's] application, conditioned on [Fall River] filing ... additional information showing that PPL has not ruled out an agreement to the modifications to its Project No. 2188." FERC required Fall River to provide this information within thirty days and by the end of each subsequent sixty-day period. Fall River did so, filing five status reports between August 2004 and May 2005.

Just before Fall River filed its last status report, however, PPL sent a letter to Fall River terminating negotiations. The letter stated that "the negotiations with [Fall River] over an extended period have not been successful" and that PPL was "not interested in proceeding any further with negotiations." PPL also filed a copy of the letter with FERC.

In its final status report, after noting PPL's letter and recognizing that "it appear[ed] that negotiations ha[d] come to a stalemate," Fall River declared its "intent to continue it's [sic] efforts to resolve there [sic] difference's[sic] with PPL in the hopes of coming to an acceptable financial arrangement." Fall River further noted that "prior to PPL's letter of January 17, 2005 there ha[d] been no objection by PPL for the licensing and development of additional generation at the Hebgen Dam," and therefore requested that FERC "continue to move forward with the licensing of the Hebgen Dam project." Alternatively, if FERC "fe[lt] it [was] unable to proceed with the licensing" in the absence of PPL's consent, Fall River requested that FERC "hold the licensing process in abeyance until such time that Fall River and PPL have resolved there [sic] differences."

PPL then sent a letter to FERC to "supplement and clarify" certain issues in Fall River's status report. PPL stated: "[O]n April 29, 2005, PPL Montana notified Falls River[sic] that it was terminating negotiations for a site agreement. As PPL Montana has already communicated to Falls River[sic] and NPSI, we do not intend to resume these negotiations for the installation of additional generation at the Hebgen Development by Falls River [sic] or NPSI."⁴

Shortly thereafter, the Director of FERC's Division of Hydropower Licensing dismissed Fall River's license application and denied its request to hold the application in abeyance. Fall River Rural Elec. Coop., Inc., 111 FERC ¶ 62,333 (2005) (the Dismissal Order). The Director concluded that Fall River's proposed project is barred under FPA Section 6 because it "would substantially alter PPL Montana's licensed project works" without PPL's consent. Id. at 64,733. The Director specifically noted Fall River's proposals to modify the "existing intake structure by inserting new gates and screens in two presently-closed intake openings," to bifurcate the outlet conduit, to install a penstock extending to a new powerhouse, and that "installation of its valve house to bifurcate the Hebgen outlet conduit ... will require extensive excavation of the earth fill covering the conduit." Id. The Director concluded, "[t]hese are the types of modifications to a licensed project that the Commission has found require the licensee's consent under Section 6 of the FPA." Id. Therefore, "[w]ithout PPL Montana's consent for these alterations, the application must be dismissed ... without prejudice to Fall River re-filing its application, in the event it is able to obtain PPL Montana's consent for use of the Hebgen Development." Id. The Director further concluded that because of PPL's intention not to resume negotiations, "[n]o public purpose would be served by continuing to process the application or to hold the application in abeyance." Id.

Fall River then filed a request for rehearing, which a panel of three commissioners denied. Fall River Elec. Coop., Inc., 114 FERC ¶ 61,152 (2006) (the Rehearing Order). The panel...