LaFlamme v. F.E.R.C.

• Decision Date: 05 July 1988
• Docket Number: No. 85-7571,85-7571
• Citation: 852 F.2d 389
• Parties: , 18 Envtl. L. Rep. 21,276 Harriet F. LaFLAMME, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. Joseph Keating * , Respondent-Intervenor.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 389

852 F.2d 389

27 ERC 2232, 18 Envtl. L. Rep. 21,276

Harriet F. LaFLAMME, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Joseph Keating ^*, Respondent-Intervenor.

No. 85-7571.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 2, 1986.

Decided March 18, 1988.

Order and Amended Opinion Filed July 5, 1988.

Glenn M. Kottcamp, Fresno, Cal., for petitioner.

John N. Estes III, Federal Energy Regulatory Com'n, Office of Gen. Counsel, Washington, D.C., for respondent.

Stuart L. Somach, McDonough, Holland & Allen, Sacramento, Cal., for respondent-intervenor.

Petition to Review a Decision of the Federal Energy Regulatory Commission.

Before SCHROEDER, NORRIS and BRUNETTI, Circuit Judges.

ORDER

In LaFlamme v. FERC, 842 F.2d 1063 (9th Cir.1988) we vacated FERC's order issuing a license to Joseph M. Keating for Sayles Flat Project No. 3195 for the construction, operation and maintenance of a diversion dam, reservoir intake, 4,000 foot steel pen stock, power house and generating units, transformer transmission line and appurtenant facilities. We vacated the license because of the Federal Energy Regulatory Commission's (FERC) failure to comply with the requirements of the Federal Power Act (FPA), the National Environmental Policy Act (NEPA), and all applicable regulations regarding the Sayles Flat Project's recreational use and visual quality, cumulative impact and need for a comprehensive plan.

Intervenor has now filed a petition for rehearing requesting that we modify our opinion and not vacate the license pending completion of the required analysis by FERC on remand, thereby allowing operation of the Sayles Flat Hydroelectric Plant during the remand. Intervenor states that the Sayles Flat Project is substantially complete and that prohibition on operation will cause irreparable harm to intervenor and, finally, that the operation will not interfere with FERC's decision making or result in harm to the environment.

FERC responded to the petition for rehearing stating that under certain conditions it had no objection to allowing the intervenor to operate the Project while FERC is conducting proceedings on remand pursuant to our opinion. However, FERC noted that the court must somehow alter its opinion so that the license remains intact on remand, if not, the Project operators would be in violation of Sec. 23b of the Federal Power Act, 16 U.S.C. Sec. 817 (1982). FERC also asserts that if the court simply preserves the original license, the Commission could arguably find itself bound by the terms and conditions presently in the license and, therefore, without sufficient authority to fulfill our mandate by protecting the environment with appropriate interim measures.

We also note that after the matter was submitted FERC, on October 20, 1987, issued an order approving a pre-project recreation use and visual quality study, and in that order has apparently increased and possibly doubled proposed minimum water flows to be released during the operation of the Project. FERC has amended the Sayles Flat Project license to establish those increased flow releases; to require the filing with FERC of a plan and schedule determining a ramping rate (the maximum rate of change in river flow due to project operation); and to establish a maximum pool elevation. We also note that on July 23, 1986, FERC prepared a cumulative impact study entitled "Environmental Assessment of Potential Cumulative Impacts Associated with Hydropower Development in the South Fork of the American (SOFAR) Basin, California" (EA), with regard to five other hydroelectric projects in the same basin where the Sayles Flat Project is located. While the July 23, 1986 EA specifically discussed the proposed hydropower projects for Pyramid Creek, Foot Trail, Upper Rock Creek, Frye Creek and Twenty-Nine Mile Creek, it also made limited reference to the Sayles Flat Project but did not make the required analysis with regard to Sayles Flat as required by our opinion.

In its order of August 23, 1985, denying LaFlamme a rehearing, FERC amended the Sayles Flat license adding Article 44 requiring a "recreation use-visual quality study". We make no findings as to whether FERC's order approving the Pre-Project Recreational Use and Visual Quality Study or the July 23, 1986, EA satisfy the requirements of our remand. Neither documents were considered on August 23, 1985, when FERC entered an order rejecting all of LaFlamme's arguments and denied her petition for rehearing, nor were they in existence when the license was issued to Keating. In accordance with the reasoning in our opinion this subsequent documentation may be considered by FERC on remand with regard to the requirements of NEPA and FPA.

Intervenor states that because the Federal Power Act, 16 U.S.C. Sec. 806, requires the licensee to commence construction within two years of the date of the issuance of the license, he was faced with the necessity of going forward with the construction of the Project to meet the deadlines of the Federal Power Act. Relying on Forelaws on Board v. Johnson, 743 F.2d 677 (9th Cir.1984), intervenor asserts that the power project is completed and we should not vacate the license. In Forelaws the Bonneville Power Administration (BPA) argued that it did not prepare an Environmental Impact Statement (EIS) prior to offering long term contracts for power delivery pursuant to the Pacific Northwest Electric Power Planning & Conservation Act (Regional Act), 16 U.S.C. Sec. 839-39h (1982), because Congress had mandated that within 21 months of the Act's effective date, a new system of contracts allocating BPA's supply of hydropower was to be in place. BPA argued that the statutory deadlines for contract offer and acceptance made it impossible to prepare an EIS. We found, in fact, that the statute did not mandate the schedule which BPA followed and we refused to enjoin the contracts pending the completion of the EIS. Forelaws is clearly distinguishable because of "clear tension between NEPA's charge to the agency to evaluate the effects of action upon the environment and the command of the Regional Act that the contracts be in place within 21 months of its passage." Forelaws, 743 F.2d at 686. Such statutory conflict does not exist between NEPA and the Federal Power Act under which the Sayles Flat Project was issued a license.

Here FERC issued its license on September 26, 1983, and in that license specified that Keating must commence construction of the Project within two years of the issuance date of the license, i.e., September 26, 1985, and prosecute and complete the construction within four years of the effective date of the license, i.e., September 1, 1987. The FPA, however, allows the commencement of construction to be extended once but not longer than two additional years and, in fact, intervenor's petition for rehearing indicates that FERC extended the time to September 25, 1987. Intervenor was aware of the pending litigation at the time he commenced construction in September 1986. According to the time lines set forth in the Federal Power Act, 16 U.S.C. Sec. 806, an additional two years could have extended the commencement of construction to September 26, 1987, and the completion date extended to September 1, 1989. Further, the FPA did not require FERC to issue the license on any particular date and certainly not before the requirements under FPA and NEPA were met. This case is totally unlike Forelaws wherein the Regional Act required the BPA to act within 21 months of the Act's effective date. Here FERC did not fail to prepare an EIS or a Finding of No Significant Impact (FONSI) or comply with FPA or NEPA because of a time limit on the issuance of the Sayles Flat license. The two year requirement on Keating to commence construction after the license was issued has no relationship to FERC's obligations to comply with NEPA and FPA prior to the issuance of the license.

Intervenor claims irreparable harm will be suffered to intervenor if the license is vacated citing the possibilities of a default being declared by a financing bank, bankruptcy of Sayles Hydro Associates, default on personal guaranties, and nonpayments to creditors. The record is not clear that even if the license remains in effect that the Project would be capable of producing power to produce the revenues required to avert what intervenor claims to be financial irreparable harm. Intervenor's petition for rehearing admits the Project is substantially complete but there must be an intertie with Pacific Gas & Electric (PG & E), the power purchaser, and "some minor work" required by the United States Forest Service in accordance with their memorandum of understanding to complete the project. Petitioner, LaFlamme, in her memorandum in opposition to the petition for rehearing, indicates that the Forest Service had suspended the special use permit for the Project over one year ago and that the intervenor does not explain how it would get the special use permit reinstated with or without the FERC license. This assertion is unsupported but raises the question with the other uncompleted conditions as to whether the Project can operate with a license. LaFlamme also states that intervenor does not provide a projection of income in "this low water year of 1988" to demonstrate a schedule of payments to satisfy its creditors if the license is allowed to be kept in force and the Project operate during the remand. LaFlamme further raises issues that the FERC license does not preempt state water rights, particularly regulation of bypass releases, an issue that is allegedly presently before this court in California v. FERC, No. 87-7538. FERC acknowledged this problem at page 10 of its August 23, 1985, order denying LaFlamme's petition for rehearing.

In order for the Project to become operational this year the intervenor has stated it is essential that all agreements with PG & E resolving...