Northern Colorado Water Conservancy Dist. v. F.E.R.C.

• Decision Date: 27 March 1984
• Docket Number: No. 82-1576,82-1576
• Citation: 730 F.2d 1509
• Parties: , 235 U.S.App.D.C. 79 NORTHERN COLORADO WATER CONSERVANCY DISTRICT, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Energenics Systems, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1509

730 F.2d 1509

76 A.L.R.Fed. 647, 235 U.S.App.D.C. 79

NORTHERN COLORADO WATER CONSERVANCY DISTRICT, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Energenics Systems, Inc., Intervenor.

No. 82-1576.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 20, 1983.

Decided March 27, 1984.

Petition for Review of an Order of the Federal Energy Regulatory commission.

Thomas P. Humphrey, Washington, D.C., for petitioner. Jeffrey H. Howard, Washington, D.C., entered an appearance for petitioner.

Joseph Davies, Atty., F.E.R.C., Washington, D.C., for respondent. Charles A. Moore, Gen. Counsel, Barbara J. Weller, Deputy Sol., and Joshua Z. Rokach and Thajauna D. Miller, Attys., F.E.R.C., Washington, D.C., were on the brief for respondent.

Andrea Hill, Washington, D.C., was on the brief for intervenor.

Before WRIGHT and GINSBURG, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.

Concurring opinion filed by Senior Circuit Judge MacKINNON.

J. SKELLY WRIGHT, Circuit Judge.

This case involves the unsuccessful efforts of the Northern Colorado Water Conservancy District (NCWCD), a political subdivision of the State of Colorado, to reopen a preliminary permit proceeding of the Federal Energy Regulatory Commission (FERC or Commission). ¹ On August 7, 1981 FERC issued to a private developer, Energenics Systems, Inc., a preliminary permit to study the feasibility of and to prepare a license application for construction and operation of a hydroelectric power project on the St. Vrain Canal in Boulder County, Colorado. NCWCD, which had not participated in the proceeding, has responsiblity under Colorado law for operating and maintaining a number of water distribution facilities that provide water to the cities, towns, and agricultural irrigation interests of northeastern Colorado. The St. Vrain Canal is one of those facilities. On December 10, 1981 NCWCD petitioned FERC to reopen the proceeding, reconsider its award of the permit to Energenics, and allow NCWCD to compete for the permit.

The bases of NCWCD's petition were NCWCD's contentions that FERC had sent it no written notice of Energenics' permit application and that Section 4(f) of the Federal Power Act, 16 U.S.C. Sec. 797(f) (1982), gave it a statutory right to such a written notice. NCWCD contended that, because no notice had been sent, FERC was required to reopen the permit proceeding even though the petition for reopening was filed over four months after the award of the permit and 72 days after NCWCD had learned of the permit.

FERC, without holding a hearing, rejected the petition as untimely. In a very brief and conclusory opinion FERC held that NCWCD had had sufficient "actual notice" to make the lateness of the petition unjustified. Because we hold that the facts, as alleged by NCWCD, show that the lateness of the petition for reconsideration was probably justified, we reverse FERC's rejection of NCWCD's petition. Our decision is based on both the clear language and the clear legislative history of Section 4(f) of the Federal Power Act. ² FERC's failure to give written notice to NCWCD was an indisputable violation of that provision. While NCWCD's subsequent behavior was not exemplary, both its failure to quickly learn of the proceeding and its failure to quickly ascertain and act on its interests were reasonably foreseeable results of FERC's statutory violation. Indeed, the Congress that passed the written notice provision of Section 4(f) did so because it fully expected that public entities like NCWCD, if not given direct written notice, would frequently behave as NCWCD seems to have behaved. FERC cannot first ignore a statutory mandate that was designed to assist municipalities in their competition for permits and then declare that a municipality loses its rights for acting as Congress expected it would act without the mandate's assistance. In light of this we reverse.

I. LEGAL BACKGROUND

To understand this controversy, one must first understand the Federal Power Act's licensing scheme and the importance to that scheme of the preliminary permit and the statutory preference for public development and operation of hydroelectric projects.

To promote development of hydroelectric power and to assure that that development would serve the public interest, Congress created a licensing scheme, administered by the Commission, for construction, operation, and maintenance of hydroelectric projects. 16 U.S.C. Sec. 797(e) (1982). Licenses may have a duration of up to 50 years. Id. Sec. 799. Although Commission licensing decisions are generally to be based on the policy of best "develop[ing], conserv[ing], and utiliz[ing] in the public interest the water resources of the region[,]" id. Sec. 800(a), the licensing process is also structured to account for at least two related policy goals: promoting extensive data collection by applicants prior to their receipt of licenses and promoting public development and operation of hydroelectric projects.

Congress wanted license decisions to be made on the basis of detailed submissions that would include as much relevant data as possible. See id. Sec. 802. And it believed that parties would only be willing to invest in collecting extensive data if there was some likelihood of a return. Congress thus empowered the Commission to issue preliminary permits for durations of up to three years that would entitle the holder to a priority at the license application stage and would thus give the prospective applicant sufficient security to invest in data collection and arrange financing. See id. Secs. 797(f), 798. Permit holders would be preferred over other license applicants so long as their plans are "at least as well adapted * * * to develop, conserve, and utilize in the public interest the water resources of the region." 18 C.F.R. Sec. 4.33(h)(1) (1983). Indeed, even where a competing applicant has a superior plan the permit holder is entitled to be informed of "the specific reason why its plan is not as well adapted" and to be given "a reasonable period of time" to bring its plan up to the level of the competitor. Id. Sec. 4.33(h)(2).

Congress also adopted a policy favoring public ownership of hydroelectric power projects. It required the Commission to give a preference to "States and municipalities" over private developers in all preliminary permit proceedings, license proceedings in which there is no prior permit, and license proceedings after the expiration of an earlier license. 16 U.S.C. Sec. 800(a) (1982). In any such proceeding a state or municipality must receive the permit or license if its plan is at least as well adapted to serving the public's water resource interests as the plan of the private parties. Id. Where a private party's plan is superior, a state or municipality is entitled to be informed of the specific deficiencies and to be given a reasonable period of time to make its plan "at least as well adapted as the other plans." 18 C.F.R. Sec. 4.33(h)(4) (1983). But in spite of the preference for public ownership, once a permit is issued, whoever has the permit has priority at the licensing stage over all competitors, be they public or private. See Washington Public Power Supply System v. FPC, 358 F.2d 840, 847 (D.C.Cir.1966), rev'd and vacated on other grounds sub nom. Udall v. FPC, 387 U.S. 428, 87 S.Ct. 1712, 18 L.Ed.2d 869 (1967).

As one might expect, this scheme focuses attention on the issuance of preliminary permits. At that stage a government entity entitled to a statutory preference must use that preference to get a permit or forever lose its statutory advantage to a private permit holder. Congress designed the written notice requirement of Section 4(f) to assure public entities' ability to participate in the permit stage.

Section 4(f) of the Act authorizes the Commission to award permits, provided that it first issues two kinds of notices. First, the section mandates "[t]hat upon the filing of any application for a preliminary permit * * * the Commission, before granting such application, shall at once give notice of such application in writing to any State or municipality likely to be interested in or affected by such application[.]" 16 U.S.C. Sec. 797(f). Second, the section mandates that the Commission "shall also publish notice of such application once each week for four weeks in a daily or weekly newspaper published in the county or counties in which the project or any part thereof or the lands affected thereby are situated." ³ Id. Both provisions seem to reflect a congressional desire to facilitate interested parties' knowledge of and possible participation in Commission proceedings. ⁴ The first notice provision, however, was primarily intended to allow states and municipalities to assert and thus protect their statutory preferences. ⁵ This case examines the consequences of FERC's failure to provide that required written notice to a municipality.

II. FACTS

On February 10, 1981 Energenics filed an application with FERC for a preliminary permit to study the feasibility of developing a hydroelectric project on the St. Vrain Canal at Station 497 + 30. The Canal, which transports water from Carter Lake, is 9.8 miles long and is part of an elaborate transmountain water diversion project known as the Colorado-Big Thompson (CBT) System. The CBT System was constructed and is primarily operated by the United States Department of the Interior's Bureau of Reclamation (Bureau) and serves to transport water from the western slope of the Rocky Mountains to the more arid eastern slope and plains of Colorado. The Bureau owns the St. Vrain Canal, but the Canal is operated and maintained entirely by NCWCD under a 1957 agreement with the United States.

On May 6, 1981, almost three months after Energenics filed its application, FERC issued two types of notices of the application. First, FERC entered...