Oconto Falls, Wis. v. F.E.R.C., 93-1340

Citation41 F.3d 671
Decision Date15 November 1994
Docket NumberNo. 93-1340,93-1340
Parties, Util. L. Rep. P 14,018 OCONTO FALLS, WI, and the American Public Power Association, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, N.E.W. Hydro, Inc.; Wisconsin Electric Power Company; City of Oswego, New York; Carl Hitchcock; Energie Development Company, Inc., Intervenors.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Carolyn Elefant, Washington, DC, argued the cause and filed the briefs, for petitioners. Gregg D. Ottinger, Washington, DC, entered an appearance.

Samuel Soopper, Atty., F.E.R.C., Washington, DC, argued the cause for respondent. On the brief were Jerome M. Feit, Sol., Joseph S. Davies, Deputy Sol., and Timm Abendroth, Atty., F.E.R.C., Washington, DC.

Donald H. Clarke, Washington, DC, entered an appearance, for intervenor N.E.W. Hydro, Inc. McNeill Watkins, II, Washington, DC, entered an appearance for intervenor Wisconsin Elec. Power Co., Paul V. Nolan, Washington, DC, entered an appearance, for intervenor City of Oswego, NY. Gail A. Greely, Alameda, CA, entered an appearance, for intervenors Carl Hitchcock and Energie Development Co., Inc.

Before: SILBERMAN, GINSBURG, and ROGERS, Circuit Judges.

Opinion of the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

The City of Oconto Falls, Wisconsin ("Oconto Falls") and the American Public Power Association petition for review of an order by the Federal Energy Regulatory Commission ("FERC") denying application of the Federal Power Act's municipal preference, 16 U.S.C. Sec. 800(a) (1988) ("Section 7(a)"), in licensing proceedings for "orphaned" projects, namely facilities for which the licensee files a notice of intent to apply for a relicense but neither the licensee nor any other applicant files a timely relicense application. Petitioners contend that FERC misinterpreted the language and legislative history of the Federal Power Act ("FPA"), as amended in 1986, in concluding that the Section 7(a) municipal preference does not apply to the Oconto Falls proceedings or to other orphaned project proceedings. While the FPA does not expressly address whether the statutory preference applies to orphaned projects, FERC concluded that the licensing of such projects is better categorized as relicensing than as original licensing. Because FERC's characterization of orphaned project licensing as relicensing is permissible and the municipal preference does not apply to relicensing, we deny the petition for review.

I.

When Congress enacted the Federal Water Power Act in 1920, now the FPA, 16 U.S.C. Secs. 791a-828c (1988), it provided a statutory preference in hydroelectric licensing proceedings for states and municipalities over other applicants if the state or municipal plans were "equally well adapted" to accomplish the statutory purposes of conserving and utilizing regional water resources in the public interest. See 16 U.S.C. Sec. 800(a). The background to the legislative compromise embodied in the 1920 Act is summarized in Clark-Cowlitz Joint Operating Agency v. FERC, 775 F.2d 366, 376-78 (D.C.Cir.1985), vacated on other grounds, 826 F.2d 1074 (1987) (en banc), cert. denied, 485 U.S. 913, 108 S.Ct. 1088, 99 L.Ed.2d 247 (1988). Suffice it to say, Congress at that time sought both to reassure private investors seeking reasonable investment returns and to accommodate conservationists favoring public control of water resources. Congress thus authorized long-term licenses (up to 50 years) and compensation if the federal government or a private entity took over a project after expiration of a license, but also adopted the statutory tie-breaker provision favoring states and municipalities over private parties in both original and relicensing proceedings, thereby rejecting efforts to avoid application of the preference against incumbent licensees. Id. 775 F.2d at 377, 378.

When the original licenses issued under the FPA began to expire during the 1970's, Congress became concerned that if the municipal preference applied at the time of relicensing, privately operated projects would be transferred to municipalities, resulting in increased electrical costs for consumers. See Kamargo Corp. v. FERC, 852 F.2d 1392, 1394 (D.C.Cir.1988); S.REP. NO. 161, 99th Cong., 1st Sess. 5-6 (1985). Consequently, Congress amended the FPA in the Electric Consumers Protection Act, Pub.L. No. 99-495, 100 Stat. 1243 (1986), 16 U.S.C. Secs. 791a-828c ("1986 Amendments"). The 1986 Amendments limited the municipal preference to "original" licensing proceedings governed by Section 7(a) and eliminated the preference altogether in relicensing proceedings governed by Section 15. 1 Henceforth, "a state or municipality can prevail over an incumbent investor-owned utility that seeks to renew a license if the former's proposal is 'best adapted,' [but] 'insignificant differences ... between competing applications are not determinative and shall not result in the transfer of a project.' " Kamargo Corp., 852 F.2d at 1394 (quoting 16 U.S.C. Sec. 808(a)(2)(1988)) (emphasis omitted).

As part of FERC's rulemaking implementing the 1986 Amendments, the agency addressed whether Section 7(a), as amended, applied to the issuance of licenses for existing "minor projects." 2 Minor projects are projects that do not involve more than two thousand horsepower of capacity, and for which FERC's longstanding practice has been to waive the requirements of Sections 14 and 15 of the FPA as well as other statutory and regulatory requirements. 3 The 1986 Amendments presented the question whether such a minor project licensing which the agency denominates a subsequent licensing is a relicensing governed by Section 15, notwithstanding FERC's earlier waiver of Section 15 relicensing requirements, or an "original" licensing governed by Section 7(a) and to which the municipal preference applies.

In Order No. 513, FERC concluded that a subsequent, or minor project license is a relicense and hence the Section 7(a) municipal preference does not apply. Order No. 513, at 31,443. FERC interpreted the term "original" inserted in Section 7(a), as amended, to mean "first," concluding that by adopting the 1986 Amendments, Congress intended to eliminate the municipal preference in all licensing proceedings that follow the expiration of a project's first license and thereby eliminate an applicant's governmental status as a decisional factor in awarding other than original licenses. Id.

Order No. 513 also prescribed procedures for the processing of applications for orphaned projects, such as the Oconto Falls project. Orphaned projects result when a licensee files a notice of intent to file for relicensing, but thereafter fails to file a timely application and, by filing the notice of intent, dissuades others from applying within the regulatory period. In Order No. 513, FERC provided a mechanism whereby applicants could compete for orphaned projects notwithstanding their initial failure to file a timely application. 4 However, Order No. 513 did not address whether the licensing of an orphaned project is a relicensing proceeding governed by Section 15 or an original licensing to which the Section 7(a) municipal preference applies. That question was answered by FERC in the instant case.

II.

In 1967, FERC issued a twenty-five year license to the Wisconsin Michigan Power Company to operate the Oconto Falls Project. Transferred to the Wisconsin Electric Power Company (WEPCO) in 1977, the Oconto Falls license expired on December 31, 1993. Although WEPCO initially filed a notice of intent to file an application for a relicense for the Oconto Falls Project, it failed to file an application by December 31, 1991, as required by FERC regulations. See 18 C.F.R. Sec. 16.20(c) (applicant must file 24 months prior to expiration of license). This failure "orphaned" the Oconto Falls project and prompted FERC to solicit potential applicants. See id. at Sec. 16.25. The City of Oconto Falls was one of three parties to submit an application.

Thereafter, Oconto Falls petitioned FERC to declare that the Section 7(a) municipal preference applied in the licensing proceeding for the Oconto Falls project. The American Public Power Association filed comments in support of Oconto Falls' position. In response, FERC decided that orphaned project proceedings were not "original" license proceedings governed by Section 7(a), but rather were relicensing proceedings governed by Section 15. Wisconsin Electric Power Co., 62 FERC p 61,064, at 61,307-08 (Jan. 22, 1993) ("Declaratory Order"). Relying on its reasoning in Order No. 513, FERC concluded that orphaned project licenses could not be "original" licenses because a previous license had been issued for such projects and had, by definition, expired. The agency found "no meaningful distinction" between an orphaned project license and a subsequent license, to which the agency had ruled the municipal preference inapplicable. Id. Hence, petitioner Oconto Falls was not entitled to the municipal preference in competing for the orphaned Oconto Falls project. Id. at 61,313. FERC denied petitions for rehearing filed by Oconto Falls and the American Public Power Association, and both parties sought review of the Declaratory Order in this court.

In addressing petitioners' challenges to FERC's decision that Section 15 rather than Section 7(a) governs the licensing of the orphaned Oconto Falls project, we apply the methodology set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The court must first determine whether "Congress has directly spoken to the precise question at issue." 467 U.S. at 842, 104 S.Ct. at 2781. If Congress has so spoken, the court must "give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. at 2781. If, however, the court determines that "the...

To continue reading

Request your trial
7 cases
  • Southern California Edison Co. v. F.E.R.C., s. 95-1171
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • June 17, 1997
    ...Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See also, e.g., Oconto Falls v. FERC, 41 F.3d 671, 674 (D.C.Cir.1994). "If the intent of Congress is clear, that is the end of the matter," and we must give effect to "that unambiguously ex......
  • City of Oswego, N.Y. v. F.E.R.C.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • October 18, 1996
    ...conserve and utilize in the public interest the water resources of the region....16 U.S.C. § 800(a). See generally Oconto Falls v. FERC, 41 F.3d 671, 672-74 (D.C.Cir.1994); Clark-Cowlitz Joint Operating Agency v. FERC, 775 F.2d 366, 376-79 (D.C.Cir.1985), vacated on other grounds, 826 F.2d ......
  • North Carolina v. Fed. Energy Regulatory Comm'n, 17-1243
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • January 18, 2019
    ...from potential applicants other than the existing licensee," see 18 C.F.R. § 16.25(a). See also 913 F.3d 151 Oconto Falls v. FERC , 41 F.3d 671, 672, 676–77 (D.C. Cir. 1994) (analogizing relicensing proceedings to those of an "orphaned project"—a project where "the licensee files a notice o......
  • City of Fremont v. F.E.R.C., 02-71477.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • July 16, 2003
    ...will ultimately do so.... The statute is simply silent" as to how FERC should proceed when the project is orphaned. Oconto Falls v. FERC, 41 F.3d 671, 677 (D.C.Cir.1994). In 1989, FERC exercised its authority to fill gaps left by Congress and promulgated regulations, 18 C.F.R. §§ 16.24-16.2......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT