Rainsong Co. v. F.E.R.C., 93-71035

Decision Date19 March 1996
Docket NumberNo. 93-71035,93-71035
Parties, 27 Envtl. L. Rep. 20,600, 97 Daily Journal D.A.R. 1282 RAINSONG COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
CourtU.S. Court of Appeals — Ninth Circuit

Christopher D. Williams, San Andreas, CA; William Devine, pro se, Maple Falls, WA, for the petitioner.

Timm L. Abendroth, Federal Energy Regulatory Commission, Washington, DC, for the respondent.

Appeal from the Federal Energy Regulatory Commission. Proj. No. 6287-007.

Before: GOODWIN, SNEED, and KLEINFELD, Circuit Judges.


The opinion filed March 19, 1996, appearing at 78 F.3d 1435 (9th Cir.1996), is WITHDRAWN.


GOODWIN, Circuit Judge:

Rainsong Company, following denial of its petition for rehearing by the Federal Energy Regulatory Commission (the Commission), seeks review of an order rejecting Rainsong's application for a hydropower license on a stream within the Olympic National Forest.


Rainsong's efforts to build a hydroelectric power plant (the project) began in 1981. Rainsong applied for a license from the Commission pursuant to the Federal Power Act (FPA), 16 U.S.C. §§ 791a et seq. The license application proposed building the project on Lena Creek.

The first application was denied by order of the Director of the Commission's Office of Hydropower Licensing on June 29, 1987. The denial was based on the conclusion of the Secretary of Agriculture, relying on the Forest Service's staff reports, that the project would interfere and be inconsistent with the purpose of the Olympic National Forest.

Rainsong appealed that order, and the Commission granted its appeal on January 25, 1990. 1 The order reinstated Rainsong's application and gave Rainsong six months to try to resolve the Forest Service's objections and to amend the license application if needed. 2 Rainsong filed an amended application on July 23, 1991. The application proposed construction of a five-megawatt hydroelectric plant. The project would consist of a ten-foot-high, 120-foot-wide concrete dam to divert water from Lena Creek through an intake structure, which would include a 2,300-foot-long steel pipeline and a 1,500-foot-long "penstock." The water would flow through a penstock into a large, concrete power house, and then out through a 150-foot-long tailrace into the Hamma Hamma River. The project would also require a six-mile underground transmission line, a fifty-foot connecting road from the powerhouse to an existing Forest Service road, and other facilities.

The staffs of the Forest Service and the Commission jointly prepared an Environmental Assessment (EA) of the project. The EA concluded that the project would be inconsistent with the Forest Service's 1990 Land Resource Management Plan for the Olympic National Forest (Forest Plan), which designates the Lena Creek area for recreation in a natural, undeveloped setting. 3

The EA delivered its opinion that the project would detract from the "natural appearance" of the area, parts of which could be seen from a popular hiking trail. The EA did not add, however, that a substantial number of clear cuts could also be viewed from the same trail. The EA asserted that the project would create an attractive nuisance, warning signs and fences would be needed to prevent vandalism and possible injury to persons who might not heed warnings signs, all of which would impact the pre-construction scenic beauty. The EA also asserted that the diversion of water at the intake facility would reduce the pleasant sights and sounds of Lena Creek's rushing water. Moreover, the EA concluded that the project would be inconsistent with the Forest Service's Spotted Owl Plan, which restricts development in areas of owl habitat, including Lena Creek. Based on the foregoing conclusions, the Commission issued an order denying Rainsong's license application.

Rainsong again filed a request for rehearing, arguing that the EA's factual conclusions were erroneous and that the Commission had failed to balance developmental considerations with the non-developmental ones. On October 22, 1993, the Commission denied the request for rehearing. 4 Rainsong timely petitioned for review arguing both that the Commission failed to balance and that the Commission abdicated its authority in relying on the 1990 Forest Plan to determine the purposes of the forest. This court has jurisdiction pursuant to the FPA, § 313(b), 16 U.S.C. § 825l(b).


Our review of agency licensing decisions is limited to asking whether the agency's action was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, or if it was taken without observance of procedure required by law. Loomis Cabinet Co. v. OSHRC, 20 F.3d 938, 941 (9th Cir.1994). An agency's interpretation of a statutory provision or regulation it is charged with administering is entitled to a high degree of deference. Todd Shipyards Corp. v. Director, Office of Workers Compensation Programs, 950 F.2d 607, 610 (9th Cir.1991). Courts must, however, reject administrative orders that are contrary to congressional intent. Id. Here we have a competition between two environmental values. Water power using abundant rainfall and favorable topography reduces negative environmental consequences of burning fossil fuel. However, water power engineering in a forest has its own environmental consequences.


Rainsong raises two arguments against the Commission's order. First, Rainsong claims that the Commission did not balance developmental and non-developmental factors in its determination. Second, Rainsong contends that the Commission effectively abdicated its authority in favor of relying unduly on the Forest Plan which it understood as strongly protective of the forest's esthetics. We note at the outset that these two arguments are interrelated. Each argument challenges the Commission's interpretation of § 4(e) of the FPA. 5


The Federal Energy Regulatory Commission shall be guided by § 4(e) of the FPA when considering project applications. Section 4(e) gives the Commission power to "issue licenses ... for the purpose of constructing ... project works" on waters subject to Congress' Commerce Clause jurisdiction and on public lands and reservations of the United States. As originally enacted, the statute directed the Commission to exercise this authority for the "development, transmission, and utilization of power." See Federal Power Act, ch. 285, § 4, 41 Stat. 1060, 1065-66 (1920) (codified at 16 U.S.C. § 797(e)). In 1986, to increase sensitivity to environmental concerns, Congress added a provision to the end of § 4(e) that directs the Commission to give "equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife ..., the protection of recreational opportunities, and the preservation of other aspects of environmental quality" in addition to "power and development purposes" "in deciding whether to issue any license." Electric Consumers Protection Act of 1986, Pub.L. No. 99-495, § 3(a), 100 Stat. 1243, 1243 (1986) (codified at 16 U.S.C. § 797(e)). With respect to "reservations," 6 the statute further directs that licenses "shall be issued ... only after a finding by the Commission that the license will not interfere or be inconsistent with the purpose for which such reservation was created or acquired." 16 U.S.C. § 797(e).

An agency's interpretation of a legislative delegation is entitled to deference where Congress' intent on the issue is not explicit. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984). "[A] court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. However, courts have a duty to make sure that the agency followed the relevant statute. Bureau of Alcohol, Tobacco and Firearms v. Federal Labor Relations Authority, 464 U.S. 89, 104 S.Ct. 439, 78 L.Ed.2d 195 (1983) ("reviewing courts ... must not rubber-stamp ... administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute"). In order for this Court to affirm the Commission's interpretation of § 4(e), we must either hold that the agency gave effect to the intent of Congress or, in the alternative, that the statute is inherently ambiguous, making the Commission's interpretation reasonable and worthy of deference.

We look first to the plain meaning of § 4(e). We do not find it to be ambiguous and, thus, we will accept the Commission's interpretation of § 4(e) only if it is compatible with Congress' clear intent as expressed by the plain meaning of the statute.

The Commission properly interprets § 4(e) to require a threshold determination of consistency with the purposes of a forest reservation before balancing developmental and non-developmental purposes in deciding whether to issue a license. 7 An analysis of the structure and purposes of § 4(e) reveals the problems with Rainsong's assertion that the Commission must give equal consideration to developmental and non-developmental issues in determining whether a hydropower project is consistent with the purposes of the forest reservation. The plain meaning of the statute supports the Commission's two-step analysis in which it balances interests only after determining the project's consistency with the forest's purpose.

First, the "reservation" clause forms part of a series of provisos designed to give special attention to the licensing process in certain situations. We must interpret the "reservation" clause consistently with these provisos of which it is a part....

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