The Grand Council of the Crees v. Fed. Energy Comm'n.

• Decision Date: 11 January 2000
• Docket Number: No. 98-1280,98-1280
• Citation: 198 F.3d 950
• Parties: (D.C. Cir. 2000) The Grand Council of the Crees (of Quebec) and New England Coalition for Energy Efficiency and the Environment, Petitioners v. Federal Energy Regulatory Commission, Respondent Hydro-Quebec and H.Q. Energy Services (U.S.) Inc.,Intervenors
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 950

198 F.3d 950 (D.C. Cir. 2000)

The Grand Council of the Crees (of Quebec) and New England Coalition for Energy Efficiency and the Environment, Petitioners v. Federal Energy Regulatory Commission, Respondent

Hydro-Quebec and H.Q. Energy Services (U.S.) Inc.,Intervenors

No. 98-1280

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 14, 1999

Decided January 11, 2000

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

William Andrew Nelson argued the cause for petitioners. With him on the briefs were James A. Dumont, Leonard A. Busby, and Howard J. Bashman.

Larry D. Gasteiger, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With him on the brief were Jay L. Witkin, Solicitor, and John H. Conway, Deputy Solicitor.

Pierre F. de Ravel d'Esclapon was on the brief for intervenor H.Q. Energy Services (U.S.) Inc. in support of respondent.

Before: Edwards, Chief Judge, Williams and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge:

H.Q. Energy Services (U.S.) Inc. ("H.Q. Energy") is a wholly owned subsidiary of Hydro Quebec, an electric utility that owns and controls facilities for the generation, transmission and distribution of electric power in Quebec. In November 1997 the Federal Energy Regulatory Commission authorized H.Q. Energy to sell power within the United States at market-based rates rather than under the traditional cost-based rate ceilings. H.Q. Energy Services (U.S.) Inc., 81 FERC p 61,184 (1997) ("Order").Petitioners, the Grand Council of the Crees (of Quebec) (the "Grand Council" or the "Crees") and the New England Coalition for Energy Efficiency and the Environment (the "Coalition"), sought rehearing; they argued mainly that H.Q. Energy and Hydro-Quebec had market power in the generation and transmission of electricity in the United States-market power that was insufficiently mitigated to permit the approval. The Commission denied the petition for rehearing, 82 FERC p 61,234 (1998) ("Rehearing Order"), and the Crees and the Coalition petitioned for review here. We dismiss the petitioners' appeal for want of standing.

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Pursuant to § 205(c) of the Federal Power Act ("FPA"), 16 U.S.C. § 824d(c) (1994), a power marketer that seeks to engage in electricity sales under the jurisdiction of the Federal Energy Regulatory Commission must place its rate schedule on file with the Commission. H.Q. Energy requested the Commission to accept for filing a rate schedule authorizing it to sell power at market-based rates.

In reviewing such applications, the Commission demands that the power marketer establish that it, and its affiliates, either do not have, or have adequately mitigated, market power in both generation and transmission. The applicant must also establish that it cannot erect barriers to entry, and that there is no evidence of other behavior perceived as anticompetitive, such as affiliate abuse or reciprocal dealing. See H.Q. Energy Services (U.S.) Inc., 79 FERC p 61,152 at 61,651 (1997).

In response to H.Q. Energy's application, several entities, including the Grand Council and the Coalition, moved to intervene. The Grand Council is a political and governmental entity, representing about 10,000 indigenous people of Northern Quebec. The Coalition is "an association of American consumers, customers, birders, recreational canoeists, energy activists and environmental organizations which has actively intervened in regulatory proceedings in Vermont since 1989."

The Commission initially addressed the issue of transmission, finding H.Q. Energy's market power adequately mitigated. 79 FERC at 61,653. Its approach was substantially similar to that which it applies to utilities owning transmission facilities within the United States, namely a requirement that the firm file an open access tariff, with adjustments to account for the different national context. Id. at 61,652.Here it found that H.Q. Energy mitigated adequately by submitting proposed transmission tariffs, to be enforced by Quebec's regulatory body, the Regie de l'energie, instead of FERC, and with Canadian rather than U.S. commercial law providing the relevant background rules. The Commission also found that H.Q. Energy satisfied its other requirements for market-based rates except for failing to provide the proper analysis of market power in generation.

H.Q. Energy then made a supplemental filing on generation. The Commission found that the firm's market shares, in the thirteen United States markets analyzed, would range from 27.8% to 35% of installed capacity, and from 31.8% to 38% of uncommitted capacity. 81 FERC p 61,184 (1997).These figures exceeded those of all applications for market based rates that the Commission had previously accepted. But the Commission identified three factors that in its view adequately reduced the attendant risks. See id. at 61,810.In light of our holding on standing we need not explore these. In their petition for review, petitioners challenge the Commission's reasoning, and also allege that the Commission's failure to prepare an environmental impact statement was contrary to its duty under the National Environmental Policy Act ("NEPA").

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Petitioners have failed to demonstrate standing to raise their claims. Although the claims arise under different statutes--and we address their standing to bring each claim in turn--they nevertheless both rest primarily on an allegation of environmental harm. The Grand Council alleges that the Commission's license will "devastate the lives, environment, culture and economy of the Crees." The Crees' reasoning is that H.Q. Energy's license to sell power at market-based rates will lead to an increase in Hydro-Quebec's exports, which will in turn lead to the construction of new hydroelectric facilities, which "will destroy fish and wildlife upon which Cree fishermen, trappers and hunters depend." The Coalition alleges an environmental harm one step further removed in the causal and geographic chain: many species of migratory birds that are found in New York and New England during parts of the year rely on the habitat of Northern Quebec; these birds, including one species that has been classified as endangered, are threatened by development of hydro-electric projects in that region.

We first consider petitioners' claims under the FPA. Although there are very serious doubts whether petitioners have satisfied Article III standing, their more straightforward deficiency is in "prudential standing." Article III standing must be established before any decision is made on the merits. See Steel Co. v. Citizens for a Better Environment, 118 S. Ct. 1003, 1012 (1998). Under the Supreme Court's recent pronouncement in Ruhrgas AG v. Marathon Oil Co., 119 S. Ct. 1563 (1999), however, it is entirely proper to consider whether there is prudential standing while leaving the question of constitutional standing in doubt, as there is no mandated "sequencing of jurisdictional issues." Id. at 1570 ("It is hardly novel for a federal court to choose among threshold grounds for denying audience to a case on the merits."). (We return to this issue later, when our reasoning on the substance of prudential standing has been made clear.)

To establish prudential standing, plaintiffs generally must show that "the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute." Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 (1970).Because prudential standing is an invention of the courts, Congress has the power to dispense with the requirement by statute. See Bennett v. Spear, 520 U.S. 154, 163 (1997) ("Congress legislates against the background of our prudential standing doctrine, which applies unless it is expressly negated.").

Petitioners argue that here Congress has dispensed with prudential standing by providing that "[a]ny person ... aggrieved by an order issued by the Commission in a proceeding under this chapter" may apply to have the order reheard, 16 U.S.C. § 825l(a). Petitioners rely on FEC v. Akins, 118 S. Ct. 1777 (1998), in which the Court stated: "History associates the word 'aggrieved' with a congressional intent to cast the standing net broadly--beyond the common law interests and substantive statutory rights upon which 'prudential' standing traditionally rested." Id. at 1783. But the purpose of this pronouncement was evidently only to recognize "person aggrieved" as a congressional means of dispensing with traditional requirements of "legal right," see, e.g., Perkins v. Lukens Steel Co., 310 U.S. 113, 125 (1940), for the Court went on to cite standard applications of the "aggrieved" language to allow standing for competitors, see Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4 (1942); FCC v. Sanders Bros. Radio Station, 309 U.S. 470 (1940), or for obviously intended beneficiaries, see Office of Communication of the United Church of Christ v. FCC, 359 F.2d 994 (D.C. Cir. 1966) (allowing listeners standing to object to licensing of firm that regularly broadcast programs promoting racial segregation); Associated Indus. of New York State v. Ickes, 134 F.2d 694 (2d Cir. 1943) (allowing consumers standing to challenge order that fixes prices and prevents competition among sellers).

Petitioners also rely upon Bennett v. Spear, 520 U.S. 154 (1997), in which the Court, construing the Endangered Species Act of 1973 ("ESA"), expressed a "readiness to take the term 'any person' at face value." See id. at 164-65 (finding that the citizen-suit provision allowing that "any person may commence a civil suit" "negate[d] the zone-of-interests test (or, perhaps more accurately, expand[ed] the zone of interests)"). But the Court in Bennett emphasized the breadth of the ESA's "any person" formula compared to other "more restrictive formulations" ...