City of Rockingham v. Federal Energy Regulatory Commission , 702 F. App'x 106 ( 2017 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2535
CITY OF ROCKINGHAM, NORTH CAROLINA; AMERICAN RIVERS, INC.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION; U.S. SECRETARY OF
COMMERCE,
Respondents,
and
DUKE ENERGY PROGRESS, LLC, f/k/a Duke Energy Progress, Inc.,
Intervenor.
On Petition for Review of an Order of the Federal Energy Regulatory Commission.
(2206−030)
Argued: March 23, 2017 Decided: July 6, 2017
Before NIEMEYER, KING, and WYNN, Circuit Judges.
Petition for review denied by unpublished opinion. Judge Niemeyer wrote the opinion, in
which Judge King and Judge Wynn joined.
ARGUED: Robert Flynn Orr, Raleigh, North Carolina; Richard Roos-Collins, WATER
AND POWER LAW GROUP PC, Berkeley, California, for Petitioners. Holly E. Cafer,
FEDERAL ENERGY REGULATORY COMMISSION, Washington, D.C.; Brian C.
Toth, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Respondents. ON BRIEF: Julie Gantenbein, WATER AND POWER LAW GROUP
PC, Berkeley, California; Nicholas T. Niiro, ROGERS JOSEPH O’DONNELL, San
Francisco, California, for Petitioners. Max Minzner, General Counsel, Robert H.
Solomon, Solicitor, FEDERAL ENERGY REGULATORY COMMISSION,
Washington, D.C., for Respondent Federal Energy Regulatory Commission. John C.
Cruden, Assistant Attorney General, Environment & Natural Resources Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Respondent
Secretary of Commerce. Garry S. Rice, Deputy General Counsel, DUKE ENERGY,
Charlotte, North Carolina; John A. Whittaker, IV, Kimberly Ognisty, WINSTON &
STRAWN LLP, Washington, D.C., for Intervenor Duke Energy Progress, LLC.
Unpublished opinions are not binding precedent in this circuit.
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NIEMEYER, Circuit Judge:
Duke Energy Progress, LLC, filed an application with the Federal Energy
Regulatory Commission (“FERC”) to renew its license for operation of two hydroelectric
facilities on the Pee Dee River in North Carolina. After numerous proceedings over a
period of nine years, consultations with other agencies, and consideration of all
objections and suggestions — as well as a record consisting of thousands of pages —
FERC entered an “Order Issuing New License” to Duke Energy on April 1, 2015. The
conditions that FERC imposed in the Order reflected its consultation with other federal
and state agencies and its consideration of comments and suggestions from numerous
intervenors, public and private. All agencies and intervenors agreed to the terms of
FERC’s Order and the reasoning it gave, except two intervenors, who are the petitioners
here.
The City of Rockingham, North Carolina, and American Rivers, Inc. filed this
petition for review, essentially challenging the choices that FERC made with respect to
the conditions it imposed for the license and FERC’s presentation of its analysis of
various disputed issues.
After consideration of the petitioners’ numerous arguments, we find them all
without merit and deny their petition for review.
I
Duke Energy operates a 108.6 megawatt facility consisting of two hydroelectric
dams and related facilities on the Pee Dee River, denominated by FERC as the “Yadkin-
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Pee Dee Hydroelectric Project No. 2206” (the “Project”). One dam, Tillery Dam, creates
Lake Tillery and produces 84 megawatts of electricity, and the other, Blewett Falls Dam,
creates Blewett Falls Lake and produces 24.6 megawatts of electricity. The Project also
includes six recreational sites located below the Tillery Dam called “the Tillery Reach”
and four recreational sites located below the Blewett Falls Dam. These sites provide boat
ramps and docks, canoe portages, fishing piers, picnic tables, and parking. Duke Energy
and its predecessor have operated and maintained the Project since 1958 under a 50-year
license issued by FERC.
FERC is given the responsibility for issuing such licenses, as provided by Part 1 of
the Federal Power Act, 16 U.S.C. § 808. That Act authorizes FERC to issue a license
when a project is “such as in the judgment of the Commission will be best adapted to a
comprehensive plan for improving or developing a waterway or waterways for the use or
benefit of interstate or foreign commerce, for the improvement and utilization of water-
power development, for the adequate protection, mitigation, and enhancement of fish and
wildlife (including related spawning grounds and habitat), and for other beneficial public
uses.” Id. § 803(a)(1). In considering an application for a license, FERC must give equal
consideration to “the power and development purposes for which licenses are issued” and
“the purposes of energy conservation, the protection, mitigation of damage to, and
enhancement of, fish and wildlife (including related spawning grounds and habitat), the
protection of recreational opportunities, and the preservation of other aspects of
environmental quality.” Id. § 797(e).
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FERC’s licensing authority is also subject to regulation by the National
Environment Policy Act (“NEPA”), 42 U.S.C. § 4321, et seq., which requires the
preparation of an environmental impact statement in circumstances such as these. See id.
§ 4332(C). FERC’s licensing authority is also regulated by the Endangered Species Act,
16 U.S.C. § 1536(a), which requires that FERC’s actions be “not likely to jeopardize the
continued existence of any endangered species or threatened species,” or result in the
destruction or adverse modification of their designated critical habitat. In satisfying those
requirements, FERC is required to consult with the National Marine Fisheries Service
within the Department of Commerce (“NMFS”) and obtain from it a biological opinion
(“BiOp”) and an incidental take statement that specifies the impact of the action to
endangered species and the measures necessary to minimize that impact. See id.
§ 1536(b)(4).
In April 2006, in anticipation of the expiration of its license, Duke Energy filed an
application with FERC for a renewal license for the Project. After receiving the
application, FERC published a notice of it in the Federal Register and solicited motions
to intervene and to protest. Seventeen entities responded and intervened, including public
agencies such as the South Carolina Department of Natural Resources; the U.S.
Department of the Interior; the North Carolina Wildlife Resources Commission; the
North Carolina Department of Environment and Natural Resources; the South Carolina
Department of Health and Environmental Control; and NMFS. Other entities also
intervened, including Alcoa Power Generating, Inc.; American Rivers and the Coastal
Conservation League, intervening collectively; The Nature Conservancy; Richmond
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County; the Carolina Forest Association; Anson County; the City of Rockingham; and
the Sandhill Rod and Gun Club.
After all intervenors were consulted, Duke Energy and all intervenors, except the
two petitioners, reached a comprehensive settlement agreeing on all outstanding issues
other than fish passage. The settlement agreement requested that FERC include the terms
and conditions of the settlement with any order issued to renew Duke Energy’s license.
With respect to the issues relating to fish passage, both the NMFS and the Department of
Interior’s Fish and Wildlife Service made recommendations to FERC to increase
minimum flows in order to enhance aquatic habitats for American shad in the Tillery
Reach. Duke Energy agreed with the recommendation and, in February 2008, filed the
agreement with the relevant agencies.
As required by NEPA, FERC issued an environmental impact statement that
comprehensively addressed the Project, minimal water flows in the Tillery Reach, and
recreational opportunities.
And as required, North Carolina issued its water-quality certification, approving
Duke Energy’s proposals as included in the settlement filed with FERC. The two
petitioners appealed North Carolina’s certification of water quality to the North Carolina
Superior Court and the North Carolina Court of Appeals, both of which upheld the
State’s certification.
In 2013 and 2014, the petitioners filed three motions before FERC seeking to
supplement the record to require a recreational flow study and to supplement the record
to include a developmental analysis in the environmental impact statement with
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additional information responding to their proposal to retrofit the Tillery Dam with new
turbines so as to accommodate their preferred flows. FERC deferred its response to the
petitioners’ motions for inclusion to its Order on Duke Energy’s application.
On April 1, 2015, FERC issued its Order granting Duke Energy a new 40-year
license for the Project. In its 174-page licensing Order, it addressed the issues raised by
the intervenors, including the three motions filed by the petitioners. FERC concluded
that the Project, under the conditions proposed by the settlement along with some
conditions added by FERC itself, was “best adapted to a comprehensive plan for
improving or developing the Yadkin-Pee Dee River system.” In particular, the licensing
Order approved the settlement’s increased minimum flows in the Tillery Reach, approved
the settlement’s recreation flows over in that same area, and rejected the petitioners’
proposal that Duke Energy replace or modify its turbines to allow their requested higher
flows.
The petitioners filed a petition for rehearing, arguing that FERC erred in not
complying with the Federal Power Act, the NEPA, and the Endangered Species Act.
FERC denied the petition for rehearing, and this petition for review followed.
II
The petitioners, in arguing that FERC violated the Federal Power Act, do not
suggest that the conditions that FERC imposed in its licensing Order were not within the
agency’s discretion. Instead, they merely express disagreement with those conditions and
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urge that they be replaced with their preferred conditions. They also criticize the format
FERC used in expressing the reasons for the conditions it imposed.
First, the petitioners argue that FERC did not make explicit the goals for the river
below Tillery Dam known as the Tillery Reach. They claim that FERC was required “to
describe desired future conditions or goals for the beneficial uses of the Tillery Reach,”
giving as an example, that FERC could have stated, “[R]ecreation in the Tillery Reach,
only 10 users per day under the original license, should increase to 100 users per day or
more over the term of the new license.” The Federal Power Act does not, however,
require FERC to prepare or publish such an explicit list of goals. See LaFlamme v.
F.E.R.C., 945 F.2d 1124, 1128 (9th Cir. 1991). Rather, it requires that FERC ensure that
all aspects of relicensing are “best adapted to a comprehensive plan for improving or
developing a waterway or waterways” toward a variety of values like commerce, water-
power, and wildlife preservation. 16 U.S.C. § 803(a)(1). In issuing its license to Duke
Energy, FERC appropriately considered all these aspects as it discussed throughout its
extensive 174-page licensing Order.
The petitioners also argue that FERC did not adequately describe its basis for
finding that there was no conflict between the conditions of the new license and the plans
created by other state and federal resource agencies, such as the NMFS. They state that
FERC is required to consider the extent to which the project is consistent with plans
prepared by those agencies. While they accept that FERC is not required to ensure that
the project is actually consistent with these plans, they nonetheless argue that
FERC failed to disclose adequately its consideration of and deliberations on the plans. In
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making this argument, however, the petitioners fail to identify any specific resource
agency plan that FERC failed to address. The environmental impact statement contains
extensive discussion of natural resources, and the BiOp of the NMFS discusses
extensively issues related to the Endangered Species Act. Both of these were fully
considered by FERC’s staff and extensively discussed by FERC in its Order. The
petitioners’ challenge essentially amounts to a formalistic argument, contending that
FERC had a duty to list explicitly every plan by another agency and address it in turn.
The text of the Federal Power Act, however, requires only that FERC consider these
plans, and the petitioners have not demonstrated that FERC did not do so here.
Next, the petitioners claim that FERC erred in deferring consideration of their
three motions calling for an expanded record, even though FERC did address their
motions in the licensing Order. The petitioners fail to explain why this method for
addressing their motions was an abuse of discretion. We conclude that it was not. See,
e.g., Mobil Oil Exploration & Producing Se., Inc. v. United Distrib. Cos., 498 U.S. 211,
230 (1991) (“[A]n agency enjoys broad discretion in determining how best to handle
related, yet discrete, issues in terms of procedures and priorities” (internal citations
omitted)).
Finally, the petitioners make a number of challenges alleging that FERC failed
adequately to develop the record regarding a number of specific issues that FERC had
before it. First, they argue that FERC failed to assess Duke Energy’s use of power,
although they concede that FERC addressed the use of power by Duke
Energy’s predecessor, Process Energy. A claim that FERC was required to reevaluate
9
that use of power when Duke Energy, through a merger with Process Energy, became the
named licensee amounts to a challenge based simply on a name change. Because the
name change was without practical effect, however, we fail to understand why the change
would necessitate new findings. Indeed, FERC specifically found that “[t]he only effect
of the merger [of Duke Energy and Process Energy] on the holder of the license . . . was a
change in its name and a change in the licensee's holding company.” The petitioners’
vague statement that the Project is now operated in an “integrated manner” does not
suggest that FERC erred in reaching this conclusion on the use of power.
The petitioners also argue that FERC should have conducted an independent study
of petitioners’ proposal to retrofit the turbines at the Tillery Dam, urging that the retrofit
was necessary to balance power generation with higher minimum flows. FERC,
however, did respond to the petitioners’ argument and did so adequately. It found that
the retrofit would be expensive and would “generate energy primarily during non-peak
demand periods rather than peak-demand periods, which reduced the value of power.” It
also found that retrofitting the turbines would reduce water quality and would increase
dangers to fish. The petitioners fail to explain why these findings were inadequate.
Indeed, the findings appear to represent a reasoned application of the agency’s expertise.
The petitioners next argue that FERC failed to complete the record with respect to
the continuing impacts of Project operations on fish. This argument is based on a
disagreement with the output FERC used in quantifying habitats over variable river flow.
After considering three possible outputs — Weighted Usable Area, Index C, and Dual
10
Flow Analysis — FERC relied on the Weighted Usable Area output. It explained that it
chose this method “because it enabled staff to study a whole suite of species across a
range of sites.” It explained further that it did not use the Dual Flow Analysis because
that analysis is best used “to assess habitat availability where there is a potential trade off
between the high- and low-flow limiting factors,” and thus, was not well suited to this
context, where high flow was not at issue. The petitioners’ argument that FERC should
have used the Dual Flow Analysis simply amounts to an expression of disagreement; they
provide no basis for us to conclude that FERC’s choice was not reasonable. This is
exactly the sort of technical issue for which deference is designed. FERC reasonably
explained its choice of technical methodology, and that decision warrants deference. As
we have held, “agencies are entitled to select their own methodology as long as that
methodology is reasonable.” Hughes River Watershed Conservancy v. Johnson, 165 F.3d
283, 289 (4th Cir. 1999).
The petitioners argue that FERC did not complete the record with respect to
recreation in the Tillery Reach, preferring that FERC conduct a field test of the computer
model of navigability, make findings about other forms of recreation than boating,
consider demand for recreation, and make findings regarding economic benefits of more
recreation. Again, however, FERC thoroughly considered recreation in the Tillery
Reach, concluding that the increased minimum flow it specified would improve boating
conditions, tailoring increased flows during weekends and holidays during the recreation
season. FERC rejected the petitioners’ proposal for yet greater flows for recreation
because such increased flows would cost nearly $200,000 and would provide limited
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benefits.” Again, the petitioners’ argument reflects little more than their preference for a
different outcome and their disagreement with the choice made by FERC. As with their
other claims, the petitioners do not present any bases on which we might overturn
FERC’s well-explained decisions.
Finally, the petitioners argue that FERC failed to prioritize recreational use to the
greatest extent possible, arguing that FERC’s rules require that it seek “the ultimate
development of [recreational] resources, consistent with the needs of the area to the
extent that such development is not inconsistent with the primary purpose of the project.”
18 C.F.R. § 2.7. They argue that, under this regulation, FERC was required to provide
the “best or most extreme” recreation development. FERC, however, disagreed with the
petitioners’ interpretation of “ultimate development,” concluding that it means the final
development, not best development, of recreational resources that is “reasonable in light
of the facts present in the case.” We have little difficulty in concluding that FERC’s
interpretation is a reasonable, and probably the better, one. To read the regulation as the
petitioners would have us read it would require FERC to pursue minimally valuable
recreational advantages even if those additional advantages came at a disproportionate
cost to the other statutory and regulatory objectives. It is eminently more reasonable to
read “ultimate” as meaning “final,” not as “the best at any cost.” Moreover, were there
any ambiguity as to the meaning of the regulation, we would defer to FERC’s
interpretation. See Auer v. Robbins, 519 U.S. 452, 461 (1997).
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III
The petitioners next contend that FERC violated NEPA in failing to consider
reasonable alternatives in assessing minimum instream flows, pointing in particular to its
treatment of the proposed flow schedules as they proposed. While they acknowledge that
FERC “considered and rejected” their proposal, they argue that it should have been
considered as “a separate action alternative” in the environmental impact statement.
Given their concession, however, that FERC did in fact consider their proposal, the
petitioners have failed to explain why failure to consider their proposal as a so-called
“separate action alternative” violates NEPA. The language of the statute simply requires
FERC to “study, develop, and describe appropriate alternatives”; it does not require
discussion of each possible alternative as a separate action alternative. See 42 U.S.C.
§ 4332(E). Indeed, the regulations explicitly permit FERC, in rejecting alternatives,
merely to “briefly discuss the reasons for their having been eliminated.” 40 C.F.R.
§ 1502.14(a). Absent any substantial flaw in FERC’s consideration of the petitioners’
proposal, we will not “flyspeck” the agency’s decision based on the format in which it
published its consideration. See Nat’l Audubon Soc’y v. Dep’t of Navy, 422 F.3d 174,
186 (4th Cir. 2005) (“Courts may not ‘flyspeck’ an agency's environmental analysis,
looking for any deficiency, no matter how minor”).
IV
Finally, the petitioners argue that FERC violated the Endangered Species Act
because it did not ensure that the new license would not jeopardize the continued
13
existence of endangered species in area. Because FERC relied on the BiOp issued by
NMFS in reaching its conclusion, the petitioners also argue that NMFS similarly violated
the Endangered Species Act in its BiOp.
In making this argument, the petitioners return to FERC’s decision to use for
output the Weighted Usable Area and Index C, instead of a Dual Flow Analysis. But this
argument is flawed for the same reasons that their similar argument was flawed under the
Federal Power Act. NMFS explained its choice to use Index C and Weighted Usable
Area outputs in considerable detail. The BiOp stated that NMFS chose to use Index C
“because of the scale of the study and the number of simulations” as it “provides an
estimate of habitat availability at the lower end of the habitat duration curve, which was
judged by the stakeholder study team to be the more critical part of the curve.” This
choice by the agency represents a sort of “scientific determination” to which “a reviewing
court must generally be at its most deferential.” Baltimore Gas & Elec. Co. v. Nat. Res.
Def. Council, Inc., 462 U.S. 87, 103 (1983).
The petitioners also argue that FERC and NMFS behaved in an arbitrary and
capricious manner by not considering alternative minimum flows in order to minimize
incidental takings of sturgeon. They do not demonstrate, however, how the NMFS
violated the Endangered Species Act. That Act provides specific procedures that apply
for incidental takings. Specifically, if NMFS were to find that FERC’s action would
effect incidental takings of an endangered species but would not jeopardize its continued
existence, it would have to prepare a statement which:
(i) specifies the impact of such incidental taking on the species,
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(ii) specifies those reasonable and prudent measures that the Secretary
considers necessary or appropriate to minimize such impact,
* * *
(iv) sets forth the terms and conditions (including, but not limited to,
reporting requirements) that must be complied with by the Federal agency
or applicant (if any), or both, to implement the measures specified under
clauses (ii) and (iii).
16 U.S.C. § 1536(b)(4). Here, NMFS did in fact prepare such a statement, and the
petitioners nowhere explain why its statement does not satisfy the requirements of the
Act.
* * *
For the reasons given, we deny the petition for review.
PETITION FOR REVIEW DENIED
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