The City of Miami, Oklahoma v. FERC ( 2022 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 9, 2021 Decided January 18, 2022
No. 20-1325
THE CITY OF MIAMI, OKLAHOMA,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
GRAND RIVER DAM AUTHORITY,
INTERVENOR
Consolidated with 20-1446
On Petitions for Review of Orders of the
Federal Energy Regulatory Commission
David M. Gossett argued the cause for petitioner. With
him on the briefs was Barbara S. Jost.
Elizabeth E. Rylander, Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
2
With her on the brief were Matthew R. Christiansen, General
Counsel, and Robert H. Solomon, Solicitor.
Misha Tseytlin argued the cause for intervenor. With
him on the brief were Charles R. Sensiba, Elizabeth J.
McCormick, and J. Houston Shaner.
Before: HENDERSON and PILLARD, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.
SILBERMAN, Senior Circuit Judge: The City of Miami,
Oklahoma complained about periodic flooding which it
asserted comes from the operation of the Pensacola Project, a
downstream dam licensed by FERC. It petitions for review of
FERC orders that reject its complaint on several grounds. We
think FERC’s position is surprisingly unpersuasive. We grant
the City’s petitions and remand for further proceedings to the
agency.
I.
Although the City has repeatedly raised its concerns in
ancillary FERC proceedings, it received no relief. In one prior
case, called a rule curve proceeding, 1 the Commission
explicitly stated that it would not consider, at least in that case,
the City’s concerns. That led the City to sharpen its position.
It brought a complaint directly challenging the Grand River
Dam Authority that operates the Pensacola Dam, contending
1
A “rule curve” describes a permitted range for how high the
reservoir can get. A rule curve proceeding is initiated when a party
wishes to change that range.
3
that it violated Article 5 of its license, issued to it by FERC
under the Federal Power Act. That provision obliges the
Authority to:
[A]cquire title in fee or the right to use in
perpetuity all lands, other than lands of the
United States, necessary or appropriate for the
construction, maintenance, and operation of the
project. (emphasis added).
The City maintains that Article 5 obliges the Authority to gain
“flowage rights” by either purchasing property or acquiring an
easement from the City to defray the cost of future flooding
(the Authority contended that an easement would be quite
expensive, and the cost would be passed on to ratepayers). 2
The City has also pursued actions in Oklahoma state courts
seeking compensation for past floods. It produced extensive
evidence that previous damage was caused by flooding
attributable to the operation of the Pensacola Dam. The
Oklahoma courts decided in favor of the petitioner. See, e.g.,
Dalrymple v. Grand River Dam Auth., No. CJ 94-444 (Okla.
Dist. Ct. Nov. 5, 1999), amended, Jan. 11, 2000; McCool v.
GRDA No. 97-020 (Okla. Civ. App. June 15, 2004); Perry v.
Grand River Dam Authority, 344 P.3d 1 (Okla. Civ. App.
2013). The evidence presented to the Oklahoma courts was
also submitted to FERC in this case along with several studies
essentially showing the same thing.
Quibbling with the evidence, the Authority blithely
asserted the dam’s operations were not responsible for any
2
The City notes that the Authority had previously purchased some
flowage rights and recognized an obligation to purchase more before
reversing course and claiming that it had no obligation to do so.
4
flooding outside the project’s exact boundaries—a much more
limited territory than the property at issue—and in any event,
the Authority blamed the U.S. Army Corps of Engineers as
responsible for flood control.
While the Commission’s response was pending, Congress
jumped into the fray. It passed a floor amendment to the
Defense Authorization Act seemingly addressing the
controversy. One provision of the amendment is particularly
relevant: “The licensing jurisdiction of the Commission for the
project shall not extend to any land or water outside the project
boundary.” National Defense Authorization Act for Fiscal
Year 2020, Pub. L. No. 116-92, § 7612(b)(2)(A), 133 Stat.
1198, 2312 (2020).
FERC’s staff in a letter order acknowledged that the City
was correct in reading Article 5 to impose on the Authority
obligations beyond the project’s boundaries. The staff in a
rather conclusory manner and without analysis however,
asserted that there was no substantial evidence that the
Authority’s operation of the dam caused the flooding at issue.
It then concluded that the Authority was not in violation of its
license because “the Commission has never determined that
any additional lands or land rights (i.e. flowage rights) [beyond
the project boundaries] are necessary.” (emphasis added).
Since the City was asserting these rights in this very
proceeding—and the Commission, as opposed to the staff, had
yet to answer the claim—the staff’s response was illogical
because it essentially assumed the conclusion.
Alternatively, the staff’s letter order relied on the floor
amendment of the Defense Authorization Act—without
actually interpreting it—as blocking the City’s relief.
5
The City sought rehearing before the Commission. Over
a dissent, FERC rejected the City’s appeal. First, the
Commission disposed of the Authority’s claim that the
responsibility for flooding beyond the project boundary was
that of the Corps of Engineers by simply stating mysteriously
that the responsibility of the Corps was “not presented by this
case.”
The Commission instead described the case before it as
presenting only a narrow issue: “whether, because of the
frequent flooding of lands outside the project boundary, [the
Authority] is in violation of Article 5 of its project’s license for
failure to obtain flowage rights on these lands.” FERC then
sustained the staff’s conclusion that the flooding evidence
petitioner had presented was insufficient simply stating as an
ipse dixit that “lands outside the project boundaries are not
flooded due to the Project’s operations.”
The Commission added that the flooding issue can be
explored in depth in the upcoming relicensing proceeding,
scheduled in 2025, at which point FERC would consider
whether lands “are needed for project purposes.”
Finally, the Commission unlimbered the statutory
howitzer.
[T]he Pensacola Act specifically deprives the
Commission of jurisdiction over ‘any land or
water outside the project boundary’ and further
provides that lands outside the project boundary
shall not be considered to be part of the project.
Accordingly, we cannot, as a matter of law,
require [the Authority] to acquire and bring
additional lands within the project boundary.
6
II.
We start by acknowledging that we are completely at sea
regarding the role of the Corps of Engineers, which may be the
deus ex machina of this play. See generally Arkansas Game &
Fish Comm’n v. United States, 568 U.S. 23 (2012) (holding that
temporary flooding caused by the Corps of Engineers’
operation of a dam could potentially be compensable through
the Takings Clause). There is no point in describing the
Authority’s contentions in this regard because FERC simply
ignored the Corps of Engineers’ alleged responsibility.
Moreover, the Department of Justice—which presumably
would represent the Corps—did not appear in this proceeding.
And we have no idea what authority FERC exercises over the
Corps’ role. Therefore the Authority’s alternative claim that
the responsibility for the flooding in the City of Miami is the
Corps’ responsibility remains essentially unaddressed. For that
reason alone, we must remand to the Commission. But there is
a good deal more in FERC’s order that troubles us.
First, FERC never really answers the narrow question it
identified, i.e., whether Article 5 of the license obliges the
Authority—putting aside the Corps’ role—to acquire rights
(either ownership or easements) to cover the expense of
flooding in the City of Miami.
Assuming, as the Commission staff seemed to suggest,
that the Authority bears that responsibility, the evidence that
Pensacola Dam’s operation has caused the flooding in the City
is powerful. Yet FERC did not analyze that evidence. It
merely asserted that its staff “review[ed]” the City’s evidence.
It added that the Authority—not surprisingly—had simply
denied for some time that the dam operations were causing
flooding. That is hardly acceptable evaluation of the evidence.
7
***
Next we turn to FERC’s alternative rationales. First,
FERC indicated that the flooding problem can be handled in
the upcoming relicensing proceeding. That runs afoul of a
basic principle of administrative law: an agency faced with a
claim that a party is violating the law (here an existing license)
cannot resolve the controversy by promising to consider the
issue in a prospective legal framework. We have previously
explained that proposition in AT&T v. FCC, 978 F.2d 727,
731–32 (D.C. Cir. 1992). We there described the FCC’s
decision to take up AT&T’s claim that MCI was violating
existing law in a future rulemaking as an “administrative law
shell game.” 3 It was “a logical non-sequitur.” Id. FERC plays
that same game here. Presented with claims that the Authority
is violating an existing license, FERC responds that it will look
at the problem when it decides whether to issue a new license.
***
There remains the significance of the floor amendment to
the Defense Authorization Act. 4 The Authority as intervenor
asserts that the statute which limits FERC’s “jurisdiction”
actually deprives us of Article III jurisdiction because we
couldn’t grant petitioner’s relief. Intervenor overlooks City of
Arlington v. FCC, 569 U.S. 290, 296–97 (2013), which
explains that when Congress uses the term jurisdiction to limit
an agency’s power, it is really referring to an agency’s
authority. In other words, it is a merits issue.
3
See also MCI Telecommunications Corp. v. AT&T, 512 U.S. 218,
222 (1994) (quoting AT&T v. FCC, 978 F.2d at 731–32).
4
Although FERC argues before us that this is not really an alternative
holding, we think otherwise.
8
In that regard we think the crucial language we quoted
above is ambiguous. It is unclear to us whether the amendment
strips FERC of authority to enforce the existing license or that
FERC’s authority to impose new conditions on future licenses
is limited. And that question is related to another issue.
Section 28 of the Federal Power Act reserves the right of
Congress to change the Act but states that such changes shall
not “affect any license” issued under the Act. FERC asserts
that since the Pensacola Act is specific legislation passed
subsequent to the Federal Power Act, it overrides § 28. Yet the
agency never actually construed the Pensacola Act, only
quoting it, which means of course that is another reason we are
obliged to remand.
***
We grant the petitions for review and remand to the
Commission for it to determine the role of the Corps in this
imbroglio, the responsibility the Authority bears if it caused
flooding in the City, analyze the evidence petitioner has
produced, and finally interpret the Pensacola Act.