FPL Energy Maine Hydro LLC v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 14, 2002 Decided May 3, 2002
No. 99-1397
FPL Energy Maine Hydro LLC,
Petitioner
v.
Federal Energy Regulatory Commission,
Respondent
American Rivers, et al.,
Intervenors
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Catherine R. Connors argued the cause for petitioner.
With her on the briefs was Matthew D. Manahan.
Cynthia L. Amara was on the brief for amici curiae
Clifton Power Corporation and New England Legal Founda-
tion in support of petitioner.
Laura J. Vallance, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
the brief were Cynthia A. Marlette, General Counsel, and
Dennis Lane, Solicitor.
Daniel H. Squire and IJay Palansky were on the brief for
intervenors American Rivers, et al.
Before: Sentelle, Rogers and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Sentelle.
Sentelle, Circuit Judge: Petitioner FPL Energy Maine
Hydro LLC (FPL), a hydroelectric facility, petitions this
Court for review of two orders by the Federal Energy
Regulatory Commission (FERC), the first determining that
FPL is subject to licensing because the Messalonskee Stream
on which FPL is located is "navigable" under 16 U.S.C.
s 796(8), the second denying FPL's request for rehearing.
Because we find that FERC's interpretation of the statute
governing navigability is a reasonable one and that its naviga-
bility finding was supported by substantial evidence, we deny
the petitions.
I. Background
The Messalonskee Stream (Stream) is a tributary of the
Kennebec River (Kennebec) located in central Maine. It runs
approximately ten miles from the Messalonskee Lake to the
Kennebec, with four dams located along its stretch. The
southernmost dam is the Union Gas Project, located approxi-
mately one mile up the Stream from the confluence of the
Stream and the Kennebec. In between the dam and the
Kennebec, beginning from the dam and progressing down-
stream, are two sets of rapids or "rips," a bridge, a third set
of rips, and two islands that together span approximately 200
feet downstream with a shallow shoal on the east side of the
islands and a narrow and rocky channel on the west side.
Below the islands the Stream widens and deepens as it
encounters the backwater of the Kennebec. The Kennebec,
itself a navigable water, empties into the Atlantic Ocean.
Pursuant to section 23(b)(1) of the Federal Power Act
(FPA), 16 U.S.C. s 817(1), a non-federal hydroelectric project
must be licensed if it is located on a navigable water of the
United States, as defined by 16 U.S.C. s 796(8), or if other
criteria not relevant to this case are met. Because the four
dams constitute one development unit, if one project requires
a license, then they all must be licensed. See Kennebec
Water District, 80 FERC p 61,208, 61,828 (1997). Thus if the
Stream between the Union Gas Project and the Kennebec is
deemed navigable pursuant to 16 U.S.C. s 796(8), all four
projects require a license.
Section 3(8) of the FPA defines navigable waters as
those parts of streams ... which either in their natural
or improved condition notwithstanding interruptions be-
tween the navigable parts of such streams or waters by
falls, shallows, or rapids compelling land carriage, are
used or suitable for use for the transportation of persons
or property in interstate or foreign commerce....
16 U.S.C. s 796(8). This means that, to be navigable for
purposes of the FPA, a waterway must form a highway for
commerce with other states or with foreign countries, by
itself or by connecting with other waters. See The Montello,
87 U.S. (20 Wall.) 430, 439 (1874). Courts have determined a
waterway to be navigable if "(1) it presently is being used or
is suitable for use, or (2) it has been used or was suitable for
use in the past, or (3) it could be made suitable for use in the
future by reasonable improvements." Rochester Gas & Elec-
tric Co. v. FERC, 344 F.2d 594, 596 (2d Cir. 1965) (emphasis
in original), see also Marine Stevedoring Corp. v. Oosting, 398
F.2d 900, 908 n.15 (4th Cir. 1968), rev'd on other grounds,
Nacirema Operating Co. v. Johnson, 396 U.S. 212 (1969);
Sierra Pacific Power Co. v. FERC, 681 F.2d 1134, 1137-38
(9th Cir. 1982). Navigability can be established based on any
of these three requirements; each alone is sufficient. Roch-
ester Gas, 344 F.2d at 596.
II. Proceedings Below
The Union Gas Project is currently licensed by FPL (as
successor in interest to Central Maine Power Company--the
original licensee of the project). The original license for the
project was issued in 1968 and expired in 1993. Since that
time, the project has been operating on annual licenses. As
part of a jurisdictional examination of several projects for
which licensing might not have been required,1 the Office of
Hydropower Licensing conducted a navigation report on the
Stream in 1996. This report indicated that the Stream was
not navigable because there was "no evidence of usage of the
stream as a water highway, a continuous link for interstate
commerce, either commercial or recreational, from above the
project sites, past the projects, to the Kennebec River."
Following a review of comments to the report, the Acting
Director of the Office of Hydropower Licensing issued an
order finding that the Union Gas Project was located on a
navigable waterway and therefore required a license. See
Kennebec Water District, 79 FERC p 62,041 (Apr. 21, 1997).
On rehearing, FERC concluded the evidence submitted was
inadequate to support a finding of navigability. See Kennebec
Water District, 80 FERC p 61,208 (Aug. 6, 1997). Following
petitions for rehearing on that order, FERC set the issue of
navigability for a hearing before an Administrative Law
Judge (ALJ) to determine, among other things, the physical
characteristics of the Stream, the difficulty associated with
navigating the Stream, and the nature and frequency of
actual use of the river for recreational boating. See Kennebec
Water District, 81 FERC p 61,073, 61,306 (Oct. 21, 1997).
The ALJ, who did not address the physical characteristics of
the Stream as they relate to navigability, found that the
Stream was not navigable despite three "successful" and two
"unsuccessful" canoe trips made for the purpose of litigation.
See Kennebec Water District, 82 FERC p 63,004 (Jan. 14,
1998). The ALJ also held that there was no evidence of
"regular and substantial recreational use" to serve as a proxy
for the simpler types of commercial navigation as allowed
under United States v. Appalachian Electric Power Co., 311
U.S. 377 (1940). FERC trial staff and several intervenors in
the proceeding below filed exceptions to the ALJ's initial
__________
1 Union Gas was previously required to be licensed pursuant to
FERC's incorrect interpretation of a different section of the FPA.
decision, which Central Maine Power opposed. Upon review,
FERC concluded that the ALJ applied an incorrect legal
standard by requiring evidence of "regular and substantial
recreational use" for a finding of navigability. It therefore
reversed the non-navigability finding and required FPL to
obtain a license. See Kennebec Water District, 84 FERC
p 61,027 (July 16, 1998). FERC based its navigability finding
on the three "successful" canoe trips taken for purpose of
litigation, as well as the physical characteristics of the
Stream. Id. at 61,126. FERC denied FPL's rehearing re-
quest and these petitions for review followed.
III. Analysis
This case requires us to answer two questions: first,
whether FERC's interpretation of "navigability" under the
FPA was reasonable; second, if so, whether FERC's naviga-
bility finding was supported by substantial evidence. We
answer both questions affirmatively.
A. "Navigability" Interpretation
FPL argues that FERC departed from the statutory "suit-
able for use ... in ... commerce" test set forth at 16 U.S.C.
s 796(8) (see also Rochester Gas, 344 F.2d at 596) and instead
applied a mere "possibility of passage" test to determine
whether the Stream is navigable. FPL contends that FERC
conducted its navigability determination by looking only to
three non-commercial, non-recreational test canoe trips that
indicated it was possible to navigate downstream in unusual
conditions, rather than looking to historical and present com-
mercial or recreational use by average canoeists. FPL fur-
ther contends that, in determining navigability, FERC deviat-
ed from its past precedent that requires more than just a
showing of specialized, recreational boating where historical
evidence of commercial use was lacking. FPL also faults
FERC for relying on the flow created when the hydroelectric
facility is generating to create navigability, as well as for
failing to identify the commercial use to which the Stream
could realistically be put.
We reject each of FPL's arguments. Where an adminis-
trative agency is tasked with interpreting an ambiguous
statute that it administers, a court will defer to that agency's
interpretation so long as it is reasonable. See Chevron
U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
843 (1984). As the statute does not define when a waterway
is "suitable for use ... in ... commerce," we assume that
Congress intended FERC to address the ambiguity in the
statute and develop an appropriate test. See United States v.
Mead Corp., 533 U.S. 218, 229 (2001). We find that FERC's
interpretation of navigability under the FPA, which was
based on test canoe trips and the Stream's physical character-
istics in the absence of any commercial or recreational use,
was reasonable and entitled to deference.
At the outset, we may quickly reject FPL's argument that
it was improper for FERC to rely on the flow created when
the Union Gas Project is generating to create navigability.
FPL confuses a finding of whether a waterway has always
been navigable because an improvement could be made if
reasonable in cost, with a finding of whether a waterway,
together with its improvements, is presently "suitable for
use." See Rochester Gas, 344 F.2d at 596. The question
before this Court is whether the Stream, with the presence of
the Union Gas Project and the flow created when there is
generation, is presently navigable, see Washington Water
Power Co. v. FERC, 775 F.2d 305, 332 (D.C. Cir. 1985), not
whether the Stream was navigable prior to the Project's
construction. See id. at 331-32.
Turning next to FPL's primary argument, FPL contends
that FERC's "possibility of passage" test: 1) ignored the fact
that the Stream has never been used, either historically or
presently, for commercial or private purposes, and 2) deviated
from past decisions wherein FERC denied a finding of navi-
gability when the only evidence of actual use was specialized,
recreational boating.
All parties agree that the Stream has never been used for
commercial traffic. But just because a body of water has not
been used for commercial use does not mean that it is not
susceptible to commercial use. See United States v. Utah,
283 U.S. 64, 82 (1931). In Appalachian Power, 311 U.S. at
416, the Supreme Court held that a lack of commercial traffic
is not "a bar to a conclusion of navigability where personal or
private use of boats demonstrates the availability of the
stream for the simpler types of commercial navigation."
Thus without evidence of commercial use, FERC may look to
other types of use to establish navigability.
In the past, FERC has often relied on evidence of recre-
ational use as a proxy for commercial suitability. Here,
however, there is no evidence of recreational use of the
Stream. In fact, the only evidence indicating actual use of
the Stream comes from the three trips made for the purpose
of litigation. Echoing the ALJ, FPL argues that this evi-
dence is insufficient to serve as a proxy for commercial
suitability. Instead, FPL argues that FERC precedent re-
quires a navigability finding to be based on "regular and
substantial recreational use" in the absence of actual commer-
cial use. We disagree. The statute and the case law make
clear that evidence of actual use is not necessary for a
navigability determination. "[T]he test [is] whether the river
... is used, or capable of being used as a highway for
commerce, over which trade and travel is or may be conduct-
ed in the customary modes of trade and travel on water."
Economy Light & Power Co. v. United States, 256 U.S. 113,
121-22 (1921) (emphasis added). To determine whether a
waterway is capable of being used as a highway for com-
merce, evidence other than recreational use may be consid-
ered. That is, recreational use may be the most common
proxy evidence FERC relies on for findings of commercial
suitability, but FERC has never taken the position, nor will
this Court take the position now, that recreational use is the
only proxy evidence on which FERC may rely. "Recreation-
al boating is ... of interest because it is boating, not because
it is recreational. Any similar personal or private use not
involving recreation, such as use of a river as a means of
personal transportation, would be equally relevant to a deter-
mination of suitability for commercial navigation." Kennebec
Water District, 88 FERC p 61,118, 61,304 (July 28, 1999).
FERC may therefore, in the absence of commercial use, rely
on evidence other than recreational use if that evidence is
relevant to a finding of navigability. The Supreme Court has
identified at least two types of evidence, declaring that the
"capacity [of a waterway to meet the needs of commerce] may
be shown by physical characteristics and experimentation as
well as by the uses to which the streams have been put."
United States v. Utah, 283 U.S. at 83. In the absence of any
"uses to which the [Stream] ha[s] been put," FERC acted
consistently with Supreme Court precedent in relying on the
three test canoe trips.
FPL nonetheless argues that the test trips were of a type
of specialized, recreational boating that FERC has previously
disregarded when making navigability determinations. The
cases on which FPL relies, however, are distinguishable from
the facts before us. For example, in Pennsylvania Elec. Co.,
56 FERC p 61,435, 62,549-50 (1991), FERC determined a
river was non-navigable because a substantial reach of the
river could only be navigated by a kayak (or comparably
specialized sporting craft designed for river running) maneu-
vered by an expert paddler. Similarly, in PacifiCorp Elec.
Operations, 73 FERC p 61,365, 62,140 (1995), rehearing de-
nied, 74 FERC p 61,262 (1996), FERC determined that a
waterway was non-navigable because "all of the evidence of
use or suitability for use for recreation concerns use by
skilled kayakers or whitewater rafters." FERC held that
"[t]his is not the sort of recreational boating that [it] has
recognized as demonstrating the suitability of a river for the
simpler types of commercial navigation." Id. at 62,140-41.
The river in PacifiCorp included Class IV rapids that could
not be navigated easily without a specialized boat. In the
present case, the Stream at most contains Class II rapids
that were successfully crossed by a canoe. FERC has re-
peatedly found waterways to be navigable that may be tra-
versed by a canoe--a simpler type of commercial transporta-
tion. See, e.g., Appalachian Power, 311 U.S. at 415-16. We
therefore find that FERC did not depart from precedent
when it relied on successful test trips taken in canoes.
FPL further argues that FERC's navigability test was
flawed because FERC failed to identify the possible commer-
cial use to which the Stream may be put. We see no reason
why FERC must identify the precise commercial use to which
a previously unused waterway may be put in order for the
Commission's finding of navigability to be upheld. The test is
whether the waterway is presently "suitable for use for the
transportation of persons or property in interstate or foreign
commerce," not whether the waterway is presently suitable
for a specific type of commercial activity named by FERC
and approved of by an opposing party. 16 U.S.C. s 796(8);
see also PacifiCorp, 73 FERC at 62,140 ("[I]n order to
demonstrate that the [waterway] at the project site is a
navigable water, [FERC] need only find that it was or is used
or suitable for use to transport persons or property between
the project site and [another navigable water]."). Conse-
quently, if the evidence in the record supports a finding that
the Stream is suitable for transporting persons or property to
the Kennebec, then this Court will uphold such a finding
without adding a requirement that FERC identify a specific
type of commerce associated with the transportation of per-
sons or property. The language of the statute does not
require such a finding; neither do we.
Even more important to our analysis, FERC did not rely
on the test canoe trips alone when finding that the Stream
was navigable. FERC also looked to the Stream's physical
characteristics when making its navigability determination.
See United States v. Utah, 283 U.S. at 83. Thus absent
evidence of commercial or recreational use, FERC properly
relied on both "physical characteristics and experimentation"
to determine whether the Stream was suitable for use in
commerce. Id.For the reasons stated, we find that FERC's interpretation
of the FPA's navigability test was reasonable insofar as it
necessarily relied on test canoe trips and the Stream's physi-
cal characteristics in the absence of past or present commer-
cial and recreational use of the waterway. It is therefore
entitled to deference.
B. Substantial Evidence
As our discussion of FERC's deference-worthy interpreta-
tion of the navigability test may suggest, we also conclude
that FERC's finding of navigability is supported by substan-
tial evidence. 16 U.S.C. s 825l(b) ("The finding of the Com-
mission as to the facts, if supported by substantial evidence,
shall be conclusive.").
The "experimental" test canoe trips provide sufficient evi-
dence that the Stream is navigable. Three witnesses, all with
differing interests in the litigation, successfully navigated
downstream without incident, and two attempted and suc-
ceeded in navigating upstream, albeit with some difficulty.
Although FPL made much of the difficulty associated with
this upstream travel both in its brief and at oral argument,
FPL failed to provide any explanation as to why an upstream
trip--either made with ease or with difficulty--is necessary
for a navigability finding when the evidence of successful
downstream trips is clear. Nowhere in the statute or accom-
panying case law does it state that the transport of persons or
property in interstate or foreign commerce must include two-
way transport. We do not view this case as an opportunity to
suggest otherwise.
In addition to relying on the three test trips, FERC made a
separate determination that the physical characteristics of the
Stream rendered it suitable for commercial navigation. The
Supreme Court has held that a water's "capacity [for com-
mercial navigation] may be shown by physical characteristics
and experimentation as well as by the uses to which the
streams have been put." United States v. Utah, 283 U.S. at
83. And in Montana Power Co. v. Federal Power Commis-
sion, 185 F.2d 491, 495 (D.C. Cir. 1951), this Court declared
that "[i]f the stream's flow, depth, gradient, width and capaci-
ty make it 'suitable for use' in interstate commerce, it is
subject to the licensing authority of [FERC]." In other
words, a waterway may never have been used for transporta-
tion, commerce, or recreation, but nonetheless may be suit-
able for interstate commerce (and subject to licensing by
FERC) based on its physical characteristics. See Loving v.
Alexander, 745 F.2d 861, 864 (4th Cir. 1984) ("The extent and
manner of use of a navigable river is not important as long as
it is usable as an actual avenue of commerce.").
The record includes sufficient evidence regarding the
Stream's physical characteristics on which FERC relied in
making its navigability determination. FERC noted that the
Stream has a very slight gradient, has a depth of approxi-
mately three and a half to four feet when the dam is
generating (although slightly shallower around the two is-
lands), is wide enough to support passage up and down the
Stream and around the two islands, and has few obstacles
(e.g., boulders and fallen trees) that a canoeist may steer
around without difficulty. Kennebec Water District, 84
FERC p 61,027, 61,125-26 (July 16, 1998). There is nothing
in the record to suggest that the Stream's physical character-
istics preclude navigability when the dam is generating other
than a water depth around the islands that is lower than the
rest of the Stream. But the same record includes evidence
that the three canoeists successfully navigated down the
Stream and past the islands. For reasons already stated, the
difficulty experienced by one of the canoeists traveling up-
stream past the islands does not negate the otherwise suffi-
cient evidence. Moreover, even though the dam does not
operate all the time, thereby rendering the water level too
low to navigate year round, navigability need not be available
"at all seasons of the year, or at all stages of the water."
Economy Light & Power, 256 U.S. at 122.
FPL attempts to bolster its argument with evidence that
the test trips upon which FERC relied were made during
periods of unusual water conditions. FPL argues that this
should negate FERC's navigability finding. That is, FPL
argues that since "susceptibility of use as a highway for
commerce should not be confined to exceptional conditions or
short periods of temporary high water," the canoe test trips
do not show the stream to be navigable. Loving, 745 F.2d at
865; see also United States v. Utah, 283 U.S. at 87. True,
the evidence indicates that two of the test trips took place
during periods of high water, but that same evidence indi-
cates that the remaining test trip took place during a period
of low water. FPL's witness navigated up and down the
Stream when the Kennebec's flow was 4030 cubic-feet per
second (cfs) (down from its average flow of 5000 cfs), an event
which would have reduced the backwater effect from the
Kennebec and lowered the already low depth of water around
the islands. This is sufficient evidence that the Stream can
be navigated both up and downstream during non-optimal
water levels.
We acknowledge that the evidence of navigability is not
overwhelming. But to uphold FERC's navigability determi-
nation, we need only find that the evidence on which the
finding is based is substantial. 16 U.S.C. s 825l(b); see
Consolidated Hydro, Inc. v. FERC, 968 F.2d 1258, 1261 (D.C.
Cir. 1992). The "substantial evidence" standard requires
more than a scintilla, but can be satisfied by something less
than a preponderance of the evidence. See Whitmore v.
AFIA Worldwide Ins., 837 F.2d 513, 515 n.4 (D.C. Cir. 1988).
We therefore find that the test trips, together with the
Stream's physical characteristics, constitute substantial evi-
dence to support FERC's finding of navigability.
IV. Conclusion
FERC's reliance on test canoe trips and the physical
characteristics of the Stream, in the absence of historical or
present commercial or recreational use, is a reasonable inter-
pretation of the navigability test set forth in the Federal
Power Act and is therefore entitled to deference by this
Court. Moreover, the record includes substantial evidence to
support FERC's navigability finding. Three witnesses were
able to successfully navigate down the Stream, and the physi-
cal characteristics of the Stream support a finding of naviga-
bility. For these reasons, the petitions for review are denied.