Albany Engineering Corp. v. Federal Energy Regulatory Commission

grоund Regulating on the Hudson accept Section 8 vouchers River-Black River District, comply that it does not wish to with Sec- Intervenor. requirements would vitiate that tion 8’s No. 07-1162. legal safeguard and the it was definition Appeals, United States Court of provide. intended to District of Columbia Circuit. Because the material facts are uncon- Argued Sept. 2008. tested, they make out a facial because violation of the District of Columbia Hu- Decided Nov. Act, man we the district Rights reverse grant summary judgment court’s fa-

vor of BSA and remand for a determina- relief. appropriate

tion of

IV reasons, the foregoing

For we conclude judgment

that the tenants are entitled to

as a matter of their United law both Housing

States Act claim and their Dis- Rights

trict of Human Act claim. Columbia grant summary

The district court’s

judgment in their favor on the former is grant summary judgment

affirmed. Its

against the tenants on the latter is re-

versed, and the case is remanded for fur- proceedings opin-

ther consistent with this

ion.

ALBANY ENGINEERING

CORPORATION,

Petitioner

FEDERAL ENERGY REGULATORY

COMMISSION, Respondent argued the cause for Huang S.

William were him on the briefs petitioner. With and Rebecca Baldwin. E. Francis Frances Perry, Attorney, Federal Ener- Lona T. Commission, argued gy Regulatory were respondent. On brief cause Marlette, Counsel, Cynthia A. General Solomon, Solicitor, and Judith Robert H. Albert, Attorney. A. Senior McCarty argued N. cause Michael him on the brief for intervenor. With Conway and D. were H. Christian John McMurray. KAVANAUGH,

Before: BROWN and WILLIAMS, Judges, and Senior Circuit Judge. Circuit filed Opinion for the Court Senior Judge Circuit WILLIAMS. filed

Concurring opinion Circuit Judge BROWN.

WILLIAMS, Judge: Senior Circuit typically An will render upstream dam pre- flow more even and the downstream dictable, enabling hydropower downstream at a plants operate higher capacity. Power Farmington River Co. (D.C.Cir.1997); see 103 F.3d 11.10(a)(2). To also 18 C.F.R. enable recoup part firms to of the conferring cost of these “headwater bene- fits,” §in Congress the Federal (“FPA”), Power Act 16 U.S.C. (2006), Energy Regu- directed the Federal latory (technically the di- Commission predecessor, rection was to its here) require no change is of moment up- licensees to reimburse its downstream part “for suсh operators stream interest, annual thereon as the Commis- equitable.” (emphases sion deem question This case presents preempts whether state law over benefits, or compensation for headwater

whether, alternatively, allows states to The Hudson Regulat- River-Black River compensation ‍‌​‌‌​‌‌‌‌‌‌‌‌‌‌‌​‌‌​‌​​‌​​‌‌‌​‌​​‌​‌‌​‌​​​‌‌​​‌​‍for elements of cost mandate (the “District”) ing District is a New York “interest, maintenance, other than and de- agency state operate authorized to preciation.” Conklingville Dam and its related im- Lake, poundment, Sacandaga Great on the 10(f) § preempted FERC held state River, Sacandaga tributary of the Hud- only insofar as the state authorized law (Mechan- son. Fourth Branch Associates interest, maintenance, charges for de- and icville) v. Reg- Hudson River-Black River preciation. Fourth Branch Associates ¶ Distriсt, ulating 61,141, 119 FERC PP (Mechanicville) v. Hudson River-Black (2007) (“Order ”). 3-10 Rehearing In District, 117 Regulating River FERC 1992, FERC determined that the District ¶ (2006) (“Order”). 61,321 Thus left must obtain Conkling- licenses for both the (the question, New York state ville Dam Sacandaga and Great Lake be- states) by course extension all other free Project, cause the E.J. West a FERC li- to authorize firms to assess Dam, censee located on the Conklingville FERC licensees for all headwater im- generate used the District’s facilities power. original FERC issued an license provement fitting costs not into the “inter- September to the District est, maintenance, and depreciation” cate- gories. Albany Engineering Corporation is the successor to Fourth Branch Associates and legislative review of the text and Our as such is the FERC licensee for the Me- § history generally of the FPA Hydroelectric Project, chanicville located 10(f) must, specifically convinces us Sacandaga downstream of Great Lake. Id. accomplish objectives in order to the full of New York law authorizes the District to Congress, understood to all preempt maintenance, capital, oper- recover its state orders of assessment for headwater ating through against costs assessments benefits. See Louisiana Pub. Serv. public corporations parcels and real estate F.C.C., 355, 368-69, Comm’n v. 476 U.S. benefited the construction of dams and (1986) 1890, 106 S.Ct. 90 L.Ed.2d 369 reservoirs. N.Y. Envtl. Conserv. Law ... (“Pre-emption occurs where the state 15-2121. Under this the Dis- as an law stands obstacle the accom- trict levying has been annual assessments plishment objec- and execution of the full against downstream FERC licensees such Congress.”); Crosby tives of v. Nat’l For- Order, Albany for decades. Council, 363, 372-73, eign Trade 61,321 530 U.S. at P 11. 2288, (2000); 147 120 S.Ct. L.Ed.2d 352 25, 2006, July Albany On filed a formal Co., Inc., Honda Gеier American Motor District, complaint against with FERC 881, 1913, 861,

529 U.S. 120 S.Ct. 146 alleging that since 2002 District had (2000); Armstrong L.Ed.2d 914 v. Accred- improperly assessing been annual iting Continuing Council Educ. and for headwater Id. at P 1. benefits. for Inc., 1362, Training, 168 F.3d 1369 argued that vests FERC with the (D.C.Cir.1999). Thus we find that jurisdiction exclusive to determine the lev- unreasonable, interpretation of was el of reimbursement associated costs and we remand with such benefits. Section states: the case to FERC to con- appropriate sider remedies consistent with That hereunder whenever licensee holding. directly our the construction benefited (The files no cross licensee, District depreciation. or permittee,

work of another issue.) on that storage appeal reser- the United States of improvement, headwater voir or other require as condi- shall Commission so that the licensee tion of the licensе agency’s reviews an generally This court the owner of shall reimburse

benefited of the statutes adminis- interpretations improvements or other such reservoir standard set ters under the deferential annual part of the for such NRDC, Inc. v. forth Chevron U.S.A. interest, L.Ed.2d 694 U.S. may deem thereon as the Commission (1984). dissenting Supreme But a recent proportion The of such equitable. question into opinion has called Court by any licensee shall paid to be appropriate deference is whether Chevron The by the Commission. determined preemption. of addressing questions when affected shall permittees or licensees Bank, 1, 550 U.S. In Watters v. Wachovia the cost of pay to the United States 1559, 1584, L.Ed.2d 389 127 S.Ct. 167 as fixed making such determination (2007) (Stevens, J., dissenting) (joined the Commission. C.J., J.), Roberts, Scalia, the dissent 803(f) (emphases 16 U.S.C. “[ujnlike adminis- argued Congress, agencies clearly designed arе not trative question” is no found that “there ” of the represent the interests States.... Albany for charged District had that the result, reasoned that As a the dissent Order, 117 FERC headwater benefits. to decide the agency purports an “when 61,321 at P Insofar as New York’s healthy re- scope preemption, of federal in- statutory scheme covered some- spect sovereignty for state calls for terest, maintenance, depreciation, Id. thing less than Chevron deference.” 10(f). by § preempted found the scheme were at P 44. far as other costs Id. So past rejected argu- have in the We concerned, however, rejected Alba- agency’s that “wherever a federal ment claim. Id. at PP 49-50. ny’s preemption authority preempt exercise of will state conclusion, reaching In it character- inappropri- power, Chevron dеference single federal manifesting ized as Natural Gas Co. v. ate.” Oklahoma “ensuring partic- interest —that of (D.C.Cir.1994). 1281, 28 F.3d owners ipation project of downstream that, exception reasoned “with the We incident to the con- the financial burden authority, negative exercises of federal all storage facilities of power struction of agency legal interpretations have some Id. at P 49. FERC also a river basin.” Hence, we re- preemptive effect....” Id. authority require that it had no found jected of a “non-deference application to rescind assessments made the District to be principle” because would “have re- under color of law or to order state universally, overturning applied almost already at PP paid. funds of amounts sure, context, to be Chevron.” Id. The 55-56. agen- scope involved an issue—the сy’s jurisdiction only implicitly was Albany sought rehearing, which FERC —that effect, not, here, court, preemptive as an ex- appeals now to this denied. undisputed of whether objecting rulings press to all the above other issue preemptive did has effect. Okla- finding than FERC’s Company Natural also of state-law mandates reim- homa Gas preempt interest, question of whether or open course left bursement pre- FPA, that avoids Neither the overall agency an decision function of the emption of a state law—as is the case with nor the sense of allows us to infer deserving still FERC’s decision here —is meaning. such a deference. Chevron Supreme extensively The Court has ana- require us Ultimately, this case doesn’t lyzed the which “circumstances culminated applicability of Chevron to to resolve the passage in the of the Federal Watеr Power decisions, “we would agency preemption Hydro-Elec. Act in 1920.” First Iowa interpretation even under vacate [FERC’s] Comm’n, Coop. v. Fed. Power 328 U.S. the more deferential Chevron standard.” 152, 180, 90 L.Ed. 1143 Authority New York and New Port (1946). It found that Act was “the Dep’t of Transp., 479 F.3d Jersey outgrowth widely supported of a effort of (D.C.Cir.2007). short, In we will assume the conservationists ‍‌​‌‌​‌‌‌‌‌‌‌‌‌‌‌​‌‌​‌​​‌​​‌‌‌​‌​​‌​‌‌​‌​​​‌‌​​‌​‍to secure enactment of of FERC that its conclusion is favor a complete regulation scheme national entitled to Chevron deference. promote which would comprehensive famil framing Another issue is the development of the water resources of the See, presumption against preemption. iar Nation.” (emphases Id. Con- Co., e.g., Geier v. American Honda Motor gress’s merely prevent intent was “not to Inc., 1236, (D.C.Cir.1999), 166 F.3d 1237 navigation,” obstructions to but rather to 861, 1913, aff'd, 529 U.S. 120 S.Ct. 146 “secure enaсtment of a comprehensive de- (2000). 914 But this presumption L.Ed.2d velopment through of national resources” if, today, as we hold the overcome control over the “engineering, economic preemptive purpose court finds that the of and financial hydropower soundness” of manifest.” “clear and Congress was Gei 172, 180-81, projects. Id. at 66 S.Ct. 906. er, Medtronic, (citing 166 F.3d at 1237 Inc. proceeded It licensing to find Iowa’s Lohr, 470, 485, 2240, v. 116 518 U.S. S.Ct. preempted: scheme (1996)). 135 L.Ed.2d 700 A authority, duplicate dual final with a system permits of state and federal li- start We with FERC counsel’s conces- required censes for each project, would argument sion at oral that under Compliance be unworkable. the impose FERC itself could not requirements duplicated sys- of such a “interest, other headwater benefits than licensing nearly tem of would be as bad. depreciation.” and Oral Ar- (internal 168, quotations Id. at 906 66 S.Ct. gumеnt Rec. 15:10-15:27. The concession omitted). Given the commitment to com- surely certainty was inevitable. As the of be, prehensive regulation, preclu- federal and other plain plain costs was as could Congress’s express provision licensing authority, for three sion of dual it is hard types hardly leave could room for FERC imagine why Congress to would have coun- of, say, op- mandate of reimbursement the disparate tenanced state reimbursement dispute erational in here. The max- costs schemes, calculated on different bases and expressio im unius est exclusio alterius hy- potentially imposing severe costs limits, plumb has its we need not them states, dropower in firms other down- here. enacting jurisdiction. This stream precisely seems like the sort of hetero- then, that al- position, must be geneity complete conflict that a and thоugh Congress would not allow it to costs, comprehensive expected scheme would be of types mandate collection other of freely. prevent. it meant to allow the states to do so 1076 States, Rodriguez v. United 480 mean that the said this does not

Of course 1391, 522, 526-27, every state exercise 107 94 precludes FPA U.S. S.Ct. hydro- to federal marginally (1987), related power L.Ed.2d 533 495 licensees. power California legislation pursues purposes But no 496-97, 2024, 490, 110 S.Ct. U.S. competing Deciding what at all costs. (1990). Thus, still we must L.Ed.2d or will not be sacrificed to the values will language legisla- specific examine the objective particular achievement of determine if there history tive very legislative choice— essence Congress intended is “clear evidence” rather than effectuates frustrates preempt headwater legislative simplistically intent assume 10(f). by § costs nоt covered pri- the statute’s that whatever furthers earlier, dis- mentioned As we objective the law. mary must be legislative the text and histo- cerned from 525-26, (emphasis in Id. at 107 S.Ct. 1391 interest,” ry single “federal original). See also Bd. Governors par- namely “ensuring interest Fin. Sys. Fed. Reserve v. Dimension project downstream owners ticipation of 373-74, 681, Corp., 361, 474 U.S. financial incident to the con- burden Vencor, (1986); Inc. v. 88 L.Ed.2d 691 facilities of power storage struction of Ins., 211 F.3d Physicians’ Mut. Order, a river basin.” (D.C.Cir.2000). 1325-26 at P 49. If that federal interest were clearly The text of reflects one, to under- it would make sense just congressional balancing. such The 10(f) leaving § states free to load stand of costs recovera types limitation on the operators with costs up the downstream ble, that such costs be and the insistence specified categories. the three outside manifest a “equitable” deеmed if such a contribution to assuring But congressional deliberate decision bal had been Con- upstream owners’ burdens goal compensating upstream ance the of intent, why gress’s it is hard to see sole (and encouraging owners thus their invest Congress would have limited FERC’s own ment) protecting and that of downstream “interest, maintenance, and authority to (and their invest encouraging ones thus depreciation,” as FERC’s own concession ment). itself, provision in own its expressio uni- application and the sound of § invokes for reimbursement under make it did. advances no us clear “equitable” support its limita the word argument why FERC would be less tion of headwater benefits to “85 than the to determine well suited states energy gains.” of the of the percent value opposed equitable operating expenses, as 11.11(b)(5). § also Order interest, 18 C.F.R. See 453, 24,314, Fed.Reg. rea- No. 51 at charges. [1986-1990 Nor does FERC offer that Congress Regs, son would be concerned Stat. & at Regs. Preambles] FERC equita- it only charges 30,310 FERC set deemed (addressing of whether the issue ble, yet to collect would leave states free cap provided operators downstream ‍‌​‌‌​‌‌‌‌‌‌‌‌‌‌‌​‌‌​‌​​‌​​‌‌‌​‌​​‌​‌‌​‌​​​‌‌​​‌​‍they charges regardless of whether met incentives); Fed.Reg. 49 1067- adequate judgment equity. FERC’s of their 01, Proposed Regs.] [1982-1987 1070 32,850 Regs, (explaining & at FERC Stat. an in- approach here manifests total purpose cap that the of a terpretative long standing, error of one of “inequitable was to avoid the result” a apparently will never die: to treat gains than charges “larger the value of object as primary precipitating statute’s or year”). for an object. Supreme project As the Court individual its sole

1077 10(f) history §of is con- legislative “administering storage projeсt The that af- interpretation. Several sistent with this variety fects downstream within uses speaking support representatives that state.” Id. stressed that was meant to evidently legis- believes that the Rep- for limited reimbursement.

provide history’s lative failure to “disrup- mention Dill, speaking in favor of the resentative espies tion” of the sort it here renders its 10(f) amendment, explained: interpretation §of reasonable. But power Take the Columbia River sites it simply “not the law that a statute can power sites on the streams that have no effects which are not explicitly into it. If a flow dam is built to estab- legislative history.” mentioned Pitt- a reservoir pow- lish for water to furnish Sebben, Group 105, ston Coal 488 U.S. streams, er on one these it furnishes 115, 414, (1988). 109 S.Ct. 102 L.Ed.2d 408 for all dams water below and whoever Moreover, “The relative importance to the may happen power tо build a dam on a State its own law is not material when site below should contribute to the cost law, there is conflict with a valid federal reservoir proportion dam in for the Framers of our pro- Constitution received. This amendment vided that the federal prevail.” law must very I provides thing, and most Bowsher, 332, Arizona v. 935 F.2d 335 earnestly hope it adopted. will be (D.C.Cir.1991) (quoting Fidelity Federal (1918) 9,916 Cong. (emphases 56 Rec. Cuesta, Savings & Loan Ass’n v. de la Raker, Representative also 141, 153, U.S. 73 L.Ed.2d amendment, speaking support (1982)). down- require stated would stream licensees to contribute to the cost Though FERC found that the District an upstream project expense “to the assessing charges was for headwater bene- [sic; subsequent works ‘extent’?] fits, 61,- Rehearing, Order on are original benefited virtue of the repeatedly at P stressed the work.” Id. here, nature “unusual” of the “situation reasoning in its orders here upstream storage which an reservoir is none signs observed of these of careful owned a state and is dependent on Rather, congressional balancing. state-authorized to cover assessments its simply legis- Commission stated “the costs,” operations id. at P 41. See also history sparse lative of section and ¶ Order, 61,321 38; at P Order Congress’s does not otherwise reveal rea- ¶ 61,141 on Rehearing, 119 FERC at P 32. limiting sons for reimbursable costs to in- But applies terms “whenever terest, maintenance depreciation.” and directly licensee hereunder is benefit- Order, 61,321 at P 45. Con- ed”—thus in all cases when licensees re- sequently, could see no reason to ceive headwater benefits from the con- prevent the District collecting from for struction efforts of licensees. interest, maintenance, than charges other attemptеd The Commission’s distinction depreciation, preventing and since that col- public ownership between and private would, it thought, “disruptive” lection to thus irrelevant to the question of whether the District’s current assessment scheme. preempts or not state laws mandat- Id. at P emphasized 50. FERC that the ing compensation for headwater benefits. expenses District “has that do not fall 10(f) preempts §If state head- charges for categories specified by within the section benefits, 10(f),” water then it does so for both and if it were unable to assess such difficulty costs the District private public equally. would have actors compre- congressional intent to create Congress’s intended disrupting Besides develop- recipient hydropower in- of provider hensive scheme between balance terests, understanding of are worth discuss- ment. Two such issues Commission’s complex First, issues naive in its generate quite would here. FERC is ing FERC-ap- with meshing pur- state would assumption that because States the absence (i.e., ones. proved costs portedly charge for “other” parties, uses its between agreement interest, maintenance, and costs other than Energy Gains model Benefits Headwater no conflict there could be depreciation) interest, allocate the to could use authority. States with FERC beneficiaries to downstream costs, for accounting methods of different energy to the value of proportion any characterization arbitrarily minimizing beneficiary enjoys, calculated as each gains interest, maintenance, depre- or of costs as obtaining equivalent an “the cost duplicate either ciation. This would invite likely electricity from the most amount of collection from downstream owners or source,” subject and of course alternative accounting an mess that some creation of 18 C.F.R. of 85% of that value. cap to the or a court—would have institution —FERC 11.11(b)(5). precisely illustrates to sort out. This case initial Or- problem. such a After FERC’s methodology is rather dif- The District’s down, adopted der was handed the District study under Using ferent. it from apply to funds received resolution hydropower pay owners 95% which Project against the Erie for the E.J. costs, West appears apportion to the District’s interest, full mainte- District’s costs for project owners among hydropower them nance, depreciation. Resolution private mixture of settle- on the basis of a Accounting Policy pro E.J. West and a Establish an agreements ment Fees, J.A. Application on the amount of head E.J. West Water chаrge rata based result, property as a as the District sees at the individual downstream 498-500. As it, Albany total head on the water- all are now for percentage of the assessments interest, way. Answer Hudson River-Black than maintenance and costs other Compl. by District Regulating River Id. at The resolution depreciation. (Mechanic- Fourth Branch Associates provides change further “shall (filed 2006); ville), Sept. Joint 7-8 impact” no financial or economic have (“J.A.”) 258-59. Appendix and others. apportionment cost though Albany Id. at 499. even acknowledged, “There is no As FERC amount currently pays the exact same that these differences between the doubt in change policy, did before this District on Re- assessment schemes exist.” Order expense proving will have to take on the ¶ 61,141 P hearing, at 33. in charges that the district’s are at least differences, light Even in of these howev- interest, maintenance, “really” for part er, the argued FERC that because “New potential elasticity the depreciation; given charges for other York scheme assesses context, cost-accounting in such a expenses, based on a different method of likely heavy beyond burden would be benefits,” the administration determining —far might anything suppose Congress one can the New York law and both approved. have Id. at P 33. problematic. not be would Second, if the cost characterization even authority headwa- But such a dual over resolved, easily FERC’s issue could be assessments, especially ones ter based interpretation of would allow states in a methodologies, different would result downstream apportion that would undermine the costs between morass of issues operators in a manner that results in ^[*] * * in of the actual benefits charges far excess doWe not reach FERC’s decision to (not cap). received to mention the 85% neither order Albany’s past refunds for Albany argues present that this issue is payments to the District nor convene a A this case as well. District-commissioned settlement FERC reasoned conference. report from 2003 concluded that the Me- grant does the “authori- project chanieville receives 0.11% of ty independent to address actions taken operations. of the District’s benefits an licensee to charges collect (Report of Gomez and Sullivan J.A. 89 under color of state law” absent a headwa- P.C.). Yet, Engineers, the District contin- ter benefits investigation. Order on Re- ¶ 61,141 hearing, And, ues to assess Mechanicville at a rate of P at 55. though plainly 2.7% of the District’s bud- had to or- approximatеly (Hudson conference, der settlement it reasoned get. J.A. 304-309 River-Black that such a conference District Annual would be “more Regulating River Assess- productive” in the context of a headwater Statutory Beneficiaries for the ments entries). investigation. Id. at P 2003-2007, 58. parcel Years Fiscal holding Our preempts Regardless accepts of whether one all state headwater benefits assessments findings of the District-commissioned re- materially changes the context for FERC’s point port, the remains FERC’s hold- ‍‌​‌‌​‌‌‌‌‌‌‌‌‌‌‌​‌‌​‌​​‌​​‌‌‌​‌​​‌​‌‌​‌​​​‌‌​​‌​‍consideration of both these issues. ing charge opera- would enable states to Whereas FERC formerly District received, tors excess of the benefits believed that the District was free to as necessarily thus in excess of FERC’s 85% sess for certain costs under the cap. Possibly might respond crea- law, authority of holding state our makes tively by reduсing “equitable” charge clear that the District never had au such interest, maintenance, thority any compensation to exact from response to state action. But Albany’s for headwater benefits. might there well instances reduc- where incentives to seek a headwater benefits enough tion to zero was not to hold the investigation, the cost of which is shared charge of FERC-computed below 85% among parties, all id. at P 58 n. are benefits. Even where FERC could thus materially by our holding, increased since statutory requirement meet the longer the District can no avoid or offset charge “equitable” be one deemed by classifying an adverse outcome costs as costly the exercise would entail Furthermore, operational. FERC based dispute resolution. to order a con decision not settlement holding would undermine pаrt opposition ference in on the District’s Congress’s clear intent to limit the total at P But proceeding. to such charges imposed amount of on downstream just Albany’s changed by incentives are limit, operators. Breach of that combined preemption holding, our so too are the (and with the cost-characterization issues District’s, expect it can no to longer as others), leads to conclusion perhaps the Albany, costs from operating recover its § interpretation that FERC’s of or without a benefits in headwater purpose would conflict with the FPA’s to vestigation. light changed In of these cir cumstances, provide comprehensive legislative appropriate for a we find it to re govern hydropower scope scheme to the nation’s to to consider the of its mand FERC development. authority appropriate to craft remedies. 1080 (“The is correct colleague Even if our

See, § Com- 385.601 e.g,, 18 C.F.R. clarify may simply that on remand FERC may ... convene a conference mission was in fact any holding at on remedies proceeding in a that participants the independent, FERC’s current any related to the con- meant to purpose for be time explicitly refer disposition proceeding”); reasoning of the on remedies duct or (“The § Com- actions under color of § FPA 16 U.S.C. 825h ences the District’s power perform partial have mission shall law as at least reason state issue, make, acts, prescribe, and to it no remedial finding and all that has FERC’s rules, orders, amend, judicial economy and rescind such authority. over Concerns necessary or may it find regulations as pre that we avoid do not dictate FERC’s the carry provisions оut appropriate if it even later emption determination chapter.”). relief, justification to deny find different agrees the reviewing court that “[i]f concurring colleague ar- separately Our law, it will set agency misinterpreted “intended its remedies gues that FERC action and remand the agency’s aside the independent from its to be determination (like agency a new though case—even determination,” a re- and as preemption mistrial) later, in the jury might after a sult, judicial economy” we purposes of “for discretion, its lawful reach exercise of scope preemption. need decide the not for a different reason.” Fed same result at Concurring Op. 1084. The concurrence Akins, v. 524 eral Election Commission in topic conclusion on sentence bases this 11, 23, 1777, 141 L.Ed.2d 10 U.S. order which FERC stated FERC’s (1998) (citing Chenery Corp., 318 SEC by preempted to the extent that “even (1943)). 454, 87 L.Ed. 626 U.S. S.Ct. 10(f), authority over the we have no section here, analysis especially fitting seems This Rehearing, on actions.” Order District’s parties the incentives of the to seek ¶ where 61,141 very at P 55. The investigation' a headwater benefits sentence, however, illustrates next —which the concurrence claims is the basis for could not have meant that it had analysis in reading FERC’s remedies as literally authority, goes on to no materially dependent affected might require District to detail what —are misinterpretation FERC’s FPA. Id. The concurrence do. observes authority” claim that it has “no closing, points Before a few on cases the would, literally, “obviously if read be ridic- power on FERC’s parties have invoked Op. at Concurring ulous.” First, on order refunds: FERC’s reliance Agency Transmission Northern Further, FERC asserted that Califor- (D.C.Cir.2007), nia v. 495 F.3d 663 give authority us to address “does misplaced. There we addressed is- independent actions taken an authority had sue of whether FERC to collect color licensee under City from the of Vernon for order refunds law, that the state even if we determine overcollection its transmission revenue is, by the FPA.” part, preempted law requirement. Id. at 665. We held 61,141 Rehearing, Order authority not have FERC did such because (emphasis language at P 55 This City municipalities such as the of Vernon open possibility would seem to leave explicitly exempted from FERC’s were charges may that where not made un- FPA law, authority refund under der state because state law is color of 824(f). Id. at 674. No ex- U.S.C. such preempted entirety, in its fact here. As a emption appears present may grant FERC some over the subject the District is FERC District’s actions. licensee jurisdiction. explain FPA Part I 16 remand and let FERC bеtter FERC’s full itself § 799. anything U.S.C. before we decide more. misplaced Albany’s is reliance Equally deep problem The is that there is a Lockyer rel. ex logical disconnect between the front and California Cir.2004). (9th the Ninth There F.3d 1006 back ends of FERC’s orders. The reason- purportedly that addressed rates Circuit ing underlying parts the two seem to be in FERC-approved with the “mar- complied (1) conflict. In particular, FERC set forth which, system,” ket-based tariff but Cali- (2) lengthy preemption analysis, but then actually manifested “artifi- alleged, fornia explained that “even to the extent that [the cial on a massive scale.” Id. manipulation system] District’s preempted assessment is scenario, at 1014. Under such a 10(f), by section authority no [FERC] ha[s] understandably author- court saw FERC’s over the District’s actions.” Order on Re- ity to enforce the filed-rate doctrine as ¶ 61,141 hearing, 119 at P If FERC remedy it to order refunds to enabling explanation this meant that alleged de facto violation of the doctrine. authority lacks compel its licensees to at The no means Id. 1015-16. decision Act, follow the Federal Power then that is compels finding that FERC can order obviously ridiculous. But if FERC meant collected the au- refunds of rates under subtle, something very more which it well thority preempted by of a state law that is have, might adequately then has not a federal statute. explained itself. appropri- Thus leave the issue of an we record, As I read the I conclude FERC remedy on re- ate for FERC to resolve intended its remedies determination to be mand, light pre- of the much broader independent preemption from its determi- emption compared that we find to what simply nation. I do not know how else to FERC assumed. it, Rehearing. read FERC’s Order on In frankly acknоwledged it found the system” “District’s assessment not “entire- judgment FERC’s below is therefore re- 10(f),” ly compatible with section but none- part versed in and remanded for further relief, Albany any theless denied even for proceedings not inconsistent with this acknowledged incompatibility. judgment. remands, majority believing The its hold- So ordered. ing requires preemption total context, materially changes this case’s but BROWN, Judge, concurring in Circuit orders interpretation does judgment: jibe comfortably not with what FERC separately I am loath to write from the that [the said: to the extent Dis- “[E]ven majority’s opinion, well-penned particular- system] preempted by trict’s assessment ly given oft-befuddling pleadings section no [FERC] ha[s] But it record this case. is because over the District’s actions.” writing separate- that I am confusion struggled I have what understand ly. adequately explained FERC has not by saying preеmption FERC meant does wrought. what it has like the ma- matter, I and this is what believe order, jority, I a remand I believe might have intended: re- yet willing say am not that FERC’s quires headwater benefits assessments irredeemable, at orders are or that 10(f)’s up- licensees to paid from downstream scope time we need resolve the Instead, “interest, mainte- preemption. I think we should stream licensees words, if District sends a “head- nance, equitable. other the to be depreciation,” However, only benefits de- a headwater water benefits” bill to for without settlement, FERC does not costs, termination or but the District is enti- “operations” appropriate fees are under know what tled under to the exact same much it does not know how “interest, money mainte- amount A beneficiary is benefited. downstream nance, depreciation,” then there would investigation' headwater benefits preemption. —-and no factual need to discuss only can occur if a thus determination — under only It is when a fee—assessed request, it. a requests licensee Without in amount greater color of state law—is determination; a deter- there is no without by § that a required than is what mination, authority to FERC has no forbid preemption must be resolved. question upstream charging an from fees licensee Second, need not conduct a head- FERC licensee, because it does on downstream investigation on its own ac- water benefits repugnant fees to not know whether position, clearly cord. This is FERC’s but assessed, being are and conse- it is a curious one under the statute.1 is quently question preemption pre- Nonetheless, in this case has chal- no one mature until FERC has determined head- lenged interpretation FERC’s nаrrow Thus, said it had water benefits. FERC role, likely it that no is licensee prevent storage project to “no all, expected ever will. After if the benefit attempting from to assess from investigation of a headwater benefits is projects downstream under color of state costs, a greater expected than the licensee law and in the absence a Commission not, if request will one. But no licensee headwater determination.” Or- benefits will want one. ¶ der, 61,321 (emphasis at P 55. however, An interesting thing happens, when FERC does not conduct a headwater Laying ques- aside for the moment the investigation, but instead allows proposed logic tion of whether this is actu- settlement, negotiate the licensees to (or is, ally position if whether only conducting investiga- with an reasonable), analysis for this to be inter- requests tion if one of the licensees it. A credible, nally things a couple of must be created, go First, “windfall” is which must true. it does matter how an upstream either the or the downstream upstream licensee labels a headwater ben- In charge, efits the amount. licensee. Who receives the windfall de- licensee, must, 10(f) says upstream 1. Section “whenever licensee from an as a directly by ... benefited construction licensing condition that downstream bene- work of another licensee ... the Commission ficiary, ensure that the licensee is require shall as a condition of the license that equitably compensated, licensees shall licensee so benefited reimburse the paying any requisite FERC for the costs of interest, ... owner of such reservoir investigation. headwater benefits But FERC ... as the passive reads for itself a role. Unless one of Then, equitable.” Commission deem requests licensees headwater benefits proportion ... “[t]he such shall be investigation, nothing, ... even FERC does determined the Commission. The licen- when the licensees are in conflict as to the pay sees ... the United shall States the Order, equitable assessment. See making cost of such determination as fixed 61,321 (“[W]e at P 55 do not undertake a the Commission.” Id. headwater benefits for benefits determination says Three times this short statute “shall.” storage project from a non-federal in the ab- requires that if a down- seems so.”). request sence of a to do stream licensee receives headwater benefits by quo (i.e., is benefited the If the status is by on which licensee reversed pends quo. allowing any charges status until a headwater investigation happened benefits has or the illustrate, hypothetical. consider this To settled), upstream licensees have then the a there is Assume river on which licensee receives the windfall: it will re- licensee, upstream and one down- one $45,000 quest something year— less than a licensee, they per- both have stream $44,000 say, other, the downstream licen- fect information about each —from (the $20,000 benefits, much a in- see about how headwater benefits headwater vestigation will cost.2 Assume further plus a share of the cost of a headwater is, determination). that a downstream licensee and will be request benefits If the is $20,000 perpetuity, year a benefited that, greater than the downstream licensee upstream expenditures from the licensee’s will seek determination. But long as “interest, deprecia- on that, charged the amount is less than the 10(f)— clearly by § tion” —costs covered upstream licensee know will investiga- but that a headwater benеfits by threat the downstream licensee go upstream tion will cost the and down- investigation FERC for an empty. is It $250,000 stream licensees each. For sim- economically would not be rational. under the plicity, assume upstream the gains licensee the windfall: “equitable” compensation rate of between the amount above the actual benefits. upstream downstream and licensees for Assuming that not FERC need under- (in fact, headwater benefits is 100% the investigation take a headwater benefits lower, percentage is but that is of no con- accord, again which no party own has that the sequence). Next assume interest contested, then placement which 10%, permits rate is and that state law quo status is more reasonable ‍‌​‌‌​‌‌‌‌‌‌‌‌‌‌‌​‌‌​‌​​‌​​‌‌‌​‌​​‌​‌‌​‌​​​‌‌​​‌​‍under feder- upstream the licensee to assess benefits If al law? a downstream licensee is fa- the downstrеam from licensee. quo, vored the then it would status be If, in hypothetical, quo the status “directly by the benefited construction (i.e., beneficiary favors the downstream licensee,” work of another but “the licen- allowing any until a headwater see so benefited” would not “reimburse investigation happened has or the the owner of such reservoir” for those settled), up- licensees have then a rational 10(f). benefits, contrary to If the status request a stream licensee will not determi- reversed, quo preference upstream the By $250,000, investing nation. the But, impor- licensee the receives windfall. upstream licensee will receive annual pay- tantly, preferable that result for the $25,000, ments of more than would re- compared downstream licensee as to the requested ceive if it a determination. The possibility alternative of universal headwa- this, downstream licensee will know ter benefits determinations. And because thus, conversations, in settlement will upstream licensee is the creator of the agree pay nothing, because it will know benefit, it makes some intuitive sense upstream licensee has no credible goes the windfall to it. Or at least that threat. The result is a windfall for the might reading reasonable of the stat- downstream licensee: it does not have to all, if compensate upstream licensee at all. ute. After a downstream licensee course, life, information, imperfect obtaining in real accurate then this Of there is problem: uncer- information. But unless there is cause to not be much of if same tainty equation, believe that either or down- is built into both sides systematic advantage stream licensee out. has it cancels half, the most benefits, nothing offered every- then headwater receives compen- analysis. pieced togeth- licensee is not I have day upstream cursory law. is a violation of federal may sated I have been FERC’s er what believe rationale, enough I am not confident hand, So, if to the case at what back say agency’s path may “the rea- even to com- Albany’s responded FERC had sonably Transp., Bowman be discerned.” really simple? by saying something plaint Inc., Freight Sys., Inc. v. Arkansas-Best Albany right if that these “Even is 438, 42 L.Ed.2d get not 419 U.S. may preempted, in fact be we will (1974). Instead, I believe FERC requested has while involved until investigation, pre- because that something headwater benefits meant when it said certain how much the we do not know emption did not matter to its decision to for 10(f). to under With- District is entitled relief, deny Albany may I be and while District enti- knowing out how much the is guess, an eduсated I do not able to hazard 10(f), do not know tled to under we saying in this is what feel comfortable any charges there are even be- whether have meant. Picasso FERC must Pablo yond already is entitled those District they “If I will take purportedly spit, said to, so, matter, may there no factual be my spit great and frame it as art.” Like- preemption at all.” On need to discuss here, I if has wise do know FERC review, preemption. we would not rule on argument, or a Ror- plausible offered is that My understanding of the record schach inkblot. I essentially have said what FERC If And it matters what FERC meant. outlined, just only difference have say preemption intended to FERC holding tongue its on being that instead a headwater bene- was irrelevant without gave its Unfor- preemption, FERC view. determination because until there is fits tunately, giving preemption its view on determination, orders, no one knows whether un- the front-end of its FERC logic analysis: requested back-end the District has fees it is not dermined the preemption premature. 10(f), might entitled to under then there no court to need decide whether instance, saying that it is For instead denying Albany’s request- FERC erred irrelevant how an licensee labels analysis preemption ed relief because its it its headwater benefit fees because Instead, awry. if went it would be as greater matters whether the amount nothing preemp- said at all about actually than what is due under purposes judicial tion. econo- length preemp- at expounded Imy deciding would remand without tion, treating operations costs as different “interest, maintenance, scope preemption, explain to let FERC than those for anew, depreciation,” explaining why opera- itself and better. preempted.

tion costs are not In other

words, actually ques- answered the answered,

tion need not have did way in a

so contradicted the most

plausible why reason an antecedent head- might

water benefits determination have That

mattered. is incoherence.

Next, why explaining instead of a head- required

water benefits determination was Albany’s

before it would intervene on be-

Case Details

Case Name: Albany Engineering Corp. v. Federal Energy Regulatory Commission

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Nov 28, 2008

Citation: 548 F.3d 1071

Docket Number: 07-1162

Court Abbreviation: D.C. Cir.