City of Fremont v. Federal Energy Regulatory Commission, Pacific Gas and Electric Company, Respondent-Intervenor. Northern California Power Agency v. Federal Energy Regulatory Commission, Pacific Gas and Electric Company, Respondent-IntervenorCity of Fremont v. Federal Energy Regulatory Commission, Pacific Gas and Electric Company, Respondent-Intervenor. Northern California Power Agency v. Federal Energy Regulatory Commission, Pacific Gas and Electric Company, Respondent-Intervenor
Larry D. Gasteiger, Federal Energy Regulatory Commission, Washington, DC, for the respondent.
William J. Madden, Jr., Winston & Strawn, Washington, DC, for the respondent-intervenor.
On Petition for Review of an Order of the Federal Energy Regulatory Commission.
OPINION
CANBY, Circuit Judge.
Pacific Gas and Electric Co. (“PG & E“) operates a hydroelectric plant in California under a fifty-year license due to expire on September 30, 2003. After properly giving notice of its intention to apply for a new license, PG & E missed the application deadline of October 1, 2001, by one day because of a mail room error. The Federal Energy Regulatory Commission (“FERC“) was generally merciful: it did not accept the late application for a regular new license proceeding, but waived its regulations to permit PG & E to compete, with an incumbent‘s preference, for a new license with any other competing applicants in a subsequent “orphan” license proceeding. The City of Fremont and the Northern California Power Agency (“NCPA“) petition for review of FERC‘s decision, contending that PG & E should have been disqualified or, at the least, should not have been accorded an incumbent‘s preference. We deny the petition for review.
I. FACTS AND PRIOR PROCEEDINGS
PG & E‘s Untimely License Application
Since 1953, PG & E has been licensed by FERC to operate the Poe Project, a hydroelectric project in Butte County, California. The license is set to expire on September 30, 2003. Under Federal Power Act (“FPA“)
Section 15(b)(1) of the FPA required PG & E, as the existing licensee, to notify FERC whether it intended to file an application for a new license at least five years before the license expires. In 1998, PG & E timely filed notice of its intent to apply for a new license for the Poe Project. FERC issued public notice of PG & E‘s intent pursuant to
Under
FERC‘s January Order
In an order dated January 16, 2002, FERC refused PG & E‘s request, stating that such an action would defy the congressional intent behind the deadlines set by the FPA. 98 FERC ¶ 61,032. FERC accordingly determined that the Poe Project was an “orphan,” a status that results when a licensee files a notice of intent to file for relicensing but thereafter fails to file a timely application, and no other applicant files by the deadline. Ordinarily, under FERC regulations, an incumbent licensee is not permitted to compete for a license on an orphaned project. See
After FERC issued its January order, Fremont intervened and sought rehearing along with NCPA. The rehearing was denied in an order of April 11, 2002, and a new deadline for notices of intent to apply for the license was set for three months thereafter. Fremont, NCPA, Butte County and PG & E each filed a timely notice of intent to apply for the license.
Ninth Circuit Proceedings
NCPA petitioned for review of the January FERC order. Fremont petitioned for review of FERC‘s April order denying rehearing. NCPA also appealed FERC‘s April order denying rehearing, and moved to intervene in Fremont‘s appeal. This court granted NCPA‘s and Fremont‘s joint motion to consolidate all three petitions. We granted PG & E‘s motion to intervene in all three petitions on behalf of FERC.
FERC moved to dismiss all three petitions for lack of jurisdiction on the ground that the orders in question were not “final” and so were not immediately reviewable. This court denied FERC‘s motion to dismiss without prejudice to FERC‘s renewing the jurisdictional arguments in its answering brief.
II. DISCUSSION
The petitioners raise three arguments on appeal. First, they contend that FERC does not have the authority to permit PG & E to compete in the orphaned project proceedings, because
Jurisdiction
Under
An agency order is final when it “imposes an obligation, denies a right, or fixes some legal relationship as a consummation of the administrative process.” Papago Tribal Util. Auth. v. FERC, 628 F.2d 235, 239 (D.C.Cir.1980) (internal quotation and citation omitted). FERC‘s challenged orders determine who can apply for the license, and the terms on which those applications will be considered. FERC‘s decision to grant PG & E incumbent preference affects the legal positioning of the parties competing for the license. Because the FERC orders attach legal consequences to the future Poe Project proceedings, they satisfy the finality prong of our analysis. See id. (holding that an order “which attach[es] legal consequences to action taken in advance of other hearings and adjudications that may follow, the results of which the regulations purport to control” is reviewable) (citing Columbia Broad. Sys., Inc. v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942)).
The second requirement is also met: if FERC‘s orders were not reviewed, the petitioners would likely suffer irreparable harm. Although it is true, as FERC contends, that the petitioners might be awarded the license under the rules established by FERC in its January order, the rules, if faulty, prejudice the petitioners in some ways unlikely to be undone. The practical consequence of the order is that the petitioners must engage in the uphill task of competing for the license against an incumbent PG & E, whose application will be treated as a benchmark. See id. at 239 (“The reviewability of an order must ... be determined by reference to its practical function and consequences“). Indeed, it is entirely conceivable that the presence of PG & E with an incumbent preference will forestall one or both petitioners from investing the large sums necessary to prepare competing applications, thus losing the opportunity for any further judicial review.
Finally, judicial review at this stage does not impinge on FERC‘s discretion. While this court does not have jurisdiction to review agency orders where such review would necessarily infringe on the statutory role of the agency, see id. at 242, this case involves significant issues of statutory interpretation that are not the exclusive province of the administrative agency. See The Steamboaters, 759 F.2d at 1388. We therefore reject FERC‘s contention that the petition must be dismissed for lack of jurisdiction.
Standard of Review
We review decisions by FERC to determine whether the agency action was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. See Administrative Procedures Act,
The FPA Did Not Require Disqualification of PG & E
The petitioners contend that
Section 15 governs “new” licensing procedures when the United States does not exercise its right to take over an expired license. Under
In 1989, FERC exercised its authority to fill gaps left by Congress and promulgated regulations,
The petitioners have no quarrel with these regulations as written. They argue, however, that in waiving the disqualification of the incumbent specified by these regulations, FERC violated the statutory application deadline contained in
The Committee, in recognition of the applications pending or about to be filed, has provided FERC authority for reasonable adjustments of these filing deadlines consistent with the objectives of these deadlines. Failure to meet the deadlines must prejudice the affected entity. FERC has no authority in the bill to waive the deadlines or to find reasons for granting exceptions, grace periods, or otherwise recognizing excuses.
H.R.Rep. No. 99-507, at 36 (1986) reprinted in 1986 U.S.C.C.A.N. 2496, 2523.1 This passage and the other points urged by the petitioners, however, illustrate only that Congress intended § 15(c)(1) to be strictly enforced in ordinary new licensing proceedings. As FERC points out, it did enforce the deadline against PG & E when it refused to accept PG & E‘s late application for purposes of a regular new license proceeding (in which PG & E would have been the only applicant) and declared the project orphaned.
Indeed, the petitioners’ argument about the meaning of § 15(c)(1) proves too much. Section 15(c)(1) applies to ”each application for a new license,” not just the applications of incumbent licensees.
We reject the petitioners’ argument that FERC‘s waiver in this case renders the deadline of § 15(c)(1) nugatory because an incumbent who fails to apply on time will simply be able to apply later in an orphan proceeding. Ample incentive remains for an incumbent to meet the deadline of § 15(c)(1), and there is no lack of penalty for failure to do so. An incumbent who fails to file by the deadline of § 15(c)(1) may find that another applicant has filed an application, which will prevent the project from being orphaned and will result in new license proceedings from which the incumbent will be excluded. Even without that prospect, there is reason to meet the deadline. Here, PG & E‘s failure has precluded it from a new license proceeding in which it would have been the only applicant, and replaced it with an orphan proceeding of less certain outcome.2 In sum, FERC‘s waiver in this case did not nullify the effectiveness of § 15(c)(1).
We conclude, therefore, that the FPA did not preclude FERC from waiving its regulations to permit PG & E to compete in the orphan proceeding. The next question is whether that waiver, or FERC‘s recognition of an incumbent preference for PG & E, was “arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.”
FERC Did Not Abuse its Discretion
FERC Can Waive Its Own Regulations
In its January order, FERC concluded that, while § 15(c)(1) prohibited FERC from accepting PG & E‘s untimely relicense application, the only provisions which prevented PG & E from competing for the resulting orphaned project were FERC‘s own regulations,
The Waiver in This Case Was Not an Abuse of Discretion
Whether FERC soundly exercised its discretion in waiving its orphaned project regulations to allow PG & E to compete for a new license for its own project “depend[s] on the circumstances of the case as reviewed by the Commission.” Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629, 636 (D.C.Cir.1984) (emphasis omitted) (quoting Municipal Elec. Util. Ass‘n v. FPC, 485 F.2d 967, 973 (D.C.Cir.1973)). FERC‘s conclusion that there was good cause to waive the incumbent bar was well supported by the circumstances. FERC pointed out that the reason the regulations excluded incumbent licensees from competing for orphaned projects was that their failure to apply after stating an intent to apply tended to mislead other potential applicants. See Hydroelectric Relicensing Regulations Under the Federal Power Act, 54 Fed.Reg. 23,756, 23,804 (June 2, 1989). FERC concluded that PG & E had not acted with the intent to mislead, but instead had prepared a license application in good faith and attempted to file it on time. PG & E spent over three million dollars assembling a four-volume application. Over several years, PG & E conducted twenty-one different resource studies and met with resource agencies, Indian tribes and the public approximately twenty times. FERC noted that barring PG & E from competing for the Poe Project would be a severe punishment for the crime of inadvertently filing one day late. FERC recognized that preventing PG & E from competing would provide the petitioners with a chance to compete without facing the incumbent preference, even though the incumbent had done nothing prejudicial to those potential applicants. If the regulations were enforced against PG & E, a new applicant would be able to purchase a 50-year license on the Poe Project for possibly less money than it would earn from that project in one year.4
In addition, relaxation of a procedural rule by an agency in a particular case is not subject to judicial interference in the absence of a showing of injury or substantial prejudice. See Sun Oil v. FPC, 256 F.2d 233, 239 (5th Cir.1958) (citing NLRB v. Monsanto Chem. Co., 205 F.2d 763, 764 (8th Cir.1953)). Neither petitioner has demonstrated injury or substantial prejudice from FERC‘s waiver of its regulations. It is true that, if FERC enforced its regulations and excluded PG & E from competing for the orphaned Poe Project, the petitioners would be in a position to profit from PG & E‘s misfortune. The lack of opportunity to realize a fortuitous profit, however, is a far cry from a genuine injury. Neither petitioner expressed any interest in applying for the Poe Project license until PG & E made its miscue. They were content to let PG & E apply for a new license without opposition. Because PG & E missed its deadline, the petitioners can now compete with PG & E for the orphaned project if they wish. The petitioners have not shown prejudice to a degree that would preclude FERC‘s discretionary waiver of its regulations.
We reject the petitioners’ contention that FERC‘s decision to grant a waiver in this case was arbitrary because it was at odds with its refusal to grant waivers in other cases. We do not dispute that FERC has at times rejected untimely filings. See, e.g. Marseilles Hydro Power LLC, 99 FERC ¶ 61,011 (2002) (denying applicants’ request to waive the
FERC Acted Lawfully in Conferring Incumbent Status on PG & E
In its January order, FERC noted that under one of its earlier rulings, affirmed in Oconto Falls, 41 F.3d at 677, an orphan proceeding is governed by the procedures set forth in
Insofar as FERC‘s decision to apply the incumbent preference constitutes an interpretation of § 15 of the FPA, we review it under a Chevron analysis. See Oconto Falls, 41 F.3d at 674. We begin with the text of the statute. See Chevron, 467 U.S. at 842-43; American Rivers, 201 F.3d at 1196. As we pointed out earlier, § 15 is “simply silent on the issue of how orphaned proceedings should be handled.” Oconto Falls, 41 F.3d at 677. The petitioners contend, however, that the language of § 15(a)(2) precludes its application in orphan proceedings, because the incumbent preference described in § 15(a)(2) is limited to a “new license issued under this section.” (emphasis added). Because applications for orphaned projects are distinct from applications for a new license, the petitioners argue, they cannot be governed by § 15.7 But the words “under this section” merely specify the proceedings to which § 15 must apply. Because Congress did not envision orphan proceedings, the text of § 15 cannot be read fairly as prohibiting FERC from applying § 15 procedures to orphan proceedings.
The petitioners argue that FERC‘s interpretation divorces the obligation to file within the statutory deadline set forth in § 15(c)(1) from the incumbent preference benefit set forth in § 15(a)(2), thereby violating the established principle that statutes must be construed as a whole so as to give meaning and purpose to each part. We side with the District of Columbia Circuit, however, in rejecting the argument that, because applications for orphan proceedings are, by definition, filed after the § 15(c)(1) deadline, § 15 procedures cannot be applied to orphan proceedings. See id. at 676-77. As our sister circuit stated, “the relicensing provisions of Section 15 govern orphaned project proceedings, notwithstanding its twenty-four month requirement because that requirement is neither a component of the definition of a relicensing proceeding nor a prerequisite to the application of Section 15 to the licensing of orphaned projects.” Id. at 676.
The statutory incumbent preference suggests a legislative intent to prevent the transfer of projects to new owners on the basis of minor differences in the merits of competing applications. See Chevron, 467 U.S. at 851; American Rivers, 201 F.3d at 1196. Section 15(a)(2) was adopted at least in part to ensure that a license would not be transferred unless the new applicant would perform significantly better than the incumbent. See Kamargo Corp. v. FERC, 852 F.2d 1392, 1394 (D.C.Cir.1988); see also 132 CONG. REC. H8953 (daily ed. Oct. 2, 1986) (statement of Rep. Shelby) (“[the] public should not suffer the disruptions and economic dislocations that would be associated with a license transfer unless a good reason in the public interest has been shown“). FERC‘s application of the incumbent preference to the orphan proceeding in the circumstances of this case dovetails with this congressional intent.
FERC‘s ruling is not inconsistent with its decision in N.E.W. Hydro, Inc., 85 FERC ¶ 61,222 (1998). Although FERC stated in N.E.W. Hydro that “in proceedings involving equally suitable competing applications to relicense an orphaned project, neither municipal preference nor incumbent licensee tie-breaker preference pertains,” it did so in the context of an orphan proceeding involving two non-incumbent applicants. See id. The quoted language is properly construed as dicta, which was uttered in the context of justifying application of a first-to-file tie-breaker in “the first competitive relicense case without an incumbent applicant.” Id. (emphasis added.)
We conclude, therefore, that FERC‘s ruling that § 15, and its incumbent preference of § 15(a)(2), applied to the Poe Project orphan proceedings was in accord with the congressional intent expressed in the FPA. Even if the legislative intent behind § 15(a)(2) did not provide guidance in reviewing FERC‘s interpretation, we would still defer to FERC‘s decision on the ground that it is a reasonable interpretation of the statute. See Chevron, 467 U.S. at 842-43.
III. CONCLUSION
The decisions of FERC to waive its regulations to permit PG & E to compete for a license in the orphaned Poe Project proceedings, and to apply the incumbent preference of § 15(a)(2) of the FPA, were not “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” nor were they “in excess of statutory jurisdiction.”
DENIED.