WESTERN MINNESOTA MUNICIPAL POWER AGENCY, et al., Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
No. 14-1153
United States Court of Appeals, District of Columbia Circuit.
Argued Oct. 19, 2015. Decided Nov. 20, 2015.
806 F.3d 588
Finally, Mobley‘s contention that the district court abused its discretion when it twice declined to review in camera an FBI document, which he claims was improperly classified, is unpersuasive.
At its discretion, a district court “may examine the contents of agency records in camera....”
Here, as our own review confirms, the district court, after reviewing in camera the FBI‘s classified declaration, acted within its sound discretion when it decided that it did not need to review the classified document in camera to conclude that the FBI withheld it as properly classified. Mobley points to no record evidence of bad faith. See id. at 392-93. Moreover, the document implicates national security, Larson, 565 F.3d at 870, and the parties’ dispute is over how to interpret the document—whether it was properly classified, Carter, 830 F.2d at 393. To the extent Mobley states in his reply brief that in camera review would also reveal that the FBI had improperly withheld records on the basis of FOIA Exemption 7(C), the court “need not consider this argument because [Mobley] ha[s] forfeited it on appeal, having raised it for the first time in [his] reply brief,” Am. Wildlands v. Kempthorne, 530 F.3d 991, 1001 (D.C. Cir. 2008), and shown no extraordinary circumstances to excuse his delay, Mich. Gambling Opposition v. Kempthorne, 525 F.3d 23, 29 n. 4 (D.C. Cir. 2008).
Accordingly, we affirm the orders granting summary judgment in Mobley‘s two cases and denying reconsideration.
Sam Kalen argued the cause for petitioners. With him on the briefs were Michael Swiger and John Clements. Randolph L. Elliott and Delia D. Patterson entered appearances.
Holly E. Cafer, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were David L. Morenoff, General Counsel, and Robert H. Solomon, Solicitor. Susanna Y. Chu, Attorney, entered an appearance.
Before: GARLAND, Chief Judge, ROGERS, Circuit Judge, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge:
I.
The Commission is authorized under Section 4 of the FPA to issue licenses for the construction, operation, and maintenance of hydroelectric projects on federal land or waters in a two-stage process: a preliminary permit and a license.
The Commission has adopted several timing regulations of relevance here. Where the municipal preference does not apply because both or neither of the competing applicants are a state or municipality, and the plans of both are equally well adapted, “the Commission will favor the applicant with the earliest application acceptance date.”
Between 5:00 p.m. on January 31, 2013 and 8:30 a.m. on February 1, 2013, the Commission received two applications for a preliminary permit to study the feasibility of a hydroelectric project at the Saylorville Dam and Lake in Polk County, Iowa: one from Western Minnesota and one from FFP. FFP is a private, non-municipal developer and holder of a prior preliminary permit for the Saylorville Dam site that expired on January 31, 2013. Western Minnesota is a municipal corporation and political subdivision of the State of Minnesota. Although Western Minnesota satisfied the definition of municipality under
On December 19, 2013, the Commission granted FFP a successive preliminary permit and priority to file a future license application and denied Western Minnesota‘s competing application. Permit Order, 145 FERC ¶ 61,255. Stating that Section 7(a) provided “no guidance as to the scope of the municipal preference,” the Commission decided that “the best reading of the statute is that municipalities should be accorded preference only with respect to the development of water resources that are located in their vicinity.” Id. at ¶ 17. More generally, the Commission observed that “it is difficult to discern what public interest is served by giving a municipality a preference with respect to a project that is far from the site of the municipality,” and that “[t]o do so would effectively make municipalities super-competitors with respect to all new hydropower developments, regardless of their location.” Id. Because Western Minnesota‘s headquarters in Ortonville, Minnesota are “almost 400 miles from” the Saylorville Dam in Iowa, and “the record reveals no connection, beyond a business development interest, between the proposed project and [Western Minnesota],” the Commission concluded that “granting municipal preference to Western Minnesota in these circumstances would not be in the public interest.” Id. (emphasis added). As Western Minnesota was not entitled to a municipal preference and “there [was] no claim that either FFP‘s or Western Minnesota‘s plans is better adapted than the other,” the Commission awarded the preliminary permit to FFP as a result of the random drawing. Id. ¶ 20.
Western Minnesota filed a request for rehearing on the ground that the Commission‘s interpretation of the municipal preference was contrary to the plain text of Section 7(a). Additionally, it argued that the Commission had impermissibly changed its longstanding interpretation of the provision and that its “in the vicinity” standard was too vague to be understood or applied. The American Public Power Association and the Public Power Council moved to intervene in support of Western Minnesota and also requested rehearing. The Commission granted the motion to intervene out of time but denied both requests for rehearing. Rehearing Order ¶ 1. Western Minnesota and intervenors (together, “Western Minnesota“) petition for review of the Permit and Rehearing Orders.
II.
The court reviews an agency‘s interpretation of a statute that it administers under the two-step framework of Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 842-43 (1984). Under step one, the court must determine “whether Congress has directly spoken to the precise question at issue.” Id. at 842. If so, then the court and the agency must “give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. If the court determines that “the statute is silent or ambiguous with respect to the specific issue,” then under step two, “the question for the court is whether the agency‘s answer is based on a permissible construction of the statute.” Id. at 843.
In addressing a question of statutory interpretation, the court begins with the text. See, e.g., Engine Mfrs. Ass‘n v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246, 252 (2004). Section 7(a) of the FPA provides:
In issuing preliminary permits hereunder or original licenses where no preliminary permit has been issued, the
Commission shall give preference to applications therefor by States and municipalities, provided the plans for the same are deemed by the Commission equally well adapted, or shall within a reasonable time to be fixed by the Commission be made equally well adapted, to conserve and utilize in the public interest the water resources of the region.
By its terms, then, Section 7(a) is a “statutory tie-breaker provision favoring states and municipalities over private parties.” Oconto Falls v. FERC, 41 F.3d 671, 672 (D.C. Cir. 1994). As defined in Section 3(7), “municipality” neither betrays ambiguity nor leaves a statutory gap for the Commission to fill. Contrary to the Commission‘s conclusion, Congress has spoken directly to the question at issue.
In concluding that Section 7(a) is ambiguous because it provided no guidance on its scope, the Commission has “manufactured ambiguity,” “ignoring [Chevron step one] altogether by failing to articulate how the plain text of Section 7(a) was unclear.” Pet‘rs’ Br. 11. The Commission never explained why the meaning of “States and municipalities” is ambiguous such that the municipal preference can be limited to those municipalities in a project‘s “vicinity,” a word Congress did not use in defining “municipality” or elsewhere in Sections 4 or 7(a). Instead, the Commission declined to apply the municipal preference because of its policy conclusion that “it is difficult to discern what public interest is served by giving a municipality a preference with respect to a project that is far from the site of the municipality.” See Permit Order ¶ 17. In the Commission‘s view, if any municipality “could legitimately claim preference,” a “distant municipality” in competition with a “nearby municipality” could “win a tie breaking drawing and then deprive the nearby municipality of the right to utilize a local water resource.” Id. Rather than inferring from Congress‘s silence that the physical proximity of a municipality to a project is irrelevant to whether it is a “municipality” for purposes of the Section 7(a) preference,
Agencies are empowered to make policy only insofar as Congress expressly or impliedly delegates that power. See Utility Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2445 (2014). “Were courts to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony, a result plainly out of keeping with Chevron and quite likely with the Constitution as well.” Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995) (emphasis in original). The Commission‘s apparent understanding that “Chevron step two is implicated any time a statute does not expressly negate the existence of a claimed administrative power ..., is both flatly unfaithful to the principles of administrative law ... and refuted by precedent.” Id. (alteration in original). In Section 7(a), Congress adopted a clear mandate that where applications are “equally well adapted,” the application of a “municipality” is to be preferred over that of a private applicant. Bolstering this mandate is the broad definition of “municipality.” The Commission‘s injection of a proximity requirement in the definition of “municipality” is unwarranted. By stating that the preference applies only when competing applicants’ plans are “equally well adapted” to develop and conserve the “water resources of the region,” Congress identified a single qualification on application of the preference in favor of a “municipality.”
Nothing in the structure of the FPA reveals a contrary intent. The Commission relies on Section 4(f) of the FPA, which requires the Commission to give notice of an application for a preliminary permit (1) “to any State or municipality likely to be interested in or affected by such application,” and (2) by publication in a daily or weekly newspaper published in the county or counties where the project is situated.
Although the Commission‘s premise that Section 7(a) must be read in light of its broader statutory context may be unobjectionable, see, e.g., FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000), its analysis has veered off course. Section 4(f) is a notice provision, not a substantive restriction on the municipal preference in Section 7(a). The Commission is not faced with two statutory provisions having differing mandates, creating a “fundamental ambiguity” that would warrant application
On rehearing, the Commission suggested that the clause limiting notice to those “State[s] or municipalit[ies] likely to be interested in or affected by such application,”
The Commission‘s reliance on Northern Colorado Water Conservancy District v. FERC, 730 F.2d 1509 (D.C. Cir. 1984), as support for interpreting Section 4(f) as a limit on the scope of Section 7(a) is misplaced. That case did not discuss whether the two provisions should be read together. In Northern Colorado, the Commission had failed to provide written notice of a preliminary permit application to the Water Conservancy District even though the District was a “municipality” under
The Commission‘s resort on rehearing to legislative history is also unavailing. The Commission points out that Section 7(a) was “originally enacted in the Federal Water Power Act of 1920, when the nation‘s electric grid was relatively undeveloped and access to hydroelectric power was at a particular premium for municipalities seeking to provide electric power to their communities.” Rehearing Order ¶ 24. But even if Congress did not envision the magnitude of current long-distance transmission, it was aware transmission capacity would grow.1 Nonetheless, relying on legislative history, the Commission concluded that “Congress intended only to give a preference to states and municipalities with respect to water resources in proximity to those public entities, to facilitate the development of those resources for the benefit of local consumers.” Rehearing Order ¶ 24. Yet the legislative history, by the Commission‘s own admission, is “limited,” id., and it is inconclusive on the question whether the municipal preference was intended to preserve local municipalities’ control over water resources or to encourage public rather than private ownership.2 On the other hand, the legislative history would suggest that Congress did not intend for the Commission to have discretion in picking among states and municipalities, contrary to the Commission‘s approach here.3 In short,
On rehearing the Commission also purported to invoke the absurdity doctrine, stating Section 7(a) was ambiguous because applying the municipal preference to all municipalities regardless of geographic proximity would work an “absurd or mischievous” result and would “thwart the statute‘s manifest purpose.” Rehearing Order ¶ 20. It again referenced hypothetical examples of an East Coast municipal entity claiming preference to develop a project in Hawaii, and a competition between a distant and a nearby municipality where a tiebreaker drawing results in depriving the nearby municipality of the right to utilize a local water resource. Id.; see Permit Order ¶ 17. In the Commission‘s view, “these types of consequences were not likely intended, or anticipated, by Congress in enacting FPA section 7(a)” in 1920. Rehearing Order ¶ 20. The statutory issue for the court, however, is not whether the Commission‘s interpretation of Section 7(a)‘s municipal preference is the better public policy. Before the Commission can invoke the doctrine of “absurd or mischievous consequences” to rewrite the statute, it must demonstrate that the plain meaning of the statutory text ““defies rationality” by “render[ing] a statute nonsensical [and] superfluous.” United States v. Cook, 594 F.3d 883, 891 (D.C. Cir. 2010) (quoting Landstar Express Am., Inc. v. Fed. Maritime Comm‘n, 569 F.3d 493, 498-99 (D.C. Cir. 2009)). The Commission has not met this high threshold. There is nothing patently unreasonable in favoring any and all municipalities over private applicants when “the chief purpose” of the FPA was “to ‘provide conditions under which capital can be secured [to develop hydropower] while at the same time fully to protect the paramount interests of the public in its last great national resource.‘” Clark-Cowlitz Joint Operating Agency v. FERC, 775 F.2d 366, 377 (D.C. Cir. 1985), vacated and reh‘g en banc granted, 787 F.2d 674 (D.C. Cir. 1986) (quoting O.C. Merrill, Benefits Accruing to Municipalities Through the Federal Water Power Act, THE AMERICAN CITY, Vol. XXIII, No. 5 (Nov. 1920)). Even when Congress limited the municipal preference in 1986 to “original” as distinct from relicensing proceedings, when it would have been aware of modern long-distance transmission, it did not add a proximity requirement. See Oconto Falls, 41 F.3d. at 672 (citing the Electric Consumers Protection Act, Pub.L. No. 99-495, 100 Stat. 1246 (1986) (codified at
To the extent the Commission is concerned that granting a preference to a too-distant municipality seeking a preliminary permit could have “undesirable consequences,” Rehearing Order ¶ 20, the Commission may be able to address it through the “equally well adapted” provision of Section 7(a), cf. id. ¶ 20 n. 25. That could permit a local municipality (or local private entity) to triumph over a distant municipality, without limiting the statutory definition of “municipality.” The nature and extent of the Commission‘s concern is unclear, however. The Commission has rejected a proximity “test” for well-adaptedness, see, e.g., N.E.W. Hydro, Inc. City of Oconto Falls, Wis., 85 FERC ¶ 61,222, 61,909 & n. 12 (1998), and reported that “many licensees are headquartered a distance from their projects, to no ill effect,” id. at 61,909. Of course, the propriety of using the “equally well adapted” requirement to impose some geographic constraints is not a question before the court and would involve a Chevron step two
private applicant.” Id. at 9804 (statement of Rep. Doremus).
Accordingly, we grant the petition for review, vacate the Commission‘s Permit Order and Rehearing Order, and remand for further proceedings without reaching Western Minnesota‘s other challenges.