Notice: This opinion is subject to formal revision before publication in the
Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify
the Clerk of any formal errors in order that corrections may be made
before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 13, 2003 Decided December 16, 2003
No. 02–1273
HYDRO INVESTORS, INC.,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
ALGONQUIN POWER CORPORATION INC., ET AL.,
INTERVENORS
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Carolyn Elefant argued the cause for petitioner. With her
on the brief was Paul V. Nolan.
Beth G. Pacella, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
the brief were Cynthia A. Marlette, General Counsel, and
Dennis Lane, Solicitor.
Elizabeth W. Whittle and John N. Estes III were on the
brief for intervenors.
Before: SENTELLE, HENDERSON and GARLAND, Circuit
Judges.
SENTELLE, Circuit Judge: This petition for review concerns
eight hydroelectric power projects owned by three corpora-
tions – Trafalgar Power Inc., Christine Falls Corporation, and
Franklin Industrial Complex, Inc. (collectively, ‘‘Trafalgar’’),
which are owned and controlled by a single individual. Peti-
tioner Hydro Investors, Inc. (‘‘Hydro’’), a developer of hydro-
electric projects, claims that the Federal Energy Regulatory
Commission has failed to regulate these projects in accor-
dance with the Federal Power Act. Hydro, however, has not
shown that it has a legally protected interest in the projects
and so we dismiss its petition for review for lack of standing.
I.
Trafalgar holds federal energy licenses and one license
exemption to operate eight hydroelectric power projects, sev-
en in New York and one in New Hampshire. FERC issued
the licenses under Part I of the Federal Power Act. 16
U.S.C. §§ 791a–823b (2000). This act authorizes FERC to
issue licenses and grant exemptions from licensing for the
construction, operation, and maintenance of hydroelectric pro-
jects on federal lands and on waterways regulated under the
Commerce Clause. Id. §§ 797(e), 823a.
Trafalgar’s projects were miserable financial failures. In
1995 it defaulted on the loans used to finance the projects.
The corporations that control the projects are all now insol-
vent; Chapter 11 bankruptcy proceedings are pending for all
three.
Algonquin Power Corporation, its subsidiaries, and related
entities (to which, for simplicity, we refer collectively as
‘‘Algonquin’’) currently control what’s left of the projects. It
took control after Trafalgar’s 1995 default. Subsequently, in
3
1996, Algonquin purchased the rights to payment on Trafal-
gar’s debt at a large discount from the debt’s face value.
That debt is secured by liens in the project property, includ-
ing the licenses. Algonquin is not, however, a co-licensee of
the projects; the sole licensees continue to be Trafalgar and
its affiliated entities. Algonquin has since tried to foreclose
on its liens in the project property, but that proceeding was
stayed when the Trafalgar entities filed for bankruptcy in
2001.
A distinct corporation, Hydro, petitioned FERC alleging
that the arrangement between Algonquin and Trafalgar vio-
lated the Federal Power Act. That act forbids energy licen-
sees from ‘‘voluntari[ly] transfer[ring]’’ their licenses without
FERC’s approval. 16 U.S.C. § 801 (2000). Because Trafal-
gar never formally transferred the project’s licenses to Algon-
quin, Hydro claimed that Algonquin exercised an illegal
amount of control over and effective ‘‘ownership’’ of the
projects (and hence the licenses). Hydro also alleged that
Algonquin and Trafalgar used irregular accounting practices
to mask their draining the projects of assets and urged
FERC to investigate these allegations of financial improprie-
ties more fully. FERC rejected all of these claims on their
merits. Hydro Investors, Inc. v. Trafalgar Power Inc., 98
FERC ¶ 61,272 (March 12, 2002); Hydro Investors, Inc. v.
Trafalgar Power Inc., 99 FERC ¶ 61,384 (June 28, 2002)
(rehearing proceeding). Hydro then petitioned this Court for
review.
More relevant to our disposition of the present petition
than Hydro’s claims on the merits, however, is its purported
interest in the hydroelectric projects. This interest, accord-
ing to Hydro, derives from joint venture agreements it had
with Trafalgar in seven of the projects. At the inception of
six of the projects, Hydro entered into a joint venture with
Trafalgar to develop the projects. Apparently, the idea was
that Hydro’s owner, Neal Dunlevy, was to provide the engi-
neering expertise, and Trafalgar was to provide the capital.
The joint venture agreement provided that Hydro would
receive distributions from project profits only if Trafalgar,
4
among other things, recovered its capital investment in the
projects, and only if the projects were constructed within
budget and met the expected energy output. In 1999, in
breach-of-contract and tort litigation between the parties, a
jury found that Trafalgar had not breached its joint venture
agreement with Hydro. Trafalgar argued at trial that it had
not breached the agreement because the conditions precedent
to Hydro’s receiving profit distributions had not occurred. In
support, Trafalgar presented evidence that Dunlevy’s esti-
mates of the expected energy output of the plants, on which
Trafalgar had relied in deciding how much to invest in them,
were much too high. Even under the best operating condi-
tions, the evidence showed, the plants never could have
produced the projected amounts of energy. Hydro Investors,
Inc. v. Trafalgar Power Inc., 63 F. Supp. 2d 225, 227
(N.D.N.Y. 1999). The jury found that Dunlevy’s conduct was
engineering malpractice and awarded Trafalgar a $7.6 million
judgment. A panel of the Second Circuit affirmed the jury’s
verdict. Hydro Investors, Inc. v. Trafalgar Power Inc., 227
F.3d 8 (2d Cir. 2000).
Hydro also claims it has a joint venture interest in a
seventh Trafalgar-affiliated hydroelectric project – the Chris-
tine Falls project. Trafalgar and Hydro are currently em-
broiled in breach-of-contract litigation in New York state
court over whether Hydro has such an interest in this project.
That suit is still pending.
To protect these purported joint venture interests, Hydro
has filed proofs of its claims in the Trafalgar entities’ various
bankruptcy proceedings. Hydro has also filed an adversarial
proceeding in the Trafalgar bankruptcy asserting that the
claims of other Trafalgar debtors should be equitably subordi-
nated to its joint venture claim. These bankruptcies, as well
as Hydro’s adversarial proceeding, are pending.
II.
The threshold issue in this case is whether Hydro has
shown that its interests in these purported joint venture
agreements give it Article III standing to bring this petition
5
for review. Only ‘‘aggrieved’’ parties may seek judicial re-
view of FERC decisions. 16 U.S.C. § 825l(b) (2000). A
party is aggrieved under this provision only if it establishes it
has both Article III and prudential standing to bring the
petition. Pub. Util. Dist. No. 1 v. FERC, 272 F.3d 607, 613
(D.C. Cir. 2002). To establish Article III standing, Hydro
must show that FERC’s action has caused it some concrete
injury that the relief it seeks – invalidation of the putatively
unlawful license transfer and further exploration of the al-
leged financial improprieties – will redress. Fla. Audubon
Soc’y v. Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996) (en banc).
The only concrete interest to which Hydro points is the
joint venture agreements. Hydro’s argument is that the
transfer of the licenses from Trafalgar to Algonquin has freed
Algonquin from FERC’s jurisdiction, and thus its regulatory
obligations. Without that regulatory deterrent, the argument
goes, Algonquin is more likely to continue draining assets
from the projects, and thus to diminish the value of its joint
venture ownership interest. The argument assumes that
these joint venture interests have value. Hydro has not
established this key assumption.
To the contrary, Hydro’s joint venture interest appears to
be worthless. The terms of Hydro’s joint venture agreement
with Trafalgar entitle Hydro to profit distributions only if
Trafalgar recovers its capital investment in the projects and
meets the expected energy output. Neither of these condi-
tions has occurred or is remotely likely ever to occur. The
evidence presented during the breach-of-contract trial be-
tween Trafalgar and Hydro’s owner showed that the projects
never did meet, nor could have met, the required energy
projections. Again, the projects were financial disasters.
Trafalgar defaulted on the debt it used to finance the project,
and thus cannot have recovered its investment.
Nor is it likely that Trafalgar will eventually pay off its
debt with project revenues. Algonquin purchased the debt at
a deep discount from face value. That market test suggests
that the project equity was worthless, at least as of 1996.
There is no evidence that the financial situation of the pro-
6
jects has improved since then. Algonquin subsequently tried
to foreclose the liens on the projects – evidence that Trafal-
gar’s ability to service the debt with project revenues has not
improved. Finally, the projects are in Chapter 11 bankrupt-
cy proceedings. From the record the parties presented on
the subject, as happens in many reorganizations, the equity
holders will ultimately receive nothing; therefore, those fil-
ings spell financial doom for Hydro’s residual interest, if any
exists in the projects. True, Trafalgar has recovered a large
engineering malpractice judgment against Dunlevy. But Hy-
dro has presented no evidence showing that this judgment is
actually collectible, much less that the value of that judgment
made the projects solvent.
Against this train of reasoning, Hydro marshals two argu-
ments that require discussion, both of which are mistaken.
Hydro first argues that Algonquin’s purchase of the project
debt was a sham transaction. The transaction, its argument
continues, made Algonquin the effective owner of the pro-
jects, ‘‘served to conceal and cover-up massive financial fraud
involving’’ the Trafalgar entities, and masked that Trafalgar
has in fact recovered its capital investment in the projects.
Reply Brief at 3–4. Hydro, however, has tendered to this
Court no evidence verifying this vast conspiracy. The record,
rather, suggests that Trafalgar did not recover its investment
because Hydro’s owner committed engineering malpractice
and vastly overestimated the energy output of the projects.
If Hydro’s allegations of fraud, deceit, and all-around mischief
are true, the bankruptcy court will address them in due
course when it disposes of Hydro’s adversarial filing. At any
rate, even if Hydro were correct that Trafalgar has recovered
its capital investment, Trafalgar still would not have met the
energy output requirement. That independent condition
precedent would prevent Hydro from receiving profit distri-
butions regardless.
Nor is the ‘‘affidavit’’ of Hydro’s bankruptcy attorney,
which Hydro appends to its reply brief, sufficient evidence of
the elaborate tale recounted in Hydro’s brief. The affidavit is
mostly legal argument sprinkled with repetitions of Hydro’s
far-flung allegations of financial improprieties. The exhibits
7
to the affidavit either are not probative of Hydro’s allegations
of misbehavior or are more unverified assertion. For exam-
ple, the affidavit repeats the allegations of financial misbehav-
ior that it makes in its appellate brief, citing as evidence an
‘‘exhibit’’ that consists solely of yet another affidavit by, once
again, Hydro’s bankruptcy attorney. This is bootstrapping.
Something more than the assertions of a litigant’s attorney is
necessary to establish standing.
We are also not persuaded by Hydro’s second argument –
that Hydro has standing to petition this Court for review of
FERC’s order because Congress authorized it to petition
FERC for relief in the first instance. Hydro points out,
correctly, that the Federal Power Act permits ‘‘[a]ny person
TTT complaining of anything done or omitted to be done by
any licensee or public utility in contravention of the provisions
of this Act [to] apply to the Commission by petition.’’ 16
U.S.C. § 825e (2000). Hydro argues that this provision
means that FERC’s order denying their petition automatical-
ly ‘‘aggrieve[s]’’ them within the meaning of 16 U.S.C.
§ 825l(b), and thus entitles them to seek judicial review in
this Court.
Hydro is wrong. Administrative agencies need not adjudi-
cate only Article III cases and controversies, but federal
courts must. If the petitioner has no Article III concrete
interest in receiving the relief requested before the agency,
this Court has held, Congress has no power to grant a
petitioner a right to seek judicial review of an agency’s
decision to deny him relief. Gettman v. DEA, 290 F.3d 430,
433 (D.C. Cir. 2002); Fund Democracy, LLC v. SEC, 278
F.3d 21, 27–28 (D.C. Cir. 2002). Because Congress cannot
abrogate the requirements of Article III, as we explained in
those cases, this principle applies even if Congress gave
Hydro a right to seek judicial review of FERC’s decision in
this Court. Gettman, 290 F.3d at 433; Fund Democracy, 278
F.3d at 27–28. Any other rule would allow Congress to
create federal jurisdiction by the simple expedient of granting
any party – no matter how far removed from the true
controversy – a right to petition the agency, and then a right
to seek judicial review if the agency denied the request.
8
Article III does not permit Congress to expand the federal
judicial function through such stratagems. If the party peti-
tioning the agency lacks Article III standing, he has not been
independently wronged simply because the agency denied his
advisory request.
Akins v. FEC, 101 F.3d 731 (D.C. Cir. 1996) (en banc),
vacated by 524 U.S. 11 (1998), on which Hydro relies, does not
require a different result, even setting aside that the Su-
preme Court vacated it. In Akins, this Court held that a
group of registered voters had standing to challenge the
Federal Election Commission’s refusal to force a political
organization to disclose the names of its donors, its campaign
contributions, and its expenditures. In the course of holding
that the voters had prudential standing, this Court could not
‘‘glean any congressional intent to preclude members of that
class from suing – so long as they filed a complaint with the
FEC that was dismissed.’’ Id. at 739. Hydro infers from
this passage that it must have standing to seek judicial review
of FERC’s decision in federal court, because like Akins, it
filed a complaint with FERC. The inference is mistaken.
This case concerns whether Hydro has constitutional stand-
ing; the passage from Akins that Hydro stresses concerns
prudential standing. The voters in Akins were injured-in-
fact, according to the Supreme Court, because they were
unable to obtain the requested information. 524 U.S. at 21.
As discussed, Hydro has suffered no such injury here.
Conclusion
For the reasons set forth above, we hold that petitioners
have no standing to bring this action. Therefore, the petition
for review is dismissed.