United States Court of Appeals
FOR THE DISTRICT OF CO LUM BIA CIRCUIT
Argued March 4, 2005 Decided July 8, 2005
No. 04-1058
MIKE BRADY AND
CHERYL CREEKMORE ,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION ,
RESPONDENT
THE GRAND RIVER DAM AUTHORITY ,
INTERVENOR
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Paul M. Flynn argued the cause and filed the briefs for
petitioners.
Judith A. Albert, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Cynthia A. Marlette, General Counsel, and Dennis
Lane, Solicitor.
John P. Coyle and Gregg D. Ottinger were on the brief for
intervenor.
2
Before: RANDOLPH and ROBERTS, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge ROBERTS.
Concurring opinion filed by Senior Circuit Judge
WILLIAMS.
ROBERTS, Circuit Judge: An Oklahoma agency licensed by
the Federal Energy Regulatory Commission to operate a
hydroelectric project applied for a license amendment to permit
the expansion of a commercial marina located on project
property. FERC approved the amendment over the opposition
of petitioners — two lakefront homeowners — who argued that
the expansion was not in the public interest. In particular, they
maintained that the cove where the marina is located had
exceeded its “carrying capacity,” precluding further growth.
They also contended that FERC could not approve the expansion
in the absence of comprehensive guidelines for shoreline
development on the project, and that FERC erred in approving
the state agency’s waiver of one of its regulations.
Our review of FERC’s decision is limited, and under that
limited review we conclude that FERC considered the impact of
the proposal on a variety of non-development objectives, as
required by the applicable statute, and that FERC’s treatment of
the carrying capacity issue was not arbitrary or capricious or
lacking in substantial evidence. We also find that FERC
adequately explained its decision to proceed in the absence of
comprehensive guidelines for shoreline development, and its
determination to approve the departure from the state agency’s
regulations. We deny the petition.
I.
The Pensacola dam in northeast Oklahoma impounds the
waters of the Grand or Neosho River, creating the Grand Lake
3
O’ the Cherokees. The dam and resulting lake are regulated by
the Grand River Dam Authority (GRDA), a state agency,
pursuant to a license issued by FERC. See Grand River Dam
Authority, Order Issuing New License, 59 FERC ¶ 62,073
(1992).
FERC’s licensing authority for such hydroelectric projects
is governed by Section 4(e) of the Federal Power Act, 16 U.S.C.
§ 797(e). That section provides, in pertinent part:
In deciding whether to issue any license under this sub-
chapter for any project, the Commission, in addition to the
power and development purposes for which licenses are
issued, shall give equal consideration to the purposes of
energy conservation, the protection, mitigation of damage
to, and enhancement of, fish and wildlife (including related
spawning grounds and habitat), the protection of recre-
ational opportunities, and the preservation of other aspects
of environmental quality.
Further guidance is found in Section 10(a)(1), 16 U.S.C.
§ 803(a)(1), which conditions all licenses on a requirement that
the project adopted . . . shall be such as in the judgment of
the Commission will be best adapted to a comprehensive
plan for improving or developing a waterway or waterways
for the use or benefit of interstate or foreign commerce, for
the improvement and utilization of water-power develop-
ment, for the adequate protection, mitigation, and enhance-
ment of fish and wildlife (including related spawning
grounds and habitat), and for other beneficial public uses,
including irrigation, flood control, water supply, and
recreational and other purposes referred to in section 797(e)
of this title.
GRDA’s license calls on that agency to develop a long-term
recreation management plan for Grand Lake, including an
4
estimate of the lake’s “carrying capacity” — defined as “the
level of use . . . that would begin to detract from a safe or
enjoyable recreation experience” — and “measures for managing
lake use if it exceeds the carrying capacity.” Order Issuing New
License, 59 FERC at 63,230. Regarding the agency’s oversight
of boat docks, the license permits GRDA to authorize the
construction of “noncommercial” structures “that can accommo-
date no more than 10 watercraft at a time.” Id. at 63,231. Larger
undertakings require the agency to apply to FERC for a license
amendment.
GRDA filed a recreation plan in 1997. Appended to the
plan was a study of carrying capacity conducted by faculty and
students at Oklahoma State University. See Pensacola Recre-
ation Management Plan, App. F. That study, the plan noted, did
not “defin[e] a ‘magic number’ that represented the statistical
carrying capacity of Grand Lake.” Rec. Plan at 15–16. The plan
also included a separate memorandum by the study’s principal
author, Professor Lowell Caneday, which did set forth a specific
capacity figure for the lake: 0.13 boats per acre. Id., App. I at 3.
Based on aerial photographs, estimated boating densities for the
lake as a whole were below Dr. Caneday’s figure in 1996, but
above it in 1997. See id., App. G & H.
GRDA explained in the recreation plan that, in light of the
carrying capacity information, it had adopted the goal of making
certain changes in the management of Grand Lake. Rec. Plan at
16. Notably, these changes did not include a halt to shoreline
development, although a management proposal featured in the
OSU study called for such a step. Compare id., App. J (GRDA
management strategy) (“Grand Lake will provide . . . F) Shore-
line development following best management practices and
existing regulations”) with id., App. F at 83 (OSU proposal)
(“Grand Lake . . . will provide . . . (f) restriction of further
shoreline development”).
5
The recreation plan also addressed the license requirement
that it include recommended measures for managing lake use if
carrying capacity were exceeded:
If the use of the project exceeded its documented carrying
capacity, GRDA could implement seasonal rules targeted at
the activity. More seasonal patrolmen could be hired to
enforce existing and future restrictions. Special events
could be limited to certain days of the week or the months
they would be allowed.
Id. at 17. Finally, the plan featured proposed rules and regula-
tions governing shore and water use — including a rule that
docks may not extend into the water the longer of 125 feet or
one-third of the distance to the opposite shore. Id., App. B at 6.
FERC approved the recreation plan. See Grand River Dam
Authority, Order Modifying and Approving Long-Term Recre-
ation Plan, 84 FERC ¶ 62,144 (1998). In particular, the
Commission endorsed GRDA’s capacity management approach,
including its decision not to implement the strategy outlined in
the OSU study that would be more restrictive with respect to
development. See id. at 64,229 (“While [the OSU strategy]
includes greater restrictions, we believe the licensee’s proposal
is reasonable at this time given the project’s slower than
expected growth in recreation uses and the currently underutil-
ized recreation facilities”). Anticipating that the lake would
experience increased shoreline development in the future,
however, and noting GRDA’s express willingness to do so,
FERC stated that GRDA “should continue its efforts to work
with project stakeholders on the development of a comprehen-
sive [shoreline] management plan [CSMP] for the project.” Id.
at 64,231. FERC also directed the agency to file periodic reports
monitoring recreation use and shoreline development, as well as
progress updates on the development of a CSMP. Id. at 64,232.
6
Duck Creek cove is an arm of Grand Lake described as “one
of the lake’s most frequently used boating areas.” Final Envi-
ronmental Assessment at 27. In 2001, the owner of Arrowhead
North Marina, a commercial facility located on Duck Creek
cove, asked GRDA for permission to expand and reconfigure the
facility. The expansion sought to add 64 boat slips, many for
large boats. GRDA endorsed the plan, and, as required by its
license, filed an application with FERC for a license amendment
permitting the expansion.
Numerous area residents, as well as the U.S. Department of
the Interior, submitted comments regarding the proposal.
Intervenors opposing the expansion included Mike Brady and
Cheryl Creekmore, owners of property on Duck Creek. While
proceedings were pending before the Commission, GRDA filed
its first monitoring report on recreation use and shoreline
development, which showed a continuing rise in boating
densities on the lake. See 2003 Recreation Plan Monitoring
Report at 3 & Attachment C.
FERC approved the marina expansion, over the dissent of
one Commissioner. Grand River Dam Authority, Order
Approving Non-Project Use of Project Property, 105 FERC
¶ 61,100 (2003). The Commission reasoned that the proposed
expansion would have “beneficial impacts on employment, tax
revenues and tourism,” offsetting “some adverse impacts on the
visual character and scenic quality of the landscape.” Id. at
61,506–07. The Commission further found that the expansion
“would result in only moderate long-term adverse impacts to
boating use and navigational safety.” Id. at 61,507. The
Commission also held that it could approve the proposal even
though the reconfigured marina exceeded GRDA’s dock length
restrictions. Id.
Turning specifically to the issue of carrying capacity, FERC
found that “while there is evidence that boating densities in the
7
cove are increasing, such evidence does not confirm that the
cove has reached its carrying capacity.” Id. In a final environ-
mental assessment accompanying the order, FERC staff added
that “the resources of Grand Lake’s Duck Creek arm are
approaching carrying-capacity limits for boating-related facilities
and activities” and promised to “intensively scrutinize any future
non-project proposals involving this cove.” Final Environmental
Assessment at 51. Lastly, although GRDA had not yet devel-
oped a CSMP, the Commission refused to delay consideration of
the proposal until such a plan was submitted. Order Approving
Non-Project Use, 105 FERC at 61,507.
Brady and Creekmore filed requests for rehearing, which
were denied without further opinion. Grand River Dam Author-
ity, Notice of Denial of Rehearing, 105 FERC ¶ 61,310 (2003).
They now petition for review of FERC’s order approving the
marina expansion.
II.
In reviewing licensing proceedings, we will uphold FERC’s
conclusions unless they are “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). The Commission’s findings of fact are conclusive
if supported by substantial evidence. 16 U.S.C. § 825l(b). In
both regards, the scope of our review is quite limited; “[s]o long
as the Commission has examined the relevant data and provided
a reasoned explanation supported by a stated connection between
the facts found and the choices made, we will defer to the
agency’s expertise.” North Carolina v. FERC, 112 F.3d 1175,
1189 (D.C. Cir. 1997); see also U.S. Dep’t of Interior v. FERC,
952 F.2d 538, 543 (D.C. Cir. 1992) (“In a licensing decision
such as this, where few explicit statutory provisions govern, our
role is narrowly circumscribed.”).
8
A. Brady and Creekmore begin with the Federal Power Act.
They assert that, in approving the marina expansion, FERC
abdicated its duty to give “equal consideration” to the non-
development purposes specified in Section 4(e) of the FPA,
including protection of fish and wildlife, recreational opportuni-
ties, and other aspects of environmental quality, and failed to
ensure that the project is “best adapted to a comprehensive plan”
that incorporates such non-development purposes, as required by
Section 10(a)(1) of the FPA. 16 U.S.C. §§ 797(e), 803(a)(1).
See Pet. Br. at 26. Congress directed that FERC consider a
variety of factors in making licensing decisions under the FPA,
but the decision about how to weigh those factors remains with
FERC. The judicial role is “narrowly circumscribed,” and “[t]he
statutory ‘equal consideration’ requirement does not change the
standard of review that we, as an appeals court, apply.” U.S.
Dep’t of Interior, 952 F.2d at 543, 545. FERC decides how to
balance the various elements listed in the FPA; our task is to
ensure that it considers the statutory factors and that its decisions
meet the threshold standards of non-arbitrariness and substantial
evidence.
Contrary to petitioners’ suggestion, FERC did not fail to
consider non-development public uses. See Order Approving
Non-Project Use, 105 FERC at 61,506–07 (discussing, in
addition to “visual character and scenic quality,” impacts on
“fish and wildlife, air and water quality, ambient noise levels,
[and] shoreline access,” as well as “boating use and navigational
safety”). Nothing on the face of FERC’s order suggests a
disregard of the considerations listed in the FPA. While Brady
and Creekmore would strike the balance differently, against
further development, the policy decision about how to weigh the
pertinent factors is FERC’s to make. The amendments to the
FPA that added the “equal consideration” language “were aimed
primarily at increasing FERC’s sensitivity to environmental
concerns,” but those amendments “do not give environmental
9
factors preemptive force.” U.S. Dep’t of Interior, 952 F.2d at
545.
In making the foregoing determination, we note that
petitioners have only raised FERC’s duty to balance develop-
ment with competing considerations. They have not challenged
— either in their petitions for rehearing before FERC or in the
briefs submitted to us — the propriety of the Commission’s
reliance on “employment, tax revenues and tourism” as the
development benefits of this proposal. Accordingly, we do not
address whether the Commission may consider these particular
benefits, either generally or under the particular circumstances
of this case. See 16 U.S.C. § 825l(b) (“No objection to the order
of the Commission shall be considered by the court unless such
objection shall have been urged before the Commission in the
application for rehearing unless there is reasonable grounds for
failure to do so.”); compare Nat’l Wildlife Fed’n v. FERC, 912
F.2d 1471, 1482–83 (D.C. Cir. 1990) (presenting a challenge to
FERC’s reliance on “water supply” benefits under FPA Section
4(e)). All we conclude is that the Commission satisfied the
statutory requirement to consider a variety of specified public
uses, including those militating against development.
B. Petitioners attempt to buttress their statutory argument
by focusing on the concept of carrying capacity. They maintain
that the evidence before the Commission indicates that the lake’s
capacity has been exceeded, and that in approving further
development, FERC necessarily proceeded on the erroneous
assumption that it had not.
We agree that the record contains evidence of crowded
conditions at Duck Creek. Aerial photographs taken in 1997
show that boating densities in the cove were significantly higher
than those for the lake as a whole. See Rec. Plan, App. H. In
surveys conducted as part of the OSU study, more people listed
Duck Creek as a place to avoid than any other area of the lake,
10
citing “too many boats” and “unsafe or too dangerous” condi-
tions. Id., App. F at 72. The 2003 monitoring report indicates
that, prior to the institution of directional traffic lanes, the cove
was the site of more boating accidents than any other arm of the
lake. See 2003 Recreation Plan Monitoring Report, Attachment
B.
FERC, however, did not ignore this evidence. In the order
approving the marina expansion, the Commission expressly
acknowledged that “boating densities in the lake and the cove
continue to increase,” and that “boating densities in the cove are
increasing.” Order Approving Non-Project Use, 105 FERC at
61,507. FERC noted the new boat-traffic lanes and speed limits
GRDA had implemented to accommodate the increasing number
of boats in the cove, and required a slight change in the location
of several of the proposed slips to ensure that boats entering and
leaving the marina did not present a safety concern. Id. The
issue of crowding was plainly recognized and addressed by
FERC.
FERC also specifically addressed the issue of crowding
relative to the concept of carrying capacity. The Commission
concluded that “while there is evidence that boating densities in
the cove are increasing, such evidence does not confirm that the
cove has reached its carrying capacity.” Id. Despite the ac-
knowledged crowded conditions in Duck Creek, this conclusion
was a permissible one for the Commission to reach:
First, the concept of “carrying capacity” does not present the
sort of bright-line limit that would mandate a particular finding
on the facts before the Commission. The recreation plan does
not treat capacity in quantitative terms. As noted in the text of
the plan, the appended OSU study did not set forth a “magic
number” of boats above which the collective lake experience
becomes unsafe or unenjoyable. See Rec. Plan at 15–16. Dr.
Caneday’s separate memorandum, which does set forth such a
11
value, concedes that a “concern with this number is that it
reflects merely the standard ‘quantity’ of watercraft without
consideration for the ‘quality’ of experience for the visitor or
‘quality’ of the lake environment.” Id., App. I at 3. What is
more, the OSU study makes clear that “[t]here are many types of
carrying capacity,” id., App. F at 82, and that the “management-
objective recreation carrying capacity” is “undefined,” because
it depends on the goals and objectives of the managing agency.
Id. at 80, 90. The amorphous nature of the carrying capacity
concept (or concepts) as presented by the OSU study makes it
difficult for us to fault FERC’s conclusion that the record
evidence did not confirm that the capacity of the cove had been
exceeded.
Second, Dr. Caneday’s estimate speaks to the capacity of the
lake as a whole, whereas FERC’s order focuses on the capacity
of the cove. This difference is significant: according to the OSU
study, “[m]easurements of recreational carrying capacity must be
site specific.” Rec. Plan, App. F at 81. The record amply
demonstrates that Duck Creek has characteristics not shared by
the lake as a whole: for instance, boats must proceed through a
portion of the cove at “no wake” speed, and no waterskiing or
swimming is permitted in the directional traffic lanes at any
time. See 2003 Recreation Plan Monitoring Report, Attach-
ments D & E. Dr. Caneday’s estimate for the lake, by contrast,
factors in space for activities such as unlimited powerboating
and waterskiing. See Rec. Plan, App. I at 3.1 Thus, what limited
1
In a letter attached to Brady’s request for rehearing, Dr.
Caneday asserts that “[c]ontinued development as permitted by the
GRDA . . . has increased traffic above the carrying capacity of the
cove.” Letter to Magalie R. Salas, Nov. 11, 2003 (emphasis added).
Dr. Caneday, however, does not explain his method for reaching this
conclusion, or describe the evidence underlying his claim.
12
tangible guidance is provided by the record does not speak to the
particular issue before the Commission.2
Petitioners broaden their argument to challenge not only
FERC’s dismissal of their evidence on carrying capacity, but
more generally FERC’s decision to approve the license amend-
ment on what petitioners regard as the necessary “assumption”
that the cove has not exceeded carrying capacity. See Reply Br.
at 1–2, 9. Nothing, however, requires FERC to conduct its
statutorily-mandated consideration and balancing of the pertinent
factors under the “carrying capacity” framework. Certainly
nothing in the FPA does so — the statute never mentions
“carrying capacity.”
Nor does the recreation plan mandate that FERC discharge
its responsibilities by assessing carrying capacity; GRDA’s
license required it to submit a plan including an estimate of
carrying capacity, but the recreation plan does not state that the
estimate would or should become the benchmark for FERC
under the FPA. Under the recreation plan, a finding that
carrying capacity has been exceeded does not trigger a ban on
commercial development. In the section of the plan titled
“Carrying Capacity Management Methodology,” GRDA
commits to monitoring future recreation use in consultation with
other state agencies. See Rec. Plan at 16–17. The agency then
proposes the following methods of dealing with an exceeded
capacity:
2
In addition, FERC noted that the number of private and
commercial slips on the lake had decreased since 1997 from 7500 to
6359, or by 15 percent, Order Approving Non-Project Use, 105 FERC
at 61,507 n.28, suggesting that any alleged increase in the number of
boats using the lake was not due to the number of slips.
13
If the use of the project exceeded its documented carrying
capacity, GRDA could implement seasonal rules targeted at
the activity. More seasonal patrolmen could be hired to
enforce existing and future restrictions. Special events
could be limited to certain days of the week or the months
they would be allowed.
Id. at 17. Plainly, these remedies do not include the suspension
of commercial development.
With respect to development, the recreation plan seems to
contemplate a different approach: “The construction of commer-
cial facilities will be controlled by demand and the decreasing
availability of suitable locations.” Id. at 22. FERC recognized
this, noting in its order approving the amendment that “[u]nder
the approved recreation plan for the project, shoreline develop-
ment is currently controlled by demand and site availability.”
Order Approving Non-Project Use, 105 FERC at 61,505; see
also id. at 61,507 (noting, with respect to earlier expansion of
another marina, that “under the project’s recreation plan ap-
proved in 1998, shoreline development is currently controlled by
demand and site availability”).
This is not to say that FERC may rest on “demand and site
availability” in approving license amendments; on the contrary,
the FPA requires the Commission to weigh a number of factors.
It does make clear, however, that the recreation plan itself cannot
be read as imposing a duty on FERC to block development
solely in light of any particular level of carrying capacity, or to
assess proposals in light of a carrying capacity analysis.
And that is in fact not how FERC read the plan when it
approved it. FERC’s order approving the plan noted that GRDA
“does not specify a specific number for carrying capacity but
proposes to use the previously prepared recreation study to assist
in its determination and implementation of future actions at the
14
project to protect and promote recreation usage on Grand Lake.”
Order Modifying and Approving Long-Term Recreation Plan, 84
FERC at 64,227–28. FERC recognized GRDA’s commitment
that “if recreation use exceeds documented carrying capacity”
GRDA could take a number of specified steps — none of which
included a ban on development. Id. at 64,228. Petitioners rely
to a large extent on the evidence in the 1997 recreation plan to
establish that carrying capacity has been exceeded, but FERC
obviously had that evidence before it when it approved the plan
in 1998, and in particular approved GRDA’s decision to adopt
a less restrictive approach to development than that recom-
mended by the OSU study. See id. at 64,229. It was obvious
from the get-go, therefore, that neither the recreation plan nor
FERC’s approval of it interpreted carrying capacity as a neces-
sary limit on development, as petitioners now envisage it, and
certainly not as a limit on how FERC analyzes proposed license
amendments.
Consistent with the foregoing, FERC’s precedents since the
approval of the recreation plan do not dictate a “carrying capac-
ity” analysis. Of the many prior decisions approving dock
expansions on Grand Lake, only one squarely engaged the
concept, and it failed to give carrying capacity any discernible
weight. See Order Approving Non-Project Use of Project Lands
and Waters, 95 FERC ¶ 62,184, 64,268–70 (2001) (noting the
shortcomings of Dr. Caneday’s numeric estimate); compare,
e.g., Order Approving Non-Project Use of Project Lands, 97
FERC ¶ 62,132 (2001) (no discussion of carrying capacity);
Order Approving Non-Project Use of Project Lands, 94 FERC
¶ 62,263 (2001) (same); Order Modifying and Approving Non-
Project Use of Project Lands and Waters, 92 FERC ¶ 62,235
(2000) (same); Order Approving Non-Project Use of Project
Lands and Waters, 92 FERC ¶ 62,238 (2000) (same); Order
Approving Non-Project Use of Project Property, 89 FERC
¶ 61,139 (1999) (same).
15
Finally, the absence of support for petitioners’ broader
argument should come as no surprise. A carrying capacity
analysis would simply determine whether approval of a proposal
entails a net detriment with respect to recreational opportunities.
See Order Approving New License, 59 FERC at 63,230 (defining
carrying capacity as “the level of use . . . that would begin to
detract from a safe or enjoyable recreation experience”) (empha-
sis added). But just as we have held that environmental factors
do not have “preemptive force” in the weighing process, U.S.
Dep’t of Interior, 952 F.2d at 545, neither do recreational
factors. FERC recognized that approving the proposal would
result in “moderate long-term adverse impacts to boating use and
navigational safety,” 105 FERC at 61,507, but determined that
the perceived benefits — not challenged here — were nonethe-
less worth it. Our “narrowly circumscribed” role, U.S. Dep’t of
Interior, 952 F.2d at 543, does not include second-guessing that
judgment.
C. Petitioners next turn to what they decry as the absence
of any definitive standards for development on Grand Lake.
According to Brady and Creekmore, FERC should have imposed
a moratorium on development pending the creation of a CSMP,
or at least required the Arrowhead marina to conform to the
length restrictions in GRDA’s rules and regulations. Without a
CSMP, petitioners argue, the rules are the only possible stan-
dards to apply.
When it approved GRDA’s recreation plan in 1998, FERC
noted that the state agency should continue its efforts to develop
a CSMP, and directed the agency to file periodic reports
documenting its progress. Order Modifying and Approving
Long-Term Recreation Plan, 84 FERC at 64,231. The state
agency has yet to complete the CSMP, and FERC has accord-
ingly been compelled to consider license amendments on a case-
16
by-case basis. Such an approach does not provide a clear
roadmap for ordered development of the Pensacola project.
FERC staff, however, found that a CSMP “will require a
substantial and uncertain amount of time to develop.” Final
Environmental Assessment at 52. Under these circumstances, it
was within the Commission’s authority to act on the expansion
proposal instead of instituting a moratorium. At any rate, neither
the text of the FPA nor FERC’s prior orders relating to the
project preclude such a course. See, e.g., 16 U.S.C.
§ 803(a)(2)(A) (Commission shall consider “[t]he extent to
which the project is consistent with a comprehensive plan
(where one exists)”) (emphasis added); Order Modifying and
Approving Long-Term Recreation Plan, 84 FERC at 64,231–32
(requiring GRDA to submit progress reports but failing to
establish a deadline for development of the plan itself).
As for the departure from GRDA’s regulations, FERC noted
in its decision that the regulations had not been adopted by
FERC as license conditions. Order Approving Non-Project Use,
105 FERC at 61,507. The FPA sets forth the criteria that FERC
is to consider in approving a proposed license amendment, and
that process cannot be preempted or displaced by local regula-
tions. As FERC explained, “we may consider a proposal’s
consistency with these regulations, but we are not bound by
them.” Id.
D. Brady and Creekmore raise two other objections that
merit only brief discussion. First, they contend that the Commis-
sion improperly relied on the lack of county land use require-
ments in deciding that lakefront homeowners did not have a
“realistic expectation that their environs would remain undis-
turbed.” Id. at 61,507. Second, they argue that FERC disre-
garded two alternate configurations for the Arrowhead marina
proposed by petitioner Brady.
17
As for the first objection, petitioners rightly maintain, as we
just noted, that local land use requirements cannot supplant the
Commission’s duties under the FPA. But FERC does not
suggest otherwise; rather, the Commission explained that it
simply noted expectations affected by local land use — in
addition to the many other factors it examined — as part of the
overall statutory balancing process.
The second objection is simply incorrect. The final environ-
mental assessment considered, and rejected, both of Brady’s
alternate designs. See Final Environmental Assessment at 81.
III.
The Federal Power Act requires FERC to balance various
public uses in making licensing decisions. In its oversight of the
Pensacola project, the Commission to date has plainly seen the
balance of statutory factors as tipping in favor of development.
Brady and Creekmore make a vigorous case for the opposite
outcome, but so long as FERC’s decisions are not arbitrary or
capricious, or lacking in substantial evidence, this court does not
have the power to alter the Commission’s judgment. The
petition for review is denied.
WILLIAMS, Senior Circuit Judge, concurring: Two
generations have now grown up with Garrett Hardin’s famous
article, The Tragedy of the Commons, 162 SCIENCE 1243
(1968), exploring the risk of over-exploitation when many
people have unlimited access to a resource. Using the simple
example of a common field in which neighboring farmers are
all entitled to pasture their cows, Hardin pointed out that if
there are no constraints the farmers will keep adding cows to
the point where a farmer who did so would gain nothing;
because of the trampling and crowding of the already grazing
cows, the extra cow and her owner would enjoy no net
benefits. Under management aimed at maximizing the net
value of the pasture, by contrast, farmers would add cows
only to the point where the feeding benefits for the next added
cow just equaled the reduction in benefits for cows already in
the field. Here, the Federal Energy Regulatory Commission
flirted with Hardin’s insight, but it didn’t click.
As the court’s opinion makes clear, FERC supervised the
creation and adoption of a “recreation plan” for the Grand
Lake O’ the Cherokees. Although the drafters left the
ultimate goal somewhat obscure, the plan points strongly
toward net-value maximization. Using the ambiguous term
“carrying capacity,” it nonetheless looks essentially to
“benefits (net of congestion disutilities),” with suitable
additional adjustments for out-of-pocket costs and ecological
damage not already counted as part of the “congestion
disutilities.” Pensacola Recreation Management Plan, App. F,
at 41.
In considering whether to let the Grand River Dam
Authority increase the number of boat slips, FERC never
quite determined whether the extra boats would push usage
beyond the lake’s “carrying capacity.” To resolve its apparent
doubts, FERC reached out to find that any resulting injury
2
was balanced by “beneficial impacts on employment, tax
revenues and tourism.” Grand River Dam Authority, Order
Approving Non-Project Use of Project Property, 105 FERC ¶
61,100 at 61,506-07 (2003). It appears from the briefing that
FERC relies on § 4(e)’s reference to “power and development
purposes” and § 10(a)(1)’s reference to “improvement and
utilization of water-power development” to justify such a
balancing operation. As the court’s opinion emphasizes,
petitioners here never claimed that the Commission lacked
statutory authority to consider such factors in this context.
Thus we cannot resolve that issue. There are, however,
reasons to question FERC’s implicit reading of the statute.
The references seem aimed directly at the issue of
licensing hydro power dams themselves, a process obviously
involving a trade-off between the values of natural amenity
and power development. Further, in considering power
development, the Commission must consider associated
development: there would, for example, be little point in a
hydropower dam if there were no prospect of users for the
resulting power.
Here, by contrast, a recreational resource has been
created as a side effect of power development. The sole issue
is how to use it. Can the Commission rely on expected
increases in tourism, employment and tax revenues, under the
“development” language of §§ 4(e) and 10(a)(1), to justify the
possible loss in recreational value?
Consider tourism first. If the plan has identified a
standard that maximizes the lake’s net value as a tourist
resource (the level at which the marginal benefit from an extra
tourist equals the marginal detriment in congestion and other
costs), then to breach that standard, in the name of
“development,” is to say that FERC wants tourism to a degree
3
that diminishes the lake’s contribution to aggregate welfare.
Such an interpretation of the statute is not self-evidently
reasonable.
Taxes and employment seem no better a fit. Consider
another form of net maximization of a resource, oil-and-gas
unitization. Unitization aims at preventing over-exploitation
of the oil or gas field, i.e., exploitation that reduces the field’s
net value. Among the methods employed is limiting the
number of wells; at some point the reductions in output at
other wells exceed the costs of an extra well, just as the
congestion costs of an extra boat (or cow!) at some point
exceed its benefits. Suppose the Commission were in charge
of managing oil and gas pooling and unitization, and it found
that optimal exploitation of a field called for 20 wells. But
then it approved the addition of another 10 because their
construction and operation would generate local taxes and
employment. Could the employment and taxes drawn to the
locality (and presumably away from another locality, as the
money spent on the extra wells would have had multiplier
effects in its alternative uses) qualify as “development” under
the guiding statutes? Again, the answer is not obviously
affirmative.
Petitioners, however, failed to question whether the
Commission had authority to invoke tourism, employment
and tax revenues as offsetting values, or even to argue that
reliance on supposed increases in the three was arbitrary or
capricious in this context. I therefore join in the opinion of
the court.