Save Our Sebasticook v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 14, 2005 Decided December 9, 2005

No. 04-1221

SAVE OUR SEBASTICOOK,
PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT

AMERICAN RIVERS, ET AL.,
INTERVENORS

On Petition for Review of Orders of the
Federal Energy Regulatory Commission

Anthony W. Buxton argued the cause for petitioner. With
him on the briefs was Linda S. Lockhart.

Lona T. Perry, 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 L. Smeltzer and Anna T. Katselas, Attorneys, U.S.
Department of Justice, were on the brief for intervenor United
States Department of the Interior.
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Charles Owen Verrill, Jr., M. Evan Corcoran, and Sarah E.
Tomalty were on the brief for intervenors American Rivers, et al.

Before: GINSBURG, Chief Judge, and HENDERSON and
RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: In an application to the Federal
Energy Regulatory Commission, the owner and operator of a
hydroelectric project sought to surrender its license and remove
part of its dam on the Sebasticook River in Maine. Over the
objection of nearby landowners, the Commission granted the
application and denied the landowners’ petition for rehearing.
FPL Energy Maine Hydro, LLC, 106 F.E.R.C. ¶ 61,038 (Initial
Order), reh’g denied, 107 F.E.R.C. ¶ 61,120 (2004) (Rehearing
Order).

The owner of the hydroelectric project, FPL Energy Maine
Hydro, LLC, determined that installation of a fish passage
device, at a capital cost of $4.1 million with $130,000 in annual
operating expenses, rendered the project economically
infeasible. (The project’s annual revenues were approximately
$165,000 to $265,000.) Installation of the device – a fish lift –
became a condition on FPL’s license after the Commission
amended the license to include the terms of a settlement
agreement entered into by the project’s previous owner, federal
and state agencies, and conservation groups. See Edwards Mfg.
Co., 84 F.E.R.C. ¶ 61,227, at 62,092-93, 62,097 (1998).

Save Our Sebasticook (SOS), the landowners’ association,
complained that breaching the dam would drain the century-old
reservoir behind it, diminishing property values and depriving
SOS’s members of the reservoir’s recreational benefits. SOS
urged the Commission to require FPL to install a less expensive
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fish passage device – a “Canavac” fish pump – and to continue
operating the project. There was some doubt whether the fish
pump was a viable alternative. At the Commission’s direction,
FPL consulted with other signatories to the agreement and
reported back that most of the parties, including the United
States Department of the Interior, insisted on installation of the
fish lift or partial removal of the dam to allow fish passage.

After further proceedings unnecessary to recount, the
Commission granted FPL’s surrender application pursuant to
section 6 of the Federal Power Act, 16 U.S.C. § 799, which
provides that licenses “may be altered or surrendered only upon
mutual agreement between the licensee and the Commission.”
See Initial Order, 106 F.E.R.C. at 61,143. Among the reasons
for its decision, the Commission stated that “a licensee is not
compelled to continue operating a project if it wishes to
surrender its license.” Id. While the Commission had the
options of conditioning surrender on “partial or total dam
removal or to approve it without dam removal,” id. at 61,143-44,
it believed that partial dam removal would be in the public
interest in light of the “long-standing fisheries goal in this river
basin,” id. at 61,144. In this initial order, and in its order
denying SOS’s rehearing petition, the Commission rejected the
plea that it amend FPL’s license to require installation of a fish
pump, something the Commission thought it could not do unless
FPL had applied for an amendment to its license, which it had
not. See id. at 61,142-43; Rehearing Order, 107 F.E.R.C. at
61,404.

SOS’s petition for judicial review raises four objections to
the Commission’s orders: (1) the Commission erred in
concluding that it had no discretion to deny the surrender
application or to force FPL to continue operating the project
with license modifications; (2) the Commission should have
evaluated its options under the “best adapted to a comprehensive
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plan” standard instead of the “public interest” standard; (3) the
Commission’s decision misinterprets section 6 of the Federal
Power Act; and (4) the Commission improperly allowed the
agreement between FPL and the federal and state agencies and
conservation groups to affect its judgment.

Only the fourth of these objections is properly before us.
Neither SOS nor the individual landowners raised the other three
in their rehearing requests. Under section 313(b) of the Federal
Power Act, “[n]o 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 ground for failure so to do.” 16
U.S.C. § 825l(b). Enforcement of this provision, which we have
considered to pose a jurisdictional bar, see, e.g., City of Orrville
v. FERC, 147 F.3d 979, 990 (D.C. Cir. 1998); Kelley ex rel.
Mich. Dep’t of Natural Res. v. FERC, 96 F.3d 1482, 1487 (D.C.
Cir. 1996); Town of Norwood v. FERC, 906 F.2d 772, 774 (D.C.
Cir. 1990), enables the Commission to correct its own errors,
which might obviate judicial review, or to explain why in its
expert judgment the party’s objection is not well taken, which
facilitates judicial review. See, e.g., Granholm ex rel. Mich.
Dep’t of Natural Res. v. FERC, 180 F.3d 278, 281 (D.C. Cir.
1999); Nw. Pipeline Corp. v. FERC, 863 F.2d 73, 77-78 (D.C.
Cir. 1988). SOS asks us to construe its claims on rehearing
liberally because the organization was not then represented by
counsel. But even the most generous construction would not
have alerted the Commission to the legal arguments SOS now
raises before us. The statement in SOS’s rehearing petition
reminding the Commission of its “duty to consider all relevant
facts” did not satisfy 16 U.S.C. § 825l(b). See Entergy Servs.,
Inc. v. FERC, 391 F.3d 1240, 1247 (D.C. Cir. 2004). To hold
that this empty generality adequately raised SOS’s legal
objections would be to disregard the provision and the reasons
underlying it.
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Nor do we believe that SOS has presented, in the words of
the statute, a “reasonable ground for [its] failure” to raise these
objections on rehearing. 16 U.S.C. § 825l(b). This exception is
reserved for an “extraordinary situation.” Wis. Power & Light
Co. v. FERC, 363 F.3d 453, 460 (D.C. Cir. 2004) (internal
quotation marks omitted); see also ASARCO, Inc.v. FERC, 777
F.2d 764, 774 (D.C. Cir. 1985) (interpreting identical language
in the Natural Gas Act). SOS reasons that it would have done
no good for it to present its objections in a rehearing petition
because the Commission would have rejected them. This
involves the troubling proposition that the less convincing the
party’s objection, the more willing a court should be to excuse
the party’s failure to present it to the Commission. SOS’s claim
also proves too much. If the Commission’s probable rejection
of a party’s argument were enough to constitute a “reasonable
ground,” very few arguments against the Commission’s original
order would need to be presented on rehearing. Yet we have
held that a party must include its objection in a rehearing
petition despite the fact that “the point sought to be appealed
was raised, considered and rejected in the original proceeding.”
ASARCO, Inc., 777 F.2d at 773 (explaining identical provision
in the Natural Gas Act). Even if it were very likely that the
Commission would deny the rehearing petition, a reviewing
court would at least have the benefit of the agency’s expert view
of why it thought the petitioner’s arguments failed.

There are two cases, both cited by SOS in its reply brief, in
which we found that a party had a “reasonable ground” for
disregarding the rehearing requirement. Neither is comparable
to this case. In Arkansas Power & Light Co. v. Federal Power
Commission, 517 F.2d 1223 (D.C. Cir. 1975), the agency had
later acknowledged “that its action under challenge had been
unlawful.” ASARCO, Inc., 777 F.2d at 774 (explaining Ark.
Power & Light Co., 517 F.2d at 1237). And in Public Service
Co. of New Mexico v. FERC, 857 F.2d 833 (D.C. Cir. 1988), the
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petitioner had twice presented its objections to and supporting
arguments against a particular Commission practice, the
Commission had given its reasons for rejecting those objections,
and an intervening decision of this court had found the
Commission’s practice illegal. Id. at 836.

This brings us to the only objection properly before us.
SOS argues, as it did in its rehearing petition, that the
Commission wrongly treated the agreement between FPL and
others as limiting the Commission’s options in deciding whether
to accept FPL’s surrender of its license. But it was the nature of
FPL’s application that constrained the Commission’s choices.
See Initial Order, 106 F.E.R.C. at 61,143-44; Rehearing Order,
107 F.E.R.C. at 61,404. When a licensee applies for a surrender
of its license, the Commission believes it may not compel the
licensee to continue operating the project. Initial Order, 106
F.E.R.C. at 61,143; Rehearing Order, 107 F.E.R.C. at 61,404;
see Niagara Mohawk Power Corp., 83 F.E.R.C. ¶ 61,226, at
62,007 (1998); see also Niagara Mohawk Power Corp. &
Fourth Branch Assocs. (Mechanicville), 98 F.E.R.C. ¶ 61,227,
at 61,903, reh’g denied, 100 F.E.R.C. ¶ 61,185 (2002); Fourth
Branch Assocs. (Mechanicville) v. Niagara Mohawk Power
Corp., 89 F.E.R.C. ¶ 61,194, at 61,596 n.60 (1999). It follows
from this legal principle, which SOS may not challenge, that
FPL’s application to surrender its license gave the Commission
three choices – allow the surrender conditioned on removal of
the dam in full, in part, or not at all. Initial Order 106 F.E.R.C.
at 61,143-44; Rehearing Order, 107 F.E.R.C. at 61,404. It
would have been a different matter if FPL had sought to amend
its license. That FPL did not seek this relief because it was
bound by the agreement is of no particular moment. Separate
contractual arrangements often constrain parties appearing
before the Commission. Nothing in the Federal Power Act, or
at least nothing SOS has mentioned, empowered the
Commission to consider the validity of the agreement in this
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license surrender proceeding. See Rehearing Order, 107
F.E.R.C. at 61,404.

Accordingly, we dismiss the petition for judicial review in
part and deny it in part.

So ordered.