United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 9, 2009 Decided December 22, 2009
No. 08-1224
JACKSON COUNTY, NORTH CAROLINA ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
DUKE ENERGY CAROLINAS, LLC AND UNITED STATES
DEPARTMENT OF THE INTERIOR,
INTERVENORS
On Petition for Review of Orders
of the Federal Energy Regulatory Commission
Philip M. Marston argued the cause for the petitioners.
Paul V. Nolan was on brief.
Jennifer S. Amerkhail, Attorney, Federal Energy Regulatory
Commission, argued the cause for the respondent. Cynthia A.
Marlette, General Counsel, and Robert H. Solomon, Solicitor,
were on brief.
John C. Cruden, Acting Assistant Attorney General, United
States Department of Justice, and Robert J. Lundman and John
2
L. Smeltzer, Attorneys, were on brief for intervenor United
States Department of the Interior.
John A. Whittaker, IV was on brief for intervenor Duke
Energy Carolinas, LLC.
Before: HENDERSON and TATEL, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Petitioners
Jackson County, N.C., Town of Franklin, N.C. and the Friends
of Lake Glenville Association, Inc. challenge orders of the
Federal Energy Regulatory Commission (FERC or Commission)
which granted the application of Duke Energy Carolinas, LLC
(Duke) to surrender its license to operate the Dillsboro, N.C.
hydroelectric project (Dillsboro Project) and to remove the
project’s dam and powerhouse. See Duke Energy Carolinas,
LLC, 120 F.E.R.C. ¶ 61,054 (July 19, 2007) (Surrender Order),
reh’g granted in part, 123 F.E.R.C. ¶ 61,069 (Apr. 22, 2008)
(Rehearing Order). We deny the petition for review because the
challenged decisions are not “arbitrary and capricious or
otherwise contrary to law.” Transmission Agency of N. Cal. v.
FERC, 495 F.3d 663, 671 (D.C. Cir. 2007) (internal quotation
omitted).
I.
The Dillsboro Project, one of seven hydroelectric projects
Duke operates in North Carolina’s Nantahala and Tuckasegee
River Basins, consists of a concrete masonry dam and a
powerhouse with two generating units on the Tuckasegee River
in Jackson County. In July 2003, Duke applied to FERC to
renew its license to operate the Dillsboro Project after its then-
effective license expired on July 31, 2005. In the application
cover letter, however, Duke advised FERC that it might
thereafter apply to surrender its license instead. In May 2004,
3
Duke filed an application to surrender the license, proposing to
remove the project’s dam and powerhouse pursuant to two
settlement agreements—the Nantahala Cooperative Stakeholder
Team’s Settlement Agreement (Nantahala Agreement) and the
Tuckasegee Cooperative Stakeholder Team’s Settlement
Agreement (Tuckasegee Agreement). Each settlement
agreement had been approved by a majority of “stakeholders” in
the respective river basin (Nantahala or Tuckasegee), including
various resident and property associations, environmental and
wildlife organizations, North Carolina environmental agencies,
the U.S. Fish and Wildlife Service (FWS) and the U.S. Forest
Service. The Tuckasegee Agreement provided for the surrender
of the Dillsboro license (and removal of the dam and
powerhouse), while Duke’s relicensing applications for three
other Tuckasegee River hydroelectric projects—the Bryson,
East Fork and West Fork Projects—would proceed. The
Nantahala Agreement covered the Franklin, Mission and
Nantahala Projects in the Nantahala River Basin and provided
that all three should be relicensed and remain in operation.1
Attached to the Dillsboro surrender application was an
“Environmental Assessment and Biological Assessment”
analyzing the effects of various alternative actions Duke could
take with regard to the Dillsboro dam (no action, partial dam
removal or full dam removal) and the powerhouse (no action,
powerhouse closure or powerhouse removal).
On June 16, 2005, a group of 12 stakeholders (the
petitioners among them) submitted an “Offer of Preferred
Settlement Agreement.” The accompanying “Tuckasegee River
and Nantahala Area Preferred Settlement Agreement” (Preferred
1
The licenses for Bryson, Franklin and Mission expired in
mid-2005; the licenses for East Fork, West Fork and Nantahala
expired in early 2006. Relicensing applications, filed in 2003 or 2004,
are currently pending for all of them.
4
Settlement Agreement) proposed that the Tuckasegee
Agreement be revised to provide that the Dillsboro Project be
relicensed, that Duke transfer its license, its equipment and all
interests in the Project to Jackson County (or its designee) as a
charitable contribution and that Duke contribute $500,000 to
state agencies “for river, stream and lakeshore restoration” and
take measures to safeguard the River, the Project and local
wildlife. Preferred Settlement Agreement, Duke Energy
Carolinas, LLC, Project Nos. P-2602-005, -007, at 11-12 (June
16, 2005).
The Commission issued a final Environmental Assessment
(EA) on July 14, 2006, setting out as its “recommended
alternative” the complete removal of the Dillsboro dam and
powerhouse, as Duke had proposed. Final Environmental
Assessment for Hydropower Licenses—Nantahala East Projects,
Duke Energy Carolinas, LLC, Project Nos. P-2602-005, -007, at
352-54 (July 2006). The EA determined that, despite
“significant short-term effects”—including effects “on habitat
for the Appalachian elktoe mussel, a federally endangered
species”—removing the dam and powerhouse would not cause
resources (“including geology, water quantity and quality,
fisheries, terrestrial, aesthetic, cultural, and recreational”
resources)—to experience “significant long-term adverse
effects.” Id. at 389. In particular, the EA found that the action,
as proposed, would (1) “restore the river to free-flowing riverine
conditions and allow continuous access to 9.5 miles of upstream
river habitat previously blocked by Dillsboro Dam,” id. at 146;
and (2) “benefit the populations of the Appalachian elktoe in
the Tuckasegee River” because the “increase in available habitat
would improve [the elktoe’s] overall abundance . . . and
contribute to the FWS recovery efforts for the species,” id. at
191, 193. Accordingly, the EA concluded the license surrender
and dam/powerhouse removal “would not constitute a major
5
federal action significantly affecting the quality of the human
environment.” Id. at 389.2
In August 2006, the FWS filed its “Biological Opinion”
(BiOp) concluding that the “incidental take” that “may occur . . .
as a result of demolition activities associated with the
decommissioning of the Dillsboro Dam” is “not likely to result
in jeopardy to the Appalachian elktoe.” Biological Opinion,
Duke Energy Carolinas, LLC, Project Nos. P-2602-005, -007
(Aug. 20, 2006), at 43, 45.3
On July 19, 2007, FERC issued the Surrender Order which
granted Duke’s surrender application, approving removal of the
dam and powerhouse, and dismissed Duke’s mooted application
for relicensure. See Surrender Order, 120 F.E.R.C. at 1 ¶ 1. In
the order, FERC concluded that, notwithstanding “short-term
environmental impacts and . . . a loss of 0.225 MW of capacity,”
surrender “will benefit environmental resources in the
Tuckasegee River, and is in the public interest” because it “will
2
“Under the National Environmental Policy Act, federal agencies
are required to prepare an environmental impact statement . . . for
‘every . . . major Federal action[ ] significantly affecting the quality of
the human environment.’ ” City of Dania Beach, Fla. v. FAA, 485
F.3d 1181, 1189 (D.C. Cir. 2007) (quoting 42 U.S.C. § 4332(2)(C))
(first ellipsis added). “At a minimum, agencies contemplating a major
federal action must prepare an ‘environmental assessment’ to
determine whether the action will cause a ‘significant’ environmental
impact.” Id. (citing 40 C.F.R. § 1508.9(a)).
3
FERC had requested FWS’s opinion pursuant to its duty under
the Endangered Species Act to “consult[] with” FWS to “insure that
any action authorized, funded, or carried out by [FERC] is not likely
to jeopardize the continued existence of any endangered species or
threatened species or result in the destruction or adverse modification
of habitat of such species which is determined . . . to be critical.” 16
U.S.C. § 1536(a)(2).
6
result in greater upstream and downstream fish movement,
wider distribution of Appalachian elktoe mussels, as well as
improvement of recreational opportunities in the Tuckasegee
River.” Id. at 20 ¶ 50. The Commission also imposed measures
to safeguard the Appalachian elktoe and to minimize the
downstream transport of sediments and directed that Duke
construct a new public boat launch and parking area.
Various parties filed requests for rehearing and clarification,
among them a group of entities that included the petitioners.
Requests for Rehearing of Jackson County, N.C. et al., Duke
Energy Carolinas, LLC, Project Nos. P-2602-005, -007 (Aug.
20, 2007) (Jackson County Rehearing Request). The
petitioners’ request asked that the Commission rescind the
Surrender Order on various grounds and reinstate the Dillsboro
Project license. FERC rejected the request in its April 22, 2008
Rehearing Order. The petitioners filed a timely petition for
review of FERC’s orders.
II.
As a preliminary matter Duke challenges the petitioners’
standing under Article III of the U.S. Constitution to bring this
action. “The ‘irreducible constitutional minimum of standing
contains three elements’: (1) injury-in-fact, (2) causation, and
(3) redressability.” Ass’n of Flight Attendants—CWA v. U.S.
Dep’t of Transp., 564 F.3d 462, 464 (D.C. Cir. 2009) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992))
(internal quotation omitted). To establish injury, a petitioner
“ ‘must[, inter alia,] show . . . it has suffered an injury in fact
that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical.’ ” Dominion
Transmission, Inc. v. FERC, 533 F.3d 845, 852 (D.C. Cir. 2008)
(quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC) Inc., 528 U.S. 167, 180 (2000)) (internal quotations
omitted) (alterations in original). Duke contends Jackson
County lacks standing because it has not produced “any rigorous
7
data or studies demonstrating the required ‘substantial
probability,’ ” Intervenor Duke’s Br. 24 (quoting Grassroots
Recycling Network, Inc. v. EPA, 429 F.3d 1109, 1112 (D.C. Cir.
2005)), to support its “assert[ions] that [the Dillsboro Project]
plays a ‘significant socio-economic role in the Town of
Dillsboro’ and in the County and . . . is important to tourism and
has aesthetic value significant to tourism,” id. (quoting Pet’rs’
Br. 2) (citing id. at 8). We conclude, however, that Jackson
County has alleged a sufficient injury-in-fact, namely “the
threatened physical destruction of property within its borders,”
which will substantially alter Jackson County’s geography by
converting a dammed lake into a free flowing river and
eliminate a possible power source. Because Jackson County has
standing to bring this action, we need not inquire into the
standing of the other two petitioners as all three parties make the
same arguments in joint briefs. See Comcast Corp. v. FCC, 579
F.3d 1, 6 (D.C. Cir. 2009) (“ ‘[I]f one party has standing in an
action, a court need not reach the issue of the standing of other
parties when it makes no difference to the merits of the case.’ ”
(quoting Ry. Labor Executives’ Ass’n v. United States, 987 F.2d
806, 810 (D.C. Cir 1993))). Accordingly, we address the merits
of the petitioners’ arguments.
A. State Water Quality Certification
First, the petitioners contend FERC issued the Surrender
Order based on an invalid section 401 certification issued by the
North Carolina Division of Water Quality (NCDWQ). Section
401 of the Clean Water Act (CWA), 33 U.S.C. § 1341, requires
that an “applicant for a Federal license or permit to conduct any
activity . . . which may result in any discharge into the navigable
waters, shall provide the licensing or permitting agency a
certification from the State in which the discharge originates or
will originate, that any such discharge will comply with the
applicable provisions of [33 U.S.C.] sections 1311, 1312, 1313,
8
1316, and 1317.” 33 U.S.C. § 1341(a)(1).4 Section 401 further
directs that each State must “establish procedures for public
notice in the case of all applications for certification by it and,
to the extent it deems appropriate, procedures for public
hearings in connection with specific applications,” 33 U.S.C.
§ 1341(a)(1)—a provision we have interpreted to “also require[]
states to comply with their public notice procedures, and
therefore [to] require[] FERC to obtain some minimal
confirmation of such compliance, at least in a case where
compliance has been called into question.” City of Tacoma,
Wash. v. FERC, 460 F.3d 53, 68 (D.C. Cir. 2006). North
Carolina has established a certification procedure which
generally requires notice by publication in a local newspaper of
“each pending application for an individual certification” at least
15 days before NCDWQ final action and not more than 20 days
after the application is accepted. 15A N.C. Admin. Code
§ 2H.0503(a).5 Duke applied for section 401 certification as
required but NCDWQ apparently failed to publish the required
notice of the application. Jackson County argues, as it did on
rehearing, that the lack of notice rendered the 2005 certification
invalid. We disagree.
4
The enumerated provisions set out requirements for effluent
limitations and water quality standards.
5
In addition, if NCDWQ decides to conduct a hearing on the
application, it must provide notice thereof by publication 30 days
before the hearing. 15A N.C. Admin. Code § 2H.0503(d). To the
extent Jackson County claims injury from NCDWQ’s failure to
provide public notice of its intent to act on Duke’s application, see
Pet’rs’ Br. 29 (citing 15A N.C. Admin. Code 2H.1303(a)(1)), Jackson
County relies on an inapplicable regulation. Compare 15A N.C.
Admin. Code 2H.0503 (governing “PUBLIC NOTICE” for “WATER
QUALITY CERTIFICATION”) with 15A N.C. Admin. Code
2H.1303(a)(1) (cited by petitioners).
9
Duke filed its “Application for 401 Water Quality
Certification for License Surrender” with NCDWQ, attached to
a cover letter dated March 11, 2005. Duke filed copies of the
application with FERC on March 17, 2005 and on March 28,
2005, mailed copies of the cover letter—stamped as “received”
by NCDWQ on March 17, 2005—to FERC and to all parties to
the FERC surrender proceeding, including Jackson County. See
Letter from Garry S. Rice, Duke Associate General Counsel to
FERC, Duke Energy Carolinas, LLC, Project Nos. P-2602-005,
-007 (Mar. 29, 2005); Pet’rs’ Br. 30 n.23 (acknowledging
Jackson County was served with stamped copy on March 29,
2005). Thus, Jackson County had timely actual notice of the
state certification application upon its receipt of same and the
purpose of section 401’s notice by publication requirement was
thereby fulfilled. Accordingly, we conclude that NCDWQ’s
failure to comply with the statutory notice requirement was
harmless. Cf. Nat’l Mining Ass’n v. Mine Safety & Health
Admin., 116 F.3d 520, 531 (D.C. Cir. 1997) (“ ‘[E]ven if [an]
agency has not given notice in the statutorily prescribed fashion,
actual notice will render the error harmless.’ ” (quoting Small
Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506,
549 (D.C. Cir. 1983))) (first alteration added); Nat’l Ass’n of
Home Builders v. Defenders of Wildlife, 551 U.S. 644, 659-60
(2007) (“ ‘In administrative law, as in federal and criminal
litigation, there is a harmless error rule.’ ” (quoting PDK Labs.,
Inc. v. U.S. Drug Enforcement Admin., 362 F.3d 786, 799 (D.C.
Cir. 2004))).6
6
Jackson County claims in its reply brief it was “assured by the
DWQ that the 2005 Certification was ‘for surrender’ and that a
subsequent 401 certification would be required for dam removal.”
Reply Br. 25 (citing letter from NCDWQ). The certification
application, however, expressly identified the subject “project” as
“removal of the Dillsboro Dam” and the certification itself references
dam removal in two places. See Certification Application for 401
10
B. Environmental Assessment
Jackson County raises several objections to FERC’s EA.
We address the objections seriatim.
First, Jackson County asserts that FERC improperly
“segmented” its review of the four Tuckasegee projects from the
three Nantahala projects and from each other. We believe the
Commission appropriately limited the scope of its review. It is
true that “[a]gencies may not evade their responsibilities under
NEPA by artificially dividing a major federal action into smaller
components, each without ‘significant’ impact.’ ” Coal. on
Sensible Transp., Inc. v. Dole, 826 F.2d 60, 68 (D.C. Cir. 1987)
(citing Taxpayers Watchdog, Inc. v. Stanley, 819 F.2d 294, 298
(D.C. Cir. 1987)). “The rule against segmentation, however, is
not required to be applied in every situation. To determine the
appropriate scope for an EIS, courts have considered such
factors as whether the proposed segment (1) has logical termini;
(2) has substantial independent utility; (3) does not foreclose the
opportunity to consider alternatives, and (4) does not
irretrievably commit federal funds for closely related projects.”
Taxpayers Watchdog, Inc., 819 F.2d at 298. In this case, FERC
Water Quality Certification, Duke Energy Carolinas, LLC, Project
Nos. P-2602-005, -007, at 11-12 (filed Mar. 17, 2005), at 4; id, N.C.
Water 401 Quality Certification, at 3 (filed Mar. 24, 2005) (conditions
5, 6). In fact, surrender alone, without removal, would not result in a
“discharge into the navigable waters,” 33 U.S.C. § 1341(a)(1), so as
to trigger the certification requirement. See John C. Jones, 107
F.E.R.C. ¶ 61,279, 62,309 n.8 (2004) (“[U]nder section 401(a) of the
Clean Water Act, 33 U.S.C. § 1341(a), water quality certification is
required only if a proposed activity would result in a discharge into the
waters of the United States. Such a discharge would be created by
removal of the dam but not by mere surrender of an exemption.”).
Duke did obtain a second compliance certification from NCDWQ,
issued on November 21, 2007, approving the method it proposed to
use to remove the dam.
11
did not “segment” the individual Tuckasegee projects but
instead considered all four in a single EA and, as the petitioners
acknowledge, did indeed address the cumulative effects of the
four projects—if not with the result the petitioners desired. See
EA at 44-45 (setting out scope of cumulative effects analysis);
id. at 105-06, 156-57, 284-85 (analyzing cumulative effects on
water quantity and quality, aquatic resources and recreational
resources); Jackson County Reh’g Req. at 53 (asserting
Surrender Order “ignores the associated cumulative impacts to
which the EA devoted considerable ink (though little wisdom)”).
Throughout, FERC noted in particular the interconnectedness of
the East and West Fork Projects with the Dillsboro dam because
the flow from the former projects largely determined the
capacity of the latter project as a “run-of-the-river” project. See,
e.g., Surrender Order at 2 ¶ 4; Rehearing Order at 2 ¶ 4, at 23
¶ 65 n.73. That FERC treated the two Nantahala River projects
and the Tuckasegee River projects separately was reasonable
under Taxpayers Watchdog, Inc., 819 F.2d at 298. The
Nantahala projects are geographically distinct from the
Tuckasegee projects, located on a separate river and covered by
a separate, albeit related, settlement agreement. Nor is it true,
as Jackson County seems to suggest, that approving the license
surrender and dam removal for the Dillsboro Project—the so-
called “linchpin” of the two settlement agreements, see, e.g.,
Pet’rs’ Br. 49—will automatically trigger FERC approval of the
other features of the two settlements. Each project’s relicensing
application requires separate approval by FERC based on an
analysis thereof. See 16 U.S.C. § 797(e) (“Issue of licenses for
construction, etc., of dams, conduits, reservoirs, etc.”); see
generally 18 C.F.R. ch. I, subch. A, pt. 4 (“Licenses, Permits,
Exemptions, and Determination of Project Costs”).
Second, Jackson County asserts FERC failed to consider
alternatives to license surrender and dam/powerhouse
removal—in particular, alternatives to licensure surrender which
would keep the project licensed and operating in some form,
12
such as the proposal in the Preferred Settlement Agreement to
relicense the Dillsboro Project and transfer it to Jackson County.
See also Pet’rs’ Br. 60 (suggesting “relicensing the Dillsboro
Project by the current licensee” and “commencing a new round
of competition”); id. at 63 (“alternative of enhancing renewable
energy generation at the site”) (emphasis in original). FERC
dismissed such alternatives, however, in reliance on its long-
held policy that it lacks authority to relicense or transfer a
license and facilities without the licensee’s consent. See
Surrender Order at 13 ¶ 28 (“A licensee cannot be required to
retain or renew its license if it wishes to surrender. Likewise,
the Commission cannot compel a transfer, and in any case, no
entity developed a transfer proposal, nor has Duke expressed
any interest in one.”) (footnotes omitted) (citing Ariz. Pub. Serv.
Co., 109 F.E.R.C. ¶ 61,036 at ¶ 39 & n.34 (2004)); Wellesley
Rosewood Maynard Mills, L.P., 108 F.E.R.C. ¶ 61,048 (2004);
Rehearing Order at 12, ¶ 31 n.41 (“[W]e cannot force a licensee
to seek a new license for its project upon expiration of the
existing license. Thus, given Duke’s express desire to surrender
its license, any alternative predicated on the company’s
receiving a new license is not feasible and merits no further
consideration.”). While Jackson County offered before the
Commission to assume responsibility for the dam and
powerhouse, and thereby save Duke the costs of removal and
mitigation, it did not then challenge FERC’s transfer policy
itself and is therefore foreclosed from doing so now. See Save
Our Sebasticook v. FERC, 431 F.3d 379, 381-82 (D.C. Cir.
2005) (petitioner forfeited challenge not raised before FERC to
Commission’s “legal principle” that it “may not compel”
licensee that applies to surrender license “to continue operating
the project” (citing 16 U.S.C. § 825l(b)). Jackson County also
contends FERC improperly ignored “alternatives regarding fish
passage proposed by Jackson County.” Pet’rs’ Br. 63. FERC
reasonably rejected this alternative, however, concluding that
“while the Commission may have the authority to order the
13
construction of such facilities as a condition of license surrender,
[it] would have no jurisdiction to require ongoing maintenance
and monitoring to ensure their effectiveness.” Rehearing Order
at 12 ¶ 32.7
Finally, Jackson County argues, summarily, that FERC
violated 18 C.F.R. § 385.602 which “provides that an offer of
settlement may be submitted by any party to a proceeding” as
well as FERC’s (unidentified) “prior cases” when it “fail[ed] to
review [the “Offer of Preferred Settlement Agreement”] as a
legitimate offer of settlement.” Pet’rs’ Br. 69. FERC
considered the Preferred Settlement Agreement but rejected it as
“simply a recitation of the filer’s position” and “a settlement
agreement in name only” because "[n]either Duke, the licensee,
nor any of the federal and state resource agencies that have
played a major role in the Dillsboro surrender are parties to it.”
Surrender Order at 6 ¶ 12 n.14. This characterization of the
document was not arbitrary or capricious.
7
Jackson County also asserts the EA improperly relied on FWS’s
BiOp because the BiOp “contained multiple factual and analytic
errors.” Pet’rs’. Br. 64. The alleged errors, however, are either
immaterial to the BiOp’s scientific determinations (characterization of
Dillsboro Project as currently operational), matters of non-factual
opinion (opinion dam removal “will not adversely affect aesthetics and
other recreational values,” BiOp at 14) or related to segmentation
issues we have addressed above (effect of upstream projects on
Appalachian elktoe). Accordingly, they provide no ground for
upsetting FERC’s decisions. Granted FWS signed on to the
Tuckasegee and Nantahala Agreements before drafting the BiOp (a
practice FWS has apparently ceased, see Pet’rs’ Br. 67 & n.30) but
Jackson County offers no reason to infer that FWS’s status as
signatory to the settlement agreements biased its staff’s scientific
determinations as expressed in the subsequently issued BiOp.
14
For the foregoing reasons, the petition for review is denied.
We emphasize that nothing in this opinion should be construed
to affect the relicensing proceedings for the other six Nantahala
and Tuckasegee River projects currently pending before the
Commission. See supra p. 3 n.1.
So ordered.