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L.S. STARRETT CO. v. F.E.R.C.
650 F.3d 19 (2011)
United States Court of Appeals, First Circuit.
Heard January 3, 2011.
Starrett II, 129 FERC ¶ 62,053, at 64,160; see also 16 U.S.C. § 817(1). The Commission concluded that Starrett's dam was subject to licensing under the fourth criterion. We lay out the governing standard of review, and then address each of the three prongs of the fourth criterion. A. Standard of Review Reviewing the Commission's orders under the Administrative Procedures Act, we "must reverse an agency action that is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" Knott v. FERC, 386 F.3d 368, 372 (1st Cir.2004) (quoting Wis. Valley Improvement Co. v. FERC, 236 F.3d 738, 742 (D.C.Cir.2001)); see also 5 U.S.C. § 706. "We review FERC's findings of fact for `substantial evidence,' and if so supported, such findings are conclusive." Knott, 386 F.3d at 371 (quoting Thomas Hodgson & Sons v. FERC, 49 F.3d 822, 825 (1st Cir. 1995)) (internal quotation marks omitted). "We `defer to the agency's expertise . . . so long as its decision is supported by "substantial evidence" in the record and reached by "reasoned decisionmaking," including an examination of the relevant data and a reasoned explanation supported by a stated connection between the facts found and the choice made.'" Id. (quoting Ne. Utils. Serv. Co. v. FERC, 993 F.2d 937, 944 (1st Cir.1993) (citation omitted)). "`Pure' legal errors require no deference to agency expertise, and are reviewed de novo." Id. at 372 (quoting Ne. Utils. Serv. Co., 993 F.2d at 944) (internal quotation marks omitted). "Questions involving an interpretation of the FPA involve a de novo determination by the court of congressional intent; if that intent is ambiguous, FERC's conclusion will only be rejected
if it is unreasonable." Id. (quoting Ne. Utils. Serv. Co., 993 F.2d at 944) (internal quotation marks omitted). When determining congressional intent, courts must first ask whether Congress has "directly addressed the precise question at issue." Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); see also Massachusetts v. Sebelius, 638 F.3d 24, 30 (1st Cir.2011). If Congress has indeed addressed the "precise question at issue" and "the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. B. A "Commerce Clause Stream" Section 23(b) requires us to ask whether L.S. Starrett's dam is on "a stream over which Congress has Commerce Clause jurisdiction," see 16 U.S.C. § 817(1), i.e., a "Commerce Clause stream." The Commission concluded, and L.S. Starrett does not dispute on appeal, that the Millers River is a "Commerce Clause stream." See Starrett III, 130 FERC ¶ 61,112, at 61,521 n. 6. We agree with the Commission's assessment because "the headwaters and tributaries of navigable waters are [C]ommerce [C]lause streams," id. (citing Fed. Power Comm'n v. Union Elec. Co., 381 U.S. 90, 94-96, 85 S.Ct. 1253, 14 L.Ed.2d 239 (1965)), and the Millers River is a tributary of the Connecticut River, which is navigable, see Starrett II, 129 FERC ¶ 62,053, at 64,161 n. 6.
1. Section 23(b), codified at 16 U.S.C. § 817(1), governs the licensing of dams and other project works on non-navigable waters and provides, in relevant part, as follows:
Any person, association, corporation, State, or municipality intending to construct a dam or other project works across, along, over, or in any stream or part thereof, other than those defined in this chapter as navigable waters, and over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States shall before such construction file declaration of such intention with the Commission, whereupon the Commission shall cause immediate investigation of such proposed construction to be made, and if upon investigation it shall find that the interests of interstate or foreign commerce would be affected by such proposed construction, such person, association, corporation, State, or municipality shall not construct, maintain, or operate such dam or other project works until it shall have applied for and shall have received a license under the provisions of this chapter. If the Commission shall not so find, and if no public lands or reservations are affected, permission is granted to construct such dam or other project works in such stream upon compliance with State laws.
16 U.S.C. § 817(1).
2. Given the state of the law as herein expounded, we are required to affirm the exercise of the FERC's jurisdiction over the dam in question. We do so without much enthusiasm, however. It may not be coincidental that Starrett, which was established in 1880 and is the principal employer in Athol, Massachusetts, is the last of its kind remaining within our borders. Its attempt to keep its manufacturing costs down to allow it to remain competitive with foreign industry has unfortunately come to naught in the face of bureaucratic outreach. Cf. United States v. Johnson, 437 F.3d 157, 159 (1st Cir.), withdrawn and vacated, 467 F.3d 56 (1st Cir. 2006); Michele Morgan Bolton, Cranberry Lawsuit at an End, Boston Globe, May 26, 2011, http://www.boston.com/news/local/articles/2011/05/ 26/21_year_legal_battle_over_cranberry_bogs_in_carver_ends/?page=full
3. Starrett explains that "installed capacity," or "nameplate capacity," is the maximum potential generating capacity of a turbine generator. "Actual capacity," on the other hand, is the measured capacity upon installation, which is affected by various site conditions.
4. Starrett believed that it was not required to obtain FERC licensing because of certain conversations that GZA had with Michael Spencer, a FERC employee. According to Starrett, on August 9, 2007, GZA contacted the Commission's small hydropower hotline, and Spencer informed GZA that repairs to the Project would not trigger FERC licensing jurisdiction so long as the total capacity of the Project would not exceed the total listed in Starrett I (i.e., 362 kW) and the height of the dam was not being increased.
Spencer called GZA back the following day regarding an outstanding question about the need to notify the Commission prior to starting the repair and rehabilitation project. Spencer said that Starrett did not need to notify the Commission so long as neither the dam nor the powerhouse was to be enlarged and so long as the Project's total capacity would not exceed the capacity listed in Starrett I.
The Commission, however, notes that the opinions of staff do not bind the Commission, and Starrett does not argue otherwise. Furthermore, the Commission pointed out in its order denying rehearing, L.S. Starrett Co., 130 FERC ¶ 61,112, at 61,521 n. 10 (2010), that because Spencer's "advice to Starrett [was] not memorialized in the written record of this proceeding, . . . [it could not] evaluate whether Starrett's conclusion . . . represented a reasonable reliance on staff advice." Thus, we only recount the details of GZA's conversations with Spencer to provide context for Starrett's actions.
5. According to a GZA employee, a cross-flow turbine was chosen because of its efficiency over a wide range of flows, and because of certain self-cleaning characteristics that are helpful when the river is carrying a heavy leaf load. The cross-flow turbine has had a good performance record in New England.
6. According to Starrett, it planned to lower the powerhouse floor in order to "reduce the amount of suction head that the turbine experiences and prevent cavitation." "Cavitation" is "the pitting of a solid surface such as metal or concrete." McGraw-Hill Dictionary of Engineering 88 (Sybil P. Parker ed., 1997).
7. A "plunge pool" serves to dissipate hydraulic energy before the water that passed through a turbine rejoins a river. See Stefano Pagliara et al., Plunge Pool Scour in Prototype and Laboratory, in Hydraulics of Dams and River Structures: Proceedings of the International Conference on Hydraulics of Dams and River Structures, 26-28 April 2004, Tehran, Iran 165, 165 (Farhad Yazdandoost & Jalal Attari eds., 2004).
8. A "draft tube" is a tube through which water travels after it passes through the turbine and before it rejoins the river. See Anand Prakash, Water Resources Engineering: Handbook of Essential Methods and Design 271 (2004).
9. A "penstock" is the pipe in which water travels toward the turbine. See Prakash, supra note 8, at 270.
10. The Commission points out that although the statute defines other terms, it does not define "construction" or otherwise clarify the meaning of the term.
11. "Head" can refer to a number of different things. According to Starrett's brief, "gross head" is the difference between the water surface elevation immediately upstream of the dam and the water elevation immediately downstream of the dam. "Net head," on the other hand, is the amount of gross head that the turbine can effectively use.
12. The Commission makes much of the fact that its own opinions have held that an increase in installed capacity constitutes post-1935 construction. See, e.g., Gilman Bros. Co., 67 FERC ¶ 61,151, at 61,436 (1994) ("The addition of generating capacity constitutes post-1935 construction for section 23(b)(1) purposes."). We, however, are not bound by its conclusions, and do not add our imprimatur to its determination regarding installed capacity here.
13. The Commission argues that the proposed work would increase the head of the Project, and that under its precedent, this increase constitutes post-1935 construction. See, e.g., Cent. Vt. Pub. Serv. Corp., 54 FERC ¶ 61,132, at 61,434 ("`Post-1935 construction' at an existing project . . . includes construction which increases the project's head, generating capacity or storage capacity."). L.S. Starrett counters that the proposed work would increase only net, not gross, head, and therefore does not constitute post-1935 construction on this basis. As noted, we need not address this issue.
14. Starrett encourages us to reverse by arguing that the FERC inappropriately grouped Starrett's facility with projects that generate power back to the grid. As Habersham notes, however, this distinction does not matter: "whatever they do with their electricity, . . . small projects [across the nation] displace power that otherwise would be generated by facilities connected to the interstate grid." 976 F.2d at 1385.
15. We do so regretfully because we are not blind to the economic realities of the situation. Under the facts of this case, the FERC could have certainly exercised its administrative discretion.
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