Knott v. FERC ( 2004 )

United States Court of Appeals
For the First Circuit
Nos. 00-1909, 01-2025, 03-2055
JAMES M. KNOTT, SR.;
RIVERDALE POWER & ELECTRIC CO., INC.,
Petitioners,
v.
FEDERAL ENERGY REGULATORY COMMISSION,
Respondent.
PETITION FOR REVIEW OF ORDERS OF THE
FEDERAL ENERGY REGULATORY COMMISSION
Before
Boudin, Chief Judge,
Lynch, Circuit Judge,
and Schwarzer,* Senior District Judge.
Jamy Buchanan Madeja, with whom Buchanan & Associates was
on brief, for petitioners.
Robert H. Solomon, Deputy Solicitor, with whom Cynthia A.
Marlette, General Counsel, and Dennis Lane, Solicitor were on
brief, for respondent.
October 25, 2004
*
Of the Northern District of California, sitting by
designation.
SCHWARZER, Senior District Judge. James M. Knott, Sr.
and the Riverdale Power & Electric Co. (“Knott”) petition for
review of three orders by the Federal Energy Regulatory Commission
(“FERC”). The orders assert mandatory licensing authority over
Knott’s hydroelectric project, require him to install gages to
measure stream flow at the project, and direct him to submit
project design revisions on microfiche cards. Knott alleges that
FERC improperly asserted jurisdiction over the project, that the
required compliance would effect a Fifth Amendment taking of his
property, that FERC improperly denied him an evidentiary hearing,
and that FERC unreasonably ordered gages and microfiche cards. For
the reasons stated, we deny Knott’s petition for review.
FACTUAL AND PROCEDURAL BACKGROUND
Originally built in the 19th century, Knott’s Riverdale
Mills Project (“Project”) is located on the Blackstone River in
Worcester County, Massachusetts. The Project includes a 142-foot-
long, 10-foot-high dam, an 11.8-acre water impoundment, and a 150-
kilowatt generator located within a mill building. Knott purchased
the Project, which had been abandoned since 1976, in 1979. Through
a separate entity, the Riverdale Mills Corporation, Knott uses the
hydropower generated by the Project to produce steel wire for use
in lobster traps.
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The Federal Power Act (“FPA”), 16 U.S.C. §§ 791a–825r,
grants FERC two types of licensing authority over hydroelectric
projects. Section 4(e) of the Act authorizes FERC to grant
voluntary licenses for any project that develops power in any body
of water over which Congress has Commerce Clause authority.
16 U.S.C. § 797(e). Section 23(b)(1) requires the mandatory
licensing of projects: (1) located on “any of the navigable waters
of the United States;” or (2) located on a body of water over which
Congress has Commerce Clause authority where project construction
occurred on or after August 26, 1935, and the project affects the
interests of interstate or foreign commerce. 16 U.S.C. § 817(1).
In 1985, Knott applied for and received a voluntary
license to operate the Project, subject to numerous conditions.
Because Knott received a voluntary license, FERC had no occasion to
determine whether it had mandatory licensing jurisdiction over the
Project.
In early 1999 FERC received letters alleging extreme
fluctuations in the Blackstone River below the Project and noted a
concern by state agencies and conservation groups that the
fluctuations might be the result of Knott’s failure to operate his
Project to allow a continuous stream flow. In a series of letters
FERC repeatedly requested stream flow gaging records, and Knott
repeatedly responded that he had no obligation to install stream
flow gages. In December 1999 FERC issued a compliance order
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requiring Knott to file a plan for installing stream flow gages at
the Project, in accordance with Article 6 of Knott’s license.1
Knott filed a request for rehearing, which FERC denied on May 22,
2000.
In November 2000 Knott filed for FERC approval to install
an unrelated “flood flow modular gate.” FERC approved the
proposal, but required Knott to file revised drawings of the gate
on aperture cards (3 1/4" x 7") on silver or gelatin 35 mm
microfilm. Knott sought rehearing of this requirement, which FERC
denied. FERC noted that its regulations require exhibit drawings
to be microfilmed onto aperture cards, that aperture cards provide
an inexpensive and durable information medium, and that some of
Knott’s paper drawings were inaccurate. Knott timely petitioned
for review.
During the course of his earlier proceedings, Knott
contended that FERC had no jurisdiction over the Project and, thus,
could not compel him to comply with either his license or agency
regulations. In response, FERC instituted a proceeding to
reexamine the basis for its jurisdiction. In November 2000 FERC
staff prepared a supplemental study of the navigability of the
Blackstone River. The study described in detail a four-day
1
The terms and conditions of the voluntary license provide
that “[t]he Licensee shall install and thereafter maintain gages
and stream-gaging stations for the purpose of determining the stage
and flow of the stream or streams on which the project is located.”
App. 106.
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expedition in September 2000, organized by local businesses,
environmental groups, and governmental bodies, in which
approximately thirty canoeists traversed the river from Worcester,
past the Project, into Rhode Island and then Narragansett Bay.
Based on this expedition, which was accomplished with a minimum of
overland transport, or “portages,” FERC staff concluded that the
Blackstone River is suitable for interstate use by recreational
boaters and is thus a navigable waterway within the meaning of FPA
§ 3(8). See 16 U.S.C. § 796(8) (defining “navigable waters”).
FERC therefore concluded that the Project is subject to its
mandatory licensing authority, and ordered Knott to abide by its
orders and all license terms and conditions.
Knott filed a request for rehearing, which FERC denied.
FERC upheld the finding of the staff navigability report and also
found, as a separate basis for jurisdiction, that (1) the
Blackstone River has an effect on interstate commerce; (2) the
Project has an effect on interstate commerce; and (3) Project
construction had occurred since August 1935 because Knott had
substantially rebuilt Project facilities and returned them to
operation after the Project had been abandoned in 1976. FERC
additionally rejected Knott’s takings and due process arguments.
Knott timely petitioned for review.
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DISCUSSION
I. STANDARD OF REVIEW
“We review FERC’s findings of fact for ‘substantial
evidence,’ and if so supported, such findings are conclusive.”
Thomas Hodgson & Sons v. FERC, 49 F.3d 822, 825 (1st Cir. 1995);
16 U.S.C. § 825l. 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.” Northeast 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. “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.(citing Chevron USA v. Natural Res. Def. Council, 467 U.S. 837,
842-45 (1984)).
We review FERC orders under the Administrative Procedure
Act, 5 U.S.C. § 551, and must reverse an agency action that is
“arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” Wis. Valley Improvement Co. v. FERC, 236
F.3d 738, 742 (D.C. Cir. 2001).
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II. MANDATORY JURISDICTION
Knott challenges both grounds upon which FERC based its
finding of mandatory jurisdiction: (1) that the Blackstone River
is navigable; and (2) that Knott’s reconstruction work after a
period of abandonment sufficed to confer jurisdiction. Because we
hold that FERC properly based its jurisdiction on a finding of
navigability, we do not reach the issues of abandonment and
reconstruction.
The FPA, adopted in 1920, defines “navigable waters” as:
[T]hose parts of streams or other bodies of
water over which Congress has [Commerce
Clause] jurisdiction . . . and which either in
their natural or improved condition
notwithstanding interruptions between the
navigable parts of such streams or waters by
falls, shallows, or rapids compelling land
carriage, are used or suitable for use for the
transportation of persons or property in
interstate or foreign commerce, including
therein all such interrupting falls, shallows,
or rapids.
16 U.S.C. § 796(8) (emphases added). Based on this definition, and
case law interpreting it, FERC correctly found that the September
2000 canoe trip demonstrated that the Blackstone River and Project
site were “suitable for use” in interstate commerce notwithstanding
the shallows “compelling land carriage.”
Knott first argues that FERC’s authority must be limited
to waterways used for actual, ongoing interstate commerce, “not
hypothetical possibilities of unrealized commerce.” This argument
is unavailing. The statutory language applies to waters in use or
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“suitable for use” for personal transportation, notwithstanding
interruptions. Id. The Supreme Court has held that the absence of
actual commercial traffic does not bar “a conclusion of
navigability where personal or private use by boats demonstrates
the availability of the stream for the simpler types of commercial
navigation.” United States v. Appalachian Elec. Power Co., 311
U.S. 377, 416 (1940); see also United States v. Utah, 283 U.S. 64,
82 (1931) (“The extent of existing commerce is not the test.”).
Irregular canoe trips may support a finding of navigability. See
FPL Energy Me. Hydro LLC v. FERC, 287 F.3d 1151, 1157 (D.C. Cir.
2002) (upholding a determination of navigability based on three
canoe trips made for the purpose of litigation).
Nor does the fact that the Blackstone River required
portages defeat a finding of navigability. The statute explicitly
contemplates that waterways may be navigable “notwithstanding
interruptions between the navigable parts of such streams or waters
by falls, shallows, or rapids compelling land carriage.” 16 U.S.C.
§ 796(8). “Such interruptions do not render an otherwise navigable
stream non-navigable.” Consol. Hydro, Inc. v. FERC, 968 F.2d 1258,
1262 (D.C. Cir. 1992) (citing cases).2
2
Knott’s selective citations do not undermine these
principles. Knott incorrectly relies on Miami Valley Conservancy
Dist. v. Alexander, 692 F.2d 447 (6th Cir. 1982), a case
challenging Army Corps of Engineers jurisdiction under the Rivers
and Harbors Act of 1899, and LeBlanc v. Cleveland, 198 F.3d 353(2nd Cir. 1999), a personal injury suit arising under general
admiralty law. Neither case evaluated or applied FPA § 3(8).
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Given this consensus, FERC’s interpretation of the FPA
concerning the standard for navigability is reasonable and entitled
to deference. The D.C. Circuit recently explained that:
As the [FPA] does not define when a waterway
is “suitable for use . . . in . . . commerce,”
we assume that Congress intended FERC to
address the ambiguity in the statute and
develop an appropriate test. See United
States v. Mead Corp., 533 U.S. 218, 229
(2001). We find that FERC’s interpretation of
navigability under the FPA, which was based on
test canoe trips and the Stream’s physical
characteristics . . . was reasonable and
entitled to deference.
FPL, 287 F.3d at 1156. FERC thus applied the proper legal test
required by the plain language of § 3(8) and the relevant case law.
Substantial evidence supports FERC’s factual
determination that the Blackstone River is suitable “for the
simpler types of commercial navigation.” Appalachian Elec. Power
Co., 311 U.S. at 416. FERC properly relied on the September 2000
canoe expedition, which was accomplished with “few problems,”
“relatively easy” portages, and “a minimum of difficulty.” Knott
asserts that the river is prone to dry or low flows and has many
natural and constructed obstacles. However, the statutory
Knott also relies on Leonard Murphy, 98 F.E.R.C. 61,302 (2002), but
that decision reaffirmed that “[s]ection 3(8) provides that the
stream may be found navigable if it was, is, or could be made
suitable for such use. Such suitability may be shown through
non-commercial or recreational uses of the stream.” Id. at 62,295.
Duke Power, 74 F.E.R.C. 61,291 (1996), does not address the
navigability question. Knott’s remaining citations predate the
Court’s landmark decision in Appalachian Electric Power Co., 311
U.S. 377 (1940), a case Knott does not address.
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definition of navigability explicitly allows for “land carriage”
around “interruptions.” 16 U.S.C. § 796(8). Knott does not
otherwise seriously dispute that the canoeists successfully
navigated the waterway. He questions the participants’ motivation,
but this is irrelevant; what matters is that the participants
completed the journey, regardless of motivation. See FPL, 287 F.3d
at 1157 (affirming jurisdiction based on canoe trips made for the
purpose of litigation).3
FERC’s finding that the Blackstone River is navigable, as
defined by 16 U.S.C. § 796(8), is supported by substantial
evidence. We therefore hold that FERC properly asserted mandatory
jurisdiction over the Project.
III. KNOTT’S CONSTITUTIONAL RIGHTS
Knott argues that a finding of mandatory licensing
jurisdiction effects a taking of his private property rights, and
that FERC violated his right to due process by denying him an
evidentiary hearing on the issue of staff bias.
3
Knott also asserts that FERC has repeatedly reversed itself
in determining the navigability of the Blackstone River, thus
undermining its most recent order. This argument lacks foundation.
FERC’s 1987 order issuing Knott a voluntary license made no finding
on the navigability issue; FERC’s instant order thus presents no
conflict. FERC did reverse itself with regard to a project located
upstream from Knott’s facility, but only after the September 2000
canoe expedition demonstrated the navigability of the river at both
locations.
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A. Fifth Amendment Takings Clause
Knott alleges that mandatory FERC jurisdiction will
deprive him of all economically viable use of his deeded right to
divert water from the Blackstone River “as he shall see fit.” We
lack jurisdiction to hear Knott’s taking claim because the Tucker
Act, 28 U.S.C. § 1491(a)(1), and “Little Tucker Act,” 28 U.S.C.
§ 1346(a)(2), vest exclusive jurisdiction in the Court of Federal
Claims (the district courts have concurrent jurisdiction over
claims for $10,000 or less) to render judgment upon any claim
against the United States for money damages that “is founded upon
the Constitution, or any Act of Congress or any regulation of an
executive department.” 28 U.S.C. § 1491(a)(1). Although Knott’s
petition for review does not specifically seek monetary
compensation, the Supreme Court has stated that “taking claims
against the Federal Government are premature until the property
owner has availed itself of the process provided by the Tucker
Act.” Preseault v. ICC, 494 U.S. 1, 11 (1990). See also
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984) (“Equitable
relief is not available to enjoin an alleged taking of private
property for public use, duly authorized by law, when a suit for
compensation can be brought against the sovereign subsequent to the
taking.”).
“Accordingly, a claim for just compensation under the
Takings Clause must be brought to the Court of Federal Claims in
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the first instance, unless Congress has withdrawn the Tucker Act
grant of jurisdiction in the relevant statute.” E. Enters. v.
Apfel, 524 U.S. 498, 520 (1998). The courts have rejected an
argument that the FPA represents such a withdrawal of jurisdiction.
See Wis. Valley Improvement Co. v. FERC, 236 F.3d 738, 743 (D.C.
Cir. 2001) (holding that while petitioner seeking review of FERC
orders imposing conditions on its license “may be able to advance
a colorable Takings-Clause claim, it is not within our jurisdiction
to adjudicate it”). Knott may thus file a takings action in the
Court of Federal Claims, but may not pursue it on a petition for
review brought under 16 U.S.C. § 825l.
B. Evidentiary hearing
Knott further alleges that FERC improperly denied him a
“true” evidentiary hearing with regard to his “repeated allegations
of official government witness bias and factual inaccuracy.” We
recently rejected a similar claim, and explained that:
The term “hearing” is notoriously malleable,
but what petitioners got here was not only a
hearing but a species of evidentiary hearing
which is now quite common in utility and
carrier regulation. Very extensive
evidentiary submissions were made by both
sides in the form of affidavits from experts
and others, together with extensive written
argument . . . .
Cent. Me. Power Co. v. FERC, 252 F.3d 34, 46 (1st Cir. 2001)
(citation omitted). We reconfirmed that a “true” hearing before an
administrative law judge is unnecessary if any genuine issues of
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material fact can be “adequately resolved on the written record.”
Id. (citing cases).
The factual issues Knott sought to raise are not issues
material to the dispute at hand. The alleged biases of certain
FERC staff are irrelevant to a finding of navigability or an order
to comply with the terms of Knott’s voluntary license. Knott does
not dispute that the September 2000 canoeists successfully
navigated the Blackstone River and Knott’s voluntary license,
explicitly requiring him to install gages, predates the alleged
biased acts and, thus, cannot be their result. Knott’s arguments
were thus properly addressed by FERC through a paper hearing.
IV. ORDERS REQUIRING COMPLIANCE WITH LICENSE AND REGULATIONS
Knott asserts that FERC acted unreasonably in demanding
that he file project drawings on microfilm. Under the arbitrary
and capricious standard, we consider whether an agency’s decision
is “based on consideration of the relevant factors” and articulates
a “rational connection between the facts found and the choice
made.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc.,
419 U.S. 281, 285 (1974) (citation omitted). FERC noted that its
regulations require exhibit drawings to be microfilmed onto
aperture cards, 18 C.F.R. § 4.39, and that “[a]perture cards
provide a durable medium for storing information about hydropower
project features and are relatively inexpensive to produce, costing
about $25-$50 for a set-up fee and one dollar for each original.”
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FERC also noted that Knott had modified his Project, rendering some
of his previous drawings inaccurate. Knott describes the microfilm
requirement as “antiquated” and lobbies for an “[i]nfusion of
modern technology,” but offers nothing further. FERC’s decision
requiring records to be submitted on microfilm, in conformity with
its existing record-keeping system and because of the medium’s
durability and relatively inexpensive cost, is not overly
burdensome and cannot be considered arbitrary or capricious.
Knott also argues that FERC acted arbitrarily in ordering
him to install stream flow gages. He contends that such gages are
not necessary because other gages exist, and that the license terms
requiring such gages do not apply to his Project. These arguments
are also unpersuasive. FERC specifically rejected Knott’s argument
that other gages sufficed to address the issue, finding that those
gages were too distant to measure impacts from the Project.
Knott’s license explicitly requires him to “install and thereafter
maintain gages and stream-gaging stations for the purpose of
determining the stage and flow of the stream or streams on which
the project is located” and to minimize fluctuations such that
“flow in the Blackstone River, as measured immediately below the
project approximates the instantaneous sum of inflow to the project
reservoir” (emphasis added). 39 F.E.R.C. 62,308. FERC decided to
enforce these conditions after receiving letters alleging extreme
fluctuations in the Blackstone River below the Project, and
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expressions of concern by state agencies and conservation groups
that the fluctuations might be the result of Knott’s failure to
operate his Project to allow a continuous stream flow. Knott’s
contention that the terms and conditions of the license do not
apply to his Project are without merit; the order issuing the
license explicitly states that the license is subject to such
terms. 39 F.E.R.C. 62,308. FERC’s orders for compliance with these
terms are reasonable. See Clifton Power Corp. v. FERC, 88 F.3d
1258, 1262 (D.C. Cir. 1996) (“It is simply not unreasonable for
FERC to require [licensee] to install [stream gaging] devices to
determine whether the dam is operating in the mode described in its
license application.”).
CONCLUSION
For the reasons stated, we DENY Knott’s petition for
review.
PETITION DENIED.
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