Monday, March 16, 2009

Eastern Niagara Public Power v. FERC

Mar 13: In the U.S. Court of Appeals, D.C. Circuit, Case No. 07-1472. From 1958 to 2007, the New York Power Authority (NYPA) operated the Niagara Power Project, a hydroelectric facility about five miles downriver from Niagara Falls, pursuant to a 50-year license granted by what is now the Federal Energy Regulatory Commission (FERC). In 2007, FERC approved NYPA’s relicensing application and granted a new 50-year license. Several communities in western New York have challenged FERC’s 2007 licensing decision as arbitrary and capricious and unsupported by substantial evidence. However, the Appeals Court decided, "We deny their petition because FERC’s decision to issue the new license was reasonable and reasonably explained."

Petitioners argue that a 50-year license is too long and inconsistent with Agency practice regarding the terms of licenses, but the Appeals Court said, "FERC possesses express statutory authority to set license terms between 30 and 50 years." Second, petitioners argue that FERC undervalued the project’s output in considering the appropriate length of the new license, but the Appeals Court said, "Applying the deferential arbitrary-and-capricious standard, we have no room to overturn that reasoned and reasonable determination."

Third, petitioners contend that FERC, as a condition of granting the license, should have required NYPA to mitigate certain adverse environmental impacts allegedly caused by the project, but the Appeals Court said, "FERC mandated measures to mitigate any such impact. In short, FERC acted entirely reasonably in addressing possible adverse environmental impacts."
Fourth, petitioners assert that FERC should have considered the consequences of “off-license” agreements that NYPA reached with interested communities and organizations in the area saying, the "agreements represented NYPA’s not-so-subtle efforts to buy off community opposition." (e.g. NYPA promised to pay the Tuscarora Nation tribe, $21.8 million if FERC approved NYPA’s relicensing). The Appeals Court said, "But the off-license agreements are not related to project operations and are irrelevant to FERC’s statutorily mandated assessment of the relicensing application. . . Therefore, FERC properly refused to consider the off-license agreements in deciding whether to reissue the license to NYPA."

Finally, petitioners also appear to directly challenge the off-license agreements as "unlawful." The Appeals Court said, "The source of law on which petitioners are relying for this argument is rather murky. In any event, petitioners lack standing to bring such a claim against FERC. The parties to the off-license agreements were NYPA and certain communities and organizations affected by the project. FERC did not approve those agreements, and FERC does not and cannot control the agreements’ terms."

Access the complete opinion (click here).

Delaware Department of Natural Resources v. FERC

Mar 13: In the U.S. Court of Appeals, D.C. Circuit, Case No. 07-1007. Petitioner Delaware seeks review of two Federal Energy Regulatory Commission (FERC or Commission) orders by which the Commission conditionally approved an application to site, construct, and operate a liquid natural gas terminal near the mouth of the Delaware River. The Appeals Court dismissed the petition citing a "lack of jurisdiction: Delaware lacks standing because it has not suffered an injury-infact."

According to the background in the case, in September 2004, Crown Landing LLC, a wholly-owned subsidiary of BP America Production Company, filed an application with the Commission to site, construct, and operate a liquid natural gas import terminal at the mouth of the Delaware River. Onshore portions of the proposed project were to be located in New Jersey, but a pier designed for the unloading of tanker ships was planned to extend beyond New Jersey waters into that portion of the river which appertains to neighboring Delaware.

Section 3 of the Natural Gas Act (NGA), prohibits the importation of foreign natural gas without prior authorization by the Commission. The NGA specifically provides for the protection of rights granted to the states under the Coastal Zone Management Act of 1972 (CZMA), and the Clean Air Act (CAA). Crown Landing did not file a CZMA certification with Delaware but did request a status decision from the state.

On February 3, 2005, the Delaware Department of Natural Resources and Environmental Control, petitioner here, issued its decision and rejected the project. On appeal, Delaware’s Coastal Zone Industrial Control Board unanimously affirmed that decision. Meanwhile, New Jersey filed an original action before the Supreme Court challenging Delaware’s jurisdiction to regulate the Crown Landing terminal pursuant to its authority under the CZMA. The Supreme Court confirmed that Delaware indeed possesses this authority. New Jersey v. Delaware, 128 S. Ct. 1410, 1427-8 (2008) [See WIMS 3/31/08].

On June 20, 2006, the Commission issued an order approving Crown Landing’s application subject to some sixty-seven conditions precedent. The Commission acknowledged that the Crown Landing proposal is subject to coastal zone consistency reviews in New Jersey, Delaware, and Pennsylvania and thus concluded that the company must obtain the concurrence of the relevant state agencies prior to Commission approval of the commencement of construction.

The Appeals Court said finally, "In sum, because FERC’s order -- as it stands now -- cannot possibly authorize Crown Landing’s project absent the approval of Delaware, the state has suffered no injury-in-fact, and thus lacks standing. For the foregoing reasons, the petition for review is dismissed."

Access the complete opinion (
click here).