ELR Citation: ELR 20127
No(s). 93-1227 (D.C. Cir. Aug 5, 1994)

The court holds that the Federal Energy Regulatory Commission (FERC) did not act arbitrarily in granting a preliminary permit to an energy company for a pumped storage station hydroelectric project under §4(e) of the Federal Power Act (FPA), even though the company's application did not identify the project's water source. Petitioners challenged FERC's grant of the preliminary permit because the company's project would use federal land that the Bureau of Land Management had segregated on petitioners' behalf in accordance with its approval of petitioners' FPA §24 land exchange application. The court first holds sua sponte that the case is not moot even though the preliminary permit expired before the court could reach its decision. Holding that FERC improperly granted the preliminary permit would prevent the company from challenging the FPA §24 land exchange. The court next holds that FERC properly asserted jurisdiction over the project's permit application because it is a hydroelectric project partly located on federal land. The court also holds that the project's speculative nature does not affect FERC's jurisdiction over the application, because the purpose of a preliminary permit is to give an applicant time to determine the feasibility of a proposed project. The court next holds that FERC reasonably construed its preliminary permit regulations not to require the company to identify a specific water source in its application. Unlike proposals involving typical hydropower projects, pumped storage projects primarily involve construction of reservoir sites rather than harnessing water power from stream flow. The court rejects petitioners' argument that FERC's failure to require identification of the project's water source violated the Electric Consumers Protection Act, because both the Act and FERC's implementing regulations apply only to license applicants, not preliminary permit applicants. The court refuses to address petitioners' argument that FERC should have rejected the company's application under 18 C.F.R. §4.32(j) for being conditioned on finding a water source, because the petitioners neither raised this argument in their petition for rehearing nor explained why they failed to assert it before FERC. Finally, the court holds that the factual dispute over the project's water source is not material enough to require FERC to order a trial-type hearing on the preliminary permit application. It would be wasteful for FERC to resolve at a preliminary stage factual disputes that may be irrelevant or, if relevant, can be contested at the licensing stage.

Counsel for Petitioners
Michael C. Dotten
Heller, Ehrman, White & McAuliffe
First Interstate Bank Tower
1300 SW 5th Ave., Ste. 3400, Portland OR 97201
(503) 227-7400

Counsel for Respondent
Joel M. Cockrell
Federal Energy Regulatory Commission
825 N. Capitol St. NE, Washington DC 20426
(202) 208-0200

Before EDWARDS, GINSBURG, and HENDERSON, Circuit Judges.