ELR Citation: ELR 21098
No(s). 88-1697 (D.C. Cir. Jul 31, 1990)

The court holds that the Federal Energy Regulatory Commission (FERC) complied with the Federal Power Act (FPA), the Federal Water Pollution Control Act (FWPCA), and the National Environmental Policy Act in granting a license for construction and operation of a dam. The project, undertaken primarily to supply water to a city, includes a small hydroelectric powerhouse that brings it under FERC's jurisdiction. The court first holds that FERC did not violate FPA §10(a)(1) by granting the license without more thoroughly considering the potential environmental effects of phase two of the project, which would greatly expand the project. The city had not submitted an application for phase two and FERC had no reason to believe that the city would submit an application. Similarly, the court holds that FERC was not required to more throughly evaluate the impacts of phase two in its environmental impact statement (EIS). An EIS need not consider the impacts of a hypothetical project. The city had withdrawn its proposals for phase two, and the possibility that it would reintroduce these proposals was speculative. The court holds that FERC did not improperly consider the benefits of possible phase two expansion in evaluating the phase one application. FERC's consideration of future expansion in evaluating the present project did not bind it to consider the future harms and benefits of phase two.

The court holds that FERC did not violate FPA §10(j) by rejecting various agencies' recommendations concerning phase two. FERC was not bound by §10(j) to consider these recommendations, since they concerned proposals not before it. Even if the recommendations did focus on the actual proposal, §10(j) gives FERC the discretion to reject them. The court holds that FERC complied with FPA §10(j)(2) by adequately reviewing recommendations from an Oklahoma wildlife agency. The court also holds that FERC's conclusions were supported by substantial evidence. FERC adopted plans to minimize the project's impact on wildlife and reasonably concluded that the city's water needs outweighed the project's potential environmental harms. The court next defers to FERC's interpretation of FPA §4(e) that the Commission is entitled to consider water supply benefits in addition to navigation and power benefits in deciding whether to issue a license. The court holds that FERC properly approved the project without an FWPCA §401 certification from the Oklahoma wildlife agency. FERC is required to obtain a certification only from the state where the discharge originates. FERC properly determined that the discharge would originate at an Arkansas dam rather that at some point upstream in Oklahoma. The court holds that FERC's EIS considered all reasonable alternatives. FERC reasonably decided not to consider alternatives to the hydropower portion of the project because the dam was proposed to satisfy water supply needs, not power needs. FERC also reasonably decided not to explore in detail the alternative of an interstate transfer of water because Oklahoma and Arkansas laws and policies disfavor interstate water transfers. The court holds that FERC reasonably relied on data prepared by an engineering firm, which held real estate interests would appreciate if the project were approved, since FERC independently confirmed the data.

Counsel for Petitioners
S. Elizabeth Birnbaum
National Wildlife Federation
1400 16th St. NW, Washington DC 20036
(202) 797-6800

Counsel for Respondent
Samuel Soopper, Catherine C. Cook, Joseph S. Davies
Federal Energy Regulatory Commission
825 N. Capitol St. NE, Washington DC 20002
(202) 208-0200

Before D.H. GINSBURG and SENTELLE, Circuit Judges, and ROBINSON, Senior Circuit Judge.