ELR Citation: ELR 21429
No(s). 90-1597 (D.C. Cir. May 5, 1992)

The court holds that the Federal Power Act's (FPA's) civil penalty provision, §31(c), does not authorize the Federal Energy Regulatory Commission (FERC) to impose a civil penalty of $2,024,000 on an unlicensed utility, based on the utility's long-standing failure to obtain the licenses required to operate its hydroelectric power plants. FERC reviewed an administrative law judge's (ALJ's) findings that the utility had violated the licensing requirements of §23(b) of the FPA and that the utility had gained economic benefits as a result of its unlicensed operations. The ALJ had found that the benefits occurred because the utility engaged in peaking operations, whereby it used its dam to store water, which potentially endangered the river's aquatic habitat below the dam, and then released the water to power its turbines during hours of peak demand. FERC rejected the ALJ's findings, concluding that the utility's repeated challenge to the integrity of the FPA licensing requirements outweighed all other considerations. The court holds that FERC's authority to impose civil penalties under §31(c) applies only to three types of hydroelectric plants: licensees, permittees, and exemptees. The court holds that the term "licensee" does not embrace an unlicensed operator required to be licensed. That Congress had previously defined "licensee" as a licensed person or entity and not a person or entity required to be licensed compels the conclusion that Congress, in enacting §31(c), did not intend the expansive reading adopted by FERC. Further, that Congress chose to differentiate the terms "person" and "licensee" within the Act as well as in the Act's definitional section demonstrates that Congress knew how to draft an enforcement provision applicable to a "licensee" but not a "person." The court holds that it does not owe deference to FERC's interpretation, because the text of §31(c) is unambiguous and thus controls the scope of FERC's authority. The court observes that FERC was not powerless to curtail the utility's operations. Under §§314 and 316 of the Act, FERC has the authority to seek criminal fines for violations of the Act committed by unlicensed entities and to seek to enjoin the operation of unlicensed plants.

Counsel for Petitioner
Ronald D. Jones
LeBoeuf, Lamb, Leiby & MacRae
125 W. 55th St., New York NY 10019
(212) 424-8000

Louis Rosenman
Whitten & Diamond
1725 DeSales St. NW, Ste. 800, Washington DC 20036
(202) 659-6568

Counsel for Respondent
Timm L. Aberdroth
Federal Energy Regulatory Commission
825 N. Capitol St. NE, Washington DC 20426
(202) 208-0200

Before MIKVA, Chief Judge, HENDERSON and RANDOLPH, Circuit Judges.