FERC Has Authority to Require Invasive Species Monitoring Plans

Rhinelander Paper Co. v. FERC, 405 F.3d 1 (D.C. Cir. 2005).

Stephen Janasie, 3L, Chicago-Kent College of Law

The D.C. Circuit Court of Appeals recently affirmed the Federal Energy Regulatory Commission’s (FERC) decision to delay modification of a hydroelectric project’s license boundaries and to require, as a provision of the renewal license, the development of an invasive species monitoring plan. The court found both actions a reasonable exercise of FERC’s authority under the Federal Power Act.

Background
The Rhinelander Paper Company (Rhinelander) operates a hydroelectric plant on the Wisconsin River in Oneida County, Wisconsin. On June 26, 1998, the company filed an application to renew its license with FERC for the 2.12 megawatt project. Under the previous license, the project encompassed approximately 2,478.5 acres of land. The modification would have removed privately owned land from the project boundaries and reduced the size of the project to approximately 292.5 acres.

On August 20, 2003, FERC renewed Rhinelander’s license under the Federal Power Act, but did not accept the company’s modification. In addition, FERC inserted two important provisions in the renewal license. First, FERC required that the project maintain its historical boundaries pending the preparation of a land management plan. Second, FERC required that Rhinelander develop and implement a plan to monitor invasive plant species at the project.

The U.S. Fish & Wildlife Service (FWS) was the primary impetus behind the addition of these two provisions. The FWS recommended maintaining the historical boundaries of the project until Rhinelander provided a clearer identification of the land to be removed from the project. The FWS also requested that the license renewal require Rhinelander to cooperate with state and federal agencies to monitor and control the spread of highly invasive and exotic plant species, despite the fact that there was no evidence of the presence of such species at the project.

Rhinelander requested a rehearing on the Director’s decision, which was denied on February 18, 2004. In its denial, FERC admitted that the land slated for removal may not be necessary, but also stated that more information was needed before a decision could be made. Also, FERC stated that the plant monitoring provision was appropriate since section 10(j)(1) of the Federal Power Act requires FERC “to include in each hydroelectric license conditions ‘to adequately and equitably protect, mitigate damages to, and enhance, fish and wildlife (including related spawning grounds and habitat),’ based on recommendations from federal and state resource agencies.”1 Rhinelander then brought the decision before the D.C. Circuit Court of Appeals for review.

Boundary Modification
In reviewing a FERC licensing decision, the courts are held to the commonly employed “arbitrary and capricious” standard.2 In other words, a court must determine if the Commission’s decision was reasonable and within the bounds of the powers granted to the agency by Congress. In this case, the D.C. Court of Appeals determined that the Commission had made a proper decision with regard to both issues. In regards to the first issue, FERC based its decision on section 10(j)(1) of the Federal Power Act, which states in part that:

the project adopted, including the maps, plans, and specifications, shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, for the adequate protection, mitigation, and enhancement of fish and wildlife (including related spawning grounds and habitat), and for other beneficial public uses, including irrigation, flood control, water supply, and recreational and other purposes.3

The Commission has construed this portion of the Act as imposing a statutory obligation upon both the Commission and the licensee to protect the shoreline and aquatic resources within the project area through the use of a buffer zone. While a modification of the project area in this case may have been acceptable, FERC contended that Rhinelander had not provided sufficient maps and other specific information about the lands for the Commission to make an informed decision concerning boundary modification. The D.C. Court of Appeals found FERC’s basis for this decision entirely reasonable.

Invasive Species Monitoring Plan
In regards to the second issue, the D.C. Court of Appeals also held that the Commission’s decision was not arbitrary and capricious. As stated earlier, FERC based this decision on section 10(j)(1) of the Federal Power Act, which requires licenses to protect, mitigate and enhance wildlife in the project area. The court used the classic Chevron analysis: determining whether Congress has spoken directly on the point at issue, and if not, whether the agency in question has made a permissible reading of the statute.4 The D.C. Court of Appeals held that FERC’s reading of section 10(j)(1) was permissible. Specifically, the court referred back to Rhinelander’s own admissions at oral arguments that a hydroelectric project like the one at issue in this case obviously has an affect upon fish and wildlife within a river system, and that the project has the potential to spread the invasive species at issue through the contribution of the seeds of these plants to the flow of the river. While the court acknowledged that prior cases had held that provisions which required project operators to work with agencies to control the spread of these plant species were premature, the court pointed out that this license merely required the operator to implement a plan for cooperative monitoring efforts. Thus, FERC’s decision was an acceptable interpretation of the statute at issue, and was not in conflict with previous license decisions.

Conclusion
The spread of invasive species like purple loosestrife and Eurasian water-milfoil have become an issue of national import. The court’s decision in this case is an important step in fighting the problems caused by these invasive species, as it has read into the Federal Power Act a federal statutory basis for FERC to impose monitoring obligations upon hydroelectric projects. These projects are acknowledged as a significant cause of the spread of these species, and this decision represents one method by which to combat the problem. If similar obligations can be read into the habitat conservation provisions of other agency’s statutes, perhaps the spread of invasive species through methods such as ship ballast water can be more adequately addressed in the future.

Endnotes
1. Rhinelander Paper Co. v. FERC, 405 F.3d 1,4 (D.C. Cir. 2005).
2. Alabama Rivers Alliance v. FERC, 325 F.3d 290, 296 (D.C. Cir. 2003), citing North Carolina v. FERC, 112 F.3d 1175, 1189 (D.C. Cir. 1997).
3. 16 U.S.C. § 803(a)(1).
4. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).