Big win for the Skokomish River

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On August 22nd, the D.C. Circuit Court of Appeals issued a decision in City of Tacoma v. Federal Energy Regulatory Commission. After being left dry for more than 80 years by the Cushman hydroelectric project, Washington's North Fork Skokomish river will once again have water.The court's decision, written by Judge Janice Rogers Brown (one of President Bush's recent appointees), also resolves several legal issues which will have an enormous positive impact on FERC hydropower licensing decisions in the future. Coalition chair American Rivers was an intervenor in the case and has issued a press release. The Cushman hydroelectric project, owned and operated by the city of Tacoma, WA, was built in the 1920's. It's two dams block all fish migration on the river, which is home to several species of salmon. For approximately half a century, the project left the river completely dry below the dam for much of the year. While a change to the license required Tacoma Power to put a token amount 60 cubic feet per second (cfs) of water back in the river, it is not enough. The combination of fish passage and nearly-dry riverbed has decimated the river's once healthy salmon runs. It has also caused serious harm to the Skokomish Tribe, whose traditional economy and culture depend heavily on the river and its fish. Or, as Judge Brown writes in her opinion, quoting a treaty signed with the tribe:

"While the Tribe arguably still has the right to 'tak[e] fish at usual and accustomed grounds,' that right is now of little value, because the water has disappeared, and with it, the fish." (p. 8)

FERC issued a new license for the project in 1998 and again in 1999 after resolving a rehearing request. After a lengthy legal challenge, the courts remanded the license back to FERC to allow for Endangered Species Act consultation. FERC issued a revised license order in 2005 (after a rehearing on a 2004 order), which was also challenged in court. The license has been under stay during these challenges, which means that Tacoma Power has been operating under its original FERC license - with no meaningful requirements to protect the environment - for more than eighty years. Judge Brown's decision also resolved a number of issues that should be of great interest to anyone involved in hydropower licensing. While the case touches on Clean Water Act and Endangered Species Act issues, the two most important precedents are in its interpretation of the Federal Power Act: 1. FERC has no authority to reject conditions submitted by federal agencies under section 4(e) of the Federal Power Act. Section 4(e) gives federal agencies authority to impose conditions on hydropower projects in order to protect the lands that Congress has tasked them with managing. FERC had rejected the Department of Interior's 4(e) conditions because they had not been submitted within a 60-day deadline. The court determined that FERC had no authority to impose such a deadline on the other agencies, pointing out that FERC was primarily responsible for the long delays:

"To the extent Congress has delegated licensing authority to agencies other than FERC, those agencies, and not FERC, determine how to exercise that authority, subject of course to judicial review. FERC can no more dictate to Interior when Interior should complete its work than Interior can dictate to FERC when FERC should do so. Here, FERC took all the time it needed -- a full 24 years -- to issue a license to Tacoma. Interior, in contrast, produced its license conditions within about three years of receiving notice on August 1, 1994." (p. 15)

The issue of time limits is somewhat moot since the 2005 joint Energy Bill rulemaking among agencies with 4(e) authority set internal deadlines that match FERC's schedule. This limit on FERC's authority is still significant, however, because in setting it, the court explicitly recognized that the Federal Power Act requires FERC to share its hydropower licensing authority with other agencies:

"The FPA provides that licenses 'within any reservation' 'shall be subject to and contain such conditions as the Secretary of the department under whose supervision such reservation falls shall deem necessary for the adequate protection and utilization of such reservation[.]' 16 U.S.C. §797(e). The FPA gives FERC no discretion in this regard. Though FERC makes the final decision as to whether to issue a license, FERC shares its authority to impose license conditions with other federal agencies." (p. 15)

This recognition alone would set a valuable precedent. But the court goes even further, examining FERC's long-standing practice of rejecting 4(e) conditions because they do not fall into FERC's overly-narrow definition of what the geographic scope of these conditions can be. In this case, a small part of the project (a transmission line and an access road) ran through a federal reservation:

"FERC concluded that Interior's authority to impose section 4(e) conditions was limited to mitigating the relatively small impact the transmission line and access road had (and would have) on the reservation, and it did not extend to the much greater impact that the dams and water diversion had (and would have) on the reservation." (p. 16)

The court, citing a previous case (Escondido Mut. Water Co. v. La Jolla Band of Mission Indians), concluded that FERC got it wrong:

"Significantly, the Court referred to any project works, which would seem to include, contrary to FERC's conclusion, even 'a small segment of a power line that crosse[s] the corner of a reservation.' [...] Later in its opinion, the [Escondito] Court stated, '[I]t is clear that Congress concluded that reservations were not entitled to the added protection provided by the proviso of §4(e) unless some of the licensed works were actually within the reservation. 'Some' means 'some'; it does not mean 'all,' or even 'a lot.' The issue under consideration in Escondido was whether Interior can impose license conditions based on the indirect effects a project havs on a reservation. Therefore, the implication of the court's statements is that Interior can do so provided that at least 'some' or 'any' part of the licensed facilities is on reservation land [...] [S]o long as some portion of the project is on the reservation, the Secretary is authorized to impose any conditions that will protect the reservation, including utilization of the reservation in a manner consistent with its original purpose." (p. 17)

In other words, in a hydropower licensing, an agency's authority to protect a federal reservation is not limited solely to those portions of the hydroelectric project that are on the reservation. Rather, an agency may impose any conditions it deems necessary to protect the purposes of the reservation, including conditions affecting parts of the project not located on the reservation. FERC has two choices: it can either choose to accept the agencies' conditions, or it can choose not to issue the license.2. FERC is not required to issue licenses that guarantee the project will be profitable. Tacoma Power had argued that the minimum flows required in the river would make the project "uneconomic," and that license terms that result in an uneconomic project are therefore "unreasonable" and in violation of the Federal Power Act. The court discussed the many environmental laws that were passed in the late 20th century, pointing out that "[o]ne of the major shifts in national priorities since the 1920's has been from a near-exclusive focus on development to an increasing focus on environmental protection.." This matters because:

"In some cases, a change in congressional priorities might cast doubt on a once viable project and lead to closure of the project when its license expires, either because FERC denies a new license outright or because FERC issues a new license that the licensee finds too costly or burdensome. [...] FERC argues persuasively that it cannot guarantee license renewal when Congress has greatly altered the regulatory landscape during the course of the prior license term. [...] Moreover, the very fact that a license may not exceed fify years [...] indicates Congress's intent that projects be reevaluated from time to time in light of changing circumstances and national priorities, and this reevaluation necessarily implies that in some cases new licenses will not be issued." (p. 30)

The court goes on to say that license terms that may lead to the project shutting down are indeed "reasonable," and FERC's "obligation to give 'equal consideration' to wildlife protection and the environment [...] implies that, at least in some cases, these environmental concerns will prevail." In other words, when making licensing decisions, FERC must take into account all of the factors -- including environmental protection -- that Congress has required it to consider. It is not required to guarantee that a project make money. This is good policy: if FERC were required to sacrifice environmental mitigation for an assurance that projects would be economically viable, then the least efficient, least economically viable projects would be resolved of responsibility for the environmental damage they cause.The court also determined that FERC has a responsibility to make sure that states comply with the procedural requirements of section 401 of the Clean Water Act when they issue a water quality certification. In this case, the Skokomish Tribe had raised questions about whether or not the Washington Department of Ecology had given public notice or held a hearing in regards to its water quality certification. The court held that FERC can't issue a license unless it has determined that a state has met the Clean Water Act's basic procedural requirements.

"Section 401(a)(1) [of the Clean Water Act] requires states to "establish procedures for public notice in the case of all applications for certification.' [...] We do not, however, think FERC's obligation is limited to confirming that the state has enacted a public notice procedure. Rather, we think that, by implication, section 401(a)(1) also requires states to comply with their public notice procedures, and therefore it requires FERC to obtain some minimal confirmation of such compliance, at least in a case where compliance has been called into question. Otherwise, FERC has no assurance that the certification the states has issued satisfies section 401, and in the absence of such an assurance, it has no authority to grant a license." (pp. 20-21)

The Cushman case now goes back to FERC, which must decide whether or not it will issue a license for the project. If FERC decides to issue a new license -- which must now incorporate Interior's 4(e) conditions -- it must amend its 1998 licensing order and lift its partial stay of the order. If FERC determines not to issue a license, it must lift its partial stay and vacate its 1998 order.In the meantime the court lifted a stay on an earlier order requiring Tacoma Power to put 240 cubic feet per second of water back into the Skokomish River. The river can now begin to heal itself.