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Keating v. Federal Energy Regulatory Commission

June 19, 2009

JOSEPH M. KEATING, PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT



On Petition for Review of Orders of the Federal Energy Regulatory Commission.

The opinion of the court was delivered by: Sentelle, Chief Judge

Argued April 14, 2009

Before: SENTELLE, Chief Judge, ROGERS and BROWN, Circuit Judges.

The Federal Energy Regulatory Commission granted Joseph Keating a license to build a hydroelectric power plant in 1992. At Keating's request, the Commission stayed the four-year statutory deadline for commencing construction on the project to allow Keating to obtain the necessary water rights. Over fifteen years after the license issued, the Commission lifted the stay and Keating's license expired. Keating now petitions for review of the Commission's decision to lift the stay, arguing that the record does not support the decision and that his reliance on the stay should estop the Commission from lifting it. We deny the petition because Keating was not entitled to an indefinite extension of the stay and the Commission's findings concerning the remaining hurdles to commencing construction were sufficient to support the denial of a further stay.

I.

In July 1992, the Commission issued Keating a license to develop his proposed "Tungstar Project," a hydroelectric power plant in the Inyo National Forest in California. Joseph M. Keating, Order Issuing License, 60 F.E.R.C. ¶ 61,016 (July 2, 1992). Under the proposed project, a dam would divert water flowing from Morgan Creek and a nearby tungsten mine's water treatment facility through a 3,500-foot-long penstock to one 990 kilowatt turbine generator. Id. at 61,061. After exiting the powerhouse tailrace, the water would "enter a 4,000-foot-long, man-made, meandering channel where suspended mine water flocculants w[ould] settle out" before the water would enter Pine Creek below its confluence with Morgan Creek. Id.

Under Section 4(e) of the Federal Power Act (FPA), 16 U.S.C. § 797(e), the United States Forest Service may impose conditions on the grant of a license on land within its jurisdiction. The Forest Service required Keating to obtain a special use permit from the Service before starting construction, which he did in November 1995. That permit in turn required Keating to obtain the necessary water rights before beginning construction.

Section 13 of the FPA, 16 U.S.C. § 806, requires a licensee to commence construction of a newly licensed hydroelectric facility within two years of license issuance but allows the Commission to extend the deadline once for a maximum of two additional years. If the licensee does not commence construction within the statutory time frame, then "the license shall . . . be terminated" by the Commission after notice to the licensee. Id.; see 18 C.F.R. § 6.3 (requiring 90 days' notice to the licensee before termination). Nevertheless, the Commission has stayed the commencement-of-construction deadline beyond the statutory four-year period when a licensee was required to await "necessary actions of other federal or state agencies," such as approval of plans, before commencing construction. Boise-Kuna Irrigation Dist., 111 F.E.R.C. ¶ 61,271, 62,216 (2005); see, e.g., R.L. Garry Corp., 51 F.E.R.C. ¶ 61,115, 61,310 (1990); cf. Kings River Conservation Dist., 30 F.E.R.C. ¶ 61,151, 61,320 (1985) (describing the Commission's authority to issue stays as deriving from Section 309 of the FPA, 16 U.S.C. § 825h, and Section 705 of the Administrative Procedure Act, 5 U.S.C. § 705). The Commission stays the deadline only in these and similar "narrowly circumscribed circumstances"; it will not grant a stay "merely to relieve the licensee from the statutorily prescribed commencement of construction deadline." Ronald E. Rulofson, 62 F.E.R.C. ¶ 61,268, 62,780 (1993); accord Elec. Plant Bd. of the City of Augusta, Ky., 112 F.E.R.C. ¶ 61,342, 62,504 (2005).

Keating requested, and the Commission granted, an extension of the commencement-of-construction deadline for two additional years as permitted under Section 13. See Joseph M. Keating, Order Granting Stay Request in Part and Setting Deadline for Required Filings, 77 F.E.R.C. ¶ 61,060, 61,224 n.4 (October 21, 1996) (noting that the Commission granted the extension in an unreported order issued April 12, 1994). On his last day to commence construction under the four-year deadline, Keating asked the Commission to stay the deadline while he sought the necessary water rights. The Commission granted a stay of the commencement-of-construction deadline and ordered Keating to file annual reports on the status of his efforts to obtain water rights and satisfy the requirements of his Forest Service permit. Id. at 61,225-26. The Commission did not, however, stay the other requirements of Keating's license and advised Keating that within six months of the stay order he must file a license amendment application (necessitated by his proposed project redesigns) and eleven outstanding pre-construction plans, addressing topics such as erosion control and wildlife mitigation, some of which needed Forest Service approval in addition to Commission approval. Id.

Seeking the water rights necessary to develop his project and satisfy his Forest Service permit, Keating first argued to the Forest Service that he already had riparian rights to use the water. The Forest Service disagreed and directed Keating to pursue appropriative water rights from the state or a special use permit for use of federal riparian rights. Id. at 61,224 n.5. Keating instead litigated against the Forest Service from 1997 through 1999 in an attempt to confirm the adequacy of his riparian rights. Ultimately, the district court dismissed his suit, holding the Forest Service entitled to sovereign immunity, and the Ninth Circuit affirmed. See Keating v. U.S. Dep't of Agric., 178 F.3d 1300, 1999 WL 311353 (9th Cir. 1999) (unpub.).

In 2001, Keating began seeking appropriative water rights by filing an application with the California State Water Resources Control Board (Water Board). His application elicited protests from twelve entities; all but one-Pine Creek Mine-were eventually dismissed. Pine Creek Mine owned the mine that discharged some of the water Keating's Tungstar Project proposed to use and also held its own FERC permit for a proposed hydroelectric project. Of concern to the Water Board was the fact that Pine Creek Mine owned the property encompassing the proposed diversion point for Keating's project. In accordance with state regulations, the Water Board required Keating to demonstrate his ability to secure the necessary right of access over the land before it would approve his application. See Cal. Admin. Code tit. 23, § 775 ("When the owner will not consent, the board may require satisfactory evidence of the applicant's ability through condemnation proceedings or otherwise to secure the necessary right of access before the application will be approved."). Keating argued that, as a FERC licensee, the FPA gave him authority to condemn the land and claim the diversion point property. See 16 U.S.C. § 814. However, because Keating had not attempted to acquire the necessary property rights, the Water Board advised Keating that it would not move forward with his application until he provided information demonstrating that he had the ability to acquire the property and was actively pursuing obtaining it. Although Keating engaged in unsurprisingly unfruitful negotiations with Pine Creek Mine, he has not taken any steps to acquire access to the diversion point property through condemnation.

During this time, Keating sought numerous extensions of the six-month deadline for filing the required pre-construction plans and license amendment application, which extensions the Commission continued to grant from 1997 through 2003. In August 2003, the Commission sent Keating a letter reminding him of the most recent extended deadline for those requirements coming up in November 2003. The Commission directed Keating to respond and address why it should not lift the stay of the construction deadline in light of the fact that the stay had been in effect for seven years, the fact that Keating had "ample opportunity . . . to secure the necessary property rights for th[is] project[] with no success," and his "repeated failure to provide timely status reports" as required by the stay order. Letter from Joseph D. Morgan, Director of Division of Hydropower, FERC, to Joseph M. Keating (August 26, 2003).

Keating missed the November 2003 deadline but requested a further extension in March 2004, which the Commission again granted. After corresponding with the Commission in April 2004, almost two years passed before Keating filed another status report, in February 2006. This report included some but not all of the required pre-construction plans. The report included correspondence showing the Forest Service approved the filed plans, but the Service later clarified that it believed its approval was not necessary because of Keating's "pending FERC license amendment." Keating, however, has not filed an amendment application with the Commission. When, in April 2007, the Commission inquired why Keating continued to resist filing the overdue amendment application to satisfy the Commission's requirement, he responded that his first priority was to obtain water rights.

The Commission lifted the stay of the commencement-of-construction deadline for the Tungstar Project by order of September 20, 2007 and announced that, because the stay was requested on the day of the deadline, the project license would terminate immediately after the mandatory 90 days' notice. See Joseph M. Keating, Order Lifting Stay of Construction Deadlines, Issuing Notice of Termination of License, and Dismissing Intervention, 120 F.E.R.C. ¶ 61,246 (September 20, 2007). The Commission explained that Keating's ability to commence construction still depended on approval of his six-year-old state water rights application, which in turn potentially depended on Keating gaining access to the diversion site from the protesting party and obtaining a "point of discharge" permit; his yet-to-be-filed license amendment application; and Forest Service approval of certain pre-construction plans. Id. at ¶¶ 19-22. Because of these remaining hurdles, the Commission had "no reasonable assurance" that Keating would be able to commence ...


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