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07/30/69 Municipal Electric v. Federal Power Commission

July 30, 1969




Wilbur K. Miller, Senior Circuit Judge, and Wright and Tamm, Circuit Judges.




This case brings before us for review a license granted by the Federal Power Commission to three private power companies *fn1 to construct and operate a large hydroelectric power plant on the Connecticut River at Northfield Mountain, Massachusetts. Petitioners, public power interests in Massachusetts, *fn2 contest the license on the grounds, first, that the licensees have failed to meet the statutory requirement that their project "be best adapted to a comprehensive plan for improving or developing a waterway . . .," 16 U.S.C. § 803(a) (1964); and, second, that the Commission has failed sufficiently to safeguard against anticompetitive activities on the part of the licensees, in violation of 16 U.S.C. § 803(h) (1964). We affirm the Commission. I

The project in question is a pumped storage plant designed to provide power for periods of peak load. A large reservoir will be constructed on top of the mountain. During non-peak hours outside power sources will be used to pump water from the Connecticut River up into reservoir. During peak hours, water will be released to flow down from the reservoir through generating units constructed in the mountain. The project is licensed for a capacity of 1,000 megawatts (1,000,000 kilowatts), and is expected to cost some $72,000,000. When placed in operation in 1972 it will be the largest facility of its type in the world. Its capacity will be equal to approximately eight per cent of the 1973 New England peak load.

The licensees are affiliated with Northeast Utilities, a registered public utility holding company. They participate in the Connecticut Valley Electric Exchange , a power pool which serves an area with a population of over 3,700,000 people. Petitioners, intervenors before the Commission, represent the municipally owned power companies in Massachusetts. These companies must buy their power from large generating facilities which are all -- like the proposed Northfield Mountain project -- owned by the private power interests of New England.

The Commission is empowered to license power projects utilizing the navigable waters of the United States. *fn3 This is not a small power or one to be exercised lightly. The nation's rivers are among its geatest economic resources and natural treasures. A license to construct a power project using a river authorizes the licensee "to appropriate water resources from the public domain." Udall v. F.P.C., 387 U.S. 428, 450, 87 S. Ct. 1712, 1724, 18 L. Ed. 2d 869 (1967). For these reasons, Congress has placed stringent conditions upon "the grant of authority to the Commission to alienate federal water resources." Ibid. In particular, the statute provides that no license shall be issued unless

"the project adopted . . . 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, and for other beneficial public uses, including recreational purposes . . .."

16 U.S.C. § 803(a). (Emphasis added.) Thus the statute does not merely require that the license suit the public interest, or be appropriate, but in effect imposes a "highest and best use" standard. While generally we are to accept the factual findings of the Commission when they are supported by substantial evidence, and to grant deference to the expert "judgment of the Commission," the grant of servitudes upon the public's rivers requires our special scrutiny.

In this case, we find that the Commission has met its burden of justifying the license. First, an urgent need has been shown for new peak-load capacity in the area served by the licensees. The Northfield Mountain project is estimated to have a three-year construction period. It is expected to be producing 750 mw by 1971, and its full 1,000 mw capacity by 1972. Testimony before the hearing examiner showed that without the Northfield Mountain power CONVEX would have a power shortage of 314 mw by 1971, and of 666 mw by 1973, and further that by 1976 or 1977 CONVEX would absorb the entire 1,000 mw. The finding of immediate and urgent need for new peak-load capacity for the CONVEX system is uncontested here.

Second, the licensees have shown that there is no alternative feasible hydroelectric power source available to them which would provide the needed power more economically. The Commission so found, and that finding is not contested here. Third, the licensees have made extensive proposals to provide for the conservation and recreation interests of the areas adjacent to the Northfield project. The plan was assertedly developed after consultation with federal, state and local agencies, and with interested citizens' organizations. The licensees' conservation and recreation proposals have won the support of federal, state and local officials. No conservation or recreation interests opposed the grant of the license before the Commission. *fn4

Against this impressive case for licensing the project, petitioners have raised two main contentions. First they have argued that the project has not been fitted into a comprehensive overall power plan for the New York-New England area. Partly in specification of this claim, and partly as a separate point, they have claimed that the licensees and the Commission have not adequately demonstrated that the project should be limited to a capacity of 1,000 mw. Petitioners argue that a 1,500 mw capacity is not only feasible but needed.

With respect to the first claim, the record indicates general agreement among all concerned that better overall planning of the power needs and resources of the region in question would be desirable.However, the five members of the Commission have concluded, with varying degrees of enthusiasm, that the licensing of this urgently needed power resource should not be further delayed in order to make it the vehicle for requiring such planning. *fn5 We are unable to say that they have abused their discretion or otherwise erred as a matter of law in so concluding.

The statute does not in terms require that a water power project be integrated into an overall regional power plan, but rather that it "be best adapted to a comprehensive plan for . . . a waterway . . .." *fn6 Here there is no claim that some crucial aspect of planning the use of the Connecticut River -- engineering, economics, navigation, recreation or conservation -- has been neglected. We need not hold that the Commission is never required to look beyond planning for the use of a single waterway in licensing a power project to conclude that, in view of the ...

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