Indian Law Resources Information

U.S. 9th Circuit Court of Appeals

No. 9570884

No. 95-70884
FERC Project No.


Petition to Review a Decision of the
Federal Energy Regulatory Commission

Argued and Submitted
March 7, 1997--Seattle, Washington

Filed August 5, 1997

Before: Eugene A. Wright, J. Clifford Wallace, and
Michael Daly Hawkins, Circuit Judges.

Opinion by Judge Hawkins



Mason D. Morisset, Morisset, Schlosser, Ayer & Jozwiak,
Seattle, Washington, for the petitioner.

Samuel Soopper, Federal Energy Regulation Commission,
Washington, D.C., for the respondent.


HAWKINS, Circuit Judge:

The Skokomish Indian Tribe ("the Tribe") appeals a deci-
sion of the Federal Energy Regulatory Commission ("FERC")
denying the Tribe's application for a preliminary permit to
develop a hydropower facility on the North Fork of the Sko-
komish River in Mason County, Washington. FERC deter-
mined that the Tribe's proposal conflicted with the City of
Tacoma's ("Tacoma")1 relicense application and denied the
Tribe's permit application on that basis. On rehearing, FERC
affirmed the denial. Because the Tribe is an aggrieved party
under the Federal Power Act ("FPA"), we have jurisdiction to
hear this appeal, and we affirm.


A. The Permit Process

Because the planning, construction, and operation of hydro-
electric projects are costly and complex, Section 4(f) of the
FPA authorizes FERC to issue preliminary permits prior to
the licensing stage to enable prospective license applicants to
obtain necessary financial commitments and to gather data for
inclusion in later license applications. 16 U.S.C.S 797(f). The
permit process is designed to induce parties otherwise unwill-
ing to expend the necessary resources to prepare and file
license applications. See, e.g., Malta Irr. Dist. v. F.E.R.C.,
955 F.2d 59, 60-61 (D.C. Cir. 1992). A permit holder main-
tains priority for a license against all potential rivals for the
term of the permit (not to exceed three years), and the permit
holder is expected to conduct general preparations (surveys,
financial arrangements, etc.) for the proposed project. 16
U.S.C. S 798. At the licensing stage, while FERC accepts and
evaluates proposals submitted by all interested parties, the
permit holder is accorded preference for the award of the
license and receives the license so long as its plans are equally
well-adapted to the development of the relevant water
resources as the plans of the competing applicants. Id. at
SS 798, 800.

B. The Tacoma Relicensing Proceeding

The Federal Power Commission first issued Tacoma a 50-
year license in 1924 for a minor part of the complete power
project designated the Cushman Hydroelectric Project No.
460 ("the Cushman project"). In 1974, Tacoma filed a new
application for a major project license encompassing all of the
project works, and it filed a revised application in late 1976.
City of Tacoma, Washington, 67 F.E.R.C.P 61,152 (May 4,
1994), 1994 WL 170164, reh'g denied, City of Tacoma,
Washington, 71 F.E.R.C. P 61,381 (June 22, 1995), 1995 WL

In 1984, FERC issued an environmental assessment ("EA")
concluding that the new license would not significantly affect
the human environment. In May 1990, however, parties to the
relicensing proceeding filed a motion with FERC asserting
that an environmental impact statement ("EIS") for the project
was necessary, and FERC eventually issued a draft EIS in
December 1995.

Meanwhile, in February 1992, the Tribe, which had partici-
pated in the Tacoma relicensing proceeding, filed a petition
with FERC requesting that it declare Tacoma's present appli-
cation to be for an "original license," rather than a relicense,
and seeking that the project's environmental evaluation be
based on the condition of the resources in the area prior to its
construction.2 FERC, however, held that Tacoma's applica-
tion was in fact a relicensing proceeding under the FPA and
that basing environmental review on pre-construction condi-
tions was not required. Id.

C. The Tribe's Application for a Preliminary Permit

The Tribe filed an application in February 1995 for a pre-
liminary permit to study the development of a power project
to be located at the toe of the existing Cushman Hydroelectric
Project Dam No. 2 ("Cushman Dam No. 2") with the intake
to be located in the forebay of the existing dam. 3 Although the
application acknowledges that Cushman Dam No. 2 is used
solely to divert water from the North Fork Skokomish River
to Tacoma's Powerhouse No. 2, it states that ongoing FERC
licensing proceedings are expected to result in requirements
to eliminate or substantially reduce out-of-basin diversions
and restore North Fork stream flows at Cushman Dam No. 2.
The Tribe's concerns are that the lack of water flowing down
the North Fork River has had devastating effects on fisheries
and on the health of the river itself; it wants to ensure that any
future development of the river, including usage of the small
amount of water now coming down the river and any amounts
that might be added after the relicensing process, will be uti-
lized in a manner consistent with its restoration.

Tacoma moved to intervene in the Tribe's permit proceed-
ings, contending that the Tribe's application competes with its
relicense proposal because the Tribe proposes to take water
that Tacoma uses in its powerhouse and use the water in a
new powerhouse at the base of the dam. Tacoma also noted
that FERC staff is currently evaluating a similar alternative --
reducing diversions to Tacoma's powerhouse and construct-
ing a new generating facility at the dam's base. Even though
Tacoma views this option as "infeasible," it nevertheless
believes the issue will be resolved in the context of the reli-

D. FERC's Orders Rejecting the Tribe's Permit

On April 6, 1995, FERC issued an order rejecting the
Tribe's request for a preliminary permit on the ground that the
Tribe's application conflicted with Tacoma's filed "initial
development application" in violation of 18 C.F.R. S 4.33(a)
(2). Specifically, it stated:

       In its relicense application, Tacoma proposes to pro-
       vide a minimum flow of 100 cubic feet per second
       (cfs) below Cushman Dam No. 2. The Tribe pro-
       poses to study development of a powerplant that
       would use flows of up to 1,500 cfs released from the
       dam, based on the assumption that [FERC] will ulti-
       mately require release of those flows as environmen-
       tal mitigation in the Cushman relicensing

Skokomish Indian Tribe, 71 F.E.R.C. P 61,023 (Apr. 6, 1995),
1995 WL 148316, at *2, reh'g denied, Skokomish Indian
Tribe, 72 F.E.R.C. P 61,268 (Sept. 20, 1995), 1995 WL

In its Rehearing Order, FERC affirmed its prior decision,
noting that while Tacoma had originally proposed to continue
substantially diverting the North Fork stream flow to its Pow-
erhouse No. 2, "in response to resource agency comments and
recommendations, Tacoma later amended its proposal to
include a minimum flow of 100 [cfs] below Cushman Dam
No. 2, to be released through a small turbine and
powerhouse." Skokomish Indian Tribe, 72 F.E.R.C. P 61,268,
1995 WL 556539, at *2. Accordingly, FERC held that the
Tribe's permit application conflicted with this amendment as
well as with Tacoma's original proposal:

       The Tribe's argument overlooks the fact that its pro-
       posed project would use the same water that Tacoma
       proposes to continue using for power generation, at
       either its existing Cushman Powerhouse No. 2 or its
       proposed powerhouse at the base of Cushman Dam
       No. 2. The water can be used by one project or the
       other, but under the applicants' proposals, it is physi-
       cally impossible for both projects to exist. Thus, the
       two applications do in fact conflict.

Id. (emphasis added).

E. Tacoma's Motion to Dismiss the Appeal

Tacoma moved to dismiss this appeal on the ground that
the Tribe is not an aggrieved party within the meaning of 16
U.S.C. S 825l, the section of the Federal Power Act governing
appeal of a Commission order to a federal circuit court. The
Ninth Circuit Appellate Commissioner denied Tacoma's
motion on the basis that out-of-circuit authority holds that
grants and denials of preliminary permits are subject to
review by a court of appeals. See Malta, 955 F.2d at 61. The
Commissioner's order, however, directed the parties to
address the jurisdictional issue in the remaining briefs.


We defer to FERC's interpretation of its own regulations
unless plainly erroneous. Pankratz Lumber Co. v. F.E.R.C.,
824 F.2d 774, 777 (9th Cir. 1987). FERC's findings of fact
are conclusive if supported by substantial evidence. Id. An
agency's interpretation of a statute, however, is a question of
law that we review de novo. Conlan v. United States Dep't of
Labor, 76 F.3d 271, 274 (9th Cir.), cert. denied, 117 S. Ct.
431 (1996).


A. Jurisdiction

Tacoma, in its appellate brief in support of respondent
FERC, continues to assert that the Tribe is not an aggrieved
party within the meaning of 16 U.S.C. S 825 l(b) and hence
this appeal should be dismissed. Tacoma argues that the Tribe
has suffered no harm from the denial of its permit application
because it does not need a permit to study the feasibility of its
proposed project or to file a timely license application. More-
over, Tacoma asserts that should there be unutilized water
capacity upon completion of the relicensing proceeding, the
Tribe, like any other interested party, would be able to file a
permit application at that time. According to Tacoma, the pri-
ority accorded a permit holder vis-a-vis its competitors would
be of no advantage here because there is no reason to provide
priority in order to encourage development of a preexisting
project that is the subject of relicensing.

[1] "It is well-established that orders granting preliminary
permits are final and therefore reviewable." National Wildlife
Fed'n v. F.E.R.C., 801 F.2d 1505, 1506 n.1 (9th Cir. 1986).
The argument for the reviewability of permit denials is even
stronger, because by definition if a party is denied a permit,
it fails to receive the benefits that such a permit would con-
vey. See City of Bedford v. F.E.R.C., 718 F.2d 1164, 1168
(D.C. Cir. 1983) ("We . . . regard the injury arising from
wrongful denial of the [preliminary] permit as a separate
injury whose extent is imponderable and therefore irrepara-
ble--which means that immediate review can be obtained.").
If a grant of a permit is reviewable, then a fortiori, a denial
should be. See Malta, 955 F.2d at 61 ("Grants and denials of
preliminary permits are considered final Commission action
reviewable by a court of appeals."). Accordingly, we adopt
the District of Columbia Circuit's reasoning in City of Bed-
ford and hold that the Tribe is an aggrieved party within the
meaning of 16 U.S.C. S 825l(b).

B. FERC's Decision

FERC rejected the Tribe's permit application on the ground
that it conflicted with Tacoma's pending relicense application.
We uphold FERC's interpretation of its regulations and its
findings of fact.

FERC's regulations implementing its FPA authority state
that "[t]he Commission will not accept an application for a
preliminary permit for project works that . . . would develop,
conserve, and utilize, in whole or in part, the same water
resources that would be developed, conserved, and utilized by
a project for which an initial development application has
been filed . . . ." 18 C.F.R. S 4.33(a)(2) (1996). An "initial
development application" is defined as:

       any acceptable application for either a license or
       exemption from licensing for a proposed water
       power project that would develop, conserve, and uti-
       lize, in whole or in part, water resources for which
       no other acceptable application for a license or
       exemption from licensing has been submitted for fil-
       ing and is pending before [FERC].

Id. S 4.30(b)(11)(i). FERC specifically has explained:

       [T]he reference in section 4.33(a)(2) to an "initial
       development application" does not restrict its scope
       to applications for an initial license as opposed to
       applications for a new license; rather, it distinguishes
       the first acceptable filing from subsequent acceptable
       filings, regardless of whether the filing is for an orig-
       inal license or for a new license.

Alpine Hydroelectric Co., 58 F.E.R.C. P 61,127 (Feb. 7,
1992), 1992 WL 19800, at *2.

[2] The regulations on their face require denial of the
Tribe's preliminary permit application. Tacoma properly filed
and FERC accepted its license application prior to the filing
of the Tribe's permit application. Tacoma's relicense applica-
tion now proposes to provide a minimum flow of 100 cfs
below Cushman Dam No. 2 to be released through a power
plant, and the Tribe proposes to study the development of a
larger power plant that would use flows of up to 1,500 cfs,
which it assumes will be required to be released from the
dam. Because the Tribe's proposed project would use the
same water that Tacoma proposes to continue to use, FERC
correctly concluded that the Tribe's permit application con-
flicts with Tacoma's filed relicense application.

Nor are we persuaded by any of the Tribe's other argu-
ments concerning the denial of its permit application. First,
the Tribe contends that Tacoma's 1974 relicense application
was illegal and hence cannot bar the Tribe's permit. But
Tacoma's relicense application is not before us at this time.

Second, the Tribe's reliance on Kamargo Corp. v. F.E.R.C.,
852 F.2d 1392 (D.C. Cir. 1988), for the proposition that a pre-
liminary permit application is not barred by the FPA even
when a proposed project conflicts with an existing project, is
misplaced. As FERC noted, that case involved applications
for preliminary permits to develop incremental capacity at
licensed projects approaching relicensing. The District of
Columbia Circuit concluded that FERC relied on irrelevant
statutory provisions to deny the permit applications and
remanded the case for further consideration. Importantly, the
case involved permits to develop "additional unutilized water
resources at existing projects." Id. at 1395 (emphasis in origi-

[3] Here, by contrast, the flows at issue are not unutilized,
but are being diverted by Tacoma to a power generating facil-
ity. As FERC found, "The Tribe's permit application seeks to
develop not incremental but substitute capacity; generation
from the Tribe's proposed project would replace, rather than
add to, generation currently provided by the Cushman
Project." Skokomish Indian Tribe, 72 F.E.R.C. P 61,268, 1995
WL 556539, at *3. At issue in the relicensing proceeding is
whether some of these flows should no longer be diverted for
their current use, but should instead be discharged into the
stream. Nevertheless, FERC stated:

       [T]he issue of whether and to what extent minimum
       flows are needed below Cushman Dam No. 2 is fun-
       damental to the Cushman relicensing proceeding.
       Until that issue is resolved, it is not possible to know
       with any degree of certainty whether any unutilized
       capacity exists at the site, and in what amount. This
       makes it impracticable to attempt to condition a per-
       mit to study only the unutilized capacity, so as to
       avoid conflicting with the filed license application.

Skokomish Indian Tribe, 71 F.E.R.C. P 61,023, 1995 WL
148316, at *3.

[4] The Tribe responds that 30 cfs of unutilized capacity
exists now and Tacoma has not applied for a license to
"harness" the water that will be required to be released down
the river by the end of the relicensing proceeding, placing its
case within the confines of Kamargo. This argument is related
to a third claim by the Tribe that Tacoma never amended its
relicense application to include a 100 cfs powerplant at Cush-
man Dam No. 2.4 This claim is outside the scope of this
appeal, and even if true, would not affect its outcome.
Regardless of whether the Tribe's permit application is com-
pared with Tacoma's relicense application as initially filed or
as later amended, it would have been denied under the ratio-
nale of FERC's orders because it seeks to develop resources
that Tacoma not only proposes to utilize in its amendment but
also currently utilizes. See Skokomish Indian Tribe, 72
F.E.R.C. P 61,268, 1995 WL 556539, at *2 & n.4.

The Tribe claims, however, even if its permit application
conflicts with Tacoma's relicense application, that FERC
should "configure the preliminary permit application to `avoid
interference' " between the two. As support for this fourth
argument, the Tribe cites Cosumnes River Water and Power
Auth., 39 F.E.R.C. P 61,272 (June 5, 1987), 1987 WL 117085.
There, the agency dismissed Cosumnes's first-filed permit
application for, inter alia, failure to comply with technical
requirements, thereby giving priority to a competing, later-
filed license application. FERC held that Cosumnes's permit
application should be reinstated because it could be config-
ured so that there would be no interference with the other
project. 1987 WL 117085, at *2.

Cosumnes does not support the Tribe's position. Unlike
Cosumnes, FERC found here that the Tribe's proposal specifi-
cally conflicts with Tacoma's relicense application. More-
over, FERC correctly observed that the permit application in
Cosumnes had been filed first and hence was not rejected pur-
suant to S 4.33(a)(2) as conflicting with a "filed initial devel-
opment application." Skokomish Indian Tribe, 71 F.E.R.C.
P 61,023, 1995 WL 148316 at *2 n.14.

A fifth claim raised by the Tribe is that FERC's dismissal
of its permit application is inconsistent with the nature and
purpose of preliminary permits, which is not only to award
the permit holder priority in any later licensing proceeding,
but also to allow a prospective license applicant sufficient
time to determine if its proposed project is feasible. The Tribe
cites Mine Reclamation Corp., v. F.E.R.C., 30 F.3d 1519
(D.C. Cir. 1994), for its argument that proposed projects are
necessarily speculative at the permit stage and need not pro-
vide complete details, such as the specific source of water.

[5] While the Tribe is correct that permit applications need
not identify all details of a proposed project, it fails to note
that Mine Reclamation did not involve a permit application
that conflicted with a filed license application. FERC stated
in its rehearing order: "If a license application has been
accepted for filing, [FERC] will not accept a later-filed permit
application that conflicts with the license application, regard-
less of the amount of detail provided in the permit
application." Skokomish Indian Tribe, 72 F.E.R.C. P 61,268,
1995 WL 556539 at *3. Therefore, FERC's "rejection of the
permit application was not based on its specificity or lack
thereof." Id.

[6] Finally, the Tribe argues that by denying its permit
application, FERC ignored its trust responsibility toward
Indian tribes. This argument also fails. FERC is "subject to
the United States' fiduciary responsibility towards Indian
tribes, which, in essence, consists of acting in the interests of
the tribes." Minnesota Power & Light Co., 75 F.E.R.C.
P 61,131 (May 1, 1996), 1996 WL 211960, at *4. Neverthe-
less, it exercises this responsibility in the context of the FPA.
City of Tacoma, 71 F.E.R.C. P 61,381, 1995 WL 369570, at
*9. Hence, FERC has previously rejected arguments that it
must afford Indian tribes greater rights than they would other-
wise have under the FPA and its implementing regulations.
See Covelo Indian Community v. F.E.R.C., 895 F.2d 581, 586
(9th Cir. 1990) (upholding Commission's denial of tribe's late
intervention petition). Here, the Tribe's permit application is
barred by FERC's regulations, and the federal trust responsi-
bility does not compel its acceptance.

The decision of FERC is AFFIRMED. the end



1 Tacoma appears in this case as an intervenor and has filed a brief in
support of respondent FERC.
2 The Tribe contends that the Cushman Dam No. 2 has never been
licensed properly because the original minor part license issued in 1924authorized only the flooding of 8.8 acres of federal land, not the approxi-
mately 4,700 acres now covered by the Cushman project (including two
dams and reservoirs, hydroelectric generating facilities, diversion works,
and transmission lines).
3 Cushman Dam No. 2 is part of the greater Cushman project.
4 Tacoma's amendment to its relicense proposal first appeared in its July
29, 1991 response to FERC's request for additional information. Tacoma
treated this amendment as part of its relicensing proposal in subsequent
filings, as did FERC.
FERC did not issue public notice of this amendment because it was not
material. See 18 C.F.R. S 4.35(f) (defining material amendment). More-
over, S 4.35 does not apply to amendments "made . . . to satisfy requests
of resource agencies or Indian tribes . . . ." Id. S 4.35(e)(4).
These sections indicate that FERC contemplates amendments being
made to applications in response to its concerns or those of resource agen-
cies or tribes. Thus, FERC acted within its authority by treating Tacoma's
proposal to include a 100 cfs powerplant at Cushman Dam No. 2 as an
amendment to its application.