UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


CITY OCONTO FALLS WI

v.

FERC


98-1594a

D.C. Cir. 2000


*	*	*


Karen LeCraft Henderson, Circuit Judge: On November  13, 1997 the
Federal Energy Regulatory Commission (Com- mission, FERC) issued a
license order awarding the Oconto  Falls (Wisconsin) hydroelectric
project to N.E.W. Hydro  (NEW). See 81 FERC p 61,238 (1997). Both the
City of  Oconto Falls (City) and the Wisconsin Department of Natural 
Resources (WDNR) challenge the Commission's action.  WDNR argues that
the Commission breached its statutory  obligation under section 10(j)
of the Federal Power Act  (FPA), 16 U.S.C. s 803(j), to give "due
weight" to WDNR's  recommendations to protect fish. The City argues
that the  Commission improperly determined that: (1) the City's li-
cense application was "essentially equal" to NEW's applica- tion under
section 15(a)(2) of the FPA, 16 U.S.C. s 808(a)(2);  (2) the
Commission's "first to file" tie-breaker procedure  applied; and (3)
NEW's application need not be dismissed for  anticompetitive activity
with Wisconsin Electric Power Com- pany, allegedly resulting from the
Commission's licensure of  NEW. In turn, the Commission challenges the
court's juris- diction over WDNR's petition for review because WDNR 
identified only the rehearing order, 85 FERC p 61,222 (1998),  not the
license order in its petition. For the reasons set forth  infra, we
conclude that we have jurisdiction to review  WDNR's petition and,
based on our review, the Commission  satisfied its duty under section
10(j) of the FPA to give  WDNR's recommendations "due weight." We
further con- clude that the Commission's factual determination that
both  NEW's and the City's applications were "essentially equal" is 
supported by substantial evidence, that the "first to file" tie-
breaker procedure did not unfairly prejudice the City and  that the
Commission correctly declined to dismiss NEW's  application.
Accordingly, we deny both WDNR's and the  City's petitions for


I.


In 1977 the Federal Power Commission issued Wisconsin  Electric Power
Company (WEPCO) a license to operate a  hydroelectric project (Oconto
Falls Project) located on the  Oconto River near Oconto Falls,
Wisconsin, to expire Decem-


ber 31, 1993. In 1988 WEPCO filed a notice of intent to  refile an
application for relicensure but it failed to file its  application
before the December 31, 1991 deadline. Instead,  WEPCO initiated
discussions to sell the Oconto Falls Project  to NEW. The sale was not
completed by the December 31,  1991 deadline, however, and because no
other party filed a  notice of intent to file an application, the
Oconto Falls Project  became orphaned.1 In February 1992 the
Commission issued  a public notice pursuant to Part I of the FPA, 16
U.S.C.  ss 791a-823a, to solicit license applications. At that time 
NEW informed the Commission of its intent to file an applica- tion. In
May 1992 the City informed the Commission of its  intent to file a
competing application. In addition the City  petitioned FERC for an
order declaring that any license  application for the Oconto Falls
Project was subject to a  municipal preference pursuant to section
7(a) of the FPA, 16  U.S.C. s 800(a).2 The Commission ruled instead
that section  15 of the FPA, 16 U.S.C. s 808, governs an orphan
proceed- ing and therefore declared the municipal preference inappli-
cable.3 This court subsequently affirmed the Commission's  decision.
See Oconto Falls v. FERC, 41 F.3d 671, 674-75  (D.C. Cir. 1994).




__________

n 1 An orphaned project is a facility "for which the licensee files a 
notice of intent to apply for a relicense but neither the licensee nor
 any other applicant files a timely relicense application." Oconto 
Falls v. FERC, 41 F.3d 671, 672 (D.C. Cir. 1994); see also 18 C.F.R. 
s 16.25.


2 In issuing a preliminary permit or original license, "the Com-
mission shall give preference to applications therefor by States and 
municipalities" so long as the competing applications are "equally 
well adapted ... to conserve and utilize in the public interest the 
water resources of the region." 16 U.S.C. s 800(a).


3 Section 15, as amended, "makes the municipal preference inap-
plicable in relicensing proceedings even when the licensee is not 
seeking to renew the license." Oconto Falls, 41 F.3d at 675.  Instead,
the license is issued to "the applicant having the final  proposal
which the Commission determines is best adapted to serve  the public
interest." 18 U.S.C. s 808(a)(2) (Supp. 1999).


In the meantime WEPCO accepted NEW's offer to acquire  the Oconto Falls
Project conditioned on NEW's licensure by  the Commission. See License
Order, 81 FERC at 61,982.  On August 21, 1992 NEW requested the
Commission to  waive the "first stage" pre-filing consultation
requirement to  provide "the relevant Federal, State and interstate
resource  agencies" detailed studies, data and documentation on the 
Oconto Falls Project, see 18 C.F.R. s 16.8(a)(1), (b), inas- much as
WEPCO had already completed the consultation re- quirement and had
transferred all of the relevant materials  to NEW. On September 1,
1992 the Commission Director  granted NEW's request. In November 1992
the City re- quested a copy of WEPCO's Initial Consultation Package 
(ICP), which contained not only WEPCO's detailed studies  and data but
also the resource agencies' comments detailing  the studies and
methodologies they recommended WEPCO  to use. NEW planned to use
WEPCO's ICP to prepare its  license application but WEPCO refused to
make it available.  The City subsequently petitioned the Commission
for a copy  of WEPCO's ICP to obtain the data it needed to prepare its
 application. In August 1993 NEW filed an application for a  license
with the Commission. Two months later the Com- mission ordered WEPCO
to make its ICP publicly available  and it did so in November 1993.
Finally, in August 1994 the  City filed a competing application for
licensure with the  Commission. Several months later, while the
applications  were pending, the City filed a complaint with FERC
alleging  anticompetitive activity by NEW and WEPCO, asking the 
Commission both to order them to cease the activity and to  dismiss


Pursuant to section 10(j) of the FPA, the Commission must  include as
license conditions any recommendations from  "State fish and wildlife
agencies" unless the Commission  determines that the recommended
conditions are "inconsis- tent with the purposes and requirements" of
the FPA or  other laws. 16 U.S.C. s 803(j)(1), (2). During the
licensing  process, WDNR recommended that the Oconto Falls Project 
licensee be required to reduce fish entrainment, i.e., their  passage
into and through the turbines of the hydroelectric 


project. On November 13, 1997 the Commission issued an  order granting
NEW the Oconto Falls Project license. See  81 FERC p 61,238 (1997)
(License Order). The Commission  concluded that both NEW's and the
City's license applications  were essentially equal, that the "first
to file" tie-breaker  procedure was appropriate under the
circumstances and that  NEW and WEPCO had not engaged in
anticompetitive activi- ty. After finding no evidence that entrainment
significantly  adversely affected the fish populations, the Commission
also  declined to impose WDNR's proposed conditions to reduce  fish
entrainment. On November 13, 1998 the Commission  denied both WDNR's
and the City's petitions for rehearing.  See 85 FERC p 61,222 (1998)
(Rehearing Order). The City  then petitioned for review of the
Commission's License Order  and Rehearing Order while WDNR petitioned
the Seventh  Circuit for review of the Commission's Rehearing Order. 
WDNR's petition was transferred to this court and the two  cases were


II.


The court upholds FERC's factual findings "if supported by  substantial
evidence" and upholds its order so long as it uses  reasoned decision
making. Texaco, Inc. v. FERC, 148 F.3d  1091, 1095 (D.C. Cir. 1999).
The Commission's decision to  award NEW the license is entitled to
deference so long as the  decision is supported by substantial
evidence. See Bangor  Hydro-Elec. Co. v. FERC, 78 F.3d 659, 663 (D.C.
Cir. 1996).  The court grants "considerable" deference to the Commis-
sion's interpretation of a statute it administers so long as its 
"interpretation is permissible." Oconto Falls, 41 F.3d at 674 


A. Jurisdiction


The Commission challenges the court's jurisdiction to re- view WDNR's
petition because it petitioned for review of the  Rehearing Order
instead of the License Order. Under sec- tion 313(b) of the FPA:


Any party to a proceeding under this chapter aggrieved  by an order
issued by the Commission in such proceeding  may obtain a review of
such order in the United States  court of appeals ... by filing in
such court, within sixty  days after the order of the Commission upon
the applica- tion for rehearing, a written petition praying that the 
order of the Commission be modified....


16 U.S.C. s 825l(b). Section 313(b)'s plain language indicates  that
"the order of the Commission upon the application for  rehearing"
(rehearing order) which begins the sixty-day limi- tations period is
different from the "order of the Commission"  ("aggrieving" order)
which the petitioner is to identify in its  petition. Section 313(b)
provides review of the "aggrieving"  order but the rehearing order
simply determines the accrual  date of the sixty-day limitations
period. It would make little  sense to provide for relief from the
"aggrieving" order but at  the same time require the petitioner to
specify the rehearing  order in its petition.4 Thus, in order to
properly petition for  review of a Commission order, section 313(b)
requires a  petitioner to identify the "aggrieving" order which in
this case  is the License Order. In its petition for review, however, 
WDNR specified only the Rehearing Order. See WDNR's  Petition for
Review 1 (Jan. 11, 1999). Federal Rule of  Appellate Procedure 15(a)
requires that a petition for review  of an agency order must "specify
the order or part thereof to  be reviewed." See also Entravision




__________

n 4 Section 313(b) of the FPA also requires a party to petition for 
rehearing before it seeks judicial review. WDNR argues that to 
interpret section 313(b) to require a party to petition for review of 
the "aggrieving" order effectively makes the required rehearing  order
nonreviewable. This court has previously determined that a  rehearing
order does not constitute a new order unless it signifi- cantly
modifies the original order. See Southern Natural Gas Co.  v. FERC,
877 F.2d 1066, 1072-73 (D.C. Cir. 1989). Although a  rehearing order
can be challenged together with an "aggrieving"  order, as was the
case in Southern Natural, a rehearing order  cannot be challenged on
its own unless it is a separate order and  rehearing has been held
pursuant to that order. See 16 U.S.C.  s 825l.


2000 WL 2667, at *1 (D.C. Cir. Feb. 11, 2000); Martin v.  FERC, 199
F.3d 1370, 1372 (D.C. Cir. 2000); City of Benton  v. NRC, 136 F.3d
824, 826 (D.C. Cir. 1998). Nevertheless,  "[a] mistaken or inexact
specification of the order to be  reviewed will not be fatal to the
petition ... if the petitioner's  intent to seek review of a specific
order can be fairly inferred  from the petition for review or from
other contemporaneous  filings, and the respondent is not misled by
the mistake."  Entravision, 2000 WL 2667, at *1 (citing Martin, 199
F.3d at  1371-73; Southwestern Bell Tel. Co. v. FCC, 180 F.3d 307, 
313 (D.C. Cir. 1999)). Although WDNR identified the Re- hearing Order
in its petition for review, it described the order  as "[t]he final
FERC order ... granting subsequent license  to N.E.W. Hydro, Inc., and
denying the City of Oconto Falls'  competing application." WDNR's
Petition for Review at 1  (emphasis added). Furthermore, WDNR's brief
identified  the License Order in its certificate of rulings under
review  and addressed the License Order in its briefs. In light of 
WDNR's contemporaneous filings, we believe it intended to  challenge
the License Order notwithstanding its denomination  of the Rehearing
Order. The Commission can hardly claim  prejudice or lack of notice
from WDNR's petition for review  and in fact acknowledged as much at
oral argument. Accord- ingly, we have jurisdiction to consider WDNR's


B. WDNR's Petition


Section 10(j)(1) of the FPA requires the Commission to  place a
condition on a license "based on recommendations  received pursuant to
the Fish and Wildlife Coordination Act  (16 U.S.C. s 661 et seq.) from
... State fish and wildlife  agencies." 6 U.S.C. s 803(j)(1) (Supp.
1999). Section 10(j)(2)  of the FPA further requires that:


Whenever the Commission believes that any recommen- dation referred to
in paragraph (1) may be inconsistent  with the purposes and
requirements of this subchapter or  other applicable law, the
Commission and the agencies  referred to in paragraph (1) shall


such inconsistency, giving due weight to the recommen- dations,
expertise, and statutory responsibilities of such  agencies.


Id. s 803(j)(2). We have held that section 10(j) "requires the 
Commission to afford significant deference to fish protection 
recommendations of state and federal fish and wildlife agen- cies."
Granholm ex rel. Michigan Dep't of Natural Re- sources v. FERC, 180
F.3d 278, 280 (D.C. Cir. 1999). Never- theless, the Commission "still
is charged with determining the  'public interest,' i.e., balancing
power and non-power values.  Even where the fish and wildlife agencies
make formal sec- tion 10(j) recommendations, those agencies have no
veto  power." United States Dep't of Interior v. FERC, 952 F.2d  538,
545 (D.C. Cir. 1992) (citation omitted). WDNR argues  specifically
that the Commission failed to support, as is  required under section
10(j)(2), its determinations that: (1) a  six per cent entrainment
rate would likely occur; (2) less  entrainment would occur at the
powerhouse intake; (3) most  of the fish leaving the reservoir were
excess fish; and (4)  small fish (comprising the majority of those
entrained) have a  higher natural mortality rate. We review to ensure
the  Commission's factual findings are supported by substantial 


The Commission derived its assumptions from WDNR's  studies of the fish
populations of the Oconto Falls reservoir  conducted in 1984 and 1989.
See, e.g., License Order, 81  FERC at 62,014; Memorandum Regarding
Oconto Falls 1989  Pond Survey (Feb. 28, 1990). The studies found that
the  reservoir had a diverse fish community structure and stability 
with healthy and abundant fish populations. See License  Order, 81
FERC at 61,911. Moreover, pike and bass existed  in large numbers and
with better than average growth rates.  See id. at 62,014. WDNR's
studies also found that any  difficulties experienced by the
largemouth bass and spawning  walleye populations resulted from a lack
of appropriate habi- tat in the reservoir, not from entrainment. See
Pond Survey  at 2. While section 10(j)(2) requires the Commission to
give  WDNR's recommendations "due weight," WDNR's own stud- ies belie
its request. Furthermore, the Commission's deter-


mination that the entrainment and mortality rate was approx- imately
six per cent is consistent with WDNR's studies and  with the best
available evidence of the potential range of fish  entrainment
mortality. See Electric Power Research Insti- tute, Fish Entrainment
and Turbine Mortality Review and  Guidelines (1992). Moreover, WDNR
produced no evidence  to contradict the Commission's assumptions
based, as noted,  on WDNR's own studies. The Commission met its
statutory  duty under section 10(j) to give WDNR's recommendations 
"due weight" and its factual findings easily meet the substan- tial


Finally, WDNR argues that the Commission improperly  failed to impose a
barrier net requirement. According to  WDNR, because the barrier net
at a nearby project (Pine  Project) cost only $50,000, the Commission
erred in estimat- ing the cost of a barrier net at the Oconto Falls
Project at  $540,000. The Commission, however, distinguished the Pine 
Project barrier net on several grounds: the Pine Project was  located
in a more sheltered area of the reservoir and in much  shallower
water; the type of net used at the Pine Project was  unsuitable for
the Oconto Falls Project; WEPCO's analysis  projected $540,000 for a
barrier net for the Oconto Falls  Project; and the Commission
concluded that a fish protection  device at the Oconto Falls Project
would not have a signifi- cant beneficial effect on fishery resources.
The Commission  gave WDNR's recommendation to construct a net barrier 
similar to the Pine Project's barrier "due weight" but ade- quately
distinguished the Oconto Falls Project's needs based  upon substantial


C. The City's Petition


The City first contends that the Commission should have  concluded that
the City's ability to comply with a license was  superior to NEW's
ability under section 15(a)(2) of the FPA.  Under section 15(a)(2),
the Commission is required to


consider (and explain such consideration in writing) each  of the
following:


(A) The plans and abilities of the applicant to comply  with (i) the
articles and conditions of any license issued  to it and (ii) other
applicable provisions of this subchap- ter.


(B) The plans of the applicant to manage, operate and  maintain the
project safely.


(C) The plans and abilities of the applicant to operate  and maintain
the project in a manner most likely to  provide efficient and reliable
electric service.


(D) The need of the applicant over the short and long  term for the
electricity generated by the project or  projects to serve its
customers....


(E) The existing and planned transmission services of  the applicant,
taking into consideration system reliability,  costs, and other
applicable economic and technical fac- tors.


(F) Whether the plans of the applicant will be  achieved, to the
greatest extent possible, in a cost effec- tive manner.


(G) Such other factors as the Commission may deem  relevant....  16
U.S.C. s 808(a)(2). Applying these factors, the Commis- sion
determined that there were no environmental or econom- ic differences
between NEW's and the City's applications.


The City contends that its license application was superior  to NEW's
because of the City's relationship to local agencies;  its increased
cost effectiveness; its ability to finance the  Oconto Falls Project
at a lower interest rate; its technical  experience in operating
public water and sewer operations;  and its closer headquarters.5 The
Commission, however,  


__________

n 5 The Commission responds that the City waived its arguments 
regarding cost effectiveness, inclusion of campground costs and  lower
financing rate because the City failed to preserve them on  rehearing.
Although the City did not make these specific cost  effectiveness
challenges, it did challenge the Commission's determi- nation of the
two applicants' relative cost effectiveness. See City's  Rehearing
Request 4-8. In making the cost effectiveness argu-


considered the City's arguments. It determined that: prox- imity was
not significant because many licensees are head- quartered far from
their projects with no bad effect; the  Congress intended that
municipal preference not apply in  relicensing proceedings; NEW had
experience with hydro-  power projects which the City lacked,
including operating the  Oconto Falls Project since 1992; both
applicants had emer- gency plans; and although the City's projected
cost effective- ness was 8.4 per cent greater than NEW's, forecasts of
 economic benefits are considered comparable unless the dif- ference
is more than 20 per cent, see City of Augusta et al.,  72 FERC p
61,114, at n.58 (1995). The Commission's deter- mination that the
City's application was "essentially equal" to  NEW's is supported by


Also unconvincing is the City's argument that the Commis- sion
erroneously applied a "first to file" tie-breaker to grant  NEW the
license. First, the City asserts that section 4.37(b)  of the
Commission's regulations, 18 C.F.R. s 4.37(b), prohib- its the
Commission from using the "first to file" tie-breaker.6 




__________

n ment, the City preserved its specific arguments related to that 
challenge. See City of Vernon v. FERC, 845 F.2d 1042, 1047 (D.C.  Cir.
1988). In addition, not until its Rehearing Order did the  Commission
weigh the City's increased recreation costs while alleg- edly failing
to consider the City's lower financing costs. Therefore,  the City had
no opportunity to raise these points before its petition  for judicial
review.


6 18 C.F.R. s 4.37(b) provides:


If two or more applications for ... licenses (not including 
applications for a new license under section 15 of the Federal  Power
Act) are filed ... the Commission will select between or  among the
applicants on the following bases:


....


(b) If both of two applicants are either a municipality or a  state, or
neither of them is a municipality or a state, and the  plans of the
applicants are equally well adapted to develop,  conserve, and utilize
in the public interest the water re- sources of the region, taking
into consideration the ability of  each applicant to carry out its
plans, the Commission will 


The Commission's interpretation of its regulations is entitled  to
substantial deference. See Associated Builders & Contrac- tors, Inc.
v. Herman, 166 F.3d 1248, 1254 (D.C. Cir. 1999).  The City correctly
notes that the Commission ruled, and this  court affirmed, that an
"orphan" proceeding is governed by  section 15 of the FPA, see Oconto
Falls, 141 F.3d at 674-75,  and that section 4.37(b) is not applicable
to a section 15 new  license proceeding.7 From there, however, the
City argues  that no provision of section 4.37(b) may be applied in
any  proceeding governed by section 15 of the FPA. But section 
4.37(b) is inapplicable only to proceedings for a "new license  under
section 15 of the Federal Power Act." 18 C.F.R.  s 4.37 (emphasis
added). Although an orphan proceeding is  governed by section 15 of
the FPA, it is not a new license  proceeding under that section.


Next, the City argues that the "first to file" tie-breaker is  an
impermissible retroactive policy change. According to the  City, the
Commission is bound by its prior decision "to deny  any applicant or
class of applicants a preference" because  "the purpose of Congress
was to place all applicants in a  relicensing on an equal footing."
Order No. 513, FERC  Stats. and Regs., p 30,854, at 31,443-445 (1989)
(finding rules  of preference inappropriate in subsequent license
proceed- ings). Order No. 513, however, does not address orphaned 
projects and does not dispense with tie-breakers in all section  15
proceedings. As we earlier determined, "Congress never  envisioned the
problem of orphaned projects. The statute is  simply silent on the
subject...." Oconto Falls, 41 F.3d at  677. Similarly, Commission
precedent is silent on orphaned 




__________

n favor the applicant with the earliest application acceptance  date.


The Commission has held that section 4.37(b) applies where, as  here,
one applicant is a non-municipality and the other applicant is a 
municipality ineligible for the section 7(a) municipal preference. 
See Idaho Water Resource Bd., 84 FERC p 61,146, at n.14 (1998).


7 18 C.F.R. s 4.37 is inapplicable to "new license [applications] 
under section 15 of the Federal Power Act."


projects. Its action here, therefore, does not constitute a 
retroactive policy change.


More plausible, but still unconvincing, the City argues that  the
"first to file" tie-breaker is unfairly prejudicial because  the
Commission's delay in granting the City's petition to  obtain WEPCO's
ICP prevented it from filing its application  before NEW filed. The
City's argument, however, assumes  that it had the same right to
WEPCO's ICP as did NEW. In  fact the City's rights significantly
differed from NEW's.  When NEW's offer to buy the Oconto Falls Project
fell  through, WEPCO hired NEW to operate the project.  NEW's access
to WEPCO's ICP arose from its contractual  relationship with WEPCO, a
relationship which the City had  every right to seek but failed to
pursue. As the Commission  recognized, "the City was free to bid on
the project, when  [WEPCO] solicited offers." License Order, 81 FERC
at  61,984. The City will not be heard to complain now.


Not to be deterred, the City also attacks NEW's agency  relationship
with WEPCO, arguing that WEPCO improperly  acted as a co-applicant in
violation of 18 C.F.R. s 16.25.  While section 16.25 precludes a
previous license holder such  as WEPCO from filing a license
application in response to the  Commission's notice soliciting
applications, it does not ad- dress "co-applicant" status.8 The
Commission appropriately  determined that neither the FPA nor its own
regulations  prohibited WEPCO from conditionally selling the Oconto 
Falls Project to NEW, from hiring NEW as its operating  agent or from
initially refusing to provide the City with the  ICP. While an agency
relationship may provide some advan- tages in filing a license
application, it does not constitute a co- applicant relationship in
violation of section 16.25. See Li- cense Order, 81 FERC at 61,984.


For the foregoing reasons, we conclude that the Commis- sion did not
err in granting NEW a license to operate the 




__________

n 8 When a project becomes orphaned, the Commission is required  to
publish a notice "soliciting applications from potential applicants 
other than the existing licensee." 18 C.F.R. s 16.25.


Oconto Falls Project and, accordingly, both WDNR's and the  City's
petitions for review are


Denied.