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


CONSRVTN LAW FDN

v.

FERC


99-1035a

D.C. Cir. 2000


*	*	*


Randolph, Circuit Judge: The Department of the Interior  and the
Environmental Protection Agency, conservation  groups,1 and the
Penobscot Indian Nation petition for review  of the Federal Energy
Regulatory Commission's relicensing  of a hydroelectric project in
north-central Maine. The issues  presented go mainly to the adequacy
of the Commission's  consideration of the various factors governing
license renew- als. Because the Commission gave sufficient attention
to  these factors and carefully explained its conclusions, the 




__________

n 1 American Rivers, American Whitewater Affiliation, Appalachian 
Mountain Club, Conservation Law Foundation, and Trout Unlimit- ed.


I


Located on the West Branch of the Penobscot River, the  Ripogenus and
Penobscot Mills Hydroelectric Projects pro- duce approximately 108
megawatts of power for Great North- ern Paper mills in Millinocket and
East Millinocket, Maine.  The projects consist of a series of
reservoirs, dams, and  powerhouses. This case focuses on one of the
dams--the  1262 foot long Stone Dam, which is part of the Penobscot 
Mills Project.2 Constructed in 1899, Stone Dam diverts  water through
a canal to a 37 megawatt powerhouse. This  diversion blocks the main
channel of the Penobscot's West  Branch for a 4.5 mile stretch known
as the "Back Channel."  Because of Stone Dam, the Back Channel
receives only  leakage flows of 2 to 5 cfs (cubic feet per second),
except for  occasional "spillage" when flows exceed power


The Penobscot Mills Project, like any project used for the 
"development, transmission, and utilization of power across,  along,
from, or in any of the streams or other bodies of water  over which
Congress has jurisdiction," requires a license from  the Federal
Energy Regulatory Commission. 16 U.S.C.  s 797(e). When the original
license for Penobscot Mills  expired at the end of 1993, Great
Northern applied for a new  one. The Commission issued a Final
Environmental Impact  Statement analyzing three different proposals
regarding the  new license: the "Applicant's Proposal," in which Great
 Northern would "operate the project[ ] nearly as it has over  the
past 50 years" with some new environmental and recre- ational
enhancements but no increased flows in the Back  Channel; "Alternative
1," which reflected the Interior De- partment's recommendations for
enhancements including  minimum flows of 350 to 500 cfs in the Back




__________

n 2 Petitioners raise no specific objection to the Commission's order 
relicensing the Ripogenus Project, see 77 F.E.R.C. p 61,316 (1996), 
though that order was also listed in the petitions for review.


3 Interior initially recommended flows of 500 cfs and later in- creased
the recommendation to 945 cfs. See 85 F.E.R.C. at 62,242 


"Alternative 2," recommending "enhancement measures inter- mediate
between those proposed by GNP and those in Alter- native 1." FEIS at
xix. As a baseline for comparison, the  Commission adopted the terms
and conditions of the existing  license as the "no action" option. The
impact statement  recommended a modified version of Alternative 2 that
did not  include flow requirements for the Back Channel. See FEIS  at
xxiii.


Shortly after issuance of the final impact statement, the  Commission
granted a new license for Penobscot Mills.4 See  77 F.E.R.C. p 61,068
(1996). The order conditioned the li- cense on Great Northern's
commitment to wetland enhance- ments, project boundary expansion, and
increased flows into  Millinocket Stream. See id. at 61,275-79. As to
the Back  Channel, the Commission decided not to order minimum flows 
"given the modest fisheries benefit likely to occur and the 
significant adverse impact on the project's energy benefits,"  id. at
61,276, a decision it affirmed on rehearing, see 85  F.E.R.C. p 61,316
(1998), and reconsideration, see 86 F.E.R.C.  p 61,184 (1999).


II


"In deciding whether to issue any license [for hydroelectric 
projects,] the Commission, in addition to the power and  development
purposes for which licenses are issued, shall give  equal
consideration to the purposes of energy conservation,  the protection,
mitigation of damage to, and enhancement of,  fish and wildlife
(including related spawning grounds and  habitat), the protection of
recreational opportunities, and the  preservation of other aspects of
environmental quality." 16  U.S.C. s 797(e). The Federal Power Act
also requires the  Commission to include conditions for the
"protection, mitiga- tion and enhancement" of fish and wildlife




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n n.6. In its petition for rehearing before the Commission, however, 
Interior only "argue[d] for a minimum flow 350 cfs." Id. at 62,242.


4 During the interim, the Commission had issued annual renewals  of the
Penobscot Mills license under the same terms as the expired  license.
See 16 U.S.C. s 808(a).


project, such conditions to be "based on recommendations  received
pursuant to the Fish and Wildlife Coordination Act  (16 U.S.C. Sec.
661 et seq.) from the National Marine Fisheries  Service, the United
States Fish and Wildlife Service, and  State fish and wildlife
agencies." 16 U.S.C. s 803(j)(1). The  Commission retains authority to
decide that recommended  conditions are "inconsistent with the
purposes" of the FPA or  other laws, in which event it shall of course
reject them. 16  U.S.C. s 803(j)(2); see United States Dep't of the
Interior v.  FERC, 952 F.2d 538, 544 (D.C. Cir. 1992). While the Com-
mission must give "equal consideration" to environmental  factors,
those factors do not have "preemptive force." 952  F.2d at 545. The
Commission "still is charged with determin- ing the 'public interest,'
i.e., balancing power and non-power  values." Id.


The petitioners contend that the Commission's rejection of  minimum
flow requirements in the Back Channel violates  these Federal Power
Act provisions and the National Envi- ronmental Policy Act, see 42
U.S.C. s 4321 et seq. Their  arguments can be grouped into two
categories: that the  Commission did not fully recognize the
recreational and envi- ronmental (i.e., nonpower) benefits that would
have resulted  if it had imposed minimum flow requirements; and that
the  Commission inflated the economic costs Great Northern  would
incur from increased Back Channel flows.


A. Nonpower Issues


The main argument of the federal petitioners is that the  Commission
should not have treated existing conditions at  Stone Dam as the
baseline "no action" option because this  caused "the Commission to
ignore ongoing impacts directly  attributable to the new license...."
Brief for the Federal  Petitioners at 29. We think there is nothing to
this objection.  The statute--16 U.S.C. s 803(j)--invites a
comparative inqui- ry. It charges the Commission with the duty of
protecting,  mitigating the damage to, and enhancing "fish and
wildlife  (including related spawning grounds and habitat) affected by
 the development, operation and management of the project."  To do
this properly the Commission must compare what 


might occur to fish and wildlife if the license does not include 
protection for nonpower resources against what will occur  with
conditions imposed. The statutory words "fish and  wildlife ...
affected" by the project seems to refer to the  fish and wildlife
currently existing in the vicinity of the  project, which supports the
Commission's choice of existing  conditions as a baseline. The quoted
language surely cannot  refer to the animals inhabiting the area in
1899, when the  project came into being. They are long gone and so
cannot  be "affected" by a Commission licensing decision in the 1990s.
 Granted, it is possible to treat the words "fish and wildlife" 
generically, so that it is not just the animals currently resid- ing
in the region that get protected or enhanced, but different  species
that might be introduced or reintroduced. But this  view of s 803(j)
does not help petitioners because it says  nothing about whether the
baseline for the Commission's  comparative inquiry should be today or
sometime other than  today. In other words, even if the statute refers
generally to  all "fish and wildlife" it hardly follows that the
Commission  must imagine the Back Channel as it existed before 1899
and  assess the effect of relicensing by pretending that Stone Dam 
does not exist--at least when no one advocates decommission- ing the
Penobscot Mills Project and tearing down the dam.


Given the language of s 803(j), the Commission certainly  had the
leeway to conduct its comparative assessments using  existing
conditions as a baseline. To the reasons just men- tioned, we
incorporate by reference those given in American  Rivers v. FERC, 201
F.3d 1186, 1195-99 (9th Cir. 2000),  which sustained the Commission's
use of an existing condi- tions baseline as a reasonable construction


In any event, the baseline business has the whiff of a red  herring.
Baseline or no baseline, the question is whether the  Commission has
fully examined options calling for greater or  lesser environmental
protection. Here the Commission spoke  of environmental "benefits" and
the economic "costs" to Great  Northern of options calling for
stronger environmental pro- tection. It could just as easily spoken of
economic "benefits"  to Great Northern from licensing the project and
environ- mental "costs." So long as the Commission adequately exam-


ines both the power and nonpower impacts of recommended  licensing
conditions, we do not see why it matters on which  side of the
equation environmental concerns are placed. In  issuing the new
licenses in these proceedings, the Commission  adopted twelve of
Interior's fourteen recommended environ- mental enhancements while
using an existing conditions base- line. See FEIS tbls.5-8 to 5-9, at
5-20 to 5-21, adopted at 77  F.E.R.C. at 61,275. This in itself proves
that the federal  petitioners are mistaken in thinking that an
existing condi- tions baseline preordains the rejection of any new
conditions  for the protection of fish and wildlife. So long as the
Com- mission examines options that include recommended environ- mental
enhancements, its choice of a baseline will not prevent  it from
giving "equal consideration" to nonpower values.5


Petitioners also argue that the Commission did not give  "equal
consideration" to nonpower values because it refused  to assess in
economic terms the nonpower benefits that would  result from restoring
significant flows to the Back Channel.  Restored flows, petitioners
believe, would attract anglers and  whitewater rafting enthusiasts to
this 4.5 mile stretch of river.  In the rehearing order, the
Commission explained its refusal  to quantify these nonpower benefits:
"[T]he public-interest  balancing of environmental and economic
impacts cannot be  done with mathematical precision, nor do we think
our statu- tory obligation to weigh and balance all public interest
consid- erations is served by trying to reduce it to a mere mathemati-
cal exercise.... [F]or non-power resources such as aquatic  habitat,
fish and wildlife, recreations, and cultural and aesth- etic values,
to name just a few, the public interest cannot be  evaluated
adequately only by dollars and cents." 85 F.E.R.C.  at 62,244-45.
Certainly nothing in the statute requires the  Commission to place a
dollar value on nonpower benefits.  Nor does the fact that the
Commission assigned dollar figures  to Great Northern's economic costs
require that the Commis- sion do the same for nonpower benefits: "




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n 5 We also agree with the American Rivers court, see 201 F.3d at 
1199-2001, that the Commission's thorough examination of a range  of
licensing alternatives satisfies NEPA's procedural requirements,  see
42 U.S.C. s 4332(2)(C)(iii).


ation' is not the same as 'equal treatment.' " State of Califor- nia v.
FERC, 966 F.2d 1541, 1550 (9th Cir. 1992). The  refusal to quantify
nonpower benefits did not "stack the deck"  against those concerns.
The Commission approved "a variety  of enhancements related to
instream flows for fisheries and  recreation, stabilization of
impoundment levels, wetlands, re- creational facilities, shoreline
protection, and cultural re- sources." 85 F.E.R.C. at 62,245; see also
id. at 62,245 n.31.  A critical factor in the Commission's refusal to
impose mini- mum flows was the increased power expenses that would 
result, not the Commission's failure to appreciate nonpower  values.
Minimum flows of 350 cfs in the Back Channel would,  the Commission
concluded, increase annual power expenses  by $916,300; the total
increase in annual power costs of the  enhancements the Commission
approved for Penobscot Mills  was $262,600. See FEIS tbl.5-3, at


Petitioners' final complaint under this heading is that the  Commission
did not focus on the possibility of a brook trout6  fishery in the
Back Channel. In its original order, the  Commission observed that
"fish species such as brook trout,  eels, minnows and suckers would
benefit slightly from the  recommended flows, [but] the Back Channel
would at best  only produce several hundred adult land-locked salmon."
77  F.E.R.C. at 61,275. The order then explained why the Back  Channel
would not be a desirable habitat for land-locked  salmon, but did not
mention brook trout again. See id. On  rehearing, the Commission
stated that there was "a low  likelihood of re-establishing limited
habitat" for brook trout.  85 F.E.R.C. at 62,243. It relied, at least
in part, on "a Maine  Department of Inland Fish and Wildlife priority
to maintain  and protect fishery resources elsewhere in the project
area."  Id. "During dry years, requiring minimum flows above leak- age
in the Back Channel could affect the ability to maintain 




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n 6 A "brook trout" (Salvelinus fontinalis) is actually a char.  "Chars
are distinguished from trout by their mouth structure; the  vomerine
bone in the center of a trout's mouth has teeth all along it,  while
the vomer of the char has only a few teeth on the front end of  the
bone." A.J. McClane, ed., McClane's New Standard Fishing  Encyclopedia
and International Angling Guide 207 (1998 ed.).


constant flows in the West Branch and Millinocket Stream,  and lake
level in the North Twin reservoir, which could cause  stress and
potential damage to salmon and trout populations  in those areas." Id.
Given the plentiful brook trout fisheries  in the Penobscot
Mills-Ripogenus area, the Commission can- not be faulted for believing
that adding another 4.5 mile  stretch would have little benefit. See


The Federal Power Act requires the Commission to consid- er the
recommendations of the United States Fish and Wild- life Service and
State fish and wildlife agencies.7 See 16  U.S.C. s 803(j)(1). Even
when the recommendations of fed- eral and state agencies are in
concert, those agencies do not  have "veto power" over Commission
licensing decisions. De- partment of Interior, 952 F.2d at 545 (citing
National Wild- life Fed'n v. FERC, 912 F.2d 1471, 1480 (D.C. Cir.
1990)). In  this case the federal and State agencies disagreed about
the  desirability of promoting a brook trout fishery in the Back 
Channel. The Commission adequately explained why Interi- or's
recommendation was inconsistent with the purposes of  the FPA. See 16
U.S.C. s 803(j)(2). Not only would Interi- or's proposal curtail power
production from the Penobscot  Mills Project, but the Commission had
reason to believe a  Back Channel brook trout fishery would actually
do more  harm than good to the region's fish habitats.


B. Power Issues


The Commission stated that the "reduction in the project's  ... annual
energy benefits for the Back Channel flows out- weighs the enhancement
in aquatic resources that the flows  would produce." 77 F.E.R.C. at
61,276. The Commission  calculated this annual reduction as $916,0008
(6% of the 




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n 7 The same provision requires the Commission to "attempt to  resolve
any inconsistency" between its proposed license and other  agency
recommendations. See 16 U.S.C. s 803(j)(2). The Commis- sion did so in
a "dispute-resolution meeting with representatives  from Interior on
February 8, 1996." 77 F.E.R.C. at 61,274.


8 The Commission concluded that the annual cost of Interior's  request
for 950 cfs would be $2.5 million, or 16% of the project's  power
production. See 77 F.E.R.C. at 61,274-75.


project's total benefits), see id., based on the price of purchas- ing
replacement power from the least-cost alternative  source--Bangor
Hydro & Electric Company,9 see FEIS  s 2.4.4, at 2-33 to 2-34.


Petitioners complain that the Commission failed to consider  the
alternative of Great Northern conserving energy, some- thing the
statute requires the Commission to consider. See  16 U.S.C. ss 797(e),
808(a)(2)(C); see also 42 U.S.C.  s 4322(2)(E); 40 C.F.R. s 1502.14.
They put it this way:  "By considering conserved power as the least
cost alternative  to hydropower, rather than the more expensive
purchased  power used by the Commission, the cost of environmental 
enhancements, such as Back Channel flows, are much lower."  Final
Brief for Petitioners Conservation Law Foundation, et  al. and Trout
Unlimited at 12. But the Commission did  consider the alternative of
energy conservation. After exam- ining Great Northern's plant data,
the Commission concluded  that the mills had recently increased energy
efficiency as the  result of plant modernization efforts and the use
of steam  generation and that no reliable evidence supported petition-
ers' view that "enormous conserved power potential" still  existed at
the mills. See FEIS E-3, cited in 77 F.E.R.C. at  61,269 n.16; id. at
E-24. The final impact statement also  noted that Great Northern,
"operating as a private for-profit  enterprise, would have a strong
economic incentive to maxim- ize savings from conservation and not
waste electric power,  particularly as it manufactures an
energy-intensive product."  Id. at E-23, cited in 85 F.E.R.C. at
62,243 n.14. Any  conservation that did occur would be "used to
displace higher- cost fossil fuel power ... [s]ince the entire output
from the  two projects supplies only a portion of GNP's total annual 
power needs...." Id., cited in 85 F.E.R.C. at 62,243 n.14.  We see no
ground for disagreeing with this reasoning. The  Penobscot Mills (31%
of energy needs) and Ripogenus (19%  of energy needs) Projects supply




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n 9 The Commission (as well as the parties) assume that Great  Northern
would purchase fossil fuel power--not hydro power--from  Bangor.


needed for Great Northern's paper manufacturing. See 77  F.E.R.C. at
61,242, 61,270. Until the company's conservation  measures achieved a
50% reduction in its energy needs  (something no one contends is
likely), the consequence of  increased energy efficiency would be a
decrease in the compa- ny's purchase of other, more expensive, sources
of power.  Thus, the "replacement cost" of reduced hydroelectric power
 would still be the price of power from Bangor, namely  $916,000.10


Petitioners' other cost-side argument is that the Commis- sion relied
on unsupported claims that the increased cost of  Back Channel flows
would result in job losses at the Great  Northern mills. This
misinterprets the Commission decision.  In the original order, the
Commission recognized "Great  Northern's need for inexpensive power to
remain competitive  in its paper making operations." 77 F.E.R.C. at
61,275.  Then, in a footnote, the Commission stated that it could not 
verify the company's claim that flows in the Back Channel  "would
result in the loss of approximately 238 jobs," so the  Commission was
just relying on what it did know--that  "Great Northern's operating
costs are high compared to other  paper manufacturers, and cost
increases could reduce the  company's competitiveness." Id. at 61,275
n.31 (italics add- ed). On rehearing, the Commission once again
indicated that  it was only relying on the risk of economic harm: "A
350-cfs  minimum flow would reduce the annual energy benefit of 
Penobscot Mills substantially, with the possibility of causing  Great
Northern to further curtail operations at, or close, its  paper
mills...." 85 F.E.R.C. at 62,242 (italics added) (foot- notes
omitted). There is ample evidence in the record to  support the
Commission's findings. Papermaking is a highly  competitive industry,
see FEIS s 5.3.5, at 5-14, cited in 77  F.E.R.C. at 61,275 n.31; Great




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n 10 Although conservation would not change the $916,000 replace- ment
cost of increased Back Channel flows, it would reduce Great 
Northern's total energy costs. But it was the magnitude of the 
replacement cost, not the impact it would have on the company's 
overall economic condition, that led the Commission to reject the 
proposal for increased Back Channel flows. See infra note 11.


producer compared to other paper manufacturers, see id.,  cited in 77
F.E.R.C. at 61,275 n.31, and Great Northern  recently closed some
Millinocket facilities, resulting in the  elimination of about 350
jobs, see 85 F.E.R.C. at 62,242 n.9.11


III


The Penobscot River Basin is "home to the Penobscot  Indian Nation
(PIN), much of whose cultural heritage is  closely associated with the
river and the resources it pro- vides." FEIS s 3-1, at 3-1. Under the
Maine Indian Claims  Settlement Act, the " 'Penobscot Indian
Reservation' " is de- fined as "the islands in the Penobscot River
reserved to the  Penobscot Nation by agreement with the States of
Massachu- setts and Maine consisting solely of Indian Island, also
known  as Old Town Island, and all islands in that river northward 
thereof that existed on June 29, 1818...." 25 U.S.C.  s 1722(i)
(incorporating 30 Me. Rev. Stat. Ann. s 6203(8)). 




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n 11 Petitioners' pre-argument motion to remand the case to the 
Commission for the taking of additional evidence, see 16 U.S.C.  s
825l(b), is denied. In November 1999, Great Northern Paper  submitted
an application to the Commission seeking the transfer of  the
Penobscot Mills license to a new subsidiary, Great Northern  Energy. A
subsidiary of Duke Energy Corporation has a minority  interest in
Great Northern Energy. Petitioners believe these de- velopments affect
two of the Commission findings: that Back  Channel flows could
threaten the mills' economic viability and that  expanded conservation
efforts are not plausible. We do not see,  however, how these
developments could alter the two dominant  factors in the Commission's
decision: the replacement energy cost  of $916,000 and the minimal
(perhaps even detrimental) effect on  fisheries. See 77 F.E.R.C. at
61,275 ("Interior's recommendations  ... would entail a significant
reduction in energy benefits on behalf  of only marginal improvements
to aquatic habitat...."); id. at  61,276 ("Given the modest fisheries
benefit likely to occur and the  significant adverse impact on the
project's energy benefits, we are  not requiring minimum flows for the
Back Channel."). It does not  "clearly appear that the new evidence
would compel or persuade to  a contrary result," so we deny the
motion. Friends of the River v.  FERC, 720 F.2d 93, 99 n.6 (D.C. Cir.
1983) (quoting Rocky Moun- tain Power Co. v. FERC, 409 F.2d 1122, 1128


The Penobscot Nation claims that its reservation includes the  islands
in the West Branch of the Penobscot. The State of  Maine disagrees,
contending that nothing "even remotely  suggests that any land or
islands in any branches or tributar- ies of the Penobscot River were
being reserved" to the Tribe.  FEIS s 4.11.1.2, at 4-69.


The land issue is of some consequence to this case. The  Tribe believes
it should have been a consulting party to the  "programmatic
agreement" the Commission adopted in fulfill- ing its duty to take
"into account the effect of [the licenses on  any site] that is
included in or eligible for inclusion in the  National Register" of
Historic Places. 16 U.S.C. s 470f; see  also 36 C.F.R. s 800.13
(authorizing agencies to delegate this  responsibility to
"programmatic agreements"). An Indian  Tribe must be named a
concurring party to a programmatic  agreement when the agency
"undertaking will affect Indian  lands." 36 C.F.R. s 800.1(c)(2)(iii).
But the Penobscot Nation  had not established legal title to the
islands in the West  Branch, and so the Commission did not confer
consulting  party status on it. See 85 F.E.R.C. at 62,245. The Commis-
sion made clear on rehearing that it was not determining the  merits
of the Tribe's land claims and that, should the Tribe  establish legal
title to the lands, it would be added as a  consulting party. See id.
at 62,245 & n.35. We agree that  the Commission was under no
obligation to make the Penob- scot Nation a consulting party; nor was


The Tribe also contends that increased flows in the Back  Channel would
provide its members with canoe access to  religious sites, which means
that the Commission violated the  American Indian Religious Freedom
Act. This statute re- quires the "United States to protect and
preserve for Ameri- can Indians their inherent right of freedom to
believe, ex- press, and exercise the traditional religions of the
American  Indian ... including but not limited to access to sites...."
 42 U.S.C. s 1996. The Commission's response is conclusive:  even with
flows of 350 cfs, canoe navigation of the Back  Channel would not be
possible. See 77 F.E.R.C. at 61,275  n.39. The Commission also noted
that "there is a nearby 


canoe route on the Penobscot that permits canoe passage to  the same
sites"--presumably the route the Tribe has used  since 1899. See 85
F.E.R.C. at 62,243. Federal agencies are  to consider, "but not
necessarily to defer to, Indian religious  values." Wilson v. Block,
708 F.2d 735, 747 (D.C. Cir. 1983).  The Commission has performed its
duty under this legisla- tion. 12


The petitions for review are denied.




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n 12 The Tribe raises several other arguments that do not warrant 
written exposition. These have been considered and rejected.