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Title Brady v. Federal Energy Regulatory Commission

Argued March 4, 2005 Decided July 8, 2005

Subject Environmental Law

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 4, 2005 Decided July 8, 2005

No. 04-1058

MIKE BRADY AND

CHERYL CREEKMORE,

PETITIONERS

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

THE GRAND RIVER DAM AUTHORITY,

INTERVENOR

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Paul M. Flynn argued the cause and filed the briefs for

petitioners.

Judith A. Albert, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With her on the

brief were Cynthia A. Marlette, General Counsel, and Dennis

Lane, Solicitor.

John P. Coyle and Gregg D. Ottinger were on the brief for

intervenor.

Before: RANDOLPH and ROBERTS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROBERTS.

Concurring opinion filed by Senior Circuit Judge

WILLIAMS.

ROBERTS,Circuit Judge: An Oklahoma agency licensed by

the Federal Energy Regulatory Commission to operate a

hydroelectric project applied for a license amendment to permit

the expansion of a commercial marina located on project

property. FERC approved the amendment over the opposition

of petitioners -- two lakefront homeowners -- who argued that

the expansion was not in the public interest. In particular, they

maintained that the cove where the marina is located had

exceeded its "carrying capacity," precluding further growth.

They also contended that FERC could not approve the expansion

in the absence of comprehensive guidelines for shoreline

development on the project, and that FERC erred in approving

the state agency's waiver of one of its regulations.

Our review of FERC's decision is limited, and under that

limited review we conclude that FERC considered the impact of

the proposal on a variety of non-development objectives, as

required by the applicable statute, and that FERC's treatment of

the carrying capacity issue was not arbitrary or capricious or

lacking in substantial evidence. We also find that FERC

adequately explained its decision to proceed in the absence of

comprehensive guidelines for shoreline development, and its

determination to approve the departure from the state agency's

regulations. We deny the petition.

The Pensacola dam in northeast Oklahoma impounds the

waters of the Grand or Neosho River, creating the Grand Lake

O' the Cherokees. The dam and resulting lake are regulated by

the Grand River Dam Authority (GRDA), a state agency,

pursuant to a license issued by FERC. See Grand River Dam

Authority, Order Issuing New License, 59 FERC ¶ 62,073

(1992).

FERC's licensing authority for such hydroelectric projects

is governed by Section 4(e) of the Federal Power Act, 16 U.S.C.

§ 797(e). That section provides, in pertinent part:

In deciding whether to issue any license under this sub-

chapter for any project, 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 recre-

ational opportunities, and the preservation of other aspects

of environmental quality.

Further guidance is found in Section 10(a)(1), 16 U.S.C.

§ 803(a)(1), which conditions all licenses on a requirement that

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 develop-

ment, for the adequate protection, mitigation, and enhance-

ment of fish and wildlife (including related spawning

grounds and habitat), and for other beneficial public uses,

including irrigation, flood control, water supply, and

recreational and other purposes referred to in section 797(e)

of this title.

GRDA's license calls on that agency to develop a long-term

recreation management plan for Grand Lake, including an

estimate of the lake's "carrying capacity" -- defined as "the

level of use . . . that would begin to detract from a safe or

enjoyable recreation experience" -- and "measures for managing

lake use if it exceeds the carrying capacity." Order Issuing New

License, 59 FERC at 63,230. Regarding the agency's oversight

of boat docks, the license permits GRDA to authorize the

construction of "noncommercial" structures "that can accommo-

date no more than 10 watercraft at a time." Id. at 63,231. Larger

undertakings require the agency to apply to FERC for a license

amendment.

GRDA filed a recreation plan in 1997. Appended to the

plan was a study of carrying capacity conducted by faculty and

students at Oklahoma State University. See Pensacola Recre-

ation Management Plan, App. F. That study, the plan noted, did

not "defin e a `magic number' that represented the statistical

carrying capacity of Grand Lake." Rec. Plan at 1516. The plan

also included a separate memorandum by the study's principal

author, Professor Lowell Caneday, which did set forth a specific

capacity figure for the lake: 0.13 boats per acre. Id., App. I at 3.

Based on aerial photographs, estimated boating densities for the

lake as a whole were below Dr. Caneday's figure in 1996, but

above it in 1997. See id., App. G & H.

GRDA explained in the recreation plan that, in light of the

carrying capacity information, it had adopted the goal of making

certain changes in the management of Grand Lake. Rec. Plan at

16. Notably, these changes did not include a halt to shoreline

development, although a management proposal featured in the

OSU study called for such a step. Compare id., App. J (GRDA

management strategy) ("Grand Lake will provide . . . F) Shore-

line development following best management practices and

existing regulations") with id., App. F at 83 (OSU proposal)

("Grand Lake . . . will provide . . . (f) restriction of further

shoreline development").

The recreation plan also addressed the license requirement

that it include recommended measures for managing lake use if

carrying capacity were exceeded:

If the use of the project exceeded its documented carrying

capacity, GRDA could implement seasonal rules targeted at

the activity. More seasonal patrolmen could be hired to

enforce existing and future restrictions. Special events

could be limited to certain days of the week or the months

they would be allowed.

Id. at 17. Finally, the plan featured proposed rules and regula-

tions governing shore and water use -- including a rule that

docks may not extend into the water the longer of 125 feet or

one-third of the distance to the opposite shore. Id., App. B at 6.

FERC approved the recreation plan. See Grand River Dam

Authority, Order Modifying and Approving Long-Term Recre-

ation Plan, 84 FERC ¶ 62,144 (1998). In particular, the

Commission endorsed GRDA's capacity management approach,

including its decision not to implement the strategy outlined in

the OSU study that would be more restrictive with respect to

development. See id. at 64,229 ("While the OSU strategy

includes greater restrictions, we believe the licensee's proposal

is reasonable at this time given the project's slower than

expected growth in recreation uses and the currently underutil-

ized recreation facilities"). Anticipating that the lake would

experience increased shoreline development in the future,

however, and noting GRDA's express willingness to do so,

FERC stated that GRDA "should continue its efforts to work

with project stakeholders on the development of a comprehen-

sive shoreline management plan CSMP for the project." Id.

at 64,231. FERC also directed the agency to file periodic reports

monitoring recreation use and shoreline development, as well as

progress updates on the development of a CSMP. Id. at 64,232.

Duck Creek cove is an arm of Grand Lake described as "one

of the lake's most frequently used boating areas." Final Envi-

ronmental Assessment at 27. In 2001, the owner of Arrowhead

North Marina, a commercial facility located on Duck Creek

cove, asked GRDA for permission to expand and reconfigure the

facility. The expansion sought to add 64 boat slips, many for

large boats. GRDA endorsed the plan, and, as required by its

license, filed an application with FERC for a license amendment

permitting the expansion.

Numerous area residents, as well as the U.S. Department of

the Interior, submitted comments regarding the proposal.

Intervenors opposing the expansion included Mike Brady and

Cheryl Creekmore, owners of property on Duck Creek. While

proceedings were pending before the Commission, GRDA filed

its first monitoring report on recreation use and shoreline

development, which showed a continuing rise in boating

densities on the lake. See 2003 Recreation Plan Monitoring

Report at 3 & Attachment C.

FERC approved the marina expansion, over the dissent of

one Commissioner. Grand River Dam Authority, Order

Approving Non-Project Use of Project Property, 105 FERC

¶ 61,100 (2003). The Commission reasoned that the proposed

expansion would have "beneficial impacts on employment, tax

revenues and tourism," offsetting "some adverse impacts on the

visual character and scenic quality of the landscape." Id. at

61,50607. The Commission further found that the expansion

"would result in only moderate long-term adverse impacts to

boating use and navigational safety." Id. at 61,507. The

Commission also held that it could approve the proposal even

though the reconfigured marina exceeded GRDA's dock length

restrictions. Id.

Turning specifically to the issue of carrying capacity, FERC

found that "while there is evidence that boating densities in the

cove are increasing, such evidence does not confirm that the

cove has reached its carrying capacity." Id. In a final environ-

mental assessment accompanying the order, FERC staff added

that "the resources of Grand Lake's Duck Creek arm are

approachingcarrying-capacitylimits for boating-related facilities

and activities" and promised to "intensively scrutinize any future

non-project proposals involving this cove." Final Environmental

Assessment at 51. Lastly, although GRDA had not yet devel-

oped a CSMP, the Commission refused to delay consideration of

the proposal until such a plan was submitted. Order Approving

Non-Project Use, 105 FERC at 61,507.

Brady and Creekmore filed requests for rehearing, which

were denied without further opinion. Grand River Dam Author-

ity, Notice of Denial of Rehearing, 105 FERC ¶ 61,310 (2003).

They now petition for review of FERC's order approving the

marina expansion.

II.

In reviewing licensing proceedings, we will uphold FERC's

conclusions unless they are "arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law." 5 U.S.C.

§ 706(2)(A). The Commission's findings of fact are conclusive

if supported by substantial evidence. 16 U.S.C. § 825l(b). In

both regards, the scope of our review is quite limited; " s o long

as the Commission has examined the relevant data and provided

a reasoned explanation supported by a stated connection between

the facts found and the choices made, we will defer to the

agency's expertise." North Carolina v. FERC, 112 F.3d 1175,

1189 (D.C. Cir. 1997); see also U.S. Dep't of Interior v. FERC,

952 F.2d 538, 543 (D.C. Cir. 1992) ("In a licensing decision

such as this, where few explicit statutory provisions govern, our

role is narrowly circumscribed.").

A. Brady and Creekmore begin with the Federal Power Act.

They assert that, in approving the marina expansion, FERC

abdicated its duty to give "equal consideration" to the non-

development purposes specified in Section 4(e) of the FPA,

including protection of fish and wildlife, recreational opportuni-

ties, and other aspects of environmental quality, and failed to

ensure that the project is "best adapted to a comprehensive plan"

that incorporates such non-development purposes, as required by

Section 10(a)(1) of the FPA. 16 U.S.C. §§ 797(e), 803(a)(1).

See Pet. Br. at 26. Congress directed that FERC consider a

variety of factors in making licensing decisions under the FPA,

but the decision about how to weigh those factors remains with

FERC. The judicial role is "narrowly circumscribed," and " t he

statutory `equal consideration' requirement does not change the

standard of review that we, as an appeals court, apply." U.S.

Dep't of Interior, 952 F.2d at 543, 545. FERC decides how to

balance the various elements listed in the FPA; our task is to

ensure that it considers the statutory factors and that its decisions

meet the threshold standards of non-arbitrariness and substantial

evidence.

Contrary to petitioners' suggestion, FERC did not fail to

consider non-development public uses. See Order Approving

Non-Project Use, 105 FERC at 61,50607 (discussing, in

addition to "visual character and scenic quality," impacts on

"fish and wildlife, air and water quality, ambient noise levels,

and shoreline access," as well as "boating use and navigational

safety"). Nothing on the face of FERC's order suggests a

disregard of the considerations listed in the FPA. While Brady

and Creekmore would strike the balance differently, against

further development, the policy decision about how to weigh the

pertinent factors is FERC's to make. The amendments to the

FPA that added the "equal consideration" language "were aimed

primarily at increasing FERC's sensitivity to environmental

concerns," but those amendments "do not give environmental

factors preemptive force." U.S. Dep't of Interior, 952 F.2d at

545.

In making the foregoing determination, we note that

petitioners have only raised FERC's duty to balance develop-

ment with competing considerations. They have not challenged

-- either in their petitions for rehearing before FERC or in the

briefs submitted to us -- the propriety of the Commission's

reliance on "employment, tax revenues and tourism" as the

development benefits of this proposal. Accordingly, we do not

address whether the Commission may consider these particular

benefits, either generally or under the particular circumstances

of this case. See 16 U.S.C. § 825l(b) ("No objection to the order

of the Commission shall be considered by the court unless such

objection shall have been urged before the Commission in the

application for rehearing unless there is reasonable grounds for

failure to do so."); compare Nat'l Wildlife Fed'n v. FERC, 912

F.2d 1471, 148283 (D.C. Cir. 1990) (presenting a challenge to

FERC's reliance on "water supply" benefits under FPA Section

4(e)). All we conclude is that the Commission satisfied the

statutory requirement to consider a variety of specified public

uses, including those militating against development.

B. Petitioners attempt to buttress their statutory argument

by focusing on the concept of carrying capacity. They maintain

that the evidence before the Commission indicates that the lake's

capacity has been exceeded, and that in approving further

development, FERC necessarily proceeded on the erroneous

assumption that it had not.

We agree that the record contains evidence of crowded

conditions at Duck Creek. Aerial photographs taken in 1997

show that boating densities in the cove were significantly higher

than those for the lake as a whole. See Rec. Plan, App. H. In

surveys conducted as part of the OSU study, more people listed

Duck Creek as a place to avoid than any other area of the lake,

citing "too many boats" and "unsafe or too dangerous" condi-

tions. Id., App. F at 72. The 2003 monitoring report indicates

that, prior to the institution of directional traffic lanes, the cove

was the site of more boating accidents than any other arm of the

lake. See 2003 Recreation Plan Monitoring Report, Attachment

FERC, however, did not ignore this evidence. In the order

approving the marina expansion, the Commission expressly

acknowledged that "boating densities in the lake and the cove

continue to increase," and that "boating densities in the cove are

increasing." Order Approving Non-Project Use, 105 FERC at

61,507. FERC noted the new boat-traffic lanes and speed limits

GRDA had implemented to accommodate the increasing number

of boats in the cove, and required a slight change in the location

of several of the proposed slips to ensure that boats entering and

leaving the marina did not present a safety concern. Id. The

issue of crowding was plainly recognized and addressed by

FERC.

FERC also specifically addressed the issue of crowding

relative to the concept of carrying capacity. The Commission

concluded that "while there is evidence that boating densities in

the cove are increasing, such evidence does not confirm that the

cove has reached its carrying capacity." Id. Despite the ac-

knowledged crowded conditions in Duck Creek, this conclusion

was a permissible one for the Commission to reach:

First, the concept of "carrying capacity" does not present the

sort of bright-line limit that would mandate a particular finding

on the facts before the Commission. The recreation plan does

not treat capacity in quantitative terms. As noted in the text of

the plan, the appended OSU study did not set forth a "magic

number" of boats above which the collective lake experience

becomes unsafe or unenjoyable. See Rec. Plan at 1516. Dr.

Caneday's separate memorandum, which does set forth such a

value, concedes that a "concern with this number is that it

reflects merely the standard `quantity' of watercraft without

consideration for the `quality' of experience for the visitor or

`quality' of the lake environment." Id., App. I at 3. What is

more, the OSU study makes clear that " t here are many types of

carrying capacity," id., App. F at 82, and that the "management-

objective recreation carrying capacity" is "undefined," because

it depends on the goals and objectives of the managing agency.

Id. at 80, 90. The amorphous nature of the carrying capacity

concept (or concepts) as presented by the OSU study makes it

difficult for us to fault FERC's conclusion that the record

evidence did not confirm that the capacity of the cove had been

exceeded.

Second, Dr. Caneday's estimate speaks to the capacity of the

lake as a whole, whereas FERC's order focuses on the capacity

of the cove. This difference is significant: according to the OSU

study, " m easurements of recreational carrying capacity must be

site specific." Rec. Plan, App. F at 81. The record amply

demonstrates that Duck Creek has characteristics not shared by

the lake as a whole: for instance, boats must proceed through a

portion of the cove at "no wake" speed, and no waterskiing or

swimming is permitted in the directional traffic lanes at any

time. See 2003 Recreation Plan Monitoring Report, Attach-

ments D & E. Dr. Caneday's estimate for the lake, by contrast,

factors in space for activities such as unlimited powerboating

and waterskiing. See Rec. Plan, App. I at 3.1 Thus, what limited

1 In a letter attached to Brady's request for rehearing, Dr.

Caneday asserts that " c ontinued development as permitted by the

GRDA . . . has increased traffic above the carrying capacity of the

cove." Letter to Magalie R. Salas, Nov. 11, 2003 (emphasis added).

Dr. Caneday, however, does not explain his method for reaching this

conclusion, or describe the evidence underlying his claim.

tangible guidance is provided by the record does not speak to the

particular issue before the Commission.2

Petitioners broaden their argument to challenge not only

FERC's dismissal of their evidence on carrying capacity, but

more generally FERC's decision to approve the license amend-

ment on what petitioners regard as the necessary "assumption"

that the cove has not exceeded carrying capacity. See Reply Br.

at 12, 9. Nothing, however, requires FERC to conduct its

statutorily-mandated consideration and balancing of the pertinent

factors under the "carrying capacity" framework. Certainly

nothing in the FPA does so -- the statute never mentions

"carrying capacity."

Nor does the recreation plan mandate that FERC discharge

its responsibilities by assessing carrying capacity; GRDA's

license required it to submit a plan including an estimate of

carrying capacity, but the recreation plan does not state that the

estimate would or should become the benchmark for FERC

under the FPA. Under the recreation plan, a finding that

carrying capacity has been exceeded does not trigger a ban on

commercial development. In the section of the plan titled

"Carrying Capacity Management Methodology," GRDA

commits to monitoring future recreation use in consultation with

other state agencies. See Rec. Plan at 1617. The agency then

proposes the following methods of dealing with an exceeded

capacity:

2 In addition, FERC noted that the number of private and

commercial slips on the lake had decreased since 1997 from 7500 to

6359, or by 15 percent, Order Approving Non-Project Use, 105 FERC

at 61,507 n.28, suggesting that any alleged increase in the number of

boats using the lake was not due to the number of slips.

If the use of the project exceeded its documented carrying

capacity, GRDA could implement seasonal rules targeted at

the activity. More seasonal patrolmen could be hired to

enforce existing and future restrictions. Special events

could be limited to certain days of the week or the months

they would be allowed.

Id. at 17. Plainly, these remedies do not include the suspension

of commercial development.

With respect to development, the recreation plan seems to

contemplate a different approach: "The construction of commer-

cial facilities will be controlled by demand and the decreasing

availability of suitable locations." Id. at 22. FERC recognized

this, noting in its order approving the amendment that " u nder

the approved recreation plan for the project, shoreline develop-

ment is currently controlled by demand and site availability."

Order Approving Non-Project Use, 105 FERC at 61,505; see

also id. at 61,507 (noting, with respect to earlier expansion of

another marina, that "under the project's recreation plan ap-

proved in 1998, shoreline development is currently controlled by

demand and site availability").

This is not to say that FERC may rest on "demand and site

availability" in approving license amendments; on the contrary,

the FPA requires the Commission to weigh a number of factors.

It does make clear, however, that the recreation plan itself cannot

be read as imposing a duty on FERC to block development

solely in light of any particular level of carrying capacity, or to

assess proposals in light of a carrying capacity analysis.

And that is in fact not how FERC read the plan when it

approved it. FERC's order approving the plan noted that GRDA

"does not specify a specific number for carrying capacity but

proposes to use the previously prepared recreation study to assist

in its determination and implementation of future actions at the

project to protect and promote recreation usage on Grand Lake."

Order Modifying and Approving Long-Term Recreation Plan, 84

FERC at 64,22728. FERC recognized GRDA's commitment

that "if recreation use exceeds documented carrying capacity"

GRDA could take a number of specified steps -- none of which

included a ban on development. Id. at 64,228. Petitioners rely

to a large extent on the evidence in the 1997 recreation plan to

establish that carrying capacity has been exceeded, but FERC

obviously had that evidence before it when it approved the plan

in 1998, and in particular approved GRDA's decision to adopt

a less restrictive approach to development than that recom-

mended by the OSU study. See id. at 64,229. It was obvious

from the get-go, therefore, that neither the recreation plan nor

FERC's approval of it interpreted carrying capacity as a neces-

sary limit on development, as petitioners now envisage it, and

certainly not as a limit on how FERC analyzes proposed license

amendments.

Consistent with the foregoing, FERC's precedents since the

approval of the recreation plan do not dictate a "carrying capac-

ity" analysis. Of the many prior decisions approving dock

expansions on Grand Lake, only one squarely engaged the

concept, and it failed to give carrying capacity any discernible

weight. See Order Approving Non-Project Use of Project Lands

and Waters, 95 FERC ¶ 62,184, 64,26870 (2001) (noting the

shortcomings of Dr. Caneday's numeric estimate); compare,

e.g., Order Approving Non-Project Use of Project Lands, 97

FERC ¶ 62,132 (2001) (no discussion of carrying capacity);

Order Approving Non-Project Use of Project Lands, 94 FERC

¶ 62,263 (2001) (same); Order Modifying and Approving Non-

Project Use of Project Lands and Waters, 92 FERC ¶ 62,235

(2000) (same); Order Approving Non-Project Use of Project

Lands and Waters, 92 FERC ¶ 62,238 (2000) (same); Order

Approving Non-Project Use of Project Property, 89 FERC

¶ 61,139 (1999) (same).

Finally, the absence of support for petitioners' broader

argument should come as no surprise. A carrying capacity

analysis would simply determine whether approval of a proposal

entails a net detriment with respect to recreational opportunities.

See Order Approving New License, 59 FERC at 63,230 (defining

carrying capacity as "the level of use . . . that would begin to

detract from a safe or enjoyable recreation experience") (empha-

sis added). But just as we have held that environmental factors

do not have "preemptive force" in the weighing process, U.S.

Dep't of Interior, 952 F.2d at 545, neither do recreational

factors. FERC recognized that approving the proposal would

result in "moderate long-term adverse impacts to boating use and

navigational safety," 105 FERC at 61,507, but determined that

the perceived benefits -- not challenged here -- were nonethe-

less worth it. Our "narrowly circumscribed" role, U.S. Dep't of

Interior, 952 F.2d at 543, does not include second-guessing that

judgment.

C. Petitioners next turn to what they decry as the absence

of any definitive standards for development on Grand Lake.

According to Brady and Creekmore, FERC should have imposed

a moratorium on development pending the creation of a CSMP,

or at least required the Arrowhead marina to conform to the

length restrictions in GRDA's rules and regulations. Without a

CSMP, petitioners argue, the rules are the only possible stan-

dards to apply.

When it approved GRDA's recreation plan in 1998, FERC

noted that the state agency should continue its efforts to develop

a CSMP, and directed the agency to file periodic reports

documenting its progress. Order Modifying and Approving

Long-Term Recreation Plan, 84 FERC at 64,231. The state

agency has yet to complete the CSMP, and FERC has accord-

ingly been compelled to consider license amendments on a case-

by-case basis. Such an approach does not provide a clear

roadmap for ordered development of the Pensacola project.

FERC staff, however, found that a CSMP "will require a

substantial and uncertain amount of time to develop." Final

Environmental Assessment at 52. Under these circumstances, it

was within the Commission's authority to act on the expansion

proposal instead of instituting a moratorium. At any rate, neither

the text of the FPA nor FERC's prior orders relating to the

project preclude such a course. See, e.g., 16 U.S.C.

§ 803(a)(2)(A) (Commission shall consider " t he extent to

which the project is consistent with a comprehensive plan

(where one exists)") (emphasis added); Order Modifying and

Approving Long-Term Recreation Plan, 84 FERC at 64,23132

(requiring GRDA to submit progress reports but failing to

establish a deadline for development of the plan itself).

As for the departure from GRDA's regulations, FERC noted

in its decision that the regulations had not been adopted by

FERC as license conditions. Order Approving Non-Project Use,

105 FERC at 61,507. The FPA sets forth the criteria that FERC

is to consider in approving a proposed license amendment, and

that process cannot be preempted or displaced by local regula-

tions. As FERC explained, "we may consider a proposal's

consistency with these regulations, but we are not bound by

them." Id.

D. Brady and Creekmore raise two other objections that

merit only brief discussion. First, they contend that the Commis-

sion improperly relied on the lack of county land use require-

ments in deciding that lakefront homeowners did not have a

"realistic expectation that their environs would remain undis-

turbed." Id. at 61,507. Second, they argue that FERC disre-

garded two alternate configurations for the Arrowhead marina

proposed by petitioner Brady.

As for the first objection, petitioners rightly maintain, as we

just noted, that local land use requirements cannot supplant the

Commission's duties under the FPA. But FERC does not

suggest otherwise; rather, the Commission explained that it

simply noted expectations affected by local land use -- in

addition to the many other factors it examined -- as part of the

overall statutory balancing process.

The second objection is simply incorrect. The final environ-

mental assessment considered, and rejected, both of Brady's

alternate designs. See Final Environmental Assessment at 81.

III.

The Federal Power Act requires FERC to balance various

public uses in making licensing decisions. In its oversight of the

Pensacola project, the Commission to date has plainly seen the

balance of statutory factors as tipping in favor of development.

Brady and Creekmore make a vigorous case for the opposite

outcome, but so long as FERC's decisions are not arbitrary or

capricious, or lacking in substantial evidence, this court does not

have the power to alter the Commission's judgment. The

petition for review is denied.

WILLIAMS, Senior Circuit Judge, concurring: Two

generations have now grown up with Garrett Hardin's famous

article, The Tragedy of the Commons, 162 SCIENCE 1243

(1968), exploring the risk of over-exploitation when many

people have unlimited access to a resource. Using the simple

example of a common field in which neighboring farmers are

all entitled to pasture their cows, Hardin pointed out that if

there are no constraints the farmers will keep adding cows to

the point where a farmer who did so would gain nothing;

because of the trampling and crowding of the already grazing

cows, the extra cow and her owner would enjoy no net

benefits. Under management aimed at maximizing the net

value of the pasture, by contrast, farmers would add cows

only to the point where the feeding benefits for the next added

cow just equaled the reduction in benefits for cows already in

the field. Here, the Federal Energy Regulatory Commission

flirted with Hardin's insight, but it didn't click.

As the court's opinion makes clear, FERC supervised the

creation and adoption of a "recreation plan" for the Grand

Lake O' the Cherokees. Although the drafters left the

ultimate goal somewhat obscure, the plan points strongly

toward net-value maximization. Using the ambiguous term

"carrying capacity," it nonetheless looks essentially to

"benefits (net of congestion disutilities)," with suitable

additional adjustments for out-of-pocket costs and ecological

damage not already counted as part of the "congestion

disutilities." Pensacola Recreation Management Plan, App. F,

at 41.

In considering whether to let the Grand River Dam

Authority increase the number of boat slips, FERC never

quite determined whether the extra boats would push usage

beyond the lake's "carrying capacity." To resolve its apparent

doubts, FERC reached out to find that any resulting injury

was balanced by "beneficial impacts on employment, tax

revenues and tourism." Grand River Dam Authority, Order

Approving Non-Project Use of Project Property, 105 FERC ¶

61,100 at 61,506-07 (2003). It appears from the briefing that

FERC relies on § 4(e)'s reference to "power and development

purposes" and § 10(a)(1)'s reference to "improvement and

utilization of water-power development" to justify such a

balancing operation. As the court's opinion emphasizes,

petitioners here never claimed that the Commission lacked

statutory authority to consider such factors in this context.

Thus we cannot resolve that issue. There are, however,

reasons to question FERC's implicit reading of the statute.

The references seem aimed directly at the issue of

licensing hydro power dams themselves, a process obviously

involving a trade-off between the values of natural amenity

and power development. Further, in considering power

development, the Commission must consider associated

development: there would, for example, be little point in a

hydropower dam if there were no prospect of users for the

resulting power.

Here, by contrast, a recreational resource has been

created as a side effect of power development. The sole issue

is how to use it. Can the Commission rely on expected

increases in tourism, employment and tax revenues, under the

"development" language of §§ 4(e) and 10(a)(1), to justify the

possible loss in recreational value?

Consider tourism first. If the plan has identified a

standard that maximizes the lake's net value as a tourist

resource (the level at which the marginal benefit from an extra

tourist equals the marginal detriment in congestion and other

costs), then to breach that standard, in the name of

"development," is to say that FERC wants tourism to a degree

that diminishes the lake's contribution to aggregate welfare.

Such an interpretation of the statute is not self-evidently

reasonable.

Taxes and employment seem no better a fit. Consider

another form of net maximization of a resource, oil-and-gas

unitization. Unitization aims at preventing over-exploitation

of the oil or gas field, i.e., exploitation that reduces the field's

net value. Among the methods employed is limiting the

number of wells; at some point the reductions in output at

other wells exceed the costs of an extra well, just as the

congestion costs of an extra boat (or cow!) at some point

exceed its benefits. Suppose the Commission were in charge

of managing oil and gas pooling and unitization, and it found

that optimal exploitation of a field called for 20 wells. But

then it approved the addition of another 10 because their

construction and operation would generate local taxes and

employment. Could the employment and taxes drawn to the

locality (and presumably away from another locality, as the

money spent on the extra wells would have had multiplier

effects in its alternative uses) qualify as "development" under

the guiding statutes? Again, the answer is not obviously

affirmative.

Petitioners, however, failed to question whether the

Commission had authority to invoke tourism, employment

and tax revenues as offsetting values, or even to argue that

reliance on supposed increases in the three was arbitrary or

capricious in this context. I therefore join in the opinion of

the court.


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