Petition for Writ of Certiorari — North Carolina v. Federal Energy Regulatory Commission

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9% 839 Nov 19 1997

OFFICE UF THE G@LERK

Record No.

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1997

ROANOKE RIVER BASIN ASSOCIATION,

Petitioner,

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent

On Petition For Writ of Certiorari

To The United States Court of Appeals

For The District of Columbia Circuit

PETITION FOR WRIT OF CERTIORARI

Robert H. Bork Patrick M. McSweeney*

1150 17th Street, N.W. William B. Ellis

Washington, D.C. 20036 John L. Marshall, Jr.

(202) 862-5851 McSWEENEY, BURTCH

& CRUMP

A professional corporation

11 South Twelfth Street

Richmond, VA 23219

(804) 783-6800

*Counsel of Record

Counsel for Petitioner Counsel for Petitioner

Appellate Printing Services * 2 South Sixth Street * Richmond, VA 23219 * (800) 642-7789 i {\

QUESTIONS PRESENTED

Whether the altered discharge from a hydropower project

resulting from federai licensing action authorizing a nom-project

use of water from the project reservoir is “any discharge” within

the meaning of § 401(a)(1) of the Clean Water Act, 33 U.S.C.

§ 1341(a)(1)?

LIST OF PARTIES AND AMICI

PETITIONERS:

Roanoke River Basin Association

State of North Carolina

RESPONDENT:

Federal Energy Regulatory Commission

INTERVENOR:

City of Virginia Beach, Virginia

AMICI:

The United States

Alabama, Alaska, Arizona, Arkansas, California, Connecticut,

Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana,

Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland,

Massachusetts, Michigan, Minnesota, Mississippi, Missouri,

Montana, Nevada, New Hampshire, New Mexico, New York,

North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island,

South Dakota, Texas, Utah, Vermont, Washington, West

Virginia, and Wyoming (in support of Petitioner North

Carolina)

Virginia (in support of Respondent)

American Public Power Association

Edison Electric Institute

National Hydropower Association

lil

TABLE OF CONTENTS

QUESTIONS PRESENTED .................... ii

LIST OF PARTIES AND AMICI ................ iii

SABLE OF AUTHORITIES ................... Vii

PETITION FOR WRIT OF CERTIORARI........... l

Ce 2

IEG. st, a, ew ee a 2

STATUTES AND REGULATIONS INVOLVED ...... 3

STATEMENT OF THECASE .................. 4

I edt. ss 6 i ee 4

The Roanoke River System ................ 6

The License Amendment .................. 7

Water Quality and Designated Uses

in the Lower Roanoke River ............... 8

REASONS FOR GRANTING THE WRIT ........... 11

CERTIORARI SHOULD BE GRANTED TO

DECIDE WHETHER AN ALTERED WATER

RELEASE IS “ANY DISCHARGE” WITHIN

THE MEANING OF SECTION 401(A)(1) OF

pp) Gwe oo 2 FN, 6 ty a eererer 11 |

I. The Decision Below

Conflicts with a Decision

of the Court of Appeals é

for the Fourth Circuit ......... 11

Il. Certiorari Should Be

Granted Because This

Case Presents an

Important, Unsettled

Question of the Balance

Struck by Congress

between the National and

State Governments in the ;

Protection of Water

Gee. SS is 11

CS 60s -o Sak weed EE GA 19

Appendix A Opinions Below (May 9, 1997) ........ la

Appendix B Judgment Below (May 9, 1997) ...... 52a

Appendix C Order Denying Petitions for

Rehearing (Aug. 21, 1997).......... 54a

Appendix D Order Denying Suggestion for

Rehearing Jn Banc (Aug. 21, 1997) .... 55a

Appendix E Remand of Record (Sept. 19, 1996) .... 57a |

Appendix F

Appendix G

Appendix H

Appendix I

Appendix J

Appendix K

Appendix L

Appendix M

Order Amending Order Remanding

Record To FERC (Sept. 19, 1996)..... 6la

FERC Order Approving Non-Project

Use of Project Lands and Waters and

Amending License (July 26, 1995)

and Errata (Aug. 23, 1995) ......... 63a

FERC Order Denying Rehearing and

Denying Stay (Sept. 22, 1995) ....... 102a

FERC Order on Remand

vO Nk Poe ga ek oe ee ook BR 125a

Text of § 401, 33 U.S.C. §1341...... 152a

Text of § 303, 33 U.S.C. §1313...... 158a

Text of relevant definitions in § 502,

i 8 | oe nee ees 169a

“Terms and Conditions of License for

Unconstructed Major Project Affecting

Navigable Waters of the United States,”

Pe Oe Cee 5 ok ORCUTT IY 170a

TABLE OF AUTHORITIES

Cases

American Mining Congress v. EPA, 824 F.2d 1177

Ro Ro re. ee ee 16

Burnet v. Chicago Portrait Co., 285 U.S. 1 (1932) .... 16

City of Fredericksburg v. FERC, 876 F.2d 1109

te Bt ee a A ee a ee

Keating v. FERC, 927 F.2d 616 (D.C. Cir. 1991) ..... 19

National Wildlife Federation v. Gorsuch, 693 F.2d 156

2.0. Ga Gee a RATT ae aca 13

P.U.D. No. 1 of Jefferson County v. Washington

Department of Ecology, 511 U.S. 700 (1994) ... 12

ey a ee a

Power Authority of the State of New York v. Williams,

101 A.D.2d 659, 660, 475 N.Y.S.2d 901 (D3

To ee Te a eee oe 16 |

Save Our Community v. U.S.E.P.A., 971 F.2d 1155 (5th |

eS Se a ee 17 |

/ :

Tulalip Tribes of Washington v. FERC, 732 F.2d 1451

Ca Ge. See in bce ine Wa ee ee ree eres 13

United Savings Ass'n of Texas v. Timbers of Inwood |

Associates, Litd., 484 U.S. 365 (1988) ........ 16 |

Vii

United States v. Puerto Rico, 721 F.2d 832 (ist Cir.

red Cee as 0) 06 ie ew ae ee 19

Statutes

16 U.S.C. § 825/, Federal Power Act, §313. ......... 5

UI a ha a heal iS aly ae iggy 3

33 U.S.C. § 1251, Clean Water Act, §101....... 14, 19

RR em eo a 3, i

Fe Gee DOPE GWU Coc cece cee dees 12

SP ee heey CWA BGO cc coe ot ewew es passim

eS a rr 12

33 U.S.C. § 1344, CWA § 404 .............. 13, 18

33 U.S.C. § 1362(16), CWA § 502(16) ....... 12, 15, 16

33 U.S.C. § 1362(19), CWA § 502(19) ......... 12, 15

Regulatory Materials

Se Sa ee RUE nce cee ccceceawesuees 5

Viil

RTT a Pe

FIO POS aE

PEI Reel FD

In The

Supreme Court of the United States

October Term, 1997

ROANOKE RIVER BASIN ASSOCIATION

Petitioner,

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent.

PETITION FOR WRIT OF CERTIORARI

The Roanoke River Basin Association (RRBA) petitions

the Court for a writ of certiorari to review the judgment of the

United States Court of Appeals for the District of Columbia

Circuit in this case. That decision denied RRBA's petition for

review of an order of the Federal Energy Regulatory

Commission (FERC) issued without either a certification or a

waiver from the State of North Carolina pursuant to § 401(a)(1)

of the Clean Water Act, 33 U.S.C. § 1341(a)(1). The FERC

order approved a license amendment that authorizes the licensee

to sell and convey 60 million gallons of water a day from its

hydropower project reservoir to a municipality for use in

another river basin, thereby altering the existing releases from

the dam.

PRIOR OPINIONS

This case (No. 95-1500 below) was consolidated below

with the State of North Carolina's petition for review (No. 95-

1494 below). The United States Court of Appeals for the

District of Columbia published majority and dissenting opinions

in these consolidated cases under the style North Carolina v.

Federal Energy Regulatory Commission, 112 F.3d 1175, on

May 9, 1997. The text of those opinions is reprinted at

Appendix A to this petition, and the judgment on the same date

is reprinted at Appendix B. The petitions for rehearing filed by

RRBA and North Carolina were denied on August 21, 1997

(order reprinted at Appendix C). Their suggestions for

rehearing in banc were also denied on that date (order reprinted

at Appendix D). The court had previously remanded the matter

to the Federal Energy Regulatory Commission in an unpublished

September 11, 1996, order (reprinted at Appendix E) and a

subsequent September 19, 1996, order modifying the initial

remand order (reprinted at Appendix F). FERC's decision to

grant the license amendment is published, Virginia Electric and

Power Co., Project No. 2009-003, 72 FERC { 61,075 (July 26,

1995) (reprinted at Appendix G), as is its decision rejecting the

joint request for rehearing filed by North Carolina and the

Roanoke River Basin Association, 72 FERC ] 61,283

(September 22, 1995) (reprinted at Appendix H), and its Order

on Remand, 77 FERC 4 61,138 (November 7, 1996) (reprinted

at Appendix J).

JURISDICTION

The judgment of the Court of Appeals was entered on

May 9, 1997. The Association's Petition for Rehearing and

Suggestion for In Banc Consideration were denied on August

21, 1997, which is within the 90-day period for filing this

petition pursuant to this Court's Rule 13.3. The Court's

jurisdiction is invoked pursuant to 28 U.S.C. § 1254.

STATUTES AND REGULATIONS INVOLVED

The relevant portion of § 401(a)(1) of the Clean Water

Act, 33 U.S.C. § 1341(a)(1), provides:

Any applicant for a Federal license or

permit to conduct any activity . . . which may

result in any discharge into the navigable waters,

shall provide the .. . permitting agency a

certification from the State in which the

discharge originates . . . or will originate... .

The entirety of § 401 and § 303, 33 U.S.C. § 1313, are

reprinted at Appendices J and K respectively.

Section 101(b), 33 U.S.C. § 1251(b), provides:

It is the policy of the Congress to

recognize, preserve, and protect the primary

responsibilities and rights of States to prevent,

reduce, and eliminate pollution, to plan the

development and use (including restoration,

preservation, and enhancement) of land and

water resources, and to consult with the

Administrator in the exercise of his authority

under this chapter. It is the policy of Congress

that the States manage the construction grant

program under this chapter and implement the

permit programs under sections 1342 and 1344

of this title. It is further the policy of Congress

to support and aid research relating to the

prevention, reduction, and elimination of

pollution and to provide Federal technical

services and financial aid to State and interstate

agencies and municipalities in connection with

the prevention, reduction, and elimination of

pollution.

Relevant Clean Water Act definitions, § 502(12)

(“discharge of a pollutant”), § 502(16) (“discharge”) and

§ 502(19) (“pollution”), 33 U.S.C. §§ 1362(12), 1362(16),

1362(19), are reprinted in Appendix L.

— STATEMENT OF THE CASE

Proceedings Below

The only question here is one of statutory construction:

Does the Clean Water Act's meaning of “any discharge” include

an altered discharge? The question arises in the context of the

license amendment obtained by Virginia Electric and Power

Company (VEPCO) from the Federal Energy Regulatory

Commission (FERC) on July 26, 1995, for “a substantial new

use of project waters” for a non-project use at its Roanoke

Rapids and Gaston Hydropower Project (Project).' The newly

| D.A. 2402 n.1. “On July 26, 1995, the Commission issued its

order approving the non-project use of project lands and waters and

amending license.” VEPCO, 72 FERC at 62,215. VEPCO's application

requested: “The non-project use of project land and waters... .” D.A. 10,

¢ 17. The Commission ruled on August 11, 1994, that VEPCO's

application “entailed a substantial new use of project waters . . . [which]

requires amendment of the license.” D.A. 2402 n.1. On remand, FERC

ignored the substantial new use of project waters for non-project purposes

and identified the construction and operation of the Virginia Beach water

supply project as the sole activity authori zed by the license amendment. 77

authorized use is VEPCO's sale of 60 million gallons of water

a day (mgd) to the City of Virginia Beach, Virginia (Virginia

Beach). The water will be withdrawn by Virginia Beach from

the Project reservoir on the Roanoke River, transported to

another river basin through a 76-mile pipeline constructed by

Virginia Beach, and used for municipal water supply purposes.

The waste water will then be discharged to the Atlantic Ocean.

Petitioner, the Roanoke River Basin Association (RRBA), is a

50-year-old, nonprofit, membership organization of local

governments, business organizations and individuals in Virginia

and North Carolina, having no parent or affiliated corporation.

RRBA invoked the jurisdiction of the court of appeals pursuant

to 16 U.S.C. § 8251, as did the State of North Carolina, to

challenge FERC's approval of the license amendment. Both

RRBA and North Carolina contend that FERC's licensing

action, taken without a certification or waiver from North

Carolina, violated § 401(a)(1) and is therefore invalid.

FERC's initial position was that its regulation, 18 C.F.R.

§ 4.38(f)(7)iii), exempted license amendments from the

§ 401(a)(1) requirement unless “the amendment would have a

material adverse impact on the water quality in the discharge

from the project. . . .” FERC assumed arguendo that the altered

dam release in this case was “any discharge” within the meaning

FERC at 61,518. This post hoc rationalization was an obvious attempt to

buttress FERC's new position on remand that the activity authorized by the

license amendment was “separate from” the operation of the Project. /d.

The court below accepted the post hoc rationalization (App. A at 17a, 112

F.3d at 1187) notwithstanding the clear language to the contrary in the

VEPCO application and FERC's own previous orders. In particular, FE RC

had determined earlier that it had no authority over Virginia Beach's

construction and operation of its water supply project. 72 FERC at 62,221.

By definition, a license amendment must authorize activity of the licensee

itself, not a stranger to the license.

of § 401(a)(1). But a panel of the District of Columbia Circuit

remanded the matter to FERC for a definitive resolution of that

question.

On remand, FERC decided that the dam release, as altered

by the license amendment, was not encompassed by the statutory

term “any discharge.” A majority of the District of Columbia

Circuit panel voted to affirm FERC's decision, and declined to

rehear the matter. A majority of the court of appeals denied

rehearing in banc.

The Roanoke River System

The Roanoke River begins in the mountains of Virginia

and flows in a southeasterly direction approximately 400 miles

to Albemarle Sound in North Carolina, draining a large area of

Virginia and North Carolina. D.A. 3010. FERC issued a 50-

year license to VEPCO in 1951 for its Roanoke Rapids

Hydropower Development 137 river miles from the mouth of

the river. Virginia Electric and Power Co., 10 FPC 1 (1951).

It also issued a 41-year license in 1960 to VEPCO for the

Gaston Hydropower Development, which is located immediately

upstream. Virginia Electric and Power Co., 23 FPC 537

(1960).2_ The two developments are now treated as a single

project, and operate subject to a single FERC license. Jd. at

543. Both dams in VEPCO's Project are located in North

Carolina. Only a portion of the Project's upstream reservoir,

Lake Gaston, lies in Virginia. D.A. 3211.

2 In its 1960 licensing action, FERC incorporated “Terms and

Conditions of License for Unconstructed Major Project Affecti ng Navigable

Waters of the United States,” originally set forth at 16 FPC 1284-88.

VEPCO, 23 FPC 544, D. The text of relevant articles of that document

are reproduced in Appendix M.

The License Amendment

The challenged FERC license amendment authorizes

VEPCO to convey property interests to the City of Virginia

Beach so that the City may divert 60 mgd from the Lake Gaston

reservoir for municipal use in southeastern Virginia, and place

an intake structure for that purpose within the Project. D.A.

2402 and n.1. The intake is located on Pea Hill Creek in the

Virginia portion of the reservoir just a few hundred yards north

of the North Carolina border. D.A. 3219. During droughts,

there is no natural inflow into Pea Hill Creek. As a result, all

of the water that will be withdrawn by Virginia Beach during a

drought will be water from North Carolina backed up by

VEPCO's dam across the North Carolina border and into the

Virginia portion of Pea Hill Creek. D.A. 2566.

As a result of the proposed water diversion, VEPCO will

operate the Project with less water available for downstream

release and hydropower generation. D.A. 3364. It will

compensate by modifying the operation of the gates at the dam

that control the flow of water through the turbines’ to allow less

water to pass downstream, thus assuring the maintenance of

reservoir levels within operating limits. D.A. 70. VEPCO will

also be required at times to increase its dam releases under the

terms of the license amendment during striped bass spawning

season. 72 FERC at 61,400 (Article 46). This requirement may

further curtail downstream releases at other times. This will

result in different and, at most times, lower dam releases than

3 Water has never been allowed over the spillway at the Gaston Dam.

All water released from the Gaston Development passes through its

hydroelectric turbines in controlled discharges that are regulated by the

opening and closing of the intake gates. D.A. 45512-16.

would occur under the 1960 license, which required that all

project water be used for original project purposes.‘

At 60 mgd, Virginia Beach would be the largest water

consumer in the Roanoke River basin. Its diversion will far

exceed the consumption by any other user, and will be one-half

of the amount consumed by all other projected consumptive uses

in the basin in 2030. D.A. 3273.

Water Quality and Designated Uses

in the Lower Roanoke River

VEPCO's diminished dam releases may adversely affect

water quality in the Lower Roanoke River. Dissolved oxygen

levels may decline; contaminants will be concentrated in a

smaller volume of water; water temperature is likely to rise; and

saltwater intrusion may increase. D.A. 3236, 3316, 3322.

EPA concluded that, as a result of the reduction in dam releases

in this case, “there will be water quality constraints to multiple

use attainability in the future.” D.A. 3497. Relying on City of

Fredericksburg v. FERC, 876 F.2d 1109 (4th Cir. 1989), North

Carolina insisted on having an opportunity to review the license

amendment under § 401(a)(1), contending to FERC that the

adverse water quality effects of reduced dam releases could be

significant. D.A. 1846-48.°

4 App. M at 170a-172a. The 1960 FERC license also stated that

VEPCO's Gaston development would use the entire hydraulic head between

the tailrace of Kerr Reservoir and VEPCO's Roanoke Rapids reservoir.

VEPCO, 23 FPC at 541.

5 From the first announcement of the proposed transfer of water fro m |

the Roanoke River to southeastern Virginia, Virginia Beach has been well

aware of North Carolina's concern, and understood the consequences of

going forward without agreement from North Carolina:

North Carolina pointed particularly to the probable

adverse impact of the license amendment on designated uses

downstream of VEPCO's Project, particularly striped bass

spawning, because flows in the Lower Roanoke River are

“already at critically low levels.” D.A. 1199. Although its

concurrence was unnecessary for § 401(a)(1) to apply here,

FERC itself also concluded that the license amendment could

result in an adverse impact on downstream uses. D.A. 3362-63,

3939-40. In 1988, Congress found the Albemarle Sound-

Roanoke River striped bass population had dramatically declined

and “may soon reach a level from which recovery will be

exceptionally difficult.” P.L. 100-589, § 5(a)(2), 102 Stat.

2984. Congress directed that a study be undertaken of the

causes of the decline. The report of that study recommended

that water flow needs for each life-cycle stage of striped bass be

determined and that augmentation flows be modified

accordingly .°

Since VEPCO constructed the Project pursuant to the

1951 and 1960 licenses, sufficient water has not been available

every year to provide target striped bass augmentation flows

below the Project. D.A. 3292. According to North Carolina:

“Lake Gaston has the capacity to satisfy the long-term

water demands of Virginia Beach. However, unless and until a bi-

state agreement can be reached between North Carolina and

Virginia on the use of shared water resources and a resolution of

the interbasin transfer issue reached within the Virginia General

Assembly, Lake Gaston cannot be regarded as a viable supply

option for Virginia Beach.” D.A. 45650.

6 North Carolina Striped Bass Study Management Board, Report on

the Albemarle Sound-Roanoke Rive r Stock of Striped Bass 40 (1992) (noted

at D.A. 3395).

“Under current conditions water quantity and

quality are frequently inadequate to assure conditions for

survival of all striped bass life stages." D.A. 1203-04

Fishery agencies have urged adoption of a program of dam

releases to simulate the natural range of flows as closely as

possible for the preservation and enhancement of striped bass.

D.A. 3294.

North Carolina and RRBA have objected to the diversion

of large volumes of water from the Roanoke River, particularly

when there is already insufficient water in the river system to

assure Current target flows during spawning season. D.A. 3292.

Among other effects, VEPCO's sale of 60 mgd of water from its

Project to Virginia Beach will: (1) reduce the amou™ of water

available to release downstream each spring to meet enhanced

flow requirements for striped bass spawning, D.A. 3297; (2)

prolong periods during droughts when flows will be at their

lowest levels, thus causing increased stress to aquatic life and

aggravated oxygen, thermal and other water quality problems,

D.A. 1201, 3283 and 4035; and (3) lower the volume of

freshwater inflow into Albemarle Sound by decreasing average

dam releases, thereby increasing salt water intrusion. D.A.

3283, 4035 and 4037.

REASONS FOR GRANTING THE WRIT

CERTIORARI SHOULD BE GRANTED TO

DECIDE WHETHER AN _ ALTERED

WATER RELEASE IS “ANY DISCHARGE”

WITHIN THE MEANING OF SECTION

401(A)(1) OF THE CLEAN WATER ACT

I. The Decision Below Conflicts with a Decision

of the Court of Appeals for the Fourth Circuit

The decision of the District of Columbia Circuit in this

case is in conflict with a decision of the Fourth Circuit in City

of Fredericksburgv. FERC, 876 F.2d 1109 (1989). In that case,

an original license for the installation of an electricity-generating

powerhouse at an existing dam, the operation of which would

reduce downstream flows, was invalidated because it was issued

without a § 401(a)(1) certification or waiver from the

Commonwealth of Virginia as required by § 401(a)(1) of the

Clean Water Act, 33 U.S.C. § 1341(a)(1). Thatcourt held that

there was a discharge and, thus, mandatory state review under

§ 401(a)(1). The majority of the panel below ruled, to the

contrary, that there is not “any discharge” within the meaning of

§ 401(a)(1) unless a substance is added to a stream (App. A at

19a, 112 F.3d at 1187).

II. Certiorari Should Be Granted Because This

Case Presents an Important, Unsettled

Question of the Balance Struck by Congress

between the National and State Governments

in the Protection of Water Quality.

This Court has never squarely addressed the question of

whether a dam release is a discharge within the meaning of

§ 401(a)(1). But in another § 401(a)(1) case, the Court

concluded that “diminished water quantity . . . can constitute

water pollution” and that “a sufficient lowering of the water

quantity in a body of water could destroy all of its designated

uses.” P.U.D. No. 1 of Jefferson County v. Washington

Department of Ecology, 511 U.S. 700, 719-20 (1994). The

Court also noted that the Clean Water Act itself defines the

alteration of stream flow as water pollution. Jd., citing 33

U.S.C. §§ 1314(f)(2)(F) and 1362(19). This includes changes

in stream flow caused by dams. 511 U.S. at 720.

The definition of “any discharge” adopted by the majority

of the panel of the District of Columbia Circuit is clearly in

conflict with the reasoning of the Court in P.U.D. No. 1. This

case presents the Court with the opportunity to decide whether

a dam-induced alteration in flow is “any discharge” within the

meaning of § 401(a)(1).’

Over a dissent, a panel majority in this case decided that

a license amendment reducing the volume of releases at an

existing dam without adding any new substance does not require

a state certification or waiver under § 401(a)(1) from the state

in which the dam is located. The decision below will have a

sweeping impact. It will put all or most FERC licensing actions

involving dam releases effectively beyond the reach of the state

7 The decision below can also be invoked to deny states the right

under § 401(a)(1) to review permit amendments or new permits issued by

EPA under the National Pollutant Discharge Elimination Sy stem established

by the Clean Water Act § 402, 33 U.S.C. § 1342, that would result in a

volume reduction in existing discharges.

certification requirement of § 401(a)(1), contrary to the clear

intent of Congress.®

The reasoning of the court of appeals that a substance

must be added to a waterbody for a discharge to occur (App. A

at 19a, 112 F.3d at 1187) compels the conclusion that dam

discharges themselves are not discharges. A dam merely

modifies the flow of a stream; it does not add pollutants or any

other substances to the stream. National Wildlife Federation v.

Consumers Power Co., 862 F.2d 580, 590 (6th Cir. 1988);

Tulalip Tribes of Washington v. FERC, 732 F.2d 1451, 1454

(9th Cir. 1984); National Wildlife Federation v. Gorsuch, 693

F.2d 156, 171 (D.C. Cir. 1982). Applying the rationale of the

court below, a FERC license amendment resulting in reduction

of an existing discharge will not trigger § 401(a)(1), no matter

how substantial the reduction.” Also, relicensing will not

require a certification or waiver because it authorizes no

8 See 116 Cong. Rec. 8984 (Mar. 24, 1970) (Sen. Mu skie, the bill's

chief sponsor); 115 Cong. Rec. 28971 (1969) (Sen. Cooper). Shortly after

the predecessor of § 401 was enacted, the Federal Power Commission

(FERC's predecessor) proposed regulations requiring state certification of

dam releases. 36 Fed. Reg. 15669 (1971). It remained FERC's position

that dar releases are “discharges” until the filing of its opposition to the

petitions for rehearing below. In fact, FERC counsel conceded below that

some reductions in existing discharges resulted in “discharges” requiring

§ 401(a)(1) review. FERC brief, dated Dec. 24, 1996, at 11 n.9.

9 Although states may have an independent right to certify those new

hydropower projects that involve the discharge of fill material requiring a

Clean Water Act § 404 permit, they will have no such opportunity where

flows can be reduced without a § 404 permit, which will include virtually al |

relicensing, and some original licensing, proceedings. See, e.g., City of

Fredericksburg v. FERC, 876 F.2d 1109 (4th Cir. 1989) (application for

original FERC license to install an electricity-generating powerhouse on an

existing dam, which merely caused reduction of dam releases).

“discharge” as defined by the court of appeals, only a changed

discharge as opposed to the addition of water or other

substances to the stream. If the definition of “discharge”

adopted by the court of appeals is to be followed, no original

FERC dam license, no amendment of a dam license and no

relicensing of dams will be subject to state review under

§ 401(a)(1).

The panel majority merely assumed arguendo that a dam

release is a discharge, and concluded that the state certification

requirement of § 401(a)(1) was not triggered here by the altered

discharge resulting from the license amendment, reasoning that

the discharge already existed and, therefore, was not the result

of any activity authorized by the license amendment. (App. A

at 20a-21a, 112 F.3d at 1188) This ignores the fact that, from

the perspective of water quality impacts, the altered discharge

is a different discharge: it is not the discharge initially produced

when the dam was constructed.’ Refusing to treat an altered

discharge as “any discharge” within the meaning of § 401(a)(1)

is inconsistent with the structure and purpose of the Clean Water

Act, which:

(1) assigns to the several states the primary

responsibility for enforcing water quality standards, 33

U.S.C. § 1251(b);

10 Review by a state under § 401(a)(1) is based upon the particular

characteristics of the discharge resulting from the federal licensing action at

issue, as those characteristics may affect water quality in the receiving

waters. It would frustrate the purpose of § 401 if a separate state

certification were not required when the licensee seeks new federal licens ing

action that may result in a discharge having different characteristics and,

hence, different potential water quality effects than the original discharge

has.

(2) defines “discharge” in an expansive manner, 33

U.S.C. § 1362(16);

(3) employs the broad phrase “any discharge” in

§ 401(a)(1);

(4) defines “pollution” to include flow alteration, 33

U.S.C. § 1362(19);

(5) contemplates state review in cases of alterations of

existing discharges by referring to where “the discharge

originates or will originate” in § 401(a)(1); and

(6) in an analogous situation, requires a new state

certification or waiver of an operating license when

circumstances potentially affecting water quality; change

after state certification of the construction license, 33

U.S.C. § 1341(a)(3)."

The majority below misapplied the plain meaning rule by

lifting a single word in § 401 from its context and, without

11 “While § 401(a)(3) does not apply here (App. A at 1la-12a, 112

F.3d at 1184), it is instructive that Congress accorded sta tes the opportunity

to review proposed licensing of a project's operations under § 401(a)(1) after

the state has already issued a § 401(a)(1) certification for a license for

project construction in instances where there is an intervening change in

circumstances causing the state to conclude that compli ance with state water

quality standards can no longer be reasonably assured. To be consistent, the

term “any discharge” in § 401(a)(1) should be con strued to accord states the

opportunity to review a license amendment under § 401(a)(1) in instances

where the characteristics of any resulting, altered discharge may have a

different water quality impact than the characteristics of the original

discharge.

regard to the structure and purpose of the Act,’ imposing

artificial limits on the meaning of that term.’ The definition of

“discharge” in the Clean Water Act is expansive: “The term

‘discharge’ when used without qualificationincludes a discharge

of a pollutant, and a discharge of pollutants.” 33 U.S.C.

§ 1362(16). The majority concluded, however, that the meaning

of the term “any discharge” does not encompass an altered

discharge and is restricted to the addition of a substance to

navigable waters. App. A at 19a, 112 F.3d at 1187; contra

Power Authority of the State of New York v. Williams, 101

12 See American Mining Congress v. EPA, 824 F.2d 1177, 1185

(D.C. Cir. 1987), citing Burnet v. Chicago Portrait Co., 285 U.S. 1, 6

(1932). Because Congress carefully balanced the roles of the United States

and the several states in the Clean Water Act, a federal court has a

responsibility to consider each term in context and to define a broad term

such as “any discharge” in light of the structure and purpose of the Act so

that the federal-state balance struck by Congress is not upset. See United

Savings Ass'n of Texas v. Timbers of Inwood Associates, Lid., 484 U.S.

365, 371 (1988) (whether a term is ambiguous often depends on the

statutory context). The majority of the panel of the court of appeals here

concluded that “discharge” is unambiguous. It summarily rejected an

alternative definition advanced by RRBA and North Carolina that had

previously been embraced by FERC and EPA in this litigation: the term “any

discharge” may include a reduced discharge. FERC brief after remand,

dated Dec. 24, 1996, at 11 n.9; D.A. 45622 (EPA).

13 The majority first decided that a release cannot be “any discharge”

without the addition of a substance. App. A at 19a, 112 F.3d at 1187. It

then said that the term “any discharge” cannot include an altered discharge

because § 401(a)(1) applies only to the original discharge, not to an altered

discharge, regardless of the difference between the two in potential water

quality impacts. App. A at 20a, 112 F.3d at 1188. This offends common

sense and ignores the purpose of § 401. In common usage, a reduced

discharge is “any discharge.” And the purpose of § 401 is to allow states to

determine whether a particular discharge (or a particular range of

discharges) will protect state water quality standards.

A.D.2d 659, 660, 475 N.Y.S.2d 901, 904 (3d Dept. 1984).

The majority reads this language as exhaustive of the meaning

of “discharge” rather than as illustrative of one type of

discharge. A definition that “includes” demonstrates that there

are additional examples not specifically mentioned. The

majority's definition, contrary to the clear intent of Congress,

excludes all dam releases, even those authorized by original

licensing and relicensing.'*

The majority below observed that the mere withdrawal

of water is not a “discharge.” App. A at 20a, 112 F.3d at 1188,

relying on Save Our Community v. E.P.A., 971 F.2d 1155,

1165 (Sth Cir. 1992). But this case involves more than the mere

withdrawal of water. This case involves a license amendment

approving a diversion of water that will change the licensee's

dam release regime and supplant electricity generation in favor

of out-of-basin municipal water supply as a fundamental project

purpose. It constitutes a deliberate alteration of the licensee's

dam releases in a way that may compromise water quality. If

the original dam release is a “discharge” within the meaning of

§ 401(a)(1), then surely the alteration of that dam release by a

license amendment constitutes a different “discharge” for

purposes of water quality certification under that statute. When

the licensee seeks licensing approval to alter its activities by

selling water for non-project uses, the purpose and structure of

the Clean Water Act call for a state review under § 401(a)(1) to

determine whether the new circumstances (i.e., the altered dam

releases) may cause a violation of state water quality standards.

The expansive term “any discharge” in that statute is clearly

broad enough to encompass an altered discharge, and should be

so construed to be consistent with the purpose and structure of

14 See discussion, supra, at pages 13-14.

the Clean Water Act and to avoid creating a gaping hole in its

coverage. !°

The impact of the decision of the court of appeals is not

limited to projects straddling a state border, as this one does.

Most of the 1,000-plus outstanding FERC licenses were issued

for projects located entirely in a single state. According to the

majority below, applications for FERC relicensing and license

amendments involving a project lying entirely within one state

will not trigger state certification under § 401(a)(1) because

changing a dam's discharge does not constitute a “discharge”

within the meaning of that statute.'°

The gaping hole in the Clean Water Act left by the

decision below will alter profoundly the relationship between the

national and state governments in the protection of water

quality. Putting more than 1,000 existing hydropower projects

effectively beyond § 401(a)(1) state water quality certification

will deprive states of the ability to protect their water quality

standards in hundreds of waterways all across the country. This

will frustrate the Act's reservation to the states of the primary

15 FERC contended below that the reduced discharge would not cau se

a violation of the decades-old minimum flow requirement of the FERC

license. Whether that claim is accurate is immaterial. The purpose of § 401

is to allow a state to determine whether state water quality standards will be

protected, and those standards may be more stringent than federal

requirements.

16 Even if the Virginia Beach intake had been located in North

Carolina so that both the intake and the dam were in the same state, North

Carolina would have no § 401(a)(1) review opportunity under the rule

adopted by the court of appeals should VEPCO later seek to sell an

additional 60 mgd to Virginia Beach to be withdrawn through the existing

intake without the need for a new § 404 construction permit.

role in establishing and enforcing water quality standards. 33

U.S.C. §§ 1251(b), 1313 and 1341; see Keating v. FERC, 927

F.2d 616, 622 (D.C. Cir. 1991); United States v. Puerto Rico,

721 F.2d 832, 838 (1st Cir. 1983).

If the Court does not to grant review in this case, the

issue is unlikely to reach the Court again for years and only

after many of the hundreds of relicensing applications that are

due in the next several years have already been prepared and

filed. To avoid unnecessary waste and confusion, the Court

should address the issue now. No case will present the issue

any more clearly than this case does.

CONCLUSION

The Court should grant this petition for a writ of

certiorari.

Respectfully submitted,

ROBERT H. BORK PATRICK M. MCSWEENEY

1150 17" Street, N.W. WILLIAM B. ELLIS

Washington, D.C. 20036 JOHN L. MARSHALL, JR.

(202) 862-5851 Counsel of Record

McSweeney, Burtch &

Crump, P.C.

11 South Twelfth Street

Richmond, Virginia 23219

(804) 783-6800

Counsel for Petitioner Roanoke River Basin Association

November 19, 1997

APPENDIX A

STATE OF NORTH CAROLINA, Petitioner,

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent,

The City of Virginia Beach, Virginia, Intervenor.

Nos. 95-1494, 95-1500.

United States Court of Appeals,

District of Columbia Circuit.

Argued Feb. 4, 1997

Decided May 9, 1997

On Petitions for Review of an Order of the Federal

Energy Regulatory Commission.

Before: WALD, SILBERMAN and SENTELLE,

Circuit Judges.

Dissenting opinion filed by Circuit Judge WALD.

SENTELLE, Circuit Judge:

Petitioners, the state of North Carolina and the Roanoke

River Basin Association ("RRBA"), seek review of the decision

of the Federal Energy Regulatory Commission ("FERC" or

"Commission") to amend a FERC license under which a power

project is operated within Lake Gaston on the Roanoke River.

The amended license allows the City of Virginia Beach, Virginia

to build an intake structure within the power project's

boundaries and withdraw water for transport to Virginia Beach.

Petitioners maintain that FERC improperly issued the license

amendment without first requiring that a water quality

certification be obtained from the state of North Carolina.

Petitioners further contend that the decision to issue the license

amendment was arbitrary and capricious. For the reasons

detailed below, we reject each of these arguments and deny the

petitions for review.

I. Background

This case arises from the nearly fourteen-year effort of

Virginia Beach to secure a new source of water via a 76-mile

pipeline originating at Lake Gaston and terminating in Norfolk,

Virginia (the "Pipeline Project"). Lake Gaston is located on the

Roanoke River, a navigable waterway traversing the states of

Virginia and North Carolina. While Lake Gaston is primarily

located in North Carolina, the intake structure for the Pipeline

Project is to be located at Pea Hill Creek Cove in Virginia.

That site is within the boundaries of FERC Project No. 2009, a

FERC-licensed power project (the "Power Project") operated by

Virginia Electric and Power Company ("VEPCO"). Upon

completion of the Pipeline Project, Virginia Beach will be able

to draw up to 60 miilion gallons per day ("mgd") of water from

Lake Gaston, reducing the discharge of water through the Power

Project's dam turbines in North Carolina by that same amount.

The drawn water will then be transported through a 76-mile

pipeline. This will result in a net increase of 54 mgd of water b

Virginia Beach's daily water supply, after adjustment for

amounts lost during transport.

Construction of the Pipeline Project's intake facility was

to result in sediment discharges into the waters of Lake Gaston.

As a result, Section 403(a) of the Federal Water Pollution

Control Act, 33 U.S.C. § 1251 et seq. , otherwise known as the

Clean Water Act ("CWA" or "Act"), required Virginia Beach

to obtain a dredge-and-fill permit from the Secretary of the

Army, acting through the Army Corps of Engineers ("Corps").

33 U.S.C. § 1344(f)(2). The City filed its application for a

Section 403(a) permit with the Corps on July 15, 1983.

Section 401(a)(1) of the CWA provides that "[a)ny

applicant for a Federal license or permit to conduct any activity

... Which may result in any discharge into the navigable waters,

shall provide the ... permitting agency a certification from the

State in which the discharge originates or will originate...."

The certification must provide that the discharge "will comply

with the applicable" water quality standards. Jd. § 1341(a)(1).

As for those states in which the discharge does not "originate"

but which may otherwise be "affected" by the discharge, Section

401(a)(2) of the CWA provides a separate set of procedures to

ensure compliance with the affected state's water quality

standards. Id. § 1341(a)(2).

Because the Corps' dredge-and-fill permit is a "Federal

license or permit" for purposes of Section 401(a)(1), Virginia

Beach was required to obtain a water quality certification from

the state of Virginia. Accordingly, Virginia Beach filed an

application with the Virginia State Water Control Board

("VSWCB"), requesting certification of the withdrawal of up to

60 mgd of water from Lake Gaston. No certification was

sought or received from North Carolina at this time. On

September 12, 1983, the VSWCB issued a Section 401(a)(1)

certification for the Pipeline Project, subject to certain

conditions needed to preserve water quality.

Following the issuance of the water quality certification,

the Corps held public hearings on Virginia Beach's application

for a dredge-and-fill permit. Both North Carolina and RRBA

intervened in this proceeding. Upon conclusion of the hearings,

the Corps found that 60 mgd would be needed in the Virginia

Beach area by the year 2030, that the Pipeline Project would

have no noticeable impact on downstream water quality, and

that the project would have no significant impact on the

environment. As a result, the Corps issued a dredge- and-fill

permit to Virginia Beach. The issuance of this permit was

ultimately upheld on appeal. North Carolina v. Hudson, 665

F.Supp. 428 (E.D.N.C.1987), appeal decided after remand,

731 F.Supp. 1261 (E.D.N.C.1990), aff'd sub nom. Roanoke

River Basin Ass'n v. Hudson, 940 F.2d 58 (4th Cir.1991), cert.

denied, 502 U.S. 1092, 112 S.Ct. 1164, 117 L.Ed.2d 411

(1992).

In 1991, VEPCO filed an application with FERC,

requesting that the Power Project license be amended to permit

the withdrawal of water for the Pipeline Project. The license for

the Power Project was initially issued in 1951 by the Federal

Power Commission, the predecessor of FERC. Virginia Elec.

and Power Co., Project No. 2009: Application for License

Under Federal Power Act, 10 F.P.C. 1 (1951) [hereinafter

License Application Order]. The Federal Power Act ("FPA"),

16 U.S.C. § 791la et seq., governs amendments to FERC

licenses and provides that an amendment may be granted "only

upon mutual agreement between the licensee and the

Commission after thirty days' public notice." 16 U.S.C. § 799.

Under VEPCO's requested amendment to the Power Project

license, Virginia Beach would be permitted to withdraw 60 mgd

of water from Lake Gaston, decreasing the flow of water

through the Power Project dams by the same amount.

North Carolina intervened in the license amendment

proceeding and requested that FERC prepare an environmental

impact statement ("EIS") pursuant to the National

Environmental Policy Act, 42 U.S.C. § 4321 et seg. On July

23, 1993, FERC issued a draft environmental assessment

("EA") tentatively concluding that the Pipeline Project would

have no unmitigable adverse environmental impacts. After

receiving numerous comments on the draft EA, FERC staff, on

June 23, 1994, issued a final EA finding that the proposed

Pipeline Project "constitutes a major federal action significantly

affecting the quality of the human environment." As a result,

FERC determined to prepare an EIS to "reflect updated

population and water consumptive projections." In the

meantime, North Carolina had petitioned the Commission to

stay its proceeding until VEPCO obtained a Section 401(a)(1)

certification from North Carolina's water control agency. The

Commission took no action on the stay request.

On July 7, 1995, FERC issued a final EIS finding that

the five-city area in the vicinity of Virginia Beach (including

, Chesapeake, Norfolk, Portsmouth, Virginia Beach, and Suffolk)

will need 54 mgd of water by the year 2030; that the proposed

water supply project will ensure Virginia Beach a safe, reliable,

and relatively inexpensive source of potable water; that the

Pipeline Project is the best source for meeting that water need;

and that the project, subject to additional mitigation measures,

should be approved. Final Environmental Impact Statement for

Virginia Beach Water Supply Project at xxii [hereinafter Final

EIS]. On July 14, 1995, North Carolina and RRBA filed a joint

motion asking the Commission to condition any order approving

the Project on North Carolina's issuance of a water quality

certification pursuant to CWA § 401(a)(1). The Commission

took no action on this motion.

Finally, on July 26, 1995, the Commission issued an

order approving VEPCO's application to amend the license

min in i kui ina ncaa

under which the Power Project is operated. Virginia Elec. and

Power Co., Project No. 2009-003: Order Approving Non-

Project Use of Project Lands and Waters and Amending

License, 72 F.E.R.C. (CCH) { 61,075 (Guly 26, 1995)

{hereinafter License Amendment Order|. In the order, the

Commission concluded that Virginia Beach's project is "best

adapted to a comprehensive plan for improving or developing

the waterway for beneficial public purposes" because Virginia

Beach will "be relieved of the serious water supply problems

that have severely constrained the lifestyle of its citizens and

clouded its economic future." Jd. at 61,399. Relying on the

findings of its Final EIS, the Commission concluded that by the

year 2030 Virginia Beach and the other regional cities will need

the entire 54 mgd that the Pipeline Project is designed to

provide. Id. at 61,396. In addition, the Commission concluded

that the downstream effects of the Pipeline Project withdrawals

could be sufficiently mitigated by the release of the water the

city had stored upstream in Kerr Reservoir. Id. at 61,398.

The Commission denied petitioners’ request to stay its

proceeding or to withhold its approval until North Carolina

issued a Section 401(a)(1) certification for the Project. Id. at

61,393. The Commission ruled that "even assuming, arguendo,

that the proposed amendment to the [Power Project] license to

accommodate the construction and operationof Virginia Beach's

water supply project is subject to the provisions of Section

401(a)(1)," the certification requirement was not triggered

because the Commission's regulations require a new

certification only for license amendments that will cause a r

‘material adverse impact on the water quality in the discharge

from the project.'" Id. at 61,393-94 (quoting from 18 C.F.R.

§ 4.38(f)(7)(iii)). Relying on the findings and conclusions of its

Final EIS, the Commission concluded that a one-percent

reduction in flow releases into the Roanoke River from the

project dam "will not significantly affect water quality." Jd. at

61,394.

Petitioners moved for rehearing. On September 22,

1995, the Commission denied the motion. Virginia Elec. and

Power Co., Project No. 2009-008: Order Denying Rehearing

and Denying Stay, 72 F.E.R.C. (CCH) 4 61,283 (Sept. 22,

1995) [hereinafter Rehearing Order]. The Commission found

that the need for a reliable water source in the area surrounding

Virginia Beach "cannot be disputed." Jd. at 62,216. Further,

the Commission reaffirmed its prior ruling that a Section

401(a)(1) certification was not required because VEPCO's

license amendment would not have a "material adverse impact

on the water quality in the discharge from the project." Jd. at

62,218. Alternatively, the Commission held that North

Carolina had waived its Section 401 certification claim. Jd. at

62,219.

Petitioners then sought review in this court, challenging

FERC's decision to issue the amended license. According to

petitioners, FERC violated CWA § 401(a)(1) by issuing the

amended license without receiving a water quality certification

from North Carolina. In addition, petitioners asserted that

certain of FERC's findings necessary to justify issuance of the

amended permit were arbitrary and capricious.

After the first oral argument in this case, we issued an

order remanding the record and directing the Commission to

determine whether the license amendment would involve

"activities ... which may result in any discharge into the

navigable waters" that "originate" in North Carolina within the

meaning of CWA § 401(a)(1). See North Carolina v. FERC,

No. 95-1494 (D.C.Cir. Sept.11, 1996) (order remanding record

to the Commission). On remand, the Environmental Protection

Agency ("EPA" or "Agency") filed a letter with FERC stating

that, in its view, the license amendment authorizing the Pipeline

Project would result in such a discharge, thus necessitating a

Section 401(a)(1) certification from North Carolina. Letter

from Jonathan Z. Cannon, General Counsel, EPA, to Lois D.

Cashell, Secretary, FERC 1 (October 24, 1996) [hereinafter

EPA Letter].!

On November 7, 1996, FERC issued an order in which

it concluded that "the activity that the Commission approved in

this proceeding (the construction and operation of facilities and

withdrawal of water from the Virginia Beach water supply

project) is not an activity that results in a discharge originating

in the State of North Carolina within the meaning of Section

401(a)(1) of the CWA." Virginia Elec. and Power Co., Project

No. 2009-010: Order on Remand, 77 F.E.R.C. (CCH) 4

61,138 (Nov. 7, 1996) [hereinafter Order on Remand]. More

specifically, the Commission found that the construction and

operational activities (and any resulting discharges originating

therefrom) would occur entirely in Virginia. Jd. at 61,518.

Because Virginia Beach obtained a Section 401(a)(1)

certification from the state of Virginia, the Commission

determined that the requirements of CWA § 401(a)(1) were

satisfied. Jd. at 61,521. We now review the Commission's

orders.

1 Because we conclude, under the first step of Chevron, that

congressional intent underlying Section 401(a)(1) is clear, infra, we find it

unnecessary to resolve the thorny question as to whether EPA is entitled to

deference as the arguably primary administrator of the CWA.

II. Analysis

A. Section 401 (a) (1) Certification Claim.

Petitioners first challenge the Commission's conclusion

that Section 401(a)(1) does not require that VEPCO obtain a

water quality certification from the state of North Carolina

before issuing an amendment to VEPCO's license. When

reviewing "an agency's construction of the statute which it

administers," we apply the two-part test developed by the

Supreme Court in Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81

L.Ed.2d 694 (1984). The first step of the Chevron test is to ask

"whether Congress has directly spoken to the precise question

at issue. If the intent of Congress is clear, thatis the end of the

matter." Jd. at 842, 104 S.Ct. at 2781. If, however, the

congressional intent is not clear, we must then ask "whether the

agency's answer is based on a permissible construction of the

statute." Jd. at 843, 104 S.Ct. at 2782. As discussed in more

detail below, we conclude that the congressional intent

underlying Section 401(a)(1) of the CWA is clear and

unambiguous.

1. Waiver

Before turning to the merits of petitioners' Section

401(a)(1) claim, we first address FERC's argument that North

Carolina waived its certification right by failing to assert such

during the Corps' dredge-and-fill permit proceeding. The

Commission's waiver argument is premised on the view that,

under Section 401(a)(1), it is a state's duty to request that a

license applicant obtain a water quality certification. See

FERC's Brief at 40 (referring to North Carolina's failure "to

ee ee ee

assert a timely request for [a water quality] certification"

(emphasis added)). The Commission plainly misconstrues

Section 401 in this respect.

Section 401(a)(1) provides that "[nJo license or permit

shall be granted until the certification required by this section

has been obtained or waived as provided in the preceding

sentence." 33 U.S.C. § 1341(a)(1) (emphasis added). The

referenced preceding sentence states that a waiver occurs when

a "State ... fails or refuses to act on a request for certification,

within a reasonable period of time (which shall not exceed one

year) after receipt of such request." Jd. (emphasis added). This

language clearly expresses a congressional intent to place the

burden of requesting a state water quality certification on the

license applicant. Only after a request has been made can a state

waive its certification right, and then only by refusing to

respond to the request within a reasonable period of time.

VEPCO, the license applicant in this case, never requested that

North Carolina provide a water quality certification for the

proposed Pipeline Project. Therefore, under the plain language

of Section 401(a)(1), North Carolina could not have waived its

certification right.

Despite the clarity of Section 401(a)(1), FERC proposes

two theories--one statutory and one common law--on which to

base a finding of waiver. First, the Commission argues that

CWA § 401(a)(3) creates an alternative means by which a state

can waive its certification right. Section 401(a)(3) provides that

"[t]he certification obtained pursuant to [CWA § 401(a)(1) ]

with respect to the construction of any facility shall fulfill the

requirements of this subsection with respect to certification in

connection with any other federal license or permit required for

the operation of such facility." 33 U.S.C. § 1341(a)(3). As the

Commission reads Section 401(a)(3), any state having

10a

certification rights as to the operation of a licensed activity must

intervene and assert those rights at the time a license is granted

to construct the facilities. Failure to intervene at the time a

construction license is granted will, according to FERC, result

in a waiver of the right to certify the operation of the project.

In support of this argument, the Commission cites Keating v.

FERC, 927 F.2d 616, 620 (D.C.Cir.1991), in which we stated

that “under section 401(a)(3) of the Clean Water Act, ..., FERC

was obliged to accept the certification underlying the Corps

permit as satisfying the state certification with respect to ... [the

FERC] license application."

To be sure, Section 401(a)(3) does provide that a

certification obtained during a facility's construction stage will

satisfy the Section 401(a)(1) certification requirement at the

project's operational stage. Section 401(a)(3) does not, however,

require a state with certification rights pertaining only to the

operation of a project to assert those rights at the time a

construction permit is issued for the project. By its terms,

Section 401(a)(3) provides only that a construction certification

actually "obtained" from a state will satisfy the certification

requirement as to the operation of the project. As discussed

above, no water quality certification was obtained from North

Carolina at the construction stage of the Pipeline Project. Only

the state of Virginia certified the Project's construction.

The Commission responds that it is irrelevant for

purposes of Section 401(a)(3) that only Virginia certified the

construction of the Pipeline Project. As the Commission reads

Section 401(a)(3), a certification obtained at a project's

construction stage from the state in which construction discharge

will originate obviates the need to obtain a certification from

those other states in which a discharge will originate as a result

of the project's operation. To the extent a state in which an

lla

operational discharge will originate wishes to exercise its right

to certify the operation of a project, that state must intervene

and assert its certification rights during the construction permit

proceeding. We disagree.

Section 401(a)(3) provides that obtaining a construction-

Stage certification satisfies the need to obtain an operational

certification from "the certifying State." See 33 U.S.C. §

1341(a)(3). Not one word of Section 401(a)(3) in any way

indicates that the construction-stage certification satisfies the

need to obtain an operational certification from another state in

which only an operational discharge will originate. Nor does

the section require that such other state intervene in the

construction permit proceeding and assert its right to certify the

operation of the project. Indeed, to so hold would place the

burden of requesting a certification on the certifying state

| directly contrary to Section 401(a)(1)'s express requirement that

| the license applicant initiate the "request for certification." Jd.

§ 1341(a)(1).

The Keating case upon which FERC relies in attempting

to avoid this interpretation of Section 401(a)(3) is easily

distinguishable. In Keating, the state of California issued a

blanket certification in connection with an applicant's request

for a Corps' dredge-and-fill permit. 927 F.2d at 619- 20.

When a party subsequently attempted to use the blanket

certification to obtain a FERC license, the state purported to

revoke its earlier certification. Jd. at 620. On petition for

review, we held that once a state grants certification in a dredge-

and-fill permit proceeding, "section 401(a)(3) permits state

revocation of the prior certification only if certain conditions are

met." Jd. at 624. Absent such conditions, "FERC was obliged

to accept the certification underlying the Corps permit as

satisfying the state certification requirement with respect to

12a

Keating's [FERC] license application.” /d. at 620. In this case,

as there was no "prior certification" by the state of North

Carolina but only by the state of Virginia, the Keating case is

inapposite.

The Commission's second theory of waiver is based on

the common law doctrine of claim preclusion. The Commission

would have us read that doctrine into Section 401(a)(1). During

the dredge-and-fill permit proceeding, the Corps specifically

considered the environmental impacts not only of the project

construction, but also of its operation and resultant discharges

in North Carolina. Further, the Corps proceedings involved the

Same issues, parties, and discharge as are involved in the

proceeding before FERC. As a result, the Commission argues,

North Carolina's failure to raise its Section 401(a)(1)

certification claim before the Corps should bar it from raising

the claim in this proceeding.

In response, North Carolina argues that the common law

defense of claim preclusion cannot now be raised because it did

not form the actual basis for FERC's order. While it is true that

"a reviewing court, in dealing with a determination or judgment

which an administrative agency alone is authorized to make,

must judge the propriety of such action solely on the grounds

invoked by the agency," Securities & Exch. Comm'n v. Chenery

Corp. , 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995

(1947), it appears that the Commission's order was based in part

on the doctrine of claim preclusion. The Commission's

Rehearing Order states that North Carolina's certification right

was "waived" and also refers to the fact that consideration of the

certification claim "would reopen an issue that has already been

put to rest by the ... Corps ... and the courts in the Hudson

litigation." 72 F.E.R.C. at 61,218-19. These statements

indicate that FERC did rely, at least in part, on the doctrine of

13a

claim preclusion in rejecting North Carolina's certification

claim.

Nevertheless, we believe that the Commission erred in

reading the doctrine of claim preclusion into Section 401(a)(1).

As discussed above, that sectionclearly provides that a Federal

license or permit may not be granted "until the certification

required by [Section 401(a)(1) ] has been obtained or has been

waived” as a result of a state's "refus[al] to act on arequest" for

such in a timely manner. 33 U.S.C. § 1341(a)(1). We see no

room for the doctrine of claim preclusion in such a precisely

worded provision. To hold otherwise would, in our view,

require us to usurp the legislative function. This we cannot do.

In sum, we do not believe that North Carolina waived its

certification right. We therefore turn to the merits of the

certification claim.

2. Merits

Petitioners maintain that the Commission improperly

interpreted Section 401 of the CWA and, as a result,

erroneously issued an amended license to VEPCO without first

requiring that a water quality certification be obtained from the

state of North Carolina. As quoted above, Section 401(a)(1) of

the CWA provides that "[a]ny applicant for a Federal license or

permit to conduct any activity ... which may result in any

discharge into the navigable waters, shall provide the licensing

Or permitting agency a certification from the State in which the

discharge originates or will originate....". 33 U.S.C. §

1341(a)(1). In the case of a license amendment, a Commission

regulation interpreting this section requires the applicant to

obtain a new water quality certification only "if the amendment

l4a

would have a material adverse impact on the water quality in the

discharge from the project." 18 C.F.R. § 4.38(f)(7)(iii) (1995).

In the initial order granting an amendment to the Power

Project license, the Commission assumed arguendo that the

activity licensed by the amendment would result in a

"discharge." However, relying on its regulation, the

Commission concluded that a water quality certification from

North Carolina was unnecessary given that "the amendment to

the license [would] not have a ‘material adverse impact on the

water quality in the discharge from the project.' " License

Amendment Order, 72 F.E.R.C. at 61,393-94 (quoting 18

C.F.R. § 4.38(f)(7)(iii)).

After the first oral argument in this case, we remanded

the record to the Commission to answer the "logically

antecedent" question whether the proposed amendment to the

Power Project license to accommodate the construction and

operation of the Pipeline Project is subject to the provisions of

Section 401(a)(1). See North Carolina v. FERC, No. 95-1494,

at 1-2 (D.C.Cir. Sept.11, 1996) (order remanding record to

Commission). On remand, the Commission altered its

reasoning on the Section 401(a)(1) issue, concluding that a water

quality certification was unnecessary because the license

amendment would not result in a "discharge" as that term is

used in Section 401(a)(1). See Order on Remand, 77 F.E.R.C.

at 61,517. Alternatively, the Commission found that "even if

the word ‘discharge’ is ultimately determined to be broad

enough to include the removal of water," the license amendment

would still not be subject to the requirements of Section

401(a)(1) as "the activity involved in enabling such removal

occurs entirely (i.e., for CWA purposes ‘originates’ in)

Virginia, and not in North Carolina." Jd. at 61,518.

15a

As an initial matter, we note that on remand the

Commission discarded 18 C.F.R. § 4.38(f)(7)(iii) as an

alternative basis for upholding the decision not to require that a

water quality certification be obtained from North Carolina. As

a result, we need not address the legality of that regulation

despite our serious reservations concerning FERC's attempt to

redefine the statutory phrase "any discharge," 33 U.S.C. §

1341(a)(1), to mean only those discharges that are "material,"

18 C.F.R. § 4.38(f)(7)(iii). We need only review the

Commission's interpretation of Section 401(a)(1) itself.

Petitioners argue that the Commission's orders

misinterpret the requirements of Section 401(a)(1). According

to petitioners, the relevant statutory "activity" is VEPCO's

“substantially altered operation" of the Power Project under

which less water will flow through the dam turbines thus

generating less electricity. These alterations in the operation of

the Power Project will, petitioner argues, "result in an altered

discharge."* Alternatively, petitioners argue that the relevant

"activity" is the operation of the Pipeline Project, which will

result in "a new and different discharge." In either case,

petitioners contend, a discharge "originates" at the point where

water exits the dam turbines in North Carolina under the

2 Our dissenting colleague suggests that "[IJogically, if a State must

consent before a new discharge is introduced into its waters, then a change

in that discharge must require a new consent.” Dissent at 1195. The logic

escapes us. The statute provides that the right of certification arises from a n

“activity ... which may result in any discharge...." The triggering event is

the causation of the discharge. Under our colleague's reasoning, a statute

referring to “conduct resulting in injury” would include conduct which

reduced injury. A transaction "resulting in financial loss" would include a

transaction which prevented financial loss. Neither in those hypotheticals

nor in this actual case does either logic or language lead us to our

colleague's conclusion.

16a

Supreme Court's holding in PUD No. 1 of Jefferson County v.

Washington Dep't of Ecology, 511 U.S. 700, 114 S.Ct. 1900,

128 L.Ed.2d 716 (1994). As a result, they conclude that a

Section 401(a)(1) certification from North Carolina was

required.

The Commission responds that the "activities" licensed

in this case are the construction and operation of the Pipeline

Project. The construction of the Pipeline Project resulted in a

discharge of dredged material only in Virginia. The operation

of the Pipeline Project, by contrast, will result in no "discharge"

at all as the Project will only withdraw water from and add

nothing to Lake Gaston. The fact that the amended license will

result in an "altered discharge” at the North Carolina dam

cannot, FERC argues, constitute a basis for granting

certification rights to North Carolina. To hold otherwise would

render superfluous Section 401(a)(2) governing the rights of

those states affected by license amendments.

We agree with the Commission that the "activities"

licensed by the amendment are the construction and operation of

the Pipeline Project. As no party contends that the construction

of the Pipeline Project resulted in a discharge "originat[ing]" in

North Carolina, only the operation of the Project is relevant for

our purposes. Even assuming arguendo that the flow of water

through the Power Project dam turbines is a "discharge" as that

17a

term is defined in the CWA,’ we fail to see how operation of

the Pipeline will "result in any discharge."

The Lake Gaston Power Project has operated under a

FERC license for many years. See License Application Order,

10 F.P.C. at 18-19. Under that license, water has been passing

through the dam turbines. Had the license amendment nat been

granted, water would have continued passing through the dam

turbines. The amendment does not permit VEPCO to release

additional water through the turbines. It simply permits

VEPCO "to authorize the City of Virginia Beach, Virginia to

withdraw up to 60[mgd] of water from the Project No. 2009

Lake Gaston reservoir." License Amendment Order, 72

F.E.R.C. at 61,400. These facts lead us to agree with FERC

that the "activity" authorized by the license amendment is the

operation of the Pipeline Project and its resultant withdrawal of

water from Lake Gaston.

We recognize that the withdrawal of water from Lake

Gaston will reduce the volume of water passing through the dam

turbines. But neither the withdrawal of water from the Lake nor

the reduction in the volume of water passing through the dam

turbines "results in a discharge" for purposes of Section

401(ay(1). 33 U.S.C. § 1362 is the definitional section for

chapter 26 of Title 33, the chapter that includes the CWA. That

+ oe dissenting colleague suggests that PUD No. 1, supra, and

National Wildlife Fed'n v. FERC, 912 F.2d 1471 (D.C.Cir.1990) (per

curiam), compel the conclusion that we assume. While we do not interpret

either of those opinions as compelling such a conclusion, since we are

willing to assume so for purposes of this case, there is no point in our

pursuing the distinctions at any length. Suffice it to say that we are s atisfied

for the reasons set forth at pp. 1188-89, infra, that a construction of the

Statutory language herein is in no way inconsistent with PUD No. | or

National Wildlife.

18a

section does not provide an express definition of the term

"discharge" but rather provides a statement of inclusion: "The

term ‘discharge’ when used without qualification includes a

discharge of a pollutant, and a discharge of pollutants." 33

U.S.C. § 1362(16). Thus, we find useful in our analysis 33

U.S.C. § 1362(12), which defines the terms “discharge of a

pollutant" and "discharge of pollutants" as "mean[ing] (A) any

addition of any pollutant of navigable water from any point

source, and (B) any addition of any pollutant to the waters to the

contiguous zone ... from any point source other than a vessel or

other floating craft." Thus, although the focus of the

definitional section is on the regulation of pollutants rather than

the general regulation of project discharges, the nearest evidence

we have of definitional intent by Congress reflects, as might be

expected, that the word "discharge" contemplates the addition,

not the withdrawal, of a substance or substances.‘

On the evidence of record, the operation of the Pipeline

Project will not result in the "addition" of anything to the waters

of Lake Gaston. Obviously, the withdrawal of water from Lake

Gaston will add nothing; nor will the withdrawal of water from

* — Our dissenting colleague "reject[s] the majority's 'substance-adding '

threshold condition on the exercise of State certification rights.” Dissent at

1196. The threshold is not ours, but Congress's. Granted, the

congressional instruction of “discharge” in 33 U.S.C. § 1362(16) does not

define discharge, but rather describes it as including "discharge of a

pollutant” which Congress has heretofore defined in § 1362(12) as

“mean{ing] ... any addition of any pollutant ...." (emphasis added). It

would seem to us apparent that since Congress meant “discharge” to in clude

“discharge of a pollutant" then Congress intended the word "discharge" to

be defined in the inclusive use consistently with the included use. Therefore ,

if “discharge of a pollutant” requires addition, then the inclusive

understanding of “discharge” also requires an addition. Indeed, we have

seen no definition of “discharge” in any source, including the dissent, whi ch

suggests that that term includes withdrawal or reduction.

19a

Lake Gaston increase the volume of water flowing through the

turbines of the Project dams. Indeed, that is petitioners’ very

point; the volume of water flowing through the turbines will

decrease as a result of the project. Order on Remand, 77

F.E.R.C. at 61,519-20. A decrease in the volume of water

passing through the dam turbines cannot be considered a

"discharge" as that term is defined in the CWA. Save Our

Community v. United States EPA, 971 F.2d 1155, 1165 (5th

Cir.1992) (holding that removal of water from wetlands is not

a "discharge" for purposes of Section 404 of the CWA).

We are not persuaded by petitioners’ argument that

Section 401(a)(1) confers certificatica rights upon North

Carolina merely because operation of the Pipeline Project will

"result in an altered discharge" through the dam turbines.

Stating that operation of the Pipeline Project will "result in an

altered discharge" is simply a way of saying in legalese that

operation of the Pipeline Project will alter the discharge.

However, the existence of certification rights under Section

401(a)(1) does not depend on whether a discharge is "altered."

Section 401(a)(1) certification rights vest only if an activity

"may result in" a discharge. This distinction is of no small -

moment. The word "alter" means to change something from its

previous state, WEBSTER'S NEW INT'L DICTIONARY 63

(3rd ed. 1961) ("to cause to become different"), implying that the

thing changed was already in existence. By contrast, the word

"result" implies causation. See id. at 1937 ("arise as a

consequence"). Obviously, a subsequent event cannot be the

cause of something that is already in existence. Given the

disparity between petitioners' proposed test and the words of the

Act, we elect to remain faithful to the language chosen by

Congress and require that an activity "result in" a discharge in

order to trigger the certification requirements of Section

401(a)(1).

20a

Our conclusion that the operation of the Pipeline Project

will not result in a "discharge" is in no way inconsistent with the

Supreme Court's opinion in PUD No. I, supra. In that case, the

state of Washington had issued a water quality certification

under Section 401(a)(1) imposing a variety of conditions on the

proposed project, including a minimum stream flow

requirement. 511 U.S. at 709, 114 S.Ct. at 1907-08. The

license applicants argued that the minimum stream flow

requirement was unlawful in that it was “unrelated to the [ ]

specific discharges" at issue. Jd. at 711, 114 S.Ct. at 1908.

The Supreme Court rejected this argument, stating that:

If § 401 consisted only of subsection (a), which refers to

a state certification that a "discharge" will comply with

certain provisions of the Act, petitioners’ assessment of

the scope of the State's certification would have

considerable force. Section 401, however, also contains

subsection (d), which expands the State's authority to

impose conditions on the certification of a project.

Id. at 711, 114 S.Ct. at 1908-09. As the Court read Section

401, subsection (a) "identifies the category of activities subject

to certification--mamely those with discharges"--whilesubsection

(d) authorizes a state to place "additional conditions on the

activity as a whole once the threshold condition, the existence

of a discharge, is satisfied." Jd. at 711-12, 114 S.Ct. at 1909.

But the Court never attempted to define a discharge and in no

way indicated that an alteration of a discharge was sufficient to

invoke the certification requirement of Section 401(a)(1). PUD

No. 1 therefore is inapposite. |

Nor is our conclusion that the operation of the Pipeline

Project will not result in a "discharge" in conflict with our

holding in National Wildlife Fed'n, supra. \n National Wildlife,

2la

we held that the Commission did not abuse its discretion in

concluding that the discharge resulting from the construction and

Operation of a new dam "originate[d] by the dam" where the

flow of water was blocked resulting in a water backup. 912

F.2d at 1484. This holding is distinguishable in two respects

from the case at hand. First, the parties in National Wildlife did

not dispute whether the construction and operation of the dam

would create a discharge. The issue there was where that

discharge would "originate." See id. at 1483-84. In addition,

the National Wildlife case involved the creation of a discharge

as a result of the construction and operation of a new dam. Id.

at 1473. That case did not involve an alteration (much less a

volume reduction) of a preexisting discharge.

Because we conclude that the withdrawal of water from

Lake Gaston resulting in a decrease in the volume of a

preexisting discharge is not an activity that "results in any

discharge" for purposes of the Section 401 of the CWA, we

must reject petitioners’ claim that the Commission erred when

it granted VEPCO's request for a license amendment without

requiring that a water quality certification first be obtained from

the state of North Carolina.

B. Arbitrary and Capricious Claims.

Petitioners also assert that the findings underlying the

Commission's decision to grant the amendment to VEPCO's

license were not Supported by substantial evidence and that the

decision itself was arbitrary and capricious. Under the FPA, we

review a Commission licensing decision to determine whether

the factual findings underlying the decision were "supported by

substantial evidence." 16 U.S.C. § 8251(b). We also review

Commission licensing decisions to determine whether they were

"arbitrary and capricious." Bangor Hydro-Electric Co. y.

22a

FERC, 78 F.3d 659, 663 & n. 3 (D.C.Cir. 1996). In both cases,

the review is quite deferential. So 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

choice made,” we will defer to the agency's expertise. United

States Dep't of Interior v. FERC, 952 F.2d 538, 543

(D.C.Cir.1992). Applying these principles of review, we

consider each of petitioners’ claims.

1. Need for 54 mgd of water.

Petitioners first challenge the Commission's conclusion

that there is a "need" for the Pipeline Project. Section 10(a) of

the FPA provides that the project for which a Commission

license is issued must

be such as in the judgment of the Commission will be

best adapted to a comprehensive plan of improving or

developing a waterway or waterways for the use or

benefit of interstate or foreign commerce, for the

improvement and _ utilization of water-power

development, for the adequate protection, mitigation,

and enhancement of fish and wildlife ..., and for other

beneficial public uses, including irrigation, flood

control, water supply, and recreational and other

purposes....

16 U.S.C. § 803(a)(1) (emphasis added). The parties all agree

that, under this provision, the Commission could only issue the

license amendment authorizing the Pipeline Project if the

Commission, in its judgment, determined that there is a need for

54 mgd of water in Virginia Beach. The only issue here is

whether the Commission's conclusion that there is such a need

was supported by substantial evidence.

23a

ein

The Commission relied on the findings of its Final EIS

in concluding that the five-city Virginia Beach region would

need 54 mgd of water by the year 2030. Rehearing Order, 72

F.E.R.C. at 62,216. The Final EIS calculation of water need

was derived from three figures: (1) projected water demand in

the five- city region by the year 2030, (2) projected supply in

that region by 2030, and (3) a drought margin. Final EIS at 146

to 1-22. The demand projection was a function of the five-city

region's projected population and per capita water use in the

year 2030. Id. at 1-9 to 1-13. Projected supply was based on

the "safe yield" of available water sources in the five-city

region. Jd. at 1-16 to 1-20. The difference between the

projected supply and the projected demand equaled the water

supply deficit for the five-city region. Jd. at 1- 20. Then, in

order to ensure “sound water supply planning,” a drought

margin was added to the water supply deficit to reach the 54

mgd of water need. /d. at 1-21. Petitioners challenge each step

of this water need calculation. We consider these challenges in

turn.

a. Population Projection.

Petitioners first contest the Commission's population

projection for the year 2030. In formulating its population

projection, the Commission had before it six different

population projections, only four of which attempted to project

the five-city region's population through the year 2030. The

Commission elected not to use any of the 2030 projections.

Instead, the Commission selected the population projection

prepared by the Hampton Roads Planning District Commission

("HRPDC") which projected the population of the five-city

region through the year 2015. That projection, according to the

Commission, was "the most reasonable in that [it] considered

local economic factors ... and the recent decrease in the region's

24a

growth rate." Final EIS at 1-12. The Commission then

extrapolated the HRPDC projection through 2030 using the

average annual growth rates underlying two of the four 2030

projections. The result was a population projection of 1,306,000

for the five-city region.

Petitioners argue that this projection was arbitrary and

Capricious in that extrapolation of the HRPDC estimate was

based on growth rates from projections the Commission had

"rejected as too high." North Carolina's Brief at 32. We

disagree. The Commission explained that the HRPDC estimate

was chosen as "the most reasonable" because it considered

"local economic factors." While the Commission's calculation

of an extrapolation rate was based on the average growth rates

from population projections rejected by the Commission as less

"reasonable" than the HRPDC projection, the fact that these

estimates were less "reasonable" does not necessarily make them

unreasonable or arbitrary. Projections of any kind--especially

those extending 40 years into the future--are necessarily

speculative, inexact, and riddled with uncertainty. But at times,

such as here, projections must be made. The mere fact that the

Commission relied on necessarily imperfect information in

calculating an extrapolation rate for the years 2015 to 2030 does

not render the projection arbitrary. An agency need not "have

perfect information before it takes any action." United States

Dep't of the Interior v. FERC, 952 F.2d 538, 546

(D.C.Cir.1992). In the face of "serious uncertainties," an

agency need only "explain the evidence which is available, and

... Offer a ‘rational connection between the facts found and the

choice made.' " Motor Vehicle Mfrs. Ass'n of the United States

v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52, 103 S.Ct.

2856, 2871, 77 L.Ed.2d 443 (1983) (quoting Burlington Truck

Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239,

245-46, 9 L.Ed.2d 207 (1962)). The Commission has done so.

25a

b. Per Capita Use Projection.

Petitioners also contest FERC's projected per capita

water use figure of 118 gallons per capita per day ("gpcd") as

arbitrarily inflated. First, RRBA contends that the Commission

reached its projected water use rate simply by taking the 1990

actual use rate for the five-city region of 121 gpcd and

subtracting 3 gpcd to account for future improvements in water

use efficiency. Reliance on a single year's data to develop a

long-term projection is, according to RRBA, arbitrary and

capricious.

RRBA's depiction of the process by which the

Commission developed its water use projection is without basis

in the record. The Conimission clearly explained that its

projected use figure was the product of a long-term "trend

analysis." Rehearing Order, 72 F.E.R.C. at 62,217. In

reaching its projection, the Commission began by noting that the

use projections for Virginia Beach alone "cluster[ed] around 100

gpcd" with actual use in 1990 for the entire five-city region

equaling 121 gpcd. Final EIS at 1-12. The Commission went

on to explain that it expected these figures to rise as Virginia

Beach and its surrounding areas became more urbanized. /d. at

1-12 to 1-13. However, the Commission also recognized that

water conservation measures required by the Federal Energy

Policy Act of 1992 were likely to result in a demand reduction

of approximately 3.7 mgd. /d. at 1-13 to 1-15. Taking all of

these factors into account, the Commission concluded that a

projected per capita use rate of 118 gpcd was "reasonable for

planning purposes." /d. at 1-15.

North Carolina asserts that the Commission's water use

projection is arbitrary as demonstrated by Virginia Beach's

concession that water use in the five-city region is declining.

26a

North Carolina too misstates the record. Virginia Beach did not

concede that water use in the five-city region is declining, but

only that it had "decline[d] slightly between 1990 and 1994."

The Commission recognized and explained this decline as an

expected year-to- year variation in demand.

North Carolina also asserts that Virginia Beach conceded

that the water use data in the Commission's Final EIS was

erroneous. Again, North Carolina misinterprets the record.

What the city actually conceded was that one of the many

figures relied upon by the Commission in developing a 40-year

water use projection contained some minor computational

errors. North Carolina, however, has not demonstrated that the

erroneous figure was integral to the Commission's water use

projection or that revision of the figure would result in an

altered projection. As a result, the error was harmless. See

Chemical Waste Mgmt., Inc. v. United States EPA, 976 F.2d 2,

32 (D.C.Cir.1992), cert. denied, 507 U.S. 1057, 113 S.Ct.

1961, 123 L.Ed.2d 664 (1993).

North Carolina further argues that the Commission's

water use projection of 118 gpcd is grossly excessive in light of

the actual per capita water use in Virginia Beach during 1990 of

89 gpcd. This argument too is not persuasive. The

Commission elected to project a water use rate for the entire

five-city region, rather than for Virginia Beach alone "because

of the existing interconnectedness of the system and the growing

trend toward regional water sharing." Rehearing Order, 72

F.E.R.C. at 62,216. While the Commission's projected use

figure for the five-city region exceeds the actual use figure for

Virginia Beach, it is significantly less than the actual use rates

of the more urbanized municipalities in the region such as

Norfolk (166 gpcd) and Portsmouth (160 gpcd). Moreover, the

Commission expected that per capita use rates in Virginia Beach

27a

and the other municipalities would likely increase as those areas

became more urbanized. Final EIS at 1-12 to 1-13. These

considerations led the Commission reasonably to conclude that

a projected use rate of 118 gpcd was most appropriate.

Still further, petitioners together argue that the

Commission's use rate projection is arbitrary in that it was

developed without reference to more recent use rate data.

According to petitioners, the Commission relied solely on 1990

use rate data in developing its projection despite the fact that

more recent data indicated that use rates are declining.

Petitioners contend that the Commission's failure to utilize this

more recent data was arbitrary and capricious. We must again

disagree with petitioners.

As discussed above, the assertion that the Commission

relied solely on 1990 use rate data in developing its use rate

projection is without merit. Moreover, the Commission clearly

explained its decision not to rely on the more recent water use

data. According to the Commission, the more recent data was

"somewhat misleading” in that it considered "finished water

ouly"” and was “not corrected to account for water from

municipal wells of the portion of the population not served by

public water." When the data was adjusted to account for these

deficiencies, the Commission concluded that it showed only a

small decline in per capita water use which was easily explained

as an expected year- to-year variation in a long-term demand

projection. Rehearing Order, 72 F.E.R.C. at 62,217. RRBA

challenges the accuracy of this explanation on several grounds.

However, the Commission refused to consider each of these

arguments on the ground that they were not raised in a timely

motion for reconsideration. Jd. at 62,217 n. 11. The review

provisions of the FPA provide that a party "aggrieved by an

order issued by the Commission ... may apply for a rehearing

28a

within thirty days after the issuance of such order." 16 U.S.C.

§ 825l(a). An objection not raised before the Commission in a

timely request for rehearing may not be considered by this

court. Jd. § 825/(b). There is no dispute that petitionersdid not

contest the Commission's explanation within the thirty-day time

period. As a result, we are precluded from considering the

issue On appeal.

c. Water Demand Projection.

Relying on its population and water use projections, the

Commission derived a water demand figure for the five-city

region for the year 2030. The Commission first adjusted its

population projection of 1,306,000 to reflect the fact that only

approximately 93.8 percent of the population will be served by

public water in 2030. Miultiplying this adjusted population

figure by the projected per capita water use figure of 118 gpcd,

the Commission reached a projected water demand for the five-

city region of 144.6 mgd. Final EIS at 1- 15 to 1-16.

RRBA argues that the Commission erred in concluding

that 93.8 percent of the five-city region's population would be

served by public water in 2030. However, this claim was not

raised in petitioners request for rehearing. We are therefore

barred from considering the issue on appeal. 16 U.S.C. §

8251(b).

d. Water Supply Projection.

Petitioners next challenge as arbitrary the Commission's

projected water supply “safe yield" of 112.8 mgd. "Safe yield"

is defined as the quantity of raw water that could be withdrawn

from a water source during the worst dry period of record since

1930 without depleting the source. Final EIS at 1-16 to 1-17.

29a

Petitioners first argue that FERC's calculation of water supply

arbitrarily excluded 3 mgd of water available from aquifer

storage and recovery ("ASR") systems. In its Rehearing Order,

the Commission explained that the ASR system was not relevant

to the calculation of water supply in that it "is not a new source

of water." An ASR system "merely stores water from the

existing supply for retrieval at a later date," and thus is not

relevant to a calculation of long-term water supply. Rehearing

Order, 72 F.E.R.C. at 62,217. The Commission further

explains the relevance of its grounds for rejecting the ASR

system data by noting that "an ASR system can accommodate

only short term (seasonal) supply and demand; it does not

resolve the significant long term regional water deficit described

in the FEIS." Jd. North Carolina's position that the ASR is

relevant to the water available to a portion of the five-city area

may be a reasonable one. However, FERC has considered and

rejected that position in the language quoted above. It is not our

role under an arbitrary and capricious review to reweigh the

evidence, and we cannot say that the Commission's response to

this comment was so unreasonable as to fail the deferential

standard we must apply.

Petitioners make much of the fact that the Commission's

draft EIS erroneously concluded that the Chesapeake ASR

system had been abandoned due to cost. However, this error

was not repeated in the Commission's Rehearing Order. See 72

F.E.R.C. at 4006. A final agency order is not rendered

arbitrary and capricious simply because preliminary agency

decisions contained errors. "Indeed, the very purpose of issuing

tentative decisions is to afford the Commission an opportunity

to correct any errors." Freeman Eng'g Assocs., Inc. v. FCC,

103 F.3d 169, 179 (D.C.Cir.1997).

30a

Finally, petitioners assert that the Commission, without

explanation, excluded from its calculation of water supply 2

mgd of water available through reservoir modifications. As we

read the Rehearing Order, the Commission's discussion of ASR

systems was also meant to apply to the reservoir modification

issue. Neither ASR systems nor reservoirs are new sources of

water; both simply store water from existing supplies for use at

a later time. Thus, under the Commission's reasoning, neither

was relevant to a calculation of longterm water supplies. We

recognize that the Commission's discussion of this issue was far

from a model of clarity. But petitioners’ discussion of the issue

in their request for rehearing was tucked away in a footnote in

a paragraph primarily devoted to a discussion of ASR systems.

Under these circumstances, the Commission "cannot be asked

to make silk purse responses to sow's ear arguments." City of

Vernon v. FERC, 845 F.2d 1042, 1047 (D.C.Cir.1988).

e. Drought Margin.

Having projected water supply and demand for the five-

city region, the Commission subtracted the former from the

latter to reach a regional water supply deficit of 31.8 mgd. To

this figure the Commission added a drought margin of 22.2 mgd

to reach the projected water need of 54 mgd. Final EIS at 1-20

to 1-21. Petitioners raise several objections to this drought

margin.

Petitioners first contend that a drought margin of any

size is unnecessary given that the Commission's calculation of

water supply was based on the "safe yield" which is defined as

the quantity of raw water that could be withdrawn from a water

source during the worst dry period of record since 1930 without

depleting the source. We reject this argument. While the

Commission's calculation of water supply was based on the

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quantity of water available during drought conditions, the

calculation also assumed "complete interconnection and

optimization of the five-city water systems ..., the imposition of

mandatory water use restrictions or rationing during droughts,

and depletion of water storage during a drought of equal or

greater severity than that on which the safe yield estimates are

based." Final EIS at 1-20 to 1-21. But as the Commission

explained, these assumptions are not consistent with "sound

water supply planning" given that: (1) especially severe

droughts might occur, (2) water sharing within the five-city

region was not guaranteed, (3) water restrictions create public

health and safety risks, and (4) future water demand might

exceed projections. Jd. at 1-21. It was to protect against these

eventualities that an additional drought margin was included.

We cannot say that such precautions are arbitrary or capricious.

In addition to objecting to the drought margin per se,

North Carolina also objects to the Commission's calculation of

the margin. North Carolina contends that it was arbitrary for

the Commission to calculate the drought margin without taking

into account the 50 mgd of water available from emergency

wells during droughts. We disagree. The emergency wells in

the five-city area are all owned by the jurisdictions surrounding

Virginia Beach. While the wells are presently being leased back

to Virginia Beach, these leases all expire by 1998 and the

surrounding jurisdictions have indicated that they do not intend

to renew the leases. Rehearing Order, 72 F.E.R.C. at 62,217.

Therefore, it was entirely appropriate for FERC to exclude

emergency well supplies when calculating the quantity of water

that will be available for drought emergencies in the year 2030.

In a similar vein, North Carolina also argues that, in

calculating the drought margin, the Commission arbitrarily

failed to consider demand management techniques that could be

32a

employed during times of drought. This argument is without

merit. The Commission clearly explained that it considered

demand management techniques such as water rationing and use

restrictions to be a threat to public safety and health. Final EIS

at 1-21. For this reason, such measures were rejected as a

solution to the five-city region's long-term water supply deficit.

Finally, RRBA argues that the Commission erred in

simply adopting a Corps calculation of the necessary drought

margin without independently verifying the Corps calculation.

See 40 C.F.R. § 1506.5. The Commission contends that we

should not reach this argument because it was not advanced

before the Commission. In their rehearing motion, petitioners

objected to the Commission's reliance on population and water

use projections supplied "by the cities to be served by the

project and the [HRPDC]." Rehearing Motion at 8. Petitioners

did not object to the Commission's reliance on the Corps'

drought margin calculation. We therefore agree with the

Commission that petitioners waived this objection. 16 U.S.C.

§ 8251(b).

In sum, we hold that the Commission's calculation of

water need for the five- city region was supported by substantial

evidence and was neither arbitrary nor capricious.

2. Kerr Reservoir

Petitioners also maintain that the Commission failed to

respond to significant comments concerning the availability of

Kerr Reservoir water for purposes of mitigating the Pipeline

Project's environmental effects on the Roanoke River. As

mentioned above, the Commission prepared an EIS for the

Pipeline Project analyzing the effects of the Project on the

Roanoke River Basin. Final EIS at 3-1, 5-2. The EIS

33a

ern

concluded that the Project withdrawals will "not have any

significant adverse effects" on the Basin. Jd. at 6-4. This

conclusion was premised on the Commission's belief that the

water Virginia Beach had stored in Kerr Reservoir would be

available for release to mitigate the Project's downstream

effects. Id. at 4-31. Petitioners contend, however, that

evidence before the Commission demonstrated that Virginia

Beach was not legally entitled to order releases from Kerr

Reservoir.

Petitioners’ argument is without merit. The Commission

concluded in its License Amendment Order that "Virginia Beach

would be able to use its stored water to replace withdrawals on

a gallon-for-gallon basis" to meet the striped bass target flows.

72 F.E.R.C. at 61,398. This conclusion appears consistent with

the provisions of Virginia Beach's contract with the Corps for

the storage of water in Kerr Reservoir which provides that

Virginia Beach has the "right to order releases to be made"

subject only to the government's rights to maintain downstream

releases to meet established water requirements, to preserve life

and/or property, and to maintain the project facilities. See

Contract Between the United States of America and the City of

Virginia Beach for Water Storage in Kerr Reservoir at 3. To

the extent that evidence presented by petitioners contradicted the

express language of this contract, it was rejected by the

Commission.

3. Other Claims.

Petitioners claim that the Commission's decision was

arbitrary and capricious in numerous other respects. Having

considered each of these arguments carefully, we find them

unworthy of separate discussion. Suffice it to say that we reject

each of the additional claims.

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III. Conclusion

For the foregoing reasons, we conclude that the

Commission was not required to obtain a water quality

certification from the state of North Carolina prior to granting

the amendment to VEPCO's license for FERC Project No.

2009. We further conclude that the Commission's order

granting the license amendment was neither arbitrary nor

capricious. We therefore deny the petition for review.

WALD, Circuit Judge, dissenting:

The majority holds (1) that the Federal Energy

Regulatory Commission ("FERC") did not err in granting the

Virginia Electric and Power Company ("VEPCO") an

amendment to its license for the Lake Gaston power project

authorizing the withdrawal of sixty million gallons per day of

project water without requiring VEPCO to obtain a water

quality certification from the State in which the power project's

"discharge" originates, and (2) that FERC's decision to issue

this license amendment was not arbitrary and capricious. I

disagree with both of these propositions.

A. North Carolina's Clean Water Act § 401(a)(1)

Certification Rights

The first paragraph of the Federal Water Pollution

Control Act, popularly known as the Clean Water Act ("the

Act"), declares that its goal is to "restore and maintain the

chemical, physical, and biological integrity of the Nation's

waters." 33 U.S.C. § 1251(a). The second subsection sets

forth Congress' overarching policy in the Act, of

"recogniz[ing], preserv[ing], and protect [ing] the primary

responsibilities and rights of States to prevent, reduce, and

35a

" eliminate pollution...." Jd. at § 1251(b). The Act charges each

State with the duty of instituting comprehensive standards

establishing quality goals for all intrastate waters. See 33

U.S.C. §§ 1311(b)(1)(C), 1313.

Section 401(a)(1) of the Act, 33 U.S.C. § 1341(a)(1),

implements the policy of empowering States to protect their

water quality programs by authorizing them to veto federal

licenses or permits that threaten to undermine the quality of their

waters. Specifically, § 401(a)(1) requires "[a]ny applicant for

a Federal license or permit to conduct any activity ... which may

result in any discharge into the navigable waters" to provide the

licensing or permitting agency with "a certification from the

State in which the discharge originates or will originate" that the

discharge does not threaten the water quality standards that the

State has implemented pursuant to other provisions of the Act.

Id. 1 disagree with the majority's conclusion that North

Carolina had no such certification right with regard to this

license amendment, because I believe it ignores the language,

structure, and purpose of the Act, and wrests away from North

Carolina the very power to make water quality judgments about

its own waterways that Congress expressly meant for that State

alone to have.

The § 401 certification right is an essential component of

the Act's state-oriented regulatory scheme. See Keating v.

FERC, 927 F.2d 616, 622 (D.C.Cir.1991) ("The States remain,

under the Clean Water Act, the prime bulwark in the effort to

abate water pollution ... Congress intended that the States would

retain the power to block, for environmental reasons, local

water projects that might otherwise win federal approval.")

(citation and internal quotation marks omitted). Obviously, how

courts construe the Act's language specifying those situations in

which States may wield this powerful weapon can critically

36a

affect their ability to protect the integrity of their waters in the

way Congress intended. Too stingy an interpretation of §

401(a)(1) will severely burden each State's ability to implement

the water quality program mandated by the Act, and will

frustrate Congress’ clear intent to institute a system under which

States carry both the responsibility of setting their own water

quality standards and a corresponding power to protect those

standards from federally-licensed activities that threaten to

undermine them. It is precisely because the § 401(a)(1)

certification right is so vital to each State's ability to maintain its

water quality that thirty-nine States signed an amicus brief

strongly opposing FERC's assertion that North Carolina has no

certification rights over this license amendment. See Brief of

Amici Curiae States of Alabama, Alaska, Arizona, Arkansas,

California, Connecticut, Delaware, Florida, Hawaii, Idaho,

Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,

Maryland, Massachusetts, Michigan, Minnesota, Mississippi,

Missouri, Montana, Nevada, New Hampshire, New Mexico,

New York, North Dakota, Ohio, Oklahoma, Pennsylvania,

South Dakota, Texas, Utah, Vermont, Washington, West

Virginia, and Wyoming.

The majority assumes arguendo that the flow of water

through the power project's turbines in North Carolina is a §

401(a)(1) "discharge" implicating that State's certification

rights, and this assumption is in fact required under the

precedents set by the Supreme Court,' this court,? and FERC.’

| See PUD No. 1 of Jefferson County v. Washington Dep't of

Ecology, 511 U.S. 700, 7i1, 114 S.Ct. 1900, 1908, 128 L.Ed.2d 716

(1994) ("There is no dispute that petitioners were required to obtain a

certification from the State pursuant to § 401. Petitioners concede that, at

a minimum, the project will result in two possible disch arges--the release of

dredged and fill material during the construction of the project, and the

37a

a a

Furthermore, it appears that North Carolina will wield a §

401(a)(1) certification right in 2001, when the project's license

will expire and VEPCO will request a new license. See Brief

for Appellant Roanoke River Basin Association at 18-22. Yet

the majority reaches the paradoxical conclusion that FERC may

approve this license amendment, which all parties concede will

alter the North Carolina "discharge," without requiring any

certification from North Carolina. It is candidly difficult for me

to get past this conundrum: Logically, if a State must consent

before a new discharge is introduced into its waters, then a

change in that discharge must require a new consent. A

discharge of water at the end of the tailrace after the water has been used to

generate electricity.").

? See National Wildlife Federation v. FERC, 912 F.2d 1471, 1484

(D.C.Cir.1990) ("Common sense supports FERC's conclusion that the

discharge in this case would occur at the dam, where the flow of water

would be blocked and consequently the water would be backed Si... "D.

> See City of Fort Smith, 42 F.E.R.C. | 61,362 at 62,047 (1988) ("In

the case of the Lee Creek project, the discharge will occur over the dam an d

from the powerhouse tailrace ...."), on reh'g, 44 F.E.R.C. ¢ 61,160 at

61,513 (1988), aff'd, 912 F.2d 1471 (D.C.Cir. 1990).

* — The majority questions the logic of this assertion by arguing that it

would be irrational as applied to statutes that refer to "conduct resulting in

injury" and "transactions resulting in financial loss." See majority opinion

at 1186 n.2. But these analogies are clearly inapt. The more appropriate

analogy would be to an argument that a statute referring explicitly to conduc t

that threatens to cause one type of injury or loss might be construed also to

cover closely related types of injury or loss, rather than to an argument that

a statute referring to conduct that causes some injury or loss should be

construed also to cover conduct that causes the reduction of these ills. After

all, the record before us involves a situation in which a reduction in a

discharge may increase the very sort of "injury" to a State's water quality

that the Act seeks to empower States to prevent. See infra.

38a

question might, of course, be raised as to whether some license

amendments are so clearly outside of the scope of § 401(a)(1) as

to create no certification rights; license amendments that

propose to alter a project in a way that will have no effect onan

existing discharge, or that will have at most a de minimis effect

on the discharge, may perhaps be granted without requiring a

new certification from the State in which the discharge

originates. But the majority imposes a far more sweeping and

arbitrary limitation on State certification rights, by declaring that

no alteration of a discharge triggers a certification right unless

it represents an “addition ... of a substance or substances" to the

discharge. Majority opinion at 1187.

I reject the majority's "substance-adding" threshold

condition on the exercise of State certification rights. It badly

distorts the definitions section of the Act, and improperly usurps

crucial judgments on water quality that Congress reserved for

the States into which the discharges flow. The initial flaw is the

majority's characterization of the Act's definition of "discharge

of a pollutant” as "the nearest evidence we have of definitional

intent by Congress" as to when States have certification rights

under § 401(a)(1). Jd. The Act's ‘egislative history says

otherwise. The language creating certification rights in States

* Additionally, there is in all cases the threshold requirement that a

discharge covered by the license in question must “originate” within the

State claiming a § 401(a)(1) certification right. The rights of “affected”

States that cannot satisfy this threshold condition are defined in § 401(a)(2).

See 33 U.S.C. § 1341(aX(2). Since there is no question that a discharge

covered by the license that FERC amended originates in North Carolina, my

interpretation would not by any means make § 401(a)(2) superfluous, c/.

majority opinion at 1186 (summarizing FERC’s arguments); if North

Carolina were not the locus of a discharge covered by the license to be

amended, its rights would be defined by § 401(a)(2), as are the rights of

downstream “affected” States in regard to this license amendment.

39a

in which a "discharge" may "originate" as a result of federally-

licensed activities first appeared as part of the Water Quality

Improvement Act of 1970, Pub.L. No. 91-224, 84 Stat. 91

(1970). The phrase “discharge of a pollutant," on which the

majority leans so heavily, was nowhere to be found in that early

version of the Act. It was only added with the passage, two

years later, of the Federal Water Pollution Control Act

Amendments of 1972, Pub.L. No. 92-500, 86 Stat. 816 (1972),

which introduced it in conjunction with a set of provisions

requiring permits for the "discharge of pollutants." 33 U.S.C.

§ 1342. Because the bare-bones term "discharge" was part of

the Act before the 1972 amendments, and because it wasn't until

two years later that Congress organized its new permit program

around the separately coined and defined phrase "discharge of

a pollutant," the notion that the latter phrase provides

compelling evidence of the meaning of the former term is totally

unpersuasive.

An even stranger facet of the majority's statutory

analysis is its insistence that "near[er]" evidence of Congress’

“definitional intent" as to what constitutes a discharge can be

found by looking at the Act's definition of the phrase "discharge

of a pollutant" than by relying on the Act's own definition of the

very term under discussion--"discharge." The Act expressly

states that the term " ‘discharge’ when used without qualification

includes a discharge of a pollutant, and a discharge of

pollutants.” 33 U.S.C. § 1362(16) (emphasis added). The only

inference I can discern from this clear expression of

nonexclusivity in the definition of "discharge" is that it was

meant to encompass a wider array of interferences with the

navigable waters than would qualify as "discharges of

pollutants." See National Wildlife Federation v. Gorsuch, 693

F.2d 156, 171-72 (D.C.Cir.1982) (distinguishing between

statutory definitions that specify what a term "means" and those

40a

that offer a non-exclusive listing of what a term "includes").°

How the majority manages to limit the scope of the unqualified

term "discharge" to one subset that is “include[d]" in the

broader term is beyond my ken.

Further evidence that Congress intended for States to

have the power to protect their waters from interferences created

by changes to a "discharge" that do not comprise the "addition"

of any “substance or substances" is observable in the Act's

treatment of the term "pollution." Section 304 of the Act

"expressly recognizes that water ‘pollution’ may result from

‘changes in the movement, flow, or circulation of any navigable

waters..... " PUD No. 1, 511 U.S. at 719-20, 114 S.Ct. at

1913 (quoting 33 U.S.C. § 1314(f)). The Environmental

Protection Agency's regulations implementing the Act likewise

express a concern with interferences that have "flowage effects."

“discharge of a pollutant” describes the addition of substances to the water,

Congress meant for the term “discharge” also to refer only to the addition

of substances to the water. See majority opinion at 1187 n.4. I find the

majority's reasoning untenable--it seems far more reasonable that, by

retaining the term “discharge” unmodified by the words “of a pollutant,”

Congress must have intended that the term would have a broader meaning

when used without these restrictive modifying words than it does when used

encompass the subtraction of part of an existing discharge because, as |

explain infra, the subtraction of water from a discharge may be just as

harmful to a waterway as the addition of substa nces to the water. Under the

majority's reasoning, even the initial construction of this power project--

which created a new discharge in North Carol ina--would not have triggered

any certification rights in North Carolina if § 401(a)(1) had then been in

effect, provided that the project did not add any substance to the water that

passed through the dam turbines. Such a result, of course, would be at odds

with the majority's assumption arguendo that the flow of water through a

power project's turbines is a discharge. See majority opinion at 1187.

4la

Id. 1 had thought it beyond dispute that even alterations of

existing discharges that do not "add" any "substance or

substances” to the water may yet affect the water's "movement,

flow, or circulation," that this effect may constitute “pollution, "

and that "[ijt is the policy of the Congress to recognize,

preserve, and protect the primary responsibilities and rights of

States to prevent, reduce, and eliminate pollution." 33 U.S.C.

§ 1251(b) (emphasis added).’? Yet the majority is comfortable

in wrenching away from a State this very power to protect its

” Employing the currently popular “dictionary jurisprudence,” the

majority reasons that the “activity” here--the diversion of water to Virginia

Beach--will not “result in" a discharge, as required by § 401(aX(1), see

majority opinion at 1188, because the activity authorized by the license

amendment gives rise only to an “altered” discharge, rather than a brand

new one. I fail to see how this dictionary exer cise provides any compelling

reason to ignore the implications of the Act's State- enforcement policy and

central concern with preventing and eliminating “pollution.” To the

contrary, it would block a State's certification rights even in the case of a

license amendment authorizing the “addition” of a “substance or substances "

to an existing discharge, since the “addition” of substances merely “alters”

a discharge, and does not cause the discharge to “arise as a consequ ence" of

the addition. Jd. I find the majority's use of the dictionary to support its

assertion that there is no hint of ambiguity in § 4.01(a)(1), see id. at 1183 n.

1, unacceptable; to my mind, there is certainly enough ambiguity to justify

consideration of the purpose and structure of the Act in determining the

scope of States’ certification rights. After all, the Act defines the term

“discharge” in a purposely open-ended fashion, see 33 U.S.C. § 1362(16),

and § 401(a)(1) doesn't even require concrete cert ainty that a discharge will

“result” from the activity to be licensed--it requires State certification for any

activity that “may result in" a discharge. 33 U.S.C. § 134 1(a)(1) (emphasis

added). Imposing dictionary-derived limitations on the Act is particularly

dangerous in this context and invites egregious abuses--for example, a

licensee could obtain a State's certification of a minor, non-threatening

discharge and then transform the discharge into a pollution-causing

nightmare, evading the State's power to prevent the change by characterizin g

it as merely as merely an “alteration” of an existing discharge.

42a

water quality from the "pollution" threatened by the alteration

of an existing discharge.

The majority's niggardly construction of the term

"discharge" threatens a congressional policy permeating the

general structure of the Act, a policy specifically declared in the

making and enforcing the crucial judgments surrounding water

quality within their borders. See 33 U.S.C. § 1251(b). When

a federally-licensed activity would “result in" a “discharge” into

the State's waters, the decision whether that interference with

the State's waters would be tolerated was to belong solely to the

State in which that discharge originated, not to a federal agency

or to a federal court. Given the relative competency of State

water quality agencies and federal courts, this policy seems

quite sound. The waterways that we judges see only as lines @n

a diagram are in reality extraordinarily complex and sensitive

systems in which water, oxygen, dissolved minerals, sediment,

and other materials intermingle and interact. Interferences with

the integrity of a waterway need not take the archetypal form of

sludge spewing from an outfall; other changes can be just as

deadly to fish and other wildlife as are toxic chemicals. For

example, alterations that cause the temperature of the water in

a discharge to rise, or that rearrange the spatial distribution of

oxygen, sediment, or minerals in the downstream water, could

be catastrophic from the perspective of water quality, see

Gorsuch, 693 F.2d at 163-642 Yet the effect of this court's

decision will be to bar States in which altered discharges

originate from acting to protect their waters from such

pernicious effects, whenever the alteration does not "add" any

“substance or substances" to the water. I do not believe

Congress intended to give this court's essentially ad hoc and

inevitably inexpert judgments precedence over the expert

judgments of the States' water quality authorities, in the making

of such crucial determinations.

The majority itself recognizes, in expressing "serious

reservations" about FERC's ability to limit by regulation States'

certification rights to license amendments that might have a

“material adverse impact" on the water quality in a discharge,

that judgments intrinsically related to water quality in the

context of the alteration of existing discharges are the sole

province of the States in which the discharges originate. See

majority opinion at 1186 (quoting 18 C.F.R. § 4.38(f)(7)(iii)

(1995)). By empowering itself to make a_ threshold

determination regarding whether an alteration in a discharge

threatens a "material adverse impact" on the State's water

quality, FERC is taking from the State a power that Congress

intended for the State alone to have. Section 401(a)(1) enables

States to raise an absolute bar to federal licenses that threaten

their waters; Congress completely stripped federal agencies of

the power to issue covered licenses without the State's

certification. Indeed, FERC is assigning itself a function which

makes no sense in light of the structure of the Act, which puts

each State in charge of authoritatively defining the term "water

quality" within its borders--why, in this one context, should a

federal agency be able to stand in a State's shoes and make the

State's "water quality" determinations for it? Thus, I share the

majority's concerns about FERC's regulation, but I can't help

but wonder why the majority doesn't feel the same discomfort

about its own arrogation of a similar power to preempt a State's

44a

water quality determinations. Congress did not intend for this

court to usurp North Carolina's power to manage its water

quality program any more than it intended to give FERC such

a role, and surely we are as ignorant as FERC on the subject of

what "water quality" is optimal for the citizens of North

Carolina.

The Supreme Court and our own court have previously

exercised appropriate reluctance to read the Clean Water Act in

the arbitrary and artificial fashion proffered today. When a city

and a utility district urged the Supreme Court in PUD No. I to

adopt a formalistic approach very much like the majority's, the

Court categorically refused. The PUD No. I petitioners

asserted that the Clean Water Act is concerned only with water

"quality," and does not regulate water "quantity." See PUD No.

1, 511 U.S. at 717-19, 114 S.Ct. at 1912. The Supreme Court

rejected this “artificial distinction," id., noting that water

quantity is closely related to water quality, and that both the

definitions section and § 304 of the Act set forth a "broad

conception of pollution" which "expressly evinces Congress’

concern with the physical and biological integrity of water." Id.

at 719, 114 S.Ct. at 1913. And in National Wildlife Federation

this court likewise recognized that the Clean Water Act is not

be constrained by artificial limitations such as the majority's

"substance-adding"” standard. In that case, we found that the

"backing up" of water by a dam constituted a § 401(a)(1)

"discharge," see National Wildlife Federation, 912 F.2d at

1483-84; in so doing, we apparently recognized that an

interference with a river that results in the alteration of the

"movement, flow, or circulation" of water (and thus causes

"pollution”) is cause for the recognition of a certification right

45a

in the State where this discharge originates.? Since the

"backing up" of water does not satisfy the majority's

"substance-adding" standard, it is clear that today's holding is

in tension with our own precedent. '°

Instead of crafting an arbitrary and exceedingly

formalistic new standard governing the scope of State

certification rights under § 401(a)(1), we should be traversing

the main channel charted by the Act, the Supreme Court, and

our own precedent. These authorities require us to find that the

license amendment at issue in this case is one that triggers a

certification right in North Carolina, the State in which the

project's discharge originates. Thus I would suspend

consideration of the other challenges to these orders, and require

FERC to await a § 401(a)(1) certification from North Carolina

before considering whether to grant the amendment.

9 In that case, we declined to recognize a certification right in the

upstream State, however, because we found that the discharge “originate[d] "

at the dam, which was located downstream in another state. See id. at 1484.

10 The majority disclaims tension between this case and National

Wildlife Federation on the grounds that the parties in that case did not

dispute the question of whether the construction and operation of the dam

would create a discharge, and that the discharge at issue related to a new

dam, rather than to the altered operations of an existing dam. See majority

opinion at 1188. But the National Wildlife opinion refers to the expulsion

of water through the dam's turbines as a § 401 “discharge,” and describes

the “discharge” as follows: “[T]he discharge in this case would occur at the

dam, where the flow of water would be blocked and consequently the water

would be backed up ...." National Wildlife Federation, 912 F.2d at 1484

(emphasis added). The fact that the “backing up” of water resulted from th e

construction of a new dam, rather than from the alteration of an existing

dam, played no part in the National Wildlife Federation court's analysis.

46a

B. FERC's Finding of a Need to Withdraw Sixty Million

Gallons of Water per Day

Even if North Carolina's failure to certify the license

amendment were not contrary to the Act, however, I would

vacate the challenged orders and remand this matter to FERC on

the ground that FERC's estimate of the "need" for the fifty-four

million gallons per day to be supplied by the pipeline project

was arbitrary and capricious.

FERC had already reached the conclusion that Virginia

Beach needed to withdraw sixty million gallons of the Roanoke

River per day by October of 1994, when it declared that "[nJo

new analysis" of this estimate was necessary. Scoping Document

2, FERC No.2009-003; Deferred Appendix "D.A." at 2547,

2551. It is hardly surprising, therefore, that FERC's July, 1995

Final Environmental Impact Statement arrived at this precise

estimate of Virginia Beach's "need." Nor is it surprising that

FERC's attempt to disguise the fact that it was "backing into"

this number fails rather badly.

I agree with my colleagues that the first few steps in

FERC's analysis were tolerably reasonable. FERC organized

its analysis into separate projections of the demand for water in

the year 2030 and of regional supply in that year. The basic

structure of the inquiry was sound, as was the projection of the

region's 2030 demand for water. But when FERC turned to the

supply side of the equation, its logic became curiouser and

curiouser. On the apparent assumption that the water supply

from existing sources would remain constant through 2030,

FERC's projection of 2030 supply was based on the water

available from existing sources. Specifically, FERC's supply

estimate was based on the amount the residents of the region

could withdraw from the existing water sources during the worst

47a

drought of record since 1930; this drought occurred in 1930,

and the U.S. Geological Survey estimates that such droughts

may recur at intervals of between thirty and eighty or more

years. The estimated "Water Supply Deficit" for 2030, based

on this drought-adjusted supply, came out to 31.8 million

gallons per day.

Common sense would seem to indicate that the obvious

way to prepare for short- term periods of special water need is

to create water storage systems that can be filled during

nondrought periods, exhausted to meet these short-term needs

when they arise, and refilled when the droughts recede. But

FERC rejected all of the storage options pressed by participants

in the proceedings below, arguing that storage techniques were

irrelevant to its "need" calculation because storage systems do

not constitute "sources" of water, and because they serve only

short-term need. See majority opinion at 1192. Of course, the

fact that storage systems aren't new "sources" of water in the

sense of meeting long-term, continuous demand hardly justifies

FERC's refusal to consider the availability of these systems,

because they just as clearly are precisely suited to serve short-

term periods of special demand that occur at intervals more than

long enough to permit the storage systems to be replenished, and

thus could be used to obviate any increment in the quantity of

water to be constantly supplied to the region to protect it from

droughts of extraordinary severity.

A similar illogic permeates FERC's attempt to explain its

refusal to take account of the water available from the region's

wells. FERC specifically refused to factor in the water available

from two Norfolk wells on the ground that these wells were

meant to be used only during droughts that threaten military

readiness, and FERC likewise thought it unnecessary to consider

the water available from unspecified "emergency wells" in the

48a

region on the ground that their use was restricted to

municipally-declaredemergencies.'' The Corps, FERC noted,

"considers these wells as protection against extreme droughts."

D.A. at 3166. I can only speculate as to what the terms

"municipal emergency" and "extreme drought" are meant to

cover, if not droughts more severe than the worst since 1930.

FERC's reasoning falls far short of providing any rational or

even vaguely comprehensible explanation for its refusal to

integrate into its need calculation the water available from

"emergency" wells and water storage systems--the most

intuitively obvious strategies for dealing with infrequent, short-

term, emergency water needs.

Having rejected the commonplace strategies that would

enable the region to weather droughts, but would not enable

FERC to claim that a pipeline continuously withdrawing sixty

million gallons of water per day was needed, FERC's next step

was to ratchet its "need" estimate up to that amount. For this

final adjustment, FERC set out five reasons for its conclusion

that a second "drought adjustment" was necessary, explaining

that merely covering the 31.8 million gallon per day "deficit"

was insufficient because:

it provides no protection against droughts of greater

severity than those that occurred in the past;

11 The majority asserts that FERC's refusal to consider the water in

these wells in its estimate of the regional supply was appropriate because

these wells may not be available for use by Virginia Beach after next year.

See majority opinion at 1193. But this portion of FERC's analysis was

based on the supply of water available to the region, rather than to Virginia

Beach alone, and therefore it is irrelevant that this emergency supply may

become unavailable to one of the cities in the region.

49a

there is no guarantee that water sharing would occur

among the cities;

severe water use restrictions would continue to place

local users at a public health and safety risk;

future water demands may exceed projections; and

loss of a water supply in this large metropolitan area

would be catastrophic.

D.A. at 3167, see also majority opinion at 1193. For these

"reasons," FERC concluded that it was necessary to jack up the

"need" estimate to include another thirteen to sixty-eight million

gallons per day of continuous supply. But these "reasons"

simply amount to FERC's generalized worry that its entire

analysis leading up the 31.8 million gallon per day "deficit"

might be flawed in such a way as to make its need estimate too

low. If water were an unlimited, free resource, it might seem

appropriate to double the estimate of water "need" in case actual

need were to exceed all expectations, but if water were an

unlimited, free resource, nothing much would turn on whether

FERC's "need" estimate satisfied any baseline standard of

rationality. FERC itself recognizes that the amount of water to

be removed from the river must correspond to a rational

calculation of actual "need," and thus makes a show of reaching

this estimate by using the available data and reasonable

assumptions; it cannot at the end of the game simply knock the

pieces off the chessboard in the name of unforeseen

contingencies and unprecedented emergencies, and still claim

that it did not act arbitrarily or capriciously because it played by

the rules almost to the end.

50a

Because, finally, I believe that the license amendment FERC

approved by its challenged order may not be granted

consistently with § 401(a)(1) of the Clean Water Act unless and

until North Carolina has certified that the activity to be

conducted pursuant to the amendment does not threaten that

State's water quality standards, I would vacate FERC's order

and rehearing order, and remand the matter to FERC with the

instruction that it withhold the amendment pending- North

Carolina's certification. Even if I did not believe that FERC's

failure to require VEPCO to obtain North Carolina's

certification was illegal, I would still vacate these orders on the

ground that they were arbitrary and capricious, and would

remand the matter to FERC for an estimate of Virginia Beach's

"need" for water that gives due consideration to storage options

and "emergency" sources. On both of these grounds, I

respectfully dissent from the majority opinion.

S5la

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 95-1494 September Term, 1996

State of North Carolina,

Petitioner

Vv.

Federal Energy Regulatory Commission,

Respondent

The City of Virginia Beach, Virginia,

Intervener

Consolidated with 95-1500

On Petitions for Review of an Order of the

Federal Energy Regulatory Commission

BEFORE: Wald, Silberman and Sentelle,

Circuit Judges

JUDGMENT

These causes came on to be heard on the petitions for

review of an order of the Federal Energy Regulatory

Commission and were argued by counsel. On consideration

thereof, it is

52a

petitions for review are denied, in accordance with the

opinion for the Court filed herein this date.

FOR THE COURT:

Mark J. Langer, Clerk

By: /s/ Robert A. Bonner

Robert A. Bonner

Deputy Clerk

Date: May 9, 1997

Opinion for the Court filed by Circuit Judge Sentelle.

Dissenting opinion filed by Circuit Judge Wald.

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 95-1494 September Term, 1996

State of North Carolina,

Petitioner

Vv.

Federal Energy Regulatory Commission,

Respondent

The City of Virginia Beach, Virginia,

Intervener

Upon consideration Of the petitions for rehearing filed by

the State of North Carolina and the Roanoke River Basin

Association it i

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 95-1494 September Term, 1996

State of North Carolina,

Petitioner

Federal Energy Regulatory Commission,

Respondent

The City of Virginia Beach, Virginia,

Intervener

Consolidated with 95-1500

BEFORE: Edwards, Chief Judge; Wald, Silberman,

Williams, Ginsburg, Sentelle,

Henderson, Randolph, Rogers, Tatel and

Garland, Circuit Judges

O)'ab) Rm

The Suggestions For Rehearing Ip Banc of the State of

North Carolina and the Roanoke River Basin Association and of

the responses thereto have been circulated to the full court. The

taking of a vote was requested. Thereafter, a majority of the

judges of the court in regular active service did not vote in favor

of the suggestions. Upon consideration of the foregoing, it is

55a

ORDERED that the suggestions be denied.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

By: /s/ Robert A. Bonner

Robert A. Bonner

Deputy Clerk

Circuit Judges Wald and Tatel would grant the suggestions.

Circuit Judge Randolph did not Participate in this matter.

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 95-1494 September Term 1996

State of North Carolina, et al.

Vv.

Federal Energy Regulatory Commission

and consolidated case No. 95-1500

Before: WALD, SILBERMAN, AND SENTELLE,

Circuit Judges

REMAND OF THE RECORD

On September 9, 1996, this Court heard oral argument in

State of North Carolina, et al. v. Federal Energy Regulatory

Commission. It appears from the record, briefs, and oral argument

that the Federal Energy Regulatory Commission("Commission"),

in the proceedings below, declined to decide a question that is of

central importance to this case, and is logically antecedent to

many of the other material issues presented in the case. The

Court, therefore, on its own motion, remands the record to the

Commission with instructions that the Commission supplement

the record with its decision of the question identified below

within 60 days of issuance of this order.

Petitioners have asked this Court to hold that the

Commission violated § 401(a)(1) of the Clean Water Act by its

57a

"Order Approving Non-Project Use of Project Lands and Waters

and Amending License" (“FERC Order") for Project No.

2009-003, a hydropower project straddling the Virginia-North

Carolina border. See Virginia Electric and Power Company,

"Order Approving Non-Project Use of Project Lands and Waters

and Amending License," 72 F.E.R.C. par. 61,075 (July 26, 1995).

The Order amended the project license to permit the city of

Virginia Beach to construct and operate a water intake facility

within the project boundary on the Virginia side, which would

withdraw project waters for transport via a pipeline to Virginia

Beach. The withdrawal of project waters in Virginia would in turn

reduce the amount of water flowing through the project dams in

North Carolina.

Section 401 (a)(1) of the Clean Water Act provides, in

pertinent part:

Any applicant for a Federal license or permit to conduct

any activity including, but not limited to, the construction

or operation of facilities, which may result in any

discharge into the navigable waters, shall provide the

licensing or permitting agency a certification from the

State in which the discharge originates or will originate .

. . that any such discharge will comply with the applicable

provisions of sections 1311, 1312, 1313, 1316, and 1317

of this title .... If the State . . . fails or refuses to act on

a request for certification, within a reasonable period of

time (which shall not exceed one year) after receipt of

such request, the certification requirements of this

subsection shall be waived vith respect to such Federal

application. No license or permit shall be granted until the

certification required by this section has been obtained or

has been waived as provided in the preceding sentence.

58a

Petitioners allege here, as they did before the

Commission, that, by granting a license amendment authorizing

the withdrawal of project waters on the Virginia side, the

Commission violated § 401(a)1) because the proposed

withdrawal of project waters is an "activity . .. which may result

in [a] discharge into the navigable waters" which discharge would

“originate” in North Carolina, and because North Carolina has

neither certified that this discharge would comply with the

applicable sections of the Clean Water Act, nor waived

certification.

In its order, the Commission responded to petitioners’

claim, but expressly declined to decide the question of whether §

401(aX(1) applies to this license amendment to require a

certification from North Carolina. Rather, the Commission quoted

from § 401, then said the following:

However, even assuming, arguendo, that the proposed

amendment to the Project No. 2009 license to

accommodate the construction and operation of Virginia

Beach's water supply project is subject to the provisions

of section 401(a)(1), the amendment does not trigger the

4.38(f)(7\iii) of the Commission'sregulations provides in

pertinent part:

[A]ny application to amend an existing license . .

. Tequires a new request for water quality

certification . . if the amendment would have a

material adverse impact on the water quality in the

The impact of an approximately one percent

reduction in flow releases into the Roanoke River from

59a

the project dam is exhaustively analyzed in the FEIS, as

summarized above and discussed below. We conclude,

based on that analysis, that the amendment to the license

will not have a material adverse impact on the water

quality in the discharge from the project. Accordingly, the

license can be amended without water quality certification

(or waiver thereof) from North Carolina.

FERC Order, 72 F.E.R.C. at 61,393-94.

This language leaves unresolved the question of

whether § 401(a)(1) applies to require a certification from

North Carolina, insofar as the Commission "assum[ed],

arguendo”" that the answer was "yes" and proceeded to rest its

action on Section 4.38(f)(7)(iii) of its regulations. Following

initial briefing and oral argument, the Court believes that in the

interest of judicial economy the Commission should answer

this question before we exercise judicial review over the other

issues of the case.

This Court will retain jurisdiction over this case until

the Commission has supplemented and returned the record with

its answer to the question posed above, at which time

additional briefing or argument may be scheduled.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

By: /s/ Cheri Carter

Deputy Clerk

APPENDIX F

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 95-1494 September Term, 1996

State of North Carolina,

Petitioner

Vv.

Federal Energy Regulatory Commission,

Respondent

The City of Virginia Beach, Virginia,

Intervener

Consolidated with 95-1500

BEFORE: Wald, Silberman and Sentelle,

Circuit Judges

Upon considerationof the motion to modify remand of the

record, it is

ORDERED, on the court's own motion, that the court's

order filed September 11, 1996, remanding the record be

amended as follows:

Page 2, Paragraph 1. line 3

6la

Delete the words:

“proposed withdrawal of project waters”

and insert in lieu thereof:

“alteration of the Project and its operations

resulting from the withdrawal of project waters”

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

By: /s/ Linda Jones

Linda Jones

Deputy Clerk

62a

APPENDIX G

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Virginia Electric and Power ) Project No. 2009-

003

Company )

ERRATA

(August 23, 1995)

ORDER APPROVING NON-PROJECT USE

OF PROJECT LANDS AND WATERS

AND AMENDING LICENSE

(Issued July 26, 1995)

On page 2, section I. BACKGROUND, the third and

fourth sentences should have read as follows: The license is for

a 50-year term, expiring on January 31, 2001. The total capacity

of the project is 277.9 MW, consisting of 100 MW for the

Roanoke Rapids Jevelopmentand 177.9 MW for the Lake Gaston

development.

On pages 23 - 25, ordering paragraph (C) should have

numbered the new license articles as Articles 44, 45, 46, 47 and

48.

Lois D. Cashell

Secretary

63a

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Elizabeth Anne Moler, Chair;

Vicky A. Bailey,

James J. Hoecker,

William L. Massey, and

Donald F. Santa, Jr.

Virginia Electric and Power) Project No. 2009-003

Company

ORDER APPROVING NON-PROJECT USE

OF PROJECT LANDS AND WATERS

AND AMENDING LICENSE

(Issued July 26, 1995)

Virginia Electric and Power Company (Virginia Power)

operates the Gaston and Roanoke Rapids Project No. 2009

pursuant to a license issued by the Commission under Part I of the

Federal Power Act (FPA).' The project is located on the

Roanoke River in Virginia and North Carolina.

On February 20, 1991, Virginia Power filed, on behalf of

the City of Virginia Beach, Virginia, an application for

Commission approval of Virginia Beach's proposal to withdraw

certain water from the project reservoir, Lake Gaston, and to

construct and operate a water intake facility within the project

boundary for that purpose. The water wouid be supplied to

Virginia Beach for consumption.

1 15 U.S.C. §§ 792-823(b).

64a

The Commission published notice of the application. The

states of North Carolina, the Town of Weldon, North Carolina,

Virginia Beach, the Roanoke Rapids Sanitary District, the

Roanoke River Basin Association, the Sierra Club, the North

Carolina Wildlife Federation, and the R. C. Wildlife Club Inc.

filed timely motions to intervene and automatically became

parties to the proceeding by operation of the Commission's Rules

of Practice and Procedure. The National Marine Fisheries Service

(NMFS) and the North Carolina Farm Bureau Federation motions

to intervene out of time were granted by the Secretary on June 20,

1991. These and many other interested persons filed written

comments.

We have carefully considered all of these expressions of

view, and all of the evidence in the voluminous record before us.

For the reasons discussed below, we will approve Virginia

Beach's proposed withdrawal of water from the Project No. 2009

reservoir and will also amend Virginia Power's license as needed

in light of that approval. In reaching this decision, however, we

are very cognizant of the concerns expressed by the other parties

the proceeding. We fully recognize the importance of protecting

the interests of persons living downstream from the project in

North Carolina, as well as those who live in the vicinity of Lake

Gaston. Those interests have been very forcefully and eloquently

brought to our attention by the State of North Carolina and a

multitude of both public officials and private citizens. We believe _

that the conditions attached to our authorizationswill fully protect

those who are so vitally concerned about the water diversion.

I. BACKGROUND

The Commission issued a license to construct and operate

the Roanoke Rapids Project in 1951.2 The license was amended

in 1960 to authorize construction and operation of the Gaston

development.’ The license is for a 50-year term, expiring on

January 24, 2001.‘ The total capacity of the project is 277.9

MW, consisting of 177.9 MW for the Roanoke Rapids

development and 100 MW for the Lake Gaston development.

Virginia Beach's Lake Gaston water supply project will

divert approximately one percent of the average annual flow of

the Roanoke River for consumptive use in Virginia Beach. The

water will be transported to Virginia Beach in a 76-mile-long

pipeline. Virginia Beach will compensate Virginia Power for the

value of the lost electric generation attributable to the water

withdrawn.

The project dams are located in North Carolina. The

project reservoir is located in both North Carolina and Virginia.

: The license was issued by the Commission's predecessor, the

Federal Power Commission. See 10 FPC 1 (1951). The license include

standard articles (L-Form, Articles 1 through 6 and 8 through 18) that are

printed at 23 FPC 537,544 (1960).

> 23 FPC 537. For other amendments to the license, see 16 FPC 862

(1956), 17 FPC 716 (1957), 24 FPC 352 (1960), 31 FPC 1141 (1964) and

52 FPC 1067 (1974).

* On March 27, 1995, Virginia Power filed with the Commission a

Copy of its First Stage Consultation Package, in which it stated that it plans

to file an application for a new license for the project on or before January

31, 1999.

66a

The facilities for supplying water to Virginia Beach will be

located in Virginia.

Under the proposal, Virginia Beach will be permitted to

use project land and water to withdraw up to 60 million gallons

per day (mgd) of water for municipal water supply purposes. The

water from Lake Gaston will supply four Virginia municipalities:

the City of Virginia Beach (48 mgd), the City of Chesapeake (10

mgd), Isle of Wight County (1 mgd), and the Town of Franklin (1

mgd). The 60 mgd withdrawal will increase the treated water safe

yield by only 54 mgd, because of transmission losses associated

with delivery, storage, and treatment of Lake Gaston water.

The parts of the water supply project that will be within

the Project No. 2009 boundary are: two wedge-wire screen intake

assemblies approximately 200 feet from the eastern shoreline of

Pea Hill Cove in Lake Gaston, at an elevation of 185 feet,° with

slot openings of 1.0 millimeter and a maximum velocity through

the slot of 0.5 feet per second (each intake will connect to a

pumping station that will have a design capacity of 60 mgd); a

mitigation facility to enhance walleye spawning in Pea Hill Cove,

consisting of submerged riprap covering 1/3 acre of lake bottom

approximately 600 feet from the intake structure; a boat ramp,

pier, boathouse, and appurtenant facilities along the Pea Hill Cove

shore, to enable inspection and maintenance of Virginia Beach's

in-water facilities and for collection of water quality samples; and

approximately 250 feet of underground 60-inch-diameterconcrete

pipe and associated facilities crossing a minor tributary 40 Pea

Hill Cove, about 4,000 feet east of the pump station on project

lands.

5 All elevations are in feet above mean sea level.

67a

In addition to the facilities within the Project No. 2009

boundary, the water supply project will include a 76-mile-long

60-inch-diameter pipeline, largely underground, which will

convey water from Lake Gaston to the Ennis Pond Channel of

Lake Prince in Suffolk, Virginia, crossing five counties. Lake

Prince is the current location of a raw water intake and

distribution facility operated by the City of Norfolk.

The pipeline will require a permanent right-of-way at least

30 feet wide. Approximately 90 percent of the pipeline will

follow existing railroad (abandoned), water, and electric

transmission line rights-of way. The top of the pipeline will be a

minimum of 36 inches below finished grade to protect against

frost action. The pipeline will include an open air cascading-step

aeration structure near Windsor, Virginia, which will aerate

pipeline water to achieve appropriate dissolved oxygen (DO)

concentrations before the water discharges to Lake Prince.

In addition to the walleye spawning facility described

above, Virginia Beach has agreed to undertake measures to

mitigate environmental impacts arising from construction and

operation of the entire water supply project. Virginia Beach has

purchased rights to approximately 10,200 acre-feet of storage in

Kerr Reservoir (a storage reservoir operated by the U.S. Army

Corps of Engineers and located upstream from Lake Gaston) to

supplement water flows during periods of drought and to mitigate

project impacts on striped bass during spawning periods. Also,

pursuant to the dredge and fill permit issued by the Corps of

Engineer (discussed below), Virginia Beach will create 11.67

acres of wetlands to mitigate any disturbance or destruction of

wetlands associated with pipeline construction.

Virginia Beach's proposal has undergone rigorous

environmental scrutiny and analysis, both by our Commission

68a

and by other federal agencies in related proceedings. On July 23,

1993, the Commission's staff issued a draft Environmental

Assessment (DEA). On June 23, 1994, the staff issued a final

Environmental Assessment (FEA, which recommended

preparation of an Environmental Impact Statement (EIS). On

August Il, 1994, the Commission issued an order confirming

preparation of an EIS.°

On-site scoping meetings for the EIS were held in July

1994.’ The draft EIS (DEIS) was issued on January 27, 1995,

and the final EIS (FEIS) was issued on July 7, 1995. The FEIS

and its conclusions are summarized in the next section of this

order.

In a related proceeding, on May 19, 1994, the Secretary of

Commerce issued his Decision and Findings in the Consistency

Appeal of the Virginia Electric and Power Company from an

Objection by the North Carolina Department of Environment,

Health and Natural Resources. The Secretary determined, among

other things, that the Virginia Beach water supply project is

consistent with the objectives and purposes of the Coastal Zone

practice (see, ¢.g., Pennsylvania Electric Co., 44 FERC 4 61,298 (1988)),

Virginia Power filed an application for approval of a non-project use of

project lands and waters. However, as we have noted (jd. at p. 62,075 n.1),

because Virginia Beach's proposal entails a substantial new use of project

waters, in this case authorization of the non-project use also requires

amendment of the license.

7 On December 22, 1994, the U.S. Court of Appeals for the Fourth

Circuit issued an opinion denying a petition filed by Virginia Beach for a

writ of mandamus, seeking in effect to omit the preparation of an EIS. 42

F.3d 881.

69a

Sa a aa

Management Act (CZMA).° In reaching this conclusion, the

Secretary determined that: (1) the project will foster development

of the coastal zone and coastal zone resources, thus furthering

objectives and purposes of the CZMA; (2) the project's individual

and cumulative adverse effects on the Coastal Zone are

outweighed by its contribution to the national interest; (3) the

project will not violate the Clean Water Act or the Clean Air Act:

and (4) there are no reasonable alternatives available which would

permit the project to be conducted in a manner consistent with the

State of North Carolina's coastal management program.

North Carolina filed a petition for review of the

Secretary's CZMA decision in the U.S. District Court for the

District of Columbia. The court appointed a mediator to facilitate

a settlement between North Carolina and Virginia Beach. As

discussed below, those efforts resulted in a settlement between

those two parties but the settlement did not become effective. The

CZMaA litigation is currently pending before that court.

In another related proceeding, the Corps of Engineers

issued a dredge and fill permit to Virginia Beach, under Section

10 of the Rivers and Harbors Act of 1899° and Section 404 of the

Clean Water Act,"° to construct the proposed water intake at Lake

Gaston and the proposed water pipeline to the vicinity of

8 Pursuant to Section 307 of the Coastal Zone Management Act 16

U.S.C. § 1456(c)(3)(A), a finding of inconsistency would have precluded

the Commission from allowing Project No. 2009 lands and waters to be used

for the water supply project.

9 33 U.S.C. § 403.

10 33 U.S.C. § 1344.

70a

Oooo Ln

Virginia Beach.'' The sufficiency of the Corps' environmental

analysis associated with the issuance of that permit was approved

on court review.’

On April 28, 1995, the Commission's staff sent a letter to

the State Historic Preservation Officer (SHPO) in the Virginia

Department of Historic Resources, concluding that there are no

historic properties within the area of potential effect, which was

defined to be the lands within the project boundary that would be

affected by the proposed construction.'? On May 1, 1995, the

Virginia Department responded with a letter concurring in the

determination that the proposed activity will have no effect on

historic properties, and stating that the requirements of Section

11 The Corps may issue a permit under Section 4 04 of the CWA only

if the activity to be permitted has received water quality certification (or

waiver thereof) under Section 401(a)(1) of the CWA, 33 U.S.C. § 1341.

The Corps’ permit, issued on January 9, 1984, was predicated on a water

quality certification issued by the Virginia Water Control Board to Virginia

Beach on September 12, 1983. Virginia Beach made minor modifications

to its proposal in 1988, which were approved by the Corps on December 17 ,

1992 (see Section 2.4.1 of the FEIS). The water quality certification is

subject to 12 conditions (see the FEIS at page 2-37).

12 See North Carolina v. Hudson, 665 F. Supp. 428 (E.D.N.C. 1987) ;

North Carolina v. Hudson, 731 F. Supp. 1261 (E.D.N.C. 1990); Roanoke

River Basin Association v. Hudson, 940 F.2d 58 (4th Cir. 1991); and Nort h

Carolina v. Virginia Beach, 951 F.2d 596 (4th Cir. 1991).

13 Letter from J. Mark Robinson, Director, Division of Project

Compliance and Administration, to Alexander Wise, Jr., State Historic

Preservation Officer, Department of Historic Resources, Richmond,

Virginia.

Tla

106 of the National Historic Preservation Act of 1966, as

amended, have been met.'4

On April 26, 1995, the Commission issued notice of a

public conference to afford the parties an opportunity to bring to

the Commission's attention any information that they believed to

be pertinent to the procedural schedule for the issuance of the

FEIS and the order on the application. The notice referred to

indications that settlement discussions were in progress. On May

1, 1995, counsel for North Carolina filed a copy of a settlement

between the State of North Carolina and the City of Virginia

Beach. On May 3, 1995, the Commission held a public

conference to discuss future schedules and procedures, at which

time counsel for the applicant and the principal parties in the

proceeding discussed their understanding of the settlement.'*

On May 12, 1995, Virginia Power filed an amendment to

its application, to which was attached a copy of the settlement.

On May 16, 1995, the Commission issued a notice of the

amendment, inviting all interested persons to file comments and

reply comments.

On June 28, 1995, Virginia Beach filed with the

Commission an amended settlementagreement between itself and

North Carolina. By separate letters dated July 6, 1995, North

'* Letter from David H. Burton, Director, Division of Project

Review, Department of Historic Resources, to J. Mark Robinson.

'° The participants in the conference included the mediator, counsel

for Virginia Power, North Carolina, Virginia Beach, Weldon, and the

Roanoke River Basin Association, Congressman L. H. Payne of Virginia,

and a Congressional staff person speaking on behalf of Senators John

Warner and Charles Robb of Virginia.

72a

Carolina and Virginia Beach notified the Commission that the

settlement (with or without the amendment thereto) did not take

effect because the conditions precedent to the settlement did not

occur, and therefore there was no agreement between those two

parties. On July 7, the Commission issued the FEIS.'®

Thereafter, several parties filed procedural motions and responses

that are discussed below.

Virginia Power's amendment to the application states that

it is to be deemed withdrawn in the event of notice to the

Commission that the settlement “failed to become effective in

accordance with its terms.” Such notice having been filed with

the Commission, we deem the May 12 amendment withdrawn.

This order, and the authorization and license amendment

contained herein, are based entirely on the record now before us

as that record was compiled at the Commission. This order

incorporates as appropriate various mitigation measures

voluntarily proposed by Virginia Power in its application,

including measures (discussed below) to fully protect the interests

of North Carolina, but the order is not premised on any

agreements, offers or representations (either express or implied)

that occurred as a part of the settlement process.

16 The Commission delayed issuing the FEIS prior to that date at the

joint request of North Carolina and Virginia Beach, who stated that

premature issuance of the FEIS might disrupt the sequence of conditions

precedent to their settlement's becoming effective. See the joint letter of

June 29, 1995, from counsel for North Carolina and Virginia Beach to the

Commission's Secretary.

17 May 12, 1995 amendment to application at 3, n.1.

73a

II. THE FEIS

The FEIS notes that Virginia Beach is the largest city in

Virginia, with nearly 400,000 residents; that it has no potable

water supply of its own and purchases all of its water from the

adjacent city of Norfolk; and that several droughts over the past

15 years have caused severe water shortages throughout the area.

In response, Virginia Beach has adopted mandatory year-round

water restrictions and imposed a moratorium on extensions of its

water system. Numerous studies have shown that the five-city

area (Virginia Beach, Chesapeake, Norfolk, Portsmouth, and

Suffolk) will need at least an additional 60 mgd of water by the

year 2030.

The FEIS evaluates the five-city area's need for water by

analyzing the supply and demand projections of previous water

supply studies using more recent population and per capita water

use information, and concludes that the five-city area will need

the 60 mgd that would be supplied by the proposed Lake Gaston

diversion.'* The FEIS evaluates other alternatives based on

current economics and engineering data, including: (1)

groundwate

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