L.S. Starrett Co. v. FERC

650 F.3d 19 (2011)

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L.S. Starrett Co. v. FERC

United States Court of Appeals for the First Circuit
650 F.3d 19 (2011)

Facts

L.S. Starrett Co. (Starrett) (plaintiff) operated a hydroelectric power-generation facility (the project) on a nonnavigable river in Massachusetts. The project included a reservoir, a dam, two powerhouses with turbine generators, and other facilities. Until 2006, the generators’ combined installed capacity was 362 kilowatts, and the combined actual capacity was 192 kilowatts. The Federal Energy Regulatory Commission (FERC) (defendant) had memorialized the project’s 362-kilowatt installed capacity in a 1992 decision. In 2006, one of Starrett’s generators failed, and Starrett decided to install a new generator with an installed and actual capacity of 198 kilowatts. Had that installation occurred, the project’s total installed capacity would have been 448 kilowatts, and the total actual capacity would have been 278 kilowatts. Starrett ordered the generator and began making improvements to one powerhouse in preparation for installation. Although hydroelectric-facility operators were required to seek licensing from FERC under § 23(b) of the Federal Power Act (FPA) before performing certain work, Starrett believed that it did not need FERC licensing for the generator-replacement work. In 2009, however, FERC became aware of Starrett’s plans and notified Starrett that the proposed work required a license. FERC’s licensing jurisdiction under § 23(b) extended to projects that (1) were located on a stream over which Congress has Commerce Clause jurisdiction, (2) were constructed or modified on or after August 26, 1935, and (3) affected the interests of interstate or foreign commerce. Starrett admitted that the project was located on a Commerce Clause stream. However, Starrett asserted that the proposed work was not construction because the work was only repair work, and the 278-kilowatt actual capacity after the proposed work would have been below the 362-kilowatt installed capacity memorialized in the 1992 decision. FERC disagreed and found that the work was construction because the work would have increased the project’s installed capacity. The commission also found that the proposed work affected interstate commerce because the project was part of a group of dams that collectively impacted interstate commerce by producing power that the operators otherwise would have received from the interstate power grid. Starrett challenged FERC’s decision in federal appellate court. The court considered whether FERC had appropriately (1) characterized Starrett’s proposed work as construction and (2) relied on a cumulative-effect theory to find an effect on interstate commerce.

Rule of Law

Issue

Holding and Reasoning (Torruella, J.)

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