United States Court of Appeals For the First Circuit

Nos. 00-1909, 01-2025, 03-2055

JAMES M. KNOTT, SR.; RIVERDALE POWER & ELECTRIC CO., INC.,

Petitioners,

v.

FEDERAL ENERGY REGULATORY COMMISSION,

Respondent.

PETITION FOR REVIEW OF ORDERS OF THE FEDERAL ENERGY REGULATORY COMMISSION

Before

Boudin, Chief Judge,

Lynch, Circuit Judge,

and Schwarzer,* Senior District Judge.

Jamy Buchanan Madeja, with whom Buchanan & Associates was on brief, for petitioners. Robert H. Solomon, Deputy Solicitor, with whom Cynthia A. Marlette, General Counsel, and Dennis Lane, Solicitor were on brief, for respondent.

October 25, 2004

* Of the Northern District of California, sitting by designation. SCHWARZER, Senior District Judge. James M. Knott, Sr.

and the Riverdale Power & Electric Co. (“Knott”) petition for

review of three orders by the Federal Energy Regulatory Commission

(“FERC”). The orders assert mandatory licensing authority over

Knott’s hydroelectric project, require him to install gages to

measure stream flow at the project, and direct him to submit

project design revisions on microfiche cards. Knott alleges that

FERC improperly asserted jurisdiction over the project, that the

required compliance would effect a Fifth Amendment taking of his

property, that FERC improperly denied him an evidentiary hearing,

and that FERC unreasonably ordered gages and microfiche cards. For

the reasons stated, we deny Knott’s petition for review.

FACTUAL AND PROCEDURAL BACKGROUND

Originally built in the 19th century, Knott’s Riverdale

Mills Project (“Project”) is located on the Blackstone River in

Worcester County, Massachusetts. The Project includes a 142-foot-

long, 10-foot-high dam, an 11.8-acre water impoundment, and a 150-

kilowatt generator located within a mill building. Knott purchased

the Project, which had been abandoned since 1976, in 1979. Through

a separate entity, the Riverdale Mills Corporation, Knott uses the

hydropower generated by the Project to produce steel wire for use

in lobster traps.

-2- The Federal Power Act (“FPA”), 16 U.S.C. §§ 791a–825r,

grants FERC two types of licensing authority over hydroelectric

projects. Section 4(e) of the Act authorizes FERC to grant

voluntary licenses for any project that develops power in any body

of water over which Congress has Commerce Clause authority.

(e). Section 23(b)(1) requires the mandatory

licensing of projects: (1) located on “any of the navigable waters

of the United States;” or (2) located on a body of water over which

Congress has Commerce Clause authority where project construction

occurred on or after August 26, 1935, and the project affects the

interests of interstate or foreign commerce.

(1).

In 1985, Knott applied for and received a voluntary

license to operate the Project, subject to numerous conditions.

Because Knott received a voluntary license, FERC had no occasion to

determine whether it had mandatory licensing jurisdiction over the

Project.

In early 1999 FERC received letters alleging extreme

fluctuations in the Blackstone River below the Project and noted a

concern by state agencies and conservation groups that the

fluctuations might be the result of Knott’s failure to operate his

Project to allow a continuous stream flow. In a series of letters

FERC repeatedly requested stream flow gaging records, and Knott

repeatedly responded that he had no obligation to install stream

flow gages. In December 1999 FERC issued a compliance order

-3- requiring Knott to file a plan for installing stream flow gages at

the Project, in accordance with Article 6 of Knott’s license.1

Knott filed a request for rehearing, which FERC denied on May 22,

2000.

In November 2000 Knott filed for FERC approval to install

an unrelated “flood flow modular gate.” FERC approved the

proposal, but required Knott to file revised drawings of the gate

on aperture cards (3 1/4" x 7") on silver or gelatin 35 mm

microfilm. Knott sought rehearing of this requirement, which FERC

denied. FERC noted that its regulations require exhibit drawings

to be microfilmed onto aperture cards, that aperture cards provide

an inexpensive and durable information medium, and that some of

Knott’s paper drawings were inaccurate. Knott timely petitioned

for review.

During the course of his earlier proceedings, Knott

contended that FERC had no jurisdiction over the Project and, thus,

could not compel him to comply with either his license or agency

regulations. In response, FERC instituted a proceeding to

reexamine the basis for its jurisdiction. In November 2000 FERC

staff prepared a supplemental study of the navigability of the

Blackstone River. The study described in detail a four-day

1 The terms and conditions of the voluntary license provide that “[t]he Licensee shall install and thereafter maintain gages and stream-gaging stations for the purpose of determining the stage and flow of the stream or streams on which the project is located.” App. 106.

-4- expedition in September 2000, organized by local businesses,

environmental groups, and governmental bodies, in which

approximately thirty canoeists traversed the river from Worcester,

past the Project, into Rhode Island and then Narragansett Bay.

Based on this expedition, which was accomplished with a minimum of

overland transport, or “portages,” FERC staff concluded that the

Blackstone River is suitable for interstate use by recreational

boaters and is thus a navigable waterway within the meaning of FPA

§ 3(8). See

(8) (defining “navigable waters”).

FERC therefore concluded that the Project is subject to its

mandatory licensing authority, and ordered Knott to abide by its

orders and all license terms and conditions.

Knott filed a request for rehearing, which FERC denied.

FERC upheld the finding of the staff navigability report and also

found, as a separate basis for jurisdiction, that (1) the

Blackstone River has an effect on interstate commerce; (2) the

Project has an effect on interstate commerce; and (3) Project

construction had occurred since August 1935 because Knott had

substantially rebuilt Project facilities and returned them to

operation after the Project had been abandoned in 1976. FERC

additionally rejected Knott’s takings and due process arguments.

Knott timely petitioned for review.

-5- DISCUSSION

I. STANDARD OF REVIEW

“We review FERC’s findings of fact for ‘substantial

evidence,’ and if so supported, such findings are conclusive.”

Thomas Hodgson & Sons v. FERC,

(1st Cir. 1995);

16 U.S.C. § 825l. We “defer to the agency’s expertise . . . so

long as its decision is supported by ‘substantial evidence’ in the

record and reached by ‘reasoned decisionmaking,’ including an

examination of the relevant data and a reasoned explanation

supported by a stated connection between the facts found and the

choice made.” Northeast Utils. Serv. Co. v. FERC,

,

944 (1st Cir. 1993) (citation omitted).

“‘Pure’ legal errors require no deference to agency

expertise, and are reviewed de novo.” Id. “Questions involving an

interpretation of the FPA involve a de novo determination by the

court of congressional intent; if that intent is ambiguous, FERC’s

conclusion will only be rejected if it is unreasonable.” Id.

(citing Chevron USA v. Natural Res. Def. Council,

(1984)).

We review FERC orders under the Administrative Procedure

Act,

, and must reverse an agency action that is

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” Wis. Valley Improvement Co. v. FERC,

(D.C. Cir. 2001).

-6- II. MANDATORY JURISDICTION

Knott challenges both grounds upon which FERC based its

finding of mandatory jurisdiction: (1) that the Blackstone River

is navigable; and (2) that Knott’s reconstruction work after a

period of abandonment sufficed to confer jurisdiction. Because we

hold that FERC properly based its jurisdiction on a finding of

navigability, we do not reach the issues of abandonment and

reconstruction.

The FPA, adopted in 1920, defines “navigable waters” as:

[T]hose parts of streams or other bodies of water over which Congress has [Commerce Clause] jurisdiction . . . and which either in their natural or improved condition notwithstanding interruptions between the navigable parts of such streams or waters by falls, shallows, or rapids compelling land carriage, are used or suitable for use for the transportation of persons or property in interstate or foreign commerce, including therein all such interrupting falls, shallows, or rapids.

(8) (emphases added). Based on this definition, and

case law interpreting it, FERC correctly found that the September

2000 canoe trip demonstrated that the Blackstone River and Project

site were “suitable for use” in interstate commerce notwithstanding

the shallows “compelling land carriage.”

Knott first argues that FERC’s authority must be limited

to waterways used for actual, ongoing interstate commerce, “not

hypothetical possibilities of unrealized commerce.” This argument

is unavailing. The statutory language applies to waters in use or

-7- “suitable for use” for personal transportation, notwithstanding

interruptions.

The Supreme Court has held that the absence of

actual commercial traffic does not bar “a conclusion of

navigability where personal or private use by boats demonstrates

the availability of the stream for the simpler types of commercial

navigation.” United States v. Appalachian Elec. Power Co.,

(1940); see also United States v. Utah,

(1931) (“The extent of existing commerce is not the test.”).

Irregular canoe trips may support a finding of navigability. See

FPL Energy Me. Hydro LLC v. FERC,

, 1157 (D.C. Cir.

2002) (upholding a determination of navigability based on three

canoe trips made for the purpose of litigation).

Nor does the fact that the Blackstone River required

portages defeat a finding of navigability. The statute explicitly

contemplates that waterways may be navigable “notwithstanding

interruptions between the navigable parts of such streams or waters

by falls, shallows, or rapids compelling land carriage.”

(8). “Such interruptions do not render an otherwise navigable

stream non-navigable.” Consol. Hydro, Inc. v. FERC,

(D.C. Cir. 1992) (citing cases).2

2 Knott’s selective citations do not undermine these principles. Knott incorrectly relies on Miami Valley Conservancy Dist. v. Alexander,

(6th Cir. 1982), a case challenging Army Corps of Engineers jurisdiction under the Rivers and Harbors Act of 1899, and LeBlanc v. Cleveland,

(2nd Cir. 1999), a personal injury suit arising under general admiralty law. Neither case evaluated or applied FPA § 3(8).

-8- Given this consensus, FERC’s interpretation of the FPA

concerning the standard for navigability is reasonable and entitled

to deference. The D.C. Circuit recently explained that:

As the [FPA] does not define when a waterway is “suitable for use . . . in . . . commerce,” we assume that Congress intended FERC to address the ambiguity in the statute and develop an appropriate test. See United States v. Mead Corp.,

(2001). We find that FERC’s interpretation of navigability under the FPA, which was based on test canoe trips and the Stream’s physical characteristics . . . was reasonable and entitled to deference.

FPL, 287 F.3d at 1156. FERC thus applied the proper legal test

required by the plain language of § 3(8) and the relevant case law.

Substantial evidence supports FERC’s factual

determination that the Blackstone River is suitable “for the

simpler types of commercial navigation.” Appalachian Elec. Power

Co.,

. FERC properly relied on the September 2000

canoe expedition, which was accomplished with “few problems,”

“relatively easy” portages, and “a minimum of difficulty.” Knott

asserts that the river is prone to dry or low flows and has many

natural and constructed obstacles. However, the statutory

Knott also relies on Leonard Murphy, 98 F.E.R.C. 61,302 (2002), but that decision reaffirmed that “[s]ection 3(8) provides that the stream may be found navigable if it was, is, or could be made suitable for such use. Such suitability may be shown through non-commercial or recreational uses of the stream.” Id. at 62,295. Duke Power, 74 F.E.R.C. 61,291 (1996), does not address the navigability question. Knott’s remaining citations predate the Court’s landmark decision in Appalachian Electric Power Co.,

(1940), a case Knott does not address.

-9- definition of navigability explicitly allows for “land carriage”

around “interruptions.”

(8). Knott does not

otherwise seriously dispute that the canoeists successfully

navigated the waterway. He questions the participants’ motivation,

but this is irrelevant; what matters is that the participants

completed the journey, regardless of motivation. See FPL, 287 F.3d

at 1157 (affirming jurisdiction based on canoe trips made for the

purpose of litigation).3

FERC’s finding that the Blackstone River is navigable, as

defined by

(8), is supported by substantial

evidence. We therefore hold that FERC properly asserted mandatory

jurisdiction over the Project.

III. KNOTT’S CONSTITUTIONAL RIGHTS

Knott argues that a finding of mandatory licensing

jurisdiction effects a taking of his private property rights, and

that FERC violated his right to due process by denying him an

evidentiary hearing on the issue of staff bias.

3 Knott also asserts that FERC has repeatedly reversed itself in determining the navigability of the Blackstone River, thus undermining its most recent order. This argument lacks foundation. FERC’s 1987 order issuing Knott a voluntary license made no finding on the navigability issue; FERC’s instant order thus presents no conflict. FERC did reverse itself with regard to a project located upstream from Knott’s facility, but only after the September 2000 canoe expedition demonstrated the navigability of the river at both locations.

-10- A. Fifth Amendment Takings Clause

Knott alleges that mandatory FERC jurisdiction will

deprive him of all economically viable use of his deeded right to

divert water from the Blackstone River “as he shall see fit.” We

lack jurisdiction to hear Knott’s taking claim because the Tucker

Act,

(a)(1), and “Little Tucker Act,”

(a)(2), vest exclusive jurisdiction in the Court of Federal

Claims (the district courts have concurrent jurisdiction over

claims for $10,000 or less) to render judgment upon any claim

against the United States for money damages that “is founded upon

the Constitution, or any Act of Congress or any regulation of an

executive department.”

(a)(1). Although Knott’s

petition for review does not specifically seek monetary

compensation, the Supreme Court has stated that “taking claims

against the Federal Government are premature until the property

owner has availed itself of the process provided by the Tucker

Act.” Preseault v. ICC,

(1990). See also

Ruckelshaus v. Monsanto Co.,

(1984) (“Equitable

relief is not available to enjoin an alleged taking of private

property for public use, duly authorized by law, when a suit for

compensation can be brought against the sovereign subsequent to the

taking.”).

“Accordingly, a claim for just compensation under the

Takings Clause must be brought to the Court of Federal Claims in

-11- the first instance, unless Congress has withdrawn the Tucker Act

grant of jurisdiction in the relevant statute.” E. Enters. v.

Apfel,

(1998). The courts have rejected an

argument that the FPA represents such a withdrawal of jurisdiction.

See Wis. Valley Improvement Co. v. FERC,

(D.C.

Cir. 2001) (holding that while petitioner seeking review of FERC

orders imposing conditions on its license “may be able to advance

a colorable Takings-Clause claim, it is not within our jurisdiction

to adjudicate it”). Knott may thus file a takings action in the

Court of Federal Claims, but may not pursue it on a petition for

review brought under 16 U.S.C. § 825l.

B. Evidentiary hearing

Knott further alleges that FERC improperly denied him a

“true” evidentiary hearing with regard to his “repeated allegations

of official government witness bias and factual inaccuracy.” We

recently rejected a similar claim, and explained that:

The term “hearing” is notoriously malleable, but what petitioners got here was not only a hearing but a species of evidentiary hearing which is now quite common in utility and carrier regulation. Very extensive evidentiary submissions were made by both sides in the form of affidavits from experts and others, together with extensive written argument . . . .

Cent. Me. Power Co. v. FERC,

(1st Cir. 2001)

(citation omitted). We reconfirmed that a “true” hearing before an

administrative law judge is unnecessary if any genuine issues of

-12- material fact can be “adequately resolved on the written record.”

(citing cases).

The factual issues Knott sought to raise are not issues

material to the dispute at hand. The alleged biases of certain

FERC staff are irrelevant to a finding of navigability or an order

to comply with the terms of Knott’s voluntary license. Knott does

not dispute that the September 2000 canoeists successfully

navigated the Blackstone River and Knott’s voluntary license,

explicitly requiring him to install gages, predates the alleged

biased acts and, thus, cannot be their result. Knott’s arguments

were thus properly addressed by FERC through a paper hearing.

IV. ORDERS REQUIRING COMPLIANCE WITH LICENSE AND REGULATIONS

Knott asserts that FERC acted unreasonably in demanding

that he file project drawings on microfilm. Under the arbitrary

and capricious standard, we consider whether an agency’s decision

is “based on consideration of the relevant factors” and articulates

a “rational connection between the facts found and the choice

made.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc.,

(1974) (citation omitted). FERC noted that its

regulations require exhibit drawings to be microfilmed onto

aperture cards,

, and that “[a]perture cards

provide a durable medium for storing information about hydropower

project features and are relatively inexpensive to produce, costing

about $25-$50 for a set-up fee and one dollar for each original.”

-13- FERC also noted that Knott had modified his Project, rendering some

of his previous drawings inaccurate. Knott describes the microfilm

requirement as “antiquated” and lobbies for an “[i]nfusion of

modern technology,” but offers nothing further. FERC’s decision

requiring records to be submitted on microfilm, in conformity with

its existing record-keeping system and because of the medium’s

durability and relatively inexpensive cost, is not overly

burdensome and cannot be considered arbitrary or capricious.

Knott also argues that FERC acted arbitrarily in ordering

him to install stream flow gages. He contends that such gages are

not necessary because other gages exist, and that the license terms

requiring such gages do not apply to his Project. These arguments

are also unpersuasive. FERC specifically rejected Knott’s argument

that other gages sufficed to address the issue, finding that those

gages were too distant to measure impacts from the Project.

Knott’s license explicitly requires him to “install and thereafter

maintain gages and stream-gaging stations for the purpose of

determining the stage and flow of the stream or streams on which

the project is located” and to minimize fluctuations such that

“flow in the Blackstone River, as measured immediately below the

project approximates the instantaneous sum of inflow to the project

reservoir” (emphasis added). 39 F.E.R.C. 62,308. FERC decided to

enforce these conditions after receiving letters alleging extreme

fluctuations in the Blackstone River below the Project, and

-14- expressions of concern by state agencies and conservation groups

that the fluctuations might be the result of Knott’s failure to

operate his Project to allow a continuous stream flow. Knott’s

contention that the terms and conditions of the license do not

apply to his Project are without merit; the order issuing the

license explicitly states that the license is subject to such

terms. 39 F.E.R.C. 62,308. FERC’s orders for compliance with these

terms are reasonable. See Clifton Power Corp. v. FERC,

(D.C. Cir. 1996) (“It is simply not unreasonable for

FERC to require [licensee] to install [stream gaging] devices to

determine whether the dam is operating in the mode described in its

license application.”).

CONCLUSION

For the reasons stated, we DENY Knott’s petition for

review.

PETITION DENIED.

-15-