Earlier this month, the D.C. Circuit vacated a FERC order renewing a hydroelectric license issued to Alabama Power Company.  FERC had granted Alabama Power Company a new 30-year license in 2013 to continue operating seven hydropower developments along the Coosa River (collectively, the Coosa Project), over the objections of a number of public and private conservation groups (collectively, the Conservation Groups).

The relicensing of hydropower projects requires action from a number of federal and state agencies.  The dispute in this particular case revolved around the interaction of three federal statutory schemes:

• The National Environmental Policy Act (NEPA).  Federal agencies are obligated under NEPA to analyze and consider the environmental consequences of proposed major federal actions.  NEPA does not, however, prohibit federal agencies from taking actions that have adverse environmental effects, so long as they have analyzed and considered these effects.  An agency must prepare a detailed Environmental Impact Statement for actions that will have a significant impact on the environment.  But, an agency may first conduct an Environmental Assessment to determine whether the proposed federal action will significantly impact the environment and thus requires an Environmental Impact Statement.
• The Endangered Species Act.  The Endangered Species Act is administered by the Department of the Interior’s Fish and Wildlife Service (FWS), which lists animal and plant species as threatened or endangered.  Federal agencies must consult with FWS to ensure that any action “authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species.”  As part of this consultation process, FWS issues a biological opinion explaining whether the action is likely to jeopardize the continued existence of listed species.  If it determines that the action is not likely to jeopardize the continued existence of a species, but will result in incidental “taking” (defined broadly to include harassing, harming, pursuing, hunting, shooting, wounding, killing, trapping, capturing, or collecting), the biological opinion must specify reasonable and prudent measures to minimize the impacts of such incidental taking and set terms and conditions for the agency action to go forward.
• The Federal Power Act.  FERC is required by the Federal Power Act to ensure that any licensed hydropower project is “best adapted to a comprehensive plan for improving or developing a waterway or waterways.”  In doing so, FERC is to give “equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife (including related spawning grounds and habitat), the protection of recreational opportunities, and the preservation of other aspects of environmental quality.”

The Conservation Groups filed petitions for review of FERC’s decision to grant a new license for the Coosa River Project, alleging violations of each of these laws.  The D.C. Circuit agreed that the relicensing of the project violated NEPA and the Endangered Species Act, and that these violations also meant that FERC had violated its Federal Power Act obligations.

The NEPA issue centered on FERC’s conclusion that relicensing would not have any significant environmental impacts and its decision not to issue an Environmental Impact Statement.  The D.C. Circuit identified two fatal flaws with FERC’s NEPA analysis.  First, FERC failed to consider and address multiple indications that the project could have significant environmental impacts, such as substantial effects on fish passage and dissolved oxygen levels.  Second, NEPA requires an agency to consider the cumulative impacts of past, present, and reasonably foreseeable future actions as part of its analysis, to ensure that actions are not segmented into separate, smaller actions that individually have only insignificant environmental impacts.  Here, the D.C. Circuit concluded that FERC did not properly consider cumulative impacts because it largely ignored the effects of past actions in this part of the Coosa River and did not offer any substantive analysis of how the impacts of those past actions would interact with those resulting from the issuance of a new 30-year license.

For the Endangered Species Act issue, the Conservation Groups argued that FWS’s biological opinion was legally deficient.  The D.C. Circuit agreed, finding that the biological opinion failed to incorporate degraded baseline conditions into its analysis.  For example, FWS largely omitted discussion of fish passage and seasonal flows from its analysis, arguing that these are part of the historically degraded condition of the relevant river segment and would remain unaffected by the relicensing.  The D.C. Circuit, however, explained that FWS was nevertheless required by law to account for the effects of degraded conditions on threatened species.  The court also concluded that the biological opinion failed to show a rational connection between its factual findings and the conclusion that the Coosa River Project will not jeopardize listed species or adversely modify critical habitat, because the opinion estimated that 90 to 100 percent of several listed species in certain sections could be “taken” yet concluded that the relicensing was not likely to jeopardize listed species or adversely modify critical habitat.

The court vacated the licensing decision and remanded the case back to FERC for further proceedings.