## Facts

- In 1924, the Federal Power Commission (FERC’s predecessor) issued the City of Tacoma a “minor part license” authorizing flooding of a small portion of federal forest land as part of the Cushman Hydroelectric Project on Washington’s North Fork Skokomish River.
- The minor part license reflected the agency’s then-narrow view of its licensing jurisdiction; Tacoma constructed and operated the broader project (dams, reservoirs, and hydropower facilities) relying on that licensing approach.
- The license expired in 1974, and Tacoma applied for a new license under § 15 of the Federal Power Act (FPA).
- The relicensing process extended for decades amid major changes in federal environmental and resource-protection law, including NEPA, ESA, NHPA, and CZMA.
- FERC issued a new 40-year license with extensive operational and mitigation conditions addressing instream flows, fish passage, reservation impacts, and ESA-listed species.
- Tacoma argued the conditions were unlawfully burdensome and effectively compelled shutdown or decommissioning.
- The Skokomish Indian Tribe and environmental groups argued FERC inadequately protected tribal and environmental interests and misapplied several statutes.
- FERC attempted to impose a unilateral 60-day deadline on the Secretary of the Interior to submit mandatory FPA § 4(e) conditions for protection and utilization of the Skokomish Reservation.
- Multiple parties filed consolidated petitions for review challenging aspects of FERC’s relicensing orders.

## Issues

1. Whether the 1924 “minor part license” was ultra vires, undermining FERC’s ability to relicense the project under FPA § 15.
2. Whether FERC’s interpretation of FPA § 15 permitting relicensing upon expiration of a minor part license is reasonable and entitled to Chevron deference.
3. Whether FERC had statutory authority to impose a 60-day deadline on Interior’s submission of mandatory § 4(e) reservation-protection conditions.
4. Whether Interior’s § 4(e) authority was limited to mitigating impacts from facilities physically on the reservation (e.g., access road and transmission line) or could address broader project effects on reservation protection and utilization.
5. Whether FERC satisfied process and consultation duties under the NHPA and reasonably concluded supplemental CZMA consistency certification was unnecessary.
6. Whether FERC could rely on ESA biological opinions from NMFS and FWS in imposing license conditions.
7. Whether the FPA implicitly authorizes FERC, in appropriate circumstances, to require cessation of hydropower operations.

## Decision

- The court denied the petitions in part, granted the petitions in part, and remanded for further proceedings without vacating the license.
- The 1924 minor part license was not ultra vires; it was issued within the agency’s statutory authority even if based on an overly narrow jurisdictional view.
- FERC’s interpretation of FPA § 15 to permit relicensing upon expiration of a minor part license was reasonable and received Chevron deference.
- FERC lacked authority to impose a unilateral 60-day limitation on Interior’s submission of mandatory § 4(e) conditions; the matter was remanded for reconsideration without that constraint.
- Interior’s § 4(e) authority was not confined to mitigating only the reservation road and transmission line impacts; it could impose conditions necessary for adequate reservation protection and utilization.
- FERC complied with the NHPA and reasonably determined that supplemental CZMA certification was not required.
- FERC was justified in relying on ESA biological opinions prepared by NMFS and FWS.
- Congress implicitly extended to FERC the power to shut down hydroelectric projects when warranted under the statutory scheme (without holding FERC ordered shutdown here).

## Legal Principles

- Agency action is not ultra vires merely because it rested on an erroneous interpretation of statutory scope; jurisdiction exists where the agency acted within its delegated power to issue the relevant class of licenses.
- Under Chevron, when the FPA is ambiguous on relicensing mechanics for minor part licenses, a reasonable FERC interpretation receives deference.
- FPA § 4(e) makes Interior’s reservation-protection conditions mandatory components of the license; FERC cannot curtail that delegated authority by imposing deadlines absent statutory authorization.
- Interior’s § 4(e) conditions may address any project impacts bearing on “adequate protection and utilization” of the reservation, not only impacts from facilities physically located on reservation land.
- NHPA compliance is assessed through fulfillment of required consultative and evaluative processes rather than substantive outcomes.
- FERC may rely on ESA biological opinions of expert wildlife agencies unless shown arbitrary or capricious on the administrative record.
- The FPA’s structure and purposes can support implied Commission authority to require cessation of project operations in appropriate circumstances.

## Conclusion

The D.C. Circuit largely upheld FERC’s relicensing of Tacoma’s Cushman Project, including deference to FERC’s § 15 interpretation and approvals under NHPA, CZMA, and ESA, but held FERC unlawfully restricted Interior’s mandatory § 4(e) reservation-protection role by imposing a 60-day deadline; the court remanded to correct that error while leaving the license in effect.


City of Tacoma, Wash. v. FERC, 460 F.3d 53 (D.C. Cir. 2006)