## Facts

- L.S. Starrett Co. operated a small hydroelectric project at a dam on the non-navigable Millers River in Massachusetts.
- In 1992, FERC determined the project did not require a federal license because there had been no “post-1935 construction” triggering Federal Power Act (FPA) § 23(b).
- In 2006, one generator failed. Starrett planned to install a new, more powerful generator and perform associated work at the powerhouse.
- The planned replacement would increase total installed generating capacity from 362 kW to 448 kW, and total actual capacity from 192 kW to 278 kW.
- Starrett ordered the generator and began preparatory work without seeking a FERC license, characterizing the work as repair.
- In 2009, FERC concluded the project would require a license under FPA § 23(b) because the planned changes were post-1935 construction and the project affected interstate commerce, including through cumulative effects with other facilities.
- Starrett petitioned for judicial review, conceding the river was within Congress’s Commerce Clause power but disputing the “construction” and interstate-commerce elements.

## Issues

1. Whether replacing the failed generator with a higher-capacity unit and related modifications constituted “post-1935 construction” under FPA § 23(b) rather than non-jurisdictional repair.
2. Whether FERC permissibly found the project “affects the interests of interstate or foreign commerce” by considering the project’s aggregated impact with other hydroelectric facilities on interstate power flows.
3. Whether FERC’s statutory interpretations and factual determinations were entitled to deference and supported by substantial evidence.

## Decision

- The First Circuit denied the petition for review and affirmed FERC’s orders.
- The court upheld FERC’s determination that the planned generator replacement and related work constituted post-1935 construction.
- The court upheld FERC’s finding that the project affected interstate commerce, including under a cumulative-effects approach tied to the interstate electricity system.
- The court concluded FERC’s interpretations were reasonable and its determinations were supported by the administrative record.

## Legal Principles

- Under FPA § 23(b), a hydroelectric project on a Commerce Clause stream requires licensing when post-1935 construction is undertaken and the project affects interstate or foreign commerce.
- FERC may reasonably treat substantial alterations and increases in installed generating capacity as “construction,” even if the owner characterizes the work as repair or replacement.
- FERC may use installed capacity, rather than site-constrained actual output, as a rational metric for assessing the significance of modifications and a project’s generating potential.
- For the interstate-commerce element, FERC may consider the aggregate effect of multiple small hydro projects on interstate electricity supply and grid operations; an individual project’s standalone effect need not be large.
- Courts generally defer to FERC’s reasonable interpretations of ambiguous FPA terms and uphold FERC’s technical and factual determinations when supported by substantial evidence and a rational explanation.

## Conclusion

The court sustained FERC’s assertion of licensing jurisdiction over Starrett’s project because the planned generator upgrade was post-1935 construction that increased installed capacity and, when considered with similar facilities, affected interstate commerce within the meaning of FPA § 23(b).


L.S. Starrett Co. v. FERC, 650 F.3d 19 (1st Cir. 2011)