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Scenic Hudson Preservation Conference v. Federal Power Commission

decided: October 22, 1971.

SCENIC HUDSON PRESERVATION CONFERENCE ET AL., PETITIONERS,
v.
FEDERAL POWER COMMISSION, RESPONDENT, AND CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., TOWN OF CORNWALL AND VILLAGE OF CORNWALL, INTERVENORS



Friendly, Chief Judge, and Hays and Oakes, Circuit Judges. Oakes, Circuit Judge (dissenting). Timbers, Circuit Judge (dissenting).

Author: Hays

HAYS, Circuit Judge:

By Opinion No. 584, dated August 19, 1970, the Federal Power Commission granted a license to Consolidated Edison Company of New York, Inc., to construct, operate, and maintain a pumped storage project along the western shore of the Hudson River at Cornwall, New York. Eight parties*fn1 have filed petitions pursuant to Section 313(b) of the Federal Power Act, 16 U.S.C. § 825 l (b) (1964) seeking to set aside this order on various grounds. The issues raised by these petitions are both complex and important, involving, as they do, the conflict between the needs of a highly technological society and the increased awareness of environmental considerations.

The opinion and order of the Federal Power Commission presented here for review follow by five years the earlier remand by this court in Scenic Hudson Preservation Conference v. Federal Power Commission, 354 F.2d 608 (2d Cir. 1965), cert. denied sub nom., Consolidated Edison Co. of New York v. Scenic Hudson Preservation Conference, 384 U.S. 941, 86 S. Ct. 1462, 16 L. Ed. 2d 540 (1966), in which the petitions challenged three 1965 orders of the Commission licensing the project and refusing to reopen proceedings and take additional evidence on various issues. In the intervening period extensive hearings have been held, two decisions have been rendered by a Hearing Examiner and the Commission has issued its own opinion.

The new proceedings have produced a project that is different in some ways from the project that was before this court in 1965.

The functional elements of the project remain the same. It is still to be the largest pumped storage plant in the world and its principal function, to provide energy for peak load periods, is unchanged. The proposed location is the same as that previously proposed, the Hudson River at approximately river mile 56.5, about 40 miles north of New York City at Storm King Mountain near Cornwall, New York, "an area of unique beauty and major historical significance." Scenic Hudson, supra at 613. The project would consist, as did the earlier version, of an upper reservoir, a tunnel between the reservoir and the powerhouse, and the powerhouse itself, a pumping-generation station located at the riverside containing eight reversible pumpturbine and motor generation units as well as switching gear and primary transmission lines. However, unlike the project presented in 1965, which provided for a powerhouse that was 80 per cent underground, the powerhouse now licensed by the Commission is to be entirely underground.

The upper reservoir would be situated approximately 10,000 feet south and west of the powerhouse in a natural mountain basin behind Storm King Mountain. When filled to its maximum elevation it would have a surface area of 240 acres. It would be formed and enclosed by five earth and rock dikes. The lower reservoir would be the Hudson River itself.

The capacity of the eight pumping-generating units in the powerhouse would be 2,000 megawatts, or 2,000,000 kilowatts.*fn2 However, the project would be constructed in a manner which would permit enlargement to a maximum of 3,000 mw. Eight discharge tunnels from the reversible pump-turbine and motor generation units would convey water between each turbine and an open tailrace leading to the river. The tailrace with abutments at both ends would run 685 feet along the river. A fish protective device is to be located in front of the tailrace intake.

The third major facet of the project relates to transmission facilities. Submarine cable installations and spare pipes would transmit the energy generated in the powerhouse under the Hudson River and would continue underground on the east side of the river for approximately 1.6 miles to a point out of sight of the river. At this point overhead transmission would commence and would continue for approximately 9.2 miles through Putnam County to Con Edison's existing Pleasant Valley-Millwood-Sprain Brook transmission right of way. Changes have been made in the proposed route and the towns of Cortlandt, Putnam Valley and Yorktown, which challenged the route before this court in 1965, no longer do so.

The project would function in the manner described in our earlier opinion. Scenic Hudson, supra at 612. The units in the powerhouse would use off-peak energy generated not at the project but at other facilities in the Con Ed system to pump water from the Hudson River to the upper reservoir. When needed for peak power production, that is, during hours of highest kilowatt demand, the units would reverse direction of rotation and provide power derived from the fall of the water released into the river from the upper reservoir. This power would then be transmitted through the transmission system described above. "The water in the upper reservoir may be regarded as the equivalent of stored electrical energy; in effect, Consolidated Edison wishes to create a huge storage battery at Cornwall." Scenic Hudson, supra at 612.

A visitor's information center and picnic and parking facilities, proposed in the original project for the powerhouse site, have been eliminated. In their place, a 57 acre, mile-long park is to be constructed along the riverfront. Additional recreational facilities are to be provided at a 36 acre scenic overlook inland from the project with access from the existing State Highway 9-W.

As an alternative the Commission has licensed the powerhouse aspect of the project at a location within Palisades Interstate Park, approximately one and one-half miles downstream from the Storm King Mountain site. Construction at the Palisades site is to be considered approved by the Commission only if construction at the Storm King Mountain site "shall be precluded on a petition to review this order."

The petitions in this case are occasioned by the "grave concern" aroused among conservationist groups by the Storm King project. Scenic Hudson, supra at 612. The petitions allege lack of compliance with the terms of our earlier remand, absence of substantial evidence to support the Commission's findings, and failure to comply with statutory mandates. We find, however, that the Commission has fully complied with our earlier mandate and with the applicable statutes and that its findings are supported by substantial evidence. In view of the extensive powers delegated to the Commission and the limited scope of review entrusted to this court, it is our duty to deny the petitions.

I.

Congress has given the Federal Power Commission broad responsibility for the development of national policies in the area of electric power. In Section 4(e) of the Federal Power Act, 16 U.S.C. § 797(e) (1964), the Commission is authorized

"To issue licenses * * * for the purpose of constructing, operating, and maintaining dams, water conduits, resservoirs, power houses, transmission lines or other project works necessary or convenient for the development and improvement of navigation and for the development, transmission, and utilization of power across, along, from, or in any of the streams or other bodies of water over which Congress has jurisdiction * * *."

There are statutory limitations on the issuance of such licenses. Section 10(a) of the Act, 16 U.S.C. § 803(a) (1964), requires

"That the project adopted * * * shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of waterpower development, and for other beneficial public uses, including recreational purposes * * *."

The Commission is now obliged also to consider the environmental factors covered by the National Environmental Policy Act, 42 U.S.C. §§ 4321 et seq. (§ 1970).

In the Federal Power Act Congress granted the Commission "sweeping authority and a specific planning responsibility." The Act "was the outgrowth of a widely supported effort on the part of conservationists to secure the enactment of a complete scheme of national regulation which would promote the comprehensive development of the nation's water resources." Scenic Hudson, supra at 613 and authorities cited there.

The scope of review of the Commission's exercise of its authority and responsibility is narrowly limited. The Act, § 313(b), provides that "the finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive." 16 U.S.C. § 825 l (b). In assessing the factual contentions raised in the petitions, this court's authority "is essentially narrow and circumscribed." Permian Basin Area Rate Cases, 390 U.S. 747, 766, 88 S. Ct. 1344, 1360, 20 L. Ed. 2d 312 (1968). The licensing of projects such as the Storm King plant and the evaluation of their environmental impact has been entrusted to "the informed judgment of the Commission, and not to the preferences of reviewing courts." Id. at 767, 88 S. Ct. at 1360.

The statutory standard of substantial evidence is "something less than the weight of the evidence and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 86 S. Ct. 1018, 1026, 16 L. Ed. 2d 131 (1966). In a recent case involving these principles of court review, the Supreme Court said:

"Insofar as the Court of Appeals' opinion implies that there was not substantial evidence to support a finding of some benefits, it is clearly wrong. And insofar as the court's opinion implies that the responsibilities assumed by Gainesville in combination with the benefits found to accrue to Florida Power were insufficient to constitute 'compensation * * * reasonably due,' the Court of Appeals overstepped the role of the judiciary. Congress ordained that that determination should be made, in the first instance, by the Commission, and on the record made in this case, the Court of Appeals erred in not deferring to the Commission's expert judgment." Gainesville Utilities Department v. Florida Power Corp., 402 U.S. 515, 527, 91 S. Ct. 1592, 1599, 29 L. Ed. 2d 74 (1971).

Petitioners would have us reject these familiar principles because, they argue, different standards ought to prevail with respect to issues arising in an environmental context.*fn3 There is an effort to find a basis for this position in our earlier remand in Scenic Hudson and in cases which have taken a similar approach.*fn4 See, e. g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971); Udall v. Federal Power Commission, 387 U.S. 428, 87 S. Ct. 1712, 18 L. Ed. 2d 869 (1967); Zabel v. Tabb, 430 F.2d 199, 213 (5th Cir. 1970), cert. denied, 401 U.S. 910, 91 S. Ct. 873, 27 L. Ed. 2d 808 (1971).

To read these cases as sanctioning a new standard of judicial review for findings on matters of environmental policy is to misconstrue both the holdings in the cases and the nature of our remand in Scenic Hudson. An element common to all these cases was the failure of an agency or other governmental authority to give adequate consideration to the environmental factors in the situations with which they were presented. In Citizens to Preserve Overton Park, Inc. v. Volpe, supra, 401 U.S. at 416, 91 S. Ct. at 824, for example, the Court remanded the case to the district court to determine whether the Secretary of Transportation's decision "was based on a consideration of the relevant factors." The Court pointed out that "although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency." Id. In Udall v. Federal Power Commission, supra, 387 U.S. at 450-451, 87 S. Ct. 1712, the remand to the Commission instructed it to explore the "neglected phases of the cases" and to make "an informed judgment on these phases of the cases." The Court explicitly stated that it expressed "no opinion on the merits." It added, "It is not our task to determine whether any dam at all should be built or whether if one is authorized it should be private or public." Id. at 450, 87 S. Ct. at 1724.

In our opinion in Scenic Hudson, supra, remanding the 1965 orders of the Commission, we were careful to make it clear that we were raising no question of change in the basic standard of administrative review and that the purpose of our remand was only to require the proper performance of its functions by the Commission. We said:

"While the courts have no authority to concern themselves with the policies of the Commission, it is their duty to see to it that the Commission's decisions receive that careful consideration which the statute contemplates." Id. at 612 of 354 F.2d.

"This court cannot and should not attempt to substitute its judgment for that of the Commission. But we must decide whether the Commission has correctly discharged its duties. * * The Commission must see to it that the record is complete." Id., at 620.

Where the Commission has considered all relevant factors, and where the challenged findings, based on such full consideration, are supported by substantial evidence, we will not allow our personal views as to the desirability of the result reached by the Commission to influence us in our decision. We now turn therefore to an examination of whether our remand has been complied with, whether there is substantial evidence to support the Commission's decisions on the issues remanded and other challenged issues, and whether the Commission has complied with all applicable statutory requirements.

II.

In our opinion remanding this proceeding to the Commission we directed the Commission to weigh a number of factors which we believed had not been given adequate consideration. Holding that "recreational purposes" in § 10(a) of the Act (16 U.S.C. § 803(a) (1964)) "encompasses the conservation of natural resources, the maintenance of natural beauty, and the preservation of historic sites," we required the Commission "properly [to] weigh each [such] factor." Scenic Hudson, supra at 614. We held "that the Commission is under a statutory duty to give full consideration to alternative plans" (Id. at 617). We criticized the Commission's refusal to receive "proffered information on fish protective devices and underground transmission facilities. * * *" Id. at 620, and directed it to "take the whole fisheries question into consideration before deciding whether the Storm King project is to be licensed." (Id. at 624). We ordered the Commission to weigh "the aesthetic advantages of underground transmission lines against the economic disadvantages" (Id. at 623). In sum the Commission was admonished to "reexamine all questions on which we have found the record insufficient and all related matters." (Id. at 624).

On January 25, 1966, acting on our remand, the Commission ordered that further proceedings be commenced before a Hearing Examiner. In that order the Commission said:

"We do not understand the Court's order as restricting any further proceedings to the specific matters on which it found the present record insufficient to support our previous determinations and we do not believe it would be in the public interest to do so. The record in the first two hearings in the proceeding will, of course, be part of the present hearing. But all parties will be free to offer timely presentations of evidence on all matters relevant to the question whether a license should be granted."

The hearings were commenced on November 14, 1966 and with several brief recesses, were concluded on May 23, 1967. A motion of the State of Connecticut's Board of Fisheries and Game to intervene was subsequently granted, and further hearings were held on the issue of the protection of fish. These hearings were closed on October 16, 1967. On August 6, 1968, the Hearing Examiner issued his Initial Decision recommending that Con Ed be granted a 50 year license for the project. On November 19, 1968, the proceedings were reopened in response to a petition by the City of New York to intervene and introduce evidence on possible hazards to its Catskill Aqueduct. At this proceeding, further evidence was taken on the alternative site in Palisades Interstate Park. The Hearing Examiner issued a Supplemental Initial Decision on December 23, 1969, which concluded that the project did not endanger the Aqueduct and that the alternative site was "not a proper and preferable alternative location for applicant's projected project." In all other respects, except for minor items,*fn5 the Initial Decision remained unchanged.

The proceedings on remand involved 100 hearing days, the testimony of some sixty expert witnesses, and the introduction of 675 exhibits. The record comprises more than 19,000 pages. Both the Hearing Examiner and the Commissioners arranged with the parties to visit the proposed site and the surrounding area before rendering their decisions.

On August 19, 1970, the Commission issued its decision. In its opinion the Commission reviewed the power needs of the area served by Con Ed and considered possible alternatives to the Storm King project in terms of reliability, cost, air and noise pollution, and overall environmental impact. Concluding that there was no satisfactory alternative, the Commission evaluated the environmental effects of the project itself. It held that the scenic impact would be minimal, that no historic site would be adversely affected, that the fish would be adequately protected and that the proposed park and scenic overlook would enhance recreational facilities. The Commission found that further undergrounding of transmission lines would result in unreliability in the delivery of power and would be too costly. The Commission determined that construction of the project would entail no appreciable hazard to the Aqueduct.*fn6

We find that the proceedings of the Commission and its report meet the objections upon the basis of which we remanded the earlier determination. Examination of the Commission's conclusions and the evidence on which the conclusions are based establishes that the Commission has complied with our instructions and that the evidence supporting the Commission's conclusions amply meets the statutory requirement of substantiality.

A. " Alternative plans "

The Commission gave detailed and comprehensive consideration to alternatives. Its initial statement of the basic issues of the case before it and the manner of its subsequent dealing with those issues demonstrates that there is no sound basis for petitioners' contention that the Commission's approach was too narrow. The Commission said:

"The weighing of social values required by the concept of the public convenience and necessity in this case involves on the one hand the alleged greater and much needed reliability, economic savings, and anti-air pollution benefits which this project offers compared with any feasible alternative, and on the other hand the alleged aesthetic and environmental detriment the project would impose on an area of great scenic, natural and historic value.

Simply put, the issue is whether the project offers substantially more reliable electric service as well as cheaper electricity generated in a cleaner manner than any other feasible alternative and, if so, whether the project will create detrimental aesthetic and environmental conditions of such degree as to lead on balance to a judgment that the public convenience and necessity would be better served by denying the application herein."

In deciding this issue the Commission proceeded to evaluate the needs of Con Ed and the probability that the proposed project would supply these needs in a more desirable way than would the possible alternatives.

The Con Ed system serves the densely populated area of New York City's five boroughs and part of Westchester County. The electric load requirements that Con Ed must meet are constantly growing. The Commission found that in 1970 Con Ed's capacity would be approximately 10,126 mw, plus 520 mw contracted from other utilities. However, much of the system is outdated and about 2,000 mw of its present capacity are due to be eliminated by 1978. And yet by 1979, Con Edison's annual peak load*fn7 will be approximately 10,850 mw.

Two factors were cited by the Commission as necessary to insure availability of the required amount of energy and to prevent major power failures, such as that which occurred in the northeast United States in 1965, as well as the lesser "brownouts" and "blackouts" which have become all too frequent in the New York area. The first of these two factors is the existence of adequate power facilities to meet the growing demand for electrical energy in the area served. The second is an adequate "reserve," a part of which must be what is called a "spinning reserve."*fn8 This "spinning reserve" is provided by units operating at less than full capacity but synchronized to the system so that the energy generated by them will all be immediately available to meet an increase in loads. It is this latter need that the Storm King project is designed to meet.

The Commission found that in order to prevent a major power failure the "spinning reserve" must be fully available within two minutes.*fn9 The Commission expressed the opinion, based on the record before it, that "if Cornwall or a pumped storage equivalent with its very fast pick-up characteristics had been available the blackout of 1965 might have been avoided."

The Commission examined in detail the possibility that there were alternatives more desirable than the Storm King project which would be capable of meeting these needs. Our earlier opinion required the Commission to consider the use of gas turbines. The Commission determined that using gas turbines alone would not be a feasible alternative to a pumped storage unit since the turbines would be less reliable and more expensive. Gas turbines, the Commission found, take between three minutes and ten seconds and four minutes to be brought to full operation from a cold start. Moreover, the Commission stated, unlike pumped storage units, gas turbines have a relatively low capacity for storage of rotational energy, and thus do not provide as substantial a cushioning effect in the event of a disturbance.

Gas turbines were found to be considerably more expensive to operate than pumped storage units. The Commission adopted the conclusion of a staff study that the operating costs of a pumped storage project would be at least $119,000,000 less over a twenty-year period than the operating costs of gas turbines.*fn10 It would cost about $38,000,000 less, the study estimated, to construct the pumped storage project than to provide the gas turbines.

The Commission also considered the possibilities of a project composed entirely of nuclear units but found that such an alternative would be inadequate for reasons which are fully developed in the report. The Commission was of the opinion that a nuclear-gas turbine combination*fn11

"suffers from the shortcomings inherent in its components, that is, unless the gas turbines are spinning they cannot be brought into operation soon enough to meet emergencies and the nuclear component has relatively slow response characteristics which when combined with the forced outage reduces the reliability quotient of such a combination."

"The reliability quotient of a nuclear-gas turbine combination," the Commission said, "is far less than Cornwall's."

The Commission estimated that construction of the nuclear-gas turbine alternative would cost $158,794,000 more than Cornwall. On the basis of these findings the Commission said:

"We do not accept the proposition put forth by Scenic Hudson that this extra cost is de minimis when spread among all of Con Ed's customers. There are often good reasons why it is in the public interest to utilize a more expensive alternative. In appropriate cases the extra cost may even be substantial. But whether substantial or not, the extra cost must be justified by a showing that the alternative is in the public interest. There has been no showing that a combination nuclear-gas turbine alternative offers any advantages or indeed is even reasonably equivalent to Cornwall."

The Commission also considered the feasibility of using power purchased from outside sources to supply Con Ed's needs as an alternative to building the Storm King plant. It found that the maximum amount that could be assured would be slightly in excess of 1000 mw.*fn12 Thus this alternative, the Commission held, would not provide sufficient power.

Petitioners do not suggest that interconnections alone could provide a feasible solution. Scenic Hudson proposed a combination of 810 mw of purchased power with gas turbines. However since the gas turbines in this combination would not be used to generate spinning reserves but to take on the load, the Commission found that this alternative would not serve the principal function for which the Storm King project is designed:

"In view of the assumption inherent in this suggestion by Scenic Hudson that the gas turbines would not operate as a spinning reserve, the spinning reserve would have to come from the purchase sources if this alternative is to be comparable to Cornwall. Accordingly this possibility cannot be deemed reliable, since such purchases would ...


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