The court of appeals affirmed FERC's decision. At the outset, the court observed that when an agency determines that its actions do not constitute a major Federal action, the reviewing court decides whether that determination was reasonable under the circumstances. 959 F.2d at 512. According to the court, major Federal actions include non-Federal actions if the project cannot begin or continue without prior Federal agency approval and if the agency possesses "actual power to control the non-federal activity." Id. (quoting Sierra Club v. Hodel, 848 F.2d 1068, 1089 (10th Cir. 1988)).
Petitioners argued that a contractual agreement between facility owners and the Potomac Electric Power Company required FERC to render certification and, but for the certification, the project could not proceed. Id. at 512-13. The court found, however, that the project could have continued without FERC certification because the certification was merely a ministerial act in which FERC had no discretion. Under FERC regulations, if a facility meets certain enumerated criteria, it is automatically eligible for benefits under PURPA. The facility was not required to apply for certification and, indeed, could have relied on self certification. Id. at 513.
Moreover, the court found that FERC did not possess actual power to approve construction or operation of the facility but, in fact, had merely determined that the facility met the regulatory qualifications PURPA established. According to the court, FERC merely regulates the rates paid to the qualifying facility and does not control project financing, construction, or operation. The court, therefore, found FERC did not have power over the project.
The court applied similar reasoning with regard to the NHPA claim, taking the position that the standard for triggering NHPA is similar to that of NEPA. The court interpreted NHPA as having a narrow reach, finding that an agency must comply only if it has the authority to license or approve expenditures for a project. Id. at 515. Thus, because there was neither Federal funding nor licensing involved in the Sugarloaf case, the court determined that the certification was not an undertaking and that NHPA did not apply.
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