In Lowman Associates and Burke Dam Hydro Associates the Commission rejected applications for a second permit filed by previous permit holders who had not demonstrated that under the prior permits they had pursued their proposals in good faith and with due diligence. Whatever applicability these cases may otherwise have to the facts of this proceeding is obviated by the fact that, despite Grover's attempts to equate the two, UAH and Hoe are not interchangeable. Hoe was not formally involved with UAH until after the statutory deadline to commence construction of the project,17 and we will not ascribe to Hoe the failings of UAH in not timely developing the Braendly Project.

Grover next contends that the Director erred by issuing the permit to Hoe on grounds of municipal preference. The permit order stated that the permit was being issued "to the applicant whose application was filed first in time," i.e., to Hoe, but referred, incorrectly, to the tiebreaker municipal preference provisions of section 7(a) of the FPA and 18 C.F.R. § 4.37(b)(3) (1990), rather than to the first-to-file tiebreaker rule, which is codified at 18 C.F.R. §4.37(b)(2). The incorrect citations are harmless error, since the correct result-grant of the first-filed permit application-was obtained.

Grover also argues that language in the Commission's orders that terminated UAH's license casts "considerable doubt" about Hoe's credi(Footnote Continued)

which provides that, unless otherwise ordered by the Commission, a request for rehearing does not stay a Commission order. Thus, once the Commission issues an order terminating a license, new applications for the site may be filed without awaiting Commission action on any request for rehearing. The effect of Grover's argument would be that a request for rehearing would serve to stay the original order, in that no applications for the site would be entertained until after rehearing.

15 37 FERC 61,115 (1986).

16 47 FERC 61,449 (1989).

17 As noted, Hoe signed his partnership agreement with UAH on February 10, 1988. The construction deadline was January 1, 1988. Grover asserts (rehearing request at 13) that giving Hoe a permit allows "Hoe and interests affiliated with him" to continue to "bank" the project site. Grover offers no support for the implicit allegation that UAH is an affiliate of Hoe in the Project No. 10745 application.

bility, 18 and asserts that in comparing permit proposals the Commission must consider the "ability or fitness" of the applicants. However, the Commission's evaluation of the adequacy of UAH's arguments in defense of its license cannot be extrapolated to put in question Hoe's general credibility as an applicant.

Grover also cites UAH's assertion on rehearing of the license termination order that it "would not be economic for it to apply for a new license."19 Grover argues that as a consequence the Commission "cannot find that it is equally likely that Robert Hoe will develop this project as expeditiously as will [Grover]." However, neither the ability of the applicant (and Hoe is not the same applicant as UAH) to finance the project 20 nor the likely speed of subsequent development of the licensed project is a determinative consideration at the permit stage.

Grover's final argument is that the Commission should have summarily rejected Hoe's application as contrary to public policy, because it breached Hoe's fiduciary duty to UAH as its managing partner, inasmuch as UAH also had a permit application on file. Grover's allegations regarding any breach of fiduciary duty are a matter for resolution in the appropriate state forum.21 In any event, UAH withdrew its permit application. Grover's alternative argument is that, if Hoe's permit application did not violate his fiduciary duty to UAH, then it necessarily follows that Hoe and UAH are seeking to subvert the Commission's policies by using Hoe as a proxy for UAH. However, since we have determined that Hoe is not the equivalent of UAH for purposes of deciding whether Hoe may obtain a permit after termination of UAH's license, Grover's argument fails. 22

18 Grover presumably refers to Commission language, quoted in Grover's rehearing request (at 5), which states (46 FERC at p. 61,592) that "UAH's allegation that it commenced construction by the January 1 deadline lacks credible substantiation. ... We find that UAH's shifting account of when turbine construction commenced undermines the credibility of its assertions."

19 Grover cites pp. 26-27 of UAH's March 23, 1989 request for rehearing, filed on March 23, 1989, in Project No. 3512.

20 See, e.g., Eastern States Energy Resources, Inc., 22 FERC ¶ 61,185 (1983). Also, lack of requisite property rights is not determinative. See, e.g., Michael E. Springer, 24 FERC ¶ 61,027 (1983).

21 Cf. Banister Development, Ltd., 27 FERC 61,026 (1984).

22 Grover suggests that it is in any event inappropriate to give Hoe an additional 36 months to study development of the Braendly Dam site, which Hoe's

the United States. Second, he determined that, because of the abandonment of the project as a hydroelectric generating project for approximately 20 years, and because the project generates electricity as part of an interconnected electric grid in interstate commerce,3 it is required to be licensed pursuant to the fourth of the above-enumerated standards. We agree with both of the Director's findings.

Ordinary maintenance, repair, and reconstruction activity with respect to a project constructed before 1935 and located on a nonnavigable water do not bring a project within the mandatory licensing provisions of section 23(b)(1) of the FPA. See Puget Sound Power & Light Co. v. Federal Power Commission, 557 F.2d 1311 (9th Cir. 1977). However, the pre-1935 construction exception protects only operating projects. Where a project has been abandoned, there is no basis for a claim that the operator retained operating rights, even if the operator restores the project to a condition identical to its pre-abandonment status. In Aquenergy Systems, Inc. v. FERC, 857 F.2d 227, 230 (4th Cir. 1988), the court held that the FPA "was designed to keep in operation projects existing in 1935, but not to restore abandoned rights."

In North American Hydro, Inc., 49 FERC ¶61,386 (1989), the Commission held that NAH's proposed Delhi Project was required to be licensed, because use of a predecessor project to generate electricity had been abandoned for 16 years, even though the dam and other facilities at the project site had been maintained and operated (for water control purposes) during that period, and even though the successor project would use the same (as refurbished) turbines and generators.*

We find the facts and circumstances surrounding the Big Falls Project to be substantially indistinguishable from the facts and

3 The Director found that the project is connected to the Lake Superior District Power Company system, which is interconnected with Dairyland Power Corp., Minnesota Power & Light Company, Northern States Power, and Dahlberg Light & Power, which are in turn interconnected with other systems forming an interstate grid.

* See also Theodore A. and Holly S. Keck, 51 FERC 61,018 (1990).

5 See, e.g., Wisconsin Public Service Corp. v. FPC, 147 F.2d 743, 245-57 (7th Cir. 1945), cert. denied, 325 U.S. 880 (1945); Connecticut Light and Power Co. v. FPC, 557 F.2d 349, 355-56 (2d Cir. 1977), and Puget Sound Power & Light Co. v. FPC, 644 F.2d 785, 788-90 (9th Cir. 1981).

6311 U.S. 377, 405-06 (1940).

7 The Navigability of the Little Wolf River (Big Falls Hydropower Project), Waupaca County, Wisconsin (October 25, 1988). The Report was placed in

circumstances in North American Hydro. In both cases, the hydroelectric function of the project was abandoned for a number of years even though the dam and other facilities were maintained and operated for other purposes. Accordingly, for the reasons discussed in North American Hydro, we conclude that the holding in Aquenergy applies in the same manner, and therefore that the Big Falls Project is required to be licensed.

We also find that there is ample evidence in the record before us to indicate that the Big Falls Project is located on a navigable water of the United States within the meaning of section 3(8) of the FPA. It is well settled that the transport of logs or timber products in interstate commerce can establish the navigability of a waterway.5 In United States v. Appalachian Electric Power Co., the Court stated, "It is obvious that the uses to which the streams may be put vary from the carriage of ocean liners to the floating out of logs; .... The tests as to navigability must take these variations into consideration."

The Navigability Report' relied upon by the Director in his order discusses the extensive history of logging in the Fox-Wolf River Basin. Timber was cut along the upper Wolf River, and along tributaries of the Wolf, including the Little Wolf. The town of Big Falls was originally created as a lumbering town, and WallSpaulding Lumber Company operated a mill on the Little Wolf at Big Falls from 1882 until at least 1910.9 A visitor to the Little Wolf River in Waupaca County in 1879 observed that for one and one-half miles the river was "crowded with logs rolled upon the ice from both banks.... 'Millions of feet'. . . were to be seen at that single stretch of river."

10

In 1853, the Wisconsin legislature declared the Little Wolf River in Waupaca County to be

the public file for this proceeding on January 12, 1989.

8

See Malcom Rosholt, The Wisconsin Logging Book 1839-1939 (1980) at 128-132, 139, 145-47; Federal Power Commission, "Report on the Navigable Status of the Fox-Wolf River Basin-Wisconsin" (Chicago Regional Office, 1983) at 18-23; Malcom Rosholt, A Photo Album of the Past (Rosholt, Wisc. 1976), Vol. I at 5, 37-41, 51; Vol. II at 25-31; Joseph Schafer, The Winnebago-Horicon Basin: A Type Study in Western History (1937); William F. Raney, "Pine Lumbering in Wisconsin," Wisconsin Magazine of History at 19 (Sept. 1935).

9 Rosholt, A Photo Album of the Past, supra, Vol. I at 51; Robert E. Gard and L.G. Sorden, The Romance of Wisconsin Place Names at 11.

Corporation (Central Vermont), the owner of the project, to obtain a license for the continued operation of the project.2 Central Vermont filed a timely request for rehearing of the Director's order.3

Section 23(b)(1) requires the licensing of a project if it (1) is located on a navigable water of the United States, (2) occupies public lands or reservations of the United States, (3) utilizes surplus water or water power from a government dam, or (4) is located on a body of water over which Congress has Commerce Clause jurisdiction, project construction occurred on or after August 26, 1935, and the Commission has not determined that the project does not affect the interests of interstate or foreign commerce. The Silver Lake Project does not utilize surplus water from a government dam. The Director made no finding as to the navigability of Sucker Brook.

The Silver Lake Project consists of three dams and three reservoirs, penstocks, a powerhouse, and a transmission line. The 855-footlong, 61-foot-high Sugar Hill Dam forms a 74-acre reservoir which serves as a storage facility for the project. Water flows from this reservoir down Sucker Brook to the 660-footlong, 36-foot-high Sucker Brook Diversion Dam. The Sucker Brook Dam forms a threeacre storage reservoir and also diverts the flows of Sucker and Dutton Brooks into a 7,920-footlong penstock which leads to Silver Lake. A 5,280-foot-long penstock carries water from the 280-foot-long, 30-foot-high Silver Lake Dam to the powerhouse, which is located on Sucker Brook about 2,000 feet above the brook's mouth at Lake Dunmore. The powerhouse contains one turbine/generator with an installed capacity of 2.2 megawatts.

All of the project works except the powerhouse and a small portion of the penstock leading to the powerhouse are within the perimeter boundaries of the Green Mountain National

2 The status of the Silver Lake Project was investigated due to the high hazard rating given by the Corps of Engineers' inspection program to some of the project structures. Central Vermont's request for a stay of the filing requirements of the Director's order pending rehearing was granted except for the dam safety filings required by Part 12 of the Commission's regulations. Central Vermont is in compliance with the filing requirements of Part 12.

3 On December 3, 1990, the Commission issued a final rule amending section 385.1902 of the Commission's procedural regulations to delete appeals of staff action. The amendment became effective on its date of issuance. Pursuant to section 385.1902(c), all appeals of staff action pending on that date are deemed to be requests for rehearing. Accordingly, the appeal filed by Central Vermont on October 31, 1988 will be treated as a request for rehearing of the Director's September 29, 1988 order.

Forest. Each of the dams and reservoirs is an inholding (i.e. an "island") of privately owned land which is within the National Forest but is not part of the National Forest lands. The Sucker Brook from Sugar Hill Dam to Sucker Brook Diversion Dam, the penstock from Sucker Brook Diversion Dam to Silver Lake, and most of the penstock from Silver Lake to the powerhouse runs across National Forest land.

The Director found that the project is located on federal lands within the Green Mountain National Forest, and that the project is located on waters over which the Congress has Commerce Clause jurisdiction, project construction occurred after 1935, and the project affects interstate commerce.5

Discussion

Central Vermont states that, while the Silver Lake Project is located within the bounds of the Green Mountain National Forest, it is not located upon federal land because it is located on rights-of-way owned by Central Vermont. According to Central Vermont, its predecessors-in-interest obtained the necessary fee ownerships, easements, and rights-of-way for the project prior to the Forest Service's condemnation of the land that became the Green Mountain National Forest.

A review of the deeds submitted by Central Vermont on rehearing shows that all of the necessary water rights and interests in land for this project were acquired by Hortonia Power Company in 1916 and 1917. In 1926 these rights and properties were purchased by the Public Service Corporation of Vermont, which in 1929 was purchased by Central Vermont. In 1953 the United States took, through condemnation, the lands around the project which are now part of the Green Mountain National Forest. This taking was expressly subject to the existing rights of Central Vermont.6

Lake Dunmore is drained by the Leicester River. The Leicester River is a tributary of Otter Creek, which in turn empties into Lake Champlain.

5 Sucker Brook is a Commerce Clause waterway because it is a headwater of Otter Creek, a navigable waterway of the United States. Otter Creek was authorized by Congress for improvement by the United States in the Rivers and Harbors Act of 1872, ch. 416, 17 Stat. 372 (1872). The Silver Lake Project affects interstate and foreign commerce because Central Vermont's transmission system is interconnected with an interstate grid and with a Canadian grid.

6 See exhibit I of Central Vermont's request for rehearing. (U.S. v. 2,235.8 Acres of Land, Civil No. 1027 (D. Vt. Feb. 13, 1951)).