The Federal Energy Regulatory Commission (“FERC”) issues licenses needed to construct and operate hydroelectric dams pursuant to the Federal Power Act (“FPA”; 16 U.S.C. § 791a, et seq). Under long-standing law, and with the limited exception of state-issued water quality certifications, the FPA “occupies the field” of licensing a hydroelectric dam, and bars environmental review of the federal licensing procedure in state courts; this preemption is necessary because recognizing a “dual final authority” for such projects would be “unworkable.” (First Iowa Hydro-Electric Cooperative v. Federal Power Com. (1946) 328 U.S. 152.) States have limited authority under the Clean Water Act (33 U.S.C. § 1341) to impose stricter water quality conditions than are federally required on a FERC license, through the section 401 water quality certification process, but must act on a project applicant’s certification request within one year or certification is deemed waived. (33 U.S.C. § 401(a)(1); Alcoa Power Generating Inc. v. FERC (D.C. Cir. 2011) 643 F.3d 963, 972.) Further, any disputes concerning the Federal licensing process or the adequacy of “required studies” for that process (including “environmental studies” serving as the predicate for the state’s water quality certification conditions) are subject to FERC’s review. (18 C.F.R. part 4, 34(i)(b)(vii) (2003).)
The Third District Court of Appeal applied this law in a published opinion, filed December 20, 2018, which dismissed consolidated appeals in CEQA actions brought by plaintiffs Butte and Plumas Counties, with directions to the trial court to vacate its judgment and dismiss the actions for lack of subject matter jurisdiction. County of Butte v. Department of Water Resources; County of Plumas, et al. v. Department of Water Resources (State Water Contractors, Inc., et al, Real Parties in Interest) (2018) ___ Cal.App.5th ___. The CEQA actions challenged the adequacy of a Draft EIR (“DEIR”) submitted to FERC in connection with the Department of Water Resources’ (“DWR”) application to extend its federal license to operate the massive Oroville Dam and its facilities, which were built in the 1960’s as part of the State Water Project (“SWP”), and sought to stay the license procedure. The actions contended the DEIR failed to analyze the impacts of climate change on the dam’s operations for its many purposes (e.g., irrigation, flood control, water supply, fish and wildlife protection, and recreation), and plaintiffs asserted that state courts had jurisdiction over these claims pursuant to CEQA.
The Third District disagreed, holding “plaintiffs cannot challenge the environmental sufficiency of the [environmental review studies for the licensure project] in the state courts because jurisdiction to review the matter lies with FERC and plaintiffs did not seek federal review as required by 18 Code of Federal regulations part 4.34(i)(6)(vii) (2003)” and thus “failed to exhaust their federal administrative remedies.” The court also clarified that the state project subject to environmental review under CEQA was not the existing Oroville Dam and its facilities and their continued operation, but new actions to be taken to provide additional mitigation for habitat loss caused by those facilities’ construction. Those new proposed actions would increase habitat along the lower reaches of the Feather River, open a valve to access colder water at the bottom of Lake Oroville to meet hatchery temperature requirements, and regulate water flow from the dam; only the implementation of these new conditions as ultimately set forth in the SWRCB’s water quality certification “Certificate,” some of which were to be completed years after FERC’s license is issued, would be subject to CEQA review in the state courts. The purposes of the CEQA document in the federal record of proceedings before FERC were essentially to satisfy the state’s obligation to provide environmental information to FERC on potential effects of the new license terms and conditions, and to provide an analysis supporting required NEPA review and the SWRCB’s changes in the water quality certification, i.e., analyzing potential effects of their implementation.
While the case has many factual and legal details I won’t go into here, its primary teaching is this: CEQA litigation in state courts cannot be used prior to issuance of a FERC license and the subsequent implementation of its terms and conditions to challenge the environmental studies and thus to delay hydroelectric dam relicensing by FERC.
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