Cal. State Water Res. Control Bd. v. Fed. Energy Regulatory Comm'n

43 F.4th 920

CALIFORNIA STATE WATER RESOURCES CONTROL BOARD, Petitioner,

v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent,Nevada Irrigation District, Intervenor.

South Yuba River Citizens League; California Sportfishing Protection Alliance ; Friends of the River; Mother Lode Chapter of the Sierra Club, Petitioners,

v.Federal Energy Regulatory Commission, Respondent,Nevada Irrigation District, Intervenor.

California State Water Resources Control Board, Petitioner,

v.Federal Energy Regulatory Commission, Respondent,Yuba County Water Agency, Respondent-Intervenor.

South Yuba River Citizens League; California Sportfishing Protection Alliance ; Friends of the River; Mother Lode Chapter of the Sierra Club, Petitioners,

v.Federal Energy Regulatory Commission, Respondent,Yuba County Water Agency, Respondent-Intervenor.

California State Water Resources Control Board, Petitioner,

v.Federal Energy Regulatory Commission, Respondent,Merced Irrigation District, Respondent-Intervenor.

California Sportfishing Protection Alliance ; Friends of the River; Sierra Club and Its Tehipite Chapter, Petitioners,

v.Federal Energy Regulatory Commission, Respondent,Merced Irrigation District, Respondent-Intervenor.

No. 20-72432

No. 20-72452

No. 20-72782

No. 20-72800

No. 20-72958

No. 20-72973

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 12, 2022 Pasadena, California

Filed August 4, 2022

Jennifer Kalnins Temple (argued), Adam L. Levitan, Kristin K. McCarthy and Julia K. Forgie, Deputy Attorneys General; Eric M. Katz, Supervising Deputy Attorney General; Robert W. Byrne, Senior Assistant Attorney General; Rob Bonta, Attorney General; Office of the Attorney General, Los Angeles, California; for Petitioner California State Water Resources Control Board.

Julie Gantenbein (argued), Water and Power Law Group PC, Berkeley, California; Andrew M. Hawley, Western Environmental Law Center, Seattle, Washington; for Petitioners South Yuba River Citizens League, California Sportfishing Protection Alliance, Friends of the River, and Sierra Club and its Mother Lode and Tehipite Chapters.

Jared B. Fish (argued), Attorney; Robert H. Solomon, Solicitor; Matthew R. Christiansen, General Counsel; Federal Energy Regulatory Commission, Washington D.C.; for Respondent Federal Energy Regulatory Commission.

Michael A. Swiger (argued), Michael F. McBride, and Ani Esenyan, Van Ness Feldman, LLP, Washington, D.C.; for Respondent-Intervenors Nevada Irrigation District and Yuba County Water Agency.

Thomas M. Berliner and Jolie-Anne S. Ansley, Duane Morris LLP, San Francisco, California; Phillip R. McMurray, General Counsel, Merced Irrigation District, Merced, California; for Respondent-Intervenor Merced Irrigation District.

Jonathan D. Brightbill and Lauren Gailey, Winston & Strawn LLP, Washington, D.C.; Andrew R. Varcoe and Stephanie A. Maloney, United States Chamber Litigation Center, Washington, D.C.; for Amicus Curiae Chamber of Commerce of the United States of America.

Andrea W. Wortzel, Troutman Pepper Hamilton Sanders LLP, Richmond, Virginia; Charles R. Sensiba and Morgan M. Gerard, Troutman Pepper Hamilton Sanders LLP, Washington, D.C.; for Amici Curiae National Hydropower Association and Northwest Hydroelectric Association.

Gabrielle Gurian and Kelly Thomas Wood, Assistant Attorneys General; Robert W. Ferguson, Attorney General; Office of the Attorney General, Olympia, Washington; Jill Lacedonia, Assistant Attorney General; William Tong, Attorney General; Office of the Attorney General, Hartford, Connecticut; Scott W. Boak ; Aaron M. Frey, Attorney General; Office of the Attorney General, Augusta, Maine; Gillian Wener; Dana Nessel, Attorney General; Office of the Attorney General, ENRA Division, Lansing, Michigan; Peter N. Surdo, Special Assistant Attorney General; Keith Ellison, Attorney General; Office of the Attorney General, Saint Paul, Minnesota; Kristina Miles, Deputy Attorney General; Andrew J. Bruck, Acting Attorney General; Office of the Attorney General, Environmental Permitting and Counseling, Trenton, New Jersey; William Grantham, Assistant Attorney General; Hector Balderas, Attorney General; Office of the Attorney General, Consumer and Environmental Protection Division, Albuquerque, New Mexico; Taylor H. Crabtree and Asher P. Spiller, Assistant Attorneys General; Daniel S. Hirschman, Senior Deputy Attorney General; Joshua S. Stein, Attorney General; Department of Justice, Raleigh, North Carolina; Paul Garrahan, Attorney-in-Charge; Ellen F. Rosenblum, Attorney General; Natural Resources Section, Department of Justice, Salem, Oregon; Laura B. Murphy ; Thomas J. Donovan, Jr., Attorney General; Office of the Attorney General, Montpelier, Vermont; Brian R. Caldwell; Karl A. Racine, Attorney General; Public Advocacy Division, Washington, D.C.; Turner H. Smith, Deputy Chief; Matthew Ireland, Assistant Attorney General; Maura Healey, Attorney General; Office of the Attorney General, Environmental Protection Division, Boston, Massachusetts; Donald D. Anderson, Deputy Attorney General; David C. Grandis, Chief, Environmental Section; Mark R. Herring, Attorney General; Office of the Attorney General, Richmond, Virginia; for Amici Curiae States of Washington, Connecticut, Maine, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Vermont, the District of Columbia, and the Commonwealths of Massachusetts and Virginia.

Before: Paul J. Watford and Michelle T. Friedland, Circuit Judges, and Carol Bagley Amon,^* District Judge.

FRIEDLAND, Circuit Judge:

Section 401 of the Clean Water Act gives states the authority to impose conditions on federal licenses for hydroelectric projects to ensure that those projects comply with state water quality standards. In these consolidated cases, we consider several petitions for review of decisions by the Federal Energy Regulatory Commission ("FERC") holding that the California Water Resources Control Board (the "State Board" or "State Water Board") waived that authority for certain hydroelectric projects in federal relicensing proceedings. FERC found that the State Board had engaged in coordinated schemes with the Nevada Irrigation District, the Yuba County Water Agency, and the Merced Irrigation District (collectively, the "Project Applicants") to delay certification and to avoid making a decision on their certification requests. FERC held that, because of that coordination, the State Board had "fail[ed] or refuse[d] to act" on the requests and had therefore waived its certification authority. See 33 U.S.C. § 1341(a)(1). We hold that FERC's findings of coordination are unsupported by substantial evidence. We therefore grant the petitions for review and vacate FERC's orders.

I.

A.

The Clean Water Act provides that "[i]t is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States" to "prevent, reduce, and eliminate pollution" and to "plan the development and use (including restoration, preservation, and enhancement) of land and water resources." 33 U.S.C. § 1251(b). To achieve those goals, Congress has enacted a scheme of cooperative federalism that gives states an important role in regulating water quality. "The states remain, under the Clean Water Act, the ‘prime bulwark in the effort to abate water pollution.’ " Keating v. FERC , 927 F.2d 616, 622 (D.C. Cir. 1991) (quoting United States v. Puerto Rico , 721 F.2d 832, 838 (1st Cir. 1983) ).

As relevant here, Section 401 of the Clean Water Act "requires States to provide a water quality certification before a federal license or permit can be issued for activities that may result in any discharge into intrastate navigable waters." PUD No. 1 of Jefferson Cnty. v. Wash. Dep't of Ecology , 511 U.S. 700, 707, 114 S.Ct. 1900, 128 L.Ed.2d 716 (1994) (citing 33 U.S.C. § 1341 ). States may adopt water quality standards that are more stringent than federal law requires, and any limitation included in the state certification becomes a condition on any federal license. Id. at 705, 708, 114 S.Ct. 1900. That certification process is "essential in the scheme to preserve state authority to address the broad range of pollution" that might affect water quality. S.D. Warren Co. v. Me. Bd. of Env't Prot. , 547 U.S. 370, 386, 126 S.Ct. 1843, 164 L.Ed.2d 625 (2006).

To prevent a state from "indefinitely delaying a federal licensing proceeding by failing to issue a timely water quality certification," Section 401 includes a deadline by which the state must act to avoid waiving its certification authority. Alcoa Power Generating Inc. v. FERC , 643 F.3d 963, 972 (D.C. Cir. 2011). The relevant statutory language reads:

If the State ... fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application. No license or permit shall be granted until the certification required by this section has been obtained or has been waived as provided in the preceding sentence. No license or permit shall be granted if certification has been denied by the State.

33 U.S.C. § 1341(a)(1). FERC, through regulations governing hydropower licensing proceedings and through agency adjudication, has interpreted the "reasonable period of time" for action under Section 401 to be the statutory maximum of one year from the receipt of the request. 18 C.F.R. §§ 4.34(b)(5)(iii), 5.23(b)(2) ; Const. Pipeline Co. , 162 FERC ¶ 61,014, at P 16 (Jan. 11, 2018).

The consequences of a waiver are potentially significant. Federal licenses for hydroelectric projects can last up to fifty years, and the default term is forty years.¹ 16 U.S.C. § 799 ; Policy Statement on Establishing License Terms for Hydroelectric Projects, 82 Fed. Reg. 49501, 49503 (Oct. 26, 2017). Accordingly, if a state waives its authority to impose conditions on a hydroelectric project's federal license through...