Ninth Circuit Vacates FERC Orders Against California Agency

On Thursday, the Ninth Circuit issued its opinion for California State Water Resources Control Board v. Federal Energy Regulatory Commission vacating the Federal Energy Regulatory Commission’s (FERC) orders concluding the California State Water Resources Control Board (California Board) had waived its authority to ensure that certain hydroelectric projects complied with state water quality standards.

According to the opinion, the Clean Air Act gives states the right to impose state water quality standards on federal hydroelectric projects. The state imposes these standards through a water quality certification and any standard or limitation of the certification becomes a condition of the licenses for the federal hydroelectric project. 

To prevent indefinite delay of the federal licenses by the state, Section 401 requires the state to act on a request for a water quality certification within one year of a request. Further, if the state “fails to act” on the request, it waives its certification authority to impose state water quality standards on the federal project. 

The opinion states that in three separate orders, FERC found that the California Board had waived its certification authority for three federal hydroelectric projects initiated by the Nevada Irrigation District, the Yuba County Water Agency and the Merced Irrigation District (Project Applicants). According to the court, FERC ruled that the California Board waived its certification authority through a coordinated scheme with the Project Applicants to delay the certification process by having the applicants withdraw and resubmit their certification requests to reset the deadline. FERC argued that because of the coordination, the California Board “failed to act” and thus waived its certifications authority. 

The Ninth Circuit held the FERC’s finding of coordination in the orders were unsupported, and the evidence showed that the California Board merely acquiesced to the Project Applicants’ decision to withdraw and submit the requests rather than have them denied. Additionally, the court cast doubt on whether FERC’s interpretation of a coordination standard, as applied through its orders, was consistent with the Clean Air Act. Regardless, the opinion stated even with applying the coordination standard, the California Board did not engage in a coordinated scheme to delay certification.

Accordingly, the Ninth Circuit Panel vacated FERC’s orders concluding the California Board waived its certification authority and remanded the case for further proceedings.