Cnty. of Butte v. Dep't of Water Res.

Decision Date01 August 2022
Docket NumberS258574
Citation13 Cal.5th 612,514 P.3d 234,296 Cal.Rptr.3d 649
Parties COUNTY OF BUTTE, Plaintiff and Appellant, v. DEPARTMENT OF WATER RESOURCES, Defendant and Respondent; State Water Contractors, Inc., et al., Real Parties in Interest and Respondents. County of Plumas et al., Plaintiffs and Appellants, v. Department of Water Resources, Defendant and Respondent; State Water Contractors, Inc., et al., Real Parties in Interest and Respondents.
CourtCalifornia Supreme Court

Bruce Alpert, County Counsel; Rossmann and Moore, Antonio Rossmann, San Francisco, Barton Lounsbury; Law Office of Roger B. Moore, Roger B. Moore; Shute Mihaly & Weinberger, Ellison Folk and Edward T. Schexnayder, San Francisco, for Plaintiff and Appellant County of Butte.

R. Craig Settlemire, County Counsel; Law Office of Roger B. Moore, Roger B. Moore; Law Offices of Michael B. Jackson and Michael B. Jackson for Plaintiffs and Appellants County of Plumas and Plumas County Flood Control and Water Conservation District.

E. Robert Wright for Sierra Club, Center for Biological Diversity, Friends of the River, California Sportfishing Protection Alliance and Friends of the Eel River as Amici Curiae on behalf of Plaintiffs and Appellants.

Law Office of Adam Keats and Adam Keats for California Water Impact Network and Aqualliance as Amici Curiae on behalf of Plaintiffs and Appellants. Laura E. Hirahara for California State Association of Counties as Amicus Curiae on behalf of Plaintiffs and Appellants.

Kamala D. Harris, Xavier Becerra and Rob Bonta, Attorneys General, Michael J. Mongan, State Solicitor General, Janill L. Richards, Principal Deputy State Solicitor General, Robert W. Byrne, Assistant Attorney General, Joshua Patashnik and Aimee Feinberg, Deputy State Solicitors General, Randy L. Barrow, Tracy L. Winsor, Deborah L. Barnes, Matthew J. Goldman, Carolyn Nelson Rowan and Linda L. Gandara, Deputy Attorneys General, for Defendant and Respondent.

The Sohagi Law Group, Margaret M. Sohagi, Philip A. Seymour, Los Angeles; Duane Morris, Thomas M. Berliner, Paul J. Killion, Jolie-Anne S. Ansley, San Francisco; Downey Brand and David R.E. Aladjem for Real Parties in Interest and Respondents.

Opinion of the Court by Liu, J.

Operation of a dam, reservoir, or hydroelectric power plant requires a license from the Federal Energy Regulatory Commission (FERC). ( 16 U.S.C. § 817(1).) For decades, California has required public entities seeking licensing of state-owned and state-operated hydroelectric projects to conduct environmental review under the California Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq. ). In this case, California's Department of Water Resources (DWR or Department) prepared an environmental impact report (EIR) under CEQA in connection with its application for renewal of its 50-year license to operate the "Oroville Facilities," an interrelated group of public works operated by DWR in Butte County. Butte and Plumas Counties (the Counties) filed writ petitions challenging the sufficiency of the EIR.

The trial court found the Department's EIR adequate, and the Counties appealed. The Court of Appeal did not reach the merits of the Counties’ CEQA claims, instead finding their actions in part preempted by the Federal Power Act (FPA; 16 U.S.C. § 791a et seq. ) and otherwise premature. In 2019, we granted the Counties’ petitions for review and transferred the matter to the Court of Appeal with directions to reconsider its decision in light of Friends of the Eel River v. North Coast Railroad Authority (2017) 3 Cal.5th 677, 220 Cal.Rptr.3d 812, 399 P.3d 37 ( Eel River ). On remand, the Court of Appeal again found the Counties’ actions in part preempted and otherwise premature.

( County of Butte v. Dept. of Water Resources (Sept. 5, 2019) C071785, opn. ordered nonpub. Dec. 11, 2019, S258574 (County of Butte ).)

The Court of Appeal held that the FPA preempts the Counties’ challenge to the environmental sufficiency of the settlement agreement DWR prepared as part of FERC proceedings. We agree that the Counties’ claims are preempted to the extent they attempt to unwind the terms of the settlement agreement reached through a carefully established federal process and seek to enjoin DWR from operating the Oroville Facilities under the proposed license. As the Court of Appeal recognized, FERC has sole jurisdiction over disputes concerning the licensing process employed here ( County of Butte , supra , C071785; see 18 C.F.R. § 4.34(i)(6)(vii) ), and the requested injunction would be akin to the "veto power" prohibited by First Iowa Coop. v. Federal Power Comm'n (1946) 328 U.S. 152, 164, 66 S.Ct. 906, 90 L.Ed. 1143 ( First Iowa ).

But the Counties’ writ petitions also challenged the sufficiency of the EIR more generally, and they have now abandoned their requests to enjoin the operation of the Oroville Facilities under the proposed license. In this court, the parties have fully briefed and asked us to decide whether the FPA preempts what remains of the Counties’ CEQA claims. On this question, we observe that DWR relied on the EIR to analyze the environmental impact of operating the Oroville Facilities under the settlement agreement or an alternative proposed by FERC staff. The EIR serves as the informational source for DWR's decisionmaking as to whether to request particular terms from FERC as it contemplates the license ( 18 C.F.R. § 4.35(b) (2022)) or to seek reconsideration of terms once FERC issues the license (id ., § 4.200(b) (2022); 16 U.S.C. § 825l ), avenues available to any applicant under federal law. It also informs decisionmaking about potential measures that may be outside of or compatible with FERC's jurisdiction. Nothing in the FPA suggests Congress intended to interfere with the way the state as owner makes these or other decisions concerning matters outside FERC's jurisdiction or compatible with FERC's exclusive licensing authority. (See Eel River , supra , 3 Cal.5th at p. 724 [CEQA not categorically preempted where the federal scheme permits the state as owner to "make its decisions based on its own guidelines"]; Wyeth v. Levine (2009) 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 [congressional intent is the " ‘ultimate touchstone in every preemption case’ "].) Accordingly, we conclude that the Court of Appeal erred in finding the Counties’ CEQA claims entirely preempted.

We affirm the decision of the Court of Appeal in part, reverse in part, and remand for further proceedings consistent with this opinion.

I.

The license governing DWR's operation of the Oroville Facilities (sometimes Facilities) was issued in 1957 and was set to expire in 2007. DWR began public preparations to apply for renewal of the license in October 1999. DWR has yet to achieve relicensing of the Facilities, and it currently operates the Facilities under annual, interim licenses. (See 18 C.F.R. § 16.18(b)(1) (2022).)

A.

At the time DWR undertook the relicensing process, FERC regulations allowed applicants to pursue the traditional licensing process or an alternative. DWR chose to pursue the alternative licensing process (ALP), a voluntary procedure designed to achieve consensus among interested parties on the terms of the FERC license before the licensing application is submitted. ( 18 C.F.R. §§ 4.34(i), 4.34(i)(2)(iv) (2022).) The ALP requires persons and entities with an interest in the operation of the project to cooperate in a series of hearings, consultations, and negotiations. ( 18 C.F.R. §§ 4.34(i)(3), (4) (2022).) The objective of the process is to identify areas of concern and disagreement among the stakeholders regarding the license terms and to resolve those differences. ( 18 C.F.R. §§ 4.34(i)(2)(ii), (iv), (v) (2022).) The ALP "[c]ombine[s] into a single process the pre-filing consultation process [of the traditional licensing procedure], the environmental review process under the National Environmental Policy Act[ of 1969 ( 42 U.S.C. § 4321 et seq. ),] and administrative processes associated with the Clean Water Act [( 33 U.S.C. § 1251 et seq. )] and other statutes." ( 18 C.F.R. § 4.34(i)(2)(i) (2022).) Ideally, ALP participants conclude the process by entering into a settlement agreement reflecting the terms of a proposed license. (Id. , subd. (i)(2)(v) (2022).) The settlement agreement then becomes the centerpiece of the license application and serves as the basis for FERC's "orderly and expeditious review" in setting the terms of the license. (Ibid .) Although FERC does not surrender its regulatory authority when it allows an applicant to pursue the ALP, the process permits the interested parties to prepare what is effectively a first draft of the license.

FERC approved DWR's request to use the ALP in January 2001, and the process consumed the next five years. The ALP participants included representatives from 39 organizations — five federal agencies, five state agencies, seven local government entities, five Native American tribes, four local water agencies, and 13 nongovernmental organizations. From late 2000 through 2004, the six working groups formed to conduct the ALP each met at least monthly, eventually logging an estimated 1,500 hours of meeting time.

During the early stages of the ALP, in September 2001, DWR issued a document combining a CEQA notice of preparation and a "scoping document." The latter plays a role under the National Environmental Policy Act (NEPA) that is similar to a notice of preparation under CEQA. (See 40 C.F.R. § 1501.9 (2022) [describing role of scoping]; Cal. Code Regs., tit. 14 (CEQA Guidelines), § 15082 [describing the notice of preparation and determination of scope of an EIR].) A primary purpose of the joint document was to solicit comment on the scope of a preliminary draft environmental assessment (PDEA) for the renewed license, a document whose preparation is mandated by the ALP. ( 18 C.F.R. § 4.34(i)(4)(iii) (2022).) The PDEA eventually prepared for the Facilities, issued in...

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