N.C. Dep't of Envtl. Quality v. Fed. Energy Regulatory Comm'n

• Decision Date: 02 July 2021
• Docket Number: No. 20-1671,No. 20-1655,20-1655
• Citation: 3 F.4th 655
• Parties: NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. State of Washington ; State of California; State of Connecticut ; State of Maine ; State of Michigan ; State of Minnesota ; State of New Jersey ; State of Oregon ; State of Vermont; Commonwealth of Virginia, Amici Supporting Petitioner. Merced Irrigation District; National Hydropower Association; Nevada Irrigation District; Northwest Hydroelectric Association; Public Utility District No. 1 of Snohomish County, Washington ; South Feather Water and Power Agency; Yuba Water Agency, Amici Supporting Respondent. PK Ventures I Limited Partnership, Petitioner, v. Federal Energy Regulatory Commission, Respondent. State of Washington ; State of California; State of Connecticut ; State of Maine ; State of Michigan ; State of Minnesota ; State of New Jersey ; State of Oregon ; State of Vermont; Commonwealth of Virginia, Amici Supporting Petitioner. Merced Irrigation District; National Hydropower Association; Nevada Irrigation District; Northwest Hydroelectric Association; Public Utility District No. 1 of Snohomish County, Washington ; South Feather Water and Power Agency; Yuba Water Agency, Amici Supporting Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

3 F.4th 655

NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY, Petitioner,

v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

State of Washington ; State of California; State of Connecticut ; State of Maine ; State of Michigan ; State of Minnesota ; State of New Jersey ; State of Oregon ; State of Vermont; Commonwealth of Virginia, Amici Supporting Petitioner.

Merced Irrigation District; National Hydropower Association; Nevada Irrigation District; Northwest Hydroelectric Association; Public Utility District No. 1 of Snohomish County, Washington ; South Feather Water and Power Agency; Yuba Water Agency, Amici Supporting Respondent.

PK Ventures I Limited Partnership, Petitioner,

v.Federal Energy Regulatory Commission, Respondent.

State of Washington ; State of California; State of Connecticut ; State of Maine ; State of Michigan ; State of Minnesota ; State of New Jersey ; State of Oregon ; State of Vermont; Commonwealth of Virginia, Amici Supporting Petitioner.

Merced Irrigation District; National Hydropower Association; Nevada Irrigation District; Northwest Hydroelectric Association; Public Utility District No. 1 of Snohomish County, Washington ; South Feather Water and Power Agency; Yuba Water Agency, Amici Supporting Respondent.

No. 20-1655

No. 20-1671

United States Court of Appeals, Fourth Circuit.

Argued: May 6, 2021

Decided: July 2, 2021

ARGUED: David Montgomery Moore, EARTH & WATER LAW, LLC, Atlanta, Georgia; Asher Paris Spiller, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Petitioners. Susanna Y. Chu, FEDERAL ENERGY REGULATORY COMMISSION, Washington, D.C., for Respondent. ON BRIEF: Joshua H. Stein, Attorney General, Taylor H. Crabtree, Assistant Attorney General, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Petitioner North Carolina Department of Environmental Quality. David L. Morenoff, Acting General Counsel, Robert H. Solomon, Solicitor, FEDERAL ENERGY REGULATORY COMMISSION, Washington, D.C., for Respondent. Robert W. Ferguson, Attorney General, Cindy Chang, Assistant Attorney General, Kelly T. Wood, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF WASHINGTON, Seattle, Washington, for Amicus State of Washington. Xavier Becerra, Attorney General, Sarah E. Morrison, Supervising Deputy Attorney General, Tatiana K. Gaur, Deputy Attorney General, Catherina M. Wieman, Deputy Attorney General, Lani M. Maher, Deputy Attorney General, Environment Section, OFFICE OF THE ATTORNEY GENERAL OF CALIFORNIA, Los Angeles, California, for Amicus State of California. William Tong, Attorney General, Jill Lacedonia, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF CONNECTICUT, Hartford, Connecticut, for Amicus State of Connecticut. Aaron M. Frey, Attorney General, Scott Boak, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MAINE, Augusta, Maine, for Amicus State of Maine. Dana Nessel, Attorney General, Fadwa Hammoud, Solicitor General, OFFICE OF THE ATTORNEY GENERAL OF MICHIGAN, Lansing, Michigan, for Amicus State of Michigan. Keith Ellison, Attorney General, Peter N. Surdo, Special Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MINNESOTA, Saint Paul, Minnesota, for Amicus State of Minnesota. Gurbir S. Grewal, Attorney General, Kristina Miles, Deputy Attorney General, OFFICE OF THE ATTORNEY GENERAL OF NEW JERSEY, Trenton, New Jersey, for Amicus State of New Jersey. Ellen F. Rosenblum, Attorney General, Paul Garrahan, Attorney-in-Charge, Natural Resources Section, OREGON DEPARTMENT OF JUSTICE, Salem, Oregon, for Amicus State of Oregon. Thomas J. Donovan, Jr., Attorney General, Laura B. Murphy, Assistant Attorney General, Environmental Protection Division, OFFICE OF THE ATTORNEY GENERAL OF VERMONT, Montpelier, Vermont, for Amicus State of Vermont. Mark R. Herring, Attorney General, Donald D. Anderson, Deputy Attorney General, Paul Kugelman, Jr., Senior Assistant Attorney General, Section Chief, David C. Grandis, Senior Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF VIRGINIA, Richmond, Virginia, for Amicus Commonwealth of Virginia. Charles R. Sensiba, Washington, D.C., Andrea W. Wortzel, Richmond, Virginia, Angela J. Levin, TROUTMAN PEPPER HAMILTON SANDERS, LLP, San Francisco, California; Michael A. Swiger, Sharon L. White, VAN NESS FELDMAN, LLP, Washington, D.C., for Amici Merced Irrigation District, National Hydropower Association, Nevada Irrigation District, Northwest Hydroelectric Association, Public Utility District No. 1 of Snohomish County, Washington, South Feather Water and Power Agency, and Yuba Water Agency.

Before KING and THACKER, Circuit Judges, and TRAXLER, Senior Circuit Judge.

Petition for review in No. 20-1655 granted and petition for review in No. 20-1671 dismissed in part and denied in part by published opinion. Senior Judge Traxler wrote the opinion, in which Judge King and Judge Thacker joined.

TRAXLER, Senior Circuit Judge:

In this case, we consider two petitions for review challenging the issuance of a license by the Federal Energy Regulatory Commission ("FERC") to McMahan Hydroelectric ("McMahan"), authorizing McMahan to operate the Bynum Hydroelectric Project (the "Project") on the Haw River in North Carolina. In Case No. 20-1655, the North Carolina Department of Environmental Quality ("NCDEQ") challenges FERC's determination that NCDEQ waived its rights under the Clean Water Act to issue a water quality certification for the Project. In Case No. 20-1671, PK Ventures I Limited Partnership ("PK Ventures") challenges FERC's jurisdiction to issue the license for the Project. As we will explain, in Case No. 20-1655, we grant NCDEQ's petition for review, vacate the license issued by FERC, and remand with instructions for FERC to re-issue the license to include the water-quality conditions imposed by NCDEQ. In Case No. 20-1671, we deny in part and dismiss in part PK Ventures’ petition for review.

I.

The Federal Power Act ("FPA"), 16 U.S.C. §§ 791a - 825r et seq. , created "a complete scheme of national regulation" to "promote the comprehensive development of the water resources of the Nation." First Iowa Hydro-Elec. Coop. v. FPC , 328 U.S. 152, 180, 66 S.Ct. 906, 90 L.Ed. 1143 (1946). The FPA provides for "comprehensive control over those uses of the Nation's water resources in which the [f]ederal [g]overnment ha[s] a legitimate interest," including "navigation, irrigation, flood control, and, very prominently, hydroelectric power." Fed. Power Comm'n v. Union Elec. Co. , 381 U.S. 90, 98, 85 S.Ct. 1253, 14 L.Ed.2d 239 (1965).

Under the FPA, a FERC-issued license is required for the construction, maintenance, and operation of any hydroelectric project located on "any of the navigable waters of the United States." 16 U.S.C. § 817(1). Since 1935, the statute has also required a FERC license for the construction of hydroelectric projects located on a non-navigable body of water that is nonetheless subject to Congress’ authority under the Commerce Clause, if FERC determines that the project will affect interstate or foreign commerce. See id. ; Aquenergy Sys., Inc. v. FERC , 857 F.2d 227, 228 (4th Cir. 1988) ("[FERC] had long had regulatory authority over [hydroelectric] projects in navigable waters, but until 1935, one undertaking any activity in non-navigable waters was not required to apply to [FERC] for anything."). The license requirement for projects on Commerce-Clause waters operates prospectively, applying only to projects where qualifying construction occurred after 1935. See Aquenergy Sys. , 857 F.2d at 228 ; L.S. Starrett Co. v. FERC, 650 F.3d 19, 23 (1st Cir. 2011).

Section 401 of the Clean Water Act ("CWA") requires an applicant seeking federal licensing of a project that would result in a discharge to navigable waters to obtain a certification from the appropriate state agency verifying that the planned project complies with state water quality requirements. See 33 U.S.C. § 1341(a)(1). If the state concludes that conditions on the operation of the project are necessary to ensure compliance with its water quality standards, those conditions must be set out in the § 401 certification, and the federal licensing agency must incorporate the state's conditions into the federal license. See id. § 1341(d). A state waives its certification authority if it "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." Id. § 1341(a)(l). "No license or permit shall be granted until the certification required by this section has been obtained or has been waived as provided .... No license or permit shall be granted if certification has been denied by the State." Id.

II.

The Project consists of a dam, powerhouse, and related facilities in Chatham County, North Carolina. The 10-feet high, 900-feet long masonry dam was built in 1874. The Project converted from a mechanical operation to an electrical hydropower operation in 1940, when an electrical turbine was installed.

In 1985, FERC issued a 30-year license for operation for the Project; the license was transferred to Bynum Hydro

Company in 1986. Petitioner PK Ventures subsequently acquired the Project from Bynum, but the license was never formally transferred to PK Ventures. J.A. 287. The Project last generated electricity more than a decade ago.

Anticipating the 2015 expiration of the license, PK Ventures in 2010 filed a notice of intent to apply for relicensing of the Project. PK Ventures did not follow through, however, and never filed a license application for the Project with FERC. On March 30, 2015, McMahan filed an application for a license to operate the Project.

While McMahan's application was pending, FERC determined that Bynum Hydro

had been dissolved, and FERC transferred the Project license to PK Ventures. PK Ventures sought rehearing, arguing that it was not the licensee of the Project and asking FERC to rescind the transfer. FERC granted rehearing...