State of Cal. ex rel. State Water Resources Control Bd. v. F.E.R.C.

• Decision Date: 03 April 1992
• Docket Number: Nos. 90-70203,90-70320,90-70360,90-70366,90-70367,90-70463 and 90-70371,s. 90-70203
• Citation: 966 F.2d 1541
• Parties: 22 Envtl. L. Rep. 21,397 STATE OF CALIFORNIA, ex rel. STATE WATER RESOURCES CONTROL BOARD; State of California, ex rel. California Department of Fish & Game; Edison Electric Institute; National Hydropower Association, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. PACIFIC GAS AND ELECTRIC COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. HENWOOD ASSOCIATES, INC., Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. AMERICAN RIVERS, INC.; Friends of the River, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1541

966 F.2d 1541

22 Envtl. L. Rep. 21,397

STATE OF CALIFORNIA, ex rel. STATE WATER RESOURCES CONTROL

BOARD; State of California, ex rel. California Department

of Fish & Game; Edison Electric Institute; National

Hydropower Association, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

PACIFIC GAS AND ELECTRIC COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

HENWOOD ASSOCIATES, INC., Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

AMERICAN RIVERS, INC.; Friends of the River, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

Nos. 90-70203, 90-70320, 90-70360, 90-70366, 90-70367,

90-70463 and 90-70371.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 20, 1991.

Decided April 3, 1992.

Michael W. Neville, Deputy Atty. Gen. of the State of Cal., San Francisco, Cal., for petitioner State of Cal., ex rel. State Water Resources Control Bd. Gail Ann Greely, Greely & Greely, Alameda, Cal., for petitioner-intervenor Henwood Associates and petitioner Nat. Hydropower Ass'n, Inc. Louis E. Vincent for petitioner Pacific Gas and Elec. Co. Henri D. Bartholomot for petitioner Edison Elec. Institute. Denis D. Smaage, Deputy Atty. Gen. of the State of Cal., Sacramento, Cal., for petitioner State of Cal., ex rel. California Dept. of Fish & Game. John D. Echeverria, Washington, D.C., for petitioners American Rivers, Inc. and Friends of the River.

Samuel Sooper, U.S. Dept. of Justice, Washington, D.C., for respondent.

John Bryson, Bureau of Land Management, U.S. Dept. of Justice, Washington, D.C., for amicus.

Petition to Review a Decision of the Federal Energy Regulatory Commission.

Before: ALARCON, T.G. NELSON, Circuit Judges, and PRICE, District Judge. ^*

T.G. NELSON, Circuit Judge.

A group of conservation organizations, two state agencies, the project sponsor and several hydropower industry representatives challenge the Federal Energy Regulatory Commission's (FERC or Commission) issuance of a license for a small hydroelectric project in California. Petitioners raise issues concerning the Commission's decisions relating to the stream flow regime, undue Congressional influence, waiver of state certification under the Clean Water Act, and the necessity of obtaining a special use authorization from the Bureau of Land Management of the Department of Interior (BLM). We deny the Commission's motion to dismiss the petitions relating to the BLM issue, and grant the petitions

                for review as to that issue.   We deny the petitions for review on all other issues
                

BACKGROUND

Henwood Associates, a closely held corporation engaged in hydropower development in California, proposes to construct a hydroelectric power project at Dynamo Pond on Green Creek, a tributary of the East Walker River in Mono County, California. Henwood's plans include the rehabilitation of a small dam that had created Dynamo Pond and diversion of some of the stream's flow through a buried penstock for power generation. In addition, a buried electric transmission line would connect the powerhouse to the distribution system of Southern California Edison Company. A portion of both the penstock and the transmission line would be located on BLM lands administered under the Federal Land Policy and Management Act (FLPMA), included in the project area as shown in Henwood's filing with FERC. The rest of the project facilities would be located on private land leased to Henwood.

On December 19, 1980, Henwood applied to BLM for a right-of-way authorization pursuant to Section 501(a)(4) of FLPMA, 43 U.S.C. § 1761(a)(4). On January 26, 1986, Henwood filed an application with FERC for a hydroelectric license for the Dynamo Pond project. On December 23, 1987, the Director of the Office of Hydropower Licensing (OHL) issued a license for the project to Henwood, containing a condition requiring Henwood to maintain minimum stream flows of 5 cubic feet per second (cfs) in Green Creek, rejecting California Fish and Game's (Cal Fish and Game) stream flow recommendations as inconsistent with the purposes of the Federal Power Act (FPA), and finding the California Water Resources Control Board (Cal Water) had waived certification under the Clean Water Act because it had not acted within one year of August 28, 1985, the date Henwood had requested state certification from the Board.

On February 10, 1988, Cal Fish and Game filed an appeal of the Director's order issuing the license. On February 17, 1988, FERC issued an order denying Cal Fish and Game's appeal on the ground that it had never intervened in the Henwood licensing proceeding and did not have standing to file an appeal. The Commission also denied the Cal Water's appeal, explaining that its 1987 rule interpreting Section 401(a)(1) of the Clean Water Act provided that state water quality certification will be deemed waived if a certifying agency does not act on a certification request within one year of its receipt of the request.

On July 18, 1988, FERC issued a declaratory order, ruling that Henwood was not required to secure a right-of-way permit from BLM in order to proceed with the project. On September 2, 1988, BLM wrote FERC a letter, requesting it rescind this ruling.

On March 9, 1989, the BLM issued a right-of-way permit to Henwood pursuant to FLPMA in an action independent of the Commission's licensing proceedings. The BLM permit required higher minimum flows for the project (9 to 15 cfs) than the Commission had required (5 cfs) in the license. Henwood "accepted" the BLM right-of-way "[t]o the extent that the Bureau has permitting authority over this project." Henwood also requested a declaratory order from FERC that BLM lacked authority under FLPMA to require FERC licensees to obtain rights-of-way from BLM.

On May 2, 1989, the Commission issued an order reaffirming its view on the water quality certification question, and a declaratory order rejecting BLM's claims that Henwood was required under FLPMA to obtain a right-of-way from BLM and sua sponte granting party status to Cal Water to raise its claims under Section 10(j) of the FPA. FERC instructed its staff to engage in additional negotiations with Cal Fish and Game to attempt to resolve the controversy about the minimum stream flow. FERC deferred Cal Water's appeal of the water certification issue and stayed the Henwood project license pending these negotiations. Commissioner Trabant dissented from FERC's decision to grant Cal Fish and On February 15, 1990, FERC entered its order on rehearing, rescinding its declaratory order as to BLM's authority under FLPMA and establishing minimum stream flows requirements as a result of the 10(j) negotiations. The Commission reexamined the language of FLPMA and its legislative history and explained, "[i]t is our revised opinion that BLM has authority under FLPMA to require right-of-way permits for licensed hydropower projects using BLM land." The Commission commented on the conflicting minimum stream flow requirements imposed by BLM and FERC, stating "[i]t appears to us that the denial or conditioning of a right-of-way under FLPMA should not be allowed to be a de facto veto of the Commission's license." FERC did not decide how the conflicts should be resolved, explaining that BLM may have exceeded its authority but that "this is a matter for the courts to decide."

Game party status and to reopen the 10(j) negotiations.

Based on the 10(j) negotiations, FERC concluded the minimum flow requirement for the project should be increased from the 5 cfs it had originally imposed to 7 cfs, thereby rejecting the higher flows recommended by Cal Fish and Game and other fish and wildlife agencies. Henwood claimed that FERC's order requiring further 10(j) negotiations should be vacated because: (1) the order improperly altered the license without notice, (2) the order was the result of undue Congressional pressure, and (3) the original 10(j) negotiations were properly conducted and administratively final. FERC rejected those claims.

FERC rejected Cal Water's request for rehearing on the water quality certification issue, emphasizing that its interpretive rule regarding waiver was effective upon issuance on February 11, 1987. FERC stated Cal Water's other challenges to the procedures in its rule were improper collateral attacks upon the rulemaking proceeding.

On May 21, 1990, FERC issued an order denying rehearing of its February 15, 1990 order. FERC affirmed its rejection of Cal Fish and Game's claim that it had erred in imposing a minimum stream flow of 7 cfs, explaining that it "would permit the project both to have an internal rate of return of 13 percent, and thus allow its development, and to adequately protect aquatic habitat."

The Commission also reaffirmed its view that BLM can require Henwood to request a right-of-way under FLPMA, and rejected Henwood's claim that FERC's interpretation of FLPMA was the result of Congressional pressure. FERC again suggested that BLM may have exceeded its authority when it issued a right-of-way permit to Henwood that might prevent construction of the project on economic grounds, but again noted this was "a matter for the courts to decide." Commissioner Trabant again dissented on the bases that the 10(j) negotiations should not have been reopened, and that FLPMA does not apply to hydroelectric licenses. These appeals followed. This court has jurisdiction pursuant to 16 U.S.C. § 825l.

THE MINIMUM STREAM FLOW ISSUE

At the point where Green Creek leaves Dynamo Pond, Henwood proposed installing a pipe to divert water 1.9 miles from Green Creek to its powerhouse. The water is to be returned to the creek below the powerhouse. As previously explained, FERC, in a proceeding in which Cal Fish and Game was not granted party status, adopted year-round minimum stream flows of 5 cfs for the portion of the stream between the point of diversion and the point at which the water returns to the channel ...