California State Water Resourc v. Ferc ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CALIFORNIA STATE WATER No. 20-72432
RESOURCES CONTROL BOARD,
Petitioner,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
NEVADA IRRIGATION DISTRICT,
Intervenor.
SOUTH YUBA RIVER CITIZENS No. 20-72452
LEAGUE; CALIFORNIA SPORTFISHING
PROTECTION ALLIANCE; FRIENDS OF FERC Nos.
THE RIVER; MOTHER LODE CHAPTER 2266-102
OF THE SIERRA CLUB, 2266-118
Petitioners,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
NEVADA IRRIGATION DISTRICT,
Intervenor.
2 CAL. STATE WATER RES. CONTROL BD. V. FERC
CALIFORNIA STATE WATER No. 20-72782
RESOURCES CONTROL BOARD,
Petitioner,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
YUBA COUNTY WATER AGENCY,
Respondent-Intervenor.
SOUTH YUBA RIVER CITIZENS No. 20-72800
LEAGUE; CALIFORNIA SPORTFISHING
PROTECTION ALLIANCE; FRIENDS OF FERC No.
THE RIVER; MOTHER LODE CHAPTER 2246-086
OF THE SIERRA CLUB,
Petitioners,
v.
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
YUBA COUNTY WATER AGENCY,
Respondent-Intervenor.
CAL. STATE WATER RES. CONTROL BD. V. FERC 3
CALIFORNIA STATE WATER No. 20-72958
RESOURCES CONTROL BOARD,
Petitioner, FERC Nos.
2179-043
v. 2467-020
2179-048
FEDERAL ENERGY REGULATORY 2467-022
COMMISSION,
Respondent,
MERCED IRRIGATION DISTRICT,
Respondent-Intervenor.
CALIFORNIA SPORTFISHING No. 20-72973
PROTECTION ALLIANCE; FRIENDS OF
THE RIVER; SIERRA CLUB AND ITS FERC No.
TEHIPITE CHAPTER, 2179-043
Petitioners,
v. OPINION
FEDERAL ENERGY REGULATORY
COMMISSION,
Respondent,
MERCED IRRIGATION DISTRICT,
Respondent-Intervenor.
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Argued and Submitted May 12, 2022
Pasadena, California
4 CAL. STATE WATER RES. CONTROL BD. V. FERC
Filed August 4, 2022
Before: Paul J. Watford and Michelle T. Friedland, Circuit
Judges, and Carol Bagley Amon, * District Judge.
Opinion by Judge Friedland
SUMMARY **
Federal Energy Regulatory Commission
The panel granted petitions for review, and vacated
orders issued by the Federal Energy Regulatory Commission
(“FERC”) in which FERC held that the California Water
Resources Control Board (the “State Board”) had waived its
authority to ensure that certain hydroelectric projects
complied with state water quality standards.
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. Under Section
401, states may impose conditions on federal licenses for
hydroelectric projects to ensure that those projects comply
with state water quality standards. States must act on a
request for water quality certification within one year of
*
The Honorable Carol Bagley Amon, United States District Judge
for the Eastern District of New York, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
CAL. STATE WATER RES. CONTROL BD. V. FERC 5receiving it to avoid waiving their Section 401 certification
authority.
In three FERC orders, 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 (“Project Applicants”) to delay
certification and to avoid making a decision on their
certification requests. According to FERC, the State Board
had coordinated with the Project Applicants to ensure that
they withdrew and resubmitted their certification requests
before the State’s deadline for action under Section 401 in
order to reset the State’s one-year period to review the
certification requests. FERC held that, because of that
coordination, the State Board had “fail[ed] or refuse[d] to
act” on requests and therefore had waived its certification
authority under Section 401 of the Clean Water Act. See
33 U.S.C. § 1341(a)(1).
The panel held that FERC’s findings of coordination
were unsupported by substantial evidence. Instead, the
evidence showed only that the State Board acquiesced in the
Project Applicants’ own unilateral decisions to withdraw
and resubmit their applications rather than have them denied.
The panel held that, even assuming that FERC’s
“coordination” standard was consistent with the statute, the
State Board’s mere acquiescence in the Project Applicants’
withdrawals-and-resubmissions could not demonstrate that
the State Board was engaged in a coordinated scheme to
delay certification. Accordingly, FERC’s orders could not
stand. The panel remanded for further proceedings.
6 CAL. STATE WATER RES. CONTROL BD. V. FERC
COUNSEL
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
CAL. STATE WATER RES. CONTROL BD. V. FERC 7
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.
8 CAL. STATE WATER RES. CONTROL BD. V. FERC
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.
CAL. STATE WATER RES. CONTROL BD. V. FERC 9OPINION
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
10 CAL. STATE WATER RES. CONTROL BD. V. FERC
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 (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. 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
(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
CAL. STATE WATER RES. CONTROL BD. V. FERC 11shall 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 Section 401’s certification procedure, that project
may be noncompliant with prevailing state water quality
standards for decades.
California’s criteria for issuing water quality
certifications often make it impracticable for a certification
to issue within one year of a project applicant’s submitting
1
If a project’s initial license expires while the relicensing process is
ongoing, FERC may issue annual, interim licenses under the same terms
and conditions as the initial license. 16 U.S.C. § 808(a)(1); 18 C.F.R.
§ 16.18.
12 CAL. STATE WATER RES. CONTROL BD. V. FERC
its request. The main cause of delay appears to be
California’s requirement, pursuant to the California
Environmental Quality Act (“CEQA”), that the State Board
receive and consider an analysis of a project’s environmental
impact before granting a certification request. 2 See Cal. Pub.
Res. Code § 21100(a) (requiring completion of “an
environmental impact report on any project . . . that may
have a significant effect on the environment”); Cal. Code
Regs. tit. 23, § 3856(f) (“[T]he [Section 401] certifying
agency shall be provided with and have ample time to
properly review a final copy of valid CEQA documentation
before taking a certification action.”). California law assigns
a “lead agency” (here, the Project Applicants) to prepare the
CEQA evaluation and designates a “responsible agency”
(here, the State Board) that must “consider[] the [evaluation]
prepared by the lead agency” and decide “whether and how
to approve the project involved.” 3 Cal. Code Regs. tit. 14,
§ 15096(a). For complex projects like the ones at issue here,
2
After FERC issued the waiver orders challenged here, the
California legislature authorized the State Board to issue certifications
before completion of CEQA review where failure to issue the
certification “poses a substantial risk of waiver of the state board’s
certification authority” under Section 401. Cal. Water Code
§ 13160(b)(2); see also 2020 Cal. Stat. 1379. The new provision directs
the State Board, “[t]o the extent authorized by federal law,” to “reserve
authority to reopen and . . . revise the certificate” as necessary after
CEQA review is eventually completed. Cal. Water Code § 13160(b)(2).
Because that amendment took effect after the events at issue here, it has
no bearing on our analysis.
3
In cases like ours, where the project applicant is a public agency,
the project applicant is the “lead agency” that must complete the CEQA
evaluation. By contrast, in cases where the project applicant is a private
entity, the State Board is both the “lead agency” and the “responsible
agency” and, accordingly, must complete the CEQA process itself. See
Cal. Code Regs. tit. 14, § 15051.
CAL. STATE WATER RES. CONTROL BD. V. FERC 13the CEQA process itself can often take more than a year to
complete. If the materials required for CEQA are not
submitted until late in the State Board’s Section 401 review
period, the State Board is unlikely to be ready to issue a
certification within the one-year deadline. 4 If the project
applicants do not give the State Board a sufficient
opportunity to “receive and properly review the necessary
environmental documentation” under CEQA by the end of
the review period, California regulations require the State
Board to “deny without prejudice certification . . . unless the
applicant in writing withdraws the request for certification.”
Id. tit. 23, § 3836(c).
Because it is often not feasible for a Section 401
certification to issue within one year of its submission, a
practice has developed over the last several decades—in
California and in other states—whereby project applicants
withdraw their requests for certification before the end of the
one-year review period and resubmit them as new requests,
rather than have their original requests denied. The theory
behind this practice is that a withdrawn-and-resubmitted
request starts a new one-year review period, affording the
project applicant more time to comply with procedural and
substantive prerequisites to certification and the state more
time to decide whether and under what conditions it will
grant the certification request. Although FERC expressed
misgivings in some orders that withdrawal-and-
resubmission could lead to delays in federal licensing, FERC
4FERC used to “deem the one-year waiver period to commence
when the certifying agency found the request acceptable for processing,”
but it has since departed from that interpretation. See California ex rel.
State Water Res. Control Bd. v. FERC, 966 F.2d 1541, 1552 (9th Cir.
1992). Apparently as a result, submitting a Section 401 certification
request in California does not require the project applicant to provide all
the materials that the State Board will eventually need for final approval.
14 CAL. STATE WATER RES. CONTROL BD. V. FERC
accepted the withdrawal-and-resubmission practice for
many years. See, e.g., Barrish & Sorenson Hydroelectric
Co., 68 FERC ¶ 62,161, 64,258 (Aug. 12, 1994) (noting that
the applicant “withdrew and refiled” its Section 401 request
the day before the one-year review deadline); Bradwood
Landing LLC, 126 FERC ¶ 61,035, at P 24 n.26 (Jan. 15,
2009) (observing that the project applicant’s withdrawal-
and-resubmission of its request for certification from the
state of Oregon “restarted the statutory one-year period” for
the state certifying agency); Const. Pipeline Co., 162 FERC
¶ 61,014, at P 23 (Jan. 11, 2018) (“We reiterate that once an
application is withdrawn, no matter how formulaic or
perfunctory the process of withdrawal and resubmission is,
the refiling of an application restarts the one-year waiver
period under section 401(a)(1).”), reh’g denied, 164 FERC
¶ 61,029, at P 17 (July 19, 2018) (reaffirming that
conclusion).
In 2019, however, the D.C. Circuit held that California
and Oregon had waived their certification authority by
entering a formal contract with a project applicant to delay
federal licensing proceedings through the continual
withdrawal-and-resubmission of the applicant’s certification
requests. Hoopa Valley Tribe v. FERC, 913 F.3d 1099(D.C. Cir. 2019). The court held that the states’ engagement
in a “coordinated withdrawal-and-resubmission scheme”
constituted a “failure” or “refusal” to act under the meaning
of Section 401. Id. at 1104–05. In response to Hoopa
Valley, FERC changed its position. In a series of orders,
including those at issue here, FERC concluded that states
had waived their Section 401 certification authority by
coordinating with project applicants on the withdrawal-and-
resubmission of Section 401 certification requests, even in
the absence of an explicit contractual agreement to do so.
CAL. STATE WATER RES. CONTROL BD. V. FERC 15B.
These petitions for review challenge three orders issued
by FERC holding that California waived its authority to
issue water quality certifications for the Yuba-Bear Project
(operated by the Nevada Irrigation District 5), the Yuba River
Project (operated by the Yuba County Water Agency), and
the Merced River and Merced Falls Projects (together, the
“Merced Projects”) (operated by the Merced Irrigation
District). We now summarize the relevant facts underlying
each of those three orders.
1.
In 1963, FERC issued the Nevada Irrigation District
(“NID”) a fifty-year license to operate the Yuba-Bear
Hydroelectric Project on the Middle Yuba, South Yuba, and
Bear Rivers, in Sierra, Placer, and Nevada Counties,
California. In 2011, two years before the license expired,
NID applied for a renewal of the license, as required by
statute. The relicensing application is still pending, 6 and
since the original license expired in 2013, NID has operated
the Yuba-Bear Project on interim, annual licenses under the
original license terms. 7 Because FERC licensed the Yuba-
Bear Project before the enactment of Section 401, those
5
The word “Nevada” in Nevada Irrigation District refers to Nevada
County, California.
6
Licensing, Federal Energy Regulatory Commission,
http://www.ferc.gov/licensing (follow hyperlink entitled “Pending
License, Relicense, and Exemption Applications” (updated July 15,
2022)).
7
See supra note 1.
16 CAL. STATE WATER RES. CONTROL BD. V. FERC
interim licenses are not subject to state-imposed conditions
under a Section 401 water quality certification.
On March 15, 2012, NID submitted a request for water
quality certification to the State Board. The request stated
that “NID intends to be the Lead Agency for the purpose of
compliance with the requirements of [CEQA], and will
coordinate with the [State] Board and other responsible
agencies.” The State Board acknowledged receipt of the
request, confirmed that the request met the state’s filing
requirements, and notified NID that the request was pending
before the State Board. The State Board reminded NID that,
“[a]lthough a final CEQA document is not required for [a]
complete application for certification, CEQA requirements
must be satisfied before the State Water Board can issue
certification.”
NID apparently never prepared the CEQA evaluation
required by California regulations. According to a status
report sent by the State Board to FERC, the State Board was
still “[a]waiting commencement of [the] CEQA process by
[NID]” as of December 2019, more than seven years after
NID submitted its initial certification request.
On March 1, 2013—two weeks before the State Board’s
deadline to act on the certification request—NID filed a
letter with the State Board withdrawing and resubmitting its
application for water quality certification. NID reiterated its
intent to act as the lead agency for CEQA purposes. The
State Board acknowledged receipt of the withdrawal-and-
resubmission and stated: “The new deadline for certification
action is February 28, 2014.”
Soon after, FERC issued a draft of its own environmental
impact statement, as required by federal law. The draft noted
NID’s withdrawal-and-resubmission and the State Board’s
CAL. STATE WATER RES. CONTROL BD. V. FERC 17new February 2014 deadline to act on the certification
request. The State Board submitted comments on the draft,
including both substantive comments on various water
quality concerns and comments attempting to clarify the
expected timeline for a Section 401 certification. The latter
set of comments stated:
The CEQA process has not started, and will
not be finished by the spring of 2014. The
most likely action will be that the Licensees
will withdraw and resubmit their respective
applications for water quality certification
before the one year deadline if the State
Water Board is not ready to issue its water
quality certifications. Otherwise, the State
Board will deny certification without
prejudice.
As noted above, NID never prepared a CEQA evaluation.
Instead, it continued to withdraw and resubmit its
certification request each year, for the five years between
2014 and 2018. In response to each withdrawal-and-
resubmission, the State Board acknowledged receipt and
conveyed the new deadline for certification action.
In 2019, on the day the D.C. Circuit decided Hoopa
Valley, the State Board denied without prejudice NID’s last
request for Section 401 certification. In the letter notifying
NID of the denial, the State Board explained that “[w]ithout
completion of the CEQA process, the State Water Board
cannot issue a certification.” NID then sought a declaratory
order from FERC that the State Board had waived its Section
401 certification authority.
FERC granted NID’s request, holding that the State
Board had waived its certification authority for the Yuba-
18 CAL. STATE WATER RES. CONTROL BD. V. FERC
Bear Project. FERC reasoned that, although Hoopa Valley
had involved a formal contract between the parties to defer
certification and delay federal licensing proceedings, “an
explicit agreement to withdraw and refile is not necessary”
to a finding of waiver. Rather, evidence of a “functional
agreement” or evidence of “the state’s coordination with the
licensee” would suffice to show that the state had “fail[ed]
or refuse[d] to act” under Section 401. Turning to the
evidence in the instant case, FERC first noted that the State
Board had consented to NID’s decision to continually
withdraw and resubmit its certification requests rather than
issue a denial. As evidence of the State Board’s coordination
in a withdrawal-and-resubmission scheme, FERC pointed to
the State Board’s comments on FERC’s draft environmental
impact statement, quoted above, describing the State
Board’s expectation that NID would withdraw and resubmit
its request. FERC also asserted that California regulations
“codify” the withdrawal-and-resubmission practice. Finally,
FERC found it “[t]elling[]” that the State Board had “failed
to dispute NID’s repeated statements” in its withdrawal-and-
resubmission letters that “the Board had all of the
information it needed to act.”
2.
The administrative record underlying FERC’s Yuba
River Project order is similar to the record from the Yuba-
Bear Project. In 1963, FERC issued the Yuba County Water
Agency (“YCWA”) a fifty-year license to operate the Yuba
River Development Project on the Yuba, North Yuba, and
Middle Yuba Rivers in Sierra, Yuba, and Nevada Counties.
YCWA filed an application for a new license in June 2017.
As with the Yuba-Bear Project, the Yuba River Project has
been operating under interim, annual licenses while its
CAL. STATE WATER RES. CONTROL BD. V. FERC 19relicensing application is pending, and those interim licenses
are not subject to state-imposed Section 401 conditions. 8
On August 24, 2017, YCWA submitted a request for
water quality certification to the State Board and affirmed its
role as the lead agency for CEQA compliance. The State
Board acknowledged receipt of the request and stated that
the deadline for certification action was one year later.
On July 25, 2018, a month before the end of the one-year
review period, a member of the State Board’s staff emailed
YCWA to remind it of the upcoming deadline. The email
stated:
YCWA’s water quality certification action
date for the Yuba River Development Project
(FERC No. 2246) is August 24, 2018. A final
CEQA document for the Project has not been
filed; therefore, the State Water Board cannot
complete the environmental analysis of the
Project that is required for certification.
Please submit a withdraw/resubmit of the
certification application as soon as possible.
Let me know if you have any questions.
YCWA responded that it planned to submit the withdrawal-
and-resubmission letter on August 20. The State Board staff
member replied: “My management usually gets a little antsy
when our action date gets below 3 weeks because a ‘deny
without prejudice’ letter takes time to route to our Executive
8
See supra notes 1 & 6.
20 CAL. STATE WATER RES. CONTROL BD. V. FERC
Director. If possible, please submit the letter by next
Friday.”
On August 3, 2018, YCWA filed a withdrawal-and-
resubmission letter with the State Board, reiterating its intent
to act as the lead agency for CEQA purposes. The State
Board acknowledged receipt of the withdrawal-and-
resubmission letter and stated: “The new deadline for
certification action is August 3, 2019.”
Like NID, YCWA apparently never prepared a CEQA
evaluation. A State Board status report to FERC indicated
that it was still “[a]waiting commencement of [the] CEQA
process by YCWA” in December 2019. After the D.C.
Circuit decided Hoopa Valley, the State Board denied
without prejudice YCWA’s resubmitted request for
certification, relying on YCWA’s failure to begin the CEQA
process. YCWA then sought a declaratory order from FERC
that the State Board had waived its Section 401 certification
authority.
FERC concluded that the State Board had waived its
certification authority for the Yuba River Project, employing
essentially the same reasoning as in its Yuba-Bear Project
order. This time, FERC found evidence of coordination in
the email exchange between the State Board’s staff member
and YCWA, reasoning that YCWA’s “withdrawal and
refiling of its application was in response to the [State]
Board’s request that it do so.” FERC asserted that “[t]he
coordination” demonstrated by that exchange “alone [was]
sufficient evidence that the [State] Board sought the
withdrawal and resubmittal of the Yuba River application to
circumvent the one-year statutory deadline for the state
agency to act.” As in the Yuba-Bear Project order, FERC
also pointed to California’s “codification” of the
withdrawal-and-resubmission practice in its regulations and
CAL. STATE WATER RES. CONTROL BD. V. FERC 21to the State Board’s failure to “dispute Yuba County’s
statements that . . . the [State] Board had all of the
information it needed to act.”
3.
The administrative record underlying FERC’s Merced
Projects order resembles the administrative records from the
Yuba-Bear and Yuba River Projects. In 1963 and 1969,
respectively, FERC issued licenses to the Merced Irrigation
District (“MID”) to operate the Merced River Hydroelectric
Project for a fifty-year term and to its predecessor licensee,
Pacific Gas and Electric Company (“PG&E”), to operate the
Merced Falls Hydroelectric Project for a forty-five-year
term. The Merced Projects are located on the Merced River
in Merced and Mariposa Counties. As with the Yuba-Bear
and Yuba River Projects, the Merced Projects are currently
operating under interim, annual licenses while relicensing is
pending. 9
On May 20 and May 21, 2014, MID and PG&E10
submitted to the State Board requests for water quality
certifications for the Merced Projects. The State Board
acknowledged receipt of the requests, conveyed the one-year
deadline for action, and warned that, “[i]f the information
necessary for compliance with CEQA is not provided to the
9
See supra notes 1 & 6.
10
PG&E transferred its license for the Merced Falls Project to MID
in 2017, making MID the applicant in the relicensing proceeding before
FERC. For the Merced Falls Project, between the initial certification
request in 2014 and the license transfer in 2017, it was the State Board—
not PG&E—that was the lead agency for the purpose of CEQA
compliance.
22 CAL. STATE WATER RES. CONTROL BD. V. FERC
State Water Board, staff may recommend denial of
certification without prejudice.”
In April 2015, one month before the original one-year
deadline, a State Board member emailed MID to remind it
of the upcoming deadline. The email stated:
Merced Irrigation District’s application for
water quality certification for the Merced
River Hydroelectric Project, FERC Project
No. 2179[,] expires on May 21, 2015. Please
withdraw the [sic] and simultaneously
resubmit an application for water quality
certification prior to May 13, 2015. If you
have any questions regarding this request or
this process, please feel free to contact me.
Please respond by email verifying receipt of
this correspondence.
MID apparently never prepared the CEQA evaluation
required by California regulations—the State Board said in
a status report to FERC that it was still “[a]waiting
commencement of [the CEQA] process” for both Merced
Projects in December 2019. Instead, each year between
2015 and 2018, MID and PG&E withdrew and resubmitted
their water quality certification requests before the
expiration of the State Board’s one-year period of review. In
response, the State Board acknowledged receipt of the
withdrawal-and-resubmission letters, conveyed the new
deadlines for certification action, and warned that failure to
comply with CEQA could result in denial of certification
without prejudice.
After the D.C. Circuit decided Hoopa Valley, the State
Board denied without prejudice MID’s resubmitted requests
for certification, relying on MID’s failure to comply with
CAL. STATE WATER RES. CONTROL BD. V. FERC 23CEQA. MID then sought a declaratory order from FERC
that the State Board had waived its Section 401 certification
authority.
FERC concluded that the State Board had waived its
certification authority for the Merced Projects, again using
nearly identical reasoning as in its Yuba-Bear Project and
Yuba River Project orders. In particular, FERC pointed to
“the four years of the applicants[’] withdrawing and
resubmitting their applications” and to the April 2015 email
from the State Board staff member to MID as evidence that
the State Board had engaged in a coordinated scheme to
continually reset its one-year deadline and avoid taking
action on the certification request. As in the other orders,
FERC noted that California’s regulations “codify” the
withdrawal-and-resubmission practice and highlighted the
State Board’s failure to “request additional information
regarding the [Section 401 requests.]”
***
In sum, in all three challenged orders, FERC held that
the Project Applicants’ withdrawals-and-resubmissions of
their Section 401 certification requests did not restart the
State Board’s one-year review clock because the State Board
“coordinated” with the Project Applicants in a scheme to
avoid deciding the request within the statutory deadline.
The State Board and various environmental
organizations timely petitioned our court for review of all
three orders.
II.
“We review FERC decisions to determine whether they
are ‘arbitrary, capricious, an abuse of discretion,
24 CAL. STATE WATER RES. CONTROL BD. V. FERC
unsupported by substantial evidence, or not in accordance
with the law.’” California ex rel. Harris v. FERC, 784 F.3d
1267, 1272 (9th Cir. 2015) (quoting Cal. Dep’t of Water Res.
v. FERC, 341 F.3d 906, 910 (9th Cir. 2003)). “[S]ubstantial
evidence constitutes more than a mere scintilla. It means
such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. If the evidence is
susceptible of more than one rational interpretation, we must
uphold [FERC’s] findings.” Fall River Rural Elec. Coop. v.
FERC, 543 F.3d 519, 525 (9th Cir. 2008) (second alteration
in original) (quoting Bear Lake Watch, Inc. v. FERC, 324
F.3d 1071, 1076 (9th Cir. 2003)). Although we must accept
reasonable inferences drawn by an agency, “[s]ubstantial
evidence cannot be based upon an inference drawn from
facts which are uncertain or speculative and which raise only
a conjecture or a possibility.” Woods v. United States, 724
F.2d 1444, 1451 (9th Cir. 1984).
III.
As noted above, FERC changed its position on
withdrawal-and-resubmission following the D.C. Circuit’s
decision in Hoopa Valley. Hoopa Valley concerned a series
of dams along the Klamath River in California and Oregon
that were operated by PacifiCorp pursuant to a federal
license. 913 F.3d 1099, 1101 (D.C. Cir. 2019). As
PacifiCorp’s license was due to expire, PacifiCorp asked
FERC to relicense the upper dams and decommission the
lower dams. Id. PacifiCorp requested Section 401
certifications from California and Oregon. Id. While those
requests were pending, a consortium of parties—including
PacifiCorp, the two states, and various other interested
groups—entered negotiations to address certain risks
associated with decommissioning the lower dams. Id.Those negotiations culminated in a formal agreement, in
CAL. STATE WATER RES. CONTROL BD. V. FERC 25which the states promised that they would not take any
action on the certification requests and PacifiCorp promised
to withdraw and resubmit them annually as necessary to
preserve the states’ certification authority. Id. at 1101–02.
The goal of that arrangement was to pause federal licensing
proceedings until PacifiCorp had satisfied various
preconditions for decommissioning specified in the
agreement, including adopting interim environmental
measures and securing federal funds for the project. Id.Pursuant to the agreement, PacifiCorp’s water quality
certification requests remained undecided by California and
Oregon even though they “ha[d] been complete and ready
for review for more than a decade.” Id. at 1105.
The Hoopa Valley Tribe, which was not a party to the
contractual agreement and whose reservation is downstream
of the dams, petitioned FERC for a declaratory order that
California and Oregon had waived their Section 401
certification authority. Id. at 1102. FERC declined to find a
waiver, id., in keeping with its long-held position that the
withdrawal-and-resubmission procedure restarted a state’s
one-year review period. The D.C. Circuit disagreed,
concluding that California and Oregon had demonstrated
“deliberate and contractual idleness” by “shelving water
quality certifications” pursuant to the “coordinated
withdrawal-and-resubmission scheme” required by the
parties’ contractual agreement. Id. at 1104–05.
Accordingly, the court held that the states had failed or
refused to act on the certification requests within one year
and had therefore waived their certification authority under
Section 401. Id.
Following Hoopa Valley, FERC began finding waiver in
many cases where project applicants had withdrawn and
resubmitted certification requests. FERC has applied Hoopa
26 CAL. STATE WATER RES. CONTROL BD. V. FERC
Valley not only to cases involving express agreements to
delay certification through withdrawal-and-resubmission,
like the agreement at issue in Hoopa Valley itself, but also to
cases involving what FERC has deemed more informal,
coordinated schemes. E.g., McMahan Hydroelectric, LLC,
168 FERC ¶ 61,185, at P 37 (Sept. 20, 2019), vacated by
N.C. Dep’t of Env’t Quality v. FERC (NCDEQ), 3 F.4th 655(4th Cir. 2021); Placer Cnty. Water Agency, 167 FERC
¶ 61,056, at P 12 (Apr. 18, 2019).
In defining its standard for waiver, FERC draws a line
between a “coordinated” scheme and a “unilateral”
withdrawal-and-resubmission by the project applicant. In its
brief to our court, FERC takes the position that “an
applicant’s unilateral withdrawal and resubmittal is not
imputed to the State” and therefore does not trigger a waiver.
Ordinarily, FERC acknowledges, “[o]nce an applicant
withdraws a request, it is not clear that the State retains
power to act on it”; the withdrawal of the request removes it
from the state’s consideration, and the resubmission of the
certification request begins a new one-year review period.
Accordingly, where the evidence shows that the state has
merely acquiesced in a project applicant’s own decision to
withdraw and refile—and, especially, where the state would
have no discernible motive for attempting to procure a
withdrawal-and-resubmission—FERC’s position is that the
state has not waived its certification authority. See, e.g.,
Village of Morrisville, 174 FERC ¶ 61,141, at P 22 (Feb. 24,
2021) (“[The Vermont certifying agency’s] mere acceptance
of Morrisville’s requests to withdraw and refile is not
evidence of a functional agreement between the parties with
the motivation to restart the one-year clock.”), modifying on
reh’g 173 FERC ¶ 61,156 (Nov. 19, 2020).
CAL. STATE WATER RES. CONTROL BD. V. FERC 27By contrast, FERC contends that “where the State
coordinates in an applicant’s withdrawal of its request, the
State has affirmatively ‘fail[ed] or refus[ed] to act’ on it
within one year,” and thus waived its Section 401
certification authority. FERC emphasizes that “it is a State’s
efforts to avoid the one-year deadline by way of withdrawal
and resubmittal that reflect the ‘State’s dalliance or
unreasonable delay.’” (quoting Hoopa Valley, 913 F.3d at
1104). In other words, according to FERC, “the dispositive
factor” is whether the state coordinates with the project
applicant “to afford itself more time to decide a certification
request.” Under that standard, where the state has sought a
withdrawal-and-resubmission for its own purposes—
perhaps, for example, because it lacks an adequate basis to
deny certification but needs more time to craft certification
conditions—the state has engaged in a coordinated scheme
to avoid the one-year deadline for action.
We need not decide whether the coordination standard
FERC advances is consistent with the text of Section 401
because we agree with the State Board and the
environmental organizations that FERC’s findings of
coordination are not supported by substantial evidence in the
record. 11 Instead, the evidence shows only that the State
11
Because the Environmental Protection Agency (“EPA”) is
charged with administering the Clean Water Act, including Section 401,
EPA’s interpretations of the Act, rather than FERC’s, are entitled to
deference under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467
U.S. 837 (1984). Alcoa Power Generating Inc. v. FERC, 643 F.3d 963,
972 (D.C. Cir. 2011). In 2020, after the events at issue here, EPA
promulgated a final rule interpreting the waiver provision in Section 401
for the first time, and EPA has since proposed a new rule that would
revise and replace the 2020 rule. See 40 C.F.R. pt. 121 (codifying Clean
Water Act Section 401 Certification Rule, 85 Fed. Reg. 42210 (July 13,
2020)); Clean Water Act Section 401 Water Quality Certification
28 CAL. STATE WATER RES. CONTROL BD. V. FERC
Board acquiesced in the Project Applicants’ own decisions
to withdraw and resubmit their applications rather than have
them denied. 12
In the Yuba-Bear Project order, FERC relied almost
entirely on comments that the State Board submitted in
response to FERC’s draft environmental impact statement.
As described above, those comments stated: “The CEQA
process has not started . . . . The most likely action will be
that [NID] will withdraw and resubmit . . . . Otherwise, the
State Water Board will deny certification without prejudice.”
From those comments, FERC concluded that NID had not
“acted voluntarily and unilaterally” in withdrawing and
resubmitting its certification request because the State Board
“expected NID to withdraw and refile its application.”
Far from showing that the State Board coordinated a
scheme to delay a decision on certification, the State Board’s
comments (which were not even conveyed directly to NID)
show merely that the State Board predicted that NID would
decide to withdraw and resubmit. The State Board observed
that NID had not started the CEQA process and that, as a
result, “[t]he most likely action” was that NID would
withdraw and resubmit its request. The statement describes
the State Board’s prediction but gives no indication that the
Improvement Rule, 87 Fed. Reg. 35318 (proposed June 9, 2022) (to be
codified at 40 C.F.R. pts. 121, 122, & 124). We need not consider EPA’s
interpretations of Section 401 because they apply only prospectively and
because, in any event, we do not reach the statutory-interpretation issue.
12
Because we vacate FERC’s orders on substantial-evidence
grounds, we also do not reach the State Board’s arguments that FERC’s
“coordination” standard cannot be applied retroactively either under
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), or under Montgomery
Ward & Co. v. FTC, 691 F.2d 1322 (9th Cir. 1982).
CAL. STATE WATER RES. CONTROL BD. V. FERC 29State Board was working to engineer that outcome. Indeed,
the State Board went on to say that it was fully prepared to
“deny certification without prejudice” if NID took a different
course. The comments do not suggest that the State Board
was motivated to delay certification by way of withdrawal-
and-resubmission. 13
FERC’s order ignored the import of other evidence in the
record that furnishes crucial context: It was NID that had
failed to comply with CEQA, and thus it was NID—not the
State Board—that apparently had a motive for delay. If,
conversely, NID had complied with its legal obligations
under state law, then statements like those quoted above
might suggest that the State Board was seeking to extend its
own decision-making window by instructing NID to
withdraw and resubmit the application. Here, though, the
comments indicate only that the State Board predicted that
NID would withdraw its application because of NID’s own
failure to comply with CEQA—and that the State Board
would deny the certification request without prejudice if
13
FERC speculates in its brief that the State Board might have
preferred withdrawal-and-resubmission because, unlike a denial without
prejudice, the withdrawal-and-resubmission might not be subject to
judicial review in state court. There is no evidence in the record that the
State Board was motivated to avoid judicial review. And, in any event,
the parties have given us no reason to believe that a state-court challenge
to such a denial would have succeeded, given that the Project Applicants
had not submitted the materials required by CEQA. See Cal. Code Regs.
tit. 23, § 3836(c) (providing that, in the absence of required CEQA
documentation, “the certifying agency shall deny without prejudice
certification for any discharge resulting from the proposed activity”);
Turlock Irrigation Dist., 174 FERC ¶ 61,042, at PP 31-33 (Jan. 19, 2021)
(noting that state law governs the validity of the State Board’s action to
deny certification pursuant to state water quality standards), petition for
review denied by Turlock Irrigation Dist. v. FERC, 36 F.4th 1179 (D.C.
Cir. 2022).
30 CAL. STATE WATER RES. CONTROL BD. V. FERC
NID chose not to withdraw it, as state law would have
required, see Cal. Code Regs. tit. 23, § 3836(c). In short, the
State Board’s comments show only that it consented to
NID’s own decision to withdraw and resubmit its
certification requests.
The evidence supporting FERC’s waiver finding in the
Yuba River Project order is similarly inadequate. FERC
relied almost exclusively on an email exchange between a
member of the State Board’s staff and YCWA, in which the
staff member reminded YCWA that the “final CEQA
document for the Project has not been filed” and asked
YCWA to “[p]lease submit a withdraw/resubmit of the
certification application as soon as possible.” The staff
member noted in a follow-up email that the reason for the
urgency was that “a ‘deny without prejudice’ letter takes
time to route to our Executive Director.”
Considered in context, those emails do not support
FERC’s finding of coordination. Because YCWA had not
complied with CEQA, the State Board could not grant a
Section 401 certification. Cal. Code Regs. tit. 23, § 3836(c).
The staff member’s request that YCWA send a withdrawal-
and-resubmission letter merely reflected his prediction that
YCWA would choose the withdrawal-and-resubmission
path rather than have its certification denied by the Board.
After all, the withdrawal-and-resubmission mechanism had
become a standard practice employed by project applicants
who had not yet complied with CEQA—a practice that both
the State Board and FERC had long accepted. The follow-
up email confirms that understanding. The State Board was
prepared to deny certification but wanted to prepare such a
denial before the deadline if YCWA chose not to withdraw;
from the State Board’s perspective, withdrawal-and-
resubmission and denial without prejudice were functional
CAL. STATE WATER RES. CONTROL BD. V. FERC 31substitutes that would have had the same practical effect.
Like the State Board’s comments on the Yuba-Bear Project,
the State Board’s communication here shows only that the
State Board acquiesced in YCWA’s own decision to
withdraw its requests.
Finally, in the Merced River Project order, FERC again
relied primarily on a single email from the State Board,
which, for similar reasons, cannot support FERC’s waiver
finding. The email asked that MID “[p]lease withdraw the
[sic] and simultaneously resubmit an application for water
quality certification prior to” the deadline. 14 Once again,
context is critical to understanding the message: MID had
not complied with its obligation to furnish the CEQA
documents required by state law. For that reason, the State
Board anticipated that MID would withdraw and resubmit
its certification request, as was the common practice, and
accepted MID’s decision to do so. Nothing in the record
suggests that the State Board was unprepared to deny the
requests in accordance with state regulations if MID chose
not to withdraw and resubmit, see Cal. Code Regs. tit. 23,
§ 3836(c), or that the State Board had any motive to delay a
certification decision by coordinating a withdrawal-and-
resubmission.
14
As noted above, see supra note 10, the State Board was the lead
CEQA agency for the Merced Falls Project before PG&E transferred its
license to MID. FERC has not offered a similar email or any other
evidence that might support a waiver determination for the Merced Falls
Project; nor has FERC argued that the State Board’s initial role provides
a basis for treating the Merced Falls Project differently from the Merced
River Project. See United States v. Dreyer, 804 F.3d 1266, 1277 (9th
Cir. 2015) (en banc) (“Generally, an appellee waives any argument it
fails to raise in its answering brief.”).
32 CAL. STATE WATER RES. CONTROL BD. V. FERC
Indeed, for all three projects, it seems that the State
Board, unlike the Project Applicants, would have had an
interest in moving along the environmental-review process.
The Project Applicants were operating under interim, annual
licenses that were not subject to state-imposed water quality
conditions. See supra notes 1 & 6. Completing the Section
401 certification process would have allowed the State
Board to impose conditions on any eventual new license.
The evidence shows that, for all three projects, the State
Board was at least actively engaged in relicensing
proceedings by, for example, participating in the pre-
application process to design the necessary environmental
studies, submitting comments on FERC’s draft
environmental analyses, and providing regular status
updates to FERC on pending certification requests. The
Project Applicants, by contrast, stood to benefit from any
delays because a Section 401 certification likely would have
imposed additional environmental-protection measures. See
Turlock Irrigation Dist. v. FERC, 36 F.4th 1179, 1183 n.6
(D.C. Cir. 2022) (noting that applicants operating under
interim, annual licenses have “an incentive to delay” because
their expired, decades-old licenses “presumably include[] far
fewer environmental conditions” than current law requires).
FERC’s remaining evidence is no more persuasive. In
all three orders under review, FERC pointed to the serial
withdrawals-and-resubmissions themselves. But, as
FERC’s own position recognizes, “an applicant’s unilateral
withdrawal and resubmittal is not imputed to the State.”
Even under FERC’s interpretation of the statute, the mere
fact that withdrawals-and-resubmissions occurred cannot
demonstrate that the State Board was engaged in a
coordinated scheme to delay certification.
CAL. STATE WATER RES. CONTROL BD. V. FERC 33FERC also observed in all three waiver orders that
California’s regulations “codify [the] practice” of
withdrawal-and-resubmission—and, in its brief to our court,
FERC offers those regulations as additional evidence that the
State Board directed the Project Applicants to withdraw their
certification requests. FERC is wrong to describe
California’s regulations as “prescribing withdrawal as a
response to the impending risk of federal waiver.” Those
regulations instead state that, where a project applicant has
failed to comply with CEQA, “the certifying agency shall
deny without prejudice certification for any discharge
resulting from the proposed activity unless the applicant in
writing withdraws the request for certification.” Cal. Code
Regs. tit. 23, § 3836(c) (emphasis added). 15 The most that
can be said about the regulations is that they acknowledge
applicants’ longstanding practice—accepted by FERC for
decades—of withdrawing and resubmitting Section 401
certification requests to avoid having them denied for failure
to comply with state environmental-review requirements.
Finally, all three orders also relied on the State Board’s
alleged failure to dispute statements by the Project
Applicants “that the Board had all of the information it
needed” or to request additional information. FERC’s orders
mischaracterize the record. The State Board never disputed
that the Project Applicants had met the minimum filing
requirements to submit a Section 401 certification request.
But the State Board continually reminded NID, YCWA, and
MID that it did not have the information it would need to
15
As mentioned above, see supra note 2, the California legislature
recently amended state law to permit the State Board to issue a Section
401 certification without a final CEQA evaluation under certain
circumstances. We express no view on how that amendment might
affect the operation of this regulation going forward.
34 CAL. STATE WATER RES. CONTROL BD. V. FERC
grant a request—namely, the CEQA evaluation that
California law required, Cal. Code Regs. tit. 23, § 3856(f).
In short, the records in all three orders under review
demonstrate that the Project Applicants chose to withdraw
and resubmit their certification requests because they had not
complied with California’s CEQA regulations. Without a
complete CEQA evaluation, the State Board was legally
obligated to deny the requests without prejudice, and the
record suggests that the State Board was prepared to do so.
To avoid such a denial, the Project Applicants employed the
common and long-accepted withdrawal-and-resubmission
maneuver, with the State Board’s acquiescence. 16 We note
that, if the Project Applicants had preferred not to undertake
withdrawal-and-resubmission, they could have declined to
do so, forced the State Board to deny their certification
requests, and, if they believed the denials were unwarranted,
challenged them in state court. The Project Applicants chose
16
Although it appears that, from the State Board’s perspective,
withdrawal-and-resubmission and denial without prejudice were
functionally equivalent, the Project Applicants apparently had reasons to
prefer withdrawal-and-resubmission. At oral argument, FERC
suggested that “there are risks that come with a denial” for the applicant,
suggesting that a denial might “affect[] their investor decisions” and
could also “imperil their federal license.” Oral Argument at 33:01-
33:16. The latter concern apparently stems from the fact that a denial
without prejudice might signal to FERC that the project applicant is not
diligently pursuing Section 401 certification—which could constitute
grounds for dismissal of the federal licensing application, see Turlock
Irrigation Dist., 174 FERC ¶ 61,042, at PP 37-38 (Jan. 19, 2021). The
Project Applicants confirmed at oral argument that they preferred to
avoid denials without prejudice: “You say denial without prejudice, but
denial is denial no matter what label you put on it. Then the applicants
would have been in the position of deciding whether they had to appeal
or not, if they didn’t appeal, whether they might be estopped from
appealing in the future.” Oral Argument at 52:50-53:12.
CAL. STATE WATER RES. CONTROL BD. V. FERC 35not to take that path—and nothing in the record shows that
the State Board encouraged that choice. Under FERC’s own
coordination standard, a state’s mere acceptance of a
withdrawal-and-resubmission is not enough to show that the
state engaged in a coordinated scheme to avoid its statutory
deadline for action. Accordingly, FERC’s orders cannot
stand.
The Fourth Circuit recently reached the same conclusion
in a case with similar facts. See NCDEQ, 3 F.4th 655. In
that case, FERC had also found waiver based on email
correspondence from the certifying agency reminding the
project applicant of the deadline for withdrawal-and-
resubmission. Id. at 662–64. The Fourth Circuit vacated
FERC’s order, concluding that, even “[a]ssuming without
deciding that a State may waive its certification authority
under [Section] 401 by coordinating with an applicant in a
scheme to defeat the statutory review period through a
process of withdrawing and resubmitting the certification
application,” the correspondence between the certifying
agency and the project applicant was not substantial
evidence of coordination. Id. at 676.
We agree with the Fourth Circuit’s observation in
NCDEQ that “it must take more than routine informational
emails to show coordination” because the states’ “rights and
responsibilities to ensure compliance with their own water-
quality standards are too important to be so easily stripped
away.” Id. at 675. Because the default term of a federal
license is forty years, a state’s waiver could result in a
hydroelectric project’s being noncompliant with a state’s
standards for decades. Considering those dramatic
consequences, FERC’s coordination findings cannot rest on
such thin evidence as a simple courtesy email reminding an
applicant of an impending deadline.
36 CAL. STATE WATER RES. CONTROL BD. V. FERC
IV.
For the foregoing reasons, we conclude that FERC’s
orders are not supported by substantial evidence. We
therefore VACATE those orders and REMAND for further
proceedings consistent with this opinion.