Commissioner James Danly Statement
May 21, 2021
Docket Nos. 2299-087 and 14581-004
I dissent from today’s order on rehearing reaffirming the Commission’s finding that the California State Water Resources Control Board (Board) did not waive its ability to issue a water quality certification to Turlock Irrigation District and Modesto Irrigation District (Districts). Although I initially voted for not finding waiver,[1] after considering the material raised in the request for rehearing and reviewing the filings in the proceeding, it is now my view that our prior finding—reaffirmed here—contravenes section 401 of the Clean Water Act (CWA).
CWA section 401 delegates to states the authority to issue water quality certifications for the construction or operation of facilities that may discharge into navigable waters within their jurisdiction.[2] While broad, that delegation is not limitless. Congress required states to “establish procedures for public notice in the case of all applications” and permitted states to establish “procedures for public hearings in connection with specific applications.”[3] Then, in order to “curb a state’s ‘dalliance or unreasonable delay,’”[4] Congress provided that if a 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 shall be waived with respect to such Federal application.”[5] In Hoopa Valley Tribe v. FERC (Hoopa Valley), the court found that “[w]hile the statute does not define ‘failure to act’ or ‘refusal to act,’ the states’ efforts . . . constitute such failure and refusal within the plain meaning of these phrases” because “the withdrawal-and-resubmission scheme could be used to indefinitely delay federal licensing proceedings.”[6]
Like the withdrawal-resubmission scheme found impermissible in Hoopa Valley, the Board in this case twice denied the Districts’ application in what appears to be an attempt to override the statute’s one-year deadline thereby affording itself additional time to act. The Board received the application, acknowledged receipt, found the Districts’ application met the filing requirements set forth in the California Code of Regulations, and identified the one-year deadline for certification.[7] The Board did not request additional information. And just two days before the one-year deadline, the Board denied the application without prejudice stating that environmental review under the National Environmental Policy Act and the California Environmental Quality Act (CEQA) had not been completed and the Board therefore could not issue its certification.[8] The Board also explained that the Districts would need to request certification “[i]n order to maintain an active certification application.”[9]
Then, after the Districts filed their application “substantively unchanged,”[10] the Board did it all again, denying the application just two days before the deadline but this time adding, “without elaboration, that ‘the proposed activity does not comply with applicable water quality standards and other appropriate requirements.’”[11] Despite finding that the proposed activity did not comply with applicable standards, the Board issued a water quality certification for the Districts’ third request, which was “identical to the first and second requests for certification.”[12] The timing of the ultimate approval also bears note: it occurred after the Districts filed their petition for finding waiver and had withdrawn their third request.
Whether the Board explicitly suggests withdrawal and resubmission, or styles its suggestion as a denial without prejudice, removing the applicant’s complicity, the result is the same: the Board’s denial without prejudice in this case “usurp[s] FERC’s control over whether and when a federal license will issue”[13] and is intended to override the waiver provision “created ‘to prevent a State from indefinitely delaying a federal licensing proceeding.’”[14] Indeed, the U.S. Environmental Protection Agency (EPA) has stated in guidance, under the heading, “When More Time is Needed,” that “states have tended to take two approaches”: (1) suggesting the applicant withdraw and resubmit its application and (2) denying the application without prejudice.[15] EPA explicitly declined to endorse either approach as consistent with CWA section 401.[16]
The Commission does not dispute that denials without prejudice could be used to override the waiver provision.[17] Rather, the Commission argues that the Board’s denial without prejudice in this case constituted an “act” because “section 401 does not define ‘failure to act’ or ‘refusal to act’”[18] and the Commission is “reluctant” to interpret such phrases as encompassing a denial without prejudice when its interpretation is entitled to no deference.[19] This argument is essentially the same as that made by the Commission, and that the Hoopa Valley court rejected, in support of the withdrawal-and-resubmission scheme constituting an “act”: “The Act therefore speaks solely to state action or inaction, rather than the repeated withdrawal and refiling of applications.”[20] This argument is no more compelling because the state treats withdrawal-resubmission and denial without prejudice differently.[21] Those may be different labels but both are used to achieve the same result. The rights of the Districts to potentially appeal (so long as they have exhausted all administrative remedies) the denial in state court does not cure the fact that the denial without prejudice is a procedural device used to override the one-year deadline.[22]
I cannot fault my colleagues for their reluctance to reduce a state’s flexibility to issue water quality certifications. Indeed, my inclination in such cases is always to allow the state instrumentality to act as it sees fit under the statutory scheme enacted by Congress and let aggrieved parties seek redress in state court. The federal courts, however, have spoken. They have stated that procedural schemes that work an extension of the one-year deadline constitute failures or refusals to act. And, in fact, here the state heeded the court’s guidance and revised their procedures in order to comply with the reinvigorated one-year deadline.[23] The Board’s repeated denials without prejudice are essentially the same as the scheme in Hoopa Valley. The court has instructed us as to our duty and I see no reason to wait for the issue to reach the courts before finding waiver as the Commission suggests, my respect for the states’ independence notwithstanding.[24]
For these reasons, I respectfully dissent.
[1] See Turlock Irrigation Dist., 174 FERC ¶ 61,042 (2021) (Declaratory Order). To the extent that the Commission signaled in Merced Irrigation District that denial without prejudice for the purpose of extending the one-year deadline is considered an “act” under CWA section 401, I voted for that order in error. See Merced Irrigation Dist., 171 FERC ¶ 61,240, at P 32 (2020) (“We note that to the extent a state lacks sufficient information to act on a certification request, it has a remedy: it can deny certification. Delay beyond the statutory deadline, however, is not an option.”).
[2] See 33 U.S.C. § 1341(a)(1).
[3] Id.
[4] Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1104 (D.C. Cir. 2019) (citing 115 Cong. Rec. 9264 (1969)) (emphasis omitted).
[5] 33 U.S.C. § 1341(a)(1).
[6] Hoopa Valley, 913 F.3d at 1104.
[7] Declaratory Order, 174 FERC ¶ 61,042 at P 5.
[8] See id. P 6; see also Merced Irrigation Dist., 171 FERC ¶ 61,240 at P 22 (“Moreover, the Commission found unavailing the Board’s assertion that it could not issue a water quality certification until the CEQA process was complete, which often takes more than one year, and determined that the general principle from Hoopa Valley still applied.”) (citing Pac. Gas & Elec. Co., 170 FERC ¶ 61,232, at PP 31-33 (2020)).
[9] Districts Petition at attachment C (Board January 24, 2019 Denial Letter).
[10] Declaratory Order, 174 FERC ¶ 61,042 at P 8 (citation omitted).
[11] Id. P 9 (quoting District Petition at attachment C (Board April 20, 2020 Denial Letters)).
[12] Id. P 10.
[13] Hoopa Valley, 913 F.3d at 1104.
[14] Id. at 1104-05 (citing Alcoa Power Generating Inc. v. FERC, 643 F.3d 963, 972-73 (D.C. Cir. 2011); Millennium Pipeline Co., L.L.C. v. Seggos, 860 F.3d 696, 701-02 (D.C. Cir. 2017)); see also N.Y. State Dep’t of Env’t Conservation v. FERC, 991 F.3d 439, 449 (2d Cir. 2021) (“Section 401 was intended to curb conduct by certifying states that upsets the regulatory balance set by Congress.”) (citation omitted); id. at 450 (“[W]e are bound by what we believe to be Congress’ intention expressed in the text of Section 401 and reinforced in its legislative history to reduce flexibility in favor of protecting the overall federal licensing regime.”).
[15] U.S. Environmental Protection Agency, Office of Wetlands, Oceans and Watersheds, Clean Water Act Section 401: A Water Quality Protection Tool for States and Tribes, 13 (2010), https://eelp.law.harvard.edu/2021/01/section-401-of-the-clean-water-act-from-trump-to-biden/ (linking to Clean Water Act Section 401: A Water Quality Protection Tool for States and Tribes under the term “interim guidance”) (2010 Guidance) (emphasis added). The 2010 Guidance was rescinded and replaced in 2019 with an updated guidance, which recommended, “the state or tribe not delay action on a certification request until a NEPA review is complete unless the request is submitted at or near the conclusion of the NEPA process.” U.S. Environmental Protection Agency, Clean Water Act Section 401 Guidance for Federal Agencies, States, and Authorized Tribes, 5 (2019), https://www.epa.gov/sites/production/files/2019-06/documents/cwa _section_401_guidance.pdf (2019 Guidance). The 2019 Guidance is no longer in effect. See U.S. Environmental Protection Agency, CWA Section 401 Certification, https://www.epa.gov/cwa-401/clean-water-act-section-401-guidance-federal-agencies-states-and-authorized-tribes.
[16] 2010 Guidance at 13 n.70 (“This handbook does not endorse either of the two approaches, but emphasizes the need for coordination regarding necessary information early in the certification process in order to avoid denial or withdrawal due to data gaps.”).
[17] See Declaratory Order, 174 FERC ¶ 61,042 at 33.
[18] Turlock Irrigation Dist., 175 FERC ¶ 61,144, at P 11 (2021) (quoting Declaratory Order, 174 FERC ¶ 61,042 at P 33).
[19] Declaratory Order, 174 FERC ¶ 61,042 at P 33.
[20] PacifiCorp, 149 FERC ¶ 61,038, at P 20 (2014), vacated and remanded sub nom. Hoopa Valley, 913 F.3d 1099 (emphasis in original).
[21] See Turlock Irrigation Dist., 175 FERC ¶ 61,144 at P 11.
[22] See id.
[23] See Board January 19, 2021 Water Quality Certification at 18 (“On June 29, 2020, Governor Newsome signed into law amendments to the Water Code that provide the State Water Board with the authority to issue certifications before completion of CEQA review, where waiting until completion of CEQA review presents a substantial risk of wavier of certification authority.”).
[24] See Declaratory Order, 174 FERC ¶ 61,042 at P 33 (“It may be that the courts will find repeated denials without prejudice, and particularly those that do not rest on any substantive conclusions, to be the equivalent of the withdrawal-and-resubmittal scheme.”). The Board has denied without prejudice water quality certifications in eight other proceedings: (1) Yuba-Bear Hydroelectric Project No. 2266 (Accession No. 20190205-0043), (2) Merced River Hydroelectric Project No. 2179 (Accession No. 20190429-0020), (3) Merced Falls Hydroelectric Project No. 2467 (Accession No. 20190429-0020), (4) Yuba River Project No. 2246 (Accession No. 20190822-5016), (5) Deer Creek Project No. 14530 (Accession No. 20181217-0025), (6) Upper North Fork Feather River Hydroelectric Project No. 2105 (Accession No. 20190228-0019), (7) Don Pedro Hydroelectric Project No. 2299 (Accession No. 20190206-0011), and (8) La Grange Hydroelectric Project No. 14581 (Accession No. 20190206-0011).