California State Water Resourc v. Ferc, 43 F.4th 920

Background

Clean Water Act §401 lets states impose conditions on federal licenses for activities that may discharge into navigable waters; states must act within one year or their certification authority is waived.
California’s CEQA often delays state certification because applicants (usually public agencies) must prepare environmental review; if CEQA materials are incomplete, state regs allow denial without prejudice unless the applicant withdraws in writing.
A longstanding practice developed where applicants withdraw and resubmit §401 requests before the one-year deadline to restart the one-year clock rather than face denial.
After Hoopa Valley Tribe v. FERC, FERC shifted positions and began finding waiver where it concluded a state had "coordinated" with applicants to withdraw-and-resubmit, even absent an express contract.
FERC issued three orders finding the California State Water Resources Control Board waived §401 authority for the Yuba‑Bear, Yuba River, and Merced projects based mainly on emails, Board comments, and the regulatory context.
The Ninth Circuit held FERC’s coordination findings were unsupported by substantial evidence, vacated the orders, and remanded for further proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether California waived §401 authority by coordinating a withdrawal‑and‑resubmission scheme	State Board: record shows only acquiescence to applicants’ unilateral withdrawals prompted by applicants’ CEQA noncompliance	FERC: a "functional agreement" or state coordination (including informal contacts) can show waiver	Court: FERC’s findings of coordination are not supported by substantial evidence; vacated orders
Whether routine emails/comments and the California regulation constitute substantial evidence of coordination	State Board: emails predicted applicant behavior and regs merely reflect established practice; do not show state-engineered delay	FERC: emails/regulations show the State sought or encouraged withdrawals to avoid the one-year deadline	Court: such routine communications and the regulation are insufficient to prove coordination
Whether FERC’s coordination standard (post‑Hoopa) is a permissible interpretation of §401 or may be applied retroactively	State Board and amici challenged the standard and argued retroactivity problems	FERC defended its post‑Hoopa application of a coordination standard	Court: declined to resolve the statutory/retroactivity questions; decision rests on lack of substantial evidence
Remedy: appropriate disposition if FERC’s findings fail	Petitioners: vacatur and remand for further proceedings	FERC: argued waiver findings should stand	Court: vacated FERC orders and remanded for further proceedings

Key Cases Cited

PUD No. 1 of Jefferson Cnty. v. Wash. Dep’t of Ecology, 511 U.S. 700 (1994) (§401 requires state certification and allows state conditions on federal licenses)
S.D. Warren Co. v. Me. Bd. of Env’t Prot., 547 U.S. 370 (2006) (§401 certification process preserves state authority over water quality)
Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (D.C. Cir. 2019) (state waiver found where formal coordinated withdrawal‑and‑resubmission agreement caused deliberate shelving)
Alcoa Power Generating Inc. v. FERC, 643 F.3d 963 (D.C. Cir. 2011) (discusses waiver period and state timing under §401)
California ex rel. State Water Res. Control Bd. v. FERC, 966 F.2d 1541 (9th Cir. 1992) (prior FERC interpretation of waiver timing discussed)
Fall River Rural Elec. Coop. v. FERC, 543 F.3d 519 (9th Cir. 2008) (standard for substantial‑evidence review of FERC findings)
N.C. Dep’t of Env’t Quality v. FERC, 3 F.4th 655 (4th Cir. 2021) (vacated FERC waiver finding where emails were insufficient to show coordination)