CALIFORNIA STATE WATER RESOURCES CONTROL BOARD, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, NEVADA IRRIGATION DISTRICT, Intervenor. SOUTH YUBA RIVER CITIZENS LEAGUE; CALIFORNIA SPORTFISHING PROTECTION ALLIANCE; FRIENDS OF THE RIVER; MOTHER LODE CHAPTER OF THE SIERRA CLUB, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, NEVADA IRRIGATION DISTRICT, Intervenor. CALIFORNIA STATE WATER RESOURCES CONTROL BOARD, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, YUBA COUNTY WATER AGENCY, Respondent-Intervenor. SOUTH YUBA RIVER CITIZENS LEAGUE; CALIFORNIA SPORTFISHING PROTECTION ALLIANCE; FRIENDS OF THE RIVER; MOTHER LODE CHAPTER OF THE SIERRA CLUB, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, YUBA COUNTY WATER AGENCY, Respondent-Intervenor. CALIFORNIA STATE WATER RESOURCES CONTROL BOARD, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, MERCED IRRIGATION DISTRICT, Respondent-Intervenor. CALIFORNIA SPORTFISHING PROTECTION ALLIANCE; FRIENDS OF THE RIVER; SIERRA CLUB AND ITS TEHIPITE CHAPTER, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, MERCED IRRIGATION DISTRICT, Respondent-Intervenor.
No. 20-72432; No. 20-72452; No. 20-72782; No. 20-72800; No. 20-72958; No. 20-72973
UNITED STATES COURT OF APPEALS FOR
August 4, 2022
FERC Nos. 2266-102, 2266-118, 2246-086, 2179-043, 2467-020, 2179-048, 2467-022. Argued and Submitted May 12, 2022 Pasadena, California.
Before: Paul J. Watford and Michelle T. Friedland, Circuit Judges, and Carol Bagley Amon, District Judge.
FOR PUBLICATION
OPINION
On Petition for Review of an Order of the Federal Energy Regulatory Commission
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 receiving 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
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.
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 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,
OPINION
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
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.”
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
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 shall 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.
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
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 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
the 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.”
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 accepted the withdrawal-and-resubmission
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.
B.
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 District5), 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 interim licenses are not subject to state-imposed conditions under a Section 401 water quality 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 new 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-
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
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 relicensing 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 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
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
to 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 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
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 CEQA. 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, 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
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 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
By 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 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
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 State 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 NID chose not to withdraw it, as state law would have required, see
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.
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
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
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.
FERC 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.”
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 grant a request—namely, the CEQA evaluation that California law required,
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
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.
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.