COUNTY OF BUTTE, Plaintiff and Appellant, v. DEPARTMENT OF WATER RESOURCES, Defendant and Respondent; STATE WATER CONTRACTORS, INC., et al., Real Parties in Interest and Respondents. COUNTY OF PLUMAS et al., Plaintiffs and Appellants, v. DEPARTMENT OF WATER RESOURCES, Defendant and Respondent; STATE WATER CONTRACTORS, INC., et al., Real Parties in Interest and Respondents.
S258574
IN THE SUPREME COURT OF CALIFORNIA
August 1, 2022
Third Appellate District C071785; Yolo County Superior Court CVCV091258*
Justice Liu authored the opinion of the Court, in which Justices Kruger, Groban, Jenkins, and Guerrero concurred.
Chief Justice Cantil-Sakauye filed a concurring and dissenting opinion, in which Justice Corrigan concurred.
S258574
Opinion of the Court by Liu, J.
Operation of a dam, reservoir, or hydroelectric power plant requires a license from the Federal Energy Regulatory Commission (FERC). (
The trial court found the Department‘s EIR adequate, and the Counties appealed. The Court of Appeal did not reach the merits of the Counties’ CEQA claims, instead finding their actions in part preempted by the Federal Power Act (FPA;
The Court of Appeal held that the FPA preempts the Counties’ challenge to the environmental sufficiency of the settlement agreement DWR prepared as part of FERC proceedings. We agree that the Counties’ claims are preempted to the extent they attempt to unwind the terms of the settlement agreement reached through a carefully established federal process and seek to enjoin DWR from operating the Oroville Facilities under the proposed license. As the Court of Appeal recognized, FERC has sole jurisdiction over disputes concerning the licensing process employed here (County of Butte, supra, C071785; see
But the Counties’ writ petitions also challenged the sufficiency of the EIR more generally, and they have now abandoned their requests to enjoin the operation of the Oroville Facilities under the proposed license. In this court, the parties have fully briefed and asked us to decide whether the FPA preempts what remains of the Counties’ CEQA claims. On this question, we observe that DWR relied on the EIR to analyze the environmental impact of operating the Oroville Facilities under the settlement agreement or an alternative proposed by FERC staff. The EIR serves as the informational source for DWR‘s decisionmaking as to whether to request particular terms from FERC as it contemplates the license (
We affirm the decision of the Court of Appeal in part, reverse in part, and remand for further proceedings consistent with this opinion.
I.
The license governing DWR‘s operation of the Oroville Facilities (sometimes Facilities) was issued in 1957 and was set to expire in 2007. DWR began public preparations to apply for renewal of the license in October 1999. DWR has yet to achieve relicensing of the Facilities, and it currently operates the Facilities under annual, interim licenses. (See
A.
At the time DWR undertook the relicensing process, FERC regulations allowed applicants to pursue the traditional licensing process or an alternative. DWR chose to pursue the alternative licensing process (ALP), a voluntary procedure
FERC approved DWR‘s request to use the ALP in January 2001, and the process consumed the next five years. The ALP participants included representatives from 39 organizations — five federal agencies, five state agencies, seven local government entities, five Native American tribes, four local water agencies, and 13 nongovernmental organizations. From late 2000
During the early stages of the ALP, in September 2001, DWR issued a document combining a CEQA notice of preparation and a “scoping document.” The latter plays a role under the National Environmental Policy Act (NEPA) that is similar to a notice of preparation under CEQA. (See
After three years of hearings and consultations, the ALP participants began negotiating an agreement in April 2004. The 28-page settlement agreement (with 96 pages of attached appendices), concluded in March 2006, was signеd by more than 50 parties. Butte and Plumas Counties, which participated in the ALP, were dissatisfied with the terms of the settlement and declined to sign the agreement. One appendix to the settlement agreement contains more than 40 pages of provisions governing the Facilities’ operation that were intended by the parties to be included in the new FERC license. These provisions address
The settlement agreement and PDEA were submitted to FERC as DWR‘s application for a renewed license, with the first appendix serving as DWR‘s proposal for the terms of the new license. The settlement agreement stated that “[n]othing in this [a]greement is intended or shall be construed to be . . . a pre-decisional determination by a Public Agency. After the Effective Date of this Settlement Agreement but prior to the issuance of the New Project License, each Public Agency shall participate in the relicensing proceeding, including environmental review and consideration of public comments, as required by applicable law.”
The relicensing process required FERC to comply with NEPA. Relying in part on the PDEA, FERC prepared a 500-page draft environmental impact statement (EIS), which issued in September 2006. As FERC explained, “In this draft [EIS], we assess the effects associated with the operation of the project as well as alternatives to the proposed project; make recommendations to [FERC‘s governing commission] about whether to issue a new license; and if so, recommend terms and conditions to become part of any license issued. . . . In addition to the power and developmental purрoses for which licenses are issued (e.g., flood control, irrigation, and water supply), [FERC] must give equal consideration to the purposes of energy conservation; protection of, mitigation of damage to, and enhancement of fish and wildlife (including related spawning
B.
The Federal Water Pollution Control Act (
Although, as noted, DWR issued a CEQA notice of preparation in 2001, it did not undertake further CEQA procedures, including the preparation of an EIR, until several years later, after its submission of the settlement agreement to
After receiving and responding to public comment on the draft EIR, DWR finalized the EIR and issued a notice of determination in July 2008. The notice contained findings that the adoption of mitigation measures was required for approval of the project but that the project, so mitigated, would not have a significant effect on the environment. Consequently, “as conditions of project approval,” DWR adopted a six-page slate of mitigation measures “that will be implemented by DWR” and a mitigation monitoring program to ensure that implementation.
The mitigation measures adopted by DWR addressed the Facilities’ impacts on wildlife resources, botanical resources, noise, air quality, public health and safety, and geology, soils, and paleontological resources. In general terms, the mitigation measures require DWR to operate the Facilities and to conduct any construction activities associated with the Facilities in a safe and environmentally sensitive manner. The first measure, for example, requires DWR to “[m]inimize direct habitat loss or disturbance through project design and construction timing,”
During the CEQA review process, proceedings continued before the Water Board, which relied on the analyses in the Department‘s EIR and FERC‘s EIS to define the scope of the project and evaluate its environmental impact. In December 2010, the Water Board certified that the project considered in the EIR would comply with water quality requirements. The certification contained its own conditions, many of which overlapped with the requirements of the settlement agreement. By operation of law, these conditions must be included as terms of any new FERC license. (
The appellate record contains no information about FERC proceedings following DWR‘s certification of the final EIR, but the parties inform us that FERC has yet to take final action on DWR‘s application for a renewed license.
C.
In August 2008, following DWR‘s certification of the EIR, Butte County and Plumas County filed separate petitions for
The parties stipulated to consolidation of the two petitions. In May 2012, the trial court issued a statement of decision rejecting the Counties’ claims and finding the EIR adequate, and the Counties appealed. The Court of Appeal requested supplemental briefing to address whether the FPA preempted the Counties’ actions. It subsequently held that the Counties’ actions were preempted to the extent they challenged the settlement agreement, challenges over which FERC has exclusive jurisdiction, and premature to the extent they challenged the Water Board‘s certification, which had not issued at the time the Counties filed their actions. We granted the
We granted review of this second decision to address two issues: (1) whether the FPA preempts application of CEQA when the state is acting on its own behalf and exercising its discretion in pursuing relicensing of a hydroelectric dam, and (2) whether the FPA preempts challenges in state court to an EIR prepared under CEQA to comply with section 401 (
II.
We describe here the interrelated federal and state statutory schemes at play in this case.
A.
The FPA, the original predecessor of which was enacted in 1920, was created to facilitate development of the nation‘s hydropower resources, in part by removing state-imposed roadblocks to such development. (First Iowa, supra, 328 U.S. at p. 174 [“Congress was concerned with overcoming the danger of divided authority so as to bring about the needed development of water power“].) “[The FPA] was the outgrowth of a widely supported effort of the conservationists to secure enactment of a complete scheme of national regulation which would promote the comprehensive development of the water resources of the Nation, in so far as it was within the reach of the federal power to do so . . . .” (Id. at p. 180.)
B.
“CEQA embodies a central state policy to require state and local governmental entities to perform their duties ‘so that major consideration is given to preventing environmental damage.’ [Citations.] [¶] CEQA prescribes how governmental decisions will be made when public entities, including the state itself, are charged with approving, funding — or themselves undertaking — a project with significant effects on the environment.” (Eel River, supra, 3 Cal.5th at pp. 711–712, italics omitted.) CEQA applies to any discretionary “project,” defined as an activity that may cause a physical change in the environment and that is undertaken or financed by a public agency or requires a public agency‘s approval. (
The EIR is often referred to as the ” ’ “heart’ ’ ” of CEQA. (E.g., Eel River, supra, 3 Cal.5th at p. 713.) “Its purpose is to inform the public and its responsible officials of the environmental consequences of their decisions before they are made.” (Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553, 564.) Ideally, an EIR serves “to identify the significant effects on the environment of a project, to identify alternatives to the project, and to indicate the manner in which those significant effects can be mitigated or avoided.” (
Mitigation measures are modifications of the proposed design and implementation of a project imposed by the lead agency to reduce the project‘s adverse environmental effects. If an EIR identifies significant environmental effects, CEQA requires the adoption of mitigation measures when “it is feasible to do so.” (
When the project is publicly financed or undertaken, as here, feasible mitigation measures must be incorporated into the plan or projeсt design. (
III.
“The Supremacy Clause provides that ‘the Laws of the United States’ (as well as treaties and the Constitution itself) ‘shall be the supreme Law of the Land . . . any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.’ [
There are “three different types of preemption — ‘conflict,’ ‘express,’ and ‘field,’ [citation] — but all of them work in the same way: Congress enacts a law that imposes restrictions or confers rights on private actors; a state law confers rights or imposes restrictions that conflict with the federal law; and therefore the federal law takes precedence and the state law is preempted.” (Murphy v. National Collegiate Athletic Assn. (2018) 584 U.S. __, __ [138 S.Ct. 1461, 1480] (Murphy).)
Further, when it comes to considering preemption of state-owned or state-operated projects, we apply a presumption that “protects against undue federal incursions into the internal, sovereign concerns of the states.” (Eel River, supra, 3 Cal.5th at p. 705, citing Gregory v. Ashcroft (1991) 501 U.S. 452 and Nixon v. Missouri Municipal League (2004) 541 U.S. 125; see also Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 518.) “To determine the reach of the federal law preempting state regulation of a state-owned [project] we must consider a
A.
Respondent State Water Contractors, Inc., an association of public water agencies, is the only party asserting that the Counties’ claims are fully preempted. It argues that the FPA contains the requisite “unmistakably clear” indication of congressional intent to occupy the field and preempt the Counties’ challenges. If the issue before us involved state regulation of private entities, these arguments may have prevailed. Although the FPA does not contain an express preemption clause, the high court recognized 70 years ago in First Iowa that “the FPA establishes a broad and paramount federal regulatory role.” (California v. FERC (1990) 495 U.S. 490, 499.) “That broad delegation of power . . . , however, hardly determines the extent to which Congress intended to have the Federal Government exercise exclusive powers, or intended to pre-empt concurrent state regulation of matters affecting federally licensed hydroelectric projects.” (Id. at pp. 496–497.)
In two decisions, First Iowa and California v. FERC, the high court determined that state regulatory efforts that conflicted with the exclusive federal licensing authority granted by the FPA were preempted. First Iowa concerned the state‘s
First Iowa and California v. FERC could be read to apply either conflict or field preemption. (See First Iowa, supra, 328 U.S. at pp. 167, 171, 178, 180–181; California v. FERC, supra, 495 U.S. at pp. 493, 496–497, 505, 506; cf. California Oregon Power Co. v. Superior Court of Cal. (1955) 45 Cal.2d 858, 868 [“Implicit in [First Iowa] is the concept that the field is not exclusively occupied for all purposes by the [FPA] or [FERC‘s predecessor]“].) As the Ninth Circuit noted in Sayles Hydro Assn. v. Maughan (9th Cir. 1993) 985 F.2d 451 (Sayles Hydro), “[t]he dichotomy between the two types of preemption is not so sharp in practical terms as the legal characterization makes it appear, so the mixed language has little significance.” (Id. at p. 456; see Murphy, supra, 584 U.S. at p. __ [138 S.Ct. at p. 1480] [“field preemption[,] . . . like all other forms of preemption, . . . concerns a clash between a constitutional exercise of Congress‘s legislative power and conflicting state law“].) Sayles Hydro ultimately applied field preemption in a casе that, similar to First Iowa and California v. FERC, involved the licensing of a private entity.
The concurring and dissenting opinion relies on the FPA’s savings clause,
“Nothing contained in this chapter shall be construed as affecting or intending to affect or in any way to interfere with the laws of the respective States relating to the control, appropriation, use, or distribution of water used in irrigation or for municipal or other uses, or any vested right acquired therein.” (
16 U.S.C. § 821 .)
Notably, the statute does not say that these matters are the only matters reserved. (See Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist. (2d Cir. 2012) 673 F.3d 84, 97 (Niagara Mohawk Power
Our concurring and dissenting colleagues also rely on judicial interpretations of section 27 in First Iowa, California v. FERC, and Sayles Hydro. But none of these decisions is probative of congressional intent on the issue before us, nor do any address whether section 27 evinces an “unmistakably clear” (Eel River, supra, 3 Cal.5th at p. 690) intent by Congress to preempt a state’s environmental review of its own project as opposed to its regulation of a private entity. The concurring and dissenting opinion does not explain how any of these cases supports defining the preempted field to include the specific conduct at issue today. We must determine whether Congress intended to preclude “the state [from] trying to govern itself — to engage in ‘decision[s] of the most fundamental sort for a sovereign entity.’ ” (Id. at p. 729; see, e.g., English, supra, 496 U.S. at p. 82; Pacific Gas & Elec. v. Energy Resources Comm’n (1983) 461 U.S. 190, 205; Niagara Mohawk Power Corp., supra, 673 F.3d at pp. 95–96.) Reliance on these opinions in the absence of evidence that Congress intended to reach this far is contrary to the “strong presumption against preemption” that applies “to the existence as well as the scope of preemption.” (Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1088, citing
The concurring and dissenting opinion contends that Congress has accepted these interpretations of section 27 and by so doing “has made unmistakably clear the broad preemptive reach it intends for [the] FPA.” (Conc. & dis. opn., post, at p. 29.) But “[a]rguments based on supposed legislative acquiescence rarely do much to persuade.” (Scher v. Burke (2017) 3 Cal.5th 136, 147; see Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1395–1396.) And they do nothing at all when premised on acquiescence to judicial opinions that do not conсern the same subject matter. (Scher, at p. 147.) To the extent legislative acquiescence is relevant at all, it is notable that the concurring and dissenting opinion places no weight on the Counties’ claim that “[f]or decades, CEQA review for such projects has coexisted with federal regulation without FERC [or Congress] ever suggesting that CEQA is preempted.” (See conc. & dis. opn., post, at p. 22, fn. 8.)
Neither the FPA’s legislative history nor its language suggests that Congress intended this to be one of the “rare cases” where it has “ ‘legislated so comprehensively’ . . . that it ‘le[aves] no room for supplementary state legislation’ ” of the type at issue here concerning how a state entity conducts its own decisionmaking. (Kansas v. Garcia (2020) 589 U.S. __, __ [140 S.Ct. 791, 804]; see First Iowa, supra, 328 U.S. at p. 171 [the FPA, when “read in the light of its long and colorful legislative history, . . . discloses both a vigorous determination of Congress to make progress with the development of . . . water power . . .
As DWR states in its briefing, “[t]he fact that the [FPA] has a significant preemptive sweep says nothing about congressional intent to prohibit state action that is nonregulatory.” When the state or a subdivision proposes to develop its own property, CEQA “operates as a form of self-government . . . . Application of CEQA to the public entity charged with developing state property is not classic regulatory behavior, especially when there is no encroachment on the regulatory domain of the [federal authority] or inconsistency with [federal law] . . . . Rather, application of CEQA in this context constitutes self-governance on the part of a sovereign state and at the same time on the part of an owner.” (Eel River, supra, 3 Cal.5th at p. 723.)
State Water Contractors argues that the reasoning of Eel River is inapt because the federal scheme at issue in that case deregulated the industry while the federal legislation here requires every dam and hydroelectric power plant to obtain a federal license to operate and grants FERC the exclusive right to issue such licenses. (See also conc. & dis. opn., post, at p. 26.) But our reasoning in Eel River did not hinge on the industry’s deregulation; rather, it was based on what the federal scheme permitted the state as owner to do as a result of that deregulation — namely, make its own choices about its project, guided by an EIR. (Eel River, supra, 3 Cal.5th at p. 724.) There is “no indication in the language of the [FPA] that Congress intended to preempt [state] self-governance” when it is carried
B.
At the same time, the fact that CEQA is not categorically preempted does not mean that no CEQA applications or remedies are preempted by the federal scheme. (Eel River, supra, 3 Cal.5th at p. 740; id. at pp. 740–741 (conc. opn. of Kruger, J.).) To the contrary, the Counties made clear during oral argument that they are no longer seeking injunctive relief that would interfere with the federal licensing process, conceding preemption on this issue, and all parties agree that no state court can issue a remedy that conflicts with federal law. In this respect, the Counties now appear to acknowledge that the Court of Appeal was correct in holding that they cannot, in this CEQA action, challenge the terms of the settlement agreement reached through the ALP.
We agree. The overriding purpose of the FPA is to facilitate the development of the nation’s hydropower resources. (First Iowa, supra, 328 U.S. at pp. 174, 180.) A primary tool in achieving that goal was to centralize regulatory authority in the federal government in order to remove any obstacles to such development posed by state regulation. (Ibid.) A CEQA challenge to the terms of a settlement agreement reached
If that were all the Counties had requested, we would affirm the judgment below directing the trial court to dismiss the action in its entirety. But the Counties’ writ petitions challenge the Department’s EIR more broadly. Beyond seeking to enjoin DWR’s project, the Counties also requested a writ of mandate setting aside the certification of the EIR as adequate and whatever “further relief . . . the Court deems just.”
State Water Contractors defends the Court of Appeal’s complete dismissal on the sole ground that all of the Counties’ CEQA claims are preempted. As discussed, the Court of Appeal was correct to hold that the Counties’ challenge to the environmental sufficiency of the settlement agreement was preempted. But the Counties not only sought an injunction against DWR’s operation of the Facilities under the terms of the settlement agreement. They also challenged the environmental sufficiency of the EIR itself, which they claim DWR can use in connection with its decisionmaking about the licensing process and the operation of the Facilities without interfering with FERC’s authority.
DWR’s decision document recognized that “[a]pproval of the Proposed Project . . . will not lead to immediate implementation of the [settlement agreement (SA)] articles. DWR’s implementation of the SA actions that are within FERC’s jurisdiction depend[s] on FERC issuing and DWR accepting a
State Water Contractors takes issue with the Counties’ desire to see particular mitigation measures imposed on the project. But any preemption concerns related to DWR’s ability to adopt additional mitigation measures in the EIR, if warranted, are premature. At this stage, the Counties challenge only the sufficiency of the EIR, and they contend the EIR can inform DWR’s decisionmaking in ways that do not conflict with FERC’s authority. They do not ask the court to impose or enforce any CEQA mitigation measures, much less any that are contrary to federal authority. A CEQA challenge to the Department’s EIR is not inherently impermissible, nor is it clear that any mitigation measures will conflict with the terms of the license ultimately issued by FERC. As noted, an EIR may contain mitigation measures that fall outside of FERC’s jurisdiction or are compatible with FERC’s exclusive licensing authority. Meanwhile, federal law provides avenues for any mitigation measures identified by the Department’s CEQA
The concurring and dissenting opinion mistakes today’s inquiry and our holding at several turns. We do not consider Eel River’s rationale to be inapplicable here, nor do we understand Eel River to have found CEQA “exempt from preemption” by the federal statute at issue in that case. (Conc. & dis. opn., post, at p. 24; see id. at p. 26.) In Eel River, we conducted trаditional preemption analysis to determine that the state’s use of CEQA in particular circumstances was not preempted, while carefully delineating the circumstances in which it was preempted. Today’s opinion likewise does not conclude that DWR’s actions are “not subject to” the usual analysis for field preemption and purposes and objectives preemption. (Conc. & dis. opn., post, at p. 33.) Instead, we find that State Water Contractors has not carried its burden to establish field preemption here. And in determining “ ‘whether, under the circumstances of this particular case, [CEQA] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress’ ” (Jones v. Rath Packing Co. (1997) 430 U.S. 519, 526), we find the Counties’ claims preempted in part. Although the concurring and dissenting opinion considers
The concurring and dissenting opinion’s concerns about the workability of today’s holding are misplaced. In contending that there is or will be conflict between our decision and federal case law, our colleagues overlook the distinction between state regulation of private parties and the state’s self-governance at issue here. We are not aware of any authority contrary to our holding today. As noted, Sayles Hydro involved state regulation of a private party, and Eel River did not involve the FPA. The closest case that our concurring and dissenting colleagues can find is a New York appellate court decision that applied field preemption, based on two sentences of analysis, to an issue we do not address here. (Conc. & dis. opn., post, at p. 22, fn. 8.)
Further, the concurring and dissenting opinion says this lawsuit has resulted in years of delay to FERC’s issuance of the license. (Conc. & dis. opn., post, at pp. 3, fn. 1, 38.) But this assertion is mere conjecture. No party has argued that the delay in obtaining a license from FERC is attributable to the Counties’ litigation, and there is no evidence in the record to that effect. There are morе than a dozen relicensing applications other than this one that were filed prior to 2010, when the section 401 certification issued in this project, that are still pending before FERC. (See FERC, Licensing: Pending License, Relicense, and Exemption Applications, updated 7/15/2022, available at <https://www.ferc.gov/licensing> [as of Jul. 28, 2022]; all Internet citations in this opinion are archived by year, docket
The concurring and dissenting opinion says our holding will have little practical impact. As an initial matter, the question of the sufficiency of the EIR or the merits of the Counties’ claims is not before us. But even if the Counties’ lawsuit is not meritorious, that does not mean a finding of preemption is warranted. Our colleagues repeatedly note the fact that environmental review was conducted at earlier stages. (Conc. & dis. opn., post, at pp. 4, 5, 34–36.) But it is incorrect to suggest the Department’s EIR is identical to those prior inquiries when it involves matters that were not yet before them or are beyond their scope. An EIR can play a role in DWR’s evaluation of matters outside of or compatible with FERC’s jurisdiction, and the concurring and dissenting opinion does not identify any mitigation measures DWR has adopted that conflict with FERC’s authority. At this stage, any concerns about conflicting mitigation measures are exaggerated or at least premature.
In sum, we affirm the Court of Appeal’s ruling that the Counties “cannot challenge the environmental sufficiency of the [settlement agreement]” (County of Butte, supra, C071785) or seek to unwind it. To do so would pose an obstacle to FERC’s
CONCLUSION
We affirm the judgment of the Court of Appeal in part, reverse in part, and remand for further proceedings consistent with this opinion.
LIU, J.
We Concur:
KRUGER, J.
GROBAN, J.
JENKINS, J.
GUERRERO, J.
S258574
Concurring and Dissenting Opinion by Cantil-Sakauye, C. J.
I agree with my colleagues that the decision of the Department of Water Resources (DWR) to engage in review under the California Environmental Quality Act (CEQA;
CEQA is a powerful regulatory statute, requiring a lead agency to adopt tailored regulations, referred to as “mitigation measures,” designed to reduce to insignificance any potentially significant adverse environmental effects of a project. The majority holds that the doctrine of preemption takes effect in this case only when these mitigation measures prove to be inconsistent with a license granted by the Federal Energy Regulatory Commission (FERC) or when a private action to enforce CEQA seeks to interfere with FERC licensing proceedings. Such limited preemption is an unavoidable concession to the most basic doctrine of implied preemption, which holds that “[w]here stаte and federal law ‘directly conflict,’ state law must give way.” (PLIVA, Inc. v. Mensing (2011) 564 U.S. 604, 617.) If that were all the supremacy clause requires, I would have no quarrel with the majority’s holding today.
The United States Supreme Court has consistently interpreted the Federal Power Act (FPA;
In addition, CEQA stands as a clear obstacle to the Congressional objective of vesting exclusive control over hydropower licensing and regulation in FERC. The key to CEQA’s success in limiting the environmental impact of regulated activities in California is its mitigation mandate. A CEQA lead agency must, in approving a project, adopt both a
Further, as this case glaringly demonstrates, the private enforcement provisions of CEQA stand as an inevitable impediment to the congressional purpose of granting to FERC exclusive control over the hydropower licensing process. FERC’s licensing regulations were clearly designed to render unnecessary the application of state environmental review statutes. Imposing such state proceedings adds nothing to the licensing process, but it appears to have created, in this case, a delay of 12 years (and counting).1
Because these critical features of CEQA — the mandatory imposition of mitigation measures and the allowance for private enforcement — stand as an obstacle to the accomplishment of
I. FACTUAL AND PROCEDURAL BACKGROUND
As the majority explains, this matter comes to us in the midst of a federal relicensing proceeding for the Oroville Facilities (Facilities), a collection of dams and hydropower projects operated by DWR in Butte County. (Maj. opn., ante, at pp. 3–7.) The unfinished relicensing proceeding is, at present, 22 years old.
FERC’s alternative licensing process (ALP) is hardly insensitive to environmental concerns. At the outset, the ALP required DWR to prepare a preliminary draft environmental assessment (PDEA), an analysis of the likely environmental impact of Facilities operation. (
In the EIS, FERC outlined the additional terms it proposed to add to the license terms proposed in the settlement agreement and evaluated the environmental impact of these additional measures, as well as the impact of the settlement agreement’s proposal.
At this point in the licensing process, two complete EIR equivalents had been prepared. Yet DWR elected to prepare a third environmental analysis under the authority of CEQA, defining as its project the implementation of the settlement agreement, which it viewed as equivalent to “the continued operation and maintenance of the Oroville Facilities for electric
Following DWR’s certification of the EIR, Butte County and Plumas County filed petitions for a writ of mandate, contending that DWR’s compliance with CEQA was deficient and seeking to stay the licensing proceedings. Although no court order halting the proceedings ever issued, the counties’ petitions had the desired effect. All of the pieces appear to have been in place for FERC’s issuance of a new license in 2010, but the federal agency has, to date, taken no action on DWR’s application.
A. Governing Law
1. Federal Power Act
The construction and operation of a dam or hydroelectric power plant requires a license from FERC, which has broad discretion to require changes in the project design and impose conditions on project operation. (
2. California Environmental Quality Act
“CEQA embodies a central state policy to require state and local governmental entities to perform their duties ‘so that major consideration is given to preventing environmental damage.’ ” (Friends of the Eel River v. North Coast Railroad Authority (2017) 3 Cal.5th 677, 711 (Eel River).) As discussed more fully by the majority (maj. opn., ante, at pp. 12–15), CEQA applies to discretionary public and private projects that may cause a change in the physical environment. (
Once identified in an EIR, the feasible mitigation measures must be adopted by the lead agency as legally enforceable features or conditions of the project. (Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, 524–525 [agencies are Natural Resources Agency, codified at title 14, division 6, chapter 3 of the California Code of Regulations, which I will refer to as the “CEQA Guidelines.” Courts must “afford great weight” to them when interpreting CEQA. (Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 391, fn. 2.)]
3. Federal Preemption and the Federal Power Act
The Supreme Court has organized preemption into three categories: Conflict, express, and field preemption. (Murphy v. National Collegiate Athletic Assn. (2018) ___ U.S. ___, ___ [138 S.Ct. 1461, 1480] (Murphy).) Although the
“Field preemption occurs when federal law occupies a ‘field’ of regulation ‘so comprehensively that it has left no room for supplementary state legislation.‘” (Murphy, supra, ___ U.S. at p. ___, 138 S.Ct. at p. 1480.) “Where Congress occupies an entire field . . . , even complementary state regulation is impermissible. Field pre-emption reflects a congressional decision to foreclose any state regulation in the area, even if it is parallel to federal standards.” (Arizona v. United States, supra, 567 U.S. at p. 401.)
The
In its seminal First Iowa decision, the Supreme Court found preempted the state‘s attempt to require the proponent of a proposed dam and power plant to obtain a state license for the project, the terms of which would have implemented state law governing the use of its waterways. (First Iowa, supra, 328 U.S. at pp. 161, 166, 176-178.) As the high court noted, requiring compliance with state law under these circumstances “would subject to state control the very requirements of the project that Congress has placed in the discretion of the Federal Power Commission.” (Id. at p. 165.) The court ultimately concluded that “[t]he detailed provisions of the [FPA] providing for the federal plan of regulation leave no room or need for conflicting state controls.” (Id. at p. 181.)
The high court reaffirmed the
B. DWR‘s Use of CEQA Is Preempted by the Doctrine of Field Preemption
As explained above, it is well settled that Section 27 of the
In Sayles Hydro, the Ninth Circuit reasonably applied high court precedent in holding that the
In Sayles Hydro, the Water Board withheld a state operating permit from a hydroelectric plant licensed by FERC because the applicant eventually declined to respond to the Water Board‘s requests for “a shifting, expanding range of reports and studies, to assure that the project satisfies the [Water] Board‘s concerns regarding recreation, aesthetics, archaeology, sport fishing, and cultural resources.” (Sayles Hydro, supra, 985 F.2d at p. 453Sayles Hydro, supra, 985 F.2d at p. 454Ibid.) Explaining the court‘s interpretation of the savings clause, the Ninth Circuit noted that “[i]n many states where water is scarce, a state property law regime enables users of streams and wells to obtain proprietary rights in a continuing quantity of water. By perfecting state water rights, users can enjoin other users who deprive them of their share of the flow. [Citation.] This state property law regime in
Significantly, the Ninth Circuit addressed and rejected the very approach to preemption adopted in the majority opinion: “The [Water] Board urges that we read California v. FERC as establishing federal preemption only where a state requirement conflicts with a federal requirement, not where it supplements a federal requirement. . . . [¶] . . . The ratio decidendi, however, does not take that course. Instead, California v. FERC reaffirms First Iowa‘s narrow interpretation of the savings provision, so that the only authority states get over federal power projects relates to allocating proprietary rights in water. First Iowa said that the separation of authority between state and federal governments ‘does not require two agencies to share in the final decision of the same issue.’ [Citation.] California v. FERC reaffirms First Iowa, uses the ‘occupy the field’ characterization ‘broad and paramount federal
Sayles Hydro continued, in an observation of obvious application here: “In the case at bar, it is clear that the federal laws have occupied the field, preventing state regulation. This conclusion is strengthened by the fact that most or all of the [Water] Board‘s concerns were considered by [FERC] in granting the license, and conditions were imposed in the license to protect these multiple values. . . . There would be no point in Congress requiring the federal agency to consider the state agency recommendations on environmental matters and make its own decisions about which to accept, if the state agencies had the power to impose the requirements themselves.” (Sayles Hydro, supra, 985 F.2d at p. 456.)
The majority argues that ”First Iowa and California v. FERC could be read to apply either conflict or field preemption.” (Maj. opn., ante, at p. 18.) Sayles Hydro acknowledged as much (Sayles Hydro, supra, 985 F.2d at pp. 455, 456), and the point does not answer the Ninth Circuit‘s careful analysis of the language of those cases in finding field preemption. As Sayles Hydro determined, the high court‘s decisions lead inescapably to the conclusion that field preemption precludes state regulation in this area.
The majority points out that none of the cases cited, First Iowa, California v. FERC, and Sayles Hydro, expressly declared that field preemption applies to federally regulated public agencies. (Maj. opn., ante, at p. 19.) The omission is understandable because all of the cases concerned state regulation of private parties, rather than a public agency. But if Congress occupies a field, it does so regardless of the identity of the party affected by the state regulation; application of the doctrine of field preemption has never been held to depend upon the nature of the party being regulated. Notably, the majority cites no case holding that state regulation preempted by the doctrine of field preemption when applied to a private party is not similarly preempted if applied to a public agency, even when the public agency applies that regulation to its own conduct. Eel River comes closest, but, for the reasons discussed below, it does not apply here.
The Ninth Circuit‘s analysis and conclusions in Sayles Hydro are sound. Under First Iowa and California v. FERC, Congress has occupied the field of hydropower licensing and operation outside the authority reserved to states under Section 27. DWR‘s application for relicensing did not concern
C. DWR‘s Use of CEQA Is Also Preempted by the Doctrine of Purposes and Objectives Preemption
Even if Congress had not occupied the field of hydropower regulation, the nature of
It bears repeating that
In addition, DWR‘s invocation of
In applying the doctrine of purposes and objectives preemption, “[w]hat is a sufficient obstacle [to the accomplishment of Congress‘s purposes and objectives] is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects.” (Crosby v. National Foreign Trade Council (2000) 530 U.S. 363, 373 (Crosby).) As this instruction suggests, ” ‘the purpose of Congress is the ultimate touchstone’ ” in determining whether state law is preempted. (Wyeth v. Levine (2009) 555 U.S. 555, 565.) Even if the federal and state laws share the same goal, “[a] state law also is pre-empted if it interferes with the methods by which the federal statute was designed to reach this goal.” (International Paper Co. v. Ouellette (1987) 479 U.S. 481, 494 (Ouellette).)
The obvious first step in a purposes and objectives preemption analysis is to identify the purposes and objectives of the federal law. (Crosby, supra, 530 U.S. at p. 373.) As the majority acknowledges, “The overriding purpose of the
DWR‘s invocation of
And that is what occurred. In certifying the EIR, DWR identified significant adverse environmental effects and adopted six pages of mitigation measures and a mitigation monitoring program. The mitigation measures directly addressed, and purported to constrain, the manner in which the Facilities could operate with respect to the many factors affecting its impact on the environment. Because these same factors are subject to FERC‘s regulatory authority, DWR‘s certification of the EIR, in effect, created an alternative set of regulations governing operation of the Facilities and designated an agency other than
The majority notes the lack of any express language in the FPA requiring the preemption of state regulation touching inter-governmental relations. (Maj. opn., ante, at p. 21.) But neither Eel River, Nixon, nor Gregory requires a literal statement of intent to preempt self-government. Rather, these decisions require that congressional intent to preempt the relevant state law must be “unmistakably clear.” (Eel River, supra, 3 Cal.5th at p. 731; see Gregory, supra, 501 U.S. at pp. 460-461; Liberty CableVision of Puerto Rico, Inc. v. Municipality of Caguas (1st Cir. 2005) 417 F.3d 216, 221 [finding “unmistakably clear” requirement met despite absence of any reference to inter-governmental relations in statutory preemption clause].) By accepting a well-settled and consistently restrictive judicial interpretation of the savings clause, augmented by statutory amendments accommodating that interpretation, Congress has made unmistakably clear the broad preemptive reach it intends for the FPA: State regulation
The majority‘s holding, if not its discussion, makes clear that the majority does not find applicable here the second rationale in Eel River. That rationale relied on high court authority holding that the overriding importance of state legislation governing intergovernmental relations makes it immune from preemption unless Congress has unmistakably indicated otherwise. As a consequence, any legislation subject to this second rationale is exempt from preemption. In Gregory, the Supreme Court held that a state‘s mandatory judicial retirement age prevailed over the contrary requirements of federal anti-discrimination law. Nixon held the same. Although a federal law forbade states from precluding entities from providing telecommunications services, the Supreme Court upheld a state statute that did just that. When the circumstances addressed by these cases are present, preemption simply does not operate.
In holding that CEQA is preempted in these circumstances, the majority implicitly finds that the unusual circumstances underlying Eel River are absent. If the FPA indeed lacks language making unmistakably clear a congressional intent to preempt CEQA in these circumstances, Gregory and Nixon — and Eel River, for that matter — demand the conclusion that preemption is absent entirely. Yet the majority concedes that CEQA is preempted here to the extent it directly conflicts with FERC regulation. This would appear to
E. The Majority‘s Ruling Is Unworkable and Serves Little Practical Purpose
Preemption is ultimately an issue of law, not practicality. But the difficulty of meshing the majority‘s scheme of partial preemption with the implementation of CEQA in these circumstances illustrates the wisdom of precluding state regulation when the federal government has assumed exclusive regulatory authority.
This unworkability begins with the majority‘s treatment of CEQA‘s civil enforcement mechanism. The majority permits a CEQA compliance lawsuit to proceed, so long as it does not seek to interfere with the FERC licensing proceedings. But, as noted above, FERC is not bound, either by the majority‘s ruling or CEQA. Once any other necessary permits are obtained, including a Clean Water Act certificate, FERC is free to issue a license and move on. It need not await the resolution under state law of issues of CEQA compliance. Yet issuance of a license plainly moots any compliance lawsuit, practically if not legally. If the EIR is found deficient, DWR can, perhaps, be forced to compile a compliant EIR, but it will be for naught. The FERC license will have issued, and any DWR dissatisfaction with the license must be resolved in a federal lawsuit, not through CEQA proceedings. Although DWR is presumably permitted to impose further mitigation measures consistent with the FERC license after its issuance, the agency would be free to adopt such practices outside the context of CEQA in any event. The FERC license inevitably provides no more than a guide to project operation that must be implemented by DWR
The practical problems with the majority‘s treatment of mitigation measures inconsistent with the FERC license are more significant. Because, as here, CEQA compliance will precede issuance of the FERC license, DWR will be unable to determine at the time of their adoption whether any particular mitigation measures will be consistent with the terms of the FERC license. Yet the majority concedes that inconsistent mitigation measures are preempted. Because inconsistent mitigation measures are not self-preempting, they will remain binding on the agency as a matter of (non-preempted) state law unless declared preempted by an appropriate court. In the meantime, DWR will be bound by two inconsistent regulations, one binding under state law and one binding under federal law, and forced to violate either one or the other.
Even assuming FERC, DWR, or a third party brings an appropriate action to have a conflicting mitigation measure declared preempted, the problems do not end there. Given the majority‘s holding that CEQA applies to projects covered by a FERC licensing proceeding, those projects require lead agency approval under CEQA. Any such approval will require, as discussed above, a finding that the project‘s adverse environmental effects have been mitigated to insignificance, a finding based on adoption of mitigation measures. As a consequence, any declaration that a mitigation measure is unenforceable necessarily invalidates the agency‘s project approval under CEQA, premised on the mitigation measure. Operation of the project may thereby be rendered unlawful under state law until a new CEQA proceeding results in a valid project approval.
The lack of a clear doctrinal basis for the majority‘s version of preemption will create further problems of its own. The majority seems to hold that when a public agency sponsors a project requiring federal approval, the ordinary rules of preemption do not apply; at a minimum, the agency‘s action is not subject to field preemption and purposes and objectives preemption. The majority justifies this partial preemption under Eel River, but, as discussed above, because the ruling goes well beyond the holding of that case, the boundaries, application, and jurisprudential basis of this partial preemption remain obscure. And there is no way to determine what other state statutes, if any, are covered by the ruling. All of this uncertainty will guarantee further litigation every time a public agency invokes a state statute in the midst of a federal licensing proceeding, adding to the cost, length and burden of such proceedings. In addition, because there is no reason to believe
Putting aside the unworkability of the majority‘s vision of limited CEQA preemption, the most disturbing aspect of its ruling is the lack of any practical benefit from its bending of the preemption rules. The implementation of CEQA here is neither necessary, nor even important. There is no claim on any side that environmental concerns are given short shrift in the FERC licensing process. As noted, the ALP аppears designed specifically to render state environmental review unnecessary. The ALP requires, at the outset of the process, the creation of a document that is the full equivalent of an EIR. The majority does not contend otherwise. The applicant is then required to negotiate with all other interested parties to reach consensus on the terms of a proposed FERC license. Given the nature of hydropower projects and the parties interested in their operation, environmental concerns are likely to be in the forefront. The majority does not identify any environmental concerns that were overlooked in the formulation of the DWR settlement agreement. Yet FERC then performs its own environmental analysis under NEPA, involving the preparation of a second environmental review document, the EIS. Environmental protection is plainly among the top priorities of the ALP. CEQA adds nothing.
DWR contends that it invoked CEQA in order to decide whether to accept the amendments proposed by FERC to the terms of a license proposed in the settlement agreement, and the majority accepts the explanation. (Maj. opn., ante, at p. 2.)10
But those new terms had already been the subject of complete environmental review in the EIS, in addition to its full environmental review of the settlement agreement‘s proposal. Such review is presumably the very purpose of the ALP‘s requirement of an EIS at this stage of the process — to make unnecessary an independent state environmental review, including review of any changes FERC might propose to the terms of a settlement agreement. There was no need for DWR to repeat the environmental review process to reach conclusions about the effect and desirability of FERC‘s proposal. FERC had done the work for them. Tellingly, neither DWR nor the majority has identified deficiencies in the EIS analysis that were uncovered by DWR‘s EIR.
DWR‘s rationalization ignores the duplication of effort represented by its pursuit of CEQA. Any information developed by DWR to aid its decision-making had already been developed and revealed in FERC‘s EIS. The EIR added nothing to the store of information on which DWR‘s decision makers were required to act and will add nothing to their evaluation of the FERC proposal, should that proposal ever be communicated. The majority‘s rationale reduces to this: DWR was entitled to do the analysis itself, even if that duplication of effort served no other purpose. It seems a small benefit to justify upsetting the proper application of the rules of preemption.
The impact of the majority‘s ruling is magnified by the mandatory nature of CEQA compliance. The application of CEQA is not discretionary; when a public agency proposes to
The absence of any meaningful regulatory or practical justification for DWR‘s invocation of CEQA reveals the majority‘s opinion for what it is: The preservation of state regulatory authority for its own sake. The proper role of our court in the application of the Supreme Court‘s supremacy clause jurisprudence should be to prevent such vain assertions of state power, not to promote and facilitate them.
In its haste to acquiesce to DWR‘s pointless and redundant invocation of CEQA, the majority has devised its own version of federal preemption, relying on a vague and inappropriate application of Eel River. The majority‘s new preemption tolerates state interference in exclusive federal authority so long as the state‘s interference does not “directly” conflict with federal action — in other words, so long as the state does not create a situation in which it is impossible simultaneously to comply with state and federal mandates. This limited preemption may seem appropriate to the majority, but it bears no resemblance to the United States Supreme Court‘s articulation of the doctrine of preemption, whiсh must be our guide. In adopting its own version of preemption, the majority tolerates DWR‘s unnecessary delay of FERC‘s licensing proceedings, turns a blind eye to Congress‘s invocation of field preemption through the enactment of Section 27, and sweeps purposes and objectives preemption under the rug. Although I concur with the majority to the extent it finds certain aspects of CEQA‘s implementation here preempted, I decline to adopt the majority‘s version of preemption and would favor a faithful application of the high court‘s law of preemption. I would affirm the judgment of the Court of Appeal.
CANTIL-SAKAUYE, C. J.
I Concur:
CORRIGAN, J.