SAYLES HYDRO ASSOCIATES, a California General Partnership;
Joseph M. Keating, Plaintiffs-Appellees,
v.
W. Don MAUGHAN; Darlene E. Ruiz; Danny Walsh; Edwin H.
Finster; Eliseo M. Samaniego, Defendants-Appellants,
State Water Resources Control Board, Intervenor-Appellant.
No. 91-15934.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted June 9, 1992.
Decided Feb. 1, 1993.
Cliffоrd T. Lee, Deputy Atty. Gen., San Francisco, CA, for defendants-appellants and intervenor-appellant.
Stuart L. Somach, of De Cuir & Somach, Sacramento, CA, for plaintiffs-appellees.
Appeal from the United States District Court for the Eastern District of California.
Before ALARCON, HALL and KLEINFELD, Circuit Judges.
KLEINFELD, Circuit Judge:
This case involves the scope of federal preemption of state regulatory authority under the Fedеral Power Act. The district court granted summary judgment to the federal licensees on the ground that Congress has occupied the field, and therefore the state lacks the power to do anything but determine proprietary water rights. The district judge thought that a recent decision of the Supremе Court, California v. FERC,
Keating and Sayles have a license from the Federal Energy Regulatory Commission to build and operate a small hydroelectric power project (a 130' long, 8.4' high dam, with a 2.3 acre reservoir) in a national fоrest in California. They could not operate it, because the California State Water Resources Control Board (State Board) would not issue a permit. Keating and Sayles sued for and won a declaratory judgment and injunction, which the members of the State Board now appeal.
Nо one else claims any conflicting water rights, and the Board knows of no impact the project would have on any prior water rights within the watershed. The problem has been that the State Board has required a shifting, expanding range of reports and studies, to assure that the project satisfies the State Board's concerns regarding recreation, aesthetics, archaeology, sport fishing, and cultural resources, and that the project meets the State Board's standards regarding cost of capital and estimated revenues.1 Most or all of these same concerns were addressed by the Federal Energy Regulatory Commission, which conditioned the license on compliance with numerous environmental requirements. Keating and the State Water Board have been working at these issues since 1980. The State Board and Keating have reached an impassе. He will not undertake any more studies, and the State Board will not hold hearings on his water rights application without them.
We review a grant of summary judgment de novo. Kruso v. Int'l Telephone & Telegraph Corp.,
I. RIPENESS.
We would have no jurisdiction to decide the preemption controversy, were it not ripe. Pacific Gas & Eleсtric Co. v. State Energy Resources Cons. and Dev. Comm.,
As Sayles characterizes the State Board's position,
a FERC licensee must jump through hoop after hoop that the State Board holds up, preparing environmental impact reports for the licensed project аnd additional environmental, economic, and other studies, regardless of the time and expense involved. If and when the licensee has jumped through the hoops to the State Board's satisfaction, and if and when the State Board issues a permit, only then can the licensee argue that thе State Board may not force the licensee to jump through the hoops or challenge binding conditions of the permit that are based on the analyses.
Appellee's brief at 30.
Ripeness of an issue depends on two things, its current fitness for judicial decision, and the hardship to the parties of withholding judicial considеration. Pacific Gas,
The hardship is the process itself. Process costs money. If a federal licensee must spend years attempting to satisfy an elaboratе, shifting array of state procedural requirements, then he must borrow a fortune to pay lawyers, economists, accountants, archaeologists, historians, engineers, recreational consultants, environmental consultants, biologists and others, with no revenue, no near-term prospect of revenue, and no certainty that there ever will be revenue. Meanwhile, politics, laws, interest rates, construction costs, and costs of alternatives change. Undue process may impose cost and uncertainty sufficient to thwart the federal determination that a power project should proceed. As the Supreme Court explained in an analogous context, "[t]o require the industry to proceed without knowing whether the [state regulation] is valid would impose a palpable and considerable hardship on the utilities, and may ultimately work harm on the citizens of California." Pacific Gas,
II. PREEMPTION.
On its face, the language of the Federal Power Act is capable of different interpretations concerning the preemption issue. The statute authorizes the Federal Energy Regulatory Commission, formerly the Federal Power Commission, to issue licenses for dаms to generate electrical power. 16 U.S.C. § 797(e). Yet state authority is preserved over control, appropriation, use and distribution of water:
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 respеctive 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. We cannot, however, construe this statute on a blank slate. The Supreme Court has read the broadest possible negаtive pregnant into this "savings clause." First Iowa Hydro-Electric Coop. v. Federal Power Comm'n, State of Iowa,
First Iowa involved circumstances similar to the instant case. The Federal Power Commission wanted the project to proceed, but the State of Iowa did not, unless the power cooperative first demonstrated compliance with Iowa law regarding pollution, fish proteсtion, construction, diversion of streams, and other requirements. The diversion of a river, prohibited by state law, was the exact means selected by the Federal Power Commission to generate a maximum amount of electricity. The Supreme Court held that the state and federal authorities dо not "share in the final decision of the same issue." Id.
The effect of § , in protecting state laws from supersedure, is limited to laws as to the control, appropriation, use or distribution of water in irrigation or for municipal or other uses of the same nature. It therefore has primary, if not exclusive, reference to such proprietary rights.
Id. at 175-76,
In 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. See Getches, Water Law 1-11 (1984). This state property law regime in water is what the savings clause reserves, under First Iowa. Such proprietary rights are not at issue in the case before us. The parties' stipulation of facts sаys that there are no protests to the application based on injury to prior water rights, and the State Board knows of no impact that the project would have on prior water rights. Since forcing Sayles and Keating to provide environmental impact reports to the State Board has nothing to do with determining proprietary rights in water, federal preemption bars the state requirements.
The language of First Iowa was broad, but its facts arguably left room to treat its construction of § 821 as dictum, because that case involved a conflict between state and federal requirements. The State Board proposed this reading to the Supreme Court in California v. FERC,
The State 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 suрplements a federal requirement. Federal preemption has sometimes been explained as two distinct categories. In one kind, sometimes called "occupy the field" preemption, the federal role is so pervasive that no room is left for the states to supplement it. In the other, sometimes called "conflict" preemption, state law is preempted to the extent that compliance with both laws is physically impossible, or state law would be an obstacle to the accomplishment of the full purposes and objectives of Congress. Pаcific Gas,
California v. FERC could have been decided as a conflict preemption case. The federal and state authorities imposed requirements of a minimum number of cubic feet per second of water to flow despite the diversion, to protect trout in the stream. Califоrnia required a higher minimum than the Federal Energy Regulatory Commission. Although it was not physically impossible for the developer to comply with both, allowing California to require higher flow requirements would interfere with the federal agency's "comprehensive planning authority," creating an obstacle to achievement of the federal purpose. Id.
Even though the ratio decidendi in California v. FERC is straight "occupy the fiеld" preemption, the State Board correctly characterizes words used in the last part of the opinion, where the rule is applied to the facts, as conflict preemption language. The dichotomy between the two types of preemption is not so sharp in practical terms as the legal categorization makes it appear, so the mixed language has little significance. The state process itself would be an obstacle to the accomplishment of the full purposes and objectives of Congress in authorizing the Federal Energy Regulatory Commission to license the project to proceed. Cf. Silkwood, supra. As explained above in the discussion of ripeness, undue process in itself burdens a project. Once the Court made it clear that the state could control only proprietary rights to water, that established thе category as "occupy the field" preemption for everything but proprietary rights to water.
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 State Board's concerns were considered by the Federal Energy Regulatory Commission in granting the license, and conditions were imposed in the license to protect these multiple values. This very project has already been the subject of two other decisions of this court, both relating to compliance with federal environmental requirements which overlap with the concerns of the State Board. LaFlamme v. FERC,
Sayles has suggested that the appeal is frivolous and deserves sanctions. We have not gone so far as this, though the Board's unwillingness to accept the meaning of thе result it obtained in California v. FERC gives us pause. Further litigation which appears to the District Court to be frivolous or for purposes of delay may expose the litigants or their attorneys to sanctions.
AFFIRMED.
Notes
In its reply brief, the State Board concedes that it cannot condition its permit on financiаl requirements inconsistent with the Federal Energy Regulatory Commission's approval
The Court interprets 1986 amendments to the Federal Power Act requiring the Commission to solicit and consider recommendations from state agencies on such matters such as recreation, fish and wildlife, and cultural resources as Congressional elaboration and reaffirmation of the "broad and paramount" federal role