Challenge to State Agency EIR Evaluating Federal Hydropower License Not Preempted When Actions Do Not Interfere with Federal Jurisdiction

November 9th, 2022

By: Dustin Peterson

In County of Butte v. Department of Water Resources (2022) 13 Cal.5th 612, the California Supreme Court ruled that challenges to an EIR prepared by the Department of Water Resources (DWR) for renewal of its 50-year license to operate the Oroville dam and surrounding facilities (Oroville Facilities) were not entirely preempted by the Federal Power Act (FPA). Two justices filed a concurring and dissenting opinion (dissent) to express that the majority’s opinions failed to properly apply federal preemption principles, and that CEQA review should accordingly be preempted by the FPA.

DWR began the process of re-licensing the Oroville Facilities through the Federal Energy Regulatory Commission (FERC) in 1999. DWR then analyzed the effects of re-licensing the Oroville Facilities by entering into FERC-regulated negotiations and a settlement agreement with various local, state, and federal agencies and numerous nongovernmental organizations and groups. FERC used the substance of these interactions and the provisions governing the operation of the Oroville Facilities in the settlement agreement to prepare an environmental impact statement (EIS) under the National Environmental Policy Act, which concluded that a staff alternative including modifications to the provisions in the settlement was preferred. DWR certified an EIR examining the EIS’s alternatives, and Butte and Plumas Counties (collectively, Counties), both who declined to enter into the FERC-regulated settlement, challenged the adequacy of the EIR’s analysis and sought an injunction against operation of the Oroville Facilities. The trial court found the EIR to be adequate, and the Third District found that the Counties’ claims were preempted by the FPA and otherwise premature without reaching the merits. The Supreme Court granted a petition for review, but remanded the case with directions to the Third District to reconsider the case in light of the Supreme Court’s decision in Friends of the Eel River v. North Coast Railroad Authority (2017) 3 Cal.5th 677 (Eel River) (See TLG’s coverage here), which held that CEQA was not preempted by federal law governing the national system of railroads. On remand, the Third District reached the same conclusion as it had previously, and the Supreme Court once more granted a petition for review.

On review, the primary issue was whether the FPA preempted application of CEQA when the state acts on its own behalf in exercising its discretion to pursue relicensing of a hydroelectric dam. The majority held that it was not, finding that neither the FPA’s legislative history, nor its language indicated an intent to preempt state legislation to govern the work of a state agency in a manner not conflicting with the state law.

State Water Contractors, an association of public water agencies, cited federal case law interpreting the FPA to preempt state regulations governing private entities with regard to hydroelectric facilities. But the majority distinguished these, finding that CEQA only regulates public entities. The dissent also highlighted the FPA’s savings clause (Section 27), which allows states to maintain control over proprietary water usage, as evidence that Congress intended to occupy the field regarding all other state regulations. However, the majority found this to fall short of the “unmistakably clear” language required to find state regulation preempted.

The dissent maintained that field preemption does not depend on whether the party being regulated is private or public, but the majority disagreed, citing Eel River for the proposition that an ambiguous preemption clause does not preempt CEQA’s application to public agencies even if it is intended to preempt regulation of private parties. The dissent, including Chief Justice Cantil-Sakauye who authored Eel River, responded that the exemption from preemption in that case rested on the specific details of the unique federal statute in question. Nonetheless, the majority found the cases to be sufficiently analogous.

In holding that CEQA was not categorically preempted by the FPA, the majority acknowledged that some CEQA applications or remedies were preempted by the federal scheme. For instance, the Counties were not allowed to challenge the terms of the settlement agreement or ask for an injunction because these acts would interfere with FERC’s jurisdiction and exclusive licensing authority. But the majority found that challenges to the sufficiency of an EIR were not inherently impermissible insofar as these types of complaints had the effect of informing a state agency concerning actions that do not encroach on FERC’s jurisdiction. The dissent opined that allowing CEQA review, along with the adoption of mitigation measures, presented a substantial obstacle to FERC’s exclusive regulatory authority under the FPA and created an alternative regulatory scheme that was both superfluous and confusing. It also maintained that the ruling was unworkable, resulting in meaningless environmental review under a “scheme of partial preemption.” Among other issues, the dissent highlighted the fact that FERC could simply ignore CEQA litigation and proceed with issuance of its permit, and the problem DWR faced in being required to impose mitigation measures before knowing whether the measures could be enforced under the subsequent FERC license conditions. But the majority dismissed these concerns, finding them to be “exaggerated or at least premature.”

As such, the Court affirmed the court of appeal’s ruling that the Counties were preempted from challenging or seeking to unwind the settlement agreements, but allowed the court to consider the Counties’ challenge to the environmental consistency of the EIR more generally on remand.

Key Points:

  • CEQA is not preempted for projects subject to FPA licensing, though its application and remedies may be limited.

Keeping you up to date on the California Environmental Quality Act


Newsletter Signup

Stay up to date with CEQA News by signing up for our newsletter.