FERC licensing post-Hoopa Valley Tribe ruling

In the wake of a January 2019 court ruling holding that the states and applicants for water quality certifications cannot indefinitely stall federal time limits for state action by repeatedly withdrawing and resubmitting their applications, federal energy regulators are being asked to rule that states have waived their rights to issue water quality certifications.

On January 25, 2019, the United States Court of Appeals for the District of Columbia Circuit issued an opinion in Hoopa Valley Tribe v. Federal Energy Regulatory Commission. The court’s basic holding addresses language in Section 401 of the Clean Water Act providing that a state’s water quality certification requirements shall be waived with respect to a federally jurisdictional application 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.” In its recent ruling, the court strictly construed the one year limit for state action, saying it couldn’t be gamed by repeatedly withdrawing and refiling the application, because that would usurp the federal regulatory scheme.

At issue in Hoopa Valley Tribe are PacifiCorp’s Klamath River hydropower facilities in California and Oregon. PacifiCorp applied for relicensing in 2004, and met all milestones except state water quality certification. A 2010 settlement agreement with a consortium of stakeholders included an agreement between the states and the licensee “to defer the one-year statutory limit for Section 401 approval by annually withdrawing-and-resubmitting the water quality certification requests that serve as a pre-requisite to FERC’s overarching review.” A Native American tribe (which was not a signatory to the settlement agreement) petitioned FERC for a declaratory order that California and Oregon had waived their Section 401 authority and that PacifiCorp had correspondingly failed to diligently prosecute its licensing application for the Project. FERC rejected the tribe’s petition.

On appeal, the DC Circuit said the issue was whether a state waives its Section 401 authority when, pursuant to an agreement between the state and applicant, an applicant repeatedly withdraws-and-resubmits its request for water quality certification over a period of time greater than one year. The court then said determining the effectiveness of this scheme was “an undemanding inquiry” given the statutory language which sets a maximum of one year for states to consider the certification request. The court says that each resubmitted request wasn’t really a “new” request, so FERC acted arbitrarily and capriciously in finding that the states hadn’t failed to act. The opinion offers strong language saying states’ “deliberate and contractual idleness” cannot be used to “usurp FERC’s control over whether and when a federal license will issue.” The court remanded the case to FERC with a directive to proceed with its review of, and licensing determination for, the project.

Now, parties are invoking the Hoopa Valley Tribe ruling in requests to the Commission for orders finding that states have waived their certification rights through the withdrawal-and-resubmission process. On February 28, 2019, Exelon Generation Company, LLC requested a declaratory order that Maryland has waived its authority to issue a water quality certification for Exelon's Conowingo Hydroelectric Project, by failing to timely act on Exelon's request for certification.

Similarly, in February, Dan Dinges, president and CEO of Cabot Oil & Gas Corporation, filed a letter with the Commission, urging prompt approval of the Constitution natural gas pipeline. Dinges described dhe Constitution Pipeline, of which Cabot is one of the developers, as having been blocked by the state of New York, and noted that the DC Circuit had held in abeyance a case relating to the Constitution pipeline’s certification pending action on the Hoopa Valley Tribe case because they raised “common questions of law.” In his letter, Dinges cites the Commission’s failure to act on the Vineyard Wind capacity auction waiver request, points to New England’s constrained pipelines and fuel security concerns, and argues that “the gamesmanship of the State of New York has never been more suspect” in the wake of the Hoopa Valley Tribe ruling. He urged the Commission to act on the Constitution Pipeline. Subsequently, the Commission posted notice allowing parties to the Constitution Pipeline case an opportunity to comment on the impact of the ruling on that case.