ELR Citation: ELR 21397
No(s). s. 90-70203 et al (9th Cir. Apr 3, 1992)

The court holds that the Federal Energy Regulatory Commission's (FERC's) decision to issue a license for a small hydroelectric power project in California, in light of concerns regarding stream flow, congressional influence, and waiver of state certification of water quality under the Federal Water Pollution Control Act (FWPCA), was not arbitrary or capricious. The court first holds that FERC's decision to reopen negotiations between FERC and the California Department of Fish and Game (DFG) on the issue of project flow requirements was appropriate. It was within FERC's discretion to reopen proceedings to correct a procedural error. Further, reopening negotiations did not improperly alter the project's license by violating §558(c) of the Administrative Procedure Act (APA), because the license was not final. Thus, the notice and hearing requirements of that section of the APA did not apply. The court next holds that substantial evidence supports FERC's stream flow requirements, and that FERC properly weighed the evidence. FERC met its obligations to balance environmental concerns with the need for power development, and where necessary, demonstrate why conditions proposed by the DFG would not be included in the license. FERC balanced the public interests specified in the Federal Power Act, giving equal consideration to conflicting interests, and reached a reasoned factual decision. Moreover, FERC gave adequate consideration to fish, wildlife, and recreational factors. The court also holds that letters from members of Congress did not rise to the level of undue influence or affect the appearance of impartiality in this case, and rejects alleged violations of ex parte rules of the APA. The court holds that FERC did not act arbitrarily or capriciously in denying the California Water Board's (CWB's) petition for rehearing on the issue of water quality certification, because the CWB waived certification pursuant to §401(a) of the FWPCA, thereby permitting FERC to issue a license without state certification. The court also holds that the Bureau of Land Management (BLM) did not have authority under the Federal Land Policy Management Act to issue a right-of-way permit to the hydropower project, because FERC has exclusive jurisdiction over hydroelectric development. BLM's right-of-way authority extends only to nonhydro sources of power generation and to transmission facilities not licensed by FERC as part of a hydroelectric project facility.

Counsel for Petitioner
Michael W. Neville, Deputy Attorney General
Attorney General's Office
455 Golden Gate Ave., San Francisco CA 94102
(415) 703-1985

Counsel for Respondent
Samuel Sooper
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Amicus Curiae
John Bryson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before: ALARCON, T. G. NELSON, Circuit Judges, and PRICE, District Judge.^*