California v. Federal Energy Regulatory Commission

PETITIONER:California
RESPONDENT:Federal Energy Regulatory Commission
LOCATION:Cumberland County Central Booking

DOCKET NO.: 89-333
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 495 US 490 (1990)
ARGUED: Mar 20, 1990
DECIDED: May 21, 1990

ADVOCATES:
Roderick Eugene Walston – on behalf of the Petitioner
Sternen L. Nightingale – on behalf of the Respondents

Facts of the case

Question

Audio Transcription for Oral Argument – March 20, 1990 in California v. Federal Energy Regulatory Commission

William H. Rehnquist:

We’ll hear argument next in Number 89-333, California v. Federal Energy Regulatory Commission.

Mr. Walston.

Roderick Eugene Walston:

Mr. Chief Justice, and may it please the Court:

The question presented in this case is whether state water laws apply to hydropower projects that are licensed by the Federal Energy Regulatory Commission, or FERC, as it is commonly known.

The case involves a dispute between California and FERC over minimum flows for the Rock Creek project out in California.

California has established higher flow requirements for the project than those imposed by FERC.

FERC makes the argument in this case that the Federal Power Act completely preempts state flow requirements.

California argues that Section 27 of the Federal Power Act authorizes the state to set its own flow requirements.

California’s position in this case, I might add, is supported literally by all 49 sister states.

Section 27 provides on its face that the Federal Power Act does not interfere with state laws relating to control, appropriation, use or distribution of water used in irrigation or for municipal or other uses, or any vested right acquired therein.

California’s flow requirements in this case relate to control, appropriation and use of water for other uses, mainly in-stream uses and also hydropower uses.

Indeed, under California law, in-stream fish flows are specifically defined as a beneficial use of water.

And therefore, Section 27 literally encompasses the California flow requirements in this case.

The legislative history we believe makes especially clear that Congress intended to defer to the states preeminent water rights authority and to preserve the state’s existing traditional water right laws.

Congress indeed has traditionally deferred the state’s water laws, and in passing the Federal Power Act, and particular Section 27, Congress intended to continue the same tradition of deference that has been followed in the past.

And that legislative history indicates that Congress specifically intended for hydropower projects to comply with state water laws to the same extent that other persons must comply.

Congressman Doremus stated during their legislative debates,

“Water power companies organized under this act will be obliged to be obliged to operate under state law. “

Congressman Mondell stated that the bill disclaims any intent to take over control of water from the states.

No congressman during the legislative debates offered any different interpretation of Section 27 or suggested that the hydropower projects are not required to comply with state water laws.

Byron R. White:

Well, literally I take it you would say then that the state would have the authority… the authority to require a license from the state.

Roderick Eugene Walston:

Yes, that is correct.

And our position is that–

Byron R. White:

Even though it’s licensed by the–

Roderick Eugene Walston:

–By the… by FERC under the Federal Power Act.

Yes, that is correct.

The scheme established by Congress is this.

Section 4 of the Act authorizes FERC to issue licenses for hydropower projects and requires those hydropower projects to comply with FERC-imposed terms and conditions.

Sandra Day O’Connor:

–Well, Mr. Claps, what’s… what has been happening as a practical matter in the years since the First Iowa decision?

Have any states been requiring licenses of these hydroelectric projects that are authorized by the Federal government?

Roderick Eugene Walston:

Yes, Justice O’Connor.

As a matter of fact there are 492 hydropower projects now in California that have acquired water rights under state water law or in the process of… of acquiring such rights.

And until this case, no hydropower project in California has challenged the validity of California law as applied to that project.

And therefore, the on the ground status quo is that hydropower projects are in fact complying with both Federal law and state law.

They are getting licenses from FERC and also getting permits from the state.

That is the actual on the ground reality that is occurring today–

Sandra Day O’Connor:

And have minimum flow requirements been imposed by the state since First Iowa?

Roderick Eugene Walston:

–The states, especially in California, routinely impose minimum flow requirements.

That is a common–

Sandra Day O’Connor:

And if those minimum flow requirements make the project economically infeasible, as is alleged here, that’s all right?

Roderick Eugene Walston:

–That is correct.

That’s the scheme envisioned by Congress, Justice O’Connor.

The idea that Congress had in mind was that hydropower projects had to get joint approval.

They had to get approval from FERC under Section 4 of the Federal Power Act.

They also had to get approval from the state, pursuant to Section 27 of the Federal Power Act.

Thereby, the… what Congress had in mind was that you had… that the hydropower project has to go both through the Federal process and the state process and has to comply with the conditions and requirements both as… as a condition of operation.

Sandra Day O’Connor:

Do you think that’s the… the language and understanding of First Iowa, which seemed to take a very restrictive view of the meaning of this particular provision?

Roderick Eugene Walston:

Well, first, in First Iowa, we think that the Court’s discussion of Section 27, Justice O’Connor, was dictum.

Sandra Day O’Connor:

Well, I know you think that.

Roderick Eugene Walston:

Because the–

Sandra Day O’Connor:

But, let’s… let’s look at what the Court said, nonetheless, and didn’t the Court at least articulate a very restrictive view of the meaning of the Section?

Roderick Eugene Walston:

–Yes, it did.

And if this Court were to sustain the First Iowa court’s analysis of Section 27, then we could not prevail here.

Our view is that the court’s interpretation in First Iowa of Section 27 has been undermined by this Court’s more recent decision in California v. United States.

Sandra Day O’Connor:

Moreover, you’re telling me that nobody’s been paying any attention to it.

Roderick Eugene Walston:

The reality is that hydropower projects have in fact complied with both Federal water law and state water law.

And probably the reason why they have done it is because the state water laws have always been deemed to apply to hydropower projects to the same extent as apply to everyone else.

Byron R. White:

And another reason is it was perfectly feasible and easy to do so.

But the point of it here in this case is to comply with the… with the state law, at least allegedly, would amount to a veto of this project.

Roderick Eugene Walston:

Well, we… we don’t believe that that’s the case, Justice White.

Byron R. White:

I know, but I said arguably.

Roderick Eugene Walston:

Okay, well–

Byron R. White:

Let’s assume that it would.

Roderick Eugene Walston:

–Okay.

If… yes.

Certainly First Iowa said in analyzing Section 27 that the states could not impose any kind of condition that would veto a project.

Byron R. White:

Uh-huh.

Roderick Eugene Walston:

Our view in this case is that the Court’s decision in First Iowa… the analysis of Section 27–

Byron R. White:

Would allow the state to have a veto.

Roderick Eugene Walston:

–Would allow the state to have a veto.

Byron R. White:

And that is… I think that’s your outright argument in your brief.

Roderick Eugene Walston:

Yes, that’s correct.

We also argue that the state is not imposing a veto in this case.

Byron R. White:

I know.

Roderick Eugene Walston:

The state has simply imposed conditions that require the project to meet higher flow requirements than those contained in the FERC license.

William H. Rehnquist:

Well, now what… what do we know about the effect of those higher flow requirements imposed by the state on the feasibility of this project?

Roderick Eugene Walston:

I don’t think… as far as I know, Justice… or Mr. Chief Justice, I don’t believe that there’s any evidence in the record concerning the effect of these conditions on economic feasibility.

I do recall that FERC, in it’s declaratory order, stated that the project would be economically feasible over the life of the project, but not during the middle years of the project under the state conditions.

But I don’t think that there is any evidence in the record offered by any parties concerning that question.

Byron R. White:

Well… evidence or not, the court of appeals thought that it would amount to a veto.

Roderick Eugene Walston:

Well, yes, the court of appeals said that potentially that could happen.

I… I… I don’t think there is any evidence in the record whatsoever to support the court of appeal analysis on that question.

Once again, I stress that the idea that Congress had in mind in 1920 was that the water project would have to go both through the Federal process and the state process.

And indeed this was FERC’s historic interpretation of the meaning of Section 27.

Antonin Scalia:

What… what state laws do you think are affected by the Federal Power Act?

Roderick Eugene Walston:

What’s… I… do–

Antonin Scalia:

What state laws are preempted by the Federal Power Act?

Roderick Eugene Walston:

–In our view the… the state laws that would be preempted are those that are in contrary… contrary to clear congressional directives.

In other words, directives espoused by Congress.

And the reason we take that–

Antonin Scalia:

Such… such as?

Roderick Eugene Walston:

–Well, I… as I recall, I think there is a provision in the Federal Power Act for example that prohibits monopolies or restraints of trade.

There is… there is an anti-monopoly provision in the Federal Power Act.

And therefore, under that provision the states could not impose any condition… or state could not authorize a cartel or a monopoly–

Byron R. White:

Well, why wouldn’t Section 27 then permit it?

Roderick Eugene Walston:

–Section 27 on its face would.

But in California v. United States, this Court said that state power under Section 8 is limited by clear congressional directives.

We assume that the–

Byron R. White:

Well, that’s… that’s all First Iowa, I suppose, meant that if… if Congress clearly authorized the FERC to… to build a project, the state couldn’t prevent it.

Roderick Eugene Walston:

–I… I think that’s clearly the expectation of Congress.

What Congress said in the legislative debate was this.

It said that the states own the water, and the Federal Government owns the land and the consent of both must be obtained.

The consent of both the state and the Federal Power Commission must be obtained.

And indeed, that was FERC’S historic view of Section 27 and the Federal Power Act.

In 19… in its 1930… 1927 annual report, FERC described the effect of the Federal Power Act as follows.

At page 20… 35 of our brief.

Quote…

“The development of water power on the lands of the United States requires the approval of both the state and the Federal government, the former granting the right to use the water, the latter the right to use the land. “

And thus the expectation of Congress was that the hydropower project had to go both through the state process and the Federal process.

Anthony M. Kennedy:

How do… how do you describe under California law the state’s interest here?

Simply that ownership of the water, or is there some descriptive term for the use of that water for the promotion of fishing?

Roderick Eugene Walston:

There’s specific statutes that protect the public interest in water for in-stream uses, and particularly for the protection of fish, Justice Kennedy.

Section 1243 and 1257 of the California Water Code specifically provide that the State Water Resources Control Board must consider, and to the extent necessary protect, fish needs.

And it also provides that the state board must balance fish needs against the needs of hydropower projects as well.

Anthony M. Kennedy:

If… if you have a riparian owner who wishes to use the water, and the state has an interest in preserving fishing, does that come out of the public trust doctrine or just–

Roderick Eugene Walston:

No, it, comes… the riparian doctrine has been so modified in California now that the same conditions that apply to appropriated use also apply to riparian use as well.

And therefore, it wouldn’t make any difference–

Anthony M. Kennedy:

–All right.

Suppose then you had an appropriated user?

And that… and that prior appropriated use seemed to conflict wish fishery requirement?

Anthony M. Kennedy:

Then how would you characterize the state interest?

Roderick Eugene Walston:

–Well, the state interest in that case would be to reassess the appropriated right in order to protect the fish needs to the extent that the state determines that fish needs have to be protected under those circumstances.

Of course, it’s always a balance.

The State of California is not in the business of putting hydropower development out of business in order to protect fish.

Antonin Scalia:

But, what about putting hydropower development into business?

If you assert that in-stream uses are covered by this provision, surely the generation of power is an in-stream use?

Roderick Eugene Walston:

That’s right.

Antonin Scalia:

So, I presume then, if you read this Section 27 the way you read it, California can license a hydroelectric plant that does not have the approval of FERC because it says nothing herein shall be construed to affect or intended to affect in any way, or in any way interfere with the laws of the respect… with respect to what you say are in-stream uses.

Roderick Eugene Walston:

That is correct.

California–

Antonin Scalia:

So, you don’t need a FERC license.

You can get a California license for a hydroelectric plant.

Roderick Eugene Walston:

–But the project couldn’t operate.

Antonin Scalia:

Why?

Roderick Eugene Walston:

Because it… it wouldn’t have the FERC license.

Antonin Scalia:

You don’t need the FERC license.

It says nothing herein contained shall be construed as affecting or intending to affect or in any way interfere with.

And California says you can… you can operate a hydroelectric plant.

Roderick Eugene Walston:

If you were to read Section 27 in the abstract and devoid of anything else in the Federal Power Act, you would come to that conclusion, Justice Scalia.

That’s the way you read it.

No, that’s not the way you would read it.

The way we read it is that Section 27 also has to be read in conjunction with other provisions of the Act, particularly Section 4 of the Act.

Section 4 of the Act specifically provides that FERC has the right to issue its own permits and its own flow requirements.

Antonin Scalia:

But this says nothing herein contained shall be construed as affecting or intending to affect.

Roderick Eugene Walston:

I… I understand your point.

I… we don’t make that argument, Justice Scalia.

Antonin Scalia:

Well, I know you don’t.

Roderick Eugene Walston:

That’s… that’s an argument to which–

Antonin Scalia:

But… but it seems to me if you… if you allow this language to cover in-stream uses, and… and I don’t see any difference in that regard from preserving fish or generating power… it seems to me you’ve got the whole act.

Well, this–

Antonin Scalia:

–This is on Federal land… this flows through a national forest, doesn’t it?

Roderick Eugene Walston:

–No, that’s not correct.

Byron R. White:

Oh?

The Federal… the… the–

Roderick Eugene Walston:

Some of the lands involved here are Federal lands and some are private lands.

Byron R. White:

–I see.

Roderick Eugene Walston:

But the Federal lands are administered by the BLM; they’re not forest lands.

Byron R. White:

Well, I know.

I know.

Roderick Eugene Walston:

But they are, say, partially Federal and partially private.

Byron R. White:

Where is this project?

Roderick Eugene Walston:

It’s… it’s… it’s a long project that… that covers both public lands and private lands.

It’s actually on Rock Creek–

Byron R. White:

Right.

Roderick Eugene Walston:

–but, as I say, part of the land is Federal and part of the land is private.

The most important point I… I think that I need to get across to the Court is that the legislative history of Section 27 of the Federal Power Act indicates that the provision was expressly modeled after Section 8 of the Reclamation Act of 1902.

The primary author of Section 27 said he copied Section 27 from Section 8.

And in California v. United States this Court held that Section 8 requires the Secretary of the Interior to comply with state water laws.

In that case, the Solicitor General made the same argument on Section 8 that he makes today on Section 27.

He argued that Section 8 is limited simply to proprietary rights.

And this Court rejected the argument saying that that argument would trivialize… and that was the Court’s word… trivialize… the broad language in policy of Section 8.

And since Section 27… or that is to say, since Section 8 requires the Secretary of the Interior to comply with state water laws, and since Section 27 is directly modeled after Section 8, it would follow that Section 27 requires hydropower projects to comply with state laws as well.

In other words, the intent of Congress was that by putting Section 8 into the Federal Power Act hydropower projects would be required to comply with state law to the same extent that Federal reclamation projects are required.

And if the result were otherwise, you would have an anomaly and indeed an inconsistency on water rights throughout the West.

Byron R. White:

Do you think… do you think, really, that on the facts of California that it was inconsistent with First Iowa?

Roderick Eugene Walston:

On the facts of California?

Byron R. White:

Yeah.

Roderick Eugene Walston:

No, we… we think–

Byron R. White:

Well, let me… let me put another way.

Wouldn’t the use that was confirmed to California in that case have been… been within the construction of 27 in First Iowa?

Byron R. White:

That the state could control, namely for irrigation?

Roderick Eugene Walston:

–Well, if I understand your question, I think the answer is yes.

In other words, the state law that was involved in California would fit within Section 27, if that’s what your asking.

Byron R. White:

Under… under… in first Iowa?

Roderick Eugene Walston:

Not as… not as interpreted by First Iowa, no.

As interpreted by First Iowa–

Byron R. White:

Well, I know, but–

Roderick Eugene Walston:

–the Court said that–

Byron R. White:

–what was the… what was the use involved in–

Roderick Eugene Walston:

–In California?

Byron R. White:

–No, in First Iowa?

Roderick Eugene Walston:

Or in First Iowa?

The state there prohibited a dam that would have been an–

Byron R. White:

Been an irrigation dam?

Roderick Eugene Walston:

–Would have done… virtually prohibited all dams that would have impaired fish in any respect whatsoever.

William H. Rehnquist:

They also said that you had to get a license from the state, didn’t they, in First Iowa?

You had to go before that board?

Roderick Eugene Walston:

I don’t recall that the Court said that–

William H. Rehnquist:

But I mean, I thought that the State of Iowa had said–

Roderick Eugene Walston:

–Oh, the State of Iowa–

William H. Rehnquist:

–had said that.

Roderick Eugene Walston:

–I’m sorry.

William H. Rehnquist:

Yeah.

Roderick Eugene Walston:

Yes, the… the State of Iowa in the First Iowa case argued that Section 9(b) of the Federal Power Act requires the hydropower project to go to the state to get a permit.

And this Court said, no, Section 9(b) is simply an informational provision only; it is not a subsidy provision.

It has no force and effect.

It simply gives evidence or information to FERC that it needs in the licensing process.

And therefore, the Court said you don’t have to get a state water right as a condition precedent to getting a FERC license.

That’s what the Court actually held in First Iowa.

Now, that holding could be correct, and indeed we do not challenge it here, and the Court could still sustain California’s position here, because in First Iowa the Court did not consider… or I should say anything that it did consider concerning the effect of Section 27 was extraneous to the decision and, therefore, in our view was dictum.

Roderick Eugene Walston:

Now certainly the Court had a very crabbed view of Section 27 in the First Iowa case.

But as I have said, that crabbed view is inconsistent with the broad view that this Court took of Section 8 in the case of California v. United States.

And since one provision was modeled after the other, it is simply incomprehensible that the Court should interpret those statutes inconsistently.

Antonin Scalia:

Why do you say it was dictum in… in–

Roderick Eugene Walston:

Well, because the actual holding in First Iowa was that Section 9(b) of the act simply imposed an informational requirement only and, therefore, that Section 9(b) in itself did not require a hydropower project to obtain a state water right as a condition precedent to getting a FERC license.

And that was the whole holding that… that… that was the question that First Iowa put before the Court and that was the holding of the Court.

Anything the Court said on Section 27 was extraneous to its decision.

And indeed, the Court analyzed Section 27 only for the purpose of distinguishing its broad, quote, 9(b).

And, therefore, we urge this Court to not overrule the holding in First Iowa.

We think the holding in First Iowa is adequate and acceptable and not inconsistent with the position we assert here.

We rather argue that the Court should disregard the dictum in First Iowa concerning Section 27.

And the reason we assert that is because that dictum is inconsistent with this Court’s recent decision in California v. United States, which provides an entirely different analysis of Section 8 which was the progenitor of Section 27.

Byron R. White:

–[inaudible] suggesting that if we have another view of the… the… of what was said in First Iowa, that we overrule it.

We should overrule the case.

Roderick Eugene Walston:

We don’t ask that.

If… if the Court is inclined to overrule First Iowa, the Court–

Byron R. White:

Well, I know, but what if we… what if we think it isn’t just dictum as you say, that it’s holding.

You… you want us to overrule it, don’t you?

Roderick Eugene Walston:

–We want the Court to disavow the dictum of… in First Iowa in the same way that in the California case the Court disavowed the dictum of two prior cases that had interpreted Section 8 as limited to proprietary rights.

Those two prior cases were Ivanhoe and City of Fresno.

Those cases said that Section 8 is limited to proprietary right.

And this Court said those… that analysis was dictum, and this Court specifically said we disavow that dictum.

We ask for the Court here to do the same thing that it did in California v. United States, which is to say disavow the dictum of First Iowa in the same sense that it disavowed the dictum in Ivanhoe and City of Fresno.

The First Iowa dictum concerning Section 27 is remarkably similar to and indeed as I… virtually identical to the dictum in the Ivanhoe and City of Fresno cases.

This Court put them aside and came out with a broad holding that reaffirmed the broad meaning and effect of Section 8 as intended by the Congress in 1902.

And therefore, we ask that the Court do the same thing here in the context of this case: disavow the dictum of First Iowa, allow its holding to remain in effect, but disavow the dictum and hold instead that Section 27 has a broad meaning intended by the Congress in 1920.

And, indeed, Federal–

Sandra Day O’Connor:

Now, Mr. Walston, the court in the State Energy Resources Conservation case and in the LaJolla Band of Mission Indians case has described its view taken in First Iowa.

And the Court said Congress intended to vest in the Power Commission exclusive authority to issue licenses for hydroelectric projects.

And there’s considerable language to that effect in our cases.

Sandra Day O’Connor:

Now, you tell me all that is wrong?

Roderick Eugene Walston:

–Well, I… I don’t believe that that… the holding, or the language that you’re describing is central to those decisions, Justice O’Connor.

The only… the main language this Court has invoked in past decisions relating to Section 27 that we’re… the parties are concerned with here today, of course, is the language in First Iowa itself.

The only… in our view, the Court need do no more than simply disavow the dictum in First Iowa.

That’s all we ask the Court to do.

Sandra Day O’Connor:

Well, then in the state… in State Energy Resources the Court said that allowing states to veto Federal decisions could destroy the effectiveness of the Federal act, meaning the Federal Power Act.

Roderick Eugene Walston:

I… I don’t–

Sandra Day O’Connor:

And it had similar language in the LaJolla Band of Mission Indians case.

Roderick Eugene Walston:

–That… I… I can only respond, Justice O’Connor, that that was not the intent of Congress in 1920 when it passed the Federal Power Act.

Congress had these issues before it and the people in Congress put Section 27 in the Federal Power Act by a very narrow vote, eight to seven.

It was widely discussed, widely debated.

After it was put in, then the Congress… then the congressmen who were behind the bill proceeded to describe its broad effects, and the broad effects were that Congress was going to continue the same deference to state water law that it had always followed in the past.

Sandra Day O’Connor:

Well, Congress has had before it now the language in First Iowa and the subsequent references, and has done nothing to change that scheme.

Roderick Eugene Walston:

Well, the… no, I… I must respectfully–

Sandra Day O’Connor:

For a good many years.

Roderick Eugene Walston:

–I must respectfully disagree, Justice O’Connor.

I… I don’t believe the Congress has ever had the issue before it recently.

The question of whether to overrule First Iowa or modify First Iowa has never been presented to Congress, as far as I know, since the First Iowa case is… or I should say since–

Sandra Day O’Connor:

But we assume Congress knows about these cases–

Roderick Eugene Walston:

–Well–

Sandra Day O’Connor:

–don’t we?

Roderick Eugene Walston:

–Well, certainly Congress knows about it, but I’m not sure that congressional inaction that takes place several generations later is relevant in construing the original meaning of Congress in 1920.

This Court has said in many… on many occasions that you cannot use later silence or inaction by Congress to explain what Congress several generations before may have intended.

Which would also–

John Paul Stevens:

May I ask this question?

How do you… how do you explain the sudden interest of 49 sister states and California asking us to make a change in the law if they haven’t made any request to Congress?

Or you’re saying this isn’t really a change in the law at all?

Roderick Eugene Walston:

–Well, our… our view is that… no, we’re not asking… we’re simply asking the Court to consider and decide this case in the same way that it considered and decided the case of California v. United States.

John Paul Stevens:

But wouldn’t you have done the same thing if California v. United States had never been decided?

How does that fit into the picture?

Roderick Eugene Walston:

Well, I–

John Paul Stevens:

Didn’t that suggest to you–

Roderick Eugene Walston:

–wait–

John Paul Stevens:

–an argument that none of these 49 states had thought–

Roderick Eugene Walston:

–We certainly–

John Paul Stevens:

–has thought of it for several years?

Roderick Eugene Walston:

–We certainly… we certainly would probably would have pressed the issue, but I… I don’t think that we would have gotten as far as we have gotten today… and we certainly wouldn’t the mean argument.

John Paul Stevens:

xxx.

Roderick Eugene Walston:

Pardon me?

Byron R. White:

You mean you’ve lost so far?

Roderick Eugene Walston:

Yes, that’s right.

And… and we certainly would… would not have the main argument that we make to this Court.

The main argument–

John Paul Stevens:

I thought it was your… your submission that California had in effect changed the… the law and now everybody was getting on the bandwagon to make sure we take advantage of this change.

Roderick Eugene Walston:

–Well, no, we… we simply ask this Court to interpret Section 27 in the same way the Court interpreted Section 8.

The reason the 49 sister states–

John Paul Stevens:

With a different statute.

Roderick Eugene Walston:

–have joined us is because the states feel very strongly about the issues.

John Paul Stevens:

But not strong enough to go to Congress on… on the point?

Roderick Eugene Walston:

Well, perhaps… you know, if all else fails, then there’s certainly that remedy available to the states.

But I–

John Paul Stevens:

But this is the first place you go to get a change in the law, in other words?

[Laughter]

Roderick Eugene Walston:

–Well, it’s… it’s… we don’t think that we’re getting a change in the law.

We’re asking for the Court simply to interpret Section 27 in the way that Congress originally intended, and I–

John Paul Stevens:

And contrary to the way the Court interpreted whether it’s dictum or not in a case of about 40 years ago.

Roderick Eugene Walston:

–Yes, but what has changed, Justice Stevens, I think, is that in California v. United States this Court took another look at those issues.

John Paul Stevens:

In a different statute.

It didn’t even cite the First Iowa case.

Roderick Eugene Walston:

Well, it wasn’t… no, and it wasn’t called on to.

Roderick Eugene Walston:

And… although the Solicitor General did, by the way, say this case is just like First Iowa, which, of course, is opposite from to the argument he makes today.

In fact, he urged this Court… he said you… you can’t overturn Section… the prior decisions concerning Section 8 because First Iowa has already decided these issues.

And this case is just like First Iowa.

That was his argument to the Court.

John Paul Stevens:

But he’s quite about that because there are differences between the cases.

They’re different statutes, among other things.

Roderick Eugene Walston:

The statutes are very similar, Justice Stevens, and I… I cannot accept the proposition that they are different in any fundamental way–

John Paul Stevens:

Is there a counterpart to Section in the other statute?

Roderick Eugene Walston:

–Pardon me?

John Paul Stevens:

Why don’t you go ahead?

Roderick Eugene Walston:

All right.

The point is that if you back to the language of the statutes, Section 27’s language was borrowed right from Section 8.

If you go back to the legislative history, the legislative history indicates that Congress meant to take Section 8 and put it in… into the Federal Power Act.

That’s precisely what Congress said during the legislative debates.

And therefore, if it is true that Section 8 is not limited to proprietary rights and does indeed authorize state regulation of water, then it must follow that Section 27 does the same thing in a hydropower context.

Otherwise, this Court is in the unenviable position… unenviable position of providing a different interpretation of two statutes, one of which was modeled after the other, and both of which contain the same language.

Byron R. White:

But you… you seem to agree that you can’t just take… construe the section… Section 27 literally, the way it reads.

Roderick Eugene Walston:

No, and neither did the Court in California v. United States.

Byron R. White:

And so how do we go about sorting out which controls Section 7 allows the state to impose and which ones that it doesn’t?

Roderick Eugene Walston:

The Court should treat Section 27 in the same way that it did Section 8 in California v. United States.

In California said that Section 8 is limited by any clear congressional directives that on its face or implicitly preempts state law.

And we would therefore urge that the same result should–

Byron R. White:

Despite Section 27?

Roderick Eugene Walston:

–Yes, that’s correct.

Did I–

Byron R. White:

And so… but… but that means that the state can set a… a different in-stream flow than the Federal Power Commission sets.

Roderick Eugene Walston:

–It could only set a more stringent, a higher standard of flow.

If it sets a higher standard of flow, the project has to meet the higher state standard.

Byron R. White:

And… and–

Roderick Eugene Walston:

If… if the reverse–

Byron R. White:

–And then… and completely veto the project?

Roderick Eugene Walston:

–Well, it could lead to that.

Of course, the state is not doing that here.

The states rarely have an incentive to do that because the state’s own citizens are the… are the beneficiary of hydropower development.

The states are interested in promoting hydropower development.

But they are also interested in balancing hydropower needs against competing needs that are very important to the state as well.

The state’s water right process has been followed for many years.

Congress has consistently followed and deferred to state water laws and this Court has consistently sustained Congress’ judgment.

Section 27 is no garden-variety savings clause.

Rather, it is a fundamental… an expression… an expression of a fundamental principle of Federalism.

And that principal of Federalism is that the states have sovereign interest in water, and that the states have the primary right to regulate the allocation and use of water.

Congress itself has traditionally followed this… this tradition for many years.

This Court has sustained Congress’ judgment.

It is First Iowa that is the aberration that stands out there all by itself.

Therefore, we ask that this Court reaffirm the enduring principle of California v. United States and reject the dictum in the First Iowa decision that we think goes contrary.

I’d like to reserve my remaining time for rebuttal.

Byron R. White:

Very well, Mr. Walston.

Mr. Nightingale.

Sternen L. Nightingale:

Thank you, Mr. Chief Justice, and may it please the Court:

In the Federal Power Act Congress has delegated to the Commission responsibility for licensing those hydroelectric projects that in the Commission’s judgment are best adapted to the development of the waterways in issue.

In each such licensing, the Commission weighs a variety of interests, including the requirements of interstate and foreign commerce, irrigation, navigation, the environment and many others.

The question presented by this case is when the Commission has undertaken that task, balanced those interests and issued a license, Section 27 reserves to the states authority to prevent the judgment from being put into effect.

Now, our fundamental contention is that this Court has reached and resolved that question in, among other cases, the First Iowa case and Federal Power Commission v. Oregon, the Pelton Dam case.

In both those cases, state laws were asserted that would have blocked hydroelectric projects that had been licensed by FERC, or in the… excuse me, in the First Iowa case the Commission had expressed approval of the project though it had not actually issue the license and this Court held that those state laws could not be applied to veto the implementation of the project.

William H. Rehnquist:

Mr. Nightingale, is it the government’s position here that the state cannot impose any requirements that the FERC doesn’t, even though the requirement wouldn’t constitute a veto?

Sternen L. Nightingale:

Your Honor, our position is that the state cannot impose conditions that are inconsistent with the license terms.

Now, in this case the Commission has explained how its minimum flow requirements implement a balance between, on the one hand the requirements of power generation, and on the other hand the protection of fish.

And it has explained that in-stream flow requirements different from those established are inconsistent with those of the state.

So, our position is that the state cannot impose conflicting conditions.

William H. Rehnquist:

Supposing it sought to impose a requirement which didn’t conflict?

Sternen L. Nightingale:

If it… if there were no conflict between the state regulation and the terms of the license, it would be our position that it would not be preempted.

Assuming it was… that would be our position, yes.

Byron R. White:

I thought you… Section 27 refers to the state’s regulations with respect to irrigation, municipal use… and what else is it?

Sternen L. Nightingale:

Section 27 refers to state laws relating to the control, appropriation, use or distribution of water used in irrigation or for municipal or other uses.

Byron R. White:

Or other uses.

I thought your position was that… that in-stream flows just wasn’t one of the uses that the state was… was protected on here?

Sternen L. Nightingale:

Our position is that Section 27 expressly saves state law from preemption.

In other words, if the state law is one that falls within Section 27, it’s saved.

It’s not our position, though, that the Federal Power Act occupies the entire field–

Byron R. White:

No, no.

Sternen L. Nightingale:

–such that–

Byron R. White:

But isn’t it your position that… that a state regulation dealing with in-stream flows just isn’t within Section 27?

Sternen L. Nightingale:

–Yes, in this case because it doesn’t create a proprietary right in water.

The–

William H. Rehnquist:

Well, what if… what if in this case instead of the Commission finding that, you know, we set the minimum flow because we wanted the minimum flow at that point… we wanted this kind of balance… the Commission says, well, sure, we set the minimum flow but it really doesn’t make a lot of difference to us, and then the state came along and set a smaller minimum flow.

And the Commission can say, well, that really won’t have any… make any difference to the feasibility of the project.

Now, is that… is the state preempted there?

Sternen L. Nightingale:

–Your Honor, I think it’s hypothetical that would not arise because the way the process works is to channel state concerns through the licensing process.

Were the Commission to establish a minimum flow requirement and to state along with it that it wasn’t prescriptive in any sense, I suppose there would be room for the states to do different things.

But that is not the Commission’s practice.

Let me make it clear.

The Commission’s minimum flow requirements express its judgments about the appropriate balance between the use of water for hydropower purposes and the protection of fish.

It does not, to my knowledge, set minimum flow requirements without meaning them to be prescriptive.

Because our position begins with the First Iowa case, I think it’s important to lay to rest the suggestion that the analysis there about the scope of Section 27 and the preemptive effect of the Federal Power Act was dicta.

In that case, it’s important to recognize the Court accepted that it would be impossible for the state to comply with the licensing requirement that was in issue.

That requirement provided that the water for a stream would have to be returned at the nearest practical place.

And the essence of the project was to divert the flow of the Cedar River through a canal to the Mississippi, effectively dewatering the last 29 miles of the stream, so that there was no suggestion that there was a possibility that the project could be licensed and compliance with the state law could be worked out later.

The Court understood the case in those terms.

The questions presented included the question whether the issue had been superseded.

The applicant for the license had not tried to get a state permit and, therefore, argued… at every stage of the proceeding it relied on the argument that the requirement for compliance was preempted.

Sternen L. Nightingale:

And the… the Court’s reasoning in that case, I believe, leaves no doubt that the Court reached and decided the question whether the state licensing requirement was enforceable.

And in reaching that conclusion and reaching the conclusion, in the Court’s words, that the question whether the project should go forward was one for the Commission and not for the authorities of the state, the Court necessarily considered and resolved three propositions I believe.

First, it analyzed the structure of the Act as a whole and reached the conclusion that the entire scheme was designed to place in the Commission responsibility for resolving the issue presented by the licensing statute.

Second, it found that Section 9(b) did not save state laws, did not… despite the inference that could be drawn from the remainder of the statute, Section did… B did not preserve the enforceability of… of the state law.

And finally, it reached and addressed the argument presented by the State of… Iowa in that case that Section 27 independently saved the state law, and it discussed the scope of Section 27, both in response to Iowa’s assertion and because it was necessary to the judgment in the case.

Aware that Section 27 was there, the Court couldn’t very well find the state statute preempted without considering whether Section 27 saved it.

Now, any… any doubt on that score, we submit, was laid to rest in the Pelton Dam case.

In that case, one of the requirements that the applicant for a license had not complied with was a state statute that required a license to appropriate water for the dam.

And the Ninth Circuit had held in that case that the FERC could issue only a permissive license, not a license that would confer a complete right to build the dam.

And this Court rejected the argument that compliance was required.

And I’d like to refer the Court to a portion of the opinion not cited in our brief, which was footnote 24 of… at 349 U.S. at 450 to 451.

The state statute with which there had been no compliance… the permit requirement is quoted there, and the Court noted that under its decision compliance was not required.

So, I think there’s no doubt at this stage that First Iowa set out the analysis that’s appropriate for determining whether state laws have been superseded in the Court’s words.

Now, Justice O’Connor inquired about the status quo on the ground in light of First Iowa.

We have a different view than California on that score.

We’ve cited a number of decisions in our brief in which courts have consistently applied First Iowa.

I’m referring to page 24 at footnote 15.

To our knowledge, there has been no case in the lower courts in which a court has taken the position that First Iowa is anything less than good law as it purports to be.

So we believe–

Anthony M. Kennedy:

The state… the state argues that under California, where the state’s interests are represented, what’s going to happen is the same water and the same stream is going to be subject to really a differential degree of preemption that doesn’t seem to make any sense.

You recall a hypothetical they had in the brief?

What is your comment on that?

Sternen L. Nightingale:

–Well, I think it’s considerably overstated.

First of all, as a general matter, we’re not talking about, as California would put it, two systems of water law on the same river.

What we are talking about is a situation where state law will have to incorporate and abide by those conditions that are established in a FERC license.

And that’s not an unfamiliar thing for state water law to have to do.

Reserve… Federal reserved water rights, for example, are taken account of within an overall structure of state law; there are Federal statutes which impact on state water decisions.

And this is a case in which what we’re talking about basically is where state water law will have to incorporate and abide by the prescriptive conditions in a FERC license.

Anthony M. Kennedy:

What happens if the dam is for reclamation and power purposes?

Sternen L. Nightingale:

If Congress has authorized the project to include hydropower purposes, the Secretary of the Interior, I understand, takes that.

Sternen L. Nightingale:

I’ll… I understand your question as dealing with the situation in which the authorization extends only to nonpower purposes.

In that situation, FERC is authorized to license the hydroelectric development of the project.

When it does that under Section 10(a) it’s obligated to consider the effect of its decision on various beneficial uses of the water.

And under the new statute, the ’86 statute, the Electric Consumers Protection Act, it will have to incorporate all re ommendations regarding the fish and wildlife unless it makes a… an affirmative finding that they’re inconsistent with the purposes of the Federal Power Act.

Remember that when we think about hypotheticals in which there is a conflict between a commissioned licensing decision and the exercise of state authority in this matter, that it won’t arise until after FERC has first balanced all the interest involved and its balancing decision will be subject to judicial review.

It will only be in those situations where FERC has… has made a good faith balancing decision that there will be a potential for conflict.

I think you can overstate the potential for inconsistency if you… if you lose sight of the fact that FERC is empowered and required to consider the effect of its decisions on other use of water in the river and to consider under ECPA specifically the input of the state agencies that are responsible for that function.

Now–

Sandra Day O’Connor:

Mr. Nightingale–

Sternen L. Nightingale:

–Yes?

Sandra Day O’Connor:

–is it the fact that states have been licensing these hydropower projects and engaging in the kind of activity that the state seeks to have us confirm here?

Sternen L. Nightingale:

Yes, Your Honor Under Section 9(b) of the Act an applicant is required to submit satisfactory evidence with respect to compliance with state laws and it’s been FERC’s practice to look for that evidence.

The act requires applicants to go through the application procedure in effect.

FERC isn’t interested in relieving applicants from any obligation to go forward with procedures that may surface, problems that it should be aware of.

Sandra Day O’Connor:

So, as a practical matter, FERC has been requiring full compliance with any state requirement?

Sternen L. Nightingale:

I won’t say full compliance; people go through the process.

The reported decisions indicate that when conflicts have arisen the Courts have resolved those conflicts in favor of the… in the manner of First Iowa and in favor of Federal authority where there’s been an actual conflict.

I believe there have been few conflicts because people understand the way the system works and… and problems are adjusted in accordance with the existing scheme.

I’m not aware of a lot of situations in which there’s insistence that hardens into a dispute that needs to be resolved judicially.

We disagree with the California’s suggestion that absence of conflict reflects a general acceptance of the idea that compliance with state law is necessary.

We think it reflects a general understanding about the way the system has worked since First Iowa.

Because my opponent’s principal point is based on California v. United States I think it’s important for me to address that now.

I think what is clear from the argument here, if it wasn’t before, is that no one is arguing for literal compliance with Section 27.

No one is arguing that if a… if an argument can be made that a state law relates to the use of water for any use, it’s automatically enforceable without respect to any other provision of Federal or… Federal law.

The question is how can we attempt to give effect to that provision and also effect to what… to the substance of what Congress was evidently attempting to achieve in the Federal Power Act.

We submit that the First Iowa accommodation, an accommodation that respects the affirmative licensing judgment conferred on the Commission and also describes that category of state law that is saved as an entirely plausible and entirely reasonable provision that has worked for some time and doesn’t deserve to be reconsidered.

But even under the framework of California, we believe that we are entitled to win this case.

Under California, one looks to identify a clear congressional directive and then recognizes that section… that a savings clause will not be deemed to supersede it.

Now, there’s nothing in California that suggests that a clear congressional directive must take a prescriptive, clear form such as no more than 160 acres, which was the issue in the Ivanhoe case.

We believe that Congress can express an intention to delegate affirmative responsibility to a Federal agency to make a particular judgment call and that when it has made that judgment call it’s entitled to the same respect as a congressional action itself.

Sternen L. Nightingale:

Let me suggest a… an example that may clarify the point.

In the Fresno case the Court noted that the savings clause would not save state law, which granted a priority to municipal uses of water.

The Court noted that the Reclamation Act required the Secretary to provide… to favor irrigation and to provide water for municipal use only when he first determined that it would not undercut the use of a project for irrigation purposes.

Let’s suppose that instead that statute had said that the Secretary shall have authority to provide water which in his judgment is best adapted… to those uses that in his judgment would best adapt the project to a comprehensive plan for the distribution of water for irrigation, power, navigation, interstate commerce and other beneficial uses.

We submit that that affirmative grant of authority would qualify as a express congressional directive, a clear congressional directive.

It’s clear why Congress had to proceed by that means in the Federal Power Act.

It couldn’t personally supervise the hundreds of hydropower projects in various situations that would be necessary across the United States.

It had to act by means of a broad delegation to someone else to study the details and to make a judgment call about whether they were the appropriate ones.

William H. Rehnquist:

Well, Mr. Nightingale, would you distinguish California against the United States on the basis of the type of condition that the state sought to attach to the use of water there as opposed to the stream flow requirement here as perhaps all in the light of Section 8 or 27?

Sternen L. Nightingale:

Our first position is that First Iowa should be enforced according to its terms.

But our second position is that the express delegation of authority to the Commission is the kind of clear congressional directive, when exercised, that is exempted from the savings clause.

William H. Rehnquist:

But you would not distinguish the two cases on the basis of the nature of the conditions which the state sought to attach?

Sternen L. Nightingale:

No.

And let me emphasize three things about the delegation that we believe underscore the importance of respecting Congress’ choice of that term.

First of all, it’s an affirmative delegation.

Congress in this case has not given the Commission the job of certifying compliance with certain minimum standards.

Its job under Section 10(a) of the Act is to determine whether the project is best adapted to a variety of interests.

And that’s a… a… it’s supposed to make an affirmative judgment, and we think that that phrasing suggests that it must have meant that when the Commission determined what was best, that would be put into effect.

Secondly, the matters committed to the Commission’s judgment are comprehensive.

In the words of this Court in the Udall case, it’s supposed to consider all interests relevant to the public interest.

The strong suggestion is that there is… that what… when it’s done that properly, disputes with state authority will take the form of differing judgments about matters that have been committed to the Commission’s judgment.

And we believe that, again, there’s another… that’s another very strong indication that Congress must have meant its judgments to be implemented… the Commission’s judgments to be implemented.

Finally, the Commission’s judgment encompasses matters of national and regional scope, matters that may not be fully reflected in state law, in particular interstate and foreign commerce and navigability and, in the background, the nation’s need for renewable resources of energy as opposed to coal and oil-fired plants.

Again, those three characteristics of the delegation to the Commission… its affirmative nature, its comprehensive nature and its national nature… are very strong indication that Congress meant for what the Commission judged to be best would be put into effect.

And in considering that I think that it’s important as well to remember that while this particular project involves a relatively small stream in California, that the Act as a whole applies nationwide to projects of a much greater scope.

We’ve cited in our brief the Allegheny Power case, in which the Commission considered an application… considered applications for 19 licenses in the upper Ohio River basin simultaneously and granted 16 of them.

Those… those projects were in two states.

The Ohio River is obviously a state that is… it crosses state boundaries and in which–

William H. Rehnquist:

xxx.

Sternen L. Nightingale:

–I’m sorry.

Sternen L. Nightingale:

The Ohio River crosses several state lines and presents serious interstate issues.

So, I… I… when… when construing the statute, trying to determine the relationship within the overall scheme of the Commission’s licensing authority and Section 27, it’s important to recognize that the accommodation will apply across the board, not just to relatively small projects.

The suggestion that it is available to the Court to disavow the dictum in First Iowa I think understates the nature of the change in law that would be necessary to adopt California’s position in this case.

As I’ve indicated, I believe that the Federal Power Commission v. Oregon case cannot stand along with a decision that every Federal hydropower project is required to obtain a Federal license on the terms that a state may choose to give it.

That was a case in which an applicant failed to get a state license and the Court nevertheless held that the project could go forward.

Finally, I’d like to follow through on the point that Justice O’Connor raised about the status quo.

I think there is a… there would be a significant… that a decision in effect overruling First Iowa subordinating Federal hydropower projects to all state water law would have a significant impact in three significant respects.

First, in 1986 Congress passed a statute, the Environmental Consumer… I mean Electrical Consumers Protection Act, which reinforced the Commission’s responsibility to consider and address environmental issues in its licenses.

Under that statute, the Congress created procedures whereby concerns about the environment would be funneled through the licensing process.

The Commission is required to solicit recommendations from state and Federal agencies with wildlife concerns.

It’s also required to consider state plans for comprehensive development in its licensing decisions.

The very clear implication of that legislation is that the Commission was to have the final say, with the benefit of the views of the states.

A decision that the states could implement their own policy choices through state water law would seriously undercut that scheme, we submit.

Secondly, there’s nothing in California’s argument that would limit its interpretation to those state water laws that apply at the threshold of a hydroelectric project.

There are a number of projects in operation right now that have been licensed, we believe, on the assumption that First Iowa was good law.

California, among other states, have begun to revise state water law to permit changes in water appropriations after an initial license or permission to use water has been granted under the public trust doctrine.

We believe that there would be considerable uncertainty engendered if California’s view were adopted and that body of state law were potentially applicable to licensed existing projects.

Finally, projects are relicensed on a regular basis.

Licenses are issued for terms of up to 50 years but a number of major projects come up for renewal on a regular basis, and we believe that the result for which California argues in this case could have a serious unsettling effect on those procedures as well.

Unless the Court has any further questions, thank you very much.

William H. Rehnquist:

Thank you, Mr. Nightingale.

Mr. Walston, do you have rebuttal?

Roderick Eugene Walston:

Some comments, Mr. Chief Justice.

I understood the Solicitor General to say that the FERC licenses… the hydropower components of Federal projects.

And if that’s what he said, that is not correct.

Indeed, FERC has no jurisdiction over the hydropower component of Federal projects.

But on the other hand, under this Court’s decision in California v. United States, the states do have jurisdiction over hydropower components of the Federal projects.

Thus the FERC argument in this case means in effect that the state can regulate the hydropower component of Federal projects, but not of private projects.

And this doesn’t make any sense to us at all.

As a matter of fact the Federal project has much deeper Federal interest connected with it then the private project, where the Federal projects that state law is applied to under California v. United States are authorized by Congress, built and operated by Federal agencies, funded by the American taxpayer.

Roderick Eugene Walston:

The hydropower projects here, on the other hand, are built, financed and operated by private entities.

And therefore, the Federal interest is much more involved with respect to Federal project than the private one.

I’d like to briefly go over the hypothetical that Justice Kennedy had in mind in his question to the Solicitor General.

My time is up, Mr. Chief Justice.

William H. Rehnquist:

Thank you, Mr. Walston.

The case is submitted.

The honorable court is now adjourned until tomorrow at ten o’clock.