[00:00:00] Speaker 00: Face number 21-1120 et al. [00:00:04] Speaker 00: Turlock Irrigation District and Modesto Irrigation District petitioners versus Federal Energy Regulatory Commission. [00:00:11] Speaker 00: Mr. Settling for the petitioners, Mr. Fish for the respondents, Mr. Katz for the intervener. [00:00:23] Speaker 02: Morning, Council. [00:00:24] Speaker 01: Thank you, Your Honor. [00:00:25] Speaker 01: Misha Settling for the petitioners. [00:00:27] Speaker 01: 363 days after we submitted our certification request full of many hundreds of pages of water quality information. [00:00:36] Speaker 01: The California board here denied, reported to deny our submission request with a two-page pro forma letter and then told us to resubmit our application again if we wanted to keep an active file. [00:00:49] Speaker 01: We of course comply. [00:00:50] Speaker 01: 364 days later, same pro forma two page letter. [00:00:55] Speaker 01: Now there's no doubt, I think in anyone's mind, what was going on here is that the board wanted to buy itself more time to draft up its eventually very lengthy certification. [00:01:05] Speaker 02: Well, it seems like there is some question about that. [00:01:08] Speaker 02: You call this pro forma, but there was some reasoning. [00:01:12] Speaker 02: And the reasoning was that [00:01:14] Speaker 02: The district had not completed CEQA process. [00:01:20] Speaker 02: And without that, state law prevented the board from approving the permit, right? [00:01:27] Speaker 02: That's what they said, right? [00:01:28] Speaker 01: That is what you said, Your Honor, and if I could just take that in two parts. [00:01:32] Speaker 01: First, the decision below did not in any way rest on whether that was legitimately state of reason. [00:01:40] Speaker 01: Burke set out a bright-line rule that as long as the document is labeled as denial, that's an act under 401 and the one-year statute does not apply. [00:01:49] Speaker 01: Now, I will answer your question, which was pressed by the board. [00:01:53] Speaker 01: in their intervener intervener thing and and we would submit what could only be decided on remand under channeling our position is that the the invocation of sikua cannot possibly evade the one-year rule sikua is of course a state statute it requires a multi-year study but you're saying they evaded the one-year rule they didn't they ruled they denied [00:02:18] Speaker 02: They well, they invoked the rule says that you have to act within a year by either granting or denying and they deny. [00:02:27] Speaker 02: So they complied with the statute. [00:02:29] Speaker 01: They did nothing more than what the agency did in Allegheny, which is that they, they took, they labeled something in denial, but it was nothing more than a tolling dog. [00:02:40] Speaker 02: Well, you can't have it both ways. [00:02:43] Speaker 02: You just said a minute ago that we can't look at really what the order said because the FERC didn't cite the order. [00:02:53] Speaker 02: And then now you're saying that we should look at this like Allegheny and look behind the order and like infer some sort of bad faith or shenanigans. [00:03:07] Speaker 02: I mean, you gotta pick a position here. [00:03:10] Speaker 01: Well, let me try this quickly. [00:03:13] Speaker 01: Primary submission is that FERC rested its decision here on a bright line rule that no matter anything else, as long as the state document is labeled a, labeled a denial, that's the end of the inquiry. [00:03:27] Speaker 01: Now I think at footnote, at footnote two on page 33 of the brief, they seem to disclaim that. [00:03:33] Speaker 01: So under Channery, this court should vacate FERC's decision and let them take a look and actually make a decision whether this was in fact a sham [00:03:41] Speaker 01: or whether they were actually seeking more water quality information. [00:03:44] Speaker 01: But with regard to CEQA in particular, let me address this. [00:03:47] Speaker 01: This is a state statute, a very unusual one, that requires a multi-year study looking at housing, aesthetics, all this other stuff. [00:03:58] Speaker 01: California has recognized that that multi-year process can't possibly override the one-year rule, which is why, since they've changed the statute to allow themselves to issue certifications even without CEQA being completed. [00:04:13] Speaker 01: And in fact, here we have the smoking gun, which is that they, in fact, issued their certification without CEQA ever starting. [00:04:21] Speaker 01: They issued a 100-page document, 45 conditions. [00:04:24] Speaker 02: But that's because the state law was changed. [00:04:27] Speaker 02: They didn't have the authority to do that until the state law was changed. [00:04:31] Speaker 02: They could've just denied your petition or permit application and been done with it, right? [00:04:41] Speaker 02: Under state law as it existed in 2018. [00:04:45] Speaker 01: Your Honor, the existence of a state law cannot possibly override the one-year rule. [00:04:50] Speaker 01: Let me give you, Your Honor, a hypothetical idea. [00:04:51] Speaker 01: Well, the one-year rule just requires them to act. [00:04:54] Speaker 02: And they could act by saying denied. [00:04:57] Speaker 01: Well, Your Honor, if I may give a hypothetical idea. [00:04:59] Speaker 02: FERC can't overrule what the state does. [00:05:02] Speaker 02: That's the whole purpose of the cooperative federalism scheme that we have here, is that the state has its authority and FERC has their authority. [00:05:12] Speaker 01: The state is not doing anything illegal here, but there's a legal... If a state adopts a state law that does not allow them to act within one year, then the consequence is waiver. [00:05:23] Speaker 01: And let me give you an honor hypothetical. [00:05:24] Speaker 01: I think this illustrates why the Reliance on CEQA must be wrong. [00:05:28] Speaker 01: Let's say California decides to enact the following statute tomorrow. [00:05:31] Speaker 01: Anytime there's a 4-1 certification, we need 18 months to study it and then an 18 months notice and comment to the public. [00:05:40] Speaker 01: If whenever that gets to 364 days, we're going to deny without prejudice. [00:05:45] Speaker 01: And we're going to say that's because this 18-month review and the 18 months of notice and comment hasn't completed. [00:05:51] Speaker 01: Certainly that would be an act in some way. [00:05:54] Speaker 04: You could bring an action against the state to set aside that. [00:06:01] Speaker 04: And I just want to follow up on Judge Wilkins. [00:06:06] Speaker 04: Questions. [00:06:08] Speaker 04: How much of your case rests on the idea that they shed without prejudice? [00:06:13] Speaker 01: Not to get all in your honor. [00:06:16] Speaker 04: Because if the board had simply said denied, and the reason is we don't have sufficient information under state law yet, you would be in the same position. [00:06:28] Speaker 04: You could, again, file once that information was available, right? [00:06:34] Speaker 01: They would have to tell us in some way what information they would want. [00:06:37] Speaker 01: They did. [00:06:38] Speaker 01: Your honor, with respect, they never told us a bit of additional information they needed. [00:06:42] Speaker 01: We submitted over a thousand pages of every environmental study. [00:06:46] Speaker 02: When they tell you that we can't approve this because your client, the district, is the responsible party to initiate the CEQA process and they haven't, [00:06:59] Speaker 02: That's not telling you what you need to do. [00:07:01] Speaker 01: Our respectful submission is the state of California did not need an additional additional bit of water quality information. [00:07:08] Speaker 01: And we have the smoking gun, which is the state of California. [00:07:11] Speaker 01: In fact, he threw the certification without getting one dollar more of water quality information. [00:07:16] Speaker 01: I know your honor said the state. [00:07:18] Speaker 02: That's because they passed a statute that said that the thing that that prevented them from [00:07:25] Speaker 02: granting your application in the past was no longer going to be a requirement. [00:07:31] Speaker 02: So the smoking gun that you're referring to proves the point. [00:07:40] Speaker 01: state of California. [00:07:41] Speaker 01: The state of California, whether it's acting through an organic statute or through its bureaucrats, decided and showed the world, beyond reasonable doubt, in the strongest smoking gun possible, that they did not need a dollar more of water quality information from us at all. [00:07:57] Speaker 01: This entire CEQA ruse was, in fact, a ruse, which is why they kept doing it. [00:08:03] Speaker 01: Why didn't your client just [00:08:05] Speaker 01: go through the SQL process? [00:08:06] Speaker 01: We provided them with every bit of information that they could possibly need. [00:08:11] Speaker 01: SQL process could not have been completed in a year for a project of this complexity inside. [00:08:16] Speaker 01: They had one year to decide, one year under the statute, and under the federal statute, which overrides their state law for purposes of these proceedings. [00:08:25] Speaker 01: They did not finish within one year. [00:08:28] Speaker 01: If we had submitted the SQL paperwork, [00:08:30] Speaker 01: they would not have finished within one year and they would have given us the same denial saying CQA isn't finished. [00:08:37] Speaker 01: And for a fact, they know that this is, that the CEQA is not sufficient justification to override 401, because why did they enact this change of law? [00:08:48] Speaker 01: They enacted this change of law in response to this court's decision in HUPA. [00:08:52] Speaker 01: And the scheme here is far more offensive to the statute than what happened in HUPA. [00:08:57] Speaker 01: In HUPA, at least the agency had to get the agreement of the applicant in order to toll the one-year limitation. [00:09:04] Speaker 01: Here, the agency can do it. [00:09:05] Speaker 01: The state can do it unilaterally. [00:09:07] Speaker 01: And if your honors, there should be no mistake about it. [00:09:10] Speaker 01: If your honors rule for my friends in this case, the one-year statute is meaningless. [00:09:16] Speaker 01: It is a dead letter. [00:09:17] Speaker 01: Every state could pass a statute like CEQA or like my hypothetical, saying, we need 18 months. [00:09:23] Speaker 01: We need notice and comment. [00:09:24] Speaker 01: And Judge Randolph, there would be no way to challenge that statute. [00:09:28] Speaker 04: Why not? [00:09:29] Speaker 01: Because it wouldn't violate any federal law. [00:09:31] Speaker 04: Your argument is that it would violate federal law because it precludes the one-year limitation on granting a certificate. [00:09:41] Speaker 04: It's very important to understand that there's nothing... If it doesn't violate federal law, as you just said, then why are you complaining to the FERC about that? [00:09:52] Speaker 01: It doesn't violate federal law, it's just a consequence under federal law. [00:09:55] Speaker 01: It's just in conflict? [00:09:56] Speaker 01: No, there's a consequence under federal law when not deciding within one year, which is that you waive your certificate. [00:10:02] Speaker 01: There's nothing illegal about waiving your certification, right? [00:10:05] Speaker 01: In fact, the statute contemplates that. [00:10:07] Speaker 04: Imagine, Your Honor, if the enactment... Do you agree or disagree that the basis for which the denial, the basis on which the denial rested was that [00:10:20] Speaker 04: the board had not received sufficient information. [00:10:25] Speaker 01: That is their claim before this court. [00:10:27] Speaker 01: Do you agree that they said that? [00:10:29] Speaker 01: I agree that they said that in their book here. [00:10:33] Speaker 04: Do you think that was plain error on the part of the board? [00:10:36] Speaker 01: I do not. [00:10:36] Speaker 01: The court here did not rest its decision on that based upon chenery. [00:10:41] Speaker 01: It certainly did not. [00:10:43] Speaker 04: And you also say that the rule that was [00:10:49] Speaker 04: stayed for a while, that the Supreme Court just lifted the stay, supports you. [00:10:56] Speaker 04: Do you realize that that rule says that the board or the state authority can reject an application on the basis of insufficient information? [00:11:09] Speaker 01: strong but bring it and that's a a denial within the one-year period that qualifies for that man and we're on our obviously don't have enough time to look at it now but when your honor about the chambers look at forty c f r one twenty seven one twenty one seven he won three that is in that role the ones back in no fact and it says that when the uh... the state board says there's not enough information [00:11:38] Speaker 01: tell the applicant what information it needs. [00:11:41] Speaker 01: Further, the rule says that you can't require multi-year studies. [00:11:45] Speaker 01: So it is unambiguous that under that rule, this would not be allowed because it would not be a legitimate denial for lack of information because they never told us what information more they needed. [00:11:55] Speaker 04: In fact... Your environmental review. [00:11:58] Speaker 04: Didn't they tell you that? [00:11:59] Speaker 04: Didn't complete your environmental review? [00:12:02] Speaker 04: They wanted us to go through a bureaucratic... Well, that's what they're telling you, what the information was that they didn't have sufficient knowledge of. [00:12:12] Speaker 01: Your honor, every bit of information was in our hundreds of pages submissions. [00:12:17] Speaker 01: They wanted an additional study of sequel deals with aesthetics, transportation, cultural rights, things of that sort. [00:12:24] Speaker 01: This is a multi-year. [00:12:25] Speaker 02: Why didn't you challenge their denial in state court? [00:12:28] Speaker 01: The reason is very important. [00:12:30] Speaker 01: The reason for that is that challenge would have failed at the blocks because their state law [00:12:36] Speaker 01: authorized to do this and if I could get back to that hypothetical because I really do think it is devastating if a state enacted a statute like that that said we need 18 months to study this under our state and we've got a bunch of forms and then we get 18 months of notice and comment there would be no federal claim you could bring against that that wouldn't violate federal law it would just be a waiver and a state law how would you challenge that it's a state statute what state law does that challenge [00:13:00] Speaker 01: We respectfully submit that CEQA is exactly the same thing. [00:13:04] Speaker 01: It creates a, or was before the latest statutory enactment, it creates a multi-year process that for any sizeable project would never be finished in a year. [00:13:13] Speaker 01: And if your honors bless the CEQA excuse, then it necessarily follows that you're blessing the hypothetical excuse that I put out. [00:13:19] Speaker 01: And then 401's one-year rule is absolutely a dead letter. [00:13:23] Speaker 01: And I had a lot of really intelligent briefs submitted on the other side case, excellent attorneys. [00:13:29] Speaker 01: Not a single word in those briefs explains why ruling for FERC here would not create a loophole that would render 401 and this one-year rule and this court decision hoop a functional dead letter whenever a state wanted to avoid it. [00:13:42] Speaker 01: And there's no answer that they have to that critique. [00:13:46] Speaker 01: Thank you, Your Honor. [00:14:00] Speaker 07: Good morning, Your Honors. [00:14:10] Speaker 05: May it please the Court, Jared Fish for the Commission. [00:14:13] Speaker 05: The petitioner's argument here is entirely circular. [00:14:16] Speaker 05: And this gets to your line of questions, Judge Wilkins. [00:14:19] Speaker 05: They assume that there was no denial here because they say the state courts or the state's reasons for the denial somehow pulled the one-year deadline under the statute. [00:14:30] Speaker 05: But how do we know that there was a denial here? [00:14:33] Speaker 05: And it's undisputed that the denial letters were issued within the one-year time frame. [00:14:37] Speaker 05: We know by looking to the text of section 401. [00:14:40] Speaker 05: Section 401 says that a waiver of a state's power to grant or deny certification occurs if it fails or refuses to act. [00:14:49] Speaker 05: We know that a denial in the next two sentences later in section 401 means that no federal license can issue. [00:14:57] Speaker 05: That is contraposed to waiver. [00:15:00] Speaker 05: The prior sentence says if the state fails or refuses to act, that results in waiver. [00:15:05] Speaker 05: The federal licensing can continue. [00:15:07] Speaker 05: If there's a denial, there can be no federal licensing. [00:15:10] Speaker 05: So the question really is whether the denial here is legitimate. [00:15:14] Speaker 05: And this gets to your question, Judge Randolph. [00:15:17] Speaker 05: Section 401 does not empower the commission to answer the why of the denial or to analyze the why of denial. [00:15:24] Speaker 05: It requires us to look at the when within one year and the what, whether the state granted or denied. [00:15:30] Speaker 05: Whether the denial is legitimate or not, [00:15:33] Speaker 05: which necessarily includes the questions of whether the denial is based on relevant state law. [00:15:41] Speaker 05: That's a question, state law to be decided in the state court, as this court has repeatedly reinforced in the city of Tacoma, in Alcoa, in the Keating decisions. [00:15:51] Speaker 04: And certainly... Just a point of interest, not necessarily involved in this case, but I was curious, if the state does waive [00:16:03] Speaker 04: its authority to grant a certificate. [00:16:07] Speaker 04: Who determines whether the water quality discharges from the dam or meet the water quality standards? [00:16:16] Speaker 05: Well, if the state waves their power to ensure water quality standards, then Congress has allowed the federal license to proceed and maybe those water standards won't be guaranteed. [00:16:25] Speaker 05: Burke does conduct a NEPA analysis, so we do conduct our own environmental. [00:16:29] Speaker 05: You did that anyway, right? [00:16:30] Speaker 05: We did that anyway. [00:16:31] Speaker 05: And by the way, we only issued the final determination in July 2020. [00:16:34] Speaker 05: which was after their second certification request was denied. [00:16:39] Speaker 05: So as a factual matter, the whole argument that the CEQA analysis held up, or the denials held up, the federal licensing is just wrong. [00:16:46] Speaker 05: What work is the one-year deadline doing, if you're correct in this case? [00:16:51] Speaker 05: The one-year deadline poses an important function because it requires the state to either grant or deny a request. [00:16:58] Speaker 05: And reasonably... That's circular. [00:17:00] Speaker 06: I mean, you said their argument is circular. [00:17:02] Speaker 06: I'm asking what's the point of a one-year deadline requiring a grant or denial if they can just do what they did. [00:17:12] Speaker 05: Well, because that grant or denial could be challenged. [00:17:15] Speaker 05: And, you know, California, we looked at California state law to determine whether that denial can be challenged in state court. [00:17:21] Speaker 05: And here, sections 3867A1 of Chapter 28. [00:17:25] Speaker 05: Could the same thing be said about the scheme in Hoopa Valley? [00:17:30] Speaker 05: No, it can't, Your Honor. [00:17:31] Speaker 05: And this is a key distinction in the effect of withdrawal and resubmittal versus denial without prejudice. [00:17:37] Speaker 05: With the withdrawal and resubmittal scheme, there's nothing to challenge. [00:17:40] Speaker 05: There is no state action. [00:17:42] Speaker 05: And, you know, petitioners, nobody that I'm aware of suggests that there is some recourse. [00:17:48] Speaker 04: More than that, in the Hupa type case, which is what you're talking about, right? [00:17:53] Speaker 04: Yes. [00:17:54] Speaker 04: Both the applicant and the permitting authority of the state have reached an agreement. [00:18:01] Speaker 04: So they're not going to sue, the applicant is not going to sue the permitting authority. [00:18:06] Speaker 04: And because they've already reached a settlement agreement, which is what went on there. [00:18:11] Speaker 04: That's not this case. [00:18:13] Speaker 04: This case, the applicant had every right to bring a suit against the state. [00:18:18] Speaker 05: Absolutely, Your Honor. [00:18:19] Speaker 05: And they didn't. [00:18:20] Speaker 05: They back away from any argument in their hearing request that California law didn't provide them some recourse through state courts. [00:18:28] Speaker 05: They abandoned that argument, and for good reason. [00:18:31] Speaker 05: You know, there's eight statutes that reasonably provide them with the right. [00:18:35] Speaker 05: And even if there's a question, this would be a particularly poor vehicle to try to federalize that inquiry because they didn't even try to seek recourse in state court from the denials. [00:18:46] Speaker 06: I know. [00:18:46] Speaker 06: But your your response to my question was very reliant on the option of recourse in state court. [00:18:54] Speaker 06: And I still don't see how your your scheme [00:19:00] Speaker 06: even allowing for recourse in state court. [00:19:04] Speaker 06: Doesn't make the one-year deadline as housing council said a dead letter because so they do what they did here and let's say that they've gone to state court. [00:19:17] Speaker 06: The state court, they're not going to fault the commission. [00:19:21] Speaker 06: The commission didn't do anything, you know, how would they win in state court? [00:19:26] Speaker 05: What would that opinion even look like? [00:19:28] Speaker 05: Well, if the state court found that the denial was truly pro-forma, which it was not, but they argued it was, provide no rationale for why the board had denied, the state court would presumably, under an analogous, you know, APA administrative review process, arbitrary concursive standard of review perhaps, would say, you haven't provided a reasoned explanation for your denial. [00:19:50] Speaker 05: So we are overturning the dial. [00:19:53] Speaker 05: And by the way, there's plenty of precedent of state courts doing just that. [00:19:58] Speaker 06: What's your response to the 18-month hypothetical? [00:20:02] Speaker 06: I'm sorry? [00:20:03] Speaker 06: What's your response to opposing counsel's hypothetical about a state that passes a statute that requires an 18-month process? [00:20:12] Speaker 05: I response that your honor is what Congress did it can take it away. [00:20:17] Speaker 05: Congress here created the power for states to grant or deny water quality certifications and when Congress granted that power Congress could have decided to condition those grants or denials it could have said. [00:20:29] Speaker 05: You waive your right to certify unless your denial is based on a substantive, on the merits of termination. [00:20:38] Speaker 06: We can assume they didn't do that. [00:20:41] Speaker 06: So I think your answer is that the hypothetical opposing counsel gave would be perfectly lawful. [00:20:47] Speaker 05: Well, it's possible and probable that it would be under Section 401. [00:20:51] Speaker 05: Again, you know, look at this court's precedent, City of Tacoma, it said our job is to... And then, so let's say that there's a... A hypothetical world exists. [00:21:03] Speaker 06: The commission two days before the one-year deadline denies it without prejudice, but doesn't have to say without prejudice, just denies this as we haven't completed this process that we're required to complete by state law. [00:21:15] Speaker 06: And then they seek recourse in state court. [00:21:18] Speaker 06: The state court is gonna say, well, the commission didn't do anything wrong. [00:21:22] Speaker 06: The commission's just following state law here. [00:21:24] Speaker 06: So your recourse in state court is out the window. [00:21:28] Speaker 06: It's not helpful to them at all. [00:21:30] Speaker 05: And the one-year deadline's dead letter. [00:21:34] Speaker 05: When your deadline is a function of what Congress set forth, Congress did not provide legitimate versus illegitimate rationales for denial. [00:21:44] Speaker 05: It just said you must deny. [00:21:45] Speaker 05: It's the when and the what, not the why. [00:21:48] Speaker 05: Hupa says that we can't allow a loophole that's that gaping. [00:21:53] Speaker 05: Well, what Hoopa Valley said, Your Honor, and I respectfully disagree, it was based on the failure to act, to grant or deny certification at all. [00:22:00] Speaker 05: It said, whatever failure or refusal to act means, it certainly encompasses the situation here because the states were, quote, deliberately- Tell me why this is wrong. [00:22:08] Speaker 06: Hoopa said the state has to make a decision within a year. [00:22:11] Speaker 06: Right. [00:22:12] Speaker 06: And the state had concocted a scheme where it got around that deadline and it did not make a decision within a year. [00:22:21] Speaker 06: And here, same one-year deadline exists. [00:22:25] Speaker 06: The state has to make a decision within a year. [00:22:27] Speaker 06: And the state seems to, in the hypothetical that you say would be lawful, the state has literally passed a statute. [00:22:35] Speaker 06: saying we will not make a decision with any you see that's fine. [00:22:38] Speaker 05: You know that I push back on the premise of of your question that state decision must be a inclusive determination whether or not a project complies with water quality standards section for what doesn't say that there's nothing that says the decision it says we cannot yet determine whether water quality standards are actually met is legitimate rather than a decision that says we concluded [00:22:59] Speaker 05: you know, definitively that water quality standards are not or are met. [00:23:02] Speaker 05: So a decision is just the denial itself. [00:23:05] Speaker 06: I mean, you're saying that a non-decision is a decision. [00:23:09] Speaker 06: No, I'm saying that, like I said, we need more time. [00:23:14] Speaker 06: Let's say this is denied because we need more time. [00:23:16] Speaker 06: Isn't that a non-decision? [00:23:20] Speaker 05: No, not under Section 401, Your Honor, because the decision is the denial itself. [00:23:25] Speaker 05: All the Section 401 says is the state has to [00:23:28] Speaker 05: on a certification request, here the state acted by denying. [00:23:32] Speaker 05: And under the plain terms of section 401, a denial means federal licensing doesn't proceed. [00:23:37] Speaker 05: Now, whether that denial is based on a legitimate state ground, you know, this court, again, Alcoa feeding city of Tacoma has repeatedly said the legitimacy, the why of the denial to be challenged in state court. [00:23:49] Speaker 05: You know, I would say, Your Honor, [00:23:52] Speaker 05: that while not an issue here, because as you pointed out, Judge Randolph, there was an explanation for the denial. [00:23:58] Speaker 05: There could be an outer bound. [00:24:00] Speaker 05: There could be a possibility or possible scenario where the why might be a federal question. [00:24:06] Speaker 05: This gets... Did Burke say that below or is that a generic? [00:24:10] Speaker 05: We did say in paragraph 33 of our initial order that this is not a totally defined area of the law yet. [00:24:21] Speaker 05: And so it could be possible that a scheme of [00:24:25] Speaker 05: Well, a different state scheme might, you know, trigger a waiver, but all we're saying is, you know, we come to the court, we await your decisions, and we'll follow it up. [00:24:36] Speaker 04: There's another problem, which you haven't mentioned. [00:24:38] Speaker 04: I don't know whether it's pure speculation or not, but it would seem to me that an applicant could game this system in following what the petitioners are proposing here. [00:24:55] Speaker 04: And by that I mean they could file with the state board knowing full well that the information was not available. [00:25:05] Speaker 04: There wasn't sufficient information just to get the ball rolling and then wind up with having the state waive [00:25:14] Speaker 04: everything, because it's not a final decision when the state says, we don't have enough information, we're going to have to deny this. [00:25:21] Speaker 05: Exactly, Your Honor. [00:25:21] Speaker 05: And we make that point in our brief, and that was the situation in the New York 1 and New York 2 cases, where the state didn't have sufficient information. [00:25:27] Speaker 05: And it said, we can't render a decision within one year of receipt of request. [00:25:31] Speaker 05: That is a federal requirement. [00:25:33] Speaker 05: The one-year clock starts at receipt of the request, not when the state has complete information. [00:25:37] Speaker 04: I'm wondering how effective this one-year thing is. [00:25:40] Speaker 04: It only runs from the date of the application. [00:25:44] Speaker 04: Is there any kind of time limit on when the application has to be made? [00:25:47] Speaker 05: Yes, it has to be filed within 60 days of PERC's issuance of a draft environmental impact statement. [00:25:55] Speaker 05: I'd just like to, on that point, push back against the notion that there's some meaningful distinction between lack of information and lack of analysis. [00:26:05] Speaker 05: Analysis is information. [00:26:06] Speaker 05: The whole reason that state goes through the CEQA environmental review process or goes through the NEPA federal environmental review process is to take that raw data and draw conclusions from it. [00:26:17] Speaker 05: I mean, raw data is just raw data. [00:26:19] Speaker 05: The analysis is what matters. [00:26:21] Speaker 05: And not even petitioners dispute that the CEQA analysis is tied to making determination on water quality standards. [00:26:29] Speaker 05: So just to get back to your point, Judge Walker, I think there could be an outer bound [00:26:33] Speaker 05: where a state issues a denial letter with no explanation. [00:26:37] Speaker 05: And because, as the Supreme Court has stated in SD Warren at 386 and the Second Circuit said in the American Rivers case at 107, [00:26:46] Speaker 05: the state certification power circumscribed by, you know, has to have a nexus to maintaining water quality. [00:26:53] Speaker 05: And in that case, perhaps there could be a, you know, federal question on whether there is any nexus to maintaining water quality or if the state was just denying certification for economic reasons or because maybe it wanted power from solar facility rather than a hydroelectric dam. [00:27:09] Speaker 05: But we are far beyond [00:27:11] Speaker 05: from that situation here where petitioners make no argument that the sequel analysis has no bearing on maintaining water quality loss. [00:27:19] Speaker 06: If I read Burke's decision below to be far more categorical than what you just said, if I read it in JA 2027 to say Burke was quote reluctant, Burke is quote reluctant to interpret 404's text to include denials without prejudice, categorically reluctant, then should we remand [00:27:41] Speaker 06: and allow the opportunity to make kind of individualized finding that you're arguing here, but that they didn't make. [00:27:49] Speaker 05: No, not at all. [00:27:50] Speaker 05: Your honor. [00:27:50] Speaker 05: All I'm, all I'm proposing is they're, they're hypothetically. [00:27:54] Speaker 05: Why not? [00:27:54] Speaker 05: Why not? [00:27:56] Speaker 06: Why not? [00:27:57] Speaker 06: Why shouldn't we, if you, if you're, if you're making an argument here that didn't make below, why shouldn't we remand for FERC to make it [00:28:06] Speaker 05: I'm perfectly happy for the court to rest on the rationale provided in our orders. [00:28:10] Speaker 05: And in fact, that's mandated by SEC versus Henry. [00:28:14] Speaker 05: I'm just responding to your question, Your Honor, to speculate that could there possibly be a scenario where denial without prejudice within one year [00:28:25] Speaker 05: would actually constitute waiver. [00:28:28] Speaker 05: My short answer is I don't know. [00:28:30] Speaker 05: I can speculate, and that's what I'm doing here. [00:28:32] Speaker 05: But this is a pretty categorical rule, and the court doesn't need to look far beyond its own precedent to determine that. [00:28:39] Speaker 05: Again, City of Tacoma explains that our role is to await and then defer to a [00:28:45] Speaker 05: termination. [00:28:46] Speaker 05: That's different from two other scenarios if I might briefly posit them. [00:28:50] Speaker 05: There are two other federal questions in Section 401 besides the one-year waiver time limit. [00:28:59] Speaker 05: One is whether the state has issued public notice of the certification request. [00:29:02] Speaker 05: That's the City of Tacoma case. [00:29:04] Speaker 05: This court vacating remanded preferred to determine whether the state had actually issued public notice. [00:29:09] Speaker 05: The second is whether a state under section 4, 1, 8, 3, has properly revoked a previously granted certification under set. [00:29:20] Speaker 05: For the reasons that are specially provided in section 4, 1, 8, 3, that's the Keating where the court, you know, explain that. [00:29:28] Speaker 05: can't just work its responsibilities to make that determination whether the state properly vote. [00:29:33] Speaker 05: But why is that different from here? [00:29:34] Speaker 05: It's different because those requirements are spelled out in Section 401 itself. [00:29:40] Speaker 05: Section 401, by contrast, says nothing about us looking at the rationales for the denial that the state is. [00:29:48] Speaker 05: The proper locale for challenging the rationale here was in state court, which the districts did not even attempt to do. [00:29:54] Speaker 06: Let me ask one more hypothetical. [00:29:57] Speaker 06: that instead of the 18th month hypothetical, it's 100 years. [00:30:01] Speaker 06: And California passes a statute that says we require an environmental impact assessment that will take us 100 years to do. [00:30:11] Speaker 06: And because of this one year 401 deadline, we're instructing the commission every 363 days to deny and require the petition to refile for 100 years. [00:30:25] Speaker 06: But you think that that state statute that scheme would not be in would not would not contradict you think that that scheme would be legal. [00:30:38] Speaker 05: I don't know that it would contradict section for one because section for one doesn't go. [00:30:42] Speaker 05: But however, I certainly think that would probably prompt Congress to amend its law to say, look, we sure Congress will be right on that with FERC at the top of their agenda. [00:30:53] Speaker 05: Well, regardless of the practicalities, I mean, this is, again, this is a power, a certification power that Congress has given, and it can condition it or it can take it away. [00:31:04] Speaker 05: And here, Congress decided to leave it at, you know, if you deny certification, then first responsibility is to consider whether it was within... If the argument, well, Congress can fix it, if that argument would fly, then Hoopa Valley would have come out [00:31:22] Speaker 05: No, your honor, it wouldn't because there there was a failure to act and act means to grant or deny something. [00:31:28] Speaker 05: There was no grant or denial there. [00:31:30] Speaker 05: So there was waiver. [00:31:31] Speaker 05: I might make one final one final point. [00:31:35] Speaker 05: One final point on Allegheny, your honor. [00:31:37] Speaker 05: Allegheny is nothing like this case there. [00:31:40] Speaker 05: In a case that concerned the natural gas acts, judicial review provision, [00:31:45] Speaker 05: The court rejected Burke's practice that overrode an expressed statutory right to seek judicial review 30 days after a hearing request was filed. [00:31:55] Speaker 05: We issued orders that said, no, you don't actually get to exercise that right to judicial review. [00:32:01] Speaker 05: And here, what happened was exactly what the statute prescribes. [00:32:05] Speaker 05: The state denied certification. [00:32:07] Speaker 05: It did so within one year. [00:32:08] Speaker 05: And the statute says, in the case of a denial, no federal license shall issue. [00:32:13] Speaker 05: That's exactly what happened. [00:32:14] Speaker 05: I have one further question, if you don't mind. [00:32:18] Speaker 04: I brought up to the Petitioners' Council the [00:32:22] Speaker 04: a current rule that the Supreme Court had before us. [00:32:26] Speaker 04: And we have a number of letters back and forth. [00:32:28] Speaker 04: Here's my question. [00:32:30] Speaker 04: The third application that the districts made was filed on July 20, 2020, right? [00:32:40] Speaker 04: Yes, Your Honor. [00:32:42] Speaker 04: This rule went into effect on July 10, 2020. [00:32:48] Speaker 04: And there's a provision in the rule that says, [00:32:52] Speaker 04: The certification denial shall not preclude a project proponent from submitting a new certification request. [00:32:59] Speaker 04: So with respect to their third request, the rule, that wouldn't be retroactive application, would it? [00:33:07] Speaker 05: Well, two points, Your Honor. [00:33:09] Speaker 05: First, the third request is not an issue here. [00:33:11] Speaker 05: All petitioners are telling me. [00:33:12] Speaker 04: I understand that, but they withdrew it, and that's why it's not an issue. [00:33:17] Speaker 04: But they could have, but that request would not have been precluded under the rule that was then in effect. [00:33:24] Speaker 05: I don't know that that's accurate, Your Honor, because while the rule was issued in July 2020, it did not take effect until September. [00:33:30] Speaker 05: Oh, OK. [00:33:32] Speaker 05: But on that point, a petitioner cited section 121.7 E3 of the new rule that says, and actually they make a concession in that statement, because they concede that a legitimate denial may be one that's based on insufficient information, which includes an environmental lack of environmental analysis that they didn't even commence. [00:33:51] Speaker 05: They can see that that could be a legitimate basis. [00:33:54] Speaker 05: The fact that that new rule requires an evidentiary showing, that's a facet of the rule. [00:34:00] Speaker 05: That's not a facet of the statute. [00:34:02] Speaker 05: So what they're conceding is the statute actually distinguishes between tolling orders and evasion of the one-year deadline on one hand. [00:34:08] Speaker 05: and denials that are based on the lack of information on the other. [00:34:12] Speaker 05: The fact that there was, you know, maybe this would be a harder case if the new rule applied to it because of that lack of evidentiary burden tying the denial to precise water quality standards. [00:34:21] Speaker 05: That's that's irrelevant. [00:34:22] Speaker 05: It actually makes our garden. [00:34:24] Speaker 05: Thank you. [00:34:24] Speaker 05: Thank you. [00:34:26] Speaker 02: Thank you. [00:34:27] Speaker 02: Um, now here from Mr Katz on behalf of the intervener. [00:34:34] Speaker 03: May it please the court, excuse me, Eric Hatz for the California State Water Resources Control Board. [00:34:42] Speaker 03: This is a straightforward statutory interpretation case. [00:34:46] Speaker 03: In section 401, Congress granted the state's powerful authority to protect their water quality from the impacts of federally licensed projects. [00:34:57] Speaker 03: States can act by certifying that the projects will comply with state law or they can deny a certification which blocks the federal agency from issuing the federal permit or license at all. [00:35:12] Speaker 03: And they only waive their authority either by affirmative statement or if they fail or refuse to act on a request within one year. [00:35:21] Speaker 03: And as this court held in Alcoa, [00:35:25] Speaker 03: Those terms are largely unqualified and the plain language therefore has to apply. [00:35:33] Speaker 03: And as FERC found, the State Board acted by denying each request within one year. [00:35:42] Speaker 03: And as FERC acknowledged, the why isn't relevant because to FERC's determination as to whether there was a timely denial [00:35:55] Speaker 03: because certainly that's a question of state law, and that is if the districts were dissatisfied with the board's denial, they had every opportunity to seek review in state court, but they did not. [00:36:13] Speaker 03: Not finding any home within the text, the districts rely on Hoopa, and as the discussion here has already illustrated, the Hoopa case is [00:36:26] Speaker 03: entirely different, entirely distinguishable from the facts of this case. [00:36:32] Speaker 03: In Hoopa, of course, there was expressly a commitment for the state to not make a decision. [00:36:39] Speaker 03: And there was an agreement with the applicants in that case to try to devise a mechanism [00:36:49] Speaker 03: for the states to not act for years and years and years, but still preserve their authority. [00:36:55] Speaker 03: And this court found in Bupa that the mechanism did not relieve the state board of a duty to act, and so found waiver. [00:37:09] Speaker 03: And here, of course, there was no such thing. [00:37:12] Speaker 03: The state board acted timely each and every time. [00:37:18] Speaker 03: I see my time is running, but very briefly responding to some of the points the district made, they characterized CEQA as unusual, and it is almost the same as NEPA. [00:37:32] Speaker 03: It has some distinguishing factors, but not very different. [00:37:37] Speaker 03: They described the denial as a loophole. [00:37:39] Speaker 03: It is not a loophole for the state board to exercise the authority that Congress granted it to deny. [00:37:49] Speaker 06: What if you had done everything that was done in Hoopa, except instead of having an explicit agreement that the petitioner would withdraw and reapply, you had an explicit agreement that said the court will continue these denials [00:38:15] Speaker 06: until it feels like it's had enough time to make a decision. [00:38:21] Speaker 06: Would that change the analysis? [00:38:23] Speaker 03: It wouldn't, because in that case, any interested party could challenge the state board's denial [00:38:34] Speaker 03: in state court. [00:38:36] Speaker 03: It wouldn't have to just be the applicant. [00:38:40] Speaker 03: It could have, as in the Hupa case, it was a third party who was interested in the outcome, but not the applicant or the state. [00:38:49] Speaker 03: And if the state had denied for illegitimate reasons, [00:38:56] Speaker 03: Any party could sue the state board in state court and the state would have to defend its decision to deny on the merits as to whether it was arbitrary and capricious or not supported by substantial evidence. [00:39:17] Speaker 03: So there would be direct judicial review available in that circumstance. [00:39:25] Speaker 02: even if the denial was without prejudice. [00:39:29] Speaker 03: Absolutely. [00:39:29] Speaker 03: The with or without prejudice is really a red herring because even if the state, whether the state terms the denial with prejudice or without prejudice, nothing precludes the applicant from resubmitting an application and restarting the state's one-year clock to act. [00:39:50] Speaker 04: I ask you, Mr. Katz, if I can interrupt you. [00:39:53] Speaker 04: I want to ask you about that because Council for FERC [00:39:57] Speaker 04: told us that you have to file an application within 60 days after it certifies its environmental impact state. [00:40:08] Speaker 04: How does that work if the applicant files the request within 60 days and it's denied? [00:40:20] Speaker 04: Then how can the applicant file another request because the 60 days is already run? [00:40:28] Speaker 03: I think that there's a little tweak on the timing that when FERC is ready to begin its NEPA process, it issues an order or a document called Ready for Environmental Analysis, which signals it's starting its NEPA process. [00:40:47] Speaker 03: The 401 CERT application to the state has to be filed within 60 days of that. [00:40:57] Speaker 03: And so the state would have a year to act within essentially 14 months of FERC's statement that it's beginning its environmental analysis. [00:41:11] Speaker 03: But in terms of the CEQA timing, the process for the renewal of or re-issuance or new licenses for existing facilities starts under FERC's regs [00:41:28] Speaker 03: and it's either four or five years prior to the expiration of their current license. [00:41:34] Speaker 03: So there are the dam operator and the districts in this case began working on this relicense renewal four to five years at least before they submitted their certification request to the state. [00:41:53] Speaker 03: And so to the extent the districts are complaining about the time that it takes to comply with CEQA, there's certainly time for them to begin earlier than, you know, from right when they request for certification. [00:42:12] Speaker 02: But I don't think that that answers Judge Randolph's question. [00:42:16] Speaker 02: I'll let him say whether it answers his question, but it didn't seem to answer to me. [00:42:25] Speaker 02: If the state denies, let's suppose here the state had denied the district's, I guess, request for a permit. [00:42:39] Speaker 02: How can they and FERC can't move forward with their process until there's a granting by this? [00:42:55] Speaker 02: So is the FERC application told or something or? [00:43:04] Speaker 02: How can the applicant resume the FERC process after getting a denial from the state? [00:43:13] Speaker 03: I apologize for not tracking it the first time, but what 401 prevents is FERC issuing a final license until the applicant receives a certification. [00:43:27] Speaker 03: So if the state denies a request, whether it's with or without prejudice or an application with or without prejudice, it doesn't necessarily halt FERC continuing with its environmental review, coordinating with the federal fishery agencies. [00:43:48] Speaker 03: It just would be a hard stop from FERC getting to the end of that process and issuing [00:43:57] Speaker 03: the new 40 year license to the districts until a certification has been obtained from the state. [00:44:06] Speaker 03: And so it may be that FERC will have to do the calculus as to whether it wants to continue doing the work given the denial. [00:44:14] Speaker 03: But I guess I'm not familiar with that, you know, fact pattern in reality to have a grounded response. [00:44:24] Speaker 02: The other questions. [00:44:27] Speaker 02: All right, thank you, Council. [00:44:31] Speaker 02: Council for the petitioner. [00:44:32] Speaker 02: I'm not sure how much time we had left. [00:44:38] Speaker 02: All right, we'll give you two minutes, Council. [00:44:40] Speaker 01: Thank you, Your Honor. [00:44:42] Speaker 01: This wolf comes with the wolf. [00:44:44] Speaker 01: You heard my friends answer to the 100-year hypothetical. [00:44:47] Speaker 01: If this court, unless this first decision below, there'll be nothing stopping states from enacting statutes that stop the permitting process forever. [00:44:58] Speaker 01: There would be no state law challenge that would be possible for that kind of thing, because that would be a state statute. [00:45:04] Speaker 01: What challenge are you going to bring in state court over that 100 year statute? [00:45:08] Speaker 01: There would be no possible challenge in federal court. [00:45:11] Speaker 01: It wouldn't violate any federal statute. [00:45:13] Speaker 01: The only possible consequence would be the one-year waiver, which Burke, in his decision below, is telling you it can't find. [00:45:19] Speaker 01: It can't even look behind the reasoning. [00:45:22] Speaker 01: So the stakes could not be higher. [00:45:26] Speaker 01: If this court affirms Brooks reasoning, which is the only thing that they could do under channeling, states will have an absolute veto authority to ignore the one year rule for one year, two years, 100 years. [00:45:41] Speaker 01: And there would be no recourse to the state court. [00:45:44] Speaker 01: There would be no recourse to the federal court. [00:45:46] Speaker 01: The only recourse would be to a very divided Congress. [00:45:49] Speaker 01: That's clearly not what the statute requires, certainly contrary to the letter and at least the spirit of what this court said in Hoopa. [00:45:56] Speaker 01: Just briefly answer a couple of the other questions. [00:46:00] Speaker 01: There's no room for abuse here for the applicants. [00:46:02] Speaker 01: As the regime laid out in the currently applicable 401, [00:46:06] Speaker 01: rule articulates if the state says we need this bit of water quality information, that is not this kind of loophole. [00:46:15] Speaker 01: And then finally, your honor's question about what FERC is considered, FERC as a matter of policy always considers the waived certifications. [00:46:25] Speaker 01: If this court finds FERC, FERC always as a matter of policy considers the waived certifications [00:46:33] Speaker 01: in issuing its final license. [00:46:35] Speaker 04: Oh, WAVE, W-A-I-V-E, okay. [00:46:38] Speaker 01: That's right. [00:46:38] Speaker 01: That's right, Your Honor. [00:46:39] Speaker 01: It always considers those. [00:46:40] Speaker 01: So, surely in this circumstance, if this court rules for us, then surely FERC would consider at least some of those 100-page certifications that the board issued more than two years after we filed our request. [00:46:57] Speaker 02: All right. [00:46:57] Speaker 02: Thank you, Counsel. [00:46:58] Speaker 02: We'll take the matter under submission.