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NW Fishletter #390, February 4, 2019

[5] Appeals Court Rules Against FERC In Klamath Project Clean Water Act Delays

The U.S. Court of Appeals for the D.C. Circuit struck down a common practice in hydroelectric dam relicensing--the annual submitting and withdrawing of water quality certification applications in order to avoid a Clean Water Act rule that gives states one year to complete the process, or waive their authority.

The Jan. 25 ruling--which found Oregon and California had waived their authority in the Klamath Hydroelectric Project relicensing process--will have no impact on a current proposal before the Federal Energy Regulatory Commission (FERC) that aims to remove the four lower Klamath River projects. It could, however, come back to haunt the states if FERC does not approve the pending applications for license transfer and surrender.

In Hoopa Valley Tribe v. Federal Energy Regulatory Commission, the D.C. Circuit judges noted that PacifiCorp first filed requests for water quality certification with Oregon and California in 2006. "Now, more than a decade later, the states still have not rendered certification decisions," Senior Judge David Sentelle wrote. "According to FERC, it is now commonplace for states to use Section 401 [of the Clean Water Act] to hold federal licensing hostage. At the time of briefing, 27 of the 43 licensing applications before FERC were awaiting a state's water quality certification, and four of those had been pending for more than a decade."

The Hoopa Valley Tribe, whose reservation lies just west of the Trinity River, a tributary of the Klamath, first petitioned FERC in May 2012, saying that California and Oregon had waived their authority to review water quality because of the repeated applications from PacifiCorp, and the case should go forward without them. But FERC denied the petition, finding that each yearly re-submission was a new request.

"In doing so, FERC acted arbitrarily and capriciously," Sentelle wrote. In explaining the decision, the judge quoted a previous D.C. Circuit decision that found the "purpose of the waiver provision is to prevent a State from indefinitely delaying a federal licensing proceeding by failing to issue a timely water quality certification under Section 401."

Vivienna Orcutt, a member of the Hoopa Valley Tribal Council, told NW Fishletter she is both heartened by the court victory and discouraged it took so long.

She said although the dams have not been in environmental compliance since PacifiCorp's license expired in 2006, the utility has been able to continue to operate them, and profit from them, by delaying relicensing. She said the tribe did not sign a settlement agreement with PacifiCorp and several other parties to remove the dams because the tribe believes the pact over-allocates water to other uses upstream. Despite the victory, she said, "I'm also a little worried about staying the course."

Her husband and the tribe's fisheries director, Mike Orcutt, said the Klamath River--California's second largest--is a complex system with many competing interests. The dams have prevented fish passage in large parts of the Klamath River for more than 100 years, and fish that are there often suffer from disease caused by severely degraded water quality. He said that in 2002, a massive fish kill occurred in the Klamath River, and between 30,000 and 70,000 adult fish died, mainly fall Chinook. Orcutt said he believes the river is on the verge of ecologic collapse. "Even if the dams are removed and water quality is improved, there are still major challenges in the upper basin that need to be addressed," he added.

The court's decision isn't expected to have any impact on the dam removal process.

Matt Cox, spokesman for the Klamath River Renewal Corporation, said in an email that the decision doesn't change FERC's authority to continue with KRRC's transfer and surrender applications. KRRC was created through an amended agreement to remove the dams and pay for it with $450 million from a California bond and PacifiCorp rate surcharges. "The DC Circuit held that the states of California and Oregon have waived their water quality certification authorities with respect to relicensing," he wrote. "The case does not affect Oregon's 2018 water quality certification, or California's pending certification proceeding, related to license surrender."

PacifiCorp spokesman Bob Gravely said company attorneys are still reviewing the decision, but noted, "We're going to continue to proceed under the settlement agreement that's in place." Gravely added that PacifiCorp has not been withdrawing and resubmitting water quality certification applications in recent years, since an amended settlement agreement was signed.

That practice, of annually submitting and withdrawing applications for a water quality permit, was spelled out in the original settlement agreement, which the court found to be a "deliberate and contractual idleness" that defies requirements in the Clean Water Act. "Such an arrangement does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project," Sentelle wrote, later adding, "Regardless, had FERC properly interpreted Section 401 and found waiver when it first manifested more than a decade ago, decommissioning of the Project might very well be underway."

Thomas Schlosser, attorney for the Hoopa Valley Tribe, said so many years have passed that the tribe's victory will have little effect, but it could speed up the process if KRRC's plan fails to win FERC's approval for a license transfer and surrender. That plan is still under scrutiny, and will depend at least partly on whether KRRC can show sufficient funding is available to completely remove the dams and to restore the lower Klamath River.

Schlosser said that although FERC has put PacifiCorp's relicensing process on hold, "It's still out there. And we're not confident the KRRC proposal is going to work, so this ruling will give us a backstop if the KRRC proposal fails and relicensing is reactivated."

The decision could also impact other relicensing efforts. According to a story in the National Law Review, the "D.C. Circuit's opinion does not appear limited to the particular facts of the case and thus could radically alter the relationship between FERC and state water quality agencies in the relicensing process." -K.C. Mehaffey

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Publisher/Editor-in-Chief: Mark Ohrenschall, Editor: K.C. Mehaffey
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