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Rock Creek Ltd. Partnership v. State Water Resources Control Bd.

ELR Citation: 23 ELR 20052
Nos. No. 91-15538, 972 F.2d 274/(9th Cir., 08/05/1992)

The court holds that a district court properly denied attorney fees to the sponsor of a small hydroelectric project for its attempts to obtain declaratory relief in administrative proceedings before the Federal Energy Regulatory Commission (FERC), but the district court erred by denying attorney fees for the sponsor's 42 U.S.C. §1983 claims for injunctive relief not available in FERC administrative proceedings. The California Water Resources Control Board (the Board) imposed minimum flow rates on the sponsor's hydroelectric project in excess of the rates contained in the sponsor's FERC license for the project, and the Board's position was subsequently rejected by the district court and affirmed by the Ninth Circuit and the U.S. Supreme Court. Shortly after the Board issued its order mandating flow rates exceeding FERC license rates, the sponsor filed a 42 U.S.C. §1983 action in district court, which included a request for attorney fees, to enjoin the Board from enforcing its order. By court order pursuant to the parties' stipulation, the sponsor agreed to withdraw its motion for an injunction in return for the Board's refraining from enforcing its rate flow order. Because the appellate proceeding pending in the Ninth Circuit involved the same preemption issue raised by the sponsor's §1983 action, the district court stayed proceedings pending resolution of the appeal.

The court first holds that the district court properly denied the sponsor's claim for attorney fees for its efforts in federal district court, because FERC action lacked the "intimate connection" necessary to sustain awards of attorney fees in administrative or state court proceedings outside the federal action itself. Here, the sponsor's goal when commencing the action before FERC was the removal of the threat posed to the sponsor's federal rights by the Board's order, which was accomplished when the Board withdrew its order after the U.S. Supreme Court ruled against it in California v. FERC, 20 ELR 20913. Although the sponsor filed this case in federal district court contemporaneously with California's administrative intervention in support of the Board's order setting flow rates in excess of FERC license rates, the two avenues of recourse are independent and either could have resulted in a decision on the question of FERC's exclusive authority. In this case, the FERC decision was not rendered as a part of a continuing federal court action.

However, the court holds that the district court erred in failing to take into account the sponsor's request for a temporary restraining order and a preliminary injunction pending the court's final decision. The relief was not available to the sponsor in FERC proceedings. The relief the sponsor gained in the district court was in effect an informal stay both of the district court proceedings and the Board's threatened enforcement proceedings. The Board had declined the sponsor's invitation to do by agreement external to the litigation what later became a condition of the stay, namely, that the Board not enforce its illegal order. By focusing too narrowly on the sponsor's failure to obtain relief on the merits in the § 1983 action, the court overlooked the possibility that the §1983 action was causally related to the practical outcome realized and the nonenforcement of the illegal order. While the district court did not enter a stay, it was the pendency of this action in the district court that gave the sponsor a vehicle by which to obtain a nonenforcement agreement by the Board. Thus, the judgment is vacated and the case remanded for reconsideration of the sponsor's claim for attorney fees for its §1983 action only.

[The FERC proceedings related to this litigation are published at 19 ELR 21303 and 20 ELR 20913.]

Counsel for Plaintiff-Appellant
Louis L. Touton
Jones, Day, Reavis & Pogue
355 S. Grand Ave., Ste. 3000, Los Angeles CA 90071
(213) 625-3939

Counsel for Defendants-Appellees
Clifford Lee, Deputy Attorney General
Attorney General's Office
455 Golden Gate Ave., Ste. 6200, San Francisco CA 94102
(414) 703-1985

Before: FLETCHER, POOLE, and NELSON, Circuit Judges.