Environmental Protection Through Federal Preemption of State Water Laws

20 ELR 10438 | Environmental Law Reporter | copyright © 1990 | All rights reserved

Environmental Protection Through Federal Preemption of State Water Laws

Peter J. Kirsch and J. Barton Seitz

Editors' Summary: On May 21, 1990, the U.S. Supreme Court ruled in California v. Federal Energy Regulatory Commission that the Federal Power Act provides FERC with the exclusive authority to determine minimum instream flow rates for hydroelectric power projects. In so doing, the Court refused to upset the longstanding line of cases, beginning with First Iowa Hydro-Electric Cooperative v. Federal Power Commission, which established the tenuous balance in favor of federal authority over hydropower regulation. With more than 2,000 hydroelectric projects operating under FERC licenses, and many eligible for relicensing between now and the year 2000, the Court's recent decision will directly impact how FERC addresses the legal and environmental standards applicable to relicensing hydropower projects. The authors review the historical application of federal preemption of state water laws under the Federal Power Act and attendant case law. Using a case study of irrigation and power-generation projects on the Platte River in Nebraska, the authors explore implications of California v. FERC for the future of state regulation of water. Although the case law prior to California v. FERC provided for the perpetuation of a constructive tension between state and federal regulation of hydropower projects, the new decision has the potential to tilt the scales in favor of exclusive federal regulation, absent congressional interdiction.

[20 ELR 10438]

Today, approximately 2,000 hydroelectric projects operate under licenses issued by the Federal Energy Regulatory Commission (FERC). Many of these licenses were issued in the 1930s for 50-year terms and are, or soon will be, eligible for relicensing. As it confronts the relicensing of hundreds of these projects between now and the end of the century, FERC will be required to reevaluate each project based on today's more sophisticated legal and environmental standards. This task will be difficult because the projects were often subjected to little or no environmental scrutiny in their initial licensing.

FERC has a statutory obligation to license only hydroelectric projects that are best adapted to a comprehensive plan for resource development. To achieve this goal, FERC is directed to consult with other federal and state government agencies that have expertise in hydropower development and environmental protection. FERC's ability to develop a comprehensive plan for resource development in each navigable waterway is complicated by state water laws that the Federal Power Act (FPA)1 has directed FERC to respect. The degree of respect that FERC must accord to state water laws has been disputed for almost 50 years. At one extreme in this dispute are the states, which insist that FERC is prohibited by law from interfering with any state water laws, whether they are water rights laws or regulatory laws governing the use of those water rights. FERC, at the other extreme, insists that it is not bound by state law except to the extent that FERC action results in a taking under the U.S. Constitution. A better view is that the FPA establishes a system of concurrent state and federal control over water allocation in which FERC must comply with state laws unless it affirmatively determines that to do so would conflict with the FPA.

On May 21, 1990, the U.S. Supreme Court added one more element to this already complex dispute. In California v. Federal Energy Regulatory Commission,2 the Court ruled that California's minimum flow rate requirements, which allow water to remain in a bypassed section of a stream and unavailable to drive hydroelectric generators, are preempted by FERC's lower flow rates set under the FPA. The Court's ruling that the FPA establishes a broad and paramount federal regulatory role in hydropower development and preempts conflicting state water regulations will have far-reaching implications on the tenuous balance between state and federal management of water and other natural resources. However, the Court's resolution of the issue — largely if not entirely in FERC's favor — leaves open questions about FERC's authority over water allocation decisions.

Historical Application of Federal Preemption of State Water Laws

Legislative History

Congress has the constitutional authority to protect the navigable waters of the United States under the Commerce Clause of the U.S. Constitution.3 To a large extent, federal plenary authority to control navigable waters has been subsumed under Congress' broader Commerce Clause powers.4 Congress also has the exclusive authority under [20 ELR 10439] the Supremacy Clause to regulate hydroelectric power and thereby supercede any conflicting state laws on the subject.5 The Supreme Court has held, however, that states and private parties may control or hold rights in or to navigable waters, but always subject to "the power of Congress to control the waters for the purpose of commerce."6

Notwithstanding clear constitutional authority to do so, both Congress and the Supreme Court have been reluctant to assert congressional supremacy to regulate matters relating to navigable waters of the United States. This has been particularly so in matters relating to proprietary water rights that form the backbone of the economy in the western United States.7 The federal policy of deference to state water law originated in the equal footing doctrine, which holds that the states have sovereign right, title, and interest to all navigable waters within their boundaries, subject only to the congressional power to regulate commerce and navigation.8 For example, § 8 of the Reclamation Act of 19029 defers to state water rights law and requires that federal reclamation projects be developed in a manner that respects such laws. Similarly, the Flood Control Act of 1944 states that it is the policy of Congress "to recognize the interests and rights of the States . . . in water utilization and control. . . . "10 The Supreme Court further reinforced the states' historical authority to regulate water rights by holding that each state is entitled to establish its own system of water rights only limited by federal reserved water rights and the federal constitutional navigation servitude.11

Against this historical and constitutional background, the FPA was enacted to promote the private development of hydroelectric power in the United States.12 The FPA was premised on the principle that the electric power potential of the nation's navigable waterways is a public resource that should be harnessed in a manner consistent with the public interest. The Act granted comprehensive authority to the Federal Power Commission (now FERC) to administer and regulate all hydroelectric development occurring on any waters in the United States over which the federal government has jurisdiction through its authority to regulate navigable waters or interstate commerce.13 The FPA requires that FERC consider all beneficial public uses of water in deciding whether and under what terms and conditions to issue a license to operate a hydroelectric project in or affecting navigable waters.14 FERC must impose conditions on every license for a hydroelectric project to ensure that its operations are consistent with a comprehensive plan for multiple use of federally regulated waterways.15 The Federal Power Commission was made the "guardian of the public domain" with respect to the use of water within navigable streams for power generation purposes.16

Expansion in federal Commerce Clause authority,17 since enactment of the Federal Water Power Act 70 years ago, has resulted in a concomitant expansion in the breadth of federal regulation under the FPA.18 Notwithstanding federal plenary authority over navigable waters and Congress' reluctance to intrude into areas of traditional state regulation, two provisions of the FPA address the need to resolve conflicts that might arise between federal regulation of hydroelectric power and state regulation of water rights.

The first provision, § 9,19 prescribes the evidentiary burden that an applicant bears in a FERC licensing proceeding. Section 9 requires an applicant for a hydropower license to submit to FERC "satisfactory evidence" that it has complied with state law requirements of the state in which the project is to be located. However, "satisfactory evidence" is not defined in the statute. The second provision, § 27,20 is known as the savings or antipreemption clause. It provides that the FPA is not to be construed as "affecting or intending to affect or . . . interfere" with state laws relating to control, appropriation, use, or distribution of water.

[20 ELR 10440]

The interplay between §§ 9 and 27 has been the subject of much litigation and scholarly debate. On their face, these provisions appear to require FERC to respect all state water laws. The facial language of these sections, however, is not entirely consistent with the intent of the FPA, which envisions comprehensive federal control over hydropower resources. As a result, the application of these provisions is far from straightforward.

Section 27 addresses an applicant's obligation to comply with state law, independent of the federal licensing process. If § 27 were to protect all state water laws from federal supremacy, it would override more specific provisions of the FPA. There is no indication in the Act's legislative history to suggest that Congress intended to leave such a gaping hole in FERC's plenary regulatory authority.21 Instead of an absolute protection for state-granted rights, § 27 has been interpreted only to require compensation when the issuance of a federal license results in the taking of state-protected water rights.22 Section 27 merely complements the provision of the FPA that permits federal licensees to exercise powers of eminent domain.23 Part of § 27's purpose is to clarify that passage of the FPA did not abrogate state usufructuary rights.24 Thus, although § 27 invokes the well-established congressional deference to state water law under the equal footing doctrine, it nonetheless was not intended to abrogate federal powers under the Commerce and Supremacy Clauses of the U.S. Constitution.

The purpose of § 9 is entirely different. It does not make compliance with state regulatory laws a condition precedent to issuance of a FERC license. Section 9 was intended to guide FERC discretionary authority where a state expresses a regulatory or policy interest in a potential license. Consistent with its obligation always to ensure that the purposes of the FPA are achieved, FERC, in its discretion, may require total or partial compliance with state regulatory requirements. Consequently, the purpose of § 9 is best seen as largely informational: FERC licensing decisions should be based on knowledge of state regulatory requirements so that its decision to disregard or to require compliance with state law will be an informed one. FERC may decide to disregard state law, if in its discretion such action is consistent with its statutory mandate, but § 9 requires that decision to be an informed one.25

Courts have appeared confused by the reach of §§ 9 and 27 because identical or similar language, which has been judicially interpreted to preserve state water laws, appears in other federal regulatory and natural resources statutes, including the Desert Land Act26 and the Reclamation Act.27 Although the language of such clauses is similar, the clauses are not interchangeable because the reach of an antipreemption clause should properly be determined in the context of the particular statute.28

Read together, §§ 9 and 27 demonstrate plenary federal control over regulation of hydropower, with few caveats:29

State proprietary rights survived passage of the FPA and cannot be extinguished by a FERC order without an unconstitutional taking.30

If state proprietary rights are taken, adequate compensation must be provided.31

Although not outlined explicitly in the statute, the FPA implicitly contemplates a system of dual, or concurrent, government control in which the federal and state governments share control over hydroelectric projects.32

A system of concurrent federal and state control, as contemplated by the FPA, is not unusual in federal environmental and natural resources statutes.33 Such a concurrent system is necessary to resolve the apparent conflict between FERC's obligations under § 10(a), to engage in comprehensive planning, and its obligation under § 27, to respect state water laws. Congress recognized that FERC's plenary authority over waterway development had the potential to conflict directly with its traditional deference to state water regulatory agencies. Not surprisingly, Congress chose to encourage cooperation wherever possible.34 Where cooperation is not desirable or practical, specific provisions of the FPA explicitly designate whether state or federal law will apply.35

[20 ELR 10441]

Judicial Interpretation

The interplay between §§ 9 and 27, on the one hand, and state water laws, on the other, was first addressed by the Supreme Court in First Iowa Hydro-Electric Cooperative v. Federal Power Commission.36 In that case, the Supreme Court held that a system of entirely concurrent jurisdiction over hydropower resources by the state and federal governments was unworkable.37 First Iowa established that, except where proprietary rights are at issue, compliance with state law is required only when, and to the extent that, the Federal Power Commission deems compliance to be necessary. First Iowa limited the reach of § 27 to the protection of state-granted proprietary rights, most important of which are state water rights.

Since First Iowa, courts have consistently applied the reasoning in that case to hold that states have a limited — or no — role in regulating hydroelectric development or the operation of hydroelectric projects.38 As a result, it is generally accepted that the pervasive federal scheme has occupied the entire field of hydroelectric power regulation.39 The First Iowa decision, however, left many questions unanswered — questions that lower federal courts have debated for 44 years. First Iowa did not define the limits, if any, on state authority over water rights and the extent to which a state could use its property law to regulate a hydropower project. For example, the Court did not decide whether a state may regulate a hydroelectric project under the guise of protecting water rights. Such an exercise of state authority would be consistent with the First Iowa protection of state proprietary rights but would conflict with the prohibition on state regulation of federally licensed hydroelectric projects. Further, the Court did not draw a bright line between state proprietary water rights and state regulatory water rights, a distinction that the Court's recent California v. FERC decision has done little to clarify.40

Defining the Limits of Federal Preemption

Judicial Attempts to Delimit Preemption

The courts have never adequately defined which state rights fall within the protection of § 27. While courts have been virtually unanimous in mimicking the First Iowa distinction between proprietary rights and governmental, police, or regulatory powers, they rarely have chosen to make finer distinctions or otherwise test the practical limits of the dichotomy set forth in that case. The Court in First Iowa failed to recognize that states often issue water rights subject to conditions and regulatory controls, including the place, rate, and time of water diversion and return. This failure has resulted in much confusion over where state proprietary water laws end and state regulatory water laws begin.

This confusion was fueled in part by the Court's 1978 decision in California v. United States.41 Although the case interprets the Reclamation Act rather than the FPA, it has been widely cited for the proposition that states retain the power not only to grant but also to regulate water rights notwithstanding a federal interest in water allocation. At issue in that case was § 8 of the Reclamation Act,42 a provision whose language is virtually identical to § 27 of the FPA. The Court held that § 8 was designed to protect more than only proprietary rights and was broad enough to preclude federal preemption of any state law that regulates water use or allocation. Rather than finding broad federal preemption, the Court held that the Reclamation Act did not preempt state laws that impose conditions on water use by federal reclamation lands or projects, so long as those conditions are not inconsistent with federal directives. The Court also found that federal directives for management of reclamation lands were not inconsistent with California's regulations on use of state-issued water rights. The Court held that the legislative history made it "abundantly clear" that Congress intended "to defer to the substance, as well as the form" of state water law.43 The only limitation on the Secretary of the Interior's obligation to comply with state law is that such laws are preempted to the extent they conflict with "clear congressional directives."44

In the 12 years since California v. United States, litigants frequently have argued that that case clarified, if not overruled, the First Iowa definition of what constitutes "proprietary" water rights laws. However, in its recent California v. FERC decision, the Supreme Court rejected the assertion that the case either called into question, or even overruled, sub silentio, the application of First Iowa to § 27 of the FPA.45 If the same interpretation were applied to § 27 of the FPA as that used by the Court in discussing § 8 of the Reclamation Act, the reach of § 27 would be broadened substantially. However, the congressional directive favoring comprehensive federal regulation and the displacing of state laws is clearer in the FPA than in the Reclamation Act. While application of the anti-preemption provisions of the Reclamation Act would not frustrate its very purpose since it is not, at its heart, a regulatory statute, such provisions would frustrate the purpose of the FPA.

In California ex rel. State Water Resources Board v. FERC,46 the Court of Appeals for the Ninth Circuit incompletely quoted First Iowa as defining proprietary rights as applying only to "municipal and irrigation proprietary rights."47 Nonetheless, it is questionable whether water rights that do not fall within the traditional definition of consumptive uses lie within the protection of § 27. For example, [20 ELR 10442] regardless of how they are characterized by a state, state laws designed to allocate water for the protection of nongame wildlife probably are not proprietary water laws under § 27, especially in light of the strong federal interest in protecting and regulating wildlife.48 Even water allocated for the protection of fisheries, which has a strong proprietary component because of the importance of fisheries to many states' economies, may not fall within the protection of § 27.49 Although states also have an interest in protecting inchoate proprietary rights, courts consistently have referred to § 27's savings clause as designed to protect only vested rights.50 There is no indication that § 27 is designed to protect rights for which no compensation would be available under the takings clause of the U.S. Constitution.51

FERC's Position

Unlike the courts, FERC has seemingly had little trouble defining the limits of § 27 and its own authority. Not surprisingly, FERC (and before it the Federal Power Commission) has traditionally viewed itself as being the final arbiter of matters affecting the nation's hydroelectric power resources. Consistent with that position, FERC has only reluctantly complied with conflicting or competing statutory and regulatory schemes, whether they concern federal environmental statutes52 or state water rights laws. FERC has taken the position that, notwithstanding § 27, the pervasive federal regulatory scheme and its comprehensive planning authority make it virtually impossible for a state law to survive FERC regulation.

FERC has found that in issuing a hydroelectric license, it may limit a licensee's ability to use its state-adjudicated water rights.53 Relying on First Iowa, FERC consistently has rejected assertions by state agencies, individual water users, and project licensees that it should defer to state water rights law in determining how a project should be operated.54 In analyses that belie the clouded line between §§ 9 and 27, FERC frequently has overruled state attempts to exercise authority over water releases from hydroelectric projects by holding that the FPA creates an exclusively federal regulatory scheme.55 More recently, FERC appears to be resolving conflicts with state water law by characterizing its decisions as being the best comprehensive use of the waterway, thereby cloaking its decisions with the protection of § 9's requirement that state law can apply only to the extent that it is not inconsistent with the purpose of the FPA.56

The use of the terminology "best comprehensive use" is derived from § 10(a) of the FPA, which has always required FERC to balance competing uses of navigable waters. The Electric Consumers Protection Act of 1986 (ECPA)57 strengthened the importance of § 10(a) by requiring, through § 4(e) of the FPA, that FERC give "equal consideration" to power and nonpower uses, thereby allowing FERC further discretionary authority to find state laws to be inconsistent with the best comprehensive use of a waterway.58 Apparently FERC perceives its authority to prescribe water release regimes as limited only by actions of other federal agencies.59

Supreme Court Clarification

The Ninth Circuit's decision in California ex rel. State Water Resources Board v. FERC60 offered the Supreme Court an opportunity to clarify the interplay of §§ 9 and 27 in cases where there is no bright line between the proprietary and regulatory elements of state water law. The Ninth Circuit held that the California Water Resources Control Board did not have the authority to set more stringent minimum water flow rates downstream of a FERC-licensed project than FERC had set for the same project.61

The Ninth Circuit explicitly rejected California v. United States and itsprogeny, by construing language in the Reclamation Act of 1902 that is substantially similar to § 27, and held that all aspects of state hydroelectric regulation are preempted by federal law, except for state proprietary rights. The court distinguished both the purpose and the nature of the federal regulatory interest expressed in the two statutory schemes in holding that Reclamation Act jurisprudence is not applicable directly to the FPA.62

The Supreme Court unanimously affirmed the Ninth Circuit in an opinion by Justice O'Connor.63 The Court relied almost exclusively on the 1946 decision in First Iowa. Although the Court noted that the case would have presented a "close question" if it were one of first impression, it believed itself constrained by First Iowa. Relying on the strength of stare decisis, the Court held that when it comes to statutory construction, it is better to be consistent than to be right.64

[20 ELR 10443]

The Court observed that Congress' passage of ECPA confirmed FERC's "broad and paramount . . . regulatory role" and affirmed Congress' concurrence with the balance struck in First Iowa and its progeny.65 Allowing state regulatory control over minimum instream flows would require the Court "fundamentally to restructure" a "highly complex and long-enduring regulatory regime."66 The Court rejected the argument that the discussion of § 27 in First Iowa was mere dicta.67 It held that California v. United States does not control the case and is not in tension with First Iowa because, while the language of the Reclamation Act and the FPA is similar, it is not identical. Furthermore, the legislative history of the two acts is more important than the words used because the histories reveal vastly different legislative intents. The purpose of the FPA is to provide an "active federal oversight role," while the Reclamation Act contemplates that the federal government will act like any ordinary holder of a state water right.68 Thus, the California v. FERC Court affirmed that California's instream flow requirement is preempted because it "would disturb and conflict with the balance embodied" in the FERC instream flow requirements.69

Although the Court's decision has reaffirmed the validity of First Iowa, it did not resolve that case's ambiguities: When is a right a proprietary right? When does a state regulatory scheme "actually conflict with" or "disturb" FERC's obligation to balance conflicting water needs? If a licensee can comply with both FERC and state requirements (i.e., where the state imposes different or more stringent requirements than FERC), how does FERC determine whether a conflict or disturbance exists? Moreover, at least some members of Congress apparently believe that the Court went too far in allowing for federal preemption of state water rights. Identical bills have been introduced in the House and Senate to clarify the interpretation of §§ 9 and 27 and to amend the FPA to limit the application of California v. FERC. The bills would provide that a FERC licensee must comply with "all . . . laws of the State or States in which the project is located with respect to the acquisition of water rights and administration of the use of water."70 Under the bills, FERC would not be able to issue a license until an applicant obtained the water rights needed for such a project.

Since the Ninth Circuit's decision in California ex rel. State Water Resources Board v. FERC, FERC has cited that decision at least three times as support for its authority to control and impact state water rights. FERC has found that it possesses authority to impair significantly the private use of state water rights.71 FERC also has held that it may overrule state agency attempts to control the use of such water rights.72 In a recent order, FERC held that it may ignore state law restrictions on who may hold an instream flow right and may direct a licensee to release water and guarantee minimum instream flows in a manner that is the functional — if not legal — equivalent of an instream flow right.73 FERC did not view the Ninth Circuit's decision as providing new authority for its actions, but only as providing additional support for its long-standing view that First Iowa's interpretation of § 27 of the FPA enables FERC in essence to preempt state water law.74

Enactment of New Environmental Protection Legislation

Enactment of the Public Utility Regulatory Policies Act and related statutes75 produced an explosion in applications for new hydroelectric project permits.76 Those new applications, combined with the expiration of licenses on hundreds of projects licensed for 50-year terms in the early days of the FPA,77 have provided an unusual opportunity to reexamine the environmental desirability of most FERC-licensed projects. Both the hydroelectric industry and environmental organizations view this historical phenomenon as an opportunity.

The ECPA, enacted partly in response to this phenomenon, was the first significant revision to the hydropower licensing provisions of the FPA since the 1920s.78 The new statute is important not only because of its substantive provisions but also because the period of relicensing comes at the time it was enacted. The environmental impacts of the hydropower projects with expiring licenses had generally never been examined. The renewal of licenses offered the first opportunity to scrutinize these environmental impacts and to impose new conditions to protect watershed ecology.79

One of the major goals of ECPA was to ensure that FERC pay more attention to environmental concerns in deciding whether to issue hydroelectric project licenses.80 The statute adds both substantive and procedural provisions elevating the importance of environmental issues. [20 ELR 10444] Most importantly, new substantive provisions were added to § 4(e) of the FPA requiring FERC to "give equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife, . . . the protection of recreational opportunities, and the preservation of other aspects of environmental quality."81 The purposes of these provisions were to change FERC's public interest review standards82 and to improve consideration of environmental factors.83 Under the new procedural requirements, FERC must solicit and consider the views of other federal and state agencies on environmental issues.84 The statute also establishes a complicated procedure requiring close consultation between FERC and state and federal fish and wildlife agencies.85

FERC generally must adopt license conditions based on recommendations it receives from state and federal fish and wildlife agencies, but it has the discretion to reject recommendations under certain circumstances. If it appears to FERC that the recommendations "may be inconsistent with the purposes" of the FPA or any other "applicable law," FERC must resolve the inconsistency itself but in so doing must give "due weight" to the recommendations and the "expertise, and statutory responsibilities" of the recommending agencies.86 The Act directs FERC to apply new, and greater, scrutiny to relicense applications to ensure that each project meets today's more sophisticated standards for whether resource development is in the public interest.87 Moreover, the congressional conference report explains that FERC's discretionary authority is intended to ensure that environmental protection recommendations do not give commenting agencies a veto over FERC license decisions88 where such recommendations appear to be "inconsistent with the purposes and requirements" of the FPA.89

ECPA does not refer explicitly to, or give guidance on how to resolve, conflicts that might arise between FERC's new environmental protection responsibilities and state proprietary rights. FERC's authority under ECPA to reject environmental protection recommendations as being contrary to law is consistent with FERC's authority under § 9 of the FPA to accept or reject state law requirements. ECPA reaffirms § 27 by disclaiming any congressional intent to "alter or establish the respective rights of States, the United States . . . or any person with respect to any water or water-related right."90 Because ECPA has no provision for FERC to receive or consider comments from state agencies responsible for protecting proprietary rights, it did not change or clarify the interplay between §§ 9 and 27 of the FPA. Instead, ECPA reaffirms — and strengthens — FERC's ultimate authority to reconcile conflicting public interests affected by hydroelectric development, including fish and wildlife protection and recreation.91

Because ECPA was the first major revision of the FPA since the Supreme Court's decision in First Iowa, Congress had an opportunity — which it declined — to explain or change how the dual authority of federal and state laws is to operate. Congress' failure to address First Iowa and the virtually unbroken line of cases, striking down most mandatory state regulations affecting hydroelectric projects, suggests congressional satisfaction with the current division of authority.

Notwithstanding established law that FERC occupies only the field of hydroelectric power regulation, ECPA also makes FERC the regulator of environmental and wildlife protection laws. While it contains no explicit language that Congress intended FERC to occupy this field, it can be argued that FERC must have comprehensive authority to protect both hydropower resources and fish and wildlife if it is to satisfy its obligation to give equal consideration to environmental concerns in comprehensive waterway planning. ECPA must be viewed in the context of other congressional environmental protection and energy enactments of the 1970s and 1980s, all of which preserved federal control over these issues. For example, the Public Utility Regulatory Policies Act of 1978 encouraged the development of small hydroelectric projects through financial and regulatory incentives, but retained FERC control over the licensing and regulation of these projects.92 Similarly, the generally applicable federal environmental protection laws, including the National Environmental Policy Act,93 the Endangered Species Act,94 and the Wild [20 ELR 10445] and Scenic Rivers Act,95 enforce procedural and substantive environmental protections in which the states have only an advisory role.

Implications of California v. FERC and the Electric Consumers Protection Act for State Water Regulation: A Case Study of the Platte River

The import of California v. FERC, in combination with FERC's enhanced environmental watchdog responsibilities, can best be appreciated through a case study. FERC presently is considering the relicensing of two irrigation and power-generation projects on the Platte and North Platte Rivers in Nebraska. The facilities, generally known as the Kingsley Dam project, impound Lake McConaughy, which, at 1.8 million acre feet, is the largest lake in Nebraska. The Kingsley Dam project, although only a small producer of hydropower, provides irrigation water for large portions of Nebraska and, in terms of its regional importance, is one of the largest FERC projects nationwide. Kingsley Dam lies immediately upstream of a 53-mile stretch of the Platte River that has been designated under the Endangered Species Act as critical habitat for the endangered whooping crane.96 The Platte River downstream of Kingsley Dam is one of the most diverse migratory bird habitats in the United States. It also provides habitat for numerous other endangered and threatened species, including the bald eagle, peregrine falcon, piping plover, eskimo curlew, least tern, a species of orchid, and a species of beetle.97 The impacts of the Kingsley Dam project on these species, as well as more generally on the environment of central Nebraska, has been well documented for years.98

The relicensing of Kingsley Dam — already pending more than six years — has been a contentious proceeding that has pitted traditional power and irrigation interests against environmental protection interests. In early 1990, on order from the D.C. Circuit, FERC imposed interim conditions on the operations of Kingsley Dam to prevent degradation of wildlife habitat during the pendency of the relicensing proceeding.99 Those conditions required, inter alia, that one of the two licensees release water from its facilities sufficient to guarantee certain minimum instream flows in the Platte River at Grand Island, Nebraska, several hundred miles downstream of Kingsley Dam.

FERC declined to impose similar restrictions on the second licensee on the grounds that a technicality in the license restricted its ability to change the license conditions until the completion of the relicensing proceeding. The first licensee, predictably, protested the FERC order, claiming that compliance with the order would interfere with its storage and irrigation water contracts.100 Before California v. FERC and ECPA, the licensee might have had a strong argument. Such is no longer the case for two principal reasons.

First, under ECPA, FERC has an affirmative statutory obligation to impose conditions on the operations of hydropower projects that are necessary for the "protection, mitigation, and enhancement" of fish and wildlife habitat.101 Both the language of the statute and its legislative history leave no doubt that FERC must exercise its authority to require such conditions upon recommendation from state and federal wildlife agencies.102 In the case of the Platte River, because the Kingsley Dam project is the first water diversion or power facility upstream of the designated endangered species habitat, ECPA requires that FERC act as a super environmental watchdog, using its licensing authority to remedy any environmental damage that has occurred upstream that might affect that wildlife habitat.103 The special protections of the Endangered Species Act104 strengthen FERC's authority in this instance but do not change FERC's fundamental obligation to impose conditions on the operations of hydropower projects to protect downstream environmental resources.105

Second, California v. FERC clarifies FERC's authority to order minimum instream flows substantially downstream of the project facilities notwithstanding both state laws restricting water rights for instream flows and the impact such flows would have on future diversions from the river. Before California v. FERC (and especially in light of the dispute over the impact of California v. United States), FERC may have believed that its authority was limited by state water laws.106 Nebraska law, for example, [20 ELR 10446] authorizes only a few government agencies to hold an instream-flow water right.107 The Kingsley Dam licensee is not authorized by Nebraska law to hold an instream-flow right. Although there are no significant diversions from the Platte River between Kingsley Dam and Grand Island, the downstream terminus of the endangered species habitat, any potential water user could apply under Nebraska law for a water right in that section of the Platte River. California v. FERC allows FERC to ignore both of those provisions of state law. So long as there is no existing contrary water right, FERC can direct the operator of Kingsley Dam to release water for instream flow, which will have the effect of creating a federal instream water right and preventing the state from issuing either an instream or a diversion water right in a several-hundred-mile-long stretch of the Platte River. Even if there were an existing water right in that stretch of the river, FERC could direct the licensee to use its eminent domain authority under the FPA108 to condemn the water right. Since FERC has the authority to condition a hydropower license on an applicant's later acquisition of water rights,109 and recently has required an applicant to relinquish a significant portion of its adjudicated water rights as a condition to issuance of a hydropower license,110 it clearly has the legal authority to require a licensee to condemn any existing water right to satisfy a license condition.111

In the case of the Platte River, FERC could use its authority not only to preempt the future issuance of new state water rights between Kingsley Dam and Grand Island, but also to restructure any existing water rights. No longer can the Kingsley Dam licensee defend against a FERC order on the grounds that it does not have adequate state water rights to satisfy FERC's demands. If a new licensee can be required to acquire water rights sufficient to operate a project, so can a relicense applicant. The licensee has a choice of purchasing or condemning the necessary water rights or declining the FERC license. For the Kingsley Dam project, and similarly for other projects eligible for relicensing, the economic impacts of abandoning an existing license make it unlikely that a licensee would choose to decline a reissuance of the FERC license.

The effect of California v. FERC and ECPA on states like Nebraska could be overwhelming. Asserting its statutory obligation to develop a comprehensive basin wide plan for waterway development,112 FERC could order a complete restructuring of the use of water from the Platte River. FERC now has clear authority to order the licensees of the Kingsley Dam projects to condemn existing water and storage rights, acquire new water rights, or abandon their own water or storage rights as necessary to protect wildlife habitat. As it already has done, FERC can order the licensee to maintain instream flows and to monitor the effectiveness of such flows in protecting wildlife habitat.

Predicting how FERC will use its authority in this and future cases, however, is difficult. On one side of the equation is FERC's traditional deference to hydropower and irrigation interests whose local control makes it unlikely that licensees would seek FERC authority to engage in widespread condemnation of water rights. On the other side is FERC's historical refusal to respect state regulatory laws and reluctance to respect state water laws. Add to the equation FERC's new environmental protection obligations that are largely untested, and there remains a substantial question as to the impact of these developments for state water regulation.

Conclusion

Although the Supreme Court in California v. FERC reaffirmed the validity of First Iowa after the enactment of ECPA, and its decision in California v. United States, the Court made no new law and did little to clarify the interplay between §§ 9 and 27. If any new law was enunciated it was that FERC's authority to disregard state laws (subject only to compensation for takings) can be used to further its environmental protection obligations under ECPA.

In the two generations between the Court's decisions in First Iowa and California v. FERC, there was a constructive tension between FERC and the states over their concurrent authority. That tension was only increased by the ambiguous application of California v. United States. The tension was constructive because both FERC and the states [20 ELR 10447] repeatedly tested the limits of their respective jurisdictions and kept each other unilaterally from asserting complete dominance over water regulation.

In the realm of environmental protection, this tension kept FERC on a moderate course, poised between its historical reluctance to consider environmental issues and its fear of losing any regulatory control to the states. The states were kept in check. Environmentally progressive states like California and Vermont were prevented from imposing economically unrealistic demands on hydroelectric projects. States like Idaho and Nebraska, which favored traditional consumptive water users, were subject to oversight by FERC and its National Environmental Policy Act and ECPA mandate to consider environmental impacts of hydropower projects.

Although it is doubtful that the Court so intended, the effect of California v. FERC likely will be to reduce the tension between the states and FERC. FERC may now believe that the Court has given it an exclusive mandate to regulate all water uses related to hydropower projects. States like California will be more cautious before they attempt to impose water-related environmental protection conditions on FERC licensees. States like Idaho and Nebraska will rely on FERC's traditional constituency to protect state consumptive water users. The prospects for environmental protection will depend almost entirely on how FERC accepts its environmental watchdog role under ECPA generally, and its consideration of state recommendations under ECPA § 10.

In light of California v. FERC, there appear to be three principal views of the role that FERC plays in regulating water rights:

That FERC maintains regulatory authority to disregard all state laws except those relating narrowly to the appropriation and use of water (proprietary rights only). FERC can disregard state regulatory water rights. Section 27 protects only vestedwater rights recognized by state law. FERC authority can be used to further its mission to promote hydropower resources or to mitigate and enhance wildlife habitat.

The Supreme Court appears to have adopted this approach. Despite its doctrinal simplicity, this view may be difficult to apply because of the clouded line between proprietary rights and regulatory laws that are attached to it.

That § 27 protects from preemption any state law that relates to control or appropriation of water. States retain the right to regulate water rights. State regulatory water laws effectively can veto a FERC license or can impose additional conditions on the exercise of license rights even if those conditions are inconsistent with FERC license conditions.

This broad reading of § 27 — although consistent with its plain language — may have been killed by California v. FERC. However, the case leaves open whether § 27 applies to protect state laws that regulate the place, time, or duration that an owner can exercise his water right.

That the states and FERC exercise concurrent authority over all hydroelectric regulatory matters, with disputes between FERC and the states settled based on certain conflict resolution priorities.

This last view appears to be the best. Although the Supreme Court implies that it has adopted this approach,113 its decisions suggest a dissatisfaction with concurrent authority. Moreover, FERC's decisions demonstrate the difficult application of concurrent authority in practice. Under the concurrent authority theory, states retain authority where vested rights are at issue or an unconstitutional taking would occur. State law determines whether FERC impairment of a water right results in a taking. FERC and the states have concurrent authority over environmental, wildlife, and fishery protection issues under ECPA, though FERC sits as the decidedly partial arbiter of any jurisdictional dispute.

The most difficult application occurs where state law allows for instream flow water rights and such rights would be implicated by FERC action. First, state law should determine whether a taking would occur. If there is no taking, § 27 is inapplicable and FERC is free to disregard the state law. If, however, a state instream flow law is incorporated into a state recommendation for wildlife protection under § 10(j) of ECPA, FERC may disregard the law only if compliance with the law would frustrate FERC's comprehensive planning authority. While state law cannot veto FERC action, FERC must respect recommendations based on state law if such laws are consistent with FERC's obligation to consider environmental implications of a hydropower license.

1. 16 U.S.C. §§ 791-828 (1982).

2. 110 S. Ct. 2024, 38 U.S.L.W. 4591, 20 ELR 20913 (U.S. 1990).

3. U.S. CONST. art. I, § 8, cl. 3; Gibbons v. Ogden, 22 U.S. (1 Wheat.) 1 (1824).

4. Oklahoma ex rel. Phillips v. Guy F. Atchison Co., 313 U.S. 508 (1941).

5. U.S. CONST. art. VI, § 2, cl. 2.

6. United States v. Appalachian Elec. Power Co., 311 U.S. 377, 423 (1940).

7. See United States v. New Mexico, 438 U.S. 696, 702 n.5, 8 ELR 20564, 20566 n.5 (1978) (citingreference to 37 statutes that indicate congressional deference to state water laws); California v. United States, 438 U.S. 645, 8 ELR 20593 (1978) (holding that the federal government must comply with state water law in obtaining water for federal reclamation projects).

8. See Oregon ex rel. State Land Bd. v. Corvallis Sand & Gravel Co., 429 U.S. 363, 7 ELR 20137 (1977); S. REP. NO. 755, 82d Cong., 1st Sess. 3, 6 (1951), cited in California v. United States, 438 U.S. 645, 8 ELR 20593 (1978).

9. 43 U.S.C. §§ 372, 383.

10. Ch. 665, 58 Stat. 877 (codified as amended at 33 U.S.C. § 701-1).

11. California v. United States, 438 U.S. at 662, 8 ELR 20597 (citing United States v. Rio Grande Dam & Irrigation Co., 174 U.S. 690, 703 (1899)).

12. Ch. 687, 49 Stat. 838 (1935) (amending Federal Water Power Act of 1920, ch. 285, 41 Stat. 1063) (codified as amended at 16 U.S.C. §§ 791-828).

13. Sections 4(e), 23(b)(i), 16 U.S.C. § 797(e), 817(b)(i); see California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

14. Section 10(a), 16 U.S.C. § 803(a).

15. Id.

16. Federal Power Comm'n v. Idaho Power Co., 344 U.S. 17, 23 (1952).

17. See, e.g., New England Power Co. v. New Hampshire, 455 U.S. 331, 340 (1982).

18. United States v. Appalachian Elec. Power Co., 311 U.S. 377 (1940); see generally Note, Small Hydropower Projects and State Water Rights, 18 PAC. L.J. 1225 (1987).

19. Section 9 of the FPA, 16 U.S.C. § 802, provides:

(a) Each applicant for a license under this chapter shall submit to the commission —

(1) Such maps, plans, specifications, and estimates of cost as may be required for a full understanding of the proposed project. Such maps, plans, and specifications when approved by the commission shall be made a part of the license; and thereafter no change shall be made in said maps, plans, or specifications until such changes shall have been approved and made a part of each license by the commission.

(2) Satisfactory evidence that the applicant has complied with the requirements of the laws of the State or States within which the proposed project is to be located with respect to bed and banks and to the appropriation, diversion, and use of water for power purposes and with respect to the right to engage in the business of developing, transmitting, and distributing power, and in any other business necessary to effect the purposes of a license under this Act.

20. Section 27 of the FPA, 16 U.S.C. § 821, provides:

Nothing contained in this chapter shall be construed as affecting or intending to affect or in any way to interfere with the laws of the respective States relating to the control, appropriation, use, or distribution of water used in irrigation or for municipal or other uses, or any vested right acquired therein.

21. See Brief for Respondent Rock Creek, Limited Partnership, California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913, for a thorough discussion of the legislative history of § 27. An equally thorough discussion of the legislative history, arguing the opposite proposition, appears in Brief for Petitioner State of California, id.

22. Portland Gen. Elec. Co. v. Federal Power Comm'n, 328 F.2d 165 (9th Cir. 1964); see Grand River Dam Auth. v. Grand-Hydro, 335 U.S. 359 (1948).

23. FPA § 21, 16 U.S.C. § 814.

24. Federal Power Comm'n v. Niagara Mohawk Power Corp., 347 U.S. 239 (1954).

25. See Public Util. Dist. No. 1 v. Federal Power Comm'n, 308 F.2d 318 (D.C. Cir. 1962), cert. denied, 372 U.S. 908 (1963); State v. Idaho Power Co., 312 P.2d 583 (Or. 1957) (state licensing superfluous for a federal licensee); accord Scenic Hudson Preservation Conference v. Federal Power Comm'n, 453 F.2d 463, 1 ELR 20496 (2d Cir. 1971) (FERC has discretion to determine whether federal license will interfere with state law), cert. denied, 407 U.S. 926, 2 ELR 20436 (1972).

26. 43 U.S.C. § 321.

27. 43 U.S.C. §§ 372, 383.

28. Compare First Iowa Hydro-Elec. Coop. v. Federal Power Comm'n, 328 U.S. 152 (1946) (Federal Power Act) with California v. United States, 438 U.S. 645, 8 ELR 20593 (1978) (Reclamation Act) and California Oregon Power Co. v. Beaver Portland Cement Co., 295 U.S. 142 (1935) (Desert Land Act). See also California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913 (legislative history, not just the language of the statute, is important for understanding the meaning of similar language in varied statutes).

29. See generally Wolfe, Hydropower: FERC Licensing and Emerging State-Federal Water Rights Conflicts, 29 ROCKY MTN. MIN. L. INST. 851 (1983); Comment, Hydroelectric Power, the Federal Power Act, and State Water Laws: Is Federal Preemption Water Over the Dam?, 17 U. CAL. DAVIS L. REV. 1179 (1984).

30. Federal Power Comm'n v. Niagara Mohawk Power Corp., 347 U.S. 239 (1954); Georgia Power Co. v. Baker, 830 F.2d 163 (11th Cir. 1987).

31. Henry Ford & Son, Inc. v. Little Falls Fibre Co., 280 U.S. 369 (1930); Portland Gen. Elec. Co. v. Federal Power Comm'n, 328 F.2d 165 (9th Cir. 1964).

32. California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913, First Iowa, 328 U.S. 152.

33. The Rivers and Harbors Act of 1899, 33 U.S.C. §§ 401, 403, provides for joint jurisdiction by the states and the Army Corps of Engineers. The Clean Water Act, 33 U.S.C. §§ 1341, 1344(a), ELR STAT. CAA 004-052, provides that a condition precedent for issuance of a permit by the Army Corps of Engineers is the obtaining of a state water quality certification.

34. See, e.g., FPA § 7, 16 U.S.C. § 800(a) (preference to states and municipalities in issuance of licenses); § 10(j), 16 U.S.C. § 803(j) (consultation with states on fish and wildlife protection); § 19, 16 U.S.C. § 812 (provision of electricity subject to state regulation).

35. See, e.g., § 27, 16 U.S.C. § 821 (states control appropriation and use of water); § 10(a), 16 U.S.C. § 803(a) (federal control over comprehensive planning for hydroelectric development).

36. 328 U.S. 152 (1946) [hereinafter First Iowa].

37. Id. at 328 U.S. 152.

38. See, e.g., City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320 (1958); Federal Power Comm'n v. Oregon, 349 U.S. 435 (1955); California ex rel. State Water Resources Bd. v. FERC, 877 F.2d 743 (9th Cir. 1989), aff'd, 58 U.S.L.W. 4591, 20 ELR 20913 (1990); Scenic Hudson Preservation Conference v. Federal Power Comm'n, 453 F.2d 463, 1 ELR 20496 (2d Cir. 1971); Washington Dep't of Game v. Federal Power Comm'n, 207 F.2d 391 (9th Cir. 1953), cert. denied, 347 U.S. 936 (1954); Town of Springfield v. McCarren, 549 F. Supp. 1134 (D. Vt. 1982), aff'd, 722 F.2d 728 (2d Cir.), cert. denied, 464 U.S. 942 (1983); Town of Springfield v. Vermont Envtl. Bd., 521 F. Supp. 243 (D. Vt. 1981).

39. See Town of Springfield v. Vermont Envtl. Bd., 521 F. Supp. 243; City of Tacoma v. Taxpayers of Tacoma, 262 P.2d 214 (Wash. 1953).

40. See California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

41. 438 U.S. 645, 8 ELR 20593 (1978).

42. 43 U.S.C. §§ 372, 383.

43. California v. United States, 438 U.S. at 675, 8 ELR at 20601.

44. Id. at 672, 8 ELR at 20600.

45. California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

46. 877 F.2d 743, 19 ELR 21303 (9th Cir. 1989).

47. Id. at 749 n.3.

48. See Missouri v. Holland, 252 U.S. 416 (1920).

49. California ex rel. State Water Resources Bd. v. FERC, 877 F.2d 743.

50. See Portland Gen. Elec. Co. v. Federal Power Comm'n, 328 F.2d 165 (9th Cir. 1964).

51. See State v. Idaho Power Co., 312 P.2d 583 (Or. 1957).

52. For example, FERC did not promulgate regulations implementing its environmental review procedures pursuant to the National Environmental Policy Act until 1987, almost 20 years after the statute was enacted. See 18 C.F.R. pt. 380. Congress' enactment of the Electric Consumers Protection Act was in large part brought about by FERC's reluctance to give due consideration to fish and wildlife and other nonpower resources in the hydroelectric licensing process. See H.R. REP. NO. 507, 99th Cong., 2d Sess., reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 2496.

53. See, e.g., Conway Ranch Partnership, 46 F.E.R.C. P62,332 (1989), aff'd, 50 F.E.R.C. P61,406 (1990); Howard & Mildred Carter, 40 F.E.R.C. P61,280 (1987).

54. See Henwood Assocs., Inc., 50 F.E.R.C. P61,183 (1990); Twin Falls Canal Co., 45 F.E.R.C. P61,423 (1988), rev'd, 48 F.E.R.C. P62,100 (1988).

55. See Guadalupe-Blanco River Auth., 42 F.E.R.C. P61,079 (1988); Rock Creek Ltd. Partnership, 38 F.E.R.C. P61,240 (1987); Roseburg Resources Co., 41 F.E.R.C. P61,142 (1987).

56. See Brazos River Auth., 48 F.E.R.C. P62,190 (1989); Twin Falls Canal Co., 45 F.E.R.C. P61,423; accord California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

57. 16 U.S.C. § 797 (1988).

58. See, e.g., Central Neb. Pub. Power & Irrigation Dist., 50 F.E.R.C. P61,180 (1990) (order on remand); Northern Lights, Inc., 39 F.E.R.C. P61,352 (1987).

59. See, e.g., Henwood Assocs., Inc., 50 F.E.R.C. P61,183 (1990) (conflict with Bureau of Land Management); Eugene Water & Elec. Bd., 49 F.E.R.C. P61,211 (1989) (conflict with Army Corps of Engineers).

60. 877 F.2d 743 (9th Cir. 1989).

61. Id. at 749.

62. Id. at 747-49.

63. California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

64. Id. at 4594 (citing Patterson v. McLean Credit Union, 109 S. Ct. 2363 (1989)).

65. Id. at 4593, 20 ELR at 20915.

66. Id. at 4594, 20 ELR at 20915.

67. Id.

68. Id. at 4595, 20 ELR at 20916.

69. Id.

70. S. 2805, 101st Cong., 2d Sess., 136 CONG. REC. S9176 (1990) (the House companion bill is H.R. 5194, 101st Cong., 2d Sess. (1990)).

71. Brazos River Auth., 48 F.E.R.C. P62,190 (1990).

72. Henwood Assocs., Inc., 50 F.E.R.C. P61,183 (1990).

73. Central Neb. Pub. Power & Irrigation Dist., 51 F.E.R.C. P61,257 (1990) (order on rehearing).

74. See Henwood Assocs., Inc., 50 F.E.R.C. P61,183; Brazos River Auth., 48 F.E.R.C. P62,190.

75. Five acts made up the National Energy Act of 1978: the Public Utility Regulatory Policies Act of 1978, Pub. L. No. 95-617, 92 Stat. 3117; the Energy Tax Act of 1978, Pub. L. No. 95-618, 92 Stat. 3174; the National Energy Conservation Policy Act, Pub. L. No. 95-619, 92 Stat. 3206 (1978); the Powerplant and Industrial Fuel Use Act of 1978, Pub. L. No. 95-620, 92 Stat. 3289; and the Natural Gas Policy Act of 1978, Pub. L. No. 95-621, 92 Stat. 3350.

76. See generally Arnold, Emerging Possibilities for State Control of Hydroelectric Development, 13 ELR 10135 (May 1983); Whittaker, The Federal Power Act and Hydropower Development: Rediscovering State Regulatory Powers and Responsibilities, 10 HARV. ENVTL. L. REV. 135 (1986).

77. See 52 Fed. Reg. 4,648 (1987) (list of hydropower licenses expiring from 1987 through 1999).

78. See generally Bornong, The Electric Consumers Protection Act of 1986: Changes in Hydro Licensing?, 23 GONZAGA L. REV. 135 (1987); Echeverria, The Electric Consumers Protection Act of 1986, 8 ENERGY L.J. 61 (1987).

79. J. ECHEVERRIA, P. BARROW, R. ROOS-COLLINS, RIVERS AT RISK 66-68 (1989). See generally Bornong, supra note 76.

80. FERC had been chastised frequently for failing to consider the environmental impacts of its license decisions. See Escondido Mut. Water Co. v. La Jolla Band of Mission Indians, 466 U.S. 765, 14 ELR 20592 (1984); Yakima Indian Nation v. FERC, 746 F.2d 466, (9th Cir. 1984),cert denied, 471 U.S. 1116 (1985); Scenic Hudson Preservation Conference v. Federal Power Comm'n, 354 F.2d 608, 1 ELR 20496 (2d Cir. 1971); Udall v. Federal Power Comm'n, 387 U.S. 428, 1 ELR 20117 (1967); see generally Echeverria, supra note 78.

81. ECPA § 3(a), 16 U.S.C. § 797(e); as amended, § 4(e) of the Federal Power Act now provides:

The Commission is authorized and empowered

(e) To issue licenses to citizens of the United States, or to any association of such citizens, or to any corporation organized under the laws of the United States or any State thereof, or to any State or municipality for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient for the development and improvement of navigation and for the development, transmission, and utilization of power across, along, from or in any of the streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States, or upon any part of the public lands and reservations of the United States (including the Territories), or for the purpose of utilizing the surplus water or water power from any Government dam, except as herein provided. . . . In deciding whether to issue any license under this Part for any project, the Commission, in addition to the power and development purposes for which licenses are issued, shall give equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife (including related spawning grounds and habitat), the protection of recreational opportunities, and the preservation of other aspects of environmental quality.

See also ECPA § 3(b), 16 U.S.C. § 803(a)(1) (adding environmental protection issues to the factors that FERC must consider in issuing licenses).

82. See Udall v. Federal Power Comm'n, 387 U.S. 428, 1 ELR 20117 (1967).

83. H.R. REP. NO. 934, 99th Cong., 2d Sess., reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 2537 (conference committee report on the statute).

84. ECPA § 3(b), 16 U.S.C. § 803(a)(2)(B).

85. Id. at § 3(c), 16 U.S.C. § 803(j).

86. Id.

87. See H.R. REP. NO. 507, 99th Cong., 2d Sess., reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 2496.

88. H.R. REP. NO. 934,supra note 83.

89. ECPA § 3(c), 16 U.S.C. § 803(j)(2).

90. Id. at § 17, 16 U.S.C. § 797 note.

91. See California v. FERC, 58 U.S.L.W. 4591, 20 ELR 20913.

92. Pub. L. No. 95-617, 92 Stat. 3117, (codified at 15 U.S.C. §§ 717f, 717x-717z, 3201-3211; 16 U.S.C. § 791a note, 796, 823a, 824-824a-4, 824d, 824i-824k, 825d, 825q-1,2601-2603, 2611-2613, 2621-2627, 2631-2634, 2641-2645, 2701-2708; 30 U.S.C. §§ 1311-1316; 42 U.S.C. §§ 6802-6808; 43 U.S.C. §§ 2001-2012).

93. 42 U.S.C. §§ 4321-4370(a), ELR STAT. NEPA 001-014.

94. 7 U.S.C. § 136, 16 U.S.C. §§ 4601-9, 460k-1, 668dd, 715i, 715a, 1362, 1371, 1372, 1402, 1531-1543, 3375, ELR STAT. ESA 001-027.

95. 16 U.S.C. §§ 1271-1287.

96. 43 Fed. Reg. 20,938 (1978).

97. For a more complete description of the environment downstream of Kingsley Dam, see P. CURRIER, G. LINGLE & J. VANDERWALKER, MIGRATORY BIRD HABITAT ON THE PLATTE AND NORTH PLATTE RIVERS IN NEBRASKA (1985).

98. For a history of these impacts, see generally Central Neb. Pub. Power & Irrigation Dist., 50 F.E.R.C. P61,180 (1990). For early litigation over the impacts of these projects on endangered and threatened species, see Nebraska v. Basin Elec. Coop., 594 F.2d 870 (8th Cir. 1979); Nebraska v. Rural Electrification Admin., 8 ELR 20789 (D. Neb. 1978).

99. Platte River Whooping Crane Critical Habitat Maintenance Trust v. FERC, 876 F.2d 109, 19 ELR 20883 (D.C. Cir. 1989), on remand, 50 F.E.R.C. P61,180 (1990), order on reh'g, 51 F.E.R.C. P61,257 (1990).

100. See generally Central Neb. Pub. Power & Irrigation Dist., 51 F.E.R.C. P61,257 (1990) (order granting stay).

101. ECPA § 3(c), 16 U.S.C. § 803(j)(1).

102. Id. While FERC is empowered to reject such recommendations if they are "inconsistent with the purposes and requirements" of the FPA, id., the purposes of the FPA, as amended by the ECPA, no longer are limited to power generation. FERC now is required to give equal consideration to hydropower generation and energy conservation, fish and wildlife protection, and preservation of environmental quality, 16 U.S.C. § 797(e), suggesting that the purposes of the FPA includes not only hydropower development, but also fish and wildlife protection. Consequently, FERC is limited severely in its authority to reject recommendations from wildlife agencies.

103. Four Bureau of Reclamation reservoirs and several private facilities lie upstream of Kingsley Dam.

104. See generally Tennessee Valley Auth. v. Hill, 437 U.S. 153, 8 ELR 20513 (1978).

105. The ECPA is unclear on the scope of environmental degradation that FERC must consider. Prior to the statute, FERC never required a licensee to mitigate damages caused by the original impact of a project. See Pacific Gas & Elec. Co., 14 F.E.R.C. P61,179 (1981); Bangor Hydro-Elec., Co., 4 F.E.R.C. P61,157 (1978). One member of Congress, writing in the Senate Report on the statute, noted that the statute did not relieve licensees of "responsibilities to mitigate damages . . . caused by original development and continued operation of the project." S. REP. NO. 161, 99th. Cong., 1st Sess. 17 (1985) (additional views of Sen. Evans). See H.R. REP. 934, supra note 83, at 22 ("Projects licensed years earlier must undergo the scrutiny of today's values.").

106. In its Order on Rehearing, 51 F.E.R.C. ¶61,257 (1990), FERC appears to defer in part to state law. Although the opinion was released after California v. FERC, 38 U.S.L.W. 4591, 20 ELR 20913, it is clear that the opinion was written before the Supreme Court decision.

107. NEB. REV. STAT. §§ 46-2107, -2108, -2119 (1984).

108. Section 21, 16 U.S.C. § 814.

109. See Sunnyside Valley Irrigation Dist., 21 F.E.R.C. P61,308 (1982), cited in Wolfe, supra note 29, at 861-62.

110. See Conway Ranch, 50 F.E.R.C. P61,406(1990), aff'g 46 F.E.R.C. P62,332 (1989). In this case, FERC upheld an earlier decision of the Director of Hydropower Licensing, holding that

the Commission can require, as a condition to a license to utilize the Nation's water resources for the generation of electricity, that a licensee use his water rights in part for other beneficial public purposes, including the mitigation or enhancement of fishery and riparian resources. If Conway accepts the license, then it will be responsible for ensuring that its water rights may be used in the manner provided for on the license. If that requires additional proceedings pursuant to the court decree [governing the stream's adjudicated water rights], that will be Conway's responsibility.

50 F.E.R.C. at P62,254. As a result of FERC's order, the applicant rejected the FERC license for the project in order to protect its 128-year irrigation water right. See HYDRO WIRE, May 21, 1990, at 5 (biweekly newsletter published by HCI Publication, Kansas City, Mo.).

111. Section 21 of the FPA, 16 U.S.C. § 814, provides:

When any licensee cannot acquire by contract or pledges an unimproved dam site or the right to use or damage the lands or property of others necessary to the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or accessory thereto, in conjunction with an improvement which in the judgment of the commission is desirable and justified in the public interest for the purpose of improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such land or other property may be located, or in the State courts. The practice and procedure in any action or proceedings for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $ 3,000.

While the language of § 21 does not refer specifically to the condemnation of water rights, the provision allows for the condemnation of "lands or property." Since the entire premise of the jurisprudence under First Iowa and California v. FERC is that § 27 protects the property right to water, it must follow that a licensee's eminent domain authority extends to condemnation of water rights. See Joseph M. Keating, 32 F.E.R.C. P61,290 (1985) (allowing licensee five years to obtain water rights by condemnation); City of Santa Clara, 20 F.E.R.C. P61,257 (1982) (same) (citing California Dep't of Water Resources, 18 F.E.R.C. P61,056 (1982)).

112. FPA § 10(a)(1), 16 U.S.C. § 803(a)(1).

113. California v. FERC, 58 U.S.L.W. at 4595, 20 ELR at 20916 (a state water law will be preempted "'to the extent it actually conflicts with federal law, that is, when it is impossible to comply with both state and federal law, or where the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress'") (quoting Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 14 ELR 20077, 20080 (1984)) (citations omitted).

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