August 15, 2011


Posted on August 15, 2011 by Rick Glick

Environmental lawyers of a certain age who work on projects licensed by the Federal Energy Regulatory Commission (FERC) once knew what federal preemption meant:  FERC has exclusive jurisdiction.  Over the past couple of decades, the lines have been blurred as courts find plenty of room in federal legislation for broad assertion of state authority.  Is there a point at which states overplay their hand?

In the context of hydropower licensing, the Supreme Court in First Iowa Hydro-Electric Cooperative v. FPC [1] made clear that federal regulation preempts duplicative state review of hydroelectric projects.  The Court reaffirmed the principal in California v. FERC,[2] which held that states may not invoke their authority over water law to impose minimum stream flow requirements in conflict with FERC.

 Then the states discovered Section 401 of the Clean Water Act (CWA)[3], which requires FERC applicants to demonstrate compliance with state water quality standards and “any other appropriate requirement of State law.”  In two separate opinions, the Supreme Court found that section 401 confers extensive regulatory authority in the states that all but equals the reach of FERC authority.  See, PUD No. 1 of Jefferson County v. Wash. Dept. of Ecology,[4] and  S. D. Warren Co. v. Me. Bd. of Envtl. Protection.[5]  Add to that the Second Circuit’s holding in American Rivers v. FERC[6] that federal agencies must accept all conditions in state certifications, and not much is left of the doctrine of federal preemption.

The preemption issue arises in an interesting way with regard to authorization of LNG projects.  Title III of the Energy Policy Act of 2005 (EPACT)[7], confers upon FERC exclusive siting authority over LNG terminals.  Like the Natural Gas Act, EPACT reserves to the states their full authority under the federal Coastal Zone Management Act (CZMA), Clean Air Act (CAA) and CWA.  In Oregon, which has a federally approved coastal management program, implementation[8] of CZMA consists of the state compiling local governments’ comprehensive land use plans that were previously acknowledged by the state; consistency with CZMA is measured by compliance with local land use regulations, which implement them.  Further, state law[9] 

requires that regulatory agencies must have received a land use compatibility statement from the local governments before a permit may be issued. Thus, Oregon imposes local land use requirements as a basis for implementing its authority under the federal laws carved out by EPACT.  Does this mean that LNG terminal and pipeline developers must get local land use approvals to comply with CZMA, CAA and CWA?  One LNG developer has challenged the state’s implementation of the federal law on the basis of EPACT preemption.  That case[10] is now pending in federal court. 

It would seem that allowing local governments veto authority over LNG development would be contrary to Congress’intent in vesting “exclusive” siting authority in FERC.  Federal courts will strive to read EPACT, CZMA, CAA and CWA as harmonious.  The question is, when does state implementation of these federal laws subvert the underlying policy?

[1]328 U.S. 152 (1946).
[2]495 U.S. 490 (1990).
[3]33 U.S.C. § 1341.
[4]511 U.S. 700 (1994).
[5]547 U.S. 370 (2006).
[6]129 F.3d 99 (2d Cir. 1997).
[7]Pub. L. 109-58, codified at 15 U.S.C. 717b(e)(1).
[8]ORS Chapters 195, 196 and 197.
[9]ORS 197.180.
[10]Pacific Connector Gas Pipeline, LP v. Louise Sollidayet. al., No.CV6279(D. Or..filed August 27, 2010).

Tags: Water


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