California v. Federal Energy Regulatory Commission

Background

A private company operates a hydroelectric project that diverts water from Rock Creek and returns it near the river. The federal licensing agency (FERC) issued a license in 1983 that set interim minimum flows to protect trout and required studies for permanent rates. California agencies later sought much higher year-round minimum flows. The licensee asked FERC to declare federal control. FERC and an administrative judge set federal flow conditions, the State adopted conflicting requirements, and the Ninth Circuit upheld FERC’s view before the Supreme Court reviewed the dispute.

Reasoning

The core question was whether a federal law about hydroelectric licensing leaves room for states to set in-stream flow rules that conflict with federal license conditions. The Court relied on a prior decision that reads the statute’s saving clause narrowly, protecting state laws only when they create proprietary water rights, not when they regulate in-stream flows for fish. The Court declined to overturn that precedent, noted that Congress requires FERC to consider state fish recommendations but gives FERC final authority, and held that allowing California’s higher flows would interfere with the federal balancing required by the licensing process.

Real world impact

The decision confirms that the federal licensing agency sets binding minimum flows for licensed hydro projects when its license conflicts with state rules. State agencies still can recommend higher flows, but FERC has final authority. In this case, California’s higher requirements cannot be enforced against the licensed project because they would conflict with the federally approved balance of environmental protection and project feasibility.