Alerts and Updates
U.S. Supreme Court Upholds State Certification of Quality of Water Released from Hydroelectric Dams
May 16, 2006
The U.S. Supreme Court issued an opinion upholding a state's authority to require approval of hydroelectric dam licenses pursuant to the Clean Water Act (CWA). In what has been called the biggest case in hydropower law in a decade, the case pitted hydroelectric dam owners and operators against state environmental protection agencies in a battle over the meaning of the term "discharge" as used in the CWA.
The Petition
Petitioner paper manufacturer S.D. Warren, which owns and operates five dams on the Presumpscot River in Maine, had asked the Federal Energy Regulatory Commission (FERC) to renew its federal licenses for those dams — each dam impounds water from the river, runs it through turbines and returns the water to the riverbed, bypassing a section of the river itself. FERC licensed the dams subject to compliance with water quality certifications required from the state pursuant to Section 401 of the CWA, which requires state approval of any activity that "may result in any discharge into the [Nation's] navigable waters," but which does not specifically define the term "discharge." The Maine Board of Environmental Protection interpreted this section of the CWA to apply to water moving from one side of a dam to another and to require hydroelectric companies to seek certifications. S.D. Warren applied for those certifications under protest, arguing that its dams did not produce a "discharge into" the river, exhausted administrative appeals, and filed suit in state court, which ultimately rejected S.D. Warren's claim that its dams do not produce a "discharge" under Section 401 of the CWA. The Maine Supreme Judicial Court affirmed.
On appeal to the U.S. Supreme Court, S.D. Warren raised three arguments for reading the term "discharge" such that it would not apply to water usage by hydroelectric dams. The first argument was based on the maxim that "a word is known by the company it keeps" (i.e., that words grouped in a list should be given related meaning) and the proximity of the term "discharge" to "pollutant" in the CWA's clarification that the term "discharge" includes pollutants thus implies that the term "discharge" standing alone signifies the addition of foreign matter to the water — a process that does not occur in releasing water from hydroelectric dams. The second argument analogized to the Court's 2004 decision in South Fla. Water Management Dist. v. Miccosukee Tribe, in which the Court found the phrase "discharge of a pollutant" in Section 402 of the CWA to be inapplicable where water is passed between two parts of the same body of water such that no "addition" of a pollutant was made. The third argument concerned the possibility of a scrivener's error in the legislative history of the description of the term "discharge."
The Decision
The U.S. Supreme Court held that because a dam raises the potential for a "discharge" within the plain meaning of the term, under Section 401 of the CWA a federal hydroelectric license requires state certification that water protection laws will not be violated. The Court found that S.D. Warren's arguments against reading the word in its common meaning "fail on their own terms," and "miss the forest for the trees." The Court rejected the "company it keeps" argument, stating that "giving one example does not convert express inclusion into restrictive equation." The Court also rejected the analogy to South Fla. Water Management Dist., stating that although Sections 401 and 402 of the CWA have parallel legislative histories, the two serve different purposes and are not interchangeable. Finally, the Court rejected the "error in the legislative history" argument as "simply speculation."
The Court summarized its argument with the conclusion that Congress passed the CWA with the goal of protecting water quality from "pollution" in general, a term Congress defined as "the man-made or man-induced alteration of the chemical, physical, biological, and radiological integrity of water." Defined this way, the Court stated, alteration of water quality is a risk inherent in limiting river flow and releasing water through turbines, and that these sorts of changes in a river fall within a state's legitimate business under the CWA. Furthermore, the Court stated, preventing polluters from hiding behind a federal license is the very reason Congress provided states the authority to impose water quality conditions thereupon.
Implications
This decision should be a relief to state environmental protection agencies and organizations that feared a decision in S.D. Warren's favor would deprive state regulators of their ability to require hydroelectric dam companies to remediate damage to aquatic habitat, requirements that would be left to FERC and other federal agencies in the absence of state authority. Hydropower industries will probably be disappointed by the decision and would have preferred the nationwide consistency and regulatory certainty that a decision in S.D. Warren's favor would have provided.
In sum, hydroelectric facilities will still be required to meet state water quality requirements and, consequently, there will not be a discernible change in hydroelectric regulation or operation in certain states with stringent water quality regulators. The decision preserves the status quo of broad state jurisdiction pursuant to Section 401 of the CWA to impose conditions on federal hydroelectric project licensing.
For Further Information
If you have questions about this Alert, please contact Thomas M. Berliner in our San Francisco office, Jennifer D. Cook in our Washington, D.C. office, or any other members of Duane Morris' Energy and Resources Practice Group or Environmental Practice Group, or the attorney in the firm with whom you are in contact regularly.
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