In California v. FERC, the Court established FERC's exclusive authority under the Federal Power Act to set conditions, including the stream flow levels, to be observed by a federally licensed hydroelectric project. To do otherwise, according to the decision, would vest states with "veto power" over such projects.
The Jefferson County case involved the same issue - stream flow levels - but that case, according to the dissent, "[gave] the States precisely the veto power over hydroelectric projects that [the court] determined in California v. Ferc...they did not posses."
The difference was that, while the California case was brought under the Federal Power Act (and the court decided the FPA superseded state law with respect to flow rates), the Jefferson County case was brought under the Clean Water Act. And, according to the court, under section 401 of the Clean Water Act, a state may condition the certification necessary to obtain a federal license for a proposed hydroelectric project upon the maintenance of a minimum flow rate in the river to be utilized by the project.
Under Section 401 of the Clean Water Act, a state may place conditions on the certification of a project to ensure compliance with "any...appropriate requirement of state law." 33 U. S. C. § 1341. Moreover, in the express language of section 401(d), any condition placed in a section 401 certification "shall become a condition on any Federal license or permit." The dissent in Jefferson County stated
Any condition imposed by a State under section 401(d) thus becomes a term of the license as a matter of law, regardless of whether FERC favors the limitation. Because of section 401(d)'s mandatory language, federal courts have uniformly held that FERC has no power to alter or review section 401 conditions, and that the proper forum for review of those conditions is state court. Section 401 conditions imposed by States are therefore binding on FERC.(Citations, quotation marks, and ellipses omitted).
Thus, the dissent commented, "it appears that the mistake of the State in California v. FERC was not that it had trespassed into territory exclusively reserved to FERC; rather it simply had not hit upon the proper device - that is, the section 401 certification - through which to achieve its objectives."
Again, I'm no expert in this area, and there are lots of cases out there on this subject matter. I'm not sure what kinds of conditions qualify as section 401 conditions, or whether all the FERC-opponents' concerns could be addressed through that vehicle. Nonetheless, reliance on California v. FERC for the proposition that the federal process necessarily spells the utter abrogation of local preferences appears unwarranted.
Meanwhile, according to the Garden Island today
A Department of Land and Natural Resources representative said the state attorney general’s office plans intervene in Federal Energy Regulatory Commission proceedings involving hydroelectric development in Hawai‘i.
“The state supports renewable energy and looks forward to hydro projects in appropriate places,” William Tam, deputy director for water at DLNR, said to Pacific Business News. “However, the state does not want Hawai‘i’s in-stream flow standards to be decided by a federal agency in Washington D.C. that does not have any experience with or understand Hawai‘i’s streams.