Clean Water Act Section 401: Hoopa Valley Tribe and Emerging Developments

Section 401 certification is one of the most significant tools available to states to control federally permitted activities that may involve a discharge into navigable waters. Section 401(a) provides an opportunity for the state to determine whether the discharge will comply with applicable aspects of the state’s approved water quality program. Section 401(d), in turn, authorizes the state to include in its certification any effluent limitations, other limitation, standards of performance, or prohibition, effluent standard, or pretreatment standard, “and [ ] any other appropriate requirement of State law.” 33 U.S.C. § 1341(d). The U.S. Supreme Court has interpreted CWA section 401 as a broad delegation of conditioning authority to the states, Pub. Util. Dist. No. 1 of Jefferson County v. Wash. Dep’t of Ecology, 511 U.S. 700 (1994), and the permitting agency has no authority to reject or modify the conditions included in a water quality certification. Am. Rivers v. FERC, 201 F.3d 1186 (9th Cir. 1999).

The key holding in Hoopa Valley Tribe, which concerns the ongoing Federal Energy Regulatory Commission (FERC) relicensing of the Klamath Hydroelectric Project in California and Oregon, is that the two states waived their authorities under CWA section 401 by failing to rule on the applicant’s submitted applications for water quality certification within one year from when they were initially filed in 2006. The applicant for many years had followed, in coordination with the two states, the common industry practice to “withdraw-and-resubmit” its water quality certification applications in an attempt to annually reset the one-year time period for the states to act. The D.C. Circuit in Hoopa Valley Tribe invalidated this practice as a means of resetting the statutory clock, instead holding that the clear text of CWA establishes that “a full year is the absolute maximum” time for a state to decide on a water quality certification application.

Since the D.C. Circuit’s ruling in January 2019, FERC has applied Hoopa Valley Tribe numerous times in both the natural gas and hydropower contexts—each time determining that the state had waived certification in the pending FERC process. See Placer Cty. Water Agency, 167 FERC ¶ 61,056, reh’g denied, 169 FERC ¶ 61,046 (2019); Empire Pipeline, Inc., 164 FERC ¶ 61,084 (2018), reh’g denied, 167 FERC ¶ 61,007 (2019), appeal docketed N.Y. Dep’t of Env’t Conservation v. FERC, No. 19-1610 (2nd Cir. June 28, 2019); Constitution Pipeline Co., LLC, 168 FERC ¶ 61,129 (2019); McMahan Hydroelectric, LLC, 168 FERC 61,185 (2019); Southern Cal. Edison. Co., 170 FERC ¶ 61,135 (2020). As FERC continues to apply Hoopa Valley Tribe to different fact patterns, it is expected that states may challenge waiver determinations on a case-by-case basis. Recently, the New York Department of Environmental Conservation (NYDEC) appealed FERC’s waiver determination in Empire Pipeline to the Second Circuit, arguing that it did not violate section 401 or inappropriately seek to extend the statutory time limit by entering an agreement with the water quality certification applicant to specify a commencement date for the one year period (a date after the certification request was received).

Going forward, Hoopa Valley Tribe and its progeny are expected to place additional pressure on both applicants and states to ensure that the state has sufficient information to meet its statutory deadline, and for the state to place sufficient resources into such requests such that it can meet the one-year maximum time allotted under CWA section 401. The emphasis on early coordination is reinforced by the recent rule proposal by the U.S. Environmental Protection Agency (EPA), the agency charged with the responsibility for implementing the CWA. If finalized and adopted as proposed, EPA’s new CWA section 401 regulations would codify the D.C. Circuit’s interpretation that one-year is the absolute maximum time period for a state to act on a request for certification, and that this deadline cannot be tolled or extended, 84 FR 44,080. The proposed rule also clarifies that a state has “failed or refused” to act when it actually or constructively fails to grant or deny certification, or waive the certification requirement, within a reasonable period of time. Id. According to the Office of Management and Budget, the Final Rule is expected to be published in May 2020.