January 01, 2018

Does “to Act” under CWA § 401 Mean “Final Action”?

Christine Y. LeBel

A controversial pipeline project had me getting up to speed quickly on Federal Energy Regulatory Commission (FERC) and permitting processes under the federal Clean Water Act (CWA; 33 U.S.C. §§ 1251–1388). My agency was reviewing an application seeking the state’s certification that proposed discharges of dredged or fill material from the pipeline project into state waters would comply with the state’s Surface Water Quality Standards and other appropriate state law requirements, pursuant to CWA Section 401 (33 U.S.C. § 1341).

CWA Section 401 empowers states and tribes to review and approve, condition, or deny federal permits or licenses that result in discharges that will not meet the applicable state requirements, including projects requiring FERC licenses, such as interstate pipeline projects. The process gives the states a way to ensure that various state-specific environmental standards will be incorporated into federal permits. However, there is a catch: if the state fails to act within a year of a request for a certification, the state will be deemed to have waived its ability to so certify. Specifically, the CWA, at 33 U.S.C. § 1341(a)(1), provides that, where “the State . . . fails to act on a request for certification within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such federal application.” A state or tribe may intentionally or through nonaction over time (intentional or inadvertent) waive its rights to issue a section 401 water-quality certification (WQC). A waiver effectively divests the state or tribe of the ability to ensure that its own water-quality standards are included in the permitting process. Sometimes, a state or tribe may choose this route, but an inadvertent waiver could have drastic local implications.

In my case, the state very much did not want to waive its certification rights. The project had a lot of local interest and the state very much wanted input and the ability to impose its protective standards into the permitting process. Additionally, it had worked long and hard over the year to negotiate with the applicant to include environmentally beneficial provisions into the planned certification. As the one-year date approached, I and my colleagues kept cognizant of the date and pushed to timely issue the WQC, which the agency ultimately did issue exactly one day shy of the one-year anniversary of the date marked on the application (and eight days shy of the date that the application had been stamped “received” by the agency—which one might argue to be the applicable date). Whew, right? Well, not so fast.

Two appeals ensued issuance of the WQC: an administrative appeal to the agency’s appeals office by various citizens and citizen groups opposed to the pipeline project and an appeal to the First Circuit by the applicant. The appeals raised various challenges to the WQC, but this article focuses only on the waiver arguments as an issue of potential importance both to agencies and participants and applicants in federal CWA permitting nationwide.

In the administrative appeal, the WQC applicant maintained that the administrative hearing office lacked jurisdiction to hear the matter, in part, it argued, because the agency had waived its right to issue the WQC within one year, thereby divesting the agency of jurisdiction and making the First Circuit the appropriate venue. Specifically, the applicant argued that the administrative appeal caused the WQC not to be “final” agency action and, therefore, put the agency’s action on the WQC beyond the statute’s one-year maximum period.

The applicant, as the basis for its argument, noted that an agency could unduly delay things by delaying an appeal’s progress and/or refusing to decide on an appeal, relying on a statement in Alcoa Power Generating, Inc. v. FERC, 643 F.3d 963, 972 (D.C. Cir. 2011), that states:

In imposing a one-year time limit on States to “act,” Congress plainly intended to limit the amount of time that a State could delay a federal licensing proceeding without making a decision on the certification request.

The agency and the citizen opponents to the project argued, contrarily, that the agency had acted within the one-year period (albeit, not “finally”), that such action was all that was required by the CWA to avoid a waiver, and that the administrative hearing office, therefore, retained jurisdiction to hear the matter until a final decision issued on the WQC and cemented the WQC as “final agency action.”

Meanwhile, in the First Circuit, the WQC applicant argued that the issuance of the WQC was sufficient agency action to vest jurisdiction in the First Circuit. The First Circuit, while not deciding on the one-year waiver issue, did note that its jurisdiction would not arise until the agency was through with its administrative process and, therefore, denied the applicant’s petition for review until a final decision had rendered. Berkshire Envtl. Action Team, Inc. v. Tenn. Gas Pipeline Co. & Mass. Dep’t of Envtl. Prot., First Cir. Docket No. 16-2100, Petition for Review of an Order of the Mass. Dep’t of Envtl. Prot., Mar. 15, 2017, pp. 15–18.

In the administrative hearing, the presiding officer found that the applicant’s position as to the waiver issue was unreasonable and contrary to the intent of the statute, finding that, under the applicant’s theory, a party who has been denied a WQC by an agency could simply undo a denial and deprive the agency from having further jurisdiction by appealing the denial to the administrative agency and waiting it out until the one-year waiver period had passed. (In re Tenn. Gas Pipeline Co., LLC, Mass. Office of Appeal and Dispute Resolution, Docket No. 2016-020, Recommended Final Decision, Mar. 22, 2017, p. 13; adopted by Final Decision, dated Mar. 27, 2017. DEP’s final decision was not appealed by either party.)

In making his finding, the administrative hearing officer cited the Maine Supreme Judicial Court in FPL Energy Me. Hydro LLC v. Dep’t of Envtl. Prot., 926 A.2d 1197 (Me. 2007), cert. denied, 552 U.S. 1100 (2008), which looked to the statute’s legislative history and noted that 33 U.S.C. § 1341(a)(1) “does not define ‘act on’ and [thus], it is . . . unclear from the plain meaning of the statute whether the requirement is one of some action or final action.” Upon evaluation, the FPL court ruled that the U.S. Congress had not intended “for all in-state appeals [of WQC determinations] to be completed within the same one-year deadline” and that, had “Congress intended to impose such extreme time pressure, it would have used specific language to that effect.” Id. at 1203. Further, legislative history revealed the statute’s purpose was “to prevent states from effectively denying approval of a project [by] . . . ‘simply sit[ting] on [their] hands and do[ing] nothing’” on the WQC application, which would effectively passively kill a project. Id. at 1202. Regarding the FPL project, FERC itself held that

Section 401 [of the federal Clean Water Act] requires a State certifying agency to act on a certification request within one year. In this case, the Maine DEP satisfied this requirement by granting certification within the statutory time period. There is nothing in the language of section 401 to suggest that a State must not only act on the certification request but also take action on any appeals that might subsequently be filed within one year. Accordingly, we cannot find that certification was waived.

FPL Energy Main Hydro LLC, 108 FERC P61, 261, 2004 FERC LEXIS 1939 (emphasis added).

Given the implications of a waiver and the difficulty governmental bodies have in taking swift action, particularly on complex projects such as pipelines, due to their need to effectively serve a broad populace of diverse interests, this strikes me as the right outcome. Congress, had it meant “final” action within a year (or else!), easily could have so specified. That kind of time pressure would unduly hobble agencies in the WQC application process—a process that should be undertaken with sufficient care and time to ensure proper consideration of the issues before a state or tribe grants its imprimatur on (or denies) a certificate.

Christine Y. LeBel

Ms. LeBel is chief regional counsel with the Massachusetts Department of Environmental Protection, Western Region, and a member of the editorial board of Natural Resources & Environment. She may be reached at cylesq@yahoo.com. The views expressed here are the author’s own and should not be attributed to the Commonwealth of Massachusetts.