On January 25, 2019, the U. S. Court of Appeals for the D. C. Circuit rendered a highly significant opinion with respect to state water quality certification under section 401 of the Clean Water Act (CWA). In Hoopa Valley Tribe v. FERC, the court rejected the commonly used workaround of the one-year statutory limit on state action by allowing multiple cycles of withdrawal-and-resubmittal of applications, holding that the States of Oregon and California had waived their authority by acceding to this practice. The attached article, just published in The Water Report, discusses the case in detail.
Section 401 provides that before a federal agency can approve a project that may result in a “discharge to the navigable waters” the applicant must obtain water quality certifications from the affected state. However, the state is deemed to have waived its delegated authority under section 401 if it "fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request."
Determining the water quality effects and appropriate mitigation for hydroelectric facilities that have been in place for over half a century is a complex undertaking. Additional study and data are often needed, which could take more than one year to complete. Moreover, since relicensing brings out a myriad of stakeholders seeking an opportunity to influence the next license term, 401 issues are frequently addressed through multi-party settlement negotiations, which can also take a long time to resolve. This has led state 401 agencies and applicants to enter into understandings under which the applicant would withdraw its application before the end of one year and then resubmit it to reset the clock. Such withdrawal-and-resubmittal cycles have often stretched over a period of many years.
The case at issue in Hoopa arises under a settlement agreement between the States of California and Oregon, PacifiCorp and other stakeholders leading to eventual removal of PacifiCorp’s Klamath River hydroelectric projects. Such removal requires FERC approval, and thus water quality certification by the two states. The parties contemplated that this process would take years to complete and agreed that each year PacifiCorp would withdraw and resubmit its 401 applications to avoid waiver, but the new annual applications would be entirely unchanged from the previous ones. The D. C. Circuit was plainly put off by this common practice, and it is clear that the particular facts of this case drove the outcome.
The court’s holding has huge implications for owners of hydroelectric facilities going through the licensing or relicensing process at FERC. In the attached article, I describe the decision, the context in which it was reached, and what it might mean for the FERC and section 401 processes going forward. More litigation is likely to come. Watch this space for updates.