D.C. Circuit Rules That States Waived Clean Water Act Section 401 Authority, Rejects Argument That “Withdrawal-and-Resubmission” of Identical Section 401 Applications Restarts the Section 401 Waiver Period

D.C. Circuit Rules That States Waived Clean Water Act Section 401 Authority, Rejects Argument That “Withdrawal-and-Resubmission” of Identical Section 401 Applications Restarts the Section 401 Waiver Period

On January 25, 2019, the United States Court of Appeals for the District of Columbia Circuit issued a unanimous decision in Hoopa Valley Tribe v. FERC, No. 14-1271 (D.C. Circuit), ruling that California and Oregon waived their authority under Section 401 of the Clean Water Act in the relicensing of a hydroelectric project along the Klamath River.  This important decision resolves a hotly-contested issue under the Clean Water Act and will have implications for all projects that require Section 401 water quality certifications.

Under Section 401 of the Clean Water Act, any applicant for a federal permit to construct or operate a facility that may result in a discharge to navigable waters must provide the federal permitting agency with "a certification from the State in which the discharge originates . . . that any such discharge will comply with" applicable state water quality standards.  33 U.S.C. § 1341(a)(1).  However, the requirements of Section 401 are waived "[i]f the State, interstate agency, or Administrator, as the case may be, 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."  Id.

As the Court explained in its opinion, the "temporal element imposed by the statute” for determining waiver "is 'within a reasonable period of time.'"  As a result, "while a full year is the absolute maximum, it does not preclude a finding of waiver prior to the passage of a full year." The Court noted that the Environmental Protection Agency – the agency charged with administering the Clean Water Act – generally finds waiver after only six months (citing 40 C.F.R. § 121.16).

In this case, the relicensing applicant had entered into an agreement with the states in which the applicant "agreed to defer the one-year statutory limit for Section 401 approval by annually withdrawing-and-resubmitting the water quality certification requests that serve as a pre-requisite to [the Federal Energy Regulatory Commission's] overarching review."  The parties operated under this arrangement for several years, whereby "before each calendar year had passed, [the applicant] sent a letter indicating withdrawal of its water quality certification request and resubmission of the very same . . . in the same one-page letter . . . for more than a decade" (emphasis in original).

Thus, the Court was faced with answering the following question: "whether a state waives its Section 401 authority when, pursuant to an agreement between the state and applicant, an applicant repeatedly withdraws-and-resubmits its request for water quality certification over a period of time greater than one year."

The Court answered this question in the affirmative, concluding that "the withdrawal-and-resubmission of water quality certification requests does not trigger new statutory periods of review."  The Court determined that the withdrawal-and-resubmittal arrangement "does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project."  "[I]f allowed, the withdrawal-and-resubmission scheme could be used to indefinitely delay federal licensing proceedings and undermine FERC’s jurisdiction to regulate such matters."  The Court explained that it has "repeatedly recognized that the waiver provision was created to prevent a State from indefinitely delaying a federal licensing proceeding" (quotations omitted).  As a result, the Court determined that the withdrawal-and-resubmission scheme directly undermines Congress' intention in "Section 401 to curb a state's 'dalliance or unreasonable delay'" (emphasis in original).

Because the applicant resubmitted the same application each year under its agreement with the states, the Court did not need to decide whether the submission of a "new" request would restart the waiver period or "how different a request must be to constitute a 'new request.'"  Those questions remain to be decided another day.  But when an applicant and a state agree to withdraw and resubmit the same application, the Hoopa Valley Tribe decision finds that "such an arrangement does not exploit a statutory loophole,” the waiver period does not reset, and the state remains obligated to act “within a reasonable period of time" of the original request for certification.

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