Acting in response to a Trump Administration Executive Order instructing federal agencies to reduce regulatory uncertainties and expedite construction of energy infrastructure, the Federal Energy Regulatory Commission (FERC) on October 19, 2020, published a Notice of Proposed Rulemaking that would, if adopted, formalize FERC’s existing practice requiring state agencies to issue a Clean Water Act Section 401 water quality certification within one year of receiving a request or else waive the right to issue a certification, and extend its existing regulation setting a formal one-year deadline to explicitly include natural gas project certifications. FERC proposes that the full one year, which is the maximum amount of time allowed under the CWA, is reasonable. If adopted, the rule will formalize a firm limit on the amount of time a state may take to consider a request under Section 401, and clarify that the time period begins upon receipt of a request, thereby reducing confusion. Comments on the proposed rule are due on November 18, 2020.

Background

Section 401(a) of the Clean Water Act requires an applicant for any federal license or permit that may result in a discharge of any pollutant into navigable waters to obtain a certification from the affected states that the project will meet all applicable Clean Water Act requirements. The statute provides that if the state “fails or refuses to act” with “a reasonable period of time (which shall not exceed one year)” after the receipt of a request for certification, the requirement is waived.

Accordingly, applicants for a variety of FERC permits or licenses—including to operate a hydroelectric project or construct a natural gas pipeline—must obtain a Section 401 certification or a waiver of the state’s authority. FERC regulations already require states to act on Section 401 certification requests for hydroelectric projects within one year or else their authority is waived. The agency has not formally set a specific time limit for certification requests for natural gas projects.

Despite this time limit for hydroelectric projects, the Section 401 certification process has often been the source of extended delays, sometimes for more than a decade. The D.C. Circuit addressed this issue last year in Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (D.C. Cir. 2019), concluding that California and Oregon had waived their Section 401 authority because the license applicant’s repeated withdrawal and resubmission of the same certification request for a hydroelectric project was insufficient to restart the one-year clock. 

The Proposed Rule

On April 10, 2019, the Trump Administration issued Executive Order 13868, which directed federal agencies to review and revise procedures for Section 401 certification reviews to reduce delays. FERC’s proposed rule was issued in response to this Executive Order.

The proposed rule would add language to FERC’s regulations governing natural gas projects, requiring states to act within one year of receiving a Section 401 certification request for a certificate of public convenience and necessity or similar Natural Gas Act permit. Accordingly, the rule extends FERC’s existing one-year rule for hydroelectric projects to cover natural gas projects.

While the rule does not address the most controversial aspect of the Section 401 certification process for FERC-regulated projects—the extent to which a revised or renewed application resets the one-year clock, the issue considered in Hoopa Valley—it does lay down a specific timeline for natural gas projects. Although the proposed rule would not shorten the maximum one-year time limit contained in Section 401, it should, if adopted, reduce the uncertainty associated with obtaining Section 401 certifications, particularly in the context of natural gas permits and licenses.

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