On March 18, 2021, FERC issued a final rule, effective 90 days after publication in the Federal Register, establishing a categorical one-year deadline for certifying authorities (usually state agencies) to act on a request for a water quality certification under Section 401 of the Clean Water Act for proposed natural gas and LNG projects. FERC’s final rule rejects the use of a case-by-case waiver analysis because FERC determined that a bright-line one-year waiver deadline provides needed certainty for a process that has often been confounding and the subject of much litigation. Section 401 of the Clean Water Act requires an applicant for a federal license or permit to conduct activities that may result in a discharge into navigable waters to provide a federal permitting agency with a water quality certification from the state where the discharge originates or evidence that the state waived this requirement. Under Section 401, a certifying agency waives these certification requirements 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.”^[1]

Prior to issuing the final rule, FERC did not have a regulation governing waiver under Section 401 of the Clean Water Act for Natural Gas Act proceedings. In practice, however, FERC historically has deemed the waiver period to be the maximum one year permitted under the statute, commencing when the state receives a request for a water quality certification. Disputes have nevertheless arisen regarding when the one-year waiver period starts to run. As recently as last week, the U.S. Court of Appeals for the Second Circuit affirmed FERC’s determination that the New York State Department of Environmental Conservation waived the water quality certification requirements for a natural gas pipeline project when it attempted to extend the one-year deadline to act on the pipeline company’s certification request by asking the company to stipulate that the request was received 36 days after the request was actually submitted. New York State Department of Environmental Conservation v. FERC, Nos. 19-1610-ag (L), 19-1618-ag (Con) (ad Cir. March 23, 2021).

FERC’s final rule amends FERC’s regulations for natural gas and LNG projects to provide that “the reasonable period of time during which the certifying agency may act on the water quality certification request is one year from the certifying agency’s receipt of the request.” A certifying agency now will be deemed to have waived Section 401’s certification requirements if the agency “has not denied or granted certification by one year after the date the certifying agency received a written request for certification.” (emphasis added). Notably, the final rule does not use the word “application,” but instead grounds the waiver period in the agency’s receipt of a “written request for certification.” Previous FERC decisions have rejected the argument some states have advanced that a “completed application” was necessary to trigger the maximum one-year window to act on a request for water quality certification.^[2] FERC’s final rule may well have been intended to avoid the difficulty of construing divergent state requirements concerning what constitutes a “completed application.”

While FERC’s final rule provides a measure of certainty by categorically allowing a certifying agency the maximum statutory period of one year to act on a request for certification, questions undoubtedly remain, including what constitutes a “written request for certification.” Some states, such as Pennsylvania, require an applicant to include specific certification language when submitting their applications for water quality certification. It remains to be seen whether future decisions will clarify what constitutes a written request for certification sufficient to trigger the one-year waiver period in what remains a hotly-contested issue for infrastructure projects under the Natural Gas Act.

1. 33 U.S.C. § 1341(a)(1).
2. Millennium Pipeline Co., L.L.C., 160 FERC ¶ 61,065 at PP 13-16 (2017), order den. reh’gs and motions to stay, 161 FERC ¶ 61,186 at PP 38-42 (2017).