The US Supreme Court declined to review an appeals court decision holding that the one-year clock for states to issue a certification under Section 401 of the Clean Water Act for a federal permit does not reset if applications are withdrawn and resubmitted.
The Court denied certiorari on December 9 in California Trout v. Hoopa Valley Tribe, letting stand a decision of the US Court of Appeals for the DC Circuit that California and Oregon had waived their authority to issue conditions on a federal hydroelectric permit under Section 401 of the Clean Water Act. The DC Circuit held that the states were prohibited from weighing in on the permit after the one-year deadline in Section 401 had expired. The states and other interested parties had argued that the deadline had been tolled because the project proponent had agreed to repeatedly withdraw and resubmit the request. But the DC Circuit concluded that such a withdraw-and-resubmit system does not give the states extra time because the one-year deadline runs from the initial submission of a permit request. The DC Circuit’s ruling has the effect of limiting a tool that states have used to influence federal permitting decisions, shifting power to federal agencies. It also sheds light on how courts may view other regulatory changes the US Environmental Protection Agency (EPA) has proposed that would restrict states’ authority under Section 401.
Under Section 401 of the Clean Water Act, any applicant seeking certain federal permits must obtain water quality certification from the relevant state or states. However, state certification requirements are “waived with respect to such Federal application” if the state “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.”
PacifiCorp, which operates a series of dams along the Klamath River in California and Oregon filed a proposal with the Federal Energy Regulatory Commission (FERC) in 2004 to relicense the dams in the upper portion of the river and decommission dams in the lower portion. After years of negotiations to resolve issues related to the decommissioning of the lower dams, a consortium of parties entered into a settlement agreement targeting a 2020 decommission date. Under that agreement, PacifiCorp agreed with California and Oregon to defer the one-year statutory limit for Section 401 approval by annually withdrawing and resubmitting the certification requests.
In 2012, the Hoopa Valley Tribe—whose reservation is downstream of the dams and which sought to move the decommissioning of the lower dams forward—petitioned FERC for a declaratory order that California and Oregon had waived their Section 401 authority and that PacifiCorp had failed to diligently prosecute its licensing application for the project. After FERC denied the petition and the Hoopa Valley Tribe’s request for rehearing, the tribe sought review of the determination in the DC Circuit.
The DC Circuit and Supreme Court Decisions
On appeal, the DC Circuit vacated and remanded FERC’s determination, ordering FERC to proceed with its review of licensing for the Klamath Hydroelectric Project. The court found the question of whether a state waives its Section 401 authority when an applicant repeatedly withdraws and resubmits its request for water quality certification over a period greater than one year to be an “undemanding” one. The court explained that the temporal element imposed by the statute is “within a reasonable period of time,” followed by the conditional parenthetical, “(which shall not exceed one year).” Thus, while a full year is the “absolute maximum,” it does not preclude a finding of waiver before that time. The court concluded that the pendency of the requests for state certification by PacifiCorp over more than a decade “far exceeded the one-year maximum” imposed by statute, and, accordingly, California and Oregon waived their Section 401 authority with regard to the project.
The court was unpersuaded by the argument that repeatedly withdrawing and resubmitting the permit request tolled the deadline, finding that the resubmissions were not equivalent to the proponent “withdraw[ing] its request and submitt[ing] a wholly new one in its place.” The court also emphasized that allowing such a system to toll the one-year deadline in Section 401 would “circumvent” the limitations Congress established on states’ review of federal permitting decisions.
The DC Circuit subsequently denied rehearing, and on December 9 the US Supreme Court denied a petition for certiorari.
The Supreme Court’s denial of certiorari leaves in place the DC Circuit’s invalidation of a process states have used to buy themselves more time to review applications for federal permits and to exert additional influence over the final conditions in federal Clean Water Act permits. Various states have used the mechanism adopted by California and Oregon in Hoopa to extend the timeline of their Section 401 review and to secure concessions from permit applicants on the conditions in the final permit. After Hoopa, states will be required to act on federal permit applications quickly or lose their ability to issue conditions. That change also will reduce the leverage of states to negotiate conditions for issuance of federal permits by limiting the ability of states to delay the issuance of Clean Water Act permits by federal agencies, during the pendency of Section 401 review.
The Hoopa decision also has implications for a proposed rule EPA recently issued that would further constrain states’ Section 401 authority. In particular, Hoopa is consistent with the proposed rule’s specification that one year is the maximum amount of time in which a state can issue a certification under Section 401 without waiving its right to do so. The proposed rule also seeks to go further, proposing various options for determining whether certification must be issued within a shorter time period for particular permits. The proposed rule would also establish several other substantive requirements for Section 401 certification. Most notably, it would limit the types of conditions that states can place on a federal permit, limiting them to “assuring that a discharge from a federally licensed or permitted activity will comply with water quality requirements.”
If finalized, aspects of EPA’s proposed Section 401 rule will likely be challenged in court. Hoopa suggests that the proposed rule’s limitations on state efforts to extend the time for Section 401 certification will likely be upheld. But other provisions of the proposed rule may face greater scrutiny. In particular, the proposed rule’s limitations on the contents of certification conditions appears to be in tension with the Supreme Court’s decision in PUD No. 1 of Jefferson County v. Washington Department of Ecology, which held that Section 401 conditions are not limited to conditions on “discharges.”
 33 U.S.C. § 1341(a)(1).
 33 U.S.C. § 1341(a)(1).
 84 Fed. Reg. 44,080 (Aug. 22, 2019).