On Thursday, April 16, 2020, FERC issued two orders concerning section 401 of the Clean Water Act (“CWA”) and state agencies’ waiver of their right to issue certifications for FERC-licensed hydroelectric projects.  In an order responding to a request from the Nevada Irrigation District (“NID”), the Commission determined that the California State Water Resources Control Board (“California Board” or “Board”) waived its authority to issue water quality certification under section 401.  In a second order, FERC denied requests for rehearing and a stay of a September 20, 2019 order issuing an original license to McMahan Hydroelectric, LLC (“McMahan”) for the Bynum Project in North Carolina and holding that the North Carolina Department of Environmental Quality (“North Carolina DEQ”) waived its authority to issue water quality certification under section 401.

On April 15, 2011, NID submitted a timely application for a new license for the Yuba-Bear Project (FERC No. 2266), located on the Middle Yuba, South Yuba, and Bear Rivers in Sierra, Nevada, and Placer Counties, California.  The Project was originally licensed in 1963.  Section 401(a)(1) of the CWA provides that any applicant for a federal license to conduct an activity which “may result in a discharge into the navigable waters of the United States” provide the federal licensing agency a water quality certification from the state in which the discharge originates, or evidence of the state’s waiver of certification.  The CWA provides that where a 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,” the certification is waived.  It also provides that the licensing or permitting agency—FERC, in this case—may not grant a license or permit until certification has been granted or waived.

Beginning on March 15, 2012, NID requested water quality certification from the California Board, and on March 29, 2012, the Board acknowledged its receipt of the request in a letter noting that the “application for certification is pending before the [Board].”  Beginning in March 2013, NID withdrew and resubmitted its application for water quality certification six times, most recently on January 29, 2018.  On January 25, 2019, the United States Court of Appeals for the D.C. Circuit issued an opinion in Hoopa Valley Tribe v. FERC, finding that, where a state and applicant agree to withdraw and re-file the same water quality certification in an effort to extend the one-year statutory deadline, the state has waived its certification authority (see January 30, 2019 edition of the WER).  On the same day, the California Board denied NID’s request for certification without prejudice.  On February 19, 2019, NID filed its request with FERC, asking it to find that the Board waived certification.  The Board filed a response, arguing that there was no waiver because there was no agreement with NID, similar to the Hoopa Valley Tribe case, to withdraw and resubmit its request for certification.

FERC disagreed and held that the California Board waived its authority to issue certification for its relicensing of the Project.  The Commission cited several orders in which it found waiver of water quality certification in the absence of an explicit written agreement to withdraw and resubmit a request for certification, including Pacific Gas and Electric Co., in which FERC did not find an explicit agreement that the applicant withdraw and re-file, but found that the Board’s expectation was for the applicant to do so, citing the Board’s indication that the “usual process” involved the applicant withdrawing and refiling its request for certification.  In NID’s case, FERC found similar circumstances, noting that the Board, in comments made to FERC on a draft environmental impact statement (“EIS”) stated that it was “most likely” that NID would withdraw and re-file its request for water quality certification prior to the expiration of the one-year period.  Comparing NID’s case to Pacific Gas and Electric’s, FERC stated that in both proceedings, “the California Board expected and encouraged the certification applicant to serially withdraw and resubmit an identical application to avoid the CWA’s one-year waiver deadline.”

On September 20, 2019, the Commission issued an original license to McMahan to operate the Bynum Project in North Carolina.  In its order, FERC held that North Carolina DEQ waived its authority to issue water quality certification for the Project under section 401 of the CWA (see September 26, 2019 edition of the WER).  In that order, FERC discussed correspondence from North Carolina DEQ instructing McMahan to withdraw and re-file its certification request, and rejected North Carolina DEQ’s argument that additional information filed by McMahan — at North Carolina DEQ’s request — to supplement its original request for water quality certification constituted a “new” request for certification.

In its April 16 order denying rehearing, the Commission found that “at a minimum, McMahan’s second withdrawal and resubmission” of its certification request in 2019 did not restart the one-year time limit for North Carolina DEQ to issue or waive its certification, because no additional information had been filed to supplement McMahan’s request and there was no change to McMahan’s proposed project.  However, FERC also found that North Carolina DEQ waived its certification under section 401 after McMahan’s first withdrawal and resubmission of its request for certification in 2018.  The Commission noted that, prior to the expiration of the first one-year period for the state to issue certification, North Carolina DEQ instructed McMahan to send a letter requesting to withdraw and refile its request, and that letter “did not convey any substantive information” to the state.  The Commission also surmised that, to the extent a state requires additional information to act on a request for certification within a one-year period, it can deny certification.  Finally, the Commission reiterated that no formal agreement between the license applicant and state agency is necessary for FERC to find that a state has waived its certification authority under Hoopa Valley Tribe, and that, in McMahan’s case, “the exchanges between McMahan Hydro and North Carolina DEQ on timing amounted to an ongoing agreement that allowed North Carolina DEQ to delay acting within the CWA section 401 one-year deadline.”

In the April 16 order, Commissioner Richard Glick dissented in part, finding that the facts surrounding McMahan’s second withdrawal and resubmission of its request in 2019 were sufficient for the Commission to find waiver of section 401 and reiterated the point made in his dissent on the September 2019 order that the Commission should not discount the fact that a substantially altered application or significant changes to how a project is monitored might constitute a “new” request for certification, even where those changes would not require a new license application with FERC.

FERC’s order in the Nevada Irrigation District proceeding is available here and its order in the McMahan proceeding is available here.