As the California Legislature prepares its 2021 budget and continues to address the impacts of COVID-19, the Subcommittee 2 on Resources, Environmental Protection, Energy and Transportation (Subcommittee) proposed language in a trailer bill related to the State Water Resources Control Board’s (Water Board) authority to issue water quality certifications under section 401 of the Clean Water Act (CWA) for federally licensed and permitted activities.  If enacted, the bill purportedly would authorize the Water Board to meet the one-year action requirement under CWA section 401 by issuing a water quality certification—even if California Environmental Quality Act (CEQA) requirements are not met.  Further, the bill seeks to authorize the Water Board to make any changes to conditions in the water quality certification at a later date after CEQA requirements are met.

The California bill is a response to recent federal court decisions holding that CWA section 401 imposes an absolute one-year period for states to act on a request for water quality certification.  In Hoopa Valley Tribe v. FERC (see Jan. 30, 2019 edition of the WER), the D.C. Circuit ruled that, where a state fails to act on an applicant’s request for water quality certification within one year, the state waives its authority to issue a certification.  The U.S. Supreme Court denied certiorari in the case (see Dec. 11, 2019 edition of the WER).  Since the D.C. Circuit’s Hoopa Valley decision, FERC has issued orders holding that states have waived their authority under section 401 in several hydropower proceedings that have been pending before FERC due to inaction by states on requests for water quality certification, as the statute precludes FERC from ruling on a hydropower licensing application before a state either issues a water quality certification or waives authority.  Prior to FERC’s orders finding waiver, some of these hydropower licensing proceedings had been languishing for years due to inaction by states.

As the California agency that issues water quality certifications, the Water Board typically requires an applicant to complete consultation under CEQA, which can take years to complete, before it will issue a certification.    Thus, in an apparent attempt to avoid having the CEQA process result in a CWA section 401 waiver in the future, on May 24 the Subcommittee proposed trailer bill language that would permit the Water Board to issue water quality certifications prior to the completion of CEQA analysis “if the board determines that awaiting completion of that environmental review poses a substantial risk of waiver of certification authority.”  This proposed language would appear to permit the Water Board to issue water quality certifications that are not based on a complete environmental analysis under CEQA.  Moreover and most significantly, the proposed bill language includes a reservation of authority to allow the Water Board to make unilateral changes—i.e., without FERC approval—to the certification after it completes its CEQA analysis, “to the extent authorized by federal law.”  Notably, such an authorization is highly controversial and may be preempted by the EPA’s proposed revisions to its regulations implementing section 401 of the CWA, which are due to be finalized in 2020, and which proposed to prohibit this type of reopening.

The state legislature is required to send a balanced budget to Governor Gavin Newsom by June 15.  While it’s not clear whether this provision will gain traction in the short-term due to the legislature’s limited focus on COVID, wildfires, and the homelessness crisis during this session, it is an important bill to track due to its potential implications for 401 certifications in California.  The proposed trailer bill language is available here.