On November 21, 2024, the Federal Energy Regulatory Commission (“FERC”) issued a final rule establishing a categorical one-year “reasonable period of time” for certifying authorities to act on requests for water quality certification under section 401 of the Clean Water Act (“CWA”). The final rule also clarifies that all FERC authorizations “that have the potential to discharge into waters of the United States,” including hydropower exemptions, amendments, and surrenders, require either a section 401 water quality certification or waiver thereof.

Section 401 of the CWA provides that a federal agency may not issue a federal license or other authorization for a project or activity that may result in a discharge into waters of the United States unless the appropriate state or tribal water quality certifying authority either grants certification under section 401 or waives its authority to do so. Section 401 provides that if the certifying authority “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,” then the certification is waived.

On September 14, 2023, the Environmental Protection Agency (“EPA”) issued a final rule that significantly revised its regulations implementing section 401 of the CWA (“2023 EPA Final Rule”).  While the most significant revisions of the 2023 EPA Final Rule expanded the scope of certifying agencies’ authority to impose conditions in water quality certifications (see Troutman’s full summary of the Final Rule here), EPA also sought comments on several other provisions, including the appropriate “reasonable period of time” for certifying authorities to act on requests for water quality certifications.  Prior to the 2023 EPA Final Rule, the Federal licensing or permitting agency would set the reasonable period of time for certifying authorities to act. The 2023 EPA Final Rule, however, allowed the federal agency and certifying authority to agree on the length of the reasonable period of time, but provided that if the parties do not reach agreement, then the default reasonable period of time is six months.  It also provides that a federal agency may establish a one-year reasonable period of time (the statutory maximum) by regulation and use that one year as the reasonable period of time when working with certifying authorities.

On May 23, 2024, FERC issued a Notice of Proposed Rulemaking (“NOPR”) that proposed to clarify the “reasonable period of time” for a certifying authority to act on a section 401 water quality certification request; clarify the types of actions that require a section 401 water quality certification or waiver; update terminology in FERC’s hydropower regulations; and update the filing requirements for the FERC’s expedited hydropower licensing process. In the final rule, FERC largely adopted its NOPR proposal.

Summary of FERC’s Final Rule:

  • “Reasonable Period of Time” is One Year. FERC’s final rule categorically establishes a one-year “reasonable period of time” for a certifying authority to act on a water quality certification request for ”all Commission authorizations that have the potential to discharge to waters of the United States.”
  • Types of FERC Authorizations that Require a Section 401 Water Quality Certification. The final rule clarifies that applicants for hydropower exemptions, as well as license amendments and license surrenders, must obtain a water quality certification or waiver if the proposed action may result in a discharge into waters of the United States.
  • Updated Terminology. The final rule updates FERC’s regulations such that the term “certifying agency” is changed to “certifying authority” to be consistent with the 2023 EPA Final Rule. FERC’s final rule also incorporates the term “express” waiver into parts 4, 5, and 7 of FERC’s regulations to reflect the four ways that a certifying authority may act on a request for certification.
  • Timing of Section 401 Filing Requirements Under Parts 4 and 5. Certain commenters on the NOPR expressed concern about the timing of the requirement to file a water quality certification application within 60 days of FERC’s notice of ready for environmental analysis (“REA Notice”),  explaining that this timeline does not guarantee that certifying authorities or stakeholders would be able to review and utilize FERC’s National Environmental Policy Act (“NEPA”) analysis prior to issuing a certification. In the final rule, FERC declined to change the filing requirements based on commenters’ concerns, stating that “it would be equally useful for [FERC] to have the certification in hand when developing its NEPA document, and further, [FERC] needs the certification to prepare and issue a license order.” FERC also explains that EPA and FERC’s 401 regulations adequately address the issue.
  • Timing of Section 401 Filing Requirements Under Part 7. The NOPR proposed changes to part 7 of the Commission’s regulations, which governs the expedited licensing process for non-federal hydropower projects at existing nonpowered dams and for certain closed-loop pumped storage projects.  In the final rule, FERC requires these applicants to file a copy of the certification request, the certification, or the certifying authority’s express waiver with the Commission within 60 days of submitting its license application to FERC.
  • Other Changes. Based on other comments received on the NOPR, FERC’s final rule removes the phrase “material adverse impact” under section 7.7(a)(1) and 5.23(b)(3) of its regulations to clarify that section 401 applies to all amendments under 18 C.F.R. 4.200, not just amendments with material adverse impacts.

FERC’s final rule will become effective on March 5, 2025. A copy of FERC’s final rule can be found here.