State Certification of Hydroelectic Facilities Under Section 401 of the Clean Water Act
By Lisa M. Bogardus
INTRODUCTION
The number of hydroelectric facilities in operation increased in the late 1970s and early 1980s when Congress established incentives to encourage hydropower development. Because hydroelectric projects can cause water quality problems within the impounded water and downstream of the dam, states have required hydroelectric applicants seeking a license from the Federal Energy Regulatory Commission (FERC) to obtain certification, pursuant to section 401 of the Clean Water Act (CWA), that the project will not violate water quality standards. States have used the certification process as a device to extract improper concessions from license applicants. Some states have used section 401 to consider the impact of hydroelectric projects on factors unrelated to water quality, to condition section 401 certification upon satisfaction of requirements unrelated to water quality and to force FERC to incorporate these conditions into operating licenses. License applicants have challenged these attempts as unlawful expansions of state authority to review federal projects.
This dispute between existing and potential hydroelectric plant operators and states may become a critical one in the near future. Licenses for 167 hydroelectric projects expire in 1993. License holders for 158 of these 167 projects filed applications for new licenses with FERC before the statutory deadline expired on December 31, 1991. If there is to be any consistency in these licensing and relicensing proceedings, the courts must reach a consensus on the proper role of the states in hydroelectric project licensing and the applicability of section 401.
A. State Regulation of Hydroelectric Licensing: Water Quality Standards Under the Clean Water Act
States argue that before FERC can issue a license, the hydroelectric project applicant must obtain state certification, under section 401 of the CWA, that no discharge from the project will violate state water quality standards or any other applicable provisions. Section 401(a) states, in part, that an applicant for a federal license must obtain certification from the state in which the discharge occurs that the discharge will not violate state water quality standards. Section 401(d) authorizes states to include in the certificate any effluent limitation and monitoring requirement necessary to assure compliance with certain limitations and standards under sections 302, 303, 306 and 307 of the CWA and “with any other appropriate requirement of State law set forth in such certification.” Section 401(d) further states that these limitations and monitoring requirements set forth in the certificate “shall become a condition on any Federal license or permit.”
Certification is the only opportunity a state has to affect significantly the licensing process of hydroelectric facilities constructed on waters over which Congress has jurisdiction. Although under the Federal Power Act (FPA) states may participate in the licensing process by providing input and data and requesting studies, section 401 of the CWA grants states authority to veto a federal project, whether or not FERC would otherwise license the project, if the state has determined that the project could violate water quality standards.
Some state water pollution control agencies have attempted to use section 401 as a means of requiring federal applicants to accomplish purposes unrelated to state water quality standards. For example, some state agencies essentially have refused to certify an otherwise certifiable project unless the applicant satisfied conditions wholly unrelated not only to water quality but also to the project itself. Also, once the state agency has imposed these conditions in the certificate, FERC claims it is powerless to reject them, even if the conditions conflict with terms of the federal license. To further complicate matters, most courts hold that only state courts may review challenges to the exercise of state authority under section 401.
In determining whether section 401 applies, a proper analysis should ask the following: Will or might the activity result in a “discharge” within the meaning of section 502(12) of the CWA? and if so, do any state water quality standards apply to this discharge? Only if the project results in a “discharge” and water quality standards apply to this “discharge” would section 401 require that the project receive the affected state's certification that the discharge will violate neither water quality standards nor any provision listed in section 401.
B. Comprehensive Federal Regulation of Hydroelectric Licensing: The Federal Power Act
The primary regulator of hydroelectric power, the FPA, preempts state regulation of hydro plant licensing and relicensing. Subchapter I regulates the comprehensive development of the nation's water power resources. Congress provided that licensed projects shall “be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, . . . and for other beneficial public uses, including irrigation, flood control, water supply, and recreational purposes.”
Numerous provisions in the FPA require FERC to consider during the licensing process the environmental effects of a hydroelectric operation. Section 10(j) requires FERC to include in each license conditions to protect and enhance resources such as fisheries and wildlife. When developing these conditions, FERC must consult with relevant state fish and wildlife agencies. FERC must also make sure that the license is consistent with a comprehensive plan, a constituent of which is the protection of natural resources and “other beneficial uses.” Because of its careful treatment of environmental factors, the FPA is the proper vehicle for addressing environmental concerns unrelated to water quality.
Part II of this article discusses hydroelectric power and the licensing process in general. Part III of this article addresses the issue of what constitutes a “discharge” from a hydroelectric facility that triggers section 401. Courts that have interpreted “discharge” hold that dam-induced water quality changes are not “discharges” within the meaning of the CWA because these changes do not satisfy all elements of the statutory definition.
If, however, the courts have determined that section 401 applies because there is a “discharge,” the next issue, discussed in part IV, is what criteria a state may consider when determining whether that discharge will comply with state water quality standards. In this complex subject area, courts have adopted several somewhat inconsistent approaches. First, although courts generally prohibit states from considering non-water quality factors, they sometimes allow them to consider the project's impact on designated uses, such as protection of aquatic life and recreation. It is unsettled just what conditions a state can impose on the federal license under section 401(d). Part IV argues that the CWA bars states from considering any non-water quality issues. Second, courts hold, as applied to hydroelectric facilities, that the FPA's regulation of hydroelectric facilities preempts the consideration of any energy laws, land use regulations, dam construction regulations and state environmental quality review regulations not promulgated pursuant to section 303 of the CWA. Part IV concludes with the argument that the FPA, particularly as amended by the Electric Consumers Protection Act (ECPA) of 1986, vests in FERC the authority to review all environmental impacts of hydroelectric projects, and states may consider only whether a project's discharge will comply with the specific numerical criteria set out in state regulations.
Part V examines which forum, state or federal, is the proper one for review of the certification process. Most courts hold that the proper forum for review is state court; FERC may not review a state's decision to grant, deny or impose conditions on a certificate. Nevertheless, whether FERC must enforce conditions unrelated to water quality or conflicting with the federal license is unsettled.
In part VI, the article concludes by recommending several courses of action for the hydroelectric applicant seeking state certification.
The number of hydroelectric facilities in operation increased in the late 1970s and early 1980s when Congress established incentives to encourage hydropower development. Because hydroelectric projects can cause water quality problems within the impounded water and downstream of the dam, states have required hydroelectric applicants seeking a license from the Federal Energy Regulatory Commission (FERC) to obtain certification, pursuant to section 401 of the Clean Water Act (CWA), that the project will not violate water quality standards. States have used the certification process as a device to extract improper concessions from license applicants. Some states have used section 401 to consider the impact of hydroelectric projects on factors unrelated to water quality, to condition section 401 certification upon satisfaction of requirements unrelated to water quality and to force FERC to incorporate these conditions into operating licenses. License applicants have challenged these attempts as unlawful expansions of state authority to review federal projects.
This dispute between existing and potential hydroelectric plant operators and states may become a critical one in the near future. Licenses for 167 hydroelectric projects expire in 1993. License holders for 158 of these 167 projects filed applications for new licenses with FERC before the statutory deadline expired on December 31, 1991. If there is to be any consistency in these licensing and relicensing proceedings, the courts must reach a consensus on the proper role of the states in hydroelectric project licensing and the applicability of section 401.
A. State Regulation of Hydroelectric Licensing: Water Quality Standards Under the Clean Water Act
States argue that before FERC can issue a license, the hydroelectric project applicant must obtain state certification, under section 401 of the CWA, that no discharge from the project will violate state water quality standards or any other applicable provisions. Section 401(a) states, in part, that an applicant for a federal license must obtain certification from the state in which the discharge occurs that the discharge will not violate state water quality standards. Section 401(d) authorizes states to include in the certificate any effluent limitation and monitoring requirement necessary to assure compliance with certain limitations and standards under sections 302, 303, 306 and 307 of the CWA and “with any other appropriate requirement of State law set forth in such certification.” Section 401(d) further states that these limitations and monitoring requirements set forth in the certificate “shall become a condition on any Federal license or permit.”
Certification is the only opportunity a state has to affect significantly the licensing process of hydroelectric facilities constructed on waters over which Congress has jurisdiction. Although under the Federal Power Act (FPA) states may participate in the licensing process by providing input and data and requesting studies, section 401 of the CWA grants states authority to veto a federal project, whether or not FERC would otherwise license the project, if the state has determined that the project could violate water quality standards.
Some state water pollution control agencies have attempted to use section 401 as a means of requiring federal applicants to accomplish purposes unrelated to state water quality standards. For example, some state agencies essentially have refused to certify an otherwise certifiable project unless the applicant satisfied conditions wholly unrelated not only to water quality but also to the project itself. Also, once the state agency has imposed these conditions in the certificate, FERC claims it is powerless to reject them, even if the conditions conflict with terms of the federal license. To further complicate matters, most courts hold that only state courts may review challenges to the exercise of state authority under section 401.
In determining whether section 401 applies, a proper analysis should ask the following: Will or might the activity result in a “discharge” within the meaning of section 502(12) of the CWA? and if so, do any state water quality standards apply to this discharge? Only if the project results in a “discharge” and water quality standards apply to this “discharge” would section 401 require that the project receive the affected state's certification that the discharge will violate neither water quality standards nor any provision listed in section 401.
B. Comprehensive Federal Regulation of Hydroelectric Licensing: The Federal Power Act
The primary regulator of hydroelectric power, the FPA, preempts state regulation of hydro plant licensing and relicensing. Subchapter I regulates the comprehensive development of the nation's water power resources. Congress provided that licensed projects shall “be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, . . . and for other beneficial public uses, including irrigation, flood control, water supply, and recreational purposes.”
Numerous provisions in the FPA require FERC to consider during the licensing process the environmental effects of a hydroelectric operation. Section 10(j) requires FERC to include in each license conditions to protect and enhance resources such as fisheries and wildlife. When developing these conditions, FERC must consult with relevant state fish and wildlife agencies. FERC must also make sure that the license is consistent with a comprehensive plan, a constituent of which is the protection of natural resources and “other beneficial uses.” Because of its careful treatment of environmental factors, the FPA is the proper vehicle for addressing environmental concerns unrelated to water quality.
Part II of this article discusses hydroelectric power and the licensing process in general. Part III of this article addresses the issue of what constitutes a “discharge” from a hydroelectric facility that triggers section 401. Courts that have interpreted “discharge” hold that dam-induced water quality changes are not “discharges” within the meaning of the CWA because these changes do not satisfy all elements of the statutory definition.
If, however, the courts have determined that section 401 applies because there is a “discharge,” the next issue, discussed in part IV, is what criteria a state may consider when determining whether that discharge will comply with state water quality standards. In this complex subject area, courts have adopted several somewhat inconsistent approaches. First, although courts generally prohibit states from considering non-water quality factors, they sometimes allow them to consider the project's impact on designated uses, such as protection of aquatic life and recreation. It is unsettled just what conditions a state can impose on the federal license under section 401(d). Part IV argues that the CWA bars states from considering any non-water quality issues. Second, courts hold, as applied to hydroelectric facilities, that the FPA's regulation of hydroelectric facilities preempts the consideration of any energy laws, land use regulations, dam construction regulations and state environmental quality review regulations not promulgated pursuant to section 303 of the CWA. Part IV concludes with the argument that the FPA, particularly as amended by the Electric Consumers Protection Act (ECPA) of 1986, vests in FERC the authority to review all environmental impacts of hydroelectric projects, and states may consider only whether a project's discharge will comply with the specific numerical criteria set out in state regulations.
Part V examines which forum, state or federal, is the proper one for review of the certification process. Most courts hold that the proper forum for review is state court; FERC may not review a state's decision to grant, deny or impose conditions on a certificate. Nevertheless, whether FERC must enforce conditions unrelated to water quality or conflicting with the federal license is unsettled.
In part VI, the article concludes by recommending several courses of action for the hydroelectric applicant seeking state certification.
