Environmental groups asked the U.S. Appeals Court for the D.C. Circuit to rethink a decision that could prevent states from using water quality certification to hold up federal energy project permitting, arguing that the decision could effectively exempt hydropower projects and natural gas pipelines from water quality standards.
The issue is significant because the court's decision, which involves a specific hydropower project, could potentially clear a roadblock for energy projects, although it is unclear how exactly it will apply to other cases. Some observers have said an expected appeal in a case involving the Constitution Pipeline Co. LLC project, long delayed by New York, could give the D.C. Circuit a chance to further explain its decision on water quality certification.
Clean Water Act Section 401 requires states to act on an application for a water quality certificate within one year. In January, the D.C. Circuit ruled that an agreement by California, Oregon and PacifiCorp to withdraw and resubmit a certificate request every year for the 169-MW Klamath hydro project does not reset the one-year clock.
Petition to rehear
On March 11, American Rivers, California Trout and Trout Unlimited petitioned the D.C. Circuit to rehear the decision. The Federal Energy Regulatory Commission's policy to allow applicants to withdraw and resubmit their water quality certification applications is an important tool to give states enough time and information to do meaningful water quality reviews, the groups said.
The court's decision to toss this policy means dozens of dams undergoing licensing would be effectively exempted from compliance with water quality standards for the next 30 to 50 years, the groups said. The decision could have the same impact for pipeline projects pending before FERC, the petition said.
The groups worried that the decision would also apply in cases where a state denies a request without prejudice, after which the applicant can reapply. "These procedures are interchangeable and functionally equivalent," the groups said.
The court's decision could have broad impacts, the groups said. FERC documents show 23 hydropower projects awaiting Section 401 certifications, and several hydro licensees have sought declaratory relief from courts based on the D.C. Circuit decision, the petition said. (U.S. Appeals Court for the D.C. Circuit docket 14-1271)
Meanwhile, FERC has said the Klamath case, also known as the Hoopa case because one of the parties is the Hoopa Valley Tribe, prompted it to reconsider a key decision that kept the Transcontinental Gas Pipe Line Co. LLC-led, 650-MMcf/d Constitution Pipeline project sidelined. FERC in 2018 denied Constitution's request to find the New York certificate denial waived because of unreasonable delay.
Gary Kruse, director of research at Law IQ, said the D.C. Circuit's decision might have a limited impact on pipelines. He said there is a key difference between a situation in which a project sponsor withdraws and resubmits a certification request and a situation in which a state denies a request and the project sponsor subsequently submits another request. Most states have recently used the latter approach, Kruse said.
So Constitution is likely one of the only pending projects that used the withdraw-and-resubmit approach at issue in the Hoopa case, Kruse said. And no matter what FERC decides on Constitution, the decision will likely be appealed, so the D.C. Circuit "will get a chance to revisit or further define the contours of the Hoopa Valley decision on a slightly different fact pattern," he said.
Christi Tezak, managing director at research firm ClearView Energy Partners, noted there may be other fixes to address the temporal mismatch between FERC and state processes. "We'd ask why FERC can't change its regulation that requires the Section 401 must be filed 'first' if FERC's procedures likely take longer."
Kate Winston is a reporter at S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.