Clean Water Act Section 401: Background and Issues
Clean Water Act Section 401:
Background and Issues
Claudia Copeland
Specialist in Resources and Environmental Policy
Resources, Science, and Industry Division
Summary
Section 401 of the Clean Water Act requires that an applicant for a federal license
or permit provide a certification that any discharges from the facility will comply with
the act, including water quality standard requirements. Disputes have arisen over the
states’ exercise of this authority in protecting water quality. For the most part, the
debate over the Section 401 certification issue has been between states and hydropower
interests. A 1994 Supreme Court decision which upheld the states’ authority in this area
dismayed development and hydropower interest groups. The Court revisited these
issues in a 2006 ruling that unanimously upheld the authority of states to condition
hydropower licenses by exercising Section 401. The dispute between states and industry
groups about Section 401 authority has been a legislative issue on several occasions, but
Congress has not modified the provision’s scope. In addition, there has been interest in
clarifying whether Section 401 certification applies to nonpoint source discharges, such
as rainfall runoff, as well as point source discharges from pipes or ditches. This
question was raised in a lawsuit in Oregon, where a federal court ruled that Section 401
does not apply to nonpoint source discharges. Still, some interests continue to favor a
broad reading of 401 that would apply to both nonpoint and point sources of pollutant
discharges.
Background
Under the Clean Water Act (CWA), an applicant for a federal license or permit to
conduct any activity that may result in a discharge to waters of the United States must
provide the federal agency with a Section 401 certification. The certification, made by
the state in which the discharge originates, declares that the discharge will comply with
applicable provisions of the act, including water quality standards. A state’s water quality
standards specify the designated use of a stream or lake (e.g., for water supply or
recreation), pollutant limits necessary to protect the designated use, and policies to ensure
that existing water uses will not be degraded by pollutant discharges.
Section 401 provides states with two distinct powers: one, the power indirectly to
deny federal permits or licenses by withholding certification; and two, the power to impose
conditions upon federal permits by placing limitations on certification. Generally, Section
401 certification has been applied to hydropower projects seeking a license from the
Federal Energy Regulatory Commission (FERC) and to dredge-and-fill activities in
wetlands and other waters that require permits from the U.S. Army Corps of Engineers
(CWA Section 404 and Sections 9 and 10 of the Rivers and Harbors Act). It also is
applied to permit requirements for industrial and municipal point source dischargers
(CWA Section 402). In addition, it has the potential to be applied to a range of other
activities that could affect water quality, a point that has increasingly become an issue.
Because participation by states in Section 401 certification is optional (they may
waive the authority if they choose to do so), state implementation has varied. In recent
years, however, many states have come to view Section 401 as an important tool in their
overall programs to protect the physical and biological, in addition to the chemical,
integrity of their waters. Some have begun using Section 401 to address a wide range of
impacts to the quality of their waters, including impacts to aquatic habitat such as wetlands
where issues of non-chemical impacts arise. Through Section 401, some states have
addressed impacts of a project such as inadequate river flow, inundation of habitat,
dissolved oxygen levels, and impacts on fish and other wildlife.
This expanded use of Section 401 has, in turn, led to tensions between state and
federal agencies (especially FERC) and regulated entities over the scope of the states’
Section 401 authority, particularly the extent to which states can legally address water flow
requirements in water quality standards. Some state courts have placed limitations on the
use of Section 401 (at least for hydropower projects) to address only chemical impacts of
projects (such as dissolved oxygen or numeric chemical criteria) and not physical impacts
(filling of aquatic habitat in a streambed as a result of the project) or biological impacts
(effects on fish migration, for example). Other courts have adopted a broader view and
allowed states to condition certification on compliance with all applicable water quality-
related laws. A 1990 Supreme Court case (California v. FERC, 495 U.S. 490, known as
the Rock Creek Case) addressed the issue of whether hydropower projects must comply
with any aspect of state water use law. The Court held that, with regard to federally
licensed hydropower facilities, the Federal Power Act preempts state water use law,
including states’ comprehensive arrangements for allocating water among competing uses.
Stakeholder Concerns and Other Court Rulings
For the most part, the debate over the Section 401 certification issue has centered on
states and hydropower interests. Many states have long favored clarifying the CWA to
confirm their broad authority to impose conditions on federally permitted activities. This
position was described in testimony at a 1991 Senate subcommittee hearing.1
1 Clive J. Strong, Statement on behalf of the National Association of Attorneys General, in, U.S.
Congress, Senate, Committee on Environment and Public Works, Subcommittee on
Environmental Protection. Water Pollution Prevention and Control Act of 1991, hearings on S.st
[A]n overly narrow reading of section 401 would deprive the States of the ability to
maintain the very beneficial uses that the Clean Water Act was designed to protect.
Federal agencies could permit activities that would undermine a State’s investment in
pollution control efforts and impose a double standard for different activities affecting
the same in-stream values. It makes no sense to authorize States to implement Clean
Water Act programs designed to protect beneficial uses and yet leave them powerless
to prevent a federally permitted activity from impairing those values.
The comprehensive nature of State management of water quality and water
quantity means that the States are best situated to determine whether a federally
permitted activity will fully protect beneficial uses. The States have lead responsibility
for protecting water quality under the Clean Water Act and for administering laws
governing allocation of water quantity. Water quality and quantity are inextricably
linked; both are essential to maintaining the integrity of the nation’s waters.
Hydropower interests favor allowing federal agencies such as FERC to determine
what conditions on a project are necessary for protection of water quality or to satisfy other
criteria, in light of the important purposes directed by Congress in other laws, specifically
the Federal Power Act.2
The current limitation on the role of the States in the [federal hydropower]
licensing process is that ultimately the FERC must make the decision balancing the
multitude of resource interests affected by the project. The expansive reading of
Section 401 water quality certification being used in some States crosses this barrier,
using this mandatory water quality review to effectively take control of all aspects of
the project.
... Expansion of 401 certification places authority for an energy resource in the
effective control of a State water quality agency, that is not responsible for utility rate
stabilization, assuring adequate water supplies, promoting clean air technology, or
controlling floods.
The Supreme Court again considered the Section 401 issue in 1994. In Public Utility
District (PUD) No. 1 of Jefferson County and City of Tacoma v. Washington Department
of Ecology, 511 U.S. 700 (1994), the Court held that a state may impose minimum stream
flow requirements as a condition in a Section 401 certification for a proposed hydropower
facility because the CWA allows states to condition certification upon any effluent
limitation or other appropriate state law requirement, to ensure that the facility will not
violate state water quality standards. Imposition of the condition as part of the Section 401
certification does not conflict with FERC’s authority to issue a license under the Federal
Power Act, the Court said. The ruling said that states may regulate the impacts of a project
as a whole, so long as there is a discharge involved. Thus, the conditions a state may
require are not confined to the discharge itself but can address a range of conditions as part
of their certifications, such as the impacts of a dam’s removal of water from a river.
Further, federal agencies must include state-imposed conditions in the license or permit.
This decision pleased states, which had sought confirmation of their power to impose
minimum stream flow and other requirements of state water quality standards.
Environmentalists, who have supported states’ use of Section 401 to address aquatic
habitat alteration and biological diversity of the nation’s waters, were similarly pleased.
2 Gail Ann Greely, statement on behalf of the National Hydropower Association, in 1991 Senate
Hearing, p. 810.
Development and hydropower interests, on the other hand, said that it would make
licensing of hydropower facilities more difficult and costly. The utility industry was
concerned that state water quality agencies reflect a narrow viewpoint under their
mandates and could bias licensing policies by not adequately addressing power needs.
The Supreme Court revisited these issues in 2006 in a case brought by the owner of
several hydropower dams in Maine who had challenged the state’s 401 certification for
renewal of its FERC licenses for the dams, arguing that the dams did not produce the
requisite “discharge” under the CWA. The Court unanimously held that states, through
Section 401 certification, can impose conditions on FERC licensing or relicensing of
hydropower facilities that states find necessary to prevent adverse alteration of water
quality (S. D. Warren Co. v. Maine Board of Environmental Protection, 126 S. Ct. 1843
(2006)). States and environmental groups applauded the ruling, as many had feared that
an adverse decision would hinder the ability of states to require measures to ameliorate the
effects of hydropower dams on water quality and aquatic life. (For additional information,
see CRS Report RS22429, The State Role in the Federal Licensing of Hydropower Dams:
S. D. Warren Co. v. Maine Board of Environmental Protection.)
Section 401 and Land Runoff
In 1996, a federal district court in Oregon ruled that Section 401 “applies to all
federally permitted activities that may result in a discharge, including discharges from
nonpoint sources” (Oregon Natural Desert Association v. Thomas, 940 F.Supp. 1534,
D.Or. 1996). The case sought to have the U.S. Forest Service obtain state Section 401
certification that cattle grazing under a Forest Service permit would not violate water
quality standards. The Forest Service argued that, under the CWA, only discharges from
a point source or nonpoint source with a conveyance (i.e., a pipe or channel outlet) are
regulated and, while cattle grazing may cause water pollution, it is not a regulated
discharge under the act. However, in its ruling, the district court distinguished the
definition of “discharge” from “discharge of a pollutant” from a point source and said that
“pollution caused by cattle grazing constitutes a discharge into navigable waters within the
meaning of section 401 of the Clean Water Act. Therefore, state certification under
section 401 was required before the U.S. Forest Service issued a cattle grazing permit.”
Supporters said that the ruling gave states new regulatory power over federal licenses
or permits that affect water quality by clarifying that Section 401 applies to nonpoint
source discharges of water pollution, in addition to point source discharges. Point sources
are discrete conveyances, such as pipes or ditches, from which pollutants are discharged.
Nonpoint source pollution is rainfall and snowmelt runoff from farmlands, ranches, city
streets, and similar areas. The ruling had the potential to give states a stronger hand in
determining how federal lands should be managed. If so, the impact on states could be
significant, since cattle grazing is a common activity on millions of acres of western lands
managed by the Forest Service and the U.S. Bureau of Land Management, and states could
face a substantial workload in processing Section 401 certifications for hundreds of
grazing permits annually. Additional impacts could occur if Section 401 were held to
apply to other types of federally permitted activities generally categorized as nonpoint
sources, such as timber harvesting or logging.
Federal agencies disagreed over how to respond to the Oregon district court’s ruling.
EPA favored letting the decision stand, on the basis that nonpoint source pollution is the
most significant contributor to water pollution in many states, and the decision would give
states more power to manage it. The Agriculture Department (parent of the Forest
Service), on the other hand, urged the Department of Justice to support an industry group’s
appeal of the case, and ultimately the government did join in appealing the decision.
In 1998, a federal court of appeals reversed the district court’s ruling, finding that
cattle grazing on federal lands does not fall within the type of pollution covered by Section
401(Oregon Natural Desert Association v. Dombeck, 151 F.3d 945 (CA9 1998)). The
court found that Congress intended to permit direct federal regulation of effluent flowing
from point sources, but to regulate nonpoint source pollution only through federal grants,
not through Section 401 water quality certification. In November 1999, the Supreme
Court declined to review the case.
The state of Oregon had responded to the 1996 district court decision by adopting
rules establishing a certification process for livestock grazing permits on federal lands in
Oregon. However, after the court of appeals reversed that ruling and the Supreme Court
declined to review it, the state withdrew the rules. Groups representing ranchers, farmers,
and similar interests were pleased that the district court’s ruling was overturned, believing
that Congress did not intend Section 401 to apply to nonpoint source pollution. Other
CWA programs and tools such as financial incentives are better means of addressing
nonpoint source pollution problems, some say. Environmentalists disagreed with the
appeals court’s conclusion and the legal outcome of the case, and many continue to argue
that Section 401 generally supports a reading that includes nonpoint source discharges.
In a broader context, some observers had viewed the district court’s ruling as giving
a boost to ongoing activities in states to develop total maximum daily load (TMDL)
allocations on pollution-impaired water bodies. Efforts to carry out this Clean Water Act
requirement have been prompted by lawsuits in more than 35 states, claiming that EPA
and states have failed to fulfill mandates in the law. (For additional information, see CRS
Report 97-831, Clean Water Act and Total Maximum Daily Loads (TMDLs) of
Pollutants.) In many cases, TMDLs are being developed that result in imposition of
pollution control requirements and other measures on nonpoint sources, as well as point
sources, in order to improve water quality and attain water quality standards. While the
9th Circuit’s ruling did not directly affect the TMDL process, some persons saw the
reversal of the lower court’s ruling as removing one possible argument for involving
nonpoint sources in TMDL processes.
Legislative Response
Since the mid-1990s, Congress has shown interest in these issues in proposals
reflecting varying perspectives, but no legislation that would modify Section 401 has been
enacted. In the 103rd Congress, interest in clarifying the scope of Section 401 certification
authority led to several proposals. The Senate Environment and Public Works Committee
included one such provision in S. 2093, a CWA reauthorization bill. It would have
strengthened Section 401 by clarifying that applicants for a federal license or permit,
including applicants for a FERC license to operate hydropower facilities, must obtain state
certification that the project will comply with water quality standards and will allow for
attainment and maintenance of designated uses included in the state’s standards. The
Senate did not act on S. 2093.
Following the Supreme Court’s 1994 PUD No. 1 decision, disputes over Section 401
became an issue in the Congress. At the end of the 103rd Congress, legislation was
introduced to amend the Clean Water Act and overturn the decision (S. 2566). The
sponsor of the bill, Senator Wallop, said that the Court’s decision threatened state water
law (by limiting the amount of water that could be used for the project in question and,
thus, interfering with state water rights systems) and the integrity of the FERC hydropower
licensing process. The Senate did not act on this bill.
The 104th Congress addressed the issue in H.R. 961, a CWA reauthorization bill
passed by the House in 1995. Section 507 would have made Section 401 inapplicable to
hydropower projects if FERC were to determine that the state’s certification is inconsistent
with the Federal Power Act. The bill also would have set up a mechanism, to be
administered by FERC, to resolve differences arising between the state and FERC on
questions relating to the consistency of the 401 certification to a hydropower project. That
is, in the event of a dispute between FERC and a state over 401 certification of a
hydropower project, FERC would be authorized to resolve the dispute between itself and
the state. This provision in H.R. 961 was one of several proposed to address the issue.
Some Members favored simply exempting hydropower projects from Clean Water Act
regulation, arguing that FERC project review is intended to consider inputs of state and
federal agencies, Indian tribes, and the public in connection with licensing and relicensing
decisions. Others argued that states should continue to have authority to regulate matters
related to water quality concerns. Section 507 attempted to balance those concerns.
However, no further action occurred on H.R. 961 during the 104th Congress, and similar
legislation has not been proposed subsequently.
Most recently, legislative interest in Section 401 occurred in connection with
recommendations on national energy policy by Vice President Cheney’s National Energy
Policy Development Group in 2001. It recommended that the hydropower licensing
process administered by FERC undergo administrative and legislative reform so that
hydropower can contribute to meeting the nation’s energy needs. At the same time, a
FERC report concluded that the most common cause of delayed hydropower licensing
proceedings is untimely receipt of state water quality certification under the Clean Water
Act.3 Responding to these concerns, legislation was proposed that would give applicants
for hydropower licenses increased flexibility in complying with conditions imposed by
federal agencies such as the Department of the Interior concerning, for example, the need
for passageways through which fish can travel around a dam — another issue raised in the
FERC report. The 109th Congress enacted the Energy Policy Act of 2005 (P.L. 109-58)
with a provision (Section 241) requiring federal agencies to consider alternative license
conditions proposed by the license applicant. While this provision only addresses the roles
of federal agencies in hydropower licensing, not state certification under CWA Section
3 Federal Energy Regulatory Commission, Staff Report to Congress, Hydroelectric Licensing
Policies, Procedures, and Regulations, Comprehensive Review and Recommendations, May