Clean Water Act Section 401:
Background and Issues
Claudia Copeland
Specialist in Resources and Environmental Policy
July 2, 2015
Congressional Research Service
7-5700
www.crs.gov
97-488
Clean Water Act Section 401: Background and Issues
Summary
Section 401 of the Clean Water Act (CWA) 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 state-established 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
the 114th Congress, Senate and House committees are considering a number of energy policy
proposals, including legislation that some states believe could impinge on states’ authority under
CWA Section 401 concerning hydropower projects.
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 lawsuits in Oregon, where a federal court ruled in 1998
and again in 2008 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.
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Clean Water Act Section 401: Background and Issues
Contents
Background ...................................................................................................................................... 1
Stakeholder Concerns and Other Court Rulings .............................................................................. 2
Section 401 and Land Runoff .......................................................................................................... 3
Legislative Response ....................................................................................................................... 5
Contacts
Author Contact Information............................................................................................................. 7
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Clean Water Act Section 401: Background and Issues
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 (in the form of numeric or narrative criteria), 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 case1 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.
1 California v. FERC, 495 U.S. 490 (1990), known as the Rock Creek Case.
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Clean Water Act Section 401: Background and Issues
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.2
[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.3
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,4 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
2 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. 1081, 102d Congress, 1st session, Washington: GPO, 1991 (S.Hrg.
102-335), p. 805. (Hereinafter, 1991 Senate Hearing)
3 Gail Ann Greely, statement on behalf of the National Hydropower Association, in 1991 Senate Hearing, p. 810.
4 511 U.S. 700 (1994).
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Clean Water Act Section 401: Background and Issues
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. 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.5 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.
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.”6
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
5 S. D. Warren Co. v. Maine Board of Environmental Protection, 126 S. Ct. 1843 (2006). 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, by Robert Meltz and Claudia Copeland.
6 Oregon Natural Desert Association v. Thomas, 940 F.Supp. 1534, D.Or. 1996.
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Clean Water Act Section 401: Background and Issues
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 401.7 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 three dozen states, claiming that EPA and states have failed to
fulfill mandates in the law.8 In many cases, TMDLs are being developed that result in imposition
of pollution control requirements and other measures affecting nonpoint sources as well as point
sources in order to improve water quality and attain water quality standards. While the 9th
Circuit’s 1998 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 ensuring that nonpoint sources are
addressed in TMDL plans and processes.
Following the Supreme Court’s 2006 ruling in the S.D. Warren case (discussed above),
environmental advocates renewed legal challenge of grazing permits, arguing that the Court’s
7 Oregon Natural Desert Association v. Dombeck, 151 F.3d 945 (CA9 1998).
8 For additional information, see CRS Report R42752, Clean Water Act and Pollutant Total Maximum Daily Loads
(TMDLs), by Claudia Copeland..
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Clean Water Act Section 401: Background and Issues
ruling in that case that 401 certification applies to dam discharges could also be applied to
agricultural runoff. The environmental group had challenged the failure of the Forest Service to
require a company that sought a cattle grazing permit on Forest Service land to obtain a 401
certificate from the state of Oregon. However, the same federal court rejected the challenge,
concluding that the facts in the more recent Oregon case differed from those in the S.D. Warren
case, thus supporting its 1998 ruling that the CWA only allows states to address point source
discharges under Section 401.9
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.
Legislative interest in Section 401 also occurred in connection with recommendations on national
energy policy by Vice President Cheney’s National Energy Policy Development Group in 2001. It
9 Oregon Natural Desert Association v. U.S. Forest Service, 550 F.3d 778 (CA9 2008).
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Clean Water Act Section 401: Background and Issues
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 2001 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.10 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 addressed the roles of federal
agencies in hydropower licensing, not state certification under CWA Section 401, these water
quality issues remain of interest to some stakeholders.
In the 112th Congress, the House passed legislation that would in part modify Section 401. The
bill, H.R. 2018, the Clean Water Cooperative Federalism Act of 2011, would have amended
several CWA provisions to restrict EPA’s authority to provide oversight of states’ implementation
of aspects of the statute. The legislation was seen as a response to concerns that EPA has over-
reached in its statutory oversight of state actions on permitting and standard setting. Section 2(b)
of the bill would have modified Section 401 to prohibit EPA from taking “any action to supersede
the determination” of a state that a particular discharge will comply with applicable provisions of
the CWA, including water quality standards. While under current law EPA has no explicit role or
conditioning authority over a state’s 401 certification, this provision of H.R. 2018 was apparently
intended to deter EPA from overriding state determinations. In comments on the legislation, EPA
officials questioned the intent of the provision, saying that the agency has not taken formal action
to supersede a state’s certification, making the practical effect of the provision unclear, in EPA’s
view. Bills with provisions similar to Section 2(b) of H.R. 2018 also were introduced in the 113th
Congress (H.R. 1829 and H.R. 1948).
In the 114th Congress, Senate and House committees are considering a number of energy policy
proposals, including legislation that some states believe could impinge on states’ authority under
CWA Section 401 concerning hydropower projects. The proposals include provisions intended to
streamline review and approval of hydropower licensing projects. One bill, S. 1236, would
designate FERC as the lead agency for coordinating all authorizations required under federal
law—including 401 certification or other approvals required by federal and state agencies under
federal law—and would authorize FERC to establish schedules for issuance of all such
authorizations. Under this bill, federal or state agencies responsible for such authorizations would
be required to report annually to congressional committees on any of the agency’s activities
affecting a FERC proceeding, including a demonstration that the agency’s actions meet policies
established in the Federal Power Act. The federal or state resource agency would be required to
maintain a publicly available website that tracks all information required in the annual report.
A second proposal, in a draft bill discussed at a House Energy and Commerce subcommittee
hearing on May 13,11 similarly would designate FERC as the lead agency for coordinating all
10 Federal Energy Regulatory Commission, Staff Report to Congress, Hydroelectric Licensing Policies, Procedures,
and Regulations, Comprehensive Review and Recommendations, May 2001, 145 pp.
11 See http://docs.house.gov/meetings/IF/IF03/20150513/103443/BILLS-114pih-
DiscussionDraftonHydropowerRegulatoryModernization.pdf.
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Clean Water Act Section 401: Background and Issues
federal and state authorizations required under federal law and would require cooperating
agencies to comply with deadlines established by FERC. Further, the House draft bill would
require that judicial review of federal and state agency actions related to hydropower projects,
such as an order or action related to a 401 or other federal authorization, be heard exclusively in
federal courts of appeal. Under current law, judicial challenges of 401 certifications are reviewed
in state courts, not federal courts.
Several state agencies have raised concerns about aspects of these proposals. For example,
Oregon officials said in a letter to House Energy and Commerce Committee leader that they
believe that the draft House hydropower bill would “effectively strip the state’s authority to
protect its fish, wildlife, and water resources.” Separately, Washington state officials said in a
letter to House Commerce Committee leaders that they oppose the draft bill because “states’ and
tribes’ authority to issue CWA 401 water quality certifications would be impacted or revoked.”
Similarly, in a letter to Senate Energy and Natural Resources Committee leaders, Maryland
officials noted objections to S. 1236, saying, “In removing or impairing the states’ primary role
and responsibility under Section 401 to fashion conditions in FERC licenses, S. 1236 relegate[s]
the states—the entities with the greatest interest and expertise in protecting water quality—to
bystander or second-class status.”12 Press reports indicate that House and Senate committee
leaders believe that CWA authority would not be affected by the bills in question.13
Author Contact Information
Claudia Copeland
Specialist in Resources and Environmental Policy
ccopeland@crs.loc.gov, 7-7227
12 Letters on file with the author of this report.
13 Amena H. Saiyid, “Aides Say Hydropower Bills Will Streamline Permitting, Not Remove State Authority,” Daily
Environment Report, June 24, 2015, pp. A-10.
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