Section 401 Certifications Must Not Defer Material Compliance Terms Without Pre-Construction Agency Approval

I. Introduction

In NY/NJ Baykeeper v. New Jersey Department of Environmental Protection (consolidated with a petition by Natural Resources Defense Council, Inc.), the United States Court of Appeals for the Third Circuit reviewed the New Jersey Department of Environmental Protection’s (NJDEP) issuance of a Clean Water Act § 401 Water Quality Certification for Transcontinental Gas Pipe Line Company, LLC’s (Transco) proposed Northeast Supply Enhancement Project (NESE).

The project includes an offshore pipeline segment beneath the Raritan Bay requiring dredging that would resuspend contaminated sediments (including, as discussed in the record, substances such as 4,4'-DDE, PCBs, mercury, and others). Petitioners argued NJDEP (i) reversed its prior denial without explanation, (ii) unlawfully deferred essential monitoring and adaptive management conditions until after certification, (iii) failed to adequately explain compliance with New Jersey water quality standards, and (iv) curtailed meaningful public participation.

The Third Circuit granted the petitions, vacated the certification, and remanded. The decision is precedential and materially clarifies when a § 401 certification may “sequence” outstanding compliance plans.

II. Summary of the Opinion

  • No arbitrary reversal: The court rejected NRDC’s claim that NJDEP arbitrarily reversed its 2019 denial because the 2025 record was materially different (including later modeling and draft plans).
  • Unlawful/irrational deferral of material terms: The court held NJDEP acted arbitrarily and capriciously by issuing certification while leaving critical monitoring and adaptive management terms unresolved, without making NJDEP approval of final plans a prerequisite to dredging.
  • Inadequate explanation of compliance: Independently, NJDEP failed to adequately explain how the project would comply with state water quality standards—particularly concerning (a) the significance of the 500-foot modeling boundary and modeled 4,4'-DDE concentrations, (b) reliance on turbidity monitoring without explaining how it assures compliance with toxic-substance criteria, and (c) mischaracterization of shellfish (surf clam) evidence.
  • Public participation claims not reached: Because vacatur was required on other grounds, the court did not decide whether notice/comment procedures were independently unlawful, but signaled NJDEP could cure issues on remand.

III. Analysis

A. Precedents Cited

1. Jurisdiction and standard of review under the Natural Gas Act and § 401

  • Delaware Riverkeeper Network v. Sec'y Pa. Dep't of Env't Prot. (Riverkeeper I), 833 F.3d 360 (3d Cir. 2016): Cited for NGA jurisdiction over state § 401 decisions and for the “arbitrary and capricious” framework. It also supplied the key sequencing concept later used as the principal comparator for NJDEP’s approach here.
  • Delaware Riverkeeper Network v. Sec'y of Pa. Dep't of Env't Prot. (Riverkeeper II), 870 F.3d 171 (3d Cir. 2017): Cited for deference principles when a state agency interprets state law in a federal review posture.
  • 15 U.S.C. § 717r(d)(1) (as discussed in the Opinion) and the court’s reiterated point that the Third Circuit has “original and exclusive” jurisdiction over these state § 401 grants.

2. The “sequencing” line—what the Third Circuit allows, and what it does not

  • Delaware Riverkeeper Network v. Secretary Pennsylvania Department of Environmental Protection (Riverkeeper I): The court upheld a § 401 certification issued before completion of a separate state assessment because construction could not begin until the agency later reviewed the assessment and issued a separate permit. The Third Circuit treated the existence of a later, mandatory agency gatekeeping approval as essential: deferral was permissible because review was deferred, not abandoned.
  • Delaware Riverkeeper Network v. Secretary Pennsylvania Department of Environmental Protection (Riverkeeper III), 903 F.3d 65 (3d Cir. 2018): Similarly upheld certification where substantive compliance showings would occur in later permit proceedings and construction remained contingent on subsequent approvals. The Opinion uses Riverkeeper III to underscore that sequencing is allowed only if enforceable pre-construction agency review/approval remains in place.
  • Waterkeeper Alliance, Inc. v. EPA, 399 F.3d 486 (2d Cir. 2005): Used as a contrasting pole. The Second Circuit rejected an EPA regime that required regulated entities to develop nutrient management plans but did not require permitting authorities to review them before issuing permits—an “impermissible self-regulatory permitting regime.” The Third Circuit here places NJDEP’s certification “somewhere between” Riverkeeper and Waterkeeper, but ultimately finds NJDEP’s conditions lacked the Riverkeeper-style safeguard (mandatory agency approval before dredging).

3. Administrative law “reasoned decisionmaking” and record-based review

  • Motor Vehicle Manfs. Ass'n v. State Farm Mutual Automobile Ins. Co., 463 U.S. 29 (1983): Anchor for the requirement that agencies examine relevant data and articulate a satisfactory explanation with a rational connection between facts and decision.
  • SEC v. Chenery Corp., 332 U.S. 194 (1947): Reiterated to reject litigation-driven rationales; reviewing courts judge agency action by the grounds the agency invoked.
  • Christ the King Manor, Inc. v. Sec'y U.S. Dep't of Health & Hum. Servs., 730 F.3d 291 (3d Cir. 2013): Cited for the same record-based review principle and the impermissibility of post hoc rationalizations.
  • Sierra Club v. EPA, 972 F.3d 290 (3d Cir. 2020): Used to emphasize that “vague allusions” to expertise cannot substitute for reasoned explanation; also invoked to condemn deferring compliance-relevant decisions to regulated parties without a discernible enforcement mechanism.
  • Ohio v. EPA, 603 U.S. 279 (2024): Cited to show arbitrariness where an agency fails to explain whether a key methodological assumption affects the outcome.

4. Deference to state-law interpretations and standing

  • E. Bay Drywall, LLC v. Dep't of Lab. and Workforce Dev., 278 A.3d 783 (N.J. 2022) and Hargrove v. Sleepy's, LLC, 106 A.3d 449 (N.J. 2015): Cited for New Jersey’s approach to deference toward agencies administering statutes and regulations.
  • Free Speech Coal., Inc. v. Att'y Gen., 974 F.3d 408 (3d Cir. 2020) and Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167 (2000): Cited in the court’s standing discussion (associational standing and injury/redressability in environmental contexts).

5. Remedies and remand practice

  • Fla. Power & Light Co. v. Lorion, 470 U.S. 729 (1985): Cited for the “ordinary course” of vacatur and remand when explanation is inadequate.
  • Prometheus Radio Project v. F.C.C., 373 F.3d 372 (3d Cir. 2004), as amended (June 3, 2016): Cited in the public participation discussion to note that remand permits agencies to cure process defects.

6. Other cited authorities that frame but do not control the holding

  • PUD No. 1 of Jefferson Cnty. v. Washington Dep't of Ecology, 511 U.S. 700 (1994): Cited for § 401’s breadth and the requirement that certifications set conditions/limitations/monitoring necessary to assure compliance.
  • F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502 (2009) and Logic Tech. Dev. LLC v. FDA, 84 F.4th 537 (3d Cir. 2023): Raised on whether “change in position” doctrine applies to successive permit decisions; the court explicitly declined to decide because it found no material reversal on the facts.
  • Twp. of Bordentown v. FERC, 903 F.3d 234 (3d Cir. 2018): Used as a comparison point showing that incomplete information can be acceptable when paired with required identification/monitoring and retained authority to impose additional measures—again highlighting the importance of enforceable agency oversight.
  • Raritan Baykeeper, Inc. v. N.Y. State Dep't of Env't Conservation, No. 25-2938, 2026 WL 2453538 (2d Cir. Aug. 21, 2026) (summary order): Not controlling, but used to contrast New York’s certification record (notably, pre-construction approvals, independent monitoring, and toxicity limits in the certification itself) with New Jersey’s.

B. Legal Reasoning

1. The court’s central doctrinal move: conditional certification requires an enforceable pre-construction approval “gate” for material terms

The Opinion’s key legal development is its refinement of the Third Circuit’s Riverkeeper sequencing doctrine: a § 401 certification may defer certain compliance details only if the certification (or an integrated permit structure) makes later agency review and approval a prerequisite to the commencement of the relevant work—here, dredging.

NJDEP argued it could issue the certification while requiring later submission of a Water Quality Monitoring Plan (Condition 9) and Adaptive Management Plan (Condition 11). The court accepted that conditional certifications are not per se unlawful, but focused on the textual enforceability of the conditions:

  • Condition 9 required submission “for review” within 60 days, not “approval,” and did not bar dredging until approval.
  • Condition 11 required an Adaptive Management Plan but set no submission deadline and did not require plan approval before dredging.
  • The court contrasted these with other conditions that expressly required “written approval prior to” specified activities, showing NJDEP knew how to draft approval prerequisites when it intended them.

This drafting distinction mattered because NJDEP itself had identified unsettled, substantive issues just days before certification (trigger thresholds, reporting deadlines, stop-work consequences). By issuing a certification that did not require NJDEP approval of the final plans before dredging, NJDEP (in the court’s view) moved toward the Waterkeeper problem: a regime where the regulated party effectively controls the operative compliance terms without a mandatory, pre-activity agency check.

2. Record-based explanation failures as an independent ground for vacatur

Separate from sequencing, the court held NJDEP’s explanation did not allow the court to “reasonably discern” the agency’s path:

  • The 500-foot modeling boundary and 4,4'-DDE: Transco’s modeling anchored contaminant comparisons at 500 feet, and the record included “mixing zone” terminology. The court did not find NJDEP formally created a regulatory mixing zone, but held NJDEP failed to explain why 500 feet was the right compliance boundary under the New Dredging Rule. This failure became acute because the model predicted 4,4'-DDE concentrations at 500 feet that numerically exceeded New Jersey’s human-health criterion, yet NJDEP’s decisional documents did not reconcile that fact, require re-modeling under final dredging conditions, or identify a lawful basis for short-term exceedances.
  • Turbidity as the sole monitored parameter: Although the New Dredging Rule provides NJDEP “may require” chemical monitoring, NJDEP still had to explain how turbidity-only monitoring could assure compliance with toxic-substance criteria—especially where NJDEP’s rationale repeatedly referenced both turbidity and contaminants. The court faulted NJDEP for not articulating whether and why turbidity was a reliable proxy for toxic contaminants in this setting.
  • Shellfish (surf clam) evidence mischaracterized: NJDEP claimed the New Jersey Marine Resources Administration determined sedimentation rates would be within surf clam tolerance and that habitat would return to baseline within 1–3 years. The court found the memorandum did not make those findings; it instead warned of impacts and noted surf clams’ particular sensitivity. This “runs counter to the evidence” problem further undermined the reasoned-explanation requirement.

3. Why the “arbitrary reversal” claim failed

The court rejected the contention that NJDEP reversed its 2019 position without explanation because the 2019 denial was largely driven by absent data (not a definitive determination that compliance was impossible), and subsequent iterations included additional modeling and draft plans not previously in the record. The court also noted NJDEP’s 2020 denial expressly rested on New York’s denial and “need not resolve” other issues, meaning NJDEP did not reach the merits of later-submitted water-quality materials in 2020.

C. Impact

1. Practical drafting and enforcement consequences for § 401 certifications in the Third Circuit

The decision pressures certifying agencies to ensure that if critical compliance instruments (monitoring plans, adaptive management plans, mitigation plans) are finalized post-certification, the certification must:

  • expressly require agency approval (not merely “review”);
  • set clear deadlines for submission and approval;
  • make approval a condition precedent to the start of the relevant activity (here, dredging); and
  • avoid discretionary language (“some or all may be employed”) that leaves compliance responses optional.

This effectively converts Riverkeeper’s “sequencing” from a general permissive concept into a more rule-like demand for an enforceable gatekeeping mechanism when material compliance terms are unresolved at issuance.

2. Enhanced explanation burden where modeling and proxies are used

Agencies relying on model boundaries (e.g., a 500-foot line) or proxy metrics (e.g., turbidity standing in for toxic contaminants) should expect that reviewing courts will require:

  • a clear statement of why the boundary is legally and scientifically relevant to the governing standard; and
  • a reasoned justification for proxy monitoring where direct monitoring is not required.

3. Interaction with public participation (left open but highlighted)

Although the court did not decide the public participation challenges, its reasoning signals risk in post-certification finalization of key compliance plans: deferral can effectively insulate operative terms from public scrutiny, raising future procedural vulnerability even when substantive defects are cured.

IV. Complex Concepts Simplified

  • Clean Water Act § 401 Water Quality Certification: A state’s certification that a federally licensed project (here, a FERC-regulated gas pipeline) will comply with state water quality standards. The state may impose conditions that become conditions of the federal authorization.
  • Arbitrary and capricious review: A court does not decide whether it agrees with the agency; it checks whether the agency examined relevant data and gave a coherent, record-supported explanation for its decision.
  • Turbidity: A measure of water cloudiness from suspended particles; dredging often increases turbidity by stirring sediments.
  • Adaptive management plan: A preplanned “if X happens, we will do Y” framework during construction. The legal issue here was whether the plan’s terms were mandatory, specific, and subject to agency approval before dredging.
  • Mixing zone: A designated area around a discharge where certain criteria may be exceeded if standards are met at the boundary. The court did not hold NJDEP created one, but required NJDEP to explain why a 500-foot boundary was adequate for compliance analysis.
  • Vacatur and remand: The court nullifies the agency action (vacatur) and sends it back (remand) so the agency can reconsider, supplement its reasoning, or impose new conditions consistent with the court’s opinion.

V. Conclusion

The Third Circuit’s decision vacating NJDEP’s NESE § 401 certification rests on two reinforcing principles: (1) material compliance terms cannot be left to post-certification plans without an enforceable requirement of agency approval before the regulated activity begins, and (2) the agency must explain, on the record, how its modeling choices, monitoring regime, and factual findings demonstrate compliance with state water quality standards.

In effect, the Opinion tightens the Third Circuit’s “sequencing” tolerance under Riverkeeper I and Riverkeeper III by demanding a concrete, pre-construction approval checkpoint for unresolved but essential monitoring and adaptive management measures—thereby preventing § 401 certification from drifting toward the “self-regulatory” structure rejected in Waterkeeper Alliance, Inc. v. EPA.