CSG Law Environmental Blog: Third Circuit Vacates Section 401 Certification – NJDEP Failed to Explain Water Quality Compliance Determination
The Third Circuit vacated the New Jersey Department of Environmental Protection’s (“NJDEP”) Clean Water Act Section 401 Certification for a proposed natural gas pipeline, the Northeast Supply Enhancement (“NESE”) project, which would involve constructing a pipeline segment beneath Raritan Bay from New Jersey to New York. The Court held that NJDEP failed to provide a reasoned basis for concluding that dredging associated with construction of the pipeline would comply with New Jersey water quality standards and unlawfully left monitoring and corrective action issues unresolved. N.R.D.C. v. NJDEP, _ F.4th_ (3d Cir. Sep. 8, 2026).
Clean Water Act Section 401 allows a state to determine whether a federally permitted project involving a discharge will comply with state water quality standards. A state may issue a Section 401 Certification only if it concludes that the discharge “will comply” with those standards, and the certification must include any limitations, monitoring requirements, or other conditions necessary to assure compliance. Without a granted or waived certification, the federal permitting agency cannot issue the underlying approval. Here, the applicant needed FERC authorization and the NJDEP Section 401 Certification because pipeline installation would require dredging in Raritan Bay, disturbing contaminated sediment and causing discharges into state waters.
NJDEP denied the initial Section 401 Certification application in 2019; the applicant voluntarily withdrew a second application in 2020; and NJDEP denied a third application in May 2020. On November 7, 2025, NJDEP approved a fourth application, which was essentially identical to the prior submissions. Environmental petitioners appealed to the Third Circuit, arguing that NJDEP unlawfully deferred monitoring and adaptive management requirements and inadequately explained how the project would comply with New Jersey water quality standards.
The Court agreed that NJDEP had unlawfully deferred monitoring and adaptive management requirements. The Section 401 Certification required submittal of a water quality monitoring plan to NJDEP for review within 60 days but did not require NJDEP approval of the plan before dredging could begin. It also required submittal of an adaptive management plan, but did not include a deadline for submission, did not require NJDEP approval before dredging could begin, and did not require the applicant to undertake any particular actions in response to increased turbidity. The Court concluded that NJDEP acted arbitrarily because material monitoring and response terms remained unresolved and no additional NJDEP approval was required before dredging could begin.
The Court also found that NJDEP’s decisional documents did not adequately explain how the proposed dredging would comply with water quality standards. NJDEP failed to explain how it selected a 500-foot boundary to evaluate contaminant concentrations, or why exceedances of 4,4’-DDE at the boundary were not addressed. The Court refused to uphold the certification based on additional explanations advanced by NJDEP for the first time in litigation. NJDEP also failed to explain why it required turbidity monitoring but not contaminant monitoring. NJDEP argued that it relied on its technical expertise to require only turbidity monitoring. The Court rejected that argument, stating that “[t]echnical expertise does not relieve an agency of its obligation to articulate the basis for its decision.” Finally, the Court found that NJDEP’s conclusion that the project would not imperil shellfish was inconsistent with the New Jersey Marine Resources Administration’s findings that the project would directly and indirectly impact shellfish.
The Court vacated the Section 401 Certification and remanded the matter to NJDEP for further proceedings. On remand, NJDEP may supplement its explanation, seek additional information, issue a revised certification, or reach a different result. For parties challenging permits, the decision provides useful precedent for arguing that agencies may not cure gaps in the administrative record through post hoc explanations in litigation. For permittees, the decision underscores the importance of developing a complete administrative record before approval to ensure that the record fully supports the permit request.
For more information, please contact the author of this post or the CSG Law Environmental Group.