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 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. 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. [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. 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 , 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. 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. 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. 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." 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.