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jurisdiction of FERC, the environmental community wants to amend the bill to make it applicable to all CWA permits. A prior draft of this bill, which came from the environmental community, would have expanded the scope of the 401 certification process from the "discharge of pollutants" to a broader standard of protecting and improving water quality. S. 106 also attempts to address this issue, but does it by amending the Federal Power Act instead of the Clean Water Act. S. 812 may be addressed during the hearings on S. 1081 on July 17 or 18. 4. Section 404 The debate over the 404 program will have obvious relevance to the development of water projects under state law. The existing 404 regulations distinguish between "water dependent" and "non-water dependent" activities. This distinction is important because it recognizes that, unlike many other proposed uses of wetlands, water projects cannot be built without affecting wetlands, and provides that water dependent activities are not subject to the same presumptions regarding the existence of an alternative site. While the pending proposals to classify wetlands based on value have merit, because it is probable that new water projects will be located in streams included within the highest category or value for wetlands, compromises which abandon the water dependent activity distinction and make it easier to develop marginal wetlands in return for more protection for high quality wetlands may ultimately make it harder to develop new water projects, particularly if the "sequencing" requirement of the 1990 MOA continues to be enforced."/ II/ Section 404 is not addressed in S. 1081. A number of 404 bills have been introduced separately, including S. 1463, which is identical to H.R. 1330, and H.R. 251, 404, 1330 and 2400. 12/ The 1990 MOA requires the Corps to implement EPA's interpretation of the "sequencing" requirements of the 404(b)(1) guidelines. Under the MOA, an applicant for a 4;04 permit must first avoid all impacts to wetlands, then minimize unavoidable impacts and then mitigate all remaining impacts. Relying on this theory, EPA has successfully asserted in court that an application for a 404 permit for a shopping center can be denied because the developer failed to purchase an alternate site which did not have any. wetlands, even though the alternate site had since been purchased by a competitor. EPA also asserted in this case that the developer's offer to provide mitigation could be ignored in making the decision to deny the permit, because, under the sequencing requirement, mitigation is only considered after the avoidance and minimization requirements are applied.