Clean Water Act Rule Limits States' Power to Block Infrastructure Projects

Overview. Under Section 401 of the CWA, any project that requires a federal permit or license and that may result in a discharge into waters of the United States must also obtain a certification or waiver from a certifying authority (a state, authorized tribe or EPA) that the project can meet applicable water quality requirements. This includes, for example, infrastructure projects requiring U.S. Army Corps of Engineers permits to disturb wetlands, as well as power and pipeline licenses issued by the Federal Energy Regulatory Commission. If the certifying authority denies a certification, a project cannot receive its required federal license or permit. Some states have invoked this power repeatedly and effectively to block energy infrastructure projects. In addition, short of outright denying certification, some states have delayed certification decisions to the point of affecting the viability of the underlying projects by seeking additional information from the permittee or licensee and asserting either that the review timeline is “tolled” until the information is provided and the application is complete or by having applicants withdraw requests before the one-year deadline expires and then refile afterward to restart the timeline.

In his April 10, 2019, Executive Order 13868, “Promoting Energy Infrastructure and Economic Growth,” President Donald Trump established a federal policy to promote energy investments, including by ensuring efficient and timely permitting and increasing regulatory certainty. The Order directed EPA to consult with stakeholders and review Section 401 and related EPA regulations and guidance to determine whether EPA’s interpretation of Section 401 should be clarified to promote energy infrastructure projects within the bounds of the Act. EPA undertook this review, issuing a proposed Rule in August 2019 and now this final Rule.

Key elements. After considering more than 125,000 public comments, the final Rule makes two essential clarifications to the Section 401 review process:

• First, the review process is limited only to impacts to water quality requirements from regulated discharges. In a number of instances, states denied applications based on legal requirements unrelated to impacts to water quality from discharges, arguing that Section 401 granted them the authority to consider any environmental impacts from the proposed project. For example, as noted in the Rule, New York in 2017 denied certification of a proposed natural gas pipeline project under Section 401 for having failed to consider the environmental effects of downstream greenhouse gas emissions. The Rule clarifies that EPA interprets Section 401 as authorizing a certifying authority to review only the water quality effects from a project’s potential point source discharge into waters of the United States. Hence, while a certifying state or tribe may include conditions on its certification, such as effluent limitations and monitoring requirements that are necessary for the project to comply with water quality standards, the conditions cannot address issues related to any other aspect of the project.
• Second, the timelines for review must fall strictly within the statutory period. The Act specifies that a certifying authority must act on a certification request “within a reasonable period of time (not to exceed one year) after receipt of such request …” 33 U.S.C. § 1341(a)(1). Certifying authorities have asserted that the Act allows a more flexible review period, as state agencies often claim applications are incomplete and that additional information is needed to conduct a proper review. The Rule includes procedures designed to ensure a timely process:
  • Mandatory pre-filing meeting request. The project proponent must request a pre-filing meeting with the certifying authority at least 30 days before filing the certification request. This request, even if not granted, provides advance notice to the certifying authority, allowing additional time for early coordination and project review.
  • Defined requirements for the “certification request.” The Rule specifies that the certification request must be a written, signed, and dated communication that includes specified project documents and information.
  • Review clock starts when the request is received by the certifying authority; there is no “tolling” of the one-year review period. The Rule defines “receipt” to mean the date that a certification request is documented as received by a certifying authority in accordance with applicable submission procedures. The Rule clarifies that there will be no tolling of the one-year review timeline. The certifying authority may grant a certification, grant it with conditions, deny it or waive it (either expressly or by failing to act in accordance with Section 401), and it must do so within a “reasonable period” but not more than a year from receipt of the request. 
  • The review period is up to, but not automatically, one year. The “reasonable period” for review can be less than one year and will be determined either categorically or on a case-by-case basis after consideration of relevant factors, including the complexity of the project, the nature of any potential discharge and need for additional study or evaluation of the effects of a discharge.
  • Mandatory federal oversight. Federal agencies are required to review final certification actions to confirm that they comply with procedural requirements under the CWA. However, any substantive review must be done by the courts.

Litigation expected. After the proposed Rule amending Section 401 was published in August 2019, 23 state attorneys general submitted comments, threatening to sue if EPA finalized the Rule. Since the final Rule hews closely to the proposal, it is likely that these states and other stakeholders will sue and argue that the Rule conflicts with legal precedent, including a 1994 Supreme Court case that allowed Washington State to include conditions that required minimum flows to protect fish. See PUD No. 1 of Jefferson County and City of Tacoma v. Washington Department of Ecology, 511 U.S. 700 (1994). EPA distinguishes the PUD decision, and premises its Rule, in part, on its interpretation of Section 401 based on the statutory text, the legislative history, judicial precedent and as a matter of the agency’s discretion to interpret the CWA. Ultimately, the federal courts will have to decide what the Act allows.