Companies seeking approval for pipelines got some encouraging news from a Trump Administration proposal to cut back on states’ authority to block pipelines by withholding state water quality approvals, but environmentalists and states continue to express skepticism and are likely to sue. On August 22, the EPA proposed its Updating Regulations on Water Quality Certification (“Proposed Rule”) to replace and update the existing water quality certification process under Section 401 of the Clean Water Act (“CWA”). The EPA’s Proposed Rule comes in response to Executive Order 13868, Promoting Energy Infrastructure and Economic Growth, issued on April 10, 2019 to “reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment.” To ensure “the timely construction of the infrastructure needed to move our energy resources through domestic and international commerce,” the Administration directed the EPA to update Section 401 for purposes of achieving a more “efficient permitting process.”

In furtherance of those goals, the Administration intends to narrow the scope of states’ and authorized tribes’ certification authority under Section 401, thereby limiting the extent to which states and tribes can enforce their own water quality standards. Comments to the Proposed Rule are due on or before October 21, 2019; environmental advocates, as well as states and tribal authorities, have expressed opposition, particularly to the 60-day public comment period, proposing a delay to afford the agency sufficient time to consult with states and tribes.

Background

Section 401 of the Clean Water Act requires any applicant for a Federal license or permit to conduct construction activities that may result in any discharge into navigable waters of the United States to provide—and first obtain—a certification from the state or tribal permitting agency in the jurisdiction in which the discharge originates that the particular project will comply with the requirements of the CWA. In this way, Section 401 provides states and tribal bodies with the power to prevent the issuance of a Federal permit if the construction and operation of the project would violate state water quality standards. To this end, the Clean Water Act authorizes states and tribal bodies to establish their own water quality standards, which can be incorporated into a federal permit under Section 401.

On its face, the Proposed Rule narrows the scope of state and tribal Clean Water Act review and certifications. In effect, the rule would also limit state and tribal authority to set water quality requirements or impose conditions on certification, and to impose delays on infrastructure projects through certification review processes. The following reflects a high-level summary of its key proposals:

One-Year Review Limit

Perhaps most notably, the Proposed Rule requires a “certifying authority [to] act on a Section 401 certification within a reasonable period of time, which shall not exceed one year and that there is no tolling provision to stop the clock at any time.” 84 Fed. Reg. 44,080, 44,099. The Proposed Rule makes clear that “receipt” of an application (or certification request) need not mean receipt of a “complete application,” rescinding the EPA’s prior Section 401 guidance (the now-withdrawn 2010 Interim Handbook). Id. at 44,101. The Agency notes that “[t]he CWA does not contain provisions for pausing or delaying the timeline for any reason, including to request or receive additional information from a project proponent.” Id. The Proposed Rule thus narrows states’ and tribal bodies’ authority to require a complete application before the timeline is triggered for the certifying authority’s review.

In this way, the Proposed Rule limits state or tribal bodies’ authority under Section 401 to grant, deny, or condition a permit if the application is not resolved within a year—notwithstanding the fact that the application for a permit may be incomplete.

Non-Water Quality Related Considerations, Unqualified Discharge, EPA Veto Power

Additional substantive proposed changes include the EPA’s elimination of “non-water quality related” considerations, and requiring EPA approval for “other appropriate requirements of state law.” See Proposed Rule at 44,095 (“When states or tribes enact CWA regulatory provisions as part of a state or tribal program, including those designed to implement the section 402 and 404 permit programs and those that are more stringent than federal requirements, those provisions require EPA approval before they become effective for CWA purposes.”) The EPA argues that its prior guidance “resulted in the incorporation of non-water quality related considerations into [state] certification review process,” and lacked “clear direction from Congress.” Id. at 44,040; 44,094 (listing the following as examples of considerations “not directly related to water quality,” including “requiring construction of biking and hiking trails, requiring one-time and recurring payments to state agencies for improvements or enhancements that are unrelated to the proposed federally licensed or permitted project, and creating public access for fishing along the waters of the United States.”).

Additionally, the EPA proposes to limit certifications under Section 401 to any unqualified discharge, rather than discharges of pollutants. Proposed Rule at 44,100. It similarly clarifies that “potential discharges into state or tribal waters that are not waters of the United States do not trigger the requirement to obtain section 401 certification,” narrowing previous practice that included certifications considering and regulating impacts from other “activities,” such as non-point source discharges. See PUD No. 1 of Jefferson County and City of Tacoma v. Washington Dep’t of Ecology, 511 U.S. 700 (1994) (“PUD No. 1”); S.D. Warren Co. v. Maine Board of Environmental Protection et al., 547 U.S. 370 (2006) (“S.D. Warren”).

Finally, the Proposed Rule allows the EPA to veto a state or tribe’s decision with respect to Section 401 certification if the EPA decides that the certification decision does not satisfy the Federal requirements. In other words, if the EPA disagrees with a certifying authority’s determination, the certifying authority may be subject to an EPA override, thereby losing its certification authority under Section 401.

Given the significant changes to the relationship between the states and Federal government with respect to enforcing the Clean Water Act through Section 401 certifications, there is likely to be significant litigation over the Proposed Rule’s validity. The EPA’s public comment period remains open through October 21, 2019.