Water quality certifications under Section 401 of the Clean Water Act (CWA) have become a focus for energy and transportation project opposition, and a couple recent decisions are likely to continue that trend.
The first recent decision relates to conditions imposed by states under Section 401. States and tribes frequently place conditions on their water quality certifications to ensure compliance with state or tribal requirements. These Section 401 certification conditions must be included in the resulting federal permit or license. The US Court of Appeals for the Fourth Circuit issued a decision at the end of November that rejected the Corps’ ability to avoid these state-imposed conditions. Sierra Club v. US Army Corps, No. 18-1173 (4th Cir., Nov. 27, 2018). The Fourth Circuit found that the Corps lacked authority to unilaterally change the state permit conditions for a portion of the Mountain Valley Pipeline, a natural gas pipeline, even in the context of streamlined nationwide permits (NWP). The court also held that a state cannot waive special conditions previously imposed on a NWP as part of the CWA section 401 certification process without notice-and-comment. The Fourth Circuit’s decision could make it more difficult to get around these state-imposed conditions for other projects as well. For example, the Corps has similarly attempted to change state permit conditions for the Atlantic Coast Pipeline, another natural gas pipeline.
The Fourth Circuit decision underscores recent concerns over Section 401, which continues to raise legal obstacles for energy and transportation projects across the country. Most notably, New York has denied the 401 certification for three natural gas pipelines in recent years.
This issue is not just impacting natural gas pipelines – we have also seen 401 challenges regarding hydroelectric projects, mines, and other types of development. For example, the State of Washington denied the 401 certification required to allow construction of the Millennium coal export terminal. The owners of the terminal challenged the denial, arguing that it violates the Commerce Clause, and that the State is preempted by federal law. On December 11, 2018, Judge Robert Bryan of US District Court in Tacoma dismissed claims that the permit denial was preempted by the Interstate Commerce Commission Termination Act and the Ports and Waterways Safety Act.
One of the questions raised in some Section 401 appeals is whether the state’s decision is based on legitimate water quality issues. The range of considerations for Section 401 certification varies widely from state to state, and is not strictly limited to water quality. Factors may include:
- wild and scenic rivers
- erosion and sedimentation
- stormwater management
- coastal protection
- threatened and endangered species and habitat
- submerged aquatic vegetation (SAV) impacts
- cultural or religious value of waters
Congress is currently considering legislation to try to reign in the scope of issues states may use to deny 401 certification. On July 31, 2018, Senators Barrasso, Inhofe, Capito, Enzi, and Daines introduced the Water Quality Certification Improvement Act of 2018 (S. 3303). The legislation makes several changes to Section 401 about the appropriate scope of review for a water quality certification, and would add procedural requirements on states’ processing of certification applications. Several senators also sent a letter to Acting EPA Administrator Wheeler in October asking EPA to “determine whether new clarifying guidance or regulations are needed in light of recent abuses of the Section 401 process by certain states.”
Given the strict enforcement of Section 401 that we have seen from courts to date, it seems unlikely that EPA can do much administratively to alter the certification process. Moreover, a legislative fix may be difficult in the next Congress. In the meantime, project opponents are actively lobbying states to deny 401 certificates for energy and infrastructure projects, as well as challenging state certification decisions. So CWA Section 401 is likely to remain an important and potentially contentious process for many projects over the coming year.