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Energy and Environment Monitor

The Administrative State Crumbles

June 17, 2019

By: Blair M. Gardner

The EPA issued a new guidance document on June 7th instructing other federal agencies and the states how they should interpret and implement §401 of the Clean Water Act (“CWA”). Individually, it is a modest step taken to fulfill an executive order issued earlier this year and will be followed by a new rule updated existing EPA’s §401 regulations. Viewed in context, it is another brick removed from the administrative edifice created by the prior administration.

Section 401 is a little-known provision of the CWA that authorizes the states to certify that activities associated with a federally-issued permit will not impair water quality in the state where the permit will operate. It has been discussed by the U.S. Supreme Court only twice in cases in 1994 and 2006, each of which concerned hydroelectric dams licensed by the Federal Energy Regulatory Commission (“FERC”). See PUD No. 1 of Jefferson County v. Washington Department of Ecology, 511 U.S. 700 (1994); S.D. Warren v. Maine Board of Environmental Protection, 547 U.S. 370 (2006). In more recent years, the §401 certification process has been weaponized by environmentalists to delay and ultimately deny authorization. Their primary target has been the oil and gas pipelines needed to deliver Marcellus-sourced shale gas into metropolitan New York and New England. Those projects, like the hydroelectric dams that were the subject of the Supreme Court cases, are also authorized by a FERC permit.

The June 7 EPA guidance focuses on three topics: 1) the timeline in which a state may exercise its rights of §401 certification; 2) the scope of certification review and the imposition of conditions to satisfy certification, and 3) information within the scope of the certification review.

The first issue is the one that has been most subject to abuse by states that disfavor projects requiring certification. States have one year in which to act on a certification request. Previously, EPA had decided that the clock began to tick when the underlying permit was deemed complete. This will change, and a state must act within one year once certification is requested. There is no tolling language in §401 so the one-year period will not stop and start based on requests for additional information. If the state denies certification, then its decision may be challenged by a permit applicant. If the state fails to act, then its right of certification is deemed waived by the language of §401.

The second issue - the appropriate scope of the review - is one that EPA has stated it will discuss in further detail in its future rulemaking. Under the CWA, the §401 certification process is designed to allow the states to verify that all discharges associated with the federally-issued permit will comply with the applicable provisions of the state’s water quality standards and effluent limitations as well as some other enumerated CWA provisions. Conditions may be added to the §401 approval to ensure this outcome. In some states, however, the §401 certification review as becoming a grab bag for broader environmental concerns. EPA is likely to provide additional clarity about the scope of review in its future rulemaking.

Finally, the scope of information relevant to a state’s review is likely to narrow in the coming rulemaking. One of the games played in recent years in the §401 review is the “request for information”, which is the demand that additional data or discussion be provided on some aspect of the project to allow the state to proceed with review. Since some states have treated the time during which the permit applicant gathers and provides the additional information as tolling its certification decision, it has prolonged the process for securing the final the §401 certification, thus thwarting whatever federally issued permit is issued. This gambit will come to an end as EPA is likely to confine information needed for review to whatever information is contained in the federal permit application.

EPA commenced its rulemaking for revising the §401 certification process on April 15th by requesting pre-proposal recommendations from the states. That information request ended before Memorial Day. Expect the agency to take at least a year to propose new regulations, receive comments, and issue a final rule. As with most environmental regulations, the goal will be to have a final rule in place before Inauguration Day of 2021. Given that §401 certification is a process, new regulation may be more difficult to dislodge regardless of which party occupies the presidency in 18 months.

 

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