Section 401 of the Clean Water Act (CWA) requires applicants for federally permitted projects “that may result in any discharge into the navigable waters” of the United States to seek water quality certifications from the local certifying authority that has jurisdiction over the project area where the discharge would occur. This cooperative federalism within the CWA gives states and authorized tribes the ability to protect their water resources from impacts related to federally permitted projects. This in turn provides states with the potential to exert significant influence over the development of energy and infrastructure projects, many of which are national in scope. For example, federal projects that require Section 401 certification can include, but are not limited to, natural gas pipelines, liquefied natural gas terminals, coal export terminals, oil pipelines and other interstate projects.
In determining whether to issue a Section 401 water quality certification, states are required to consider whether the proposed activity satisfies effluent limitation standards, water quality standards, national standards of performance, toxic and pretreatment effluents standards, and “any other appropriate requirement of state law.” There are numerous examples of states relying on ambiguous language in their respective rules and regulations in order to halt development projects or place on them impractical conditions that are arguably unrelated to the protection of water quality, including using potential climate change-related impacts as a basis for denying a certification.
States’ influence under Section 401 has blocked or significantly delayed critical energy and infrastructure projects. Litigation and inconsistent application of the elements of the program to different projects are common.
To address the inconsistent application of the program and the threat posed to projects, particularly those that have national implications, in 2020, the U.S. Environmental Protection Agency (EPA) revised its regulations governing the implementation of the Section 401 Water Quality Certification Program with what is referred to as the 401 Certification Rule. See 40 CFR 121. Among other revisions are three noteworthy changes: 1) implementation of a one-year time frame for certification decisions; 2) a requirement that all decisions regarding Section 401 certifications be based on the proposed discharge, not on impacts of the activity (such as potential climate change-related impacts); and 3) a limitation that any conditions imposed as part of a certification be restricted to point source discharges.
Proponents of major energy and infrastructure projects viewed these changes as necessary to prevent individual states from blocking projects otherwise in the best interest of the country, whereas environmental groups and several states characterized the changes as a rollback of environmental protections. It appears the changes may be short lived. On June 2, 2021, EPA issued a notice of intent to reconsider the 401 Certification Rule, which suggests that EPA under the Biden administration will take a different view of the role of states in the Section 401 Water Quality Certification Program. In its notice of intent, EPA requested comment on 10 topics, including:
- The actual value of the pre-filing meeting and the 30-day timeframe.
- The extent to which non-water quality impacts should be considered in the certification process.
- Extending independent enforcement and inspection authority to the states.
- The appropriate scope of federal agency review and oversight of the certification process.
The comment period for the notice of intent ended on Aug. 2, 2021. Future blog posts will contemplate specific issues being considered by EPA in its review of the 401 Certification Rule and the potential implications for developers of energy and infrastructure projects in the United States.