Environmental Protection Agency Proposes Revised Clean Water Act Regulation

The U.S. Environmental Protection Agency (EPA) published a proposed rule on June 9, 2022, to revise the requirements for water quality certification under the Clean Water Act (CWA) Section 401. The proposed rule changes both the time in which certifying states and tribes must take action and what factors they may consider. The EPA will hold a virtual public hearing on July 18, 2022, and is accepting comments through Docket ID No. EPA-HQ-OW-2022-0128 until Aug. 8, 2022. The proposed rule is anticipated to take effect in Spring 2023.

Background

Under Section 401, a federal agency may not issue a license or permit to conduct any activity that may result in any discharge into navigable waters unless the state or tribe where the discharge would originate either 1) issues a Section 401 water quality certification finding "that any such discharge will comply with the applicable provisions of Sections 301, 302, 303, 306, and 307" of the CWA, or 2) certification is waived. 33 U.S.C. § 1341(a)(1). The scope of state and tribe review and the time period in which it must be completed have been the subject of recent litigation, often regarding natural gas projects under the jurisdiction of the Federal Energy Regulatory Commission (FERC), with project proponents arguing states failed to act timely and thus waiving their rights to issue a certification with conditions. Like its predecessor, this proposal seeks to clarify some of the disputed issues.

Under the Trump Administration in 2020, in response to Executive Order 13868, the EPA issued new regulations under Section 401 designed to increase the clarity and efficiency of the Section 401 certification process. Under the 2020 rule, states and tribes may only consider the impacts of the discharges themselves, rather than the activity as a whole, and may only evaluate compliance with "water quality requirements," defined as "regulatory requirements for point source discharges into waters of the United States." The 2020 rule has also been subject to litigation. On April 6, 2022, the U.S. Supreme Court issued a stay of the October 2021 order by the U.S. District Court for the Northern District of California that vacated the 2020 rule, putting its requirements back into effect. That litigation is ongoing. FERC also issued clarifying regulations published March 29, 2021, confirming the deadline by which Section 401 certifications must be issued in FERC proceedings.

The EPA has now published a proposed rule to displace the 2020 regulations. While retaining some of the streamlining improvements from the 2020 rule, the proposed rule hands authority back to states and tribes to define the terms of both the process and scope of Section 401 certifications.

Procedural Changes

• The EPA's proposed rule would allow each certifying authority to define the components of a request for certification in order to start the clock on certification. Under the 2020 rule, the EPA had adopted a uniform list of request components that would constitute a "request" and start the one-year timeframe for certification. But states and tribes argued that the "one size fits all" approach did not address varying state law requirements or the need for "more specific, tailored information." The proposed rule provides certifying authorities with more flexibility to define the scope of a complete request, but at the expense of clarity and certainty for project proponents regarding the timeline for agency action. The EPA is encouraging states and tribes to adopt or revise their own standards for a complete request in order to include all contents they want considered. This change may continue the historic conflict regarding what constitutes a complete application starting the clock to complete the process.
• The EPA's proposed rule would allow the certifying state or tribe and the EPA to jointly determine the appropriate length of time for certification within 30 days, with a default "reasonable period" of 60 days. The 2020 rule required federal agencies to set the "reasonable period" within 15 days after receipt of a certification request.
• The EPA has removed the regulatory bar to certifying authorities requesting an applicant withdraw and resubmit the certification request in order to circumvent the one-year limitation. The EPA believes that because the certifying authority may already impose extensive informational requirements in order for a request to be "received" and for the one-year clock to begin ticking, the certifying authorities are unlikely to need to utilize the withdraw-resubmit tool, which is already limited in certain circumstances under existing case law.

Substantive Changes

• The proposed rule would restore the authority of certifying states and tribes to evaluate the effects of the activity as a whole on water quality standards, rather than the "discharge-only" approach taken in the 2020 rule. Under this approach, every aspect of the project activity – including both construction and operation – could be considered and subject to conditions under Section 401. For hydropower projects, this could extend Section 401 certification beyond discharges from the tailrace or powerhouse to building fish passage or habitat restorations. For pipelines, this could include erosion or sedimentation conditions. States and tribes may also require adaptive management to address temperature, flow, riparian buffer conditions and species impacts under this broader approach. This has raised some concern about whether a federal licensing or permitting agency can effectively implement certification conditions that address the "activity as a whole" if it has authority over only a small part of a larger project.
• Consistent with the 2020 rule, the proposed rule would continue to require states and tribes to specifically identify the federal, state or tribal law that authorizes each condition imposed on a certification. However, the proposed rule will no longer require the certifying authority to explain how the condition will achieve the cited provision. The proposed rule similarly alleviates some of the burden on certifying authorities to justify denials by requiring a more general written explanation rather than a description of the specific water quality data or information needed to assure compliance.
• The proposed rule reinstates a modification process when circumstances warranting modification arise. The EPA is not proposing to define these circumstances, but generally requires the state or tribe and federal agency to be in agreement that modification is required.

While FERC and other federal agencies have their own regulations regarding Section 401 certifications, these agencies may follow the EPA's lead in the processing of applications once the proposed rule is adopted. Further information may be found on the EPA's website for the proposed rule, including the fact sheet, upcoming outreach and engagement opportunities and the rule's economic analysis. Given the history, it is expected that many stakeholders will comment on the proposed rule. Stay tuned.

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