Overview
The US Environmental Protection Agency (EPA) issued guidance on June 7 to clarify the implementation of Clean Water Act (CWA) Section 401. The guidance "is intended to assist federal permitting agencies and states and tribes until the EPA promulgates a final rule updating its CWA Section 401 regulations."
Under Section 401, a federal agency cannot issue a permit for activity involving a discharge into waters of the United States unless the state where the discharge occurs issues a certification of compliance with state water quality requirements or waives the certification. A state can deny certification if it determines the project will have a negative impact on water quality within the state's borders, even if the project would otherwise be approved by a federal regulator like the Federal Energy Regulatory Commission (FERC) or the US Army Corps of Engineers (USACE).
Water quality certifications under Section 401 have become a focus for energy and transportation project opposition across the country. For example, New York has denied the 401 certification for several natural gas pipelines in recent years, and 401 challenges have impacted other types of infrastructure and energy development in other states. Some of the state decisions were perceived as politically motivated, and were criticized for relying on considerations beyond traditional water quality impacts, including climate change.
The Trump administration has sought to limit this perceived misuse of Section 401, including through Executive Order 13868, which directed EPA to clarify CWA Section 401 requirements. As directed by the EO, EPA's new guidance addresses the following topics:
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timelines for action on Section 401 certifications;
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appropriate scope of Section 401 certification review and conditions; and
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information within the scope of Section 401 certification reviews.
Timing. EPA does not set new timelines in the guidance. However, the guidance provides that an outstanding request for information does not toll the time for acting on a certification request. "Accordingly, any effort by a state or tribe to delay action past the reasonable timeline due to insufficient information may be inconsistent with the Act and specifically with Section 401."
Scope. EPA provides that the scope of a Section 401 certification review, and the decision whether to issue a certification, is limited to an evaluation of potential water quality impacts. This is a critical point, as many states have been criticized for bringing in factors arguably unrelated to water quality, such as climate change. EPA goes on to suggest that if a state issues a certification with conditions "not related to water quality requirements," or denies a certification based on factors "beyond the scope of Section 401," federal agencies may issue a permit without the conditions, or determine that waiver has occurred.
Information. EPA recommends that project proponents provide appropriate water quality-related information to the state to ensure timely action on a request. EPA recommends that states do not delay action on a certification request based on on-going NEPA reviews, since the environmental review required by NEPA has a broader scope than that required by Section 401.
EPA provides numerous recommendations to federal and state agencies, including:
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developing model procedures to facilitate efficient and consistent Section 401 certifications, including anticipated timelines and identification of relevant aquatic resources and relevant effluent limitations and water quality standards.
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establishing reasonable timelines for action on Section 401 certifications, potentially based on the type of permit under review and the complexity of the project.
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having lead federal agencies coordinate deadlines and make waiver determination recommendations for its federal partners when multiple federal agencies are involved.
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consulting with EPA where questions arise concerning the application of Section 401.
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identifying state Section 401 certification conditions that are clear, specific, and directly related to a water quality requirement.
Section 401 provides states a powerful tool in federal permitting decisions, and there are limits on how much this administration can curb its usage without legislative change. Nonetheless, EPA’s guidance, and upcoming changes to its 401 regulations, may be helpful to federal agencies and applicants in ensuring that state activities under 401 are limited to established water quality requirements. The guidance may also be helpful in ensuring that certifications are completed within the one year limit. Although EPA's prior Section 401 guidance indicated that the timeline for state action began upon receipt of a "complete application," EPA has now reversed that position and provided that the timeline begins on receipt of a written request for certification.