Regulatory Developments, Special Topics in Environmental Management

Executive Order Directs EPA to Review State Water Certifications

As part of a new policy to expedite the permitting and construction of energy infrastructure projects, President Donald Trump has issued an Executive Order (EO) directing the EPA to review and revise the federal program for Clean Water Act (CWA) Section 401 certifications.

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Specifically, the Agency must review its 2010 guidance document on Section 401 certifications, revise the guidance in conformance with the energy policy stated in the EO, and initiate rulemaking to revise implementing regulations for Section 401 certifications, also in conformance with the EO’s policy “to promote private investment in the nation’s energy infrastructure.”

A Powerful Tool for States

Section 401 provides that any applicant for a federal license or permit to conduct any activity that may result in a discharge to waters of the United States must provide the federal agency with a Section 401 certification. The certification, which is made by the state in which the discharge originates, declares that the discharge will comply with applicable provisions of the CWA, including water quality standards. The section gives states considerable powers, mainly the ability to both indirectly deny federal permits or licenses by withholding certification power and impose conditions on federal permits by placing limitations on certification.

Expanding Range of Impacts

Industry and its advocates in Congress have been concerned that states are misusing their Section 401 authority. For example, the conservative view is that a state should withhold a certification if there would be an adverse impact only on water quality within that state. However, some have charged that states are looking at other environmental impacts—for example, air pollution—to deny or limit certifications.  The front-page story on this topic is Washington State’s denial of a Section 401 certification for a project to ship Western coal by rail to a proposed export terminal on the Columbia River. Among its reasons for denying the permit, the state listed increased air pollution from railroads, as well as impacts on regional traffic.

Water Quality or Politics?

This month, Senator John Barrasso (R-WY) specifically cited Washington’s denial when he proposed legislation that would limit the scope of a Section 401 review to water quality impacts.

“The water quality certification process is being abused to delay important energy projects,” said Barrasso. “Washington state has hijacked the water quality certification process and blocked Wyoming coal from being exported. Workers across the West would benefit from the coal export terminal Washington state has blocked. Washington state’s obstruction is about politics, not water quality. Similarly, [E]ast [C]oast states are using these authorities to block natural gas pipeline projects.”

New Regs by May 2020

The president’s EO indicates that the EPA’s review of the Section 401 guidance should focus on the need to promote timely federal-state cooperation and collaboration, as well as the “appropriate scope of water quality reviews” and the “types of conditions that may be appropriate to include in a certification.” Within 60 days after the April 11, 2019, date of the EO, the EPA must complete its review, issue new Section 401 guidance to the states, and also issue guidance to other federal agencies involved in the Section 401 process.

Regarding rulemaking, the EO gives the EPA 120 days to propose revisions to regulations at 40 CFR Part 121 (State Certification of Activities Requiring a Federal License or Permit) and 13 months to issue final revisions to those regulations.

States Want to Be Consulted

Some states have expressed concern about signs from the administration that it wants to curtail their Section 401 authority. In February 2019, several state organizations, including the Western Governors’ Association and the Western States Water Council, wrote to the  EPA and the Army Corps of Engineers about the potential changes.

“Curtailing or reducing state authority under CWA Section 401, or the vital role of states in maintaining water quality within their boundaries, would inflict serious harm to the division of state and federal authorities established by Congress,” said the organizations. “Any regulatory change to the Section 401 permitting process must not come at the expense of state authority and—regardless of whether promulgated through Administrative Procedure Act rulemaking or otherwise—federal action should be informed by early, meaningful, substantive, and ongoing consultation with state officials.”