Overview
Under section 401 of the Clean Water Act (CWA), any applicant seeking a federal permit or license for an activity that “may result in any discharge into the navigable waters” must also obtain a water quality certification from the state or authorized tribe with jurisdiction over the project area where a discharge could occur. This requirement aims to ensure that the proposed activity will not violate state and tribal water quality requirements, in addition to other requirements under the CWA. Section 401 recognizes that water quality standards are set at state and tribal levels; it provides a process for federal agencies to check in with states and have them certify that the project will not violate these standards and other requirements. Projects requiring section 401 certification include those needing federal NPDES permits under CWA section 402, federal dredge and fill permits under CWA section 404, FERC licenses (e.g. for hydropower facilities and natural gas pipelines), and permits under the Rivers and Harbors Act.
States and tribes may grant, grant with conditions, or deny certification requests. If certification is denied, the related federal permit cannot be issued. The CWA mandates that certifying authorities must act “within a reasonable period of time (which shall not exceed one year) after receipt” of a certification request; otherwise, the certification requirement for that project will be waived. In 2019, the D.C. Circuit gave this waiver provision teeth in Hoopa Valley Tribe v. FERC, holding that the one-year period cannot be reset by the withdrawal and resubmission of certification requests.[1]
In determining whether to grant certification, states and tribes consider whether the proposed activity satisfies effluent limitations standards, water quality standards, national standards of performance, toxic and pretreatment effluent standards, and “any other appropriate requirement of state [or tribal] law.” The Supreme Court has twice upheld the broad discretion of states making certification determinations. In PUD No. 1 of Jefferson County v. Washington Department of Ecology, the Court held that a state can require a minimum stream flow requirement in its certification.[2] In doing so, the Court decided that certifying authorities may use section 401 to impose conditions on “activities” as a whole, not just on individual discharges. The Court confirmed this holding in S. D. Warren Co. v. Maine Board of Environmental Protection, explaining that section 401 certifications are “essential in the scheme to preserve state authority to address the broad range of pollution.”[3]
The Trump Era and State Certification Denials
Seeking to protect water quality within their borders, states have used their section 401 authority to deny certification for a variety of proposed activities related to fossil fuels. For example, Washington denied certification for a proposed coal export terminal in 2017, New York denied certification for a natural gas pipeline in 2018, and Oregon denied certification for a liquified natural gas export facility in 2019. Increasingly frustrated with states’ ability to halt energy industry projects, the Senate Committee on Environment and Public Works held a hearing in August 2018 to discuss alleged state “abuses” of the section 401 certification program.
On April 10, 2019, President Trump issued EO 13868, the Executive Order on Promoting Energy Infrastructure and Economic Growth. Noting that “[o]utdated [f]ederal guidance and regulations regarding section 401 . . . are causing confusion and uncertainty and are hindering the development of energy infrastructure,” the EO directed the EPA Administrator to ensure section 401’s consistency with the government’s goal of “promot[ing] private investment in the Nation’s energy infrastructure,” including through “efficient permitting processes.” The EO also directed the Administrator to “take into account federalism considerations underlying section 401.” The Administrator was instructed to issue new guidance on section 401 within 60 days, and to publish proposed rules revising EPA’s implementing regulations within 120 days.
In June 2019, pursuant to EO 13868, EPA rescinded the Obama Administration’s interim guidance on section 401, replacing it with a new guidance that declared the Trump Administration’s intention to “place[] limitations on how [the state and tribal] role may be implemented to maintain an efficient process that is consistent with the overall cooperative federalism construct established by the CWA.” The guidance announced EPA’s plan to “moderniz[e]” the section 401 implementing regulations.
On August 22, 2019, EPA published a proposed rule “intended to increase the predictability and timeliness of section 401 certification.” The proposed rule proceeded through the notice-and-comment process. On June 1, 2020, EPA finalized the Clean Water Act Section 401 Certification Rule.[4] The Certification Rule was published in the Federal Register on July 13, 2020, and went into effect on September 11, 2020. Litigation challenging the Certification Rule is pending in multiple federal district courts.[5]
Overview of the Certification Rule
The Certification Rule places three notable limits on the section 401 certification process. The first limit relates to the timeframe for certification; the second and third relate to the scope of review in which certifying authorities can engage.
First, the Certification Rule codifies the D.C. Circuit’s decision in Hoopa Valley Tribe that certifying authorities are bound by a strict timeline in making their certification decisions. Under the Certification Rule, “federal agencies determine the reasonable period of time for a certifying authority to act on a certification request,” based on the complexity of the proposed project, the nature of any potential discharge, and the potential need for additional study of water quality effects from the discharge. This timeframe is subject to an “absolute outer bound of one year,” and the CWA does not contain any “tolling provision” for this deadline.
Second, the Certification Rule establishes that a certification decision must be based on specific discharges from a proposed activity, not on the water quality effects of the activity as a whole. This limitation goes against the Supreme Court’s decision in PUD No. 1, where the Court allowed states to impose conditions on activities as long as those activities included discharges that triggered section 401. For example, the Court decided that states and tribes may consider activities’ effects on water quantity (such as minimum stream flow requirements in order to protect fish populations) as part of the inquiry into an activity’s effects on water quality.
Finally, the Certification Rule restricts the conditions that states and tribes may impose, limiting them to point source discharges into waters of the United States and no longer allowing conditions related to nonpoint source discharges or discharges into nonfederal waters. As a result, the certification process must be based mainly on the requirements of the CWA itself and cannot consider issues related to waters protected under state law. This decision reflects EPA’s determination that “section 401 focuses on water quality and is not intended to address other environmental impacts such as air emissions, transportation effects, [and] climate change.” Thus, states and tribes responding to certification requests can no longer consider such factors.
The Certification Rule contains various other provisions; for example, it encourages advance coordination between federal agencies, state and tribal certifying authorities, and private parties submitting certification requests. The following section, however, focuses specifically on the legal rationales posited by EPA for the above three significant changes.
The Legal Interpretations Underpinning the Certification Rule
This section outlines the legal basis for the three major changes to section 401 implementation, and suggests that while the timeframe requirement may be required by the CWA (as it has been interpreted), the other two changes can be more readily undone by the incoming Biden Administration. In particular, because EPA acknowledges significant statutory ambiguity with regard to the scope of section 401 certification, a future administration should be able to interpret section 401 differently.[6]
I. Timeframe for Certification Analysis and Decision
The Certification Rule’s requirement of a strict one-year maximum timeline stems from the plain text of section 401, which states that certifying authorities must act “within a reasonable period of time (which shall not exceed one year) after receipt” of a certification request. In Hoopa Valley Tribe, the D.C. Circuit found that “[s]ection 401’s text is clear” not only that one year is the “absolute maximum time permitted for certification,” but also that federal agencies may “find[] waiver prior to the passage of a full year.”[7] The Certification Rule codifies this holding, explaining that this timeframe requirement “reflects the plain language of section 401,” and adding that the “clock does not toll for any reason.”
Given Hoopa Valley Tribe’s holding that section 401 unambiguously 1) allows federal agencies to set timelines shorter than one year, and 2) prevents the timeframe from ever exceeding one year (and prohibits the withdrawal and resubmission of certification requests to extend this timeframe), a future administration is unlikely to be able to change these elements of the Certification Rule through regulation. Nevertheless, future administrations can be more lenient in determining the “reasonable period of time” in which certifying authorities must act to avoid waiver. The Certification Rule acknowledges that it provides federal agencies the “maximum flexibility” in determining this timeframe, as long as it does not exceed one year. Therefore, federal licensing and permitting agencies retain the option of setting the timeline close to or at the one-year maximum, if they find that doing so is “reasonable.”
II. Activity Versus Discharge
In PUD No. 1, the Supreme Court held that although the presence of a discharge is necessary to trigger section 401, certifying authorities may impose conditions on the proposed activity as a whole — not just the discharge — once section 401 is triggered. In particular, the Court found that “EPA’s conclusion that activities — not merely discharges — must comply with state water quality standards is a reasonable interpretation of § 401, and is entitled to deference.”[8] The Certification Rule has instead limited section 401 certifications to a review of the discharge. Under the Certification Rule, “[t]he scope of a . . . section 401 certification is limited to assuring that a discharge” — not the activity as a whole — “will comply with water quality requirements.”[9]
EPA casts this interpretation as a reasonable one in light of ambiguities created by the text and the legislative history of section 401. It notes that section 401(a) refers specifically to discharges, whereas section 401(d) authorizes certifying authorities to establish conditions to assure that the “applicant” — not merely the discharge — will comply with applicable requirements. EPA notes that these two sections render the scope of certification ambiguous, and it has opted to resolve this ambiguity in favor of discharge-only regulation. This decision rests partly on the legislative history of section 401: EPA writes that the 1972 amendments to the Federal Water Pollution Control Act of 1948, which created the CWA, specifically changed the law’s focus from “activity” to “discharge.”
EPA acknowledges that the Certification Rule’s interpretation is “not consistent with the majority opinion in PUD No. 1.” But it writes that because PUD No. 1 recognized that section 401 is ambiguous, the agency’s interpretation of the provision can change. In other words, the EPA’s interpretation approved by the Supreme Court in PUD No. 1 was just one possible interpretation, and EPA can advance an alternative reasonable interpretation and still receive Chevron deference. [10]
This portion of the Certification Rule, unlike the timeframe requirement, should be relatively easy for a future administration to undo. EPA has acknowledged that this “activity versus discharge” issue is “susceptible to a multitude of interpretations,” including the one condoned by the Supreme Court in PUD No. 1. Therefore, if a future agency reverts to the position that section 401 certification conditions can extend to activities as a whole such that they require compliance with various other CWA provisions, that position should still be entitled to deference, given that the Court has already deemed it a reasonable reading of the statute (and perhaps even the best reading).
If a future administration opts to reverse the Certification Rule’s position on this issue, it should be careful to acknowledge the potential ambiguities in section 401 noted by the Trump EPA. Doing so will be particularly important if reviewing courts view this reversal as a “policy change” that must be explained under FCC v. Fox Television Stations, Inc.[11] A new administration should acknowledge the Certification Rule’s interpretation and explain why it has instead chosen a different interpretation, like the one in PUD No. 1.
III. State- and Tribe-Imposed Conditions
Section 401 allows certifying authorities to impose “any other appropriate requirement of state [or tribal] law.” The Certification Rule interprets this language to refer to “state or tribal regulatory requirements for point source discharges into waters of the United States.”[12] Thus, under the Certification Rule, “nonpoint source discharges and discharges to other non-federal waters are not within the scope of certification”; furthermore, certifying authorities are no longer allowed to impose conditions related to “other environmental impacts such as air emissions, transportation effects, [and] climate change.”
To arrive at this conclusion, EPA decided that “other appropriate requirements of state law” must be “counterparts” to the sections of the CWA with which a state or tribe must certify compliance: sections 301, 302, 303, 306, and 307. EPA writes that other than section 303, all of those enumerated sections concern discharge-related limitations to point sources, and that the water quality standards of section 303 are “primarily used to establish numeric limits in point source discharge permits.” Applying the interpretive canon of ejusdem generis,[13] EPA finds that the phrase “other appropriate requirements of state law” extends “only to provisions that, like other provisions in the statutory list, impose discharge-related restrictions.”
A future administration has several options to justify reversing course on this issue. For one thing, EPA’s application of ejusdem generis here may be suspect, in particular with respect to its discussion of section 303 of the CWA. The Certification Rule’s claim that section 303 is primarily used in relation to point source discharges arguably misconstrues the fundamental purpose of that section. The water quality standards mandated by section 303 are specifically designed to supplement the technology-based point source regulations otherwise pervasive in the CWA; for example, section 303 requires total maximum daily loads (TMDLs) to be enforced in waters where point source regulation is insufficient to meet water quality standards, and courts have found that EPA can take nonpoint source pollution into account in setting these TMDLs.[14]
More importantly, though — and parallel to the “activity versus discharge” issue —EPA has acknowledged that the phrase “other appropriate requirements of state law” is ambiguous and is subject to a “range of potential interpretations.” For example, EPA admits that one interpretation is that states and tribes may impose certification conditions relating to nonfederal waters and nonpoint source discharges, in addition to those the Certification Rule allows.[15] EPA opines that this interpretation “not required by the statute and is not the better reading of section 401(d),” but it does not deem it impermissible.[16] Another interpretation would allow certifications to be based on any state or tribal law, “regardless of whether it is related to water quality.” EPA writes that this interpretation would “exceed the scope of authority provided under the CWA” by rendering the word “appropriate” superfluous, but it acknowledges that “[t]his interpretation reflects the current practice of some certifying authorities.” In summary, EPA acknowledges that the Certification Rule’s interpretation of “other appropriate requirements of state law” is no more than a “reasonable interpretation of the ambiguous statutory text.”
As with the “activity versus discharge” issue, a future administration can agree that the CWA is ambiguous, but decide to adopt a different interpretation. In particular, there is a strong statutory argument that certifying authorities can impose conditions relating to nonpoint discharges and discharges into nonfederal waters. Conditions affecting water quality indirectly — such as air quality, climate change, and transportation effects — might be more susceptible to judicial skepticism, but may survive challenge if the state or tribe describes their effects on water quality in sufficient detail.
Conclusion
The Certification Rule acknowledges that the language of section 401 contains considerable ambiguity. In particular, uncertainty persists over whether the provision is best read to allow conditions on the proposed activity as a whole or solely on discharges, and over the scope of the phrase “any other appropriate requirement of state law.” The Trump Administration opted to confine certifying authorities’ powers under section 401 by allowing them to impose conditions only on specific discharges from point sources into waters of the United States. But its admission of ambiguities has made this approach susceptible to change.
Although the Biden Administration could simply repeal the Certification Rule outright, it will have more success in the courts if it squarely addresses the areas of ambiguity raised by the Certification Rule. In particular, the Biden Administration can resolve these ambiguities in favor of allowing states and tribes more autonomy in the certification process — after all, section 401 is fundamentally shaped by federalism concerns.[17] Doing so will allow certifying authorities to impose conditions essential to their own policy visions on environmental and climate protection. Additionally, the Biden Administration can collaborate with these states and tribes — whether through federal guidelines on the permissible scope of certification conditions, or through less formal means — in order to pursue its own objectives, ranging from renewable generation capacity to environmental justice.
[1] Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1101 (D.C. Cir. 2019), reh’g denied, No. 14-1271, 2019 WL 3928669 (D.C. Cir. 2019), cert. denied sub nom. California Trout v. Hoopa Valley Tribe, 140 S. Ct. 650 (2019).
[2] PUD No. 1 of Jefferson Cty. v. Wash. Dep’t of Ecology, 511 U.S. 700, 710 (1994).
[3] S. D. Warren Co. v. Me. Bd. of Envtl. Prot., 547 U.S. 370, 387 (2006).
[4] Clean Water Act Section 401 Certification Rule, 85 Fed. Reg. 42210 (July 13, 2020) (to be codified at 40 C.F.R. pt. 121) [hereinafter Certification Rule].
[5] Del. Riverkeeper Network v. EPA, No. 2:20-CV-3412 (E.D. Pa. filed July 13, 2020); American Rivers v. Wheeler, No. 20-04636 (N.D. Cal. filed July 13, 2020); California v. Wheeler, No. 4:20-cv-04869 (N.D. Cal. filed July 21, 2020); S.C. Coastal Conservation League v. Wheeler, No. 2:20-cv-03062 (D.S.C. filed Aug. 26, 2020); Suquamish Tribe v. Wheeler, No. 3:20-cv-06137 (N.D. Cal. filed Aug. 31, 2020).
[6] The Certification Rule’s admissions of ambiguity seemingly differentiate it from the Trump EPA’s ACE Rule and WOTUS Rule, which both asserted that the statutory language was clear and supported the Trump EPA’s interpretations.
[7] Hoopa Valley Tribe, 913 F.3d at 1103–04.
[8] PUD No. 1 of Jefferson Cty. v. Wash. Dep’t of Ecology, 511 U.S. 700, 712 (1994).
[9] 40 C.F.R. § 121.3 (emphasis added).
[10] See Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Serv., 545 U.S. 967 (2005).
[11] 556 U.S. 502 (2009).
[12] 40 C.F.R. § 121.1(n) (emphasis added).
[13] Ejusdem generis, latin for “of the same kind,” is the notion that when a statute lists specific classes of things and then ends the list with a general phrase such as “other appropriate requirements of state law,” the general phrase should be interpreted to include only similar kinds of things as the specific ones listed.
[14] See, e.g., American Farm Bureau Federation v. EPA, 792 F.3d 281 (3d Cir. 2015); Pronsolino v. Nastri, 291 F.3d 1123 (9th Cir. 2002).
[15] See Certification Rule at 42256 (“The EPA also considered another broader interpretation that would authorize certification conditions based on any State or Tribal water quality-related provision. Such an interpretation could bring in conditions that purport to address non-federal waters or that regulate nonpoint source discharges.”).
[16] EPA does contend that this interpretation “errs by equating ‘appropriate’ with ‘any’ and thereby fails to provide meaning to the word ‘appropriate,’” but opts not to definitively decide whether the interpretation is permissible under the statute. Id.
[17] See, e.g., S. D. Warren Co. v. Me. Bd. of Envtl. Prot., 547 U.S. 370, 387 (2006) (“State certifications under § 401 are essential in the scheme to preserve state authority to address the broad range of pollution.”).