The Nickel Report

On Wednesday, April 10, President Trump signed an Executive Order (EO), titled Promoting Energy Infrastructure and Economic Growth, that requires the US Environmental Protection Agency (EPA) and other federal agencies to undertake a series of regulatory actions to clarify the Clean Water Act (CWA) § 401 water quality certification (WQC) process. CWA § 401 provides states with the opportunity to evaluate the potential water quality impacts from discharges of proposed projects by certifying whether the discharge will comply with applicable water quality standards. States can waive this requirement, and if they do not act within “a reasonable period of time (which shall not exceed one year) after receipt” of a request for certification, waiver is automatic. 33 U.S.C. § 1341(a). A handful of states have relied on this process to thwart the development of energy infrastructure projects, either by denying certification due to concerns unrelated to water quality (such as opposition to hydraulic fracturing, climate change concerns, etc.) or by ignoring the statutory time period to reach a determination.

The EO directs the EPA to coordinate with other relevant permitting agencies, such as the US Army Corps of Engineers, to identify ways to revise outdated guidance and regulations to clarify important aspects of the state water quality certification process. As the agency charged with CWA implementation, EPA is in the best position to provide clarifying guidance on the WQC process. EPA regulations implementing CWA § 401 were promulgated in 1971 and have not been updated since 1979. They provide only minimal criteria for states in issuing certifications, and they do little to clarify the timeframe for a state to act on a WQC application before the requirement will be deemed waived. See 40 C.F.R. Part 121. In addition, statements contained in EPA’s “interim” CWA § 401 Handbook that address the timeline and scope of state review are similarly deficient and have recently been deemed unlawful by court decisions. See, e.g., New York State Department of Environmental Conservation v. FERC, 884 F.3d 450 (2d Cir. 2018) (confirming that the statutory time period for review begins upon a state’s “receipt of such request”).

Pursuant to the EO, EPA must consult with states, tribes and relevant agencies to revise EPA’s 401 Handbook and modernize EPA’s § 401 regulations. Within 60 days (by approximately June 10, 2019), EPA must issue new guidance that addresses the appropriate scope of state review, the types of conditions that may be included in a certification, the reasonable times for review of various types of certification requests, and the nature and scope of information states may need to act on a certification request within a prescribed period of time. Following issuance of its own 401 guidance, EPA is directed to lead an interagency review of other permitting agencies’ guidance and regulations. Within 90 days of the issuance of EPA’s new guidance (by approximately September 9, 2019), those agencies shall update their respective guidance documents.

 Within 120 days after the date of the EO (by approximately August 8, 2019), EPA must publish proposed rules implementing § 401 that are consistent with the new guidance. The EO directs EPA to finalize these rules within 13 months (by May 2020). Within 90 days of the completion of the EPA rulemaking (by August 2020), the other federal permitting agencies, if necessary, must initiate rulemakings to ensure consistency with EPA’s rulemaking.

Once finalized, the guidance and new regulations should aid regulators and permittees in ensuring the timely processing of CWA § 401 WQCs. Faced with tighter timelines, however, some states may choose to rely on their statutory authority to deny WQCs without prejudice, forcing applicants to re-apply and providing the state agency with more time to review the application. This approach would likely be the exception to the rule. In most cases, states will likely try and meet the new timelines established by EPA and other agencies, providing a more predictable and efficient permitting process.