The Nickel Report

On June 1, the U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, signed a final rule seeking to increase predictability for applicants by clarifying the regulations that govern the Clean Water Act (CWA) Section 401 water quality certification process.

Over the past few years, certain states have relied on ambiguities in the Clean Water Act (CWA) Section 401 water quality certification process to block the construction of significant energy infrastructure projects (e.g., oil and gas pipelines, coal export facilities, and liquid natural gas [LNG] terminals) determined by federal agencies to be in the public interest of individual states, regions, and the nation as a whole. Consistent with the cooperative federalism structure of the CWA—and the important role of states in protecting water quality within their borders—Section 401 requires applicants for a federal license or permit anticipated to result in discharges to navigable waters to obtain a certification from the relevant state that the discharge will comply with applicable state 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 the request for the certification, waiver is automatic. 33 U.S.C. § 1341(a).

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.

Recent press reports indicate that a cyber-attack disabled the third-party platform used by oil and gas pipeline company Energy Transfer Partners to exchange documents with other customers. Effects from the attack were largely confined because no other systems were impacted, including, most notably, industrial controls for critical infrastructure. However, the attack comes on the heels of a Federal Bureau of Investigation and Department of Homeland Security (“DHS”) alert warning of Russian attempts to use tactics including spearphishing, watering hole attacks, and credential gathering to target industrial control systems throughout critical infrastructure, as well as an indictment against Iranian nationals who used similar tactics to attack private, education, and government intuitions, including the Federal Energy Regulatory Commission (“FERC”). These incidents are raising questions about cybersecurity across the US pipeline network.

On Monday, the Trump Administration released an ambitious legislative proposal that aims to stimulate $1.5 trillion in new infrastructure investment over the next 10 years, expedite the federal permitting process, address rural infrastructure needs, and prepare the American workforce for the future. To accomplish those goals, the proposal includes aggressive recommendations to streamline key federal environmental review and permitting processes for infrastructure projects. In addition to traditional forms of infrastructure, such as roads, bridges, and airports, the Legislative Outline for Rebuilding Infrastructure in America addresses drinking and wastewater systems, energy infrastructure, veterans’ hospitals, and Brownfields and Superfund sites.

Federal agencies that authorize or permit large infrastructure projects, like interstate natural gas pipelines, are often subject to the requirements of the National Environmental Policy Act (NEPA), and environmental organizations frequently rely on NEPA to challenge a project. The D.C. Circuit recently struck down a decision by the Federal Energy Regulatory Commission (FERC) to approve the construction and operation of three interstate natural gas pipelines because the Court found defects in FERC’s NEPA analysis. The court’s decision to vacate FERC’s authorization now threatens to shut down the pipelines, including the Sabal Trail pipeline currently supplying natural gas to newly constructed power plants in Florida.

Despite oil already flowing through the pipeline, federal litigation involving the controversial Dakota Access Pipeline (DAPL) took another turn last week when partial summary judgment was granted to tribes challenging the adequacy of the US Army Corps of Engineers’ review of DAPL under the National Environmental Policy Act (NEPA) and other statutes. Two tribes, the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe, filed suit in July 2016 attempting to block construction of the last remaining segment and operation of DAPL. As sometimes is the case, agency approvals came faster than the court’s opinion, and without a stay of proceedings DAPL began operating in early June 2017. Having granted partial summary judgment, the court did not require pipeline operations to cease, instead delaying the question of an appropriate remedy until after further briefing by the parties.