POWER March 2021 - 19

LEGAL & REGULATORY
Michael
Campbell
Veronica
Keithley
Future of EPA's Rule
on State Water
Quality Certification
of Federal Permits
H
igh on the list of Trump administration rules that will
be reevaluated by the Biden administration is the Environmental
Protection Agency's (EPA's) Clean Water
Act (CWA) section 401 rule on state water quality certifications
of federal permits. Frustrated by states that have used
their section 401 authority to thwart new energy projects-
particularly natural gas pipelines-the Trump administration
directed the EPA to overhaul its 50-year-old section 401
rule. The revised rule, which took effect last September,
interprets state section 401 authority more narrowly, and
deadlines to exercise that authority more strictly.
Twenty states and several other entities immediately
challenged the rule. It would not be surprising if the Biden
administration ceased defending these challenges and revised
the rule to at least broaden the grounds on which
states may reject or restrict projects. Moreover, because
section 401 clearly allows states to reject projects based
on a wide range of water quality concerns, the rule, even if
it survives, may do little in practice to prevent a state that
opposes a project from identifying a sufficient water quality
reason to reject it.
Section 401 is a powerful tool for states, and for tribes
that are treated as states under the CWA. It prohibits issuing
a federal permit for an activity that may discharge to
" waters of the United States, " unless the state where the
discharge originates certifies that the discharge will comply
with specified provisions of the CWA, including water
quality standards. A certification must include conditions
necessary to ensure compliance with these provisions, as
well as with " any other appropriate requirement of State
law. " These become conditions of any federal permit for
the activity. If, however, the state fails to act on a request
for certification " within a reasonable period, " not to exceed
one year, the certification requirement is waived.
Because most activities subject to section 401 are also
regulated under state law, a state ordinarily does not need
section 401 to regulate the activity. Some federal laws,
however, " preempt " state law, including federal laws that
give the Federal Energy Regulatory Commission exclusive
authority to license hydropower projects, natural gas pipelines,
and certain other facilities. In these instances, section
401 may be the principal or only means for a state to
block or restrict the facility.
The EPA's rule attempts to constrain the states' section
401 authority by strictly interpreting the statutory
deadline to make a certification decision, and by limiting
the grounds for denying or conditioning a certification to
specified " water quality requirements. " Under the rule,
March 2021 | POWER
www.powermag.com
if a state does not act on a certification request within
a year or any shorter period that the federal permitting
agency determines is reasonable, certification is waived.
The state may not extend this period by deeming a request
to be " incomplete " ; the federal agency may not allow
the state more than a year; and the applicant may not
agree to more time.
A state can obtain more time simply by denying the certification
request, forcing the applicant to either challenge
the denial or submit a new request, restarting the clock. Or
the state may certify the project with conservative conditions,
forcing the applicant to submit a request and supporting
information to modify it. In either case, obtaining a
certification with acceptable conditions might still require
longer than a year.
The EPA's rule also narrows the grounds on which a state
may deny or condition a certification in two substantial
ways. First, it interprets " any other appropriate requirement
of State law " under section 401 to be limited to " regulatory
requirements for point source discharges. " Courts have
generally interpreted the statutory phrase more broadly, albeit
not uniformly. For example, many courts have held that
it includes any requirement related to water quality.
Second, and contrary to a 1994 U.S. Supreme Court decision,
the rule interprets section 401 to be limited to a
project's discharges, not other aspects of the project that
may affect water quality. These elements of the rule are
the most controversial and most likely to be revised, either
through litigation or modifications.
The fate of the EPA's rule under the Biden administration
is likely to be similar to that of Obama administration rules
during the Trump presidency-multiple, protracted legal
challenges to the rule, the adoption of a revised rule, and
then multiple, protracted legal challenges to the revised
rules, with the challengers and defenders switching sides.
Section 401 is 50 years old and, like much of the rest of the
CWA, needs to be clarified and updated. But with a divided
and partisan Congress and almost no political consensus
on water quality issues, that will not happen in the foreseeable
future. The scope of the states' section 401 authority
will likely remain in the courts, with uncertainty for years
to come. ■
-Michael Campbell is a partner in the Portland,
Oregon, office of Stoel Rives LLP, advising energy clients on
Clean Water Act section 401 and water quality issues.
Veronica Keithley is a lawyer in the Seattle,
Washington, office of Stoel Rives; she advises clients
on water quality and other environmental issues.
19
http://www.powermag.com
POWER March 2021

Table of Contents for the Digital Edition of POWER March 2021
