Posted on April 19, 2019 by Richard Glick
As part of the Administration’s policy in favor of domestic oil and gas development, President Trump issued an Executive Order on April 10 “Promoting Energy Infrastructure and Economic Growth.” The EO seeks to make the regulatory process more efficient and to create “increased regulatory certainty.”
A policy focus in the EO is water quality certification under section 401 of the Clean Water Act. Section 401 provides that before a federal agency may approve a project that could result in a “discharge” to navigable waters, the state or tribe with jurisdiction must certify that the discharge would comply with water quality standards, effluent limitations and “other appropriate requirements of State law.” The statute imposes a one-year period for the state or tribe to act.
This issue arises most often in the context of permits issued by the Corps of Engineers under section 404 of the CWA to fill wetlands, and licenses issued by the Federal Energy Regulatory Commission for hydroelectric projects under the Federal Power Act. Both trigger state review under section 401. Gas pipelines and LNG terminal developments almost always involve stream crossings or shoreline work, which means filling of wetlands.
The EO directs EPA to take the lead to review federal policy and regulations concerning section 401 implementation. In particular, EPA is to revisit the 2010 interim guidance entitled “Clean Water Act Section 401 Water Quality Certification: A Water Quality Protection Tool for States and Tribes.” In its review, EPA is directed to focus on a list of issues, including the appropriate scope of 401 review, the “types of conditions that may be appropriate to include in a certification,” reasonable review times and how much information should be requested of the applicant.
Who could be opposed to improved regulatory efficiency and certainty? To be sure, the section 401 process can be contentious and time consuming. Although section 401 prescribes a one-year review period, the issues are thorny and it has become a common practice for applicants to withdraw and refile applications to restart the clock. A recent decision by the D. C. Circuit Court of Appeals throws a shadow on that practice, but one year doesn’t necessarily mean one year. It is also true that states have used section 401 as a cudgel to block LNG developments, as in the AES Sparrows Point LNG Project.
The problem with the EO is that it directs EPA to “fix” a problem over which it has little authority. Section 401 is a program administered by the states and EPA has just a marginal role to ensure that one state’s 401 decision doesn’t violate a downstream state’s water quality standards. Even EPA’s 2010 interim guidance is just a compendium of case law and general principles to aid state implementation, not a document that establishes policy.
Indeed, the scope of state section 401 authority is broad, and states use that authority to promote state policies far beyond water quality standards. Any limitations on state discretion over the process and conditions of certification are likely to come from the courts, not EPA. States are not shy in asserting their sovereignty and no state is going to cede any of its authority to EPA, regardless of what any new guidance or rules might suggest.