EPA to Revise Controversial Clean Water Act Section 401 Rule, with Major Implications for Energy and Infrastructure Projects

The US Environmental Protection Agency (EPA) announced on May 27, 2021 that it will be revising the Trump Administration’s Clean Water Act (CWA) Section 401 Certification Rule. This announcement was not unexpected, as a month earlier the US Department of Justice’s status report in the ongoing litigation challenging the rule stated that the rule is “among the highest priorities for EPA’s Office of Water.” This rule is also among the highest priorities for many other stakeholders because the CWA Section 401 process has been used by states, tribes and environmental groups to block or delay controversial infrastructure projects. This rulemaking promises to be an important indicator of how the Biden Administration will balance two competing priorities—protecting environmental resources and expediting infrastructure build-out.

In CWA Section 401, Congress directly grants authority to states and certain tribes to review any discharge into a water of the United States that may result from a proposed activity that requires a federal license or permit. Federal agencies may not issue a permit or license authorizing covered discharges unless the state or tribe:

• Issues a certification, including any conditions incorporated therein, verifying that the discharge will comply with applicable water quality requirements; or
• Waives the certification requirement, which can occur expressly or impliedly if the State or Tribe fails to act on a request for certification within “a reasonable time period (which shall not exceed one year) after receipt of such request.”

Through this authority, states and tribes have significant influence over the federal permitting process.

As explained in our June 2020 Advisory, the Trump Administration hailed its CWA Section 401 Rule as a key component of its effort to expedite infrastructure permitting. Among other controversial changes, the rule: (1) restricted the authorities of states and tribes by limiting the substantive scope, time allotted, and conditions that may be imposed when conducting their reviews, and (2) expanded the ability of federal agencies to overrule their determinations. The rule was challenged in the Northern District of California by a group of 20 states and the District of Columbia, as well as several environmental interest groups and tribes.

In the recent Federal Register Notice announcing the new rulemaking, the Biden Administration explains that “the [EPA] has identified substantial concerns with a number of provisions of the CWA Section 401 Certification Rule that relate to cooperative federalism principles and CWA Section 401’s goal of ensuring that states are empowered to protect their water quality.” On the other hand, EPA signaled that it does not intend simply to restore the rule that was in place before the Trump Administration.

EPA will hold multiple webinar-based listening sessions (which are scheduled for June 2021), and solicits feedback on several topics, including:

• The application procedures for making a certification request;
• The “reasonable period of time” that states and tribes have to decide whether to grant (potentially with conditions), deny, or waive the certification request;
• The scope of state and tribal review;
• The authority of federal agencies to review state and tribal certification decisions;
• The enforcement of conditions incorporated into a CWA Section 401 certification; and
• The modification of decisions to grant a certification.

EPA is also soliciting data about the potential impacts of the rule on particular projects—including on “any major projects that are anticipated in the next few years that could benefit from or be encumbered by” the rule.

Stakeholders involved in all kinds of development that require federal environmental permits, including energy and infrastructure projects, will want to follow this rulemaking closely. It will put to the test whether and how the Biden Administration can harmonize its infrastructure build-out and environmental protection objectives. For more information, please contact one of the authors listed above.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.