U.S. EPA Takes on Controversial State Water Quality Certification Process

9 min

The EPA recently released a prepublication copy of its final "Clean Water Act Section 401 Certification Rule." Despite the mundane title, this rule marks a significant and controversial benchmark in EPA's approach to State Water Quality Certifications. The rule will be effective 60 days after publication in the Federal Register.


The rulemaking marks the first time the EPA has promulgated regulations implementing Section 401 of the Clean Water Act (CWA), 33 U.S.C. Section 1341, since that section was enacted in 1972.1 The EPA is acting now, after all these years, in response to criticism of Section 401 Water Quality Certifications (discussed below) and Executive Order 13868: Promoting Energy Infrastructure and Economic Growth (April 10, 2019), which directed EPA to engage with states, Tribes, and federal agencies and update its outdated water quality certification guidance and regulations.2 EPA released its proposal on August 22, 2019 and received about 125,000 comments during the 60-day public comment period.

Under CWA Section 401, a federal permit that may result in a discharge to navigable waters cannot be granted until the permit applicant either obtains a certification from the applicable State or Tribe that any such discharge will comply with certain provisions of the Act or the certification requirement is waived. States and Tribes can impose conditions on that certification, including effluent limitations, and monitoring requirements "necessary to assure. . . [compliance] with" certain sections of the CWA or "with any other appropriate requirement of State Law." A State or Tribe must act on a request for certification "within a reasonable period of time (which shall not exceed one year)." 33 U.S.C. Section 1341(a),(d). If the State or Tribe fails to act on the request in that time frame, the certification requirements are waived.

Criticisms of 401 Certification Process

Some States have interpreted Section 401 broadly, imposing certification conditions unrelated to water quality or relying on non-water quality environmental impacts to support a denial. Pre-Pub. at 76. For example, on May 15, 2020, New York State Department of Environmental Conservation denied a 401 Water Quality Certification for the proposed Northeast Supply Enhancement Project to construct a natural gas pipeline, citing impacts to shellfish propagation and survival and impacts from greenhouse gas emissions among the reasons for denial. Similarly, Washington State Department of Ecology denied with prejudice a Section 401 Certification for a coal export terminal based on compliance with the State Environmental Policy Act and a myriad of environmental impacts identified during the environmental review, including alleged impacts to or from air quality, transportation, and noise and vibration.

States have also worked around the statutory one-year deadline, either by not starting the clock until the application is deemed complete or by "restarting" the clock through successive application submissions. Again, the recent denial of the proposed Northeast Supply Enhancement Project provides a useful example. There, the applicant initially submitted its application in June 2017. NYSDEC subsequently denied the application without prejudice twice, requiring the applicant to resubmit its application for water quality certification, before this most recent denial. Similarly, the project proponent for the coal export terminal in Washington State withdrew and resubmitted its water quality certification application to restart the clock on the State's review.

Without doubt, 401 Certification has become a tool by which States can exert considerable control over the federal permitting project. The process has been criticized by project proponents as causing delay and uncertainty in project permitting and subsequent litigation. The EPA's rulemaking attempts to address these issues.

The EPA's Solution – The Final Rule

The EPA grounds its final rule in "a holistic review of the text of section 401 in the larger context of the structure and legislative history" of the CWA and states that the final rule "presents a framework that the EPA considers to be most consistent with the text of the Act and congressional intent." Pre-Pub at 75. The following are key aspects of the rule.

Certification Triggers: Under the final rule 401 certification review is triggered by a potential or actual point source discharge to waters of the United States. Pre-pub. at 99. The final rule requires certification for "any license or permit that authorizes an activity that may result in a discharge." Pre-Pub. 100-102; 33 U.S.C. Section 1341(a) (requiring a certification to accompany federal permits "which may result" in a discharge).

EPA defines "discharge" in the final rule to be "a point source discharge into a water of the United States," thereby excluding potential or actual discharges from non-point sources (for example runoff) or into State or Tribal waters that do not meet the definition of waters of the United States. Thus, the certification requirement is triggered only by potential or actual discharges from point sources to federal waters. Pre-pub. at 106-108. But a discharge is not limited to a discharge of pollutants. Rather, discharge includes unqualified discharges of water that do not add contaminants (such as water from a dam). Pre-Pub. at 103.

Scope of Certification Review: The core of the EPA's approach in the final rule is based on its conclusion that "the scope of a State's or Tribe's section 401 review or action is not unbounded and must be limited to considerations of water quality." Pre-pub at 76. While acknowledging that some states have incorporated non-water quality-related considerations into their certification process, the EPA concludes that such a broad interpretation of Section 401 is "not consistent with the scope of the CWA generally or section 401." Pre-Pub at 77. The final rule defines "water quality requirements" as applicable effluent limitations, water quality standards, toxic pollutant pretreatment effluent standards, and State or Tribal regulatory requirements for point source discharges into waters of the United States, including those more stringent than federal standards. Pre-pub. at 159. Water quality requirements so defined are "the universe of provisions that certifying authorities may consider when evaluating a certification request" under Section 401(a) and (d). Pre-pub. at 160.

EPA also directs that review by States and Tribes "must be limited to water quality impacts from the potential discharge associated with the proposed federally licensed or permitted project" rather than the activity as a whole. The EPA found it significant that Congress did not carry forward the term "activity" used in prior versions of the statutory language when it enacted the CWA amendments, including Section 401, in 1972. Instead Congress used the term "discharge." Pre-pub at 87.

Certification Conditions: The EPA concludes that conditions imposed in certifications must also be limited to concerns of water quality. The EPA interprets "other appropriate requirement of State Law" in under Section 401(d) to include "those provisions of State or Tribal law that contain requirements for point source discharges into waters of the United States." Pre-pub at 81.

Timing: The final rule imposes specific time frames for procedural requirements. For example, the statutory clock starts "when the certifying authority receives a 'certification request,'" not when the State or Tribe determines the application for a certification is "complete." Pre-pub. at 122. The final rule also requires project proponents to submit a request for a meeting with the appropriate certifying authority at least 30 days prior to submission of a certification request. Pre-pub. at 114-115 (States and Tribes retain the discretion to accept, reject, or not respond to this request). The goal is to start the conversation early to allow the State or Tribe to meet the timelines imposed by Section 401. The EPA notes that Section 401, while clearly stating the certification requirement is waived if the State or Tribe fails to act within a reasonable time period, not to exceed one year, the statute "does not contain provision for tolling the timeline for any reason, including to request or receive additional information from the project proponent." Pre-pub. at 96. Consistent with this interpretation, the final rule does not allow certifying authorities to request applicants to withdraw certification applications, thereby restarting the clock, though applicants may do so voluntarily. Pre-pub. at 189, 192. The final rule also provides that the federal permitting or licensing agencies are responsible for setting the "reasonable period of time" for a certification request based on enumerated criteria. Pre-pub. at 181.

Certification Actions: Under the final rule States and Tribes are limited to taking one of four actions: (1) grant certification, (2) grant certification with conditions, (3) deny certification or (4) waive their opportunity to provide a certification (expressly or implicitly by failing to respond within a reasonable time). Pre-pub. at 145. A waiver may also occur if the federal permitting agency determines the certification decision does not comply with the procedural requirements of the CWA or the final rule. Pre-pub. at 208. But project proponents are able to submit a new certification request if a previous request is denied. Pre-pub. at 147.

Interpretation of Case Law and Prior Agency Guidance

In its analysis, the EPA is often critical of and offers a narrow reading of Section 401 case law to support its approach. See Pre-pub at 41-58. For example, the EPA acknowledges its interpretation limiting the scope of certification conditions to concerns of water quality is consistent with a dissent in applicable United States Supreme Court precedent. Pre-pub. At 81, 88 (citing approvingly to Justice Thomas's dissent in PUD No. 1 of Jefferson County v. Washington Dep't of Ecology, 511 U.S. 700 (1994) (PUD No. 1). The Supreme Court's decision in PUD No. 1 has been interpreted to allow imposition of non-water quality-related conditions. Pre-pub at 43. In defense of its final rule, the EPA finds that "neither the Court's analysis nor its holding in PUD No. 1 forecloses alternative [Agency] interpretations" of Section 401. Pre-Pub at 88.

The EPA is also critical of its own prior interpretations in guidance and briefing. For example, when discussing its determination that certification review is limited to evaluation of point source discharges, the EPA acknowledges that "EPA previously suggested that the scope of section 401 may extend to nonpoint discharges to non-federal waters" in the now-withdrawn Interim Handbook but rejected that prior interpretation. Pre-pub. at 92-93.

What's on the Horizon

The EPA's Section 401 Certification Rule is an important regulatory development designed to provide certainty in an area of the permitting process that has been the subject of considerable criticism. Comments submitted during the rulemaking process clearly preview future court challenges to the agency's new interpretation of the Act. Thus, the immediate impact of the rule is far from certain. Section 401 seems destined to join the list of other fundamental elements of the CWA (the definition of "waters of the United States" and "discharge") that remain subject to controversy and litigation.

[1] In 1971 the EPA issued regulations implementing the certification provisions of Section 21(b) of the Federal Water Pollution Control Act of 1948 but never updated those regulations to reflect the 1972 amendments to the FWPC, which added Section 401.

[2] Pursuant to Executive Order 13868, on June 7, 2019 the EPA issued updated Clean Water Act Section 401 Guidance for Federal Agencies States and Authorized Tribes. According to the preamble of the rule, the guidance is rescinded coincident with the final rule.