The Lower Lake Clementine Dam on the North Fork American River, Photo by DWR

YOSEMITE ENVIRO LAW CONFERENCE: Federalism & water quality: After 50 years, are we done with the 401?

Recent changes by the Trump Administration to the Clean Water Act have had a ripple effect on many regulatory programs.  The changes to Section 401 in particular, intended to promote energy infrastructure, have really changed how the states and the federal government implement the Section 401 program. 

At the Environmental Law Conference at Yosemite held in October of 2020, a panel of speakers discussed how Section 401 has functioned in the past in different contexts, how the final rule might be changing the legal landscape, and how a change in the federal administration after the election might affect the changed rule.

The panelists were:

Kathy Robb is CEO of Blue Access LLC, a New York City-based sustainable finance company promoting water security and quality in underserved communities through local collaboration and innovative water-related investments.  Prior to joining Blue Access in February, Ms. Robb was in private practice representing water districts, financial institutions, energy companies, and industry, advising on environmental-driven transactions and regulatory issues, and litigating water issues across the US.  She is a fellow of the American College of Environmental Lawyers.

Moneen Nasmith is an attorney in the Northeast office of Earthjustice, a non-profit public interest environmental law organization.  After spending time in private practice, Moneen has been litigating fossil fuel infrastructure cases among others for the last eight years, including representing community and environmental groups in a variety of proceedings involving Section 401 of the Clean Water Act.  She is currently representing three tribes and two environmental groups in the challenge to EPA’s final rule reinterpreting Section 401.

Ron Shems practices environmental and energy law from his firm Terrance, Gillies, Richardson & Shems in Montpelier, Vermont.  He represents clean energy developers and utilities.  He also represents environmental groups in proceedings before the Federal Energy Regulatory Commission or FERC and other agencies.  Formerly with the Vermont Attorney General’s Office, Ron co-authored the US Supreme Court amicus brief joined by 49 states in the Public Utility District #1 case.  He also coauthored American Rivers US Supreme Court amicus brief in SD Warren and has litigated numerous other Section 401 cases in various federal courts of appeals.

Serena Liu is Senior Staff Counsel at the State Water Resources Control Board and the lead attorney for the State Water Board’s dredge or fill procedures which went into effect in May of this year.  In addition to her focus on Section 401 certification program and wetlands protections, she advises the Stormwater National Pollutant Discharge Elimination System or NPDES program and the site cleanup program.

The panel was moderated by Nell Green Nylen, a Senior Research Fellow with the Wheeler Water Institute at the Center for Law, Energy & the Environment (CLEE).

1. Introduction

Ms. Green Nylen began with some background information.  Section 401 of the federal Clean Water Act applies to any activity by a federal agency that requires a federal license or permit that could result in a discharge to Waters of the United States.  Before that activity can occur, the federal agency needs the relevant state or tribal authority to certify that the discharge will comply with all applicable water quality standards, or waive certification.  Over time, EPA regulations and case law have fleshed out the details of water quality certification and waiver under Section 401.

In April of 2019, President Trump signed an Executive Order on promoting energy infrastructure and economic growth that directed the US EPA to review its Section 401 regulations and guidance to determine whether they needed to be updated or clarified.  Just four months later, EPA put forward a proposed rule updating its regulations on water quality certifications.  The final rule was published in the federal register in July and went into effect in September.  It introduced a number of changes to EPA’s interpretation of Section 401.

2. The Clean Water Act is designed to give joint responsibility to state and federal governments.  What is cooperative federalism under the Clean Water Act in general and Section 401 specifically?

What is cooperative federalism?” said Kathy Robb.  “That is a great question.  If only we knew.  Cooperative federalism, or as some commentators have referred to it, uncooperative federalism, refers to the joint governance at the state and federal level that is baked into certain statutes.  It varies widely from program to program and depends a lot on what the statute prescribes.  It’s the bedrock of the Clean Water Act.”

Prior to the passage of the Clean Water Act, some of the rivers in the country were occasionally on fire and had been catching fire periodically for decades.  Ms. Robb presented a slide showing a picture of the Cuyahoga River in Ohio on fire in 1952.  It caught on fire again in 1969 but the fire was extinguished before a picture could be taken, so instead Time Magazine published this photo on the cover, which spurred a national outcry and contributing to the passage of the Clean Water Act in 1972.

Ms. Robb noted that cooperative federalism has worked out differently across statutes.  To consider it, there are three questions:  First, who regulates?  Second, who issues permits?  And third, who controls?

In the context of the Clean Water Act generally, EPA and the Army Corps promulgate rules, regulations, and guidance under Section 401, and it is the new EPA rule that brings us here today,” she said.  “Under Section 401, federally permitted actions involving discharges to Water of the US or WOTUS, as defined by the Clean Water Act requires state certification, and who controls under 401?  In terms of the statute, the states do.”

The actual language of the Clean Water Act Section 401 provides that unless the state or a tribe certifies or waives certification, the federal permit cannot issue.  Ms. Robb noted that the language in the Act stating that nothing abrogates the states was in the Federal Water Pollution Control Act of 1948, the first US statute to address water pollution and the precursor to the 1972 Act.  Subsequent amendments to the Act in 1965 encouraged states to set up water quality standards and to abate discharges that violated them; the federal role was to fund, advise, and step in with abatement conferences when pollution affected interstate waters.  By the time the Clean Water Act was passed in 1972, half the states had water quality criteria.

In water, the states have always been major players because they often own the water or hold it for the benefit of the public,” she said.  “The 1972 statute retained the state primacy language, although for example, point source discharges are limited to levels set by EPA.  Forty-eight states now administer the permitting programs for NPDES permits, for example.  So the states have stepped up since 1972, encourage in part by citizen suits and by the need to improve water quality for their citizens.  Section 401 is perhaps the strongest example of the state role in a statute, the Clean Water Act, that emphasizes this joint governance scheme.”

Lake Oroville, Photo by DWR

3.  It would be helpful to understand more about how Section 401 works, or at least how it has worked in the past.  What triggers Section 401?

To explain what triggers 401, first of all, it’s important to understand the Clean Water Act’s purpose,” said Ron Shems.  “In a nutshell, the Clean Water Act’s purpose is to restore and maintain the chemical, physical, and biological integrity of the nation’s waters.  What does that mean?  What does restoring and maintaining the chemical, physical, and biological integrity of the nation’s waters?

He provided the example of a waterfall that plummets 10 feet and in doing so, the energy of the water falling oxygenates the water, and the water flow allows for salmon to jump 10 feet.  If someone then puts a hydropower dam there to capture that energy, the energy that would have gone to oxygenate the water now goes to producing hydropower, and instead of being able to jump up a waterfall, there’s a concrete barrier that prevents the salmon from going up. 

There you have a chemical change (the dissolved oxygen) and the physical change (the dam barrier) that changes the nation’s water and it also affects the biological integrity because it affects the habitat,” he said.  “What was once white water is now flat water.  That is a change in the nation’s waters.”

To trigger Section 401, there are two things:  First, an application for a federal license or permit to conduct an activity, and secondly, that may result in a discharge to navigable waters.  What is meant by discharge? 

Mr. Shems explained that the term discharge, when used without qualification, includes a discharge of a pollutant and a discharge of pollutants.  ‘Discharge of pollutant’ is a term of art that triggers a need to get an NPDES permit.  A discharge for 401 purposes can be just a release of water going over the crest of a dam, down a spillway, or water at the end of a tailrace.  It can be the release of materials, dredged and fill materials during dam construction or maintenance.  It can be releases involved in changing new turbines or upgrading the dam.

4. What does Section 401 cover, once it’s triggered?

Mr. Shem answered the question in two parts:  procedurally and substantively. 

Procedurally, under Section 401, a state could:

    • Deny a certification, which precludes the federal agency from issuing the license or permit.
    • Grant the certification with conditions; Section 401d mandates that the federal agency shall include all the 401 conditions as conditions of the federal license or permit.
    • Waive the ability to issue a 401 certification. Most commonly this occurs if the state takes longer than one year from the application date, the state is deemed to have waived its ability to certify the project. 

The substantive scope of Section 401 gets back to the Clean Water Act’s purpose, said Mr. Shems.  The Clean Water Act defines pollution as being the anthropogenic alteration of the chemical, physical, or biological integrity of water.  Section 401 through its plain language says the state certifies the permit for a federally licensed activity – the certification covers the scope of the activity, not just the discharge that triggers the need for the 401, but the full activity covered by the federal license or permit.

The quote on the slide is from the PUD #1 case from the US Supreme Court authored by Justice O’Connor.  “The conditions that are typically issued along with 401 certifications can cover things like recreation, access, fishing, drinking, aesthetics – basically the whole scope of what you can get under designated uses, not just the numeric criteria but narrated designated uses and the narrative water quality standards,” said Mr. Shems.  “The Clean Water Act is supposed to allow fishing or swimming, for example, but you can’t fish or swim unless you have access to the water.  You can’t canoe or recreate without portage.  Those are typically all conditions that come within the scope of Section 401.”

The US Supreme Court in the S.D. Warren case reinforced the decision in PUD #1 case by going to the definitions of pollution and the purposes of the act, recognizing that if you limit flow, if you have a water quality standard that provides for high-quality habitat, you can’t have high quality fish habitat if there’s no water, so you need adequate flow and you need an adequate amount of water in order to have habitat.”

5.  Under the statute, who has jurisdiction: the states or the federal agency?

Section 401 plainly says that it’s the state or tribal water quality agencies that have authority to issue 401 certifications, and if the state or tribe doesn’t have their own authority to do it, then EPA can step in, said Mr. Shems.

The plain language of Section 401 says the certification conditions shall become the conditions on any federal license or permit,” he said.  “There are two Court of Appeals cases that address this issue.  The first is American Rivers v. FERC from the Second Circuit where the Federal Energy Regulatory Commission tried to pick and choose various state conditions and determine which ones apply or which ones were related to water quality.  And the Second Circuit said, no, shall means shall, so all the conditions become part of the federal license or permit.

Both the Second Circuit and the DC Circuit in the Alabama Rivers case said FERC, or other federal agencies for that matter, don’t have expertise in determining what’s related to water quality,” he continued.  “They aren’t water quality agencies; FERC for example is an energy agency.  You get no deference to FERC’s decision in determining a 401 question.  It really is up to the states to make that determination.

Another point I want to make is that American Rivers, Alabama Rivers, the PUD #1 case, and SD Warren – they all turn on the plain language of the Clean Water Act itself.  They aren’t really driven by the regulations that EPA had promulgated at the time those decisions were issued.  These are all plain language of the statute itself cases.”

6. What does this look like in the real world?  How does Section 401 plays out in the context of hydropower, dredge and fill procedures, and pipelines?

Hydropower facilities are licensed by the Federal Energy Regulatory Commission (or FERC), and Mr. Shems reminded that 401 is triggered by any discharge – it doesn’t have to be a discharge of pollutants; it can just be a discharge of water. 

With respect to hydropower, Section 401 is triggered in three ways:

    • When building a new dam, it would be triggered in one of several ways; a dredge and fill permit would also be needed.
    • FERC licenses are issued for 20 to 50 years, and in order to renewing the license, a Section 401 certification is needed.
    • Construction or maintenance on an existing dam, such as upgrading or adding a turbine or some other type of construction that can cause a discharge.

Serena Liu noted that dredge or fill projects are covered by Section 404 of the Clean Water Act, and with the exception of New Jersey and Michigan, the Army Corps always administers those programs. 

Roughly speaking, this means doing work in the water,” said Ms. Liu.  “A lot of times, you’ll hear dredge or fill used interchangeably with wetlands programs, but keep in mind, that these kinds of activities affect non-wetland waters as well.  It’s any time you are scooping or filling in a water body for construction purposes.”

In the dredge and fill context, they have approximately 1000 per year.  The types of projects vary significantly, from the very small projects, such as replacing a 10” utility pole with a 12” utility pole, to the very large projects like constructing the Bay Bridge which involved a lot of in-water work and required certification.  Project purposes also vary, from public infrastructure projects to private development to public and private restoration projects.

That is in contrast to the number of FERC licenses, which is about 10 per year.

Moneen Nasmith noted that a lot of attention recently has been paid to 401 certifications in the context of fossil fuel infrastructure projects in general, and a lot of attention paid to pipelines specifically. 

She noted that a lot of pipelines require a Section 404 permit from the Army Corps of Engineers, gas pipelines can require a certificate from the Federal Energy Regulatory Commission, and both can trigger Section 401.

From a practical standpoint, to construct a pipeline, basically the company will dig a very large trench into which the pipeline, whether it be oil or gas carrying, will go,” said Ms. Nasmith.  “Every time that trench encounters a wetland or a water body, you have the potential to affect those wetlands or water bodies.  There are options of trying to go underneath these water bodies, but that method is not without its risks.  It also can be quite expensive and isn’t always technologically feasible.

So in a lot of these big pipeline projects, you will see often hundreds of crossings straight through rivers and streams and wetlands,” she continued.  “What that means is the potential for the riverbed to be destroyed and the habitat that the riverbed provides.  There are risks of destabilizing river banks.  There is an incredible risk of sedimentation, both from the construction itself as well as over the life of the pipeline because there is the requirement to keep the entirety of the pipeline pathway vegetation-free, so when you take away vegetation, you’re increasing the risk of erosion and sedimentation and ultimately having that sediment end up in the riverway.”

There are also risks over time of the pathway of a river or a stream bed changing,” Ms. Nasmith continued.  “So you put the pipeline in on year 1, but that river or bed may not be in the same place on year 5 or year 10, which then can expose the pipeline and require more construction activities to fix the problem, as well as create a real risk of spills or leaks.  There have been some unfortunate examples recently, for example, tar sands oil being spilled into riverways from pipelines that are incredibly difficult to clean up.  So these are all the reasons why major pipeline construction and operation will trigger Section 401.”

The ways that communities and residents participate in decision making under 401 includes through the state processes, and also through the representation provided by the state review,” said Kathy Robb.  “The stakeholders are varied and can include residents concerned about their drinking water and groundwater, fishermen, swimmers, boaters, farmers, surfers, hunters, divers, conservation groups – all manner of communities.”

The states and tribes deal with thousands of certification requests on projects large and small, and outright denials of the certification have been relatively rare in the context of the number of certifications that are issued. 

However, community review and involvement often has resulted in conditions on the projects that protect water resources for communities,” Ms. Robb said.  “The conditions have addressed water quality standards and any other requirement appropriate under state law.  They’ve been broad and they include construction and operational impacts.

States can deny or condition if they determine the project has a negative impact on water quality within the state borders,” she continued.  “The conditions have included conditions to address lower stream flows, blocked passage for fish, elevated temperatures, increased sedimentation, to preserve historic resources, to create or preserve hiking and biking trails, air emissions issues, traffic congestion, deed notifications, and groundwater changes.  They’ve also included consideration of designated uses both with primary and secondary contact recreation, swimming, boating, fishing, surfing, diving, children wading in water – anytime people are potentially swallowing water.  These are all critical considerations for communities.”

Folsom Dam

7. So far, the discussion has focused on how Section 401 has worked in the past.  We’re going to shift gears to talk about the final rule that went into effect in September and how it changes the landscape that affects Section 401 water quality certification.  Let’s start with a bit of context on this.  Why did EPA change its interpretation of Section 401?

Moneen Nasmith noted that the Section 401 framework has been in place for a long time, so why make such sweeping changes now?  “The Trump Administration and the EPA have not been shy about sharing that reason,” she said.  “The Executive Order that started off this whole process was titled, ‘Promoting energy infrastructure and economic growth.’ And the motivation for this really was that there have been a handful of high profile cases where the states have used the power under Section 401 to stop certain fossil fuel infrastructure projects.  These revisions are clearly aimed at preventing that in the future.”

Not only do we have the Executive Order but we also have the economic analysis that was done with the final rule where most of the focus there is on the alleged costs of not having these fossil fuel projects go forward,” she added.

That’s not to say that there aren’t potential areas where Section 401 and the interpretation thereof could be improved and clarified, but the sweeping nature of the changes don’t really line up with the problems that we have seen,” Ms. Nasmith continued.  “An important bit of context here is whether you think it’s appropriate to be making these changes based on fossil fuel infrastructure needs or not.  It is really important to remember that Section 401 does not just apply to fossil fuel projects; it applies to thousands and thousands of other projects, all of which will be subjected to these changes.” 

Ms. Nasmith also noted that while the denials have received a lot of press coverage, denials are relatively rare, and even in many of these cases that the EPA is pointing to as justification for these changes have in fact been extensively litigated and upheld.  

One to look at is the Constitution Pipeline Company versus the NY State Department of Environmental Conservation where the Second Circuit took a very hard look at what the state did and did not find in any way, shape, or form that the state was exceeding its authority,” she said.  “The problem was the applicant had not met its burden under the statute to show that the project would comply with the Clean Water Act.”

8.  What are the major changes the final rule makes?

The changes are incredibly broad and sweeping,” said Moneen Nasmith.  “One thing to note is there is another rule saga under the Clean Water Act that is churning along right now – the Waters of the United States rule which we’re not going to speak about that in any detail here, but it’s important to consider the changes that are being made here in connection with that rule, and the one-two punch that those two rules have in really upsetting the balance of the cooperative federalism.” 

Ms. Nasmith said this particular rule narrows state authority quite significantly and expands the role of the federal agencies quite significantly.  “In addition to the trigger issue, one of the huge changes from the previous system is that the final rule no longer allows the states and tribes to consider the activity itself, which under the PUD #1 case and subsequent cases, is cleanly what the Supreme Court interpreted Section 401 as allowing is that once the Section has been triggered, the entirety of activity that is permitted is fair game for the state to consider,” she said.  “The final rule says no, the states may only consider effects from a discharge from a point source into waters of the US.”

Similarly, the final rule also limits the conditions that can be imposed if the state were to grant a permit and again, contrary to the holding in PUD #1 and subsequent cases, they are saying that no, it has to be related directly to any conditions to water quality requirements,” she continued.  “It no longer considers the additional language in the statute that says that the conditions may be related to other appropriate requirements of state law.”

So if PUD #1 is pretty clear, one may ask how can EPA change its interpretation and effectively go with the dissent in PUD #1 instead of the majority; isn’t that settled Supreme Court law?  “What the agency is doing is using a case called Brand X that is a more recent court case to say that the agency is free to choose among reasonable interpretations of the statute and that while PUD #1 represents a reasonable interpretation, it’s not the only reasonable interpretation so the agency is free to shift gears and go with the dissent in PUD #1.”

Also denials have to be very directly related to water quality requirements, and just throughout the rule, there are a lot of suggestions about the extent of the information that the states can ask for, as well as just other attempts throughout the rule in limiting the time the states have to consider applications that are really aimed at cabining state authority,” Ms. Nasmith said.

As to the expansion of federal authority under the revised final rule, one of the ways that the federal government has an expanded role under the new rule is determining whether or not a waiver has occurred. 

It’s pretty settled that the federal agency whose permit triggers the need to get a Section 401 certification is allowed to determine whether or not the state has exceeded the one year limit under the statute, but EPA now in its final rule is expanding on that role significantly,” Ms. Nasmith said.  “The new requirements now are that if the state is going to deny a 401 certification, it has to comply with what EPA is calling procedural requirements, and if the state does not comply with these procedural requirements, the federal agency can just decide that the state has waived its authority.”

Similarly, the federal government has been given the role under the final rule that it can pick and choose amongst the conditions that the state has imposed if it deems that the state has not fulfilled these procedural requirements,” she continued.  “So although these requirements are being styled as procedural, the requirements themselves are substantive in terms of having to provide an explanation, cite to various legal provisions, and so there’s an incredible amount of room for very murky realities of how far can the federal agency stretch this and the rule does not provide any clarity on that.”

The last large enhancement of federal authority and chipping away at state authority is that the states are no longer allowed to enforce the conditions that they impose if they were to grant the certification, and EPA has said that those conditions become part of the federal license or permit, so the federal government has the exclusive authority to enforce those and the states are out.”

9. At least five lawsuits have been filed in response to the final rule.  What are the important things for us to know about this litigation?  Who is bringing it and what issues are they raising?

Many lawsuits have been filed; five are listed on the slide.  Three have been filed by environmental groups: American Rivers, the Delaware Riverkeeper Network, and the Southern Coastal Conservation League cases.  One case, California v. Wheeler, has been filed by 20 states and the District of Columbia.  Ms. Nasmith is counsel on a fifth case representing three tribes and two environmental groups.  All of these litigations are in the very early stages, so there’s a long way to go.

However, Ms. Nasmith noted that there are some common themes.

One is that the EPA has exceeded its authority both broadly in engaging in this rulemaking process at all and also specifically with respect to having given itself and other federal agencies power that the section does not contemplate the federal government having. 

In the former, Section 401, unlike other provisions of the Clean Water Act, never contemplates EPA having an extensive rulemaking role in Section 401 and so unlike other provisions where Congress directed EPA to go forth and set standards, no such provision exists under Section 401 and so this very aggressive revamping of 401 by EPA is wholly across the board inappropriate,” said Ms. Nasmith.  “With respect to those waiver provisions I spoke of, there’s nothing in the statute that suggests the EPA is allowed to impose procedural requirements on the state or allow the federal agencies to start determining that their waiver exists or to start cherry-picking different conditions out of a grant or a certification.  It’s just not in the statute.”

There are also a series of claims that EPA acted arbitrarily, capriciously, and contrary law.  “This relates to the extent to which EPA is not considering the actual language of the statute,” continued Ms. Nasmith.  “With respect to what the scope of review is and what conditions can be, the language of the statute does not support EPA’s interpretation here.  Also, some of the other requirements that I didn’t speak to in great detail but I think one of the really critical ones is there is a requirement in the law or a suggestion that state should only ask for information that they can reasonably get in the amount of time that the federal agency has given the state to review the applications, which again, there’s nothing in the statute that backs that up and it really is not connected or very much antithetical to the purpose of the Clean Water Act.

Finally, the basis for this rule is to promote fossil fuel infrastructure projects which is not something that the Clean Water Act speaks to and therefore not a factor that EPA should be considering as part of a revamp to Section 401,” she continued.  “There’s also a procedural claim that the tribes have brought that this rule was passed with incredible haste, very little consultation, and that violates the requirement that tribes are supposed to be appropriately consulted in rules that very directly affect them.”

10. These changes seem like they could have major repercussions for state and tribal authorities.  How do you expect the final rule to affect state regulators?

Serena Liu said there’s a lot of uncertainty with the new rule, but it will certainly affect all certifying authorities.  She also gave the standard disclaimer that while she works for the State Water Resources Control Board, she is here today in her personal capacity and not representing official State Water Board positions or any opinions of any specific board member.

Although Ms. Liu is focused on California, she noted that it will have a varying effect on different certification authorities across the country depending on what existing state law is in place, and how well defined the water quality requirements are prior to these regulations. 

I think it’s going to hit the states hardest where 401 is their only regulatory tool and where they have few if any water quality standards that are actually set forth in regulations,” said Ms. Liu. 

The other effect will depend on the underlying federal permit of which there are two: FERC licenses and Section 404 permits.  FERC licenses or amendments are not very frequent.  “The FERC program is unquestionably going to be affected more harshly in that state authority is preempted in that context, and certification is likely the state’s only bite at the apple for a license that lasts for decades,” she said.

In contrast, with the Section 404 program which is related to dredging or filling, there’s at least the opportunity for the state to exercise state law to keep water quality control at roughly the same level as it was prior to these changes. 

So the question is how much can we rely on state authorities?  The state authorities we have available in California are the Porter-Cologne Water Quality Control Act, then pursuant to that authority last year, the state adopted the state wetland definition and procedures for discharges of dredged and fill materials and that went into effect in May,” Ms. Liu continued.  “The hope is that the procedures will be able to blunt some of the negative impacts of the new rule, but it won’t be a panacea and that’s part of the reason why the State Water Board and California are part of the litigation challenging the new rule.”

Shasta Dam

11. What are the specific challenges that state regulators are already seeing or expect to see?

One important context is under the new rule, they are required to request a pre-application meeting and only 30 days after that request can they submit a request for certification,” said Ms. Liu.  “As of today, we haven’t actually received any certification requests pursuant to the new rule, so all of these are projected changes that we’re going to see, and there’s a ton.  This is a complete program overhaul.”

There were the four major changes and those are really the building blocks of the program, and those are the changes I think that is going to be the most impactful,” she continued.  “Certification requests, what starts our timeline to act?  The scope of certification, what kind of conditions may be included in that certification and forth federal agency review.”

One question is what starts the timeline for review? The procedures that went into effect earlier this year in May outlined materials that are required for all applications and materials that are required in some applications and that would make the application complete. 

The idea behind that was if the Water Boards receive complete application materials, upfront, early in the process, then the Water Boards can make more efficient, faster determinations on those applications,” said Ms. Liu.  “Part of the idea was also so that dischargers have to get used to two different playbooks, one federal and one non-federal.  There’s one playbook that looks similar whether you are applying the discharge to non-federal waters or to federal waters, the process is similar, and that’s what the program looked like prior to these regulations.

But what we see with the new regulations is essentially a different approach.  Their approach is very bare-bones information earlier in the process, and as long as it’s very expressed that that’s your certification request, then that’s what starts your timeline and then your timeline is a hard one year from there,” she continued.  “So I think the ultimate result is going to be at least the potential for two different applications or at least an application where you have to look to two different spots to know what should be in there and the potential is for two different deadlines.”

She presented a diagram with the inner circle representing a 401 certification and the outer circle represents the waste discharge requirements which are the state permits.  “Traditionally, these circles have effectively in most cases been close to coextensive, and what you see, in combination, these 401 rules and changes to the waters of the US, you see that inner circle shrinking, and exactly where it is is hard to know.  It’s something that we’re going to have to figure out as its imposed, but clearly there’s going to be a delta between the two circles. … The bigger the difference between the inner and outer circle, the bigger potential for confusion.”

At the Water Board, they work with a wide variety of different dischargers, many of whom are not well-versed in the Clean Water Act, who aren’t going to want to listen to a long explanation of the differences between the regulations and the orders – they just want to know what they have to do so they can go forward with their project. 

I think that’s going to be a challenge explaining that to them,” said Ms. Liu.  “In addition, their orders are going to look different.  There’s a requirement now that we have to provide citations and explanations of why conditions are necessary, so it’s just going to look different.   There are substantive components that are going to be difficult complying with the new rule, and there are also procedural requirements where the administration of the program is just going to change, and it’s about finding the balance between complying with the new regulations but also protecting water quality.  It’s also putting in good governance and making the program clear for dischargers to use.  That’s always a difficult balance point to hit, but then you also get a sprinkling of the global pandemic and anticipated reduction in resources, so in short, the state is being asked to do more with less time and with less resources and that’s going to be a challenge for us.”

Lastly, there’s a lot of uncertainty with the federal review.  Ms. Liu pointed out that FERC is not an environmental water quality protection agency, but they are going to be reviewing state law.  “This is not something that they are traditionally steeped in and in fact, existing case law said they should not be evaluating the validity of conditions, but they are going to be asked to do that.  The consequence for failure to comply is significant; it’s a waiver of a condition or waiver of the denial and the state never has the opportunity to cure any perceived deficiencies.”

To emphasize what a change this is, under the prior regime, if a discharger had issues with conditions in its certification, it would challenge that in state court with a state judge evaluating state law, and then they could remand to the agency,” she continued. “Here, there’s no opportunity to cure, so there’s going to be more instances where possible where we’re going to have to invoke our state law and say, even if there is a finding of waiver, you still have to comply with our state law and obtain a waste discharge requirement because that’s what’s necessary to protect water quality.”

Ms. Liu concluded by saying that she didn’t think the new Section 401 regulations are going to achieve the intended goals and instead, create a lot of confusion.  “There are growing pains with any change, but in particular, when there’s a complete overhaul of a program, I think there’s going to be longer processing times because people are incentivized to start timelines earlier and for the Section 404 program, we have a general limitation of 60 days and so that is going to mean more denials. Under the new rule, all denials are without prejudice so applicants can come back, but I don’t think that’s going to aid in efficiency to ask agencies to issue more denials and ask applicants to come back again.  The underlying threat is to water quality, because if the new rules are applied in a way that can trap state authority, what really is going to suffer is water quality.”

12. The presidential election is just a couple of weeks away.  How might the result of the election have an impact on Section 401 regulations?

Kathy Robb gave an overview of the Congressional Review Act, which is a little-used oversight tool that Congress may apply to overturn rules issued by federal agencies. It was passed in 1996 under House Speaker Newt Gingrich and signed into law by President Bill Clinton.  Under the CRA provisions, rules, interim rules, and guidance from any executive agency promulgated within the applicable timeline are potentially vulnerable to summary reversal.

There is a period at the beginning of each new administration during which rules issued near the end of the previous administration are eligible for consideration under the Congressional Review Act.  These are sometimes referred to as midnight rules, and the timeline is considered the lookback period.  Congressional Review Act resolutions must be approved by both chambers of Congress and signed by the President.  Under the fast track procedures, only simple majorities are needed to pass the House and the Senate for these resolutions, and the resolutions are generally not subject to judicial review.

The Congressional Review Act allows new members of Congress to introduce a joint resolution of disapproval of any rules submitted within 60 legislative days of the prior year.  Ms. Robb noted that legislative days are the days Congress is actually in session, not calendar days. 

Based on the number of days the House has been in session so far this year, and House majority leader’s current session schedule for the remainder of the year, the 60 days legislative lookback period likely will begin on Monday, June 1, 2020,” she said.  “Any rules or guidance promulgated on or after that day is subject to the Congressional Review Act.  Of course, we won’t know the exact date until the session ends.”  (Reminder: this panel happened in mid-October, prior to the election.)

What are the rules of engagement for Congressional Review Act decisions?,” continued Ms. Robb.  “The Congressional Review Act can only be used to invalidate an agency’s final rule in its entirety.  There cannot be picking and choosing; it cannot be used to modify or restructure a rule.  Under the Congressional Review Act, rules that are reversed cannot be reissued in substantively the same form without Congressional prior authorization.  If a rule is disapproved under the Congressional Review Act by Congress and the President, it will not take effect if it had not taken effect by the time the disapproval enacted.  If the rule had already taken effect by the time it is disapproved, it will not continue and it will be as if it was never in effect.”

Until 2017, Congress had used the Congressional Review Act since 1996 to disapprove one rule.  In the 107th Congress, which was in the 2001-2002 time frame, and it was not an environmental rule.  In the 115th Congress, 2017-2018, 16 rules were overturned, including some environmental-related rules, one of which was the Stream Protection Rule.

The possible application for the 2021-22 Congress is if there’s a Democratic majority in the House and the Senate and a Democratic president, conditions would be ripe for the Congressional Review Act,” said Ms. Robb.  “Using the June 1 date, the Clean Water Act Section 401 certification rule would fall within the lookback period and could be subject to reversal.  Interestingly also, the NEPA rule would also be within the lookback period.  That is one potential outcome dependent on a lot of contingencies.”

Nimbus Dam, photo by DWR

DISCUSSION: Panelists mentioned earlier that there are areas of Section 401 that could benefit from clarification or improvement.  Regardless of the outcome of the challenges to the new rule, what aspects of Section 401 as was previously administered would you like to see changed? 

One aspect of the rule that I’ve always had a hard time with is that a FERC license issues for 30 to 50 years for a hydroelectric facility, but water quality standards are periodically revised as required by statute,” said Ron Shems.  “Typically, a discharge permit would only last five years.  It would be great to try and figure out a way that a hydroelectric facility could remain current with evolving water quality requirements over the 30 to 50 years, and that’s a scenario that could use some clarifications.  States have tried to do this through reopeners or through other mechanisms, but the law on this is not settled and it’s an open question.”

From my perspective, one of my biggest concerns with the new rule is that it’s a complete overhaul of the program, and so from a regulator’s standpoint, regardless of whether you agree or disagree with the substance, it’s very hard to toggle between for program administration purposes,” said Ms. Liu.  “So under the assumption that the rule is invalidated, I think what I would prefer to see is tweaking the program maybe in the ways that have been mentioned, or if the rule is upheld, what would be really helpful is more clear guidance from the federal agencies on how they expect this to actually work.  Like for example, just getting actual guidance regarding how to structure orders and what kinds of orders are going to be accepted.”

It really feels like this new program overhaul was rushed through without very much forethought on how it was going to be implemented,” continued Ms. Liu.  “This plugs into the waters of the US litigation where if, I’m an agency, generally speaking, I’m going to be in favor of agency deference, but if the US EPA can change the program entirely based on policy preferences of whoever is in charge of the executive branch, that’s just going to whipsaw the agencies back and forth, and I don’t think anyone is going to benefit from that.

As a practical matter, I just don’t know how this new rule is going to work,” said Ron Shems.  “The state agency is not going to be transmitting a record to the federal agency and so you’re going to have several federal agencies all looking at the same conditions but without any coordination.  You have FERC looking at a certain type of condition, you could have the Army Corps looking at a similar condition, you could have the Department of Transportation looking at some other pipeline condition, all looking at these so-called procedural requirements in different ways and coming up with different conclusions on what are substantively very similar 401 conditions.  I just see this as being really messy.”

I think the new rule is going to limit participation and has conditions in at least four aspects that really affect communities and community involvement in the whole process,” said Kathy Robb.  “The inflexible time limitation for reviews is going to play out in a way that further disadvantages community involvement.  The provision about the information requested by the state must be limited to information available in a reasonable time period – it’s hard to understand how that’s going to be ascertained by the state in looking at certification.”

The final rule limits notice to parties known to be interested and leaves the decision with EPA about public hearings,” said Ms. Robb.  “That’s another limitation on community involvement and there are already disproportionate impacts in all vulnerable communities on water which are going to be exacerbated by having been excluded in the executive order environmental justice considerations in promulgating the rule.  I see the rule as unfortunately part of a potential trend in overall narrowing community participation in environmental decisions.  We touched on it about WOTUS, it’s in NEPA, some of the other statutes, and I question whether this is sound environmental policy.”

Even if you were to bring the waiver determinations back to where they were, which is just a question of timing, there’s always been a real unanswered question out there, which is what happens when you have more than one federal agency whose permit has triggered Section 401?” said Moneen Nasmith.  “It’s something that folks have glossed over and it hasn’t risen to that much of a head, but I think there’s substantial room for both confusion and potential conflict between what happens if the Army Corps said, no there’s no waiver and FERC says yes there is.  It’s really not something the statute addresses and it would be great to have some clarity.”

One of the biggest messes in Section 401, both currently and even before the new rule and now post rule is this issue of the timing question,” continued Ms. Nasmith.  “The states are given a reasonable time not to exceed a year under the statute; however, almost every single federal agency that has Section 401 permits associated with their projects has come out with regulations that define that reasonable period of time differently.  And under the final rule, in an effort to ostensibly clarify this situation, but under the new rule, for each individual project, after the application goes in, the federal agency is supposed to within 15 days tell the state how much time they have for that project.  The federal agency could come back and say you have a full year, which is what FERC commonly does, or surprise, they could say you have 30 days.  And that is just a recipe for a tremendous amount of confusion I think on the part of the states and does not provide any clarity.”

It really has become such a complete project by project determination under the final rule,” continued Ms. Nasmith.  “I really don’t think that helps anything, but that’s not to say that we couldn’t come up with a more standard set of rules that still allows for the necessary amount of flexibility given the fact some of these projects are a telephone pole and others are massive hydro dams.”

One of the things that the rule did not do anything to address really is the confusion that has come out of the DC Circuit’s decision called the Hoopa Valley Tribe v. FERC, and there was an issue that goes deeper into the weeds on the waiver and timing question, which is what happens when a state needs more than a year?” continued Ms. Nasmith.  “In the Hoopa Valley Tribe case, what ended up happening is that the applicant and the state entered into an agreement that allowed the applicant to just resubmit the same application for a decade, and the DC Circuit came in and said, no, that’s really kind of getting beyond what Congress meant by setting a time limit; you can’t do that.  But there is still a huge question as to whether or not any kind of resubmission is OK under the statute, whether the submission of a new application is OK under the statute, or how new that new application needs to be and in what ways.  EPA completely punted on that question in the final rule and provided no clarity whatsoever.”

We’re also seeing applicants basically taking the Hoopa Valley decision and EPA’s supposedly forward-looking proclamation under the rule, and they are weaponizing it to undue existing denials and existing conditions in permits in a backward-looking way,” said Ms. Nasmith.  “So the whole thing has been thrown into the air in a very confusing and very inefficient way, so getting some clarity on what is the timeline, what is reasonable for different projects, and then what happens when the state needs more time, how and whether that’s permissible would be a huge help in my view.”

I would add it’s slopping over also into the question of whether or not a state is getting a complete application with the information it needs to make a 401 determination,” added Ron Shems.

Another thing the final rule isn’t clear on is there’s been some discussion about when does that one year period start,” said Moneen Nasmith.  “States would very much like for that one year period to start when they have something they can work with, so a complete application.  There have been some court cases under FERC that have indicated that in fact, just some kind of application is fine, but that’s not really fine if what you’re looking for is efficient processing of the application and timely decision making.  The final rule just put in a very thin packet of information that does not give the state what it needs to really process the application in a meaningful way, and so clarifying what is complete and that the clock needs to start upon receipt of that complete application I think would be a huge help.”

It seems in so many ways, talking about the new rule, that there is a huge difference between the two permits and what existing practices were and what our response capabilities are,” said Serena Liu.  “Maybe a potential path forward is to just acknowledge that difference and treat them differently because I think when you mention complete application, that ties into my earlier point where it’s very hard to change state regulations on a dime like the procedures took over 10 years to implement and adopt.  There’s existing state law that defines a valid application as a complete application and our current regulations require us to take actions within a certain time to determine completeness, as does the permit streamlining act, and the new rule does nothing to address.  It just adds to bureaucracy rather than cutting through any of it.”

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