It is no secret that the Trump administration wants to promote the United States as an independent supplier and potentially, even an exporter of energy resources.
According to the administration, in an Executive Order on Promoting Energy Infrastructure and Economic Growth (13868) issued this past April, “…last year, the United States surpassed production records set nearly 5 decades ago and is in all likelihood now the largest producer of crude oil in the world. We are also the world’s leading producer of natural gas, and we became a net exporter in 2017 for the first time since 1957.”
Although there are new technologies and innovations in place to help companies unlock these resources, the appropriate infrastructure is not. Without which, according to the administration, “the manufacturing and geopolitical advantages of the United States will erode.”
In addition, there are ambiguous laws in place that are preventing or at least hindering construction of pipelines in a timely and cost-effective manner.
Specifically, Section 401 of the Clean Water Act (CWA) (33 U.S.C. 1341). This ruling grants states and tribes the authority to ensure that federal agencies do not issue permits or licenses that violate the water quality standards of their respective jurisdictions, by allowing them to grant, deny, or waive certification of the proposed federal licenses or permits.
Between the original arbitrary wording, and the fact that the rule has not been updated in 50 years, the Trump administration asked the U.S. Environmental Protection Agency (EPA) to review and clarify Section 401 to help expedite infrastructure construction projects.
Recently, the EPA did just that. Here’s what’s new:
Presently, Section 401 provides a state or authorized tribe “a reasonable period of time, which shall not exceed one year, to act on a Section 401 certification request.”
The EPA Section 401 regulations currently define a “reasonable timeline” as generally six months (40 C.F.R. § 121.16(b)). And the National Pollutant Discharge Elimination System (NPDES) permits provide 60 days unless a finding is made that unusual circumstances require more time.
The timeline for action begins upon receipt of a “complete application.” However, there is no clarification of what a “complete application” means.
The new ruling suggests, instead, that the timeline for review begins upon receipt of a written request for certification.
If the state or tribe does not grant, deny, or waive the Section 401 certification within the “reasonable timeline,” — up to a year of receipt of the request — federal permitting agencies will determine that the requirement has been waived and will grant a license.
Importantly, this permit is binding.
Unless a company modifies the project after the permit has been issued, the state or tribe has no legal right to alter or challenge the license.
In a recent court case, Hoopa Valley Tribe v. FERC, the court held that withdrawing and resubmitting the same Section 401 request for the purpose of circumventing the one-year statutory deadline does not restart the timeline.
Scope of Section 401
The original intent of Section 401 was to give states and tribes authority to protect their waters. One of the ways it did this was to require projects “to ensure compliance with ‘applicable effluent limitations,’ and ‘water quality requirements.’”
The EPA says this is too vague and actually underscores “the focused intent of this provision on the protection of water quality.”
In the new proposal, the EPA recommends that the scope of a Section 401 certification review “be limited to an evaluation of potential water quality impacts.”
It goes on to say that, “If a state or tribe issues a Section 401 certification with conditions beyond the scope of Section 401, i.e., conditions not related to water quality requirements, or if it has denied a certification for reasons beyond the scope of Section 401, ‘federal permitting agencies should work with their Office of General Counsel and the EPA to determine whether a permit or license should be issued with those conditions or if waiver has occurred.’”
This has been disputed in court. Some smaller courts concluded that the CWA does not authorize federal permitting agencies to reject conditions of a Section 401 certification, and that a federal license or permit must contain all conditions of a certification.
EPA disagrees. More clarification of this section may follow.
So What is Required?
There is no CWA provision that requires specific information to be submitted with a Section 401 certification request.
Because this is the case, under the updated 401 process, a company should only need to provide a state or tribe the application materials submitted for the federal permit or license.
It is the state or tribe’s responsibility to prove that any additional requirements are needed. The state or tribe may want an environmental assessment or environmental impact statement prepared by the project proponent, for example. However, the EPA recommends that “the state or tribe not delay action on a certification request until a National Environmental Policy Act (NEPA) review is complete unless the request is submitted at or near the conclusion of the NEPA process.” This is because the EPA feels that the NEPA has a broader scope than that required by Section 401; plus, it generally requires more than a year to complete.
Basically, the EPA recommends that companies wishing to apply for a Section 401 certification “provide appropriate water quality-related information to the state or tribe to ensure timely action on a request.”
This ruling is now in the comment period. Due the amount of attention this issue has generated, the EPA is considering “providing additional clarity.”
At the moment, anyway, the EPA is scheduled to finalize this rule in May 2020.