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On October 21, 2021, the U.S. District Court for the Northern District of California vacated and remanded the U.S. Environmental Protection Agency’s 2020 Clean Water Act Section 401 final “Certification Rule.”
In response to the court’s ruling, the U.S. Environmental Protection Agency (EPA) is implementing nationwide the previous water quality certification rule (which had been in effect since 1971) while it develops a new rule.
The result? Permitting uncertainties for project proponents that require water quality certifications.
Two examples:
- As an immediate result of the court’s ruling, the U.S. Army Corps of Engineers had halted issuing certain Nationwide Permits, known as NWPs, while the states re-issue water quality certifications under the 1971 rule. Some states have now granted certifications for certain NWPs, which allows the Corps to issue these permits. However, some Corps permits may still be lacking state certification and there may be resulting permitting delays.
- Procedural rights and protections implemented by the Certification Rule no longer apply. These include the pre-filing meeting with the state water quality certification agency and limitations of state conditioning authority under CWA Section 401.
The Deep Dive
Pursuant to Section 401 of the Clean Water Act (CWA), no federal license or permit that may result in a discharge to waters of the U.S. may be issued unless the state or authorized Tribe where the discharge will originate issues a water quality certification or waives the certification requirement.
A Section 401 certification must be issued or waived before a license can be issued by the Federal Energy Regulatory Commission (FERC) for hydropower projects and for all permits issued by the Corps.
As part of the Section 401 certification process, EPA’s regulations provide that states and Tribes must confirm that the federal license or permit provides “reasonable assurance” that state or Tribal water quality requirements will be met (40 C.F.R. § 121.24). Any conditions imposed by a state or Tribe in a Section 401 certification must be incorporated into the federal license or permit.
The water quality certification process under Section 401 has long been a cause of delay and uncertainty for proposed infrastructure projects. The Certification Rule resolved many of uncertainties for project proponents.
Two notable issues addressed by the Certification Rule that come up in the context of hydropower projects during the Section 401 certification process are:
- The one year-time period for issuance/waiver of the certification
- The scope of the certification (whether it can include conditions beyond water quality or conditions beyond those associated with the discharge from the project)
The Certification Rule was promulgated by the Trump Administration to address these issues, among others. The Certification Rule also codified the D.C. Circuit’s 2019 ruling in Hoopa Valley Tribe v. FERC that states and Tribes have up to one year to act on a request for water quality certification. The Certification Rule also provided that the scope of the water quality certification under Section 401 “must address water quality concerns from the discharge itself, not the proposed activity as a whole.” Under the Certification Rule, Section 401 water quality certifications pertain only to point-source discharges associated with a federally licensed or permitted activity—and not the entire project proposal.
Shortly after the Certification Rule was finalized, several states and environmental groups challenged the rule in three separate cases (brought in federal district courts in California, Pennsylvania, and South Carolina), arguing that it impeded upon states’ rights and their ability to regulate water quality.
The National Hydropower Association (NHA) intervened in all three cases in support of the Certification Rule. As the cases progressed, the incoming Biden Administration asked the courts to remand the rule to EPA, but without vacatur—which would leave the Certification Rule in effect while EPA determined how to proceed with its policy priorities. NHA successfully opposed vacatur in the federal district courts in Pennsylvania and South Carolina.
The California district court did not follow suit and instead vacated the Certification Rule. Courts have consistently not set aside agency rules without first reviewing the merits of whether the rule is defective. Thus, vacatur in this context was unusual, and the district court applied a test normally reserved to determine the appropriateness of a preliminary injunction. Intervenors that supported the Certification Rule (including NHA) have filed appeals in the Ninth Circuit.
Short-Term Uncertainties Are Expected
EPA’s website acknowledges the vacatur and explains: “As the Court stated, this order requires a temporary return to EPA’s 1971 rule until EPA finalizes a new certification rule. EPA is reviewing the Court decision and considering next steps.” It appears that EPA considers the vacatur to apply nationwide and that EPA will return to implementing the 1971 certification regulations until it promulgates a new rule.
As a general matter, vacatur of the Certification Rule does not automatically impair prior actions taken pursuant to the vacated rule. The court’s order does not address the legality of, or purport to invalidate, certifications issued pursuant to the Certification Rule.
More to Come?
As discussed above, litigation on the vacatur of the Certification Rule will now continue in the Ninth Circuit.
EPA’s intent is to now promulgate a new Section 401 rule, and it remains to be seen whether any elements of the Certification Rule will remain in EPA’s next iteration. EPA has not yet announced its plan for issuing the Section 401 rule proposal.
