Change is Afoot: EPA Revisiting Section 401 Program
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Change is Afoot: EPA Revisiting Section 401 Program

Brownstein Client Alert, June 28, 2022

More changes are ahead for entities seeking federal authorization for projects that may impact waters of the United States. On June 9, 2022, the Environmental Protection Agency (“EPA”) published a proposed rule that would substantially change the Clean Water Act (“CWA”) Section 401 regulations promulgated by the Trump administration in 2020 by giving states and authorized Tribes (Tribes eligible for Treatment in a Similar Manner as States, hereinafter “Tribes”) a more expansive scope of review in considering 401 certifications. CWA Section 401 vests states and Tribes with responsibility to certify that a discharge is consistent with water quality requirements before certain federal permits can be issued. Infrastructure, reservoir, pipeline and utility projects, among others, often require a Section 401 certification (or waiver) as a prerequisite to securing a U.S. Army Corps of Engineers Section 404 dredge and fill permit, Federal Energy Regulatory Commission license or Coast Guard Section 9 or 10 permit.

Key Changes

The Trump administration’s rule narrowed the authority of states and Tribes to deny Section 401 certifications, in part by limiting the time frame for review and the scope of conditions that certifying authorities could impose on federal permits. While the 2020 rule is subject to ongoing litigation, which is summarized in a prior Brownstein alert, it will remain in place until the EPA finalizes the proposed rule in this separate action, which it intends to do in Spring 2023.

The proposed rule reverses much of the 2020 rule and significantly expands the authority of states and Tribes to review, condition, and approve or deny certifications. The proposed rule includes major policy changes relevant to a wide variety of infrastructure, development and mining entities that may require federal approvals or permits. These changes include:

Scope Review Broadened

  • The proposed rule expands the scope of review that a certifying authority may engage in and the conditions that can be applied to a certification.
  • The 2020 rule limited the scope of review to only consider potential water quality impacts directly occurring from the project’s point source discharges that triggered review under Section 401.
  • The proposed rule, however, authorizes states and Tribes to consider the impacts to state and tribal waters from the “activity as a whole” including “any aspect of the project activity with the potential to affect water quality.” This authorizes the certifying authority to analyze water quality impacts caused by other aspects of the project potentially unrelated to the discharge that triggered the federal permitting or licensing requirement.

Applicable Water Quality Requirements Expanded

  • Under the proposed rule, when a certifying authority reviews a federal license or permit, it must determine whether the “activity as a whole” complies with “water quality requirements.” The 2020 rule limited applicable “water quality requirements” to enumerated provisions of the CWA and “state or tribal regulatory requirements for point source discharges into waters of the United States.” 40 C.F.R. Section 121.1(n).
  • The proposed rule expands the definition of “water quality requirements” to include any limitation, standard or other requirements under the enumerated provisions of the CWA; any federal and state laws or regulations implementing the CWA; and any other water quality-related requirements of state or tribal law regardless of whether they apply to point source discharges.
  • Although Section 401 certification is triggered by a point source discharge into a “water of the United States,” the certifying authority may review the project’s effects on water quality in the jurisdiction as a whole, including non-navigable state and local waters that may be affected.

Timeline for Section 401 Certification Review

  • The CWA requires that certifying authorities act on requests for certification within a “reasonable period of time (which shall not exceed one year).” 33 U.S.C. 1341(a)(1).
  • The 2020 rule granted federal agencies unilateral authority to establish their timeline for a project’s review within the one year period from the receipt of the request for certification.
  • The proposed rule instead provides federal agencies and certifying authorities with the responsibility to jointly set the timeline (still within one year).
  • The proposed rule does not provide clear implementation for states and Tribes, such as whether certification applications submitted prior to adoption of the new rule, will be governed by the 2020 rule or the forthcoming final rule. EPA notes that “states asked EPA to clarify definitions and conveyed support for interim guidance and immediate relief as they continued to implement the 2020 Rule.” 87 Fed. Reg. 35,376 (June 9, 2022).

Requirements for Certification

  • The proposed rule would grant state or Tribes significant discretion in defining the necessary requirements for a Section 401 certification request.
  • States and Tribes could define by regulation other requirements for requests for certification. If states and Tribes do not promulgate additional requirements, the proposed rule includes a default list of five elements that each request must include.
  • Also under the proposed rule, all requests for certification would require a copy of a draft license or permit and any existing and readily available data or information related to the potential water quality impacts from the project.

The full text of the proposed rule and related information is available here. Public comments can be submitted online until Aug. 8, 2022. We anticipate the proposed rule will attract a wide variety of comments from a multitude of stakeholders, including environmental groups and the regulated community.

While the proposed rule will likely evolve based on public comments, it offers the regulated community a preview of changes to come and an opportunity to collect data and information necessary to support their 401 certification request under the potential new rules. The final rule will vest states and Tribes with substantially more authority and discretion, making it more difficult for the regulated community to anticipate future permit conditions and requirements. For those same reasons, it is highly likely that the final rule immediately will be subject to litigation and probable stays, not unlike the 2020 rule.

This document is intended to provide you with general information regarding an EPA proposed rule that would substantially change the Clean Water Act's Section 401 regulations. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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