As Some States Use the Clean Water Act to Delay Energy Projects, EPA Issues New CWA 401 Guidance

In just the past few weeks, three states have used their Clean Water Act 401 authority to delay, for an indefinite period, FERC-authorized pipeline expansion projects. On May 6, 2019, the Oregon Department of Environmental Quality denied, without prejudice, Jordan Cove’s application for a Section 401 water quality certification. Jordan Cove plans to build an LNG export terminal at Coos Bay, Oregon, if it can obtain the necessary federal and permits. Under Section 401(a) of the Clean Water Act, any applicant for a federal permit to conduct any activity, including the operation of facilities which may result in any discharge into the navigable waters, shall provide the permitting agency a certification from the State in which the discharge may originate that any such discharge will comply with the applicable provisions of the Clean Water Act, including effluent limitations and state water quality standards. The States have a “reasonable time”—which shall not exceed one year after the receipt of the 401 application—in which to act, or the state’s authority may be waived by this inaction. The Oregon DEQ concluded that Jordan Cove has not demonstrated that its project, as presently configured, will satisfy state water quality standards. The 401 applications submitted by Transcontinental Gas Pipe Line Co. (Transco) to the New Jersey Department of Environmental Protection and the New York State Department of Environmental Protection were similarly rejected without prejudice on May 15, 2019 (New York) and June 5, 2019 (New Jersey). This use of the states’ 401 authority has frustrated plans to build and operate LNG pipelines around the country.

Coincidentally or not, on June 7, 2109, EPA issued new guidance on the Clean Water Act 401 Certification Process, emphasizing its statutory limitations and making a commitment to revisit and revise the agency’s existing CWA 401 certification rules that were issued in 1971. EPA remarks that states and authorized tribes can only use their CWA 401 certification process authority to evaluate a prospective federally permitted project’s impact on potential water quality impacts, and not, as the guidance suggests, climate change concerns. Moreover, the one-year review process begins when an application for certification is received, and not when a “complete” application is received by the state authorities. The agency emphasizes that this is only policy guidance, and not new rules. However, this guidance may be transformed into new rules in the future.