A High Stakes Debate Over an Environmental Permitting Law That Empowers States

As the Trump administration and Republicans in Congress look to ease permitting difficulties for companies seeking to build pipelines and other energy infrastructure, they’ve turned their attention to part of a federal law that gives states the power to stop these sorts of projects.

New guidance the Environmental Protection Agency released last week focuses on this state-level approval process, which takes place under Section 401 of the Clean Water Act. The guidance stems from an executive order Trump issued in April.

At the time he signed that order, Trump described “destructive permitting delays and denials” and said his directive would prevent “state-level abuse of water quality certifications.”

But critics characterize the new guidance as the latest sign that the administration is seeking to reduce the clout states have in a process that has, at times, frustrated industry. They also note that it comes ahead of related rules EPA is expected to propose later this summer.

While it may sound like an arcane permitting procedure, the stakes surrounding the Section 401 process are high.

Proponents of the authority that states now have say that the law gives states crucial sway over projects that could affect water quality in rivers, lakes and wetlands within their boundaries.

But Trump and other Republicans claim that some states have misused the process to stymie projects that politicians are ideologically opposed to, such as natural gas pipelines in the northeast and a coal export terminal along the Columbia River in Washington state.

Some of these projects are worth hundreds of millions, or even billions of dollars. They provide oil and gas producers and mining companies with connections that they need to move fossil fuels to markets both inside and outside the U.S. Whether the projects are built can also have implications for local economies and jobs in places like Wyoming, where much of the nation’s coal is mined.

“The water quality certification process has been abused by states to block natural gas pipelines,” American Gas Association president and CEO Karen Harbert said in a statement last week. “It is our hope that EPA’s balanced approach in its new guidance will end this practice while also protecting water quality as Congress intended.”

The American Petroleum Institute also voiced support for EPA’s latest Section 401 guidance.

EPA says the guidance is meant to provide clarifications and recommendations for implementing Section 401. It is not a regulation. And it doesn’t change the law. For now, it’s not entirely clear what the practical effects will be for states.

“There are so many more questions than we have answers,” Moneen Nasmith, a staff attorney with the group Earthjustice told Route Fifty.

“But I certainly have some very significant concerns about what EPA thinks its role is in an area that the Clean Water Act clearly has carved out for the states,” she said.

Throughout the guidance, Nasmith added, EPA seems to suggests it sees itself as having a broader role in areas that historically and per the language of the law have been left to states.

Jon Devine, who leads a team at the Natural Resources Defense Council that focuses on clean water issues, said by email that the guidance “reveals the plans EPA has to undercut states’ authority when it writes new rules later this year.”

It’s not only environmental groups that are skeptical of federal efforts to rework the current Section 401 process.

The Western Governors’ Association and the National Conference of State Legislatures, along with eight other groups representing state officials, have expressed concerns about potential revisions.

“EPA’s engagement with state and local officials on this issue has thus far failed to satisfy the express directives requiring meaningful consultation,” these groups said last month in a letter sent to EPA administrator Andrew Wheeler, himself a former coal lobbyist.

In an earlier letter to Trump, leaders of the Western Governors’ Association urged the president “to direct federal agencies to reject any changes to agency rules, guidance, or policy that may diminish, impair, or subordinate states’” authority to protect water quality within their boundaries.

“Since the enactment of the CWA, states have exercised their authority under Section 401 efficiently, effectively and equitably.” they added.  

Under Section 401, applicants seeking federal permits or licenses for activities that may cause a “discharge” into certain waters need a “certification” from the state where the discharge will originate.

This involves states verifying the discharge will comply with water quality standards. States can indirectly block the federal government from green-lighting a project by denying the certification, and can also use the process to impose conditions on federal permits.

One issue the new guidance deals with has to do with the time states take to review and make a decision on Section 401 applications. The law says states or tribes can take a “reasonable” period of time, “which shall not exceed one year,” to act on a 401 certification request.

EPA’s guidance emphasizes that the law does not guarantee that a state can always take a full year to act and that it leaves federal agencies with the authority to establish certification timelines.

Devine explained that EPA has previously stated that the time states have to review a project starts when an application for state approval is deemed to be complete. But in the new guidance the agency says it starts immediately upon receipt of a request for approval.

This would be the case, he noted, even if a state hasn’t received the information it believes is necessary to assess a project.

“EPA is hellbent on limiting the time a state has to act,” Devine said. “If EPA does that, it’ll create a perverse incentive for applicants to withhold information. It might also lead states to reject projects that they would approve with a better understanding of the project.”

Nasmith pointed out that disagreements over the law’s timeline provisions have been at issue in legal disputes. The guidance, in her view, offers little clarity on this front, beyond EPA indicating that it favors the clock starting when an application is first received.

The Federal Energy Regulatory Commission and the Army Corps of Engineers generally have bigger roles than EPA in permitting natural gas pipelines—a key area of focus for the Trump administration and Republicans from gas-producing states, like Oklahoma Sen. Jim Inhofe.

Nasmith noted that FERC’s approach to the Section 401 timeline for states is that the clock starts when the state receives an application. The state then has a full year from that point to review and either approve or deny the certification request.

States that don’t meet these deadlines risk waiving their Section 401 authority, at which point federal agencies could proceed with permitting and licensing a project without them weighing in.

EPA in its new guidance also recommends that the scope of states’ Section 401 certification reviews should be limited to evaluating impacts on water quality.

But this is another legal gray area. In general, companies would like to see a narrower definition of what falls under the umbrella of “water quality impacts,” while those concerned about the environment would prefer to see the term interpreted more broadly.

An example is whether a state could look at alternative pipeline routes when assessing water quality impacts.

That question was central to a case that Constitution Pipeline Company tried to petition to the U.S. Supreme Court, challenging New York’s denial of a Section 401 certification.

The company is seeking to build a portion of a 124-mile pipeline through New York to transport natural gas from Pennsylvania to the state and to other states in New England.

It took the position that New York exceeded its authority by denying a certification request on the basis of receiving insufficient information about alternative pipeline routes.

The 2nd U.S. Circuit Court of Appeals had ruled that “a state’s consideration of a possible alternative route that would result in less substantial impact on its waterbodies is plainly within” its authority.

The Supreme Court declined to take the case, leaving the lower court ruling intact.

There is still other legal wrangling going on over the Constitution project, as well as the Northern Access Pipeline, another gas pipeline that failed to secure Section 401 approval in New York.

Minnesota is conducting a Section 401 review for the Enbridge Line 3 pipeline project, which would carry crude oil from Canadian oil fields in Alberta into the United States. The U.S. component of the project will cost $2.9 billion, according to the company.

And Oregon in May rejected a Section 401 application from Pembina Pipeline Corp. for a $10 billion project that would involve building a pipeline and other facilities to export natural gas at Coos Bay, a city located about 160 miles southwest of Portland along the Pacific coast.

In 2017, Washington state denied a Section 401 certification for a controversial coal export facility proposed by Millennium Bulk Terminals, which would have provided a departure point for shipping coal mined in Wyoming to Asia.

Wyoming Sen. John Barrasso, a Republican, is the lead sponsor on a bill, also floated in 2018, that would revise the Section 401 process, placing new limits on how states carry it out.

The state’s governor, Mark Gordon, also a Republican, told the news website WyoFile earlier this month that he’d asked state attorney general Bridget Hill to research a legal strategy for how Wyoming by itself, or with other states, could sue Washington over the denial.

“They’re using the Clean Water Act and their Department of Ecology to block export of coal and they’re doing it unabashedly,” Gordon told the news outlet. “They’re using these environmental regulations ill-advisedly for things that are not appropriate for the regulation.”

The Washington Department of Ecology says the terminal would have involved filling 24 acres of wetlands and dredging about 41 acres of the river and that it denied the permit because it would have harmed the Columbia River and the surrounding environment.