Legal & Regulatory

SCOTUS Reinstates Trump-Era Environmental Certification Rule

The U.S. Supreme Court on April 6 reinstated a Trump-era environmental rule that limited state and tribal roles in enforcing a section of the Clean Water Act (CWA) related to project certification. The order is a temporary triumph for eight states and three energy trade associations, including the National Hydropower Association (NHA).

The high court’s order in Louisiana et al. v. American Rivers et al. reinstates a Clean Water Act Section 401 Certification Rule, which the Environmental Protection Agency (EPA) finalized in July 2020 (and which became effective in September 2020) to address potential delays in certifications and project development that resulted in protracted litigation involving state and tribal reviews under Section 401 of the Clean Water Act (CWA).

The Supreme Court acted on an application filed on March 21 by eight states—Arkansas, Louisiana, Mississippi, Missouri, Montana, West Virginia, Wyoming, and Texas—and three industry groups—NHA, American Petroleum Institute, and the Interstate Natural Gas Association of America—that asked the high court to stay an October 2021 order from the U.S. District Court for the Northern District of California, which vacated the rule. Although Justice Elena Kagan, Stephen Breyer, and Sonia Sotomayor issued a written dissent, the high court stayed the district court’s order pending an appeal in the Ninth Circuit Court of Appeals or a petition for a writ of certiorari.

The court’s order is a setback for multiple plaintiffs, including 20 states and the District of Columbia, the Tribal and Environmental Plaintiff Group, and several environmental groups, which successfully persuaded the U.S. District Court for the Northern District of California that the rule significantly limited the scope of projects subject to review under Section 401 of the CWA. But it’s also potentially a new legal hurdle for the EPA, which sought to provide clarification to Section 401 under the Trump administration, but, under the Biden administration, announced it intended to revise the rule. While the EPA had asked federal courts in the district of South Carolina, the Eastern District of Pennsylvania, and the Northern District of California to remand the rule without prejudice and without vacateur, only two of the district courts agreed to the remand.

“[T]he Northern District of California took an entirely different path. Even though the court had not found the Rule unlawful under the [Administrative Procedure Act]—indeed, it had not received a single merits brief or reviewed the administrative record—it took the extraordinary and unlawful step of vacating the Rule in its entirety and nationwide,” applicants wrote in their request for a stay at the Supreme Court on March 21. “The new Administration not-so-subtly welcomed the result. Relieved of the burden of changing the Rule through the administrative process, EPA did not appeal the district court’s unlawful decision and sought actively to thwart Applicants’ attempt to obtain a stay on appeal.”

Section 401, implemented in 1972, directly grants states and tribes the authority to review for compliance with other sections of the CWA any discharge into “a water of the U.S.” that may result from a proposed activity that requires a federal license or permit. Reviews, which have been highly litigated for several high-profile infrastructure projects, have included compliance with the effluent limitations and standards of performance, and water quality standards and implementation plans.

When it promulgated the 2020 rule, the Trump administration said it was setting out to mitigate legal risks for infrastructure projects by updating and clarifying the substantive and procedural requirements for water quality certification under the CWA Section 401. The rule, for example, established when 401 certification is required, as well as the scope of certification, and procedures associated with certification. By finalizing the rule, however, the EPA also determined that Section 401 does not allow a certifying authority to unilaterally modify a certification, drawing immediate challenges from states and tribal authorities. 

The Trump administration argued that without the rule, when a federal license or permit is modified or the underlying project is changed, Section 401 would require a new certification depending on the federal agency’s procedures. Without clarification as laid out in the 2020 rule, the EPA said hydropower project proponents could, for example, be required to submit a new certification request when they move to amend an existing hydropower license at the Federal Energy Regulatory Commission (FERC) or amend a pending application for a hydropower license.

Section 401 also requires developers of interstate pipelines and transmission lines to seek water quality certifications from more than one state. According to the case’s applicants, this has posed regulatory ambiguity, which states have “exploited” to extend the amount of time they have to act on a certification request to “kill a project.” Recent Section 401 certification denial cases in New York, for example, involve the $683 million Constitution Pipeline, a 124-mile natural gas pipeline from Pennsylvania to New York, and the Valley Lateral Pipeline, an extension of an existing pipeline in Orange Country, New York, that would have served a new gas-fired power plant in Wawayanda, New York. While the Constitution Pipeline was ultimately canceled, the Valley Lateral Pipeline eventually got FERC’s green light to proceed three years after filing a Section 401 request. In another case involving a proposed coal export terminal—the largest in North America—in Cowlitz County, Washington, where the state denied the Section 401 certification, federal efforts continue (albeit with considerable state pushback) to restart the permitting process.

In its order, the U.S. District Court for the Northern District of California, however, found that plaintiffs established “significant environmental harms will likely transpire should remand occur without vacatur,” noting it was “particularly” persuaded by Washington state’s example of three hydropower dams on the Skagit River, which each require Section 401 certifications before the EPA can replace the current certification rule. “As noted in the State of Washington’s brief, ‘because FERC licenses for dams will last between 30–50 years, the lack of adequate water quality conditions attached to these licenses will have adverse impacts for a generation,’ ” the court wrote.

Justices Kagan, Breyer, and Sotomayor in their dissent urged the high court not to grant the application, given that the issue does not constitute “extraordinary circumstances.” The applicants “have not met our standard because they have failed to substantiate their assertions of irreparable harm. The Court therefore has no warrant to grant emergency relief,” they wrote.

Sonal Patel is a POWER senior associate editor (@sonalcpatel@POWERmagazine).

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