Today, the Competitive Enterprise Institute submitted a comment to the Environmental Protection Agency (EPA) on its proposed regulatory changes to Section 401 of the 1972 Clean Water Act. The proposed rule would enable states to misuse this section to block fossil fuel-related projects, including ones needed to deliver American energy to markets both in the United States and abroad. For this reason, CEI urged the agency to withdraw it.
Section 401 allows the state most directly impacted by a proposed project to veto it if it violates specified water quality provisions in the Clean Water Act. But in the last several years some states have used this section as a climate policy tool, blocking fossil fuel-related projects unlikely to have otherwise raised any Section 401 objections.
For example, the State of New York has invoked Section 401 to stop new natural gas pipelines no different than ones that had routinely received state certifications in the past. It has also been used by the State of Washington to stop a coal export facility and by the State of Oregon against a liquefied natural gas (LNG) export facility, even though both had minimal water quality impacts.
Beyond rejecting some projects outright, several states have tried to skirt the one-year deadline under Section 401 by repeatedly asking the project developers for additional information and resetting the one-year clock each time they do so, despite the fact that the statute contains no such exception to the deadline. That way, states can delay projects indefinitely without ever having to make a final determination.
In 2020, the Trump EPA finalized a rule reiterating that the Clean Water Act deals with water and not climate, and therefore states can only invoke it based on potential water quality violations directly attributable to the project. For example, the fact that the natural gas carried by a pipeline (or the coal or LNG sent abroad through an export facility) will eventually be combusted by end users and emit carbon dioxide is not a valid reason to block it under Section 401. It also reinforced that the one-year hard deadline means what it says and that states cannot circumvent it. CEI submitted a comment to the EPA in favor of these provisions.
However, this Trump rule was one of many targeted by the Biden administration, and last June the EPA proposed a rule largely reversing its provisions and again giving states wide latitude in using Section 401 to go after fossil fuel-related projects.
In our comment opposing this proposal, we asserted that the text and history of Section 401 militates heavily against its use for anything other than water quality violations, and that the one-year deadline in the statute is unambiguous.
Our comment also noted the applicability of the recent Supreme Court case West Virginia v. EPA, which reins in climate-related regulations that lack statutory authorization. As much as the Supreme Court held that EPA cannot target coal and natural gas electric generation absent a statutory mandate to do so under the Clean Air Act, states cannot do the same to fossil fuel-related infrastructure projects without statutory authority in the Clean Water Act.
The timing of the proposed rule could not be worse. Expanded supplies of American energy are needed to combat high prices domestically while expanding LNG exports to undercut Vladimir Putin’s geopolitical leverage over our Western European allies. The Appalachian region has vast reserves of natural gas but struggles to bring more to market due to pipeline constraints, while several proposed pipelines there have been stropped by Section 401. Federal and state governments should be facilitating the approval of fossil energy infrastructure, not misusing unrelated Clean Water Act provisions to block it.