CEI and PLF comment on Implementation of Clean Water Act Section 401

Dear Ms. Kasparek:

On behalf of the Competitive Enterprise Institute and the Pacific Legal Foundation, I appreciate this opportunity to provide comments on the Environmental Protection Agency’s (EPA) notice “Establishment of Public Docket and Listening Sessions on Implementation Challenges Associated With Clean Water Act Section 401.”

The purpose for seeking public input, as explained in the notice, is in large part to ascertain whether the EPA should use guidance or rulemaking “to address identified areas of regulatory uncertainty or implementation challenges regarding the scope of certification.”

Our organizations strongly urge the EPA to rescind the Biden administration’s “Clean Water Act Section 401 Water Quality Certification Improvement Rule” (2023 rule) and propose a new rule that is consistent with the rule of law and the proper scope of the Clean Water Act (CWA), including the statute’s focus on discharges from point sources into navigable waters. The 2023 rule expanded the scope of certification beyond what is consistent with the statute, including allowing states and other certifying authorities to look beyond discharges, point sources, and navigable waters.

Beyond Discharges. A central problem of the final rule is its “activity as a whole” approach to Section 401 as opposed to a discharge-only approach. The rule states, “EPA has concluded that the best reading of the statutory text is that the scope of certification is the activity subject to the Federal license or permit, not merely its potential point source discharges.”

Beyond Point Sources. The 2023 rule allows states to look to nonpoint sources, explaining, “With respect to using section 401 certifications to address nonpoint source discharges, certifying authorities may consider water quality-related impacts from nonpoint source discharges after determining that the project satisfies the prerequisite potential for a point source discharge into waters of the United States.”

Beyond Navigable Waters. The 2023 rule does not even limit the scope of certification to navigable waters, explaining “the Agency concludes that while a certifying authority is limited to considering impacts to “waters of the United States” when certifying compliance with the enumerated provisions of the CWA, a certifying authority is not so limited when certifying compliance with requirements of state or Tribal law that otherwise apply to waters of the state or Tribe beyond waters of the United States.”

After providing some brief background, this comment will discuss these and other scope of certification problems.

I.    Background

When Congress passed the CWA, it recognized the importance of cooperative federalism and the role of states in protecting water quality. At the start of the statute Congress stated, “it is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution…”

Section 401 reflects this belief in cooperative federalism. Congress created a major new federal permitting scheme in the CWA yet ensured that states could have a voice in the permitting process through state certification. States have a means to push back when the federal government is trying to issue a permit or license that could harm water quality. Unfortunately, this voice for states has too often become a state veto on projects for reasons that have nothing to do with water quality issues. The Trump administration’s EPA 2020 “Clean Water Act Section 401 Certification Rule” (2020 rule) helped to outline the problem:

[C]ertifying authorities have on occasion required in a certification condition the construction of biking and hiking trails, requiring one-time and recurring payments to State agencies for improvements or enhancements that are unrelated to the proposed federally licensed or permitted project, and the creation of public access for fishing along waters of the United States. Certifying authorities have also attempted to address all potential environmental impacts from the creation, manufacture, or subsequent use of products generated by a proposed federally licensed or permitted activity or project that may be identified in an environmental impact statement or environmental assessment, prepared pursuant to the NEPA or a State law equivalent. This includes, for example, consideration of impacts associated with air emissions and transportation effects.

The 2020 rule tried to address this overreach. The 2023 rule embraces it.

II.     The 2023 Rule Improperly Interprets Section 401

Under the 2023 rule, once a specific trigger is met, then the state can block federal permits and licenses for a wide range of reasons beyond what is authorized under Section 401. Specifically, “once there is a prerequisite potential for a point source discharge into waters of the United States, then the certifying authority may evaluate and place conditions on the ‘activity,’ which includes consideration of water quality-related impacts from both point sources and nonpoint sources.” Further, once there is this potential discharge, a state is not limited to considering the effects on navigable waters.

The 2023 rule’s misinterpretation of Section 401(a) and Section 401(d) is at the heart of the problem. The following is the start of Section 401(a)(1), which lays out the core requirements under Section 401:

Any applicant for a Federal license or permit to conduct any activity including, but not limited to, the construction or operation of facilities, which may result in any discharge into the navigable waters, shall provide the licensing or permitting agency a certification from the State in which the discharge originates or will originate, or, if appropriate, from the interstate water pollution control agency having jurisdiction over the navigable waters at the point where the discharge originates or will originate, that any such discharge will comply with the applicable provisions of sections 1311, 1312, 1313, 1316, and 1317 of this title.

This Section 401 process exists to address “any discharge into the navigable waters” of the activity. The language expressly references “discharges” and “navigable waters.” Discharges are required to be from point sources under this section, as the 2023 rule acknowledges. Additional language, “in which the discharge originates or will originate,” supports the requirement that the discharges be from point sources. In addition, Section 401(a)(1) also requires compliance with other CWA sections that are discharge-related and in no way apply regulatory requirements beyond discharges, point sources, and navigable waters.

Instead of limiting its analysis to the effects of discharges, the 2023 rule takes an overbroad approach by looking at the effects of the activity as a whole. The rule is heavily swayed by the fact that Section 401(d) does not use the term “discharge” but instead uses “applicant.” The Section 401(d) language says, “Any certification provided under this section shall set forth any effluent limitations and other limitations, and monitoring requirements necessary to assure that any applicant for a Federal license or permit will comply.…” [Emphasis added]. As a result, the 2023 rule took the activity as a whole approach, arguing “Because section 401(d) requires that a section 401(a)(1) certification include conditions necessary to assure the ‘applicant . . . will comply’ with water quality requirements, section 401 is most reasonably read to require the certifying authority—when it reviews a request for certification under section 401(a)(1)—to review the applicant’s activity subject to the Federal license or permit, and not merely the potential point source discharges.”

This interpretation is problematic for many reasons. Section 401(a)(1), which focuses on discharges, is the foundation of the certification process yet the 2023 rule treats it as secondary to Section 401(d), a narrow provision that is limited in scope. The rule would in effect have Section 401(d) swallow up the core requirements established in Section 401(a)(1).

Further, Section 401(d) did not ignore discharges. The compliance requirements being imposed on an applicant are to comply with water quality concerns related to discharges. Section 401(d)’s compliance requirements involve cross-referenced sections of the CWA that address discharges.

Section 401(d) does require an applicant to comply with “any other appropriate requirement of State law.” This state language follows a list dealing with CWA discharge-related requirements. The principle of statutory interpretation ejusdem generis requires that the state law requirements be like the preceding requirements in the list.

Therefore, any requirement should be related to the CWA discharges of concern. It is not meant to allow states to impose compliance requirements that have nothing to do with water quality concerns. In addition, the language in Section 401(d) does not say “any requirement of State law” but expressly conditions the requirements to those that are “any other appropriate” requirements. This is an express signal that any state law requirements be consistent with the preceding requirements dealing with discharges.

In general, the 2023 rule does not read Section 401 consistently with the overall structure of the statute, or even consistently within the section itself. The CWA’s regulatory regime and Section 401 are focused on discharges (not activities) from point sources into the navigable waters. The 2023 rule would ignore this. In so doing, it would increase the ways that states can block projects for reasons that are well beyond the scope of the CWA.

III.   The 2023 Rule Does Not Limit Certification to Water-Quality Concerns

The 2023 rule would improperly expand the scope of the Section 401 certification process by not limiting reviews to genuine water quality concerns. While the 2023 rule does discuss focusing on “water quality-related impacts,” this is a façade. Even this language is a problem. It does not say “water-quality” impacts but is more expansive to cover “water-quality-related” impacts.

The proposed rule that preceded the final 2023 rule is instructive on what is envisioned to be covered by “water quality-related impacts.” The EPA pointed to public access to a river for recreational purposes as being appropriate for states to address in the certification process. The agency highlighted imposing conditions like “construction of public access for fishing,” and “construction of recreation facilities to support designated uses (e.g., whitewater release for kayakers, canoe portages, parking spaces).” These might be concerns for states, but whether an individual can access a river or park a car is not a water quality concern nor is it appropriate to address through Section 401.

Admittedly, this language was from the proposed rule. However, the final rule did not dispute that these types of issues should be considered in the certification process:

A few commenters argued that the scope of certification should be limited to protection of water quality sufficient to support designated uses, as opposed to direct protection of those uses, and argued that some examples in the proposal constituted the latter. A few commenters focused specifically on the examples regarding public fishing access and recreation facilities, arguing that they are not linked to preserving the water quality necessary for the designated use and should not be in the scope of a certifying authority’s review. A few other commenters asserted that EPA was equating ensuring people can enjoy the benefits of water quality with actually ensuring water quality and argued that certifications should not include impacts that are not directly related to improving or maintaining water quality. Some commenters provided their own examples of conditions they considered to be related or unrelated to water quality and asked for EPA to explicitly state which conditions would be within or outside the scope of section 401 certification.

The Agency declines to explicitly identify which conditions would be within or outside the scope of section 401 certification because, subject to a case-by-case review of the particular facts presented by each certification, a wide variety of conditions could be appropriate as necessary to prevent adverse impacts to a state’s or Tribe’s water quality…

The 2023 rule could have clarified that it did not cover these specific conditions that the EPA itself identified in its proposal rule. It chose not to do so.

The EPA in the 2023 rule stresses that projects would have to comply with requirements related to a designated use of a water:

To be clear, a certifying authority could condition an activity to ensure its compliance with any and all components of applicable water quality standards (water quality criteria, designated uses, and antidegradation requirements). Therefore, certifying authorities could include conditions to ensure a project will comply with, in addition to water quality criteria, a designated use of a water.… [Emphasis by EPA]

These conditions could lead to the same designated use concerns that existed for the proposed rule, such as imposing conditions like “construction of public access for fishing,” and “construction of recreation facilities to support designated uses (e.g., whitewater release for kayakers, canoe portages, parking spaces).”

The water quality façade of the 2023 rule is also reflected in what initially may appear to be strong language limiting certification to water quality. The EPA explained:

[W]hile EPA continues to interpret section 401 as providing broad authority to certifying authorities to review activities subject to a Federal license or permit, the review must be limited to the water quality-related impacts from the activity. It would be inconsistent with the purpose of CWA section 401 to deny or condition a section 401 certification based on potential impacts that have no connection to water quality (e.g., based solely on potential air quality, traffic, noise, or economic impacts that have no connection to water quality).”²³

The key word is “solely.” The 2023 rule through this language is merely saying that it would be inappropriate to base certification solely “on potential air quality, traffic.…” By implication, certification technically could be denied if 99.9 percent of the reason is based on non-water quality reasons. Maybe the EPA in its rule did not intend for such an extreme outcome, but the word “solely” could lead to such an outcome and its existence in the final rule is not there by accident.

Conclusion

Regulatory guidance will not fix the major problems that exist with the 2023 rule. Section 401 is supposed to be a narrow but valuable way for states to have a voice when it comes to water quality, specifically as it relates to discharges from point sources into navigable waters. Instead, the 2023 rule makes the certification process a means for states to block projects for reasons that have nothing to do with discharges, point sources, and navigable waters, as well as for reasons that are not genuinely related to water quality. For these reasons, we urge you to repeal the 2023 rule and move forward with a new rulemaking in a timely manner.

Sincerely,

Daren Bakst

Director, Center for Energy and Environment, Competitive Enterprise Institute Visiting Senior Fellow, Pacific Legal Foundation