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U.S. Supreme Court Reinstates Trump-Era Regulations for Clean Water Act Section 401 Certification

Rule Limits States and Tribal Objections to Certain Projects (At Least For Now)

On April 6, 2022, the U.S. Supreme Court stayed an October 21, 2021 District Court Order that vacated 2020 regulations adopted by the Trump Administration on State and tribal water quality certification authority under Clean Water Act Section 401.  Under Section 401, an applicant for a federal permit or license for an activity that “may result in any discharge into the navigable waters” must obtain a “water quality certification” from the state or authorized tribe in the area where a discharge could occur.  The Trump Administration regulations placed restrictions on the time frame and scope of objections by States and tribal governments under Section 401, limiting their respective authority to impose conditions on certification for discharge into waters within their borders.  The 2020 rule was vacated by U.S. District Court in California as the result of a legal challenge.  In a 5-4 vote, the high court’s decision reinstated the Trump-era rule nationwide, without any explanation, while the legal challenges are pending in the Court of Appeal.

The return of the Trump-era rule will contribute to uncertainty as to how California and other states and tribal groups will conduct Section 401 review of federal licenses and permits affecting its waters.  The Biden Administration had announced plans to review 2020 regulations, and on June 2, 2021, the EPA issued a Notice of Intention to Reconsider and Revise the Clean Water Act Section 401 Certification Rule in the Federal Register.  However, the new regulations are not expected to be published until next year.  In the meantime, the outcome of currently pending federal cases such as CalState Water ResControl BdvFERC, No. 20-72782 (9th Cir. filed Sept. 17, 2020)  and Turlock Irrigation District, et al v. FERC,  No. 21-1121 (D.C. Cir. May 21, 2021) may provide some clarity regarding Section 401 certification authority.

Background on 2020 Clean Water Act Section 401 Certification Rule

States can protect the water quality of federally regulated waters within their borders pursuant to federal statute under Clean Water Act Section 401.  The 1971 version of the Section 401 EPA Rule (40 CFR Part 121.1(1971)) provides guidelines as to how States and Tribal governments can provide final certification for discharges into their waters based on federal, state, and Tribal water quality standards.

In 2019, the Trump administration issued Executive Order 13868 to encourage greater investment in energy infrastructure and reduce regulatory uncertainty in the United States, including broad directives to the EPA regarding Section 401.  This guidance was formalized in the 2020 Rule (see 40 CFR Part 121(2020)).  The 2020 Rule limited the role of States and Tribes in the certification in certain key respects:

  • Scope: The certification must address water quality concerns from the discharge itself and not the proposed activity as a whole. 40 CFR Part 121.3.  This has the effect of preventing objections from States and Tribes based on broader environmental concerns, such as climate change.
  • Timing: The federal agency must establish a reasonable period for certification review, capped at a maximum of one year. 40 CFR Part 121.6.  This rule is meant to codify a recent federal holding that requiring withdrawal and resubmission of the same certification request for the purpose of circumventing the one-year statutory deadline does not restart the reasonable period of time.  Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1101 (D.C. Cir. 2019).
  • Federal Oversight: The 2020 Certification Rule creates an affirmative obligation for federal permitting agencies to review state Section 401 Certifications to ensure compliance with procedural requirements. 40 CFR Part 121.8.  Failure to comply with procedural requirements can lead to Section 401 Certification being waived.

Legal Challenge to Trump Rule

Shortly after the 2020 Rule was finalized, California, other states, and environmental groups challenged the rule in three separate cases (brought in federal district courts in California, Pennsylvania, and South Carolina).  The California challenge resulted in Judge Alsup’s October 21, 2021, vacating the 2020 Certification Rule and reinstating the 1971 version. The District Court concluded the 2020 Rule arbitrarily limits the power to “consider all state actions related to water quality in imposing conditions” on Section 401 certification.

A group of States, led by Louisiana, and several energy groups intervened to defend the rule and requested the Ninth Circuit stay the ruling. The Ninth Circuit denied a motion to stay the effect of Judge Alsup’s order while the appeal was pending.

The “Shadow” Supreme Court Ruling and Justice Kagan’s Dissent

After the Ninth Circuit denied their request on February 24, an application for stay pending appeal was granted by the US Supreme Court in its 5-4 ruling on April 6.  In what is commonly referred to as a “shadow docket,” which are orders and summary decisions that defy normal procedural regularity, the 5-4 decision was issued without any explanation or rationale.

Justice Elena Kagan authored a dissent, joined notably by Chief Justice John Roberts, as well as Justice Breyer and Justice Sotomayor, to the Stay.  Citing Supreme Court precedent, Justice Kagan reiterated the standard for obtaining a stay in a case pending before an appellate court.  In such a case, a stay may only be granted in extraordinary circumstances and upon a showing of irreparable injury absent a stay.  According to the dissent, the applicants failed to meet this standard because they could not identify a single project that a State has blocked in the months since the District Court’s decision.  Moreover, the applicants failed to identify a single project that the court’s ruling threatens and failed to show why the reinstated regulatory regime was incapable of countering state overreach.

In addition, Judge Kagan discussed how the Supreme Court signaled its view on the case merits despite the applicants failure to make a showing of irreparable harm.  As a result, the Court’s emergency docket was misused for merit determination without proper briefing and argument.

Impact on California

Several major federal licensing and permitting schemes are subject to the Clean Water Act Section 401, including permits for discharge of dredged or fill material into wetlands under Section 404 and Federal Energy Regulatory Commission (FERC) licenses for hydropower facilities and natural gas pipelines.  California is a State that has extensively utilized certification review under Section 401 to impose conditions on projects.  In particular, California’s State Water Resources Control Board (SWRCB) has used 401 Certification Authority in the Federal Energy Regulatory Commission (FERC) licensing context to require certain project conditions.

For example, in CalState Water ResControl BdvFERC, No. 20-72782 (9th Cir. filed Sept. 17, 2020) the SWRCB brought a petition to vacate a FERC issued license for the hydroelectric Yuba River Development Project.  SWRCB had issued a certification in July 2020 pending certain conditions and obligations.  FERC had determined that SWRCB had waived its certification authority by not acting on an initial application within one year of filing by Yuba County Water Authority (YCWA) based on Hoopa Valley Tribe v. FERC and the plain language of Clean Water Act Section 401.  YCWA has also filed a Federal suit that is currently stayed by the Eastern District of California court pending a decision in the Ninth Circuit where oral argument is scheduled for next month.

Similarly, in Turlock Irrigation District, et al v. FERC, No. 21-1121 (D.C. Cir. May 21, 2021), the Turlock and Modesto irrigation districts have asked the appeals court to overturn FERC’s order affirming California’s SWRCB rejection of the irrigation district’s application and request for the districts to resubmit certification days before a one-year deadline expired.  The order relates to two hydroelectric projects along the Tuolomne River.  Oral argument for the case was held this month in the D.C. Circuit, where the case is pending.  The irrigation districts relied on Hoopa Valley Tribe v. FERC as authority to argue that the state agency forfeited its authority when it delayed acting and required repeated resubmissions of an application.  States in support of FERC’s determination have pointed to the complexity of hydroelectric licensing and the inapplicability of Hoopa Valley Tribe v. FERC, which involved a different set of facts wherein the States took no action on certification requests after demanding repeated withdrawals and resubmissions.  

Nevertheless, both FERC cases demonstrate how the duration of the review period is an important aspect of the certification process.  The resolution of these cases will provide helpful precedent as to the appropriate review period for California’s state agencies engaged in 401 certification review.