Updating Regulations on Water Quality Certification

Federal RegisterAug 22, 2019

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 121

[EPA-HQ-OW-2019-0405; FRL-9997-82-OW]

RIN 2040-AF86

Updating Regulations on Water Quality Certification

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

The Environmental Protection Agency (EPA) is publishing for public comment a proposed rule providing updates and clarifications to the substantive and procedural requirements for water quality certification under Clean Water Act (CWA or the Act) section 401. CWA section 401 is a direct grant of authority to states (and tribes that have been approved for “treatment as a state” status) to review for compliance with appropriate federal, state, and tribal water quality requirements any proposed activity that requires a federal license or permit and may result in a discharge to waters of the United States. This proposal is intended to increase the predictability and timeliness of section 401 certification by clarifying timeframes for certification, the scope of certification review and conditions, and related certification requirements and procedures.

DATES:

Comments must be received on or before October 21, 2019.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-HQ-OW-2019-0405, at

https://www.regulations.gov.

Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from

Regulations.gov

. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (

i.e.,

on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit

https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT:

Lauren Kasparek, Oceans, Wetlands, and Communities Division, Office of Water (4504-T), Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: (202) 564-3351; email address:

cwa401@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. General Information

A. How can I get copies of this document and related information?

B. Under what legal authority is this proposed rule issued?

C. How should I submit comments?

II. Background

A. Executive Summary

B. Executive Order 13868: Promoting Energy Infrastructure and Economic Growth

C. Pre-Proposal Stakeholder Engagement

D. Guidance Document

E. Effect on Existing Federal, State, and Tribal Regulations

F. Legal Background

1. The Clean Water Act

2. The EPA's Role in Implementing Section 401

3. The EPA's Existing Certification Regulations

4. Judicial Interpretations of Section 401

a. U.S. Supreme Court Decisions

i. P.U.D. No. 1 of Jefferson County

ii. S.D. Warren

b. Circuit Court Decisions

5. Administrative Law Principles

6. Legal Construct for the Proposed Rule

a. Scope of Certification

i. Water Quality

ii. Activity Versus Discharge

iii. Discharges From Point Sources to Waters of the United States

b. Timeline for Section 401 Certification Analysis

III. Proposed Rule

A. When Section 401 Certification Is Required

B. Certification Request/Receipt

C. Certification Actions

D. Appropriate Scope for Section 401 Certification Review

E. Timeframe for Certification Analysis and Decision

F. Contents and Effect of a Certification

G. Certification by the Administrator

1. Public Notice Procedure

2. Pre-filing Meeting Procedure

3. Requests for Additional Information

H. Determination of Effect on Neighboring Jurisdictions

I. EPA's Role in Review and Advice

J. Enforcement

K. Modifications

IV. Economic Analysis

V. Statutory and Executive Order Reviews

A. Executive Order 13771: Reducing Regulation and Controlling Regulatory Costs

B. Executive Order 12866: Regulatory Planning and Review; Executive Order 13563: Improving Regulation and Regulatory Review

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Unfunded Mandates Reform Act

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

I. General Information

A. How can I get copies of this document and related information?

Docket.

An official public docket for this action has been established under Docket ID No. EPA-HQ-OW-2019-0405. The official public docket consists of the documents specifically referenced in this action, and other information related to this action. The official public docket is the collection of materials that is available for public viewing at the OW Docket, EPA West, Room 3334, 1301 Constitution Ave. NW, Washington, DC 20004. This Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The OW Docket telephone number is 202-566-2426. A reasonable fee will be charged for copies.

Electronic Access.

You may access this

Federal Register

document electronically under the “

Federal Register

” listings at

https://www.regulations.gov.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may access EPA Dockets at

https://www.regulations.gov

to view public comments as they are submitted and posted, access the index listing of the contents of the official public docket, and access those documents in the public docket that are available electronically. For additional information about EPA's public docket, visit the EPA Docket Center homepage at

http://www.epa.gov/epahome/dockets.htm.

Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the Docket Facility.

B. Under what legal authority is this proposed rule issued?

The authority for this action is the Federal Water Pollution Control Act, 33 U.S.C. 1251

et seq.,

including section 401 and 501(a).

C. How should I submit comments?

Throughout this document, the EPA solicits comment on a number of issues related to the proposed rulemaking. Comments on this proposed rulemaking should be submitted to Docket ID No. EPA-HQ-OW-2019-0405 at

https://www.regulations.gov

per the online instructions for submitting comments and the information provided in

ADDRESSES

, above.

As discussed in section II.C in this preamble, this proposed rule is the outgrowth of extensive outreach efforts, including requests for recommendations, and the EPA has taken recommendations received into account in developing this proposal. In developing a final rule, the EPA will be considering comments submitted on this proposal. Persons who wish to provide views or recommendations on this proposal and have them considered as part of this rulemaking process must provide comments to the EPA as part of this comment process. To facilitate the processing of comments, commenters are encouraged to organize their comments in a manner that corresponds to the outline of this proposal.

II. Background

A. Executive Summary

Congress enacted section 401 of the CWA to provide states and authorized tribes with an important tool to help protect water quality of federally regulated waters within their borders in collaboration with federal agencies. Under section 401, a Federal agency may not issue a license or permit to conduct any activity that may result in any discharge into waters of the United States,

unless the state or authorized tribe where the discharge would originate either issues a section 401 water quality certification finding compliance with existing water quality requirements or waives the certification requirement. As described in greater detail below, section 401 envisions a robust state and tribal role in the federal licensing or permitting process where local authority may otherwise be preempted by federal law, but places limitations on how that role may be implemented to maintain an efficient process, consistent with the overall cooperative federalism construct established by the CWA as explained below in section II.F.1 in this preamble.

The CWA, including section 401, uses “navigable waters”, defined as “waters of the United States, including territorial seas.” 33 U.S.C. 1362(7). This proposal uses “waters of the United States” throughout. The EPA is currently in the process of revising the definition of waters of the United States via rulemaking and expects the final definition of the term to control in all CWA contexts.

The plain language of section 401 provides that a state or authorized tribe must act on a section 401 certification request within a reasonable period of time, which shall not exceed one year.

Section 401 does not guarantee a state or tribe a full year to act on a certification request. The statute only grants as much time as is reasonable, and federal licensing or permitting agencies, in their discretion, may establish a period of time shorter than one year if the federal licensing and permitting agencies determine that a shorter period is “reasonable.” 33 U.S.C. 1341(a)(1). The CWA provides that the timeline for action on a section 401 certification begins “upon receipt” of a certification request.

Id.

If a state or tribe does not grant, grant with conditions, deny, or expressly waive the section 401 certification within a reasonable time period as determined by the federal licensing and permitting agencies, section 401 authorizes the federal licensing and permitting agencies to find that the state or tribe waived the section 401 certification requirement and issue the federal license or permit.

Id.

at 1341; 40 CFR 121.16(b). If the certification requirement has been waived and the federal license or permit is issued, any subsequent action by a state or tribe to grant, grant with condition, or deny section 401 certification has no legal force or effect.

“If the State, interstate agency, or Administrator, as the case may be, fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application.” 33 U.S.C. 1341(a)(1);

see also Will

Michigan Dept. of State Police,

491 U.S. 58, 65 (1989) (“[I]f Congress intends to alter the `usual constitutional balance between the States and the Federal Government,' it must make its intention to do so `unmistakably clear in the language of the statute.' ”) (quoting

Atascadero State Hospital

Scanlon,

473 U.S. 234, 242 (1985));

Gregory

Ashcroft,

501 U.S. 452, 461 (1991) (“this plain statement rule . . . acknowledg[es] that the States retain substantial sovereign powers under our constitutional scheme, powers with which Congress does not readily interfere”). This means that that the executive branch's authority under the CWA, while broad, is not unlimited, and the waters to which CWA regulatory programs apply must necessarily respect those limits. For further discussion of these principles, see 84 FR at 4165 and 83 FR at 32234.

In some cases, CWA section 401 denials have been challenged on grounds that the denial improperly interfered with interstate commerce.

See, e.g., Lighthouse Resources, Inc.

Inslee,

No. 3:18-cv-5005, Complaint at ¶¶ 206-210; ¶¶ 224-248 (W.D. Wash. Filed Jan. 8, 2018) (alleging State's denial of section 401 certification violated the dormant commerce clause and dormant foreign commerce clause). In

Lake Carriers Association

EPA,

652 F.3d 1 (D.C. Cir. 2011), a court of appeals found that the section 401 statutory scheme of delegation to states itself does not create an impermissible burden on interstate commerce; however actions taken by states pursuant to section 401 are not insulated from dormant commerce clause challenges. 652 F.3d at 10 (“If [petitioners] believe that the certification conditions imposed by any particular state pose an inordinate burden on their operations, they may challenge those conditions in that state's courts. If [petitioners] believe that a particular state's law imposes an unconstitutional burden on interstate commerce, they may challenge that law in federal (or state) court.”). Accordingly, EPA seeks comment on whether its proposed regulations appropriately balance the scope of state authority under section 401 with Congress' goal of facilitating commerce on interstate navigable waters, and whether they define the scope in a manner that would limit the potential for states to withhold or condition certifications such that it would place undue burdens on interstate commerce.

2. The EPA's Role in Implementing Section 401

The EPA, as the federal agency charged with administering the CWA, is responsible for developing regulations and guidance to ensure effective implementation of all CWA programs, including section 401.

In addition to administering the statute and promulgating implementing regulations, the Agency has several other roles under section 401.

See

33 U.S.C. 1251(d), 1361(a);

Mayo Found. for Medical Educ. and Res.

United States,

562 U.S. 44, 45 (2011);

Hoopa Valley Tribe

FERC,

913 F.3d 1099, 1104 (D.C. Cir. 2019);

Alabama Rivers Alliance

FERC,

325 F.3d 290, 296-97 (D.C. Cir. 2003);

California Trout

FERC,

313 F.3d 1131, 1133 (9th Cir. 2002);

American Rivers, Inc.

FERC,

129 F. 3d 99, 107 (2d. Cir. 1997).

The EPA acts as the section 401 certification authority under two circumstances. First, the EPA will certify on behalf of a state or tribe where the jurisdiction in which the discharge will originate does not itself have certification authority. 33 U.S.C. 1341(a)(1). In practice, this results in the EPA certifying on behalf of the many tribes that do not have TAS authority for section 401. Second, the EPA will act as the certifying authority where the discharge would originate on lands of exclusive federal jurisdiction.

The federal government may obtain exclusive federal jurisdiction over lands in multiple ways, including where the federal government purchases lands with state consent consistent with article 1, section 8, clause 17 of the U.S. Constitution, where a state chooses to cede jurisdiction to the federal government, and where the federal government reserved jurisdiction upon granting statehood.

See Collins

Yosemite Park Co.,

304 U.S. 518, 529-30 (1938);

James

Dravo Contracting Co.,

302 U.S. 134, 141-42 (1937);

Surplus Trading Company

Cook,

281 U.S. 647, 650-52 (1930);

Fort Leavenworth Railroad Company

Lowe,

114 U.S. 525, 527 (1895). Examples of lands of exclusive federal jurisdiction include Denali National Park.

The EPA also coordinates the opportunity for neighboring jurisdictions to raise concerns and recommendations where their water quality may be affected by a discharge subject to section 401 certification.

Id.

at 1341(a)(2). Although section 401 certification authority lies with the jurisdiction where the discharge originates, a neighboring jurisdiction whose water quality is potentially affected by the discharge may have an opportunity to raise concerns. Where the EPA Administrator determines that a discharge subject to section 401 “may affect” the water quality of a neighboring jurisdiction, the EPA is required to notify that other jurisdiction.

Id.

If the neighboring jurisdiction determines that the discharge “will affect” the quality of its waters in violation of any water quality requirement of that jurisdiction, it may notify the EPA and the federal licensing or permitting agency of its objection to the license or permit.

Id.

It may also request a hearing on its objection with the federal licensing or permitting agency. At the hearing, the EPA will submit its evaluation and recommendations. The federal agency will consider the jurisdiction's and the EPA's recommendations, and any additional evidence presented at the hearing. The federal agency “shall condition such license or permit in such manner as may be necessary to insure compliance with the applicable water quality requirements” of the neighboring jurisdiction.

Id.

If the conditions cannot ensure compliance, the federal agency may not issue the license or permit.

The EPA also must provide technical assistance for section 401 certifications upon the request of any federal or state agency, or project proponent.

Id.

at 1341(b). Technical assistance might include provision of any relevant information on applicable effluent limitations, standards, regulations, requirements, or water quality criteria.

Finally, the EPA is responsible for developing regulations and guidance to ensure effective implementation of all CWA programs, including section 401. The EPA's current water quality certification regulations were promulgated in 1971,

prior to the 1972

amendments that enacted CWA section 401.

The EPA's existing water quality certification regulations are found at 40 CFR part 121, 36 FR 22487 (November 25, 1971). The EPA has also promulgated regulations addressing how 401 certification applies to the CWA section 402 NPDES program, found at 40 CFR 124.53, 124.54, 124.55; 48 FR 14264 (April 1, 1983). This proposed rule

does not address the NPDES regulations, and the Agency will make any necessary conforming regulatory changes in a subsequent rulemaking.

The EPA's 1971 regulations were designed to implement an earlier version of the certification requirement that was included in the pre-1972 version of the FWPCA. The legislative history reveals Congress added the certification requirement to “recognize[] the responsibility of Federal agencies to protect water quality whenever their activities affect public waterways.” S. Rep. No. 91-351, at 3 (1969). “In the past, these [Federal] licenses and permits have been granted without any assurance that the [water quality] standards will be met or even considered.”

Id.

As an example, the legislative history discusses the Atomic Energy Commission's failure to consider the impact of thermal pollution on receiving waters when evaluating “site selection, construction, and design or operation of nuclear powerplants.”

Id.

Prior to 1972, the certification provision required states to certify that “such

activity

will be conducted in a manner which will not violate applicable

water quality standards.”

Public Law 91-224, § 21(b)(1), 84 Stat. 91 (1970) (emphasis added). As described above, the 1972 amendments restructured the CWA and created a framework for compliance with effluent limitations that would be established in discharge permits issued pursuant to the new federal permitting program.

The 1972 amendments retained the pre-existing water quality certification requirements but modified the requirements to be consistent with the overall restructuring of the CWA so that a water quality certification would assure that the “

discharge will comply

” with effluent limitations and other enumerated regulatory provisions of the Act, and with “any other appropriate requirement” of state or tribal law. 33 U.S.C. 1341(a), (d) (emphasis added). Because the EPA's existing certification regulations were promulgated prior to the 1972 CWA amendments, they contain language from the pre-1972 FWCPA that Congress changed in those amendments. In contrast to the language in CWA section 401, the EPA's existing certification regulations direct authorities to certify that there is “

reasonable assurance

that

the activity

will be conducted in a manner which will not violate applicable water quality standards.” 40 CFR 121.2(a)(2)-(3) (emphasis added). These outdated provisions have caused confusion for states, tribes, stakeholders, and courts reviewing section 401 certifications, and a primary goal for this proposal is to update and clarify the Agency's regulations to ensure that they are consistent with the CWA.

3. The EPA's Existing Certification Regulations

The EPA's existing certification regulations require certifying authorities to act on a certification request within a “reasonable period of time.” 40 CFR 121.16(b). The regulations provide that the federal licensing or permitting agency determines what constitutes a “reasonable period,” and that the period shall generally be six months but in any event shall not exceed one year.

Id.

The existing certification regulations also provide that certifying authorities may waive the certification requirement under two circumstances: First, when the certifying authority sends written notification expressly waiving its authority to act on a request for certification; and second, when the federal licensing or permitting agency sends written notification to the EPA Regional Administrator that the certifying authority failed to act on a certification request within a reasonable period of time after receipt of such a request.

Id.

at 121.16(a)-(b). Once waiver occurs, certification is not required, and the federal license or permit may be issued. 33 U.S.C. 1341(a).

When the EPA is the certifying authority, the existing certification regulations at 40 CFR part 121 establish different requirements, including specific information to be included in a certification request and additional procedures. When the EPA is providing certification, the project proponent must submit to the EPA Regional Administrator the name and address of the project proponent, a description of the facility or activity and of any related discharge into waters of the United States, a description of the function and operation of wastewater treatment equipment, dates on which the activity and associated discharge will begin and end, and a description of the methods to be used to monitor the quality and characteristics of the discharge. 40 CFR 121.22. Once the request is submitted to the EPA, the Regional Administrator must provide public notice of the request and an opportunity to comment, specifically stating that “all interested and affected parties will be given reasonable opportunity to present evidence and testimony at a public hearing on the question whether to grant or deny certification if the Regional Administrator determines that such a hearing is necessary or appropriate.”

Id.

at 121.23. If, after consideration of relevant information, the Regional Administrator determines that there is “reasonable assurance that the proposed activity will not result in a violation of applicable water quality standards,” the Regional Administrator shall issue the certification.

Id.

at 121.24.

Use of the terms “reasonable assurance” and “activity” in this operative provision of the EPA's existing certification regulation is an artifact of the pre-1972 statutory language and those terms are not used in the operative provision of CWA section 401.

See

Public Law 91-224, 21(b)(1), 84 Stat. 91 (1970).

The existing certification regulations identify a number of requirements that all certifying authorities must include in a section 401 certification.

Id.

at 121.2. For example, a section 401 certification shall include the name and address of the project proponent.

Id.

at 121.2(a)(2). The certification shall also include a statement that the certifying authority examined the application made by the project proponent to the federal licensing or permitting agency and bases its certification upon an evaluation of the application materials which are relevant to water quality considerations or that it examined other information sufficient to permit the certifying authority to make a statement that there is a “reasonable assurance that the activity will be conducted in a manner which will not violate applicable water quality standards.”

Id.

at 121.2(a)(2)-(3). The certification shall state “any conditions which the certifying agency deems necessary or desirable with respect to the discharge of the activity,” and other information the certifying authority deems appropriate.

Id.

at 121.2(a)(4)-(5).

The term “desirable” is also not used in CWA section 401.

The existing certification regulations at 40 CFR part 121 also establish a process for the EPA to provide neighboring jurisdictions with an opportunity to comment on a certification that is similar to that provided in the modern CWA section 401(a)(2). Under the existing certification regulations, the Regional Administrator is required to review the federal license or permit application, the certification, and any supplemental information provided to the EPA by the federal licensing or permitting agency, and if the Regional Administrator determines there is “reason to believe that a discharge may affect the quality of the waters of any State or States other than the State in which the discharge originates,” the Regional Administrator is required to notify each affected state within thirty days of receipt of the application materials and certification.

Id.

at 121.13. If the documents provided are insufficient to make the

determination, the Regional Administrator may request any supplemental information “as may be required to make the determination.”

Id.

at 121.12. In cases where the federal licensing or permitting agency holds a public hearing on the objection raised by a neighboring jurisdiction, notice of such objection shall be forwarded to the Regional Administrator by the licensing or permitting agency no later than 30 days prior to the hearing.

Id.

at 121.15. At the hearing the Regional Administrator shall submit an evaluation and “recommendations as to whether and under what conditions the license or permit should be issued.”

Id.

at 121.15.

The existing certification regulations establish that the Regional Administrator “may, and upon request shall” provide federal licensing and permitting agencies, certifying authorities, and project proponents with information regarding water quality standards, status of compliance by dischargers with the conditions and requirements of applicable water quality standards.

Id.

at 121.30.

Finally, the existing certification regulations establish an oversight role for the EPA when a certifying authority modifies a prior certification. The regulation provides for a certifying authority to modify its certification “in such manner as may be agreed upon by the certifying agency, the licensing or permitting agency, and

the Regional Administrator.” Id.

at 121.2(b) (emphasis added).

As noted throughout this preamble, the EPA's existing certification regulations were promulgated prior to the 1972 CWA amendments and they do not reflect the current statutory language in section 401. In addition, the EPA's existing certification regulations at 40 CFR part 121 do not address some important procedural and substantive components of section 401 certification review and action. This proposal is intended to modernize the EPA's regulations, align them with the current text and structure of the CWA, and provide additional regulatory procedures that the Agency believes will help promote consistent implementation of section 401 and streamline federal license and permit processes, consistent with the objectives of the Executive Order.

4. Judicial Interpretations of Section 401

During the 47 years since its passage, the federal courts on numerous occasions have interpreted key provisions of section 401. The United States Supreme Court has twice addressed questions related to the scope and triggering mechanism of section 401, and lower courts have also addressed certain elements of section 401 certifications. This section summarizes the U.S. Supreme Court decisions and major lower court decisions.

a. U.S. Supreme Court Decisions

i. P.U.D. No. 1 of Jefferson County

In 1994, the Supreme Court reviewed a water quality certification issued by the State of Washington for a new hydroelectric project on the Dosewallips River.

See PUD No. 1 of Jefferson County and City of Tacoma

Washington Department of Ecology,

511 U.S. 700 (1994) (

PUD No. 1

). This particular decision, though narrow in its holding, has been read by other courts as well as the EPA and some states and tribes to significantly broaden the scope of section 401 beyond its plain language meaning.

The principal dispute adjudicated in

PUD No. 1

was whether a state or tribe may require a minimum stream flow as a condition in a certification issued under section 401. In this case, the project proponent identified two potential discharges from its proposed hydroelectric facility: “the release of dredged and fill material during construction of the project, and the discharge of water at the end of the tailrace after the water has been used to generate electricity.”

at 711. The project proponent argued that the minimum stream flow condition was unrelated to these discharges and therefore beyond the scope of the state's authority under section 401.

Id.

The Court analyzed sections 401(a) and 401(d); specifically it analyzed the use of different terms in those sections of the statute to inform the scope of a section 401 certification. Section 401(a) requires the certifying authority to certify that the

discharge

from a proposed federally licensed or permitted project will comply with enumerated CWA provisions, and section 401(d) allows the certifying authority to include conditions to assure that the

applicant

will comply with enumerated CWA provisions and “other appropriate state law requirements.” The Court concluded that, consistent with the EPA's implementing regulations, section 401(d) “is most reasonably read as authorizing additional conditions and limitations on the activity as a whole once the threshold condition, the existence of a discharge, is satisfied.”

Id.

at 712. The Court cited the EPA's certification regulations at 40 CFR 121.2(a)(3) with approval and quoted the EPA's guidance titled Wetlands and 401 Certification, and stated that “EPA's conclusion that

activities

—not merely discharges—must comply with state water quality standards is a reasonable interpretation of § 401 and is entitled to deference.”

Id.

(citing EPA,

Wetlands and 401 Certification

23 (April 1989)).

The Court apparently failed to identify or understand that the EPA's regulations were promulgated prior to the 1972 CWA amendments and that the exact provision the Court was analyzing contained outdated terminology, including the term “activity” from the pre-1972 versions of the Act.

The Court was careful to note that a state's authority to condition a certification “is not unbounded” and that states “can only ensure that the project complies with `any applicable effluent limitations and other limitations, under [33 U.S.C. 1311, 1312]' or certain other provisions of the Act, `and with any other appropriate requirement of State Law.' ”

Id.

The Court concluded that “state water quality standards adopted pursuant to § 303 are among the `other limitations' with which a State may ensure compliance through the § 401 certification process” and noted that its view “is consistent with EPA's view of the statute,” again citing the EPA's regulations and guidance.

Id.

at 713.

Although this decision has been interpreted by some to broadly expand state authority under section 401—beyond assessing water quality impacts from the discharge and allowing conditions beyond the enumerated CWA provisions—the Court did not stray from the bedrock principles that a section 401 certification must address water quality and that appropriate conditions include those necessary to assure compliance with the state's water quality standards. Indeed, referring to the section 401 language allowing certification conditions based on “any other appropriate requirements of state law,” the Court explicitly declined to speculate “on what additional state laws,

if any,

might be incorporated by this language. But at a minimum, limitations imposed pursuant to state water quality standards adopted pursuant to § 303 are appropriate requirements of state law.”

Id.

(emphasis added).

On the scope of section 401, the dissenting opinion would have declined to adopt the interpretation suggested by the EPA's regulations and guidance and instead analyzed the statutory section as a whole, attempting to harmonize sections 401(a) and (d). The dissent first noted that, if the Court's conclusion that states can impose conditions unrelated

to discharges is correct, “Congress' careful focus on discharges in § 401(a)(1)—the provision that describes the scope and function of the certification process—was wasted effort,” and that the Court's conclusion “effectively eliminates the constraints of § 401(a)(1).”

Id.

at 726. The dissent then “easily reconciled” the two provisions by concluding that, “it is reasonable to infer that the conditions a State is permitted to impose on certification must relate to the very purpose the certification process is designed to serve. Thus, while section 401(d) permits a State to place conditions on a certification to ensure compliance of `the applicant,' those conditions must still be related to discharges.”

Id.

at 726-27. The dissent further noted that each of the CWA provisions enumerated in section 401 “describes discharge-related limitations” and therefore the plain language of section 401(d) supports the conclusion that certification conditions must address water quality concerns from the discharge, not the proposed activity as a whole.

Id.

at 727. Finally, the dissent applied the principle

ejusdem generis

in its analysis and concluded that because “other appropriate requirements of state law” is included in a list of more specific discharge-related CWA provisions, that the “appropriate” requirements are “most reasonably construed to extend only to provisions that, like the other provisions in the list, impose discharge-related restrictions.”

Id.

at 728.

The dissent also took issue with the Court's reliance, at least in part, on the EPA's regulations and its application of

Chevron

deference in this case without first identifying ambiguity in the statute and, where the government apparently did not seek deference on an interpretation of section 401(d).

Id.

The dissent noted that there was no EPA interpretation directly addressing the language in sections 401(a) and (d), and that the only existing EPA regulation that addresses conditions “speaks exclusively in terms of limiting discharges.”

Id.

(citing 40 CFR 121.2(a)(4)).

The EPA's amicus brief filed in this case did not grapple with the language in 401(a) and (d) at all, but primarily argued that the proposed project had two distinct discharges (which were undisputed) and that “both discharges could reasonably be said to cause a violation of the State's water quality standards,” including the designated uses and antidegradation components. Brief for the United States as Amicus Curiae Supporting Affirmance, at 12 n. 2 (Dec. 1993) (“It is therefore unnecessary to determine in this case whether Congress intended by the use of the term “applicant,” rather than “discharge” in section 401(d) to grant States a broader power to condition certifications under Section 401(d) than to deny them under Section 401(a) and, if so, whether there are limitations on the States' authority to impose such conditions.” The EPA's amicus brief also did not inform the Court that the Agency's implementing regulations included language from the prior version of the Act.

The

PUD No. 1

decision addressed two other scope-related elements of section 401: Whether certification conditions may be designed to address impacts to designated uses, and whether conditions related to minimum stream flows are appropriate under section 401. First, the Court conducted a plain language analysis of the CWA and concluded that, “under the literal terms of the statute, a project that does not comply with a designated use of the water does not comply with the applicable water quality standards.”

Id.

at 715. This means a section 401 certification may appropriately include conditions to require compliance with designated uses, which pursuant to the CWA, are a component of a water quality standard.

Id.

Second, the Court acknowledged that the Federal Power Act (FPA) empowers FERC “to issue licenses for projects `necessary or convenient . . . for the development, transmission, and utilization of power across, along, from, or in any of the streams . . . over which Congress has jurisdiction,'” and that the FPA “requires FERC to consider a project's effect on fish and wildlife.”

Id.

at 722. Although the Court had previously rejected a state's minimum stream flow requirement that conflicted with a stream flow requirement in a FERC license, the Court found no similar conflict in this case because FERC had not yet issued the hydropower license.

Id.

Given the breadth of federal permits that CWA section 401 applies to, the Court declined to assert a broad limitation on stream flow conditions in certifications but concluded they may be appropriate if necessary to enforce a state's water quality standard, including designated uses.

Id.

at 723.

ii. S.D. Warren

In 2006, the Court revisited section 401 in connection with the State of Maine's water quality certification of FERC license renewals for five hydroelectric dams on the Presumpscot River.

S.D. Warren Co.

Maine Board of Environmental Protection et al.,

547 U.S. 370 (2006) (

S.D. Warren

). The issue presented in

S.D. Warren

was whether operation of a dam may result in a “discharge” into the waters of the United States, triggering the need for a section 401 certification, even if the discharge did not add any pollutants. The Court analyzed the use of different terms—“discharge” and “discharge of pollutants”—within the CWA, how those terms are defined and how they are used in CWA sections 401 and 402. The Court noted that section 402 expressly uses the term “discharge of pollutants” and requires permits for such discharges; and that section 401, by contrast, provides a tool for states to maintain water quality within their jurisdiction and uses the term “discharge” which is not independently defined in the Act.

Finding no specific definition of the term “discharge” in the statute, the Court turned to its common dictionary meaning: A “flowing or issuing out” and concluded that the term is “presumably broader” than “discharge of a pollutant.”

Id.

at 375-76.

The Court noted that the Act provides, that “the term `discharge' when used without qualification incudes a discharge of a pollutant, and a discharge of pollutants.” 547 U.S. at 375 (quoting 33 U.S.C. 1362(16)).

The Court held that operating a dam “does raise the potential for a discharge” and, therefore, section 401 is triggered.

Id.

at 373. In so holding, the Court observed that, “[t]he alteration of water quality as thus defined is a risk inherent in limiting river flow and releasing water through turbines,” and such changes in a river “fall within a State's legitimate legislative business, and the Clean Water Act provides for a system that respects the State's concerns.”

Id.

at 385-86. The Court concluded by observing that “[s]tate certifications under [section] 401 are essential in the scheme to preserve state authority to address the broad range of pollution.”

Id.

at 386. This sentence when read in isolation could be interpreted as broadening the scope of section 401 to allow certifying authorities to consider potential environmental impacts from a proposed federally licensed or permitted project beyond water quality. However, the Court followed that sentence with a quote from Senator Muskie's floor statement during the enactment of section 401:

No polluter will be able to hide behind a Federal license or permit as an excuse for a violation of

water quality standard[s].

No polluter will be able to make major investments in facilities under a Federal license or permit without providing assurance that the facility will comply with

water quality standards.

No State water pollution control agency will be confronted with a fait accompli by an industry that has built a plant without consideration of

water quality requirements.

Id.

(emphasis added). The Court then stated, “These are the

very reasons

that Congress provided the States with

power to enforce `any other appropriate requirement of State law,' by imposing conditions on federal licenses for activities that may result in a discharge.”

Id.

(emphasis added). Read in context, the Court's statement about a state's authority to address a “broad range of pollution” under section 401 does not suggest that an “appropriate requirement of State law” means anything other than water quality requirements or that a state's or tribe's action on a certification request can be focused on anything other than compliance with appropriate water quality requirements.

b. Circuit Court Decisions

Over the years, federal appellate courts have also addressed important aspects of section 401, including the timing for certifying authorities to act on a request and the scope of authority of federal agencies other than the EPA to make determinations on section 401 certifications. This section highlights a few of the most significant issues concerning section 401 and the most often cited decisions but does not cover the universe of lower federal court or state court case law. The Agency intends for this proposed rule, if finalized, to provide consistency and certainty where there may currently be conflicting or unclear but locally binding legal precedent.

Recent case law has provided insight concerning the timing and waiver provisions of section 401. In 2018, the Second Circuit addressed the question of when the statutory review clock begins.

N.Y. State Dep't of Envtl. Conservation

FERC,

884 F.3d 450, 455-56 (2d Cir. 2018). Considering Millennium Pipeline Company's certification request, the court disagreed with the State of New York and held that the statutory time limit is

not

triggered when a state determines that a request for certification is “complete,” but that the “plain language of Section 401 outlines a bright-line rule regarding the beginning of review,” and that the clock begins upon “receipt of such request” by the certifying authority.

Id.

Otherwise, the court noted that states could “blur this bright-line into a subjective standard, dictating that applications are complete only when state agencies decide that they have all the information they need. The state agencies could thus theoretically request supplemental information indefinitely.”

Id.

at 456.

The D.C. Circuit has also recently analyzed the statutory timeline for review of a certification and held that, consistent with the plain language of CWA section 401(a)(1), “while a full year is the absolute maximum, [the statute] does not preclude a finding of waiver prior to the passage of a full year.”

Hoopa Valley Tribe

FERC,

913 F.3d 1099, 1104 (D.C. Cir. 2019). The court also noted that the EPA—“the agency charged with administering the CWA”—has regulations that allow it to find that a state has waived certification of an NPDES permit application after only six months.

Id.

Hoopa Valley Tribe,

the D.C. Circuit also held that “the withdrawal-and-resubmission of water quality certification requests does not trigger new statutory periods of review.”

Id.

at 1101. The court found that the project proponent and the certifying authorities (California and Oregon) had improperly entered into an agreement whereby the “very same” request for state certification of its relicensing application was automatically withdrawn-and resubmitted every year by operation of “the same one-page letter,” submitted to the states before the statute's one-year waiver deadline.

Id.

at 1104. The court observed that “[d]etermining the effectiveness of such a withdrawal-and-resubmission scheme is an undemanding inquiry” because the statute's text “is clear” that failure or refusal to act on a request for certification within a reasonable period of time, not to exceed one year, waives the state's ability to certify.

Id.

at 1103. The court found that, pursuant to the unlawful withdrawal-and resubmission “scheme,” the states had not yet rendered a certification decision “more than a decade” after the initial request was submitted to the states.

Id.

at 1104. The court declined to “resolve the legitimacy” of an alternative arrangement whereby an applicant may actually submit a new request in place of the old one.

Id.

Nor did it determine “how different a request must be to constitute a `new request' such that it restarts the one-year clock.”

Id.

On the facts before it, the court found that “California's and Oregon's deliberate and contractual idleness” defied the statute's one-year limitation and “usurp[ed] FERC's control over whether and when a federal license will issue.”

Id.

Two decisions from the Second Circuit Court of Appeals recently acknowledged that project proponents have withdrawn and resubmitted certification requests to extend the reasonable time period for a state to review.

See N.Y. State Dep't of Envtl. Conservation

FERC,

884 F.3d at 456;

Constitution Pipeline

N.Y. State Dep't of Envtl. Conservation,

868 F.3d 87, 94 (2d Cir. 2018). However, in neither case did the court consider the merits or opine on the legality of such an arrangement.

Another important area of case law deals with the scope of authority and deference provided to federal agencies other than the EPA in addressing issues arising under section 401. Many other federal agencies, including FERC and the Corps, routinely issue licenses and permits that require section 401 certifications and are responsible for enforcing state certification conditions that are incorporated into federal licenses and permits. However, because the EPA has been charged by Congress with administering the CWA, some courts have concluded that those other federal agencies are not entitled to deference on their interpretations of section 401.

See Alabama Rivers Alliance

FERC,

325 F.3d 290, 296-97 (D.C. Cir. 2002);

California Trout, Inc.

FERC,

313 F.3d 1131, 1133-34 (9th Cir. 2002);

American Rivers, Inc.

FERC,

129 F.3d 99, 107 (2d. Cir. 1997). Other courts have concluded that FERC has an affirmative obligation to determine whether a certifying authority has complied with requirements related to a section 401 certification.

See City of Tacoma

FERC,

460 F.3d 53, 67-68 (D.C. Cir. 2006) (FERC had an obligation to “obtain some minimal confirmation of such compliance.”);

see also Keating

FERC,

927 F.2d 616, 622-623, 625 (D.C. Cir. 1991) (while federal agency may not question propriety of state certification before license has issued, “FERC must at least decide whether the state's assertion of revocation satisfies section 401(a)(3)'s predicate requirements.”).

In an important determination of procedural authorities, the Second Circuit affirmed that FERC—as the licensing agency—“may determine whether the proper state has issued the certification or whether a state has issued a certification within the prescribed period.”

Am. Rivers, Inc.,

129 F.3d at 110-111. This holding is consistent with and supported by the implied statutory authority of a federal agency to establish the “reasonable period of time (which shall not exceed one year)” in the first place. 33 U.S.C. 1341(a)(1).

Case law also highlights the potential enforcement challenges that federal agencies face with section 401 certification conditions included in federal licenses and permits. Federal agencies have been admonished not to “second guess” a state's water quality certification or its conditions,

see, e.g., City of Tacoma,

460 F.3d at 67;

Am. Rivers Inc.,

129 F.3d at 107;

U.S. Dept. of Interior

FERC,

952 F.2d 538, 548 (D.C. Cir. 1992) (“FERC may not alter or reject conditions imposed by the states through section 401 certificates.”), even where the federal agency has attempted to impose conditions that are more

stringent than the state's condition.

See Sierra Club

U.S. Army Corps of Engineers,

909 F.3d 635, 648 (4th Cir. 2018) (“the plain language of the Clean Water Act does not authorize the Corps to replace a state condition with a meaningfully different alternative condition, even if the Corps reasonably determines that the alternative condition is more protective of water quality”)

; see also Lake Carriers' Association

EPA,

652 F.3d 1, 6, 12 (D.C. Cir. 2011) (concluding that petitioners' request for additional notice and comment procedure on state certification conditions would have been futile because “the petitioners have failed to establish that EPA can alter or reject state certification conditions. . . .” But the court also observed, “[n]otably, the petitioners never argued that the certifications failed to `compl[y] with the terms of section 401,' . . . by overstepping traditional bounds of state authority to regulate interstate commerce” (citing

City of Tacoma,

460 F.3d at 67) and the court “therefore need not consider whether EPA has authority to reject state conditions under such circumstances.”)). But in

Snoqualmie Indian Tribe

FERC,

the Ninth Circuit upheld FERC's inclusion of minimum flow requirements greater than those specified in the State of Washington's certification as long as they “do not conflict with or weaken the protections provided by the [State] certification.” 545 F.3d 1207, 1219 (9th Cir. 2008). In that case, FERC had added license conditions increasing the minimum flows specified in the state's certification in order to “produce a great amount of mist” which it determined would “augment the Tribe's religious experience,” one of the water's designated uses.

Id.; see also

cases discussed at section III.F in this preamble affirming a role for federal agencies to confirm whether certifications comply with the requirements of section 401.

This proposal is intended to provide clarity to certifying authorities, federal agencies, and project proponents, as it addresses comprehensively and for the first time some competing case law and attempts to clarify the scope of conditions that may be included in a certification and the federal agencies' role in the certification process.

5. Administrative Law Principles

To understand the full context and legal basis for this proposal, it is useful to understand some key governing principles of administrative law. In general, administrative agencies can only exercise authority provided by Congress, and courts must enforce unambiguous terms that clearly express congressional intent. However, when Congress delegates authority to administrative agencies, it sometimes enacts ambiguous statutory provisions. To carry out their congressionally authorized missions, agencies, including the EPA, must often interpret ambiguous statutory terms. However, they must do so consistent with congressional intent. In

Chevron, U.S.A., Inc.

Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984) (

Chevron

), the Supreme Court concluded that courts have a limited role when reviewing agency interpretations of ambiguous statutory terms. In such cases, reviewing courts defer to an agency's interpretation of ambiguous terms if the agency's interpretation is reasonable. Under

Chevron,

federal agencies—not federal courts—are charged in the first instance with resolving statutory ambiguities to implement delegated authority from Congress.

The Supreme Court has described the

Chevron

analysis as a “two-step” process.

Encino Motorcars, LLC

Navarro,

136 S. Ct. 2117, 2124 (2016). At step one, the reviewing court determines whether Congress has “directly spoken to the precise question at issue.”

Chevron,

467 U.S. at 842. If so, “that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”

Id.

at 842-43. If the statute is silent or ambiguous, the reviewing court proceeds to the second step, where the court must defer to the agency's “reasonable” interpretation.

Id.

at 844.

Chevron

deference relies on the straightforward principle that, “when Congress grants an agency the authority to administer a statute by issuing regulations with the force of law, it presumes the agency will use that authority to resolve ambiguities in the statutory scheme.”

Encino Motorcars,

136 S. Ct. at 2125 (citing

Chevron,

467 U.S. at 843-44). Indeed, courts have applied

Chevron

deference to an agency's statutory interpretation “when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”

Mayo Found. for Medical Educ. and Res.

United States,

562 U.S. 44, 45 (2011) (quoting

United States

Mead Corp.,

533 U.S. 218, 226-27 (2001)).

Chevron,

the Supreme Court reviewed the EPA's interpretation of statutory language from the Clean Air Act Amendments of 1977. Congress amended the Clean Air Act to impose requirements on states that had not achieved the national air quality standards promulgated by the EPA. States that had not attained the established air standards had to implement a permit program that would regulate “new or modified major stationary sources” of air pollution. Clean Air Act Amendments of 1977, Public Law 95-95, 91 Stat. 685 (1977). The EPA promulgated regulations defining a “stationary source” as the entire plant where pollutant-producing structures may be located. The EPA, therefore, treated numerous pollution-producing structures collectively as a single “stationary source,” even if those structures were part of the same larger facility or complex.

See

40 CFR 51.18(j)(1)(i)-(ii) (1983). Under the EPA's regulation, a facility could modify or construct new pollution-emitting structures as long as the stationary source—the facility as a whole—did not increase its pollution emissions.

The Natural Resources Defense Council (NRDC) opposed the EPA's definition of “stationary source” and filed a challenge to the Agency's regulations. The D.C. Circuit agreed with the NRDC and set aside the EPA's regulations. The D.C. Circuit acknowledged that the Clean Air Act “does not explicitly define what Congress envisioned as a `stationary source,' to which the permit program . . . should apply” and also concluded that Congress had not clearly addressed the issue in the legislative history.

NRDC

Gorsuch,

685 F.2d 718, 723 (D.C. Cir. 1982). Without clear text or intent from Congress, the D.C. Circuit looked to the purposes of the program to guide the court's interpretation.

Id.

at 726. According to the court, Congress sought to improve air quality when it amended the Clean Air Act, and the EPA's definition of “stationary source” merely promoted the maintenance of current air quality standards.

In a unanimous decision, the Supreme Court reversed, finding that the D.C. Circuit committed a “basic legal error” by adopting “a static judicial definition of the term `stationary source' when it had decided that Congress itself had not commanded that decision.”

Chevron,

467 U.S. at 842. The Court explained that it is not the judiciary's place to establish a controlling interpretation of a statute delegating authority to an agency, but, rather, it is the agency's job to “fill any gap left, implicitly or explicitly, by Congress.”

Id.

at 843. When Congress expressly delegates to an administrative agency the authority to interpret a

statute through regulation, courts cannot substitute their own interpretation of the statute when the agency has provided a reasonable construction of the statute.

See id.

at 843-44.

During the rulemaking process, the EPA had explained that Congress had not fully addressed the definition of “source” in the amendments to the Clean Air Act or in the legislative history.

Id.

at 858. The Supreme Court agreed, concluding that “the language of [the statute] simply does not compel any given interpretation of the term `source.' ”

Id.

at 860. And the legislative history associated with the amendments was “silent on the precise issue.”

Id.

at 862.

In its proposed and final rulemaking, the EPA noted that adopting an individualized equipment definition of “source” could disincentivize the modernization of plants, if industry had to go through the permitting process to create changes.

Id.

at 858. The EPA believed that adopting a plant-wide definition of “source” could result in reduced pollution emissions.

Id.

Considering the Clean Air Act's competing objectives of permitting economic growth and reducing pollution emissions, the Supreme Court stated that “the plantwide definition is fully consistent with one of those concerns—the allowance of reasonable economic growth—and, whether or not we believe it most effectively implements the other, we must recognize that the EPA has advanced a reasonable explanation for its conclusion that the regulations serve the environmental objectives as well.”

Id.

at 863. The Court upheld the EPA's definition of the term “stationary source,” explaining that “the Administrator's interpretation represents a reasonable accommodation of manifestly competing interests and is entitled to deference: The regulatory scheme is technical and complex, the agency considered the matter in a detailed and reasoned fashion, and the decision involves reconciling conflicting policies.”

Id.

at 865.

For other instructive applications of

Chevron's

interpretative principles, see

Entergy Corp.

Riverkeeper, Inc.

556 U.S. 208, 222-223 (2009) (statutory silence interpreted as “nothing more than a refusal to tie the agency's hands”);

Zuni Pub. School Dist.

Dep't of Edu.

550 U.S. 81, 89-94 (2007) (court considered whether agency's interpretation was reasonable in light of the “plain language of the statute” as well as the statute's “background and basic purposes”);

Healthkeepers, Inc.

Richmond Ambulance Auth.,

642 F.3d 466, 471 (4th Cir. 2011) (“statutory construction . . . is a holistic endeavor”).

Even if a court has ruled on the interpretation of a statute, the “court's prior judicial construction of a statute trumps an agency construction otherwise entitled to

Chevron

deference

only if

the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion.”

Nat'l Cable & Telecomm. Ass'n

Brand X Internet Serv.,

545 U.S. 967, 982 (2005) (emphasis added). Put another way,

Brand X

held that “a court's choice of one reasonable reading of an ambiguous statute does not preclude an implementing agency from later adopting a different reasonable interpretation.”

United States

Eurodif S.A.,

555 U.S. 305, 315 (2009). This principle stems from

Chevron

itself, which “established a `presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows.' ”

Brand X,

545 U.S. at 982 (quoting

Smiley

Citibank,

517 U.S. 735, 740-41 (1996)). Indeed, even the “initial agency interpretation is not instantly carved in stone.”

Chevron,

467 U.S. at 863.

Brand X,

the Federal Communications Commission (FCC or Commission) interpreted the scope of the Communications Act of 1934, which subjects providers of “telecommunications service” to mandatory common-carrier regulations.

Brand X,

545 U.S. at 977-78. Brand X internet Services challenged the FCC's interpretation, and the Ninth Circuit concluded that the Commission could not permissibly construe the Communications Act the way that it did based on the Court's earlier precedent.

Id.

at 979-80. The Supreme Court granted certiorari and reversed. The Supreme Court upheld the FCC's interpretation of the Communications Act by applying

Chevron'

s two-step analysis. The Court found that the relevant statutory provisions failed to unambiguously foreclose the Commission's interpretation, while other provisions were silent. The FCC had “discretion to fill the consequent statutory gap,” and its construction was reasonable.

Id.

at 997.

The entire “point of

Chevron

is to leave the discretion provided by the ambiguities of a statute with the implementing agencies.”

Id.

at 981 (quoting

Smiley,

517 U.S. at 742). The Supreme Court emphasized that courts cannot override an agency's interpretation of an ambiguous statute based on judicial precedent.

Id.

at 982. Instead, as a “better rule,” a reviewing court only can rely on precedent that interprets a statute at “

Chevron

step one.”

Id.

“Only a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction.”

Id.

at 982-83. A contrary rule produces anomalous results because the controlling interpretation would then turn on whether a court or the agency interprets the statutory provision first.

See id.

at 983. Congress delegated authority to agencies to interpret statutes and that authority “does not depend on the order in which the judicial and administrative constructions occur.”

Id.

Agencies have the authority to revise “unwise judicial constructions of ambiguous statutes.”

Id.

6. Legal Construct for the Proposed Rule

As the preceding summary of the statutory, regulatory and judicial history demonstrates, the most challenging aspects of section 401 concern the scope of review and action on a certification request, and the amount of time available for a certifying authority to act. The Agency is proposing a regulation that would clarify these aspects and provide additional regulatory certainty for states, tribes, federal agencies, and project proponents. This subsection summarizes some of the core legal principles that inform this proposal, and the following section (section III) describes how the Agency is applying those legal principles to support the proposed regulation.

a. Scope of Certification

The EPA has for the first time conducted a holistic analysis of the text, structure, and history of CWA section 401. As a result of that analysis, the EPA proposes to interpret the scope of section 401 as protecting the quality of waters of the United States from point source discharges associated with federally licensed or permitted activities by requiring compliance with the CWA and EPA-approved state and tribal CWA regulatory program provisions.

Since at least 1973, the EPA has issued memoranda and guidance documents and filed briefs in various court cases addressing section 401. Only a handful of these documents address the scope of section 401, and they were not the product of a holistic examination of the statute or its legislative history and, as a result, included little explanation for the Agency's interpretations. For example, in 1989, the EPA issued a guidance document asserting that a section 401 certification could broadly address “all of the potential effects of a proposed

activity on water quality—direct and indirect, short and long term, upstream and downstream, construction and operation. . . .” EPA,

Wetlands and 401 Certification

23 (April 1989). The EPA's only explanation for this assertion is a reference to section 401(a)(3), which provides that a certification for a construction permit may also be used for an operating permit that requires certification. The guidance does not provide any analysis to support its assertion that a certification could address all potential impacts from the “proposed activity” as opposed to the discharge. Several years later, the United States filed an amicus brief on behalf of the EPA in the

PUD No. 1

case. The EPA's brief asserted that petitioners were “mistaken” in their contention that the minimum flow condition is outside the scope of section 401 because it does not address a discharge, but the brief provided no analysis to support this position. The EPA's brief also did not offer an affirmative interpretation to harmonize the different language in sections 401(a) and 401(d). More than a decade later, the EPA's amicus brief in the

S.D. Warren

case simply adopted the Supreme Court's analysis in

PUD No. 1

that once section 401 is triggered by a discharge, a certification can broadly cover impacts from the entire activity. Finally, in 2010 the EPA issued its now-rescinded Interim Handbook which included a number of recommendations on scope, timing, and other issues, none of which were supported with robust analysis or interpretation of the Act.

This proposed rulemaking marks the first time that the EPA has undertaken a holistic review of the text of section 401 in the larger context of the structure and legislative history of the 1972 Act and earlier federal water protection statutes and the first time the Agency has subjected its analysis to public notice and comment. The proposed regulation is informed by this holistic review and presents a framework that EPA considers to be most consistent with congressional intent. The Agency solicits comments on whether the proposed approach appropriately captures the scope of authority for granting, conditioning, denying, and waiving a section 401 certification.

i. Water Quality

The EPA proposes to conclude that the scope of a section 401 review or action must be limited to considerations of water quality. The Congressional purpose of the CWA is to protect and maintain water quality, and there is no suggestion in either the plain language or structure of the statute that Congress envisioned section 401 to authorize action beyond that which is necessary to address water quality directly. Indeed, as described in greater detail above, the 1972 amendments to the CWA resulted in the enactment of a comprehensive scheme designed to prevent, reduce, and eliminate pollution in the nation's waters generally, and to regulate the discharge of pollutants into waters of the United States specifically.

The EPA is aware that certifying authorities may have previously interpreted the scope of section 401 in a way that resulted in the incorporation of non-water quality related considerations into their certification review process. For example, certifying authorities have included conditions not related directly to water quality in section 401 certifications, including requiring 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 creating public access for fishing along waters of the United States. Certifying authorities have also attempted to address all potential impacts from the operation or subsequent use of products generated by a proposed federally licensed or permitted 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 Agency proposes to conclude that expanding the scope of section 401 to include consideration of effects and the imposition of conditions unrelated to water quality would, at a minimum, invoke the outer limits of power Congress delegated under the CWA. There is nothing in the text of the statute or its legislative history that signals that Congress intended to impose federal regulations on anything more than water quality-related impacts to waters of the United States. Indeed, Congress knows how to craft statutes to require consideration of multi-media effects,

see

42 U.S.C. 4321

et seq.

(NEPA), and has enacted specific statutes addressing impacts to air (Clean Air Act), land (Resource Conservation and Recovery Act), wildlife (Endangered Species Act), and cultural resources (National Historic Preservation Act), by way of example.

Subsequent congressional action directly addressing a particular subject is relevant to determining whether a previously adopted statute reaches that subject matter.

See FDA

Brown & Williamson Tobacco Corp.,

529 U.S. 120, 155 (2000) (determining that “actions by Congress over the past 35 years” that addressed tobacco directly, when “taken together,” “preclude[d] an interpretation” that a previously adopted statute, the Food, Drug, and Cosmetic Act, “grant[ed] the FDA jurisdiction to regulate tobacco products.”).

See, e.g.,

42 U.S.C. 7401

et seq.

(Clean Air Act); 42 U.S.C. 6901

et seq.

(Resource Conservation and Recovery Act); 16 U.S.C. 1531

et seq.

(Endangered Species Act); and 16 U.S.C. 470

et seq.

(National Historic Preservation Act).

If Congress intended section 401 of the CWA to authorize consideration or the imposition of certification conditions based on air quality concerns, public access to waters, energy policy, or other multi-media or non-water quality impacts, it would have provided a clear statement to that effect. Neither the CWA nor section 401 contain any such clear statement. In fact, Congress specifically contemplated a broader policy direction in the 1972 amendments that would have authorized the EPA to address impacts to land, air and water through implementation of the CWA, but it was rejected.

Agencies must avoid interpretations of the statutes they implement to avoid pressing the envelope of constitutional validity absent a clear statement from Congress to do so.

See SWANCC,

531 U.S. at 172-73; Rapanos, 547 U.S. at 738 (Scalia, J., plurality). That includes interpretations of the statute that would provide states, tribes and the EPA the ability to regulate interstate commerce beyond the four corners of the CWA.

See

discussion

supra

at section II.F.1 in this preamble. The Agency proposes to conclude that inclusion of the phrase “other appropriate requirements of state law” in section 401(d) lacks that clear direction from Congress.

As Congress drafted the 1972 CWA amendments, the House bill (H.R. 11896) included section 101(g) within its “Declaration of Goals and Policy” providing, “(g) In the implementation of this Act, agencies responsible therefor shall consider all potential impacts relating to the water,

land, and air

to insure that other significant environmental degradation and damage to the health and welfare of man does not result.” H.R. 11896, 92nd Cong. (1971). Section 101(g) of the House bill was “eliminated” at conference, and the Act was ultimately passed with no federal policy, goal or directive to address non-water quality impacts through the CWA. S. Rep. 92-1236, at 100 (1972) (Conf. Rep.).

The Agency also proposes to conclude that the use of the term “applicant” in 401(d) creates ambiguity in the statute. See section II.F.6.a.ii in this preamble for discussion on the use of the term “applicant” in section 401(d).

Pursuant to the plain language of section 401, when a state or authorized tribe (and in some cases, the EPA) issues

a certification, it has determined that the discharge to waters of the United States from a proposed federally licensed or permitted activity will comply with applicable effluent limitations for new and existing sources (CWA sections 301, 302 and 306), water quality standards and implementation plans (section 303), toxic pretreatment effluent standards (section 307), and other “appropriate requirements” of state or tribal law. 33 U.S.C. 1341(a)(1), (d). The enumerated CWA provisions identify requirements to ensure that discharges of pollutants do not degrade water quality,

and specifically referenced throughout section 401 is the requirement to ensure compliance with “applicable effluent limitations” and “water quality requirements,” underscoring the focused intent of this provision on the protection of water quality from discharges.

See

33 U.S.C. 1341(a), (b), (d). The legislative history for the Act provides further support for the EPA's interpretation, as it frequently notes the focus of the section is on assuring compliance with water quality requirements and water quality standards and the elimination of any discharges of pollutants.

See e.g.,

S. Rep. No. 92-414, at 69 (1971).

For example, section 306 defines the standard of performance for new sources of discharges as “a standard for the control of the discharge of pollutants which reflects the greatest degree of effluent reduction which the Administrator determines to be achievable through application of best available demonstrated control technology, processes, operating methods, or other alternatives, including, where practicable, a standard permitting no discharge of pollutants.” 33 U.S.C. 1316(a)(1). Section 303 notes that new or revised state water quality standards “[s]hall be such as to protect the public health or welfare, enhance the quality of water and serve the purposes of this chapter.”

Id.

at 1313(c)(2)(A).

The term “effluent limit” is defined as, “any restriction established by a State or the Administrator on quantities, rates, and concentrations of chemical, physical, biological, and other constituents which are discharged from point sources into navigable waters, the waters of the contiguous zone, or the ocean, including schedules of compliance[,]” 33 U.S.C. 1362(11); and the CWA requires that “water quality standards” developed by states and tribes “consist of the designated uses of the navigable waters involved and the water quality criteria for such waters based upon such uses.”

Id.

at 1313(c)(2)(A).

The CWA does not define what is an “appropriate requirement” of state law that should be considered as part of a section 401 review, and the Agency acknowledges the need to respect the clear policy direction from Congress to recognize and preserve state authority over land and water resources within their borders.

See

33 U.S.C. 1251(b). Indeed, the Agency must avoid interpretations of the CWA that infringe on traditional state land use planning authority.

See SWANCC,

531 U.S. at 172-73;

Will,

491 U.S. at 65. One potential interpretation of this clause in section 401(d) could be to authorize the imposition of conditions or veto authority over a federal license or permit based on non-water quality related impacts if those requirements are based on existing state law. But such an interpretation could authorize the EPA as a certifying authority to push the constitutional envelope of its delegated authority into regulatory arenas more appropriately reserved to the states, “powers with which Congress does not readily interfere.”

Gregory,

501 U.S. at 461 (describing the “plain statement rule”).

More importantly, the Agency does not believe that Congress intended the phrase “any other appropriate requirements of State law” to be read so broadly. Instead, the principle

ejusdem generis

helps to inform the appropriate interpretation of the text. Under this principle, where general words follow an enumeration of two or more things, they apply only to things of the same general kind or class specifically mentioned.

See Washington State Dept. of Social and Health Services

Keffeler,

537 U.S. 371, 383-85 (2003). Here, the general term “appropriate requirement” follows an enumeration of four specific sections of the CWA that are all focused on the protection of water quality from point source discharges to waters of the United States. Given the text, structure, purpose, and legislative history of the CWA and section 401, the EPA proposes to interpret “appropriate requirements” for section 401 certification review to include those provisions of state or tribal law that are EPA-approved CWA regulatory programs that control discharges, including provisions that are more stringent than federal law.

See

S. Rep. No. 92-414, at 69 (1971) (“In addition, this provision makes clear that any water quality requirements established under State law, more stringent than those requirements established under the Act, shall through certification become conditions on any Federal license or permit.”). In this respect, the EPA agrees with the logic of Justice Thomas's dissent in

PUD No. 1,

wherein he concludes that “the general reference to `appropriate' requirements of state law is most reasonably construed to extend only to provisions that, like other provisions in the list, impose discharge-related restrictions.”

PUD No. 1,

511 U.S. at 728 (Thomas, J., dissenting). The CWA provisions that regulate point source discharges to waters of the United States, and those discharge-related restrictions referenced in Justice Thomas's dissent, are the “regulatory provisions of the CWA.” When states or tribes enact CWA regulatory provisions as part of a state or tribal program, including those designed to implement the section 402 and 404 permit programs and those that are more stringent than federal requirements, those provisions require EPA approval before they become effective for CWA purposes. Because the EPA interprets “appropriate requirements” to mean the regulatory provisions of the CWA, it follows that those would necessarily be EPA-approved provisions. The EPA requests comment on whether this interpretation is a reasonable and appropriate reading of the statute and related legal authorities.

ii. Activity Versus Discharge

Based on the text, structure, and legislative history of the CWA, the EPA proposes to conclude that a certifying authority's review and action under section 401 must be limited to water quality impacts from the potential discharge associated with a proposed federally licensed or permitted project. Section 401(a) explicitly provides that the certifying authority, described as “the State in which the

discharge

originates or will originate,” must certify that “any such

discharge

will comply with the applicable provisions of sections 301, 302, 303, 306 and 307 of this Act” (emphasis added). The plain language of section 401(a) therefore directs authorities to certify that the discharge resulting from the proposed federally licensed or permitted project will comply with the CWA. Section 401(d) uses different language and allows the certifying authority to include conditions “to assure that

any applicant

for a Federal license or permit will comply” (emphasis added) with applicable provisions of the CWA and other appropriate requirements of state or tribal law. The use of this different term in section 401(d) creates ambiguity and has been interpreted as broadening the scope of section 401(a) beyond consideration of water quality impacts from the “discharge” which triggers the certification requirement, to allow certification conditions that address water quality impacts from any aspect of the construction or operation of the activity as a whole.

See PUD No. 1,

511 U.S. at 712.

As a matter of practice, the Corps seeks state certification for “its own discharges of dredged or fill material”, “[a]lthough the Corps does not process and issue permits for its own activities.” 33 CFR 336.1(a)(1).

The ordinary meaning of the word “applicant” is “[o]ne who applies, as for a job or admission.”

See Webster's II, New Riverside University Dictionary

(1994). In section 401(d), this term is used to describe the person or entity that applied for the federal license or permit that requires a certification. The use of this term in section 401(d) is consistent with the text of the CWA, which uses the term “applicant” throughout to describe an individual or entity that has applied for a grant, a permit, or some other authorization.

Importantly, the term is also used in section 401(a) to identify the person responsible for obtaining the certification: “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 . . . .” Broadly interpreting the use of “applicant” in section 401(d) to authorize certification conditions that are unrelated to the discharge would expand section 401 beyond the scope of federal regulatory authority integrated throughout the core regulatory provisions of the modern CWA—the ability to regulate discharges to waters of the United States. The Agency is not aware of any other instance that the term “applicant” (or permittee or owner or operator) as used in the CWA has been interpreted to significantly expand the jurisdictional scope or meaning of the statute and believes a better interpretation would be to align its meaning with its plain language roots.

See e.g.,

33 U.S.C. 1311 (“An application for an alternative requirement under this subsection shall not stay the applicant's obligation to comply with the effluent limitation guideline or categorical pretreatment standard which is the subject of the application.”);

id.

at 1344 (“Not later than the fifteenth day after the date an applicant submits all the information required to complete an application for a permit under this subsection, the Secretary shall publish the notice required by this subsection.”)

The Agency therefore proposes to interpret the use of the term “applicant” in section 401(d), consistent with its use in section 401(a) and other areas of the CWA, as identifying the person or entity responsible for obtaining and complying with the certification and any associated conditions. Throughout the CWA, the term “applicant” is used to identify the person or entity responsible for compliance with the federal regulatory provisions of the CWA, all of which remain focused on controlling discharges of pollutants to waters of the United States.

The legislative history of section 401, discussed below, provides additional support for this interpretation.

For example, section 404 provides that after an applicant requests a permit, the Corps “may issue [a] permit[ ], after notice and opportunity for public hearings for the discharge of dredged or fill material into the navigable waters at specified disposal sites.” 33 U.S.C. 1344(a).

Section 401 was updated as part of the 1972 CWA amendments to reflect the restructuring of the Act, as described in section II.F.1 in this preamble. Two important phrases were modified between the 1970 and the 1972 versions of section 401 that help inform what Congress intended with the 1972 amendments. First, the 1970 version provided that an authority must certify “that such

activity

. . . will not violate water quality standards.” Public Law 91-224 § 21(b)(1) (emphasis added). The 1972 version was modified to require an authority to certify “that any such

discharge

shall comply with the applicable provisions of [the CWA].” 33 U.S.C. 1341(a) (emphasis added). On its face, this modification makes the 1972 version of section 401 consistent with the overall framework of the amended statutory regime, which focuses on eliminating discharges and attaining water quality standards.

Second, the 1972 version included section 401(d) for the first time, which authorizes conditions to be imposed on a certification “to assure that any applicant for a Federal license or permit will comply with any applicable effluent limitations and other limitations, under section 301 or 302 of this Act, standard of performance under section 306 of this Act, or prohibition, effluent standard, or pretreatment standard under section 307 of this Act, and with any other appropriate requirement of State law set forth in such certification . . . .”

Id.

at 1341(d). This new section also requires such conditions to be included in the federal license or permit.

Together, these provisions: Focus section 401 on discharges that may affect water quality; enumerate newly-created federal regulatory programs with which section 401 mandates compliance; and require that water-quality related certification conditions be included in federal licenses and permits and thereby become federally enforceable. The legislative history describing these changes supports a conclusion that they were made intentionally and with the purpose of making the new section 401 consistent with the new framework of the Act. Indeed, the 1971 Senate Report provides that section 401 was “amended to assure consistency with the bill's changed emphasis from water quality standards to effluent limitations based on the elimination of any discharge of pollutants.” S. Rep. No. 92-414, at 69 (1971).

The EPA previously analyzed the modifications made to section 401 between the 1970 and 1972 Acts.

See

Memorandum from Catherine A. Winer, Attorney, EPA Office of General Counsel, to David K. Sabock, North Carolina Department of Natural Resources (November 12, 1985).

In its analysis, the EPA characterized the legislative history quoted above as “not very explicit,” and characterized the new section 401 language as “not altogether clear.”

Id.

Based on this analysis, the EPA found at that time that “the overall purpose of section 401 is clearly `to assure that Federal licensing or permitting agencies cannot override water quality requirements' ” and that “section 401 may reasonably be read as retaining its original scope, that is, allowing state certifications to address any water quality standard violation resulting from an activity for which a certification is required, whether or not the violation is directly caused by a `discharge' in the narrow sense.”

Id.

(citing S. Rep. No. 92-414, at 69 (1971)).

Available at

https://www.epa.gov/sites/production/files/2015-01/documents/standards-marinas-memo.pdf

The EPA has now performed a holistic analysis of the text and structure of the CWA, the language of section 401, and the amendments made between 1970 and 1972. Based on this review, the EPA now proposes to adopt the reasonable interpretation that the 1972 version of section 401 made specific changes to ensure that

discharges

were controlled and in compliance with the modern CWA regulatory programs, and appropriate requirements of state law implementing the same. For the reasons noted above in section II.F.1 in this preamble, identifying and regulating discharges, as opposed to managing ambient water quality, promotes accountability and enforcement of the Act in a way that the 1970 and earlier versions did not. The EPA also observes that, had Congress intended the 1972 amendments to retain the original scope concerning the “activity,” it could have easily crafted section 401(d) to authorize certification conditions to assure that “the activity” would comply with the specified CWA provisions, but it did not. Instead Congress used the term “applicant” which, based upon its plain ordinary meaning, identifies the person seeking the certification and the related federal

license or permit. When Congress enacted the 1972 CWA amendments, it used the term “discharge” to frame the scope of the certification requirement under the Act. As a result, the Agency now considers a more natural interpretation of the 1972 amendments to be that Congress rejected the idea that the scope of a certifying authority's review or its conditions should be defined by the term “activity.” Congress specifically did not carry forward the term “activity” in the operative phrase in section 401(a) and did not incorporate it into the new provision authorizing certification conditions in section 401(d). Under basic canons of statutory construction, the EPA begins with the presumption that Congress chose its words intentionally.

See, e.g., Stone

INS,

514 U.S. 386, 397 (1995) (“When Congress acts to amend a statute, we presume it intends its amendment to have real and substantial effect.”). This is also consistent with the dissent in

PUD No. 1,

wherein Justice Thomas concluded that “[i]t is reasonable to infer that the conditions a State is permitted to impose on certification must relate to the very purpose the certification process is designed to serve. Thus, while § 401(d) permits a State to place conditions on a certification to ensure compliance of the `applicant'[,] those conditions must still be related to discharges.”

PUD No. 1,

511 U.S. at 726-27 (Thomas, J., dissenting). The EPA proposes to conclude that this interpretation is a reasonable and appropriate reading of the statute and related legal authorities and seeks public comment on this proposed interpretation.

As described in detail in section II.F.4.a.i in this preamble, the Supreme Court in

PUD No. 1

considered the scope of a state's authority to condition a section 401 certification and concluded that, once the 401(a) “discharge to navigable water” triggers the requirement for certification, section 401(d) authorizes a certifying authority to impose conditions on “the applicant,” meaning the activity as a whole and not just the discharge. In its discussion of the CWA, the Supreme Court relied on its own interpretation of the scope of section 401 and did not analyze section 401 at “

Chevron

step one” or rely on “the unambiguous terms” of the CWA to support its reading of section 401.

Brand X,

545 U.S. at 982. Instead, the Court “

reasonably read

” section 401(d) “as authorizing additional conditions and limitations on the activity as a whole once the threshold condition, the existence of a discharge, is satisfied.”

PUD No. 1,

511 U.S. at 712 (emphasis added).

To support what it considered to be a reasonable reading of section 401(d), the Court looked at the EPA's certification regulations at 40 CFR 121.2(a)(3) and related guidance at that time, but did not have before it the EPA's interpretation of how section 401(a) and 401(d) could be harmonized.

Id.

In fact, the Court either was not aware of or did not mention that the EPA regulations in place at that time predated the 1972 CWA amendments and therefore contained outdated terminology implementing what was functionally a different statute. As described above, the EPA's existing certification regulations are consistent with the text of the pre-1972 CWA, and they require a state to certify that the “activity” will comply with the Act. The 1972 CWA amendments changed this language to require a state to certify that the “discharge” will comply with the Act.

Based in part on what the EPA now recognizes was infirm footing, the Court found that “EPA's conclusion that activities—not merely discharges—must comply with state water quality standards is a

reasonable interpretation

of § 401 and is entitled to deference.”

Id.

(emphasis added). As amicus curiae, the federal government did not seek

Chevron

“deference for the EPA's regulation in [the

PUD No. 1

case]” or for EPA's interpretation of section 401.

Id.

at 729 (Thomas, J., dissenting). In fact, the EPA's amicus brief did not analyze or interpret the different language in sections 401(a) and 401(d) and instead asserted that it was unnecessary to harmonize the provisions to resolve the dispute.

See

Brief for the United States as Amicus Curiae Supporting Affirmance, at 12 n. 2. The EPA's amicus brief asked the Court to analyze the two undisputed discharges from the proposed federally licensed project and determine whether they would cause violations of the state's water quality standards.

Given the circumstances of the

PUD No. 1

litigation, and the fact that the Supreme Court did not analyze section 401 under

Chevron

Step 1 or rely on unambiguous terms in the CWA to support its own reasonable reading of the statute,

PUD No. 1

does not foreclose the Agency's proposed interpretation of section 401 in this document.

See Brand X,

545 U.S. at 982-83. The Supreme Court's “choice of one reasonable reading” of section 401 does not prevent the EPA “from later adopting a different reasonable interpretation.”

Eurodif S.A.,

555 U.S. at 315. An agency may engage in “a formal adjudication or notice-and-comment rulemaking” to articulate its interpretation of an ambiguous statute.

Christensen

Harris County,

529 U.S. 576, 587 (2000). When it does, courts apply “

Chevron

-style” deference to the agency's interpretation.

Id.

That is exactly what the EPA is doing in this proposal. EPA has for the first time, holistically interpreted the text of section 401(a) and (d) to support this proposed update to the EPA's existing certification regulations while ensuring consistency with the plain language of the 1972 CWA. The Agency solicits comment on its proposed interpretation of the CWA and the prevailing case law as discussed above in section II.F.1 and II.F.4 in this preamble.

The EPA is not proposing to modify or alter the Agency's longstanding interpretation of the Act that was confirmed by the Court in

PUD No. 1

that “a water quality standard must `consist of the designated uses of the navigable waters involved

and

the water quality criteria for such waters based upon such uses' ” and that “a project that does not comply with the designated use of the water does not comply with the applicable water quality standards.” 511 U.S. at 714-15 (emphasis in original).

The Agency also solicits comment on an alternate interpretation of the text of section 401(d) suggested by language in the

PUD No. 1

majority opinion. At page 712, the Court observes that, “[a]lthough 401(d) authorizes the State to place restrictions on the activity as a whole, that authority is not unbounded.” (emphasis added). The Court does not define the precise limits of State authority under section 401(d). However, the Court goes on to say that “[t]he State can only ensure that the project complies with `any applicable effluent limitations and other limitations, under [33 U.S.C. 1311, 1312]' or certain other provisions of the Act, `and with any other appropriate requirement of State law.' 33 U.S.C. 1341(d).” In the previous discussion, we explained why the most reasonable interpretation of the “bounds” set by the statutory text is that it limits the imposition of effluent limitations, limitations, and other certification conditions to “the discharge,” and not “the activity as a whole.” However, EPA is also seeking comment on an alternate interpretation of the text that would allow imposition of effluent limitations and other similar conditions that address the water quality-related effects of “the activity as a whole,” and not just “the discharge,” provided such effluent limitations and other conditions are based on “water quality requirements” as defined in this proposal.

iii. Discharges From Point Sources to Waters of the United States

Based on the text, structure and purpose of the Act, the history of the 1972 CWA amendments, and supporting case law, the EPA proposes to conclude that a certifying authority's review and action under section 401 is limited to water quality impacts to waters of the United States resulting from a potential

point source

discharge associated with a proposed federally licensed or permitted project. The text of section 401(a) clearly specifies that certification is required to “conduct any activity . . . which may result in any discharge into the

navigable

waters” (emphasis added). Prior interpretations extending section 401 applicability beyond such waters conflict with and would render meaningless the plain language of the statute. And although the statute does not define with specificity the meaning of the unqualified term

discharge,

interpreting section 401 to cover all discharges without qualification would undercut the bedrock structure of the CWA regulatory programs which are focused on addressing

point source

discharges to waters of the United States. CWA section 502(14) defines point source as “any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.”

In the section 404 context, point source includes bulldozers, mechanized land clearing equipment, dredging equipment, and the like.

See, e.g., Avoyelles Sportsman's League, Inc.

March,

715 F.2d 897, 922 (5th Cir. 1983).

As described in section II.F.1 in this preamble, the CWA is structured such that the federal government provides assistance, technical support, and grant money to assist states in managing

all

of the nation's waters. By contrast, the federal regulatory provisions, including CWA sections 402 and 404, apply only to

point source

discharges to waters of the United States. 33 U.S.C. 1362(7). Section 401 is the first section of Title IV of the CWA, titled Permits and Licenses, and it requires water quality-related certification conditions to be legally binding and federally enforceable conditions of federal licenses and permits.

Id.

at 1341(d). Similar to the section 402 and 404 permit programs, section 401 is a core regulatory provision of the CWA. Accordingly, the scope of its application is most appropriately interpreted, consistent with the other federal regulatory programs, as addressing point source discharges to waters of the United States.

The EPA is not aware of any court decisions that have directly addressed the scope of waters covered by section 401; however, in

Oregon Natural Desert Association

Dombeck,

the Ninth Circuit relied on the text and structure of section 401 to interpret the meaning of “discharge.” In that case, a citizen's organization challenged a decision by the U.S. Forest Service to issue a permit to graze cattle on federal lands without first obtaining a section 401 certification from the state of Oregon. 172 F.3d 1092. The government argued that a certification was not needed because the “unqualified” term “discharge”—as used in CWA section 401—is “limited to point sources but includes both polluting and nonpolluting releases.”

Id.

at 1096. Finding that the 1972 amendments to the CWA “overhauled the regulation of water quality,” the court said that “[d]irect federal regulation [under the CWA] now focuses on reducing the level of effluent that flows from point sources.”

Id.

The court stated that the word “discharge” as used consistently in the CWA refers to the release of effluent from a point source.

Id.

at 1098. The court found that cattle—even if they wade in a stream—are not point sources.

Id.

at 1098-99. Accordingly, the court held that certification under section 401 was not required.

Id.

at 1099.

The EPA previously suggested that the scope of section 401 may extend to non-point discharges to non-waters of the United States once the requirement for the section 401 certification is triggered. Specifically, in the EPA's now-withdrawn 2010 Interim Handbook the Agency included the following paragraphs,

The scope of waters of the U.S. protected under the CWA includes traditionally navigable waters and also extends to include territorial seas, tributaries to navigable waters, adjacent wetlands, and other waters. Since § 401 certification only applies where there may be a discharge into waters of the U.S., how states or tribes designate their own waters does not determine whether § 401 certification is required. Note, however, that once § 401 has been triggered due to a potential discharge into a water of the U.S., additional waters may become a consideration in the certification decision if it is an aquatic resource addressed by “other appropriate provisions of state [or tribal] law.”

* * *

Section 401 applies to any federal permit or license for an activity that may discharge into a water of the U.S. The Ninth Circuit Court of Appeals ruled that the discharge must be from a point source, and agencies in other jurisdictions have generally adopted the requirement. Once these thresholds are met, the scope of analysis and potential conditions can be quite broad. As the U.S. Supreme Court has held, once § 401 is triggered, the certifying state or tribe may consider and impose conditions on the project activity in general, and not merely on the discharge, if necessary to assure compliance with the CWA and with any other appropriate requirement of state or tribal law.

EPA,

Clean Water Act Section 401 Water Quality Certification: A Water Quality Protection Tool for States and Tribes,

5, 26 (2010) (citations omitted). To support the first referenced paragraph on the scope of waters, the Interim Handbook cited to section 401(d), presumably referring to the use of the term “applicant” rather than “discharge” used in section 401(a).

To support the second paragraph on the scope of discharges, the Interim Handbook cited to the

PUD No. 1

and

S.D. Warren Co.

Supreme Court decisions. It appears that both paragraphs from the Agency's 2010 Interim Handbook relied on the

PUD No. 1

Court's interpretation of the ambiguity created by the different language in sections 401(a) and 401(d).

Interim Handbook, at 5 n. 23. Tellingly, footnote 23 of the Interim Handbook also states, “Note that the Corps may consider a 401 certification as administratively denied where the certification contains conditions that require the Corps to take an action outside its statutory authority or are otherwise unacceptable.

See, e.g.,

RGL 92-04, `Section 401 Water Quality Certification and Coastal Zone Management Act Conditions for Nationwide Permits.” In other words, in this footnote the EPA was advising states that, while section 401(d) could perhaps be interpreted to expand the scope of federal regulatory and enforcement authority beyond navigable waters (but without citation to any case law to support that proposition), the Army Corps of Engineers may reject a certification in its entirety that is outside the statutory authority provided by the CWA.

The

S.D. Warren

decision did not analyze or adopt the

PUD No. 1

Court's analysis of section 401(a) and 401(d).

For many of the same reasons that the Agency proposes to avoid interpreting the word “applicant” in section 401(d) as broadening the scope of certification beyond the discharge itself, the Agency also proposes to decline to interpret section 401(d) as broadening the scope of waters and the types of discharges to which the CWA federal regulatory programs apply. Were the Agency to interpret the use in section 401(d) of the term “applicant” instead of the term “discharge” as authorizing the federal government to implement and enforce CWA conditions on non-waters of the United States, that single word (“applicant”) would effectively broaden the scope of the federal regulatory programs enacted by the 1972 CWA

amendments beyond the limits that Congress intended. Such an interpretation could permit the application of the CWA's regulatory programs, including section 401 certification conditions that are enforced by federal agencies, to land and water resources more appropriately subject to traditional state land use planning authority.

See, e.g., SWANCC,

531 U.S. at 172-73.

As described in section II.F.4.a.i in this preamble and pursuant to its authority to reasonably interpret ambiguous statutes to fill gaps left by Congress, the EPA is proposing to interpret section 401 differently than the Supreme Court did in

PUD No. 1.

The Court's prior interpretation of sections 401(a) and 401(d) was not based on the plain unambiguous text of the statute, but rather was based on the Court's own reasonable interpretation (see section II.F.4.a.i in this preamble). The EPA's proposed interpretation is also based on a reasonable interpretation of the text, structure and legislative history of section 401 and the Agency's current proposal is not foreclosed by the Court's prior interpretation.

See Brand X,

545 U.S. at 982.

For the reasons above, the EPA proposes to conclude that section 401 is a regulatory provision that creates federally enforceable requirements and its application must therefore be limited to point source discharges to waters of the United States. This proposed interpretation is consistent with the text and structure of the CWA as well as the principal purpose of this rulemaking,

i.e.,

to ensure that the EPA's regulations (including those defining a section 401 certification's scope) are consistent with the current CWA. The Agency solicits comment on this revised interpretation of the CWA and associated case law discussed in this section.

b. Timeline for Section 401 Certification Analysis

Based on the language of the CWA and relevant case law, the EPA proposes to conclude that a certifying authority must act on a section 401 certification within a reasonable period of time, which shall not exceed one year and that there is no tolling provision to stop the clock at any time. The Agency requests comment on this plain language interpretation of the statute.

The text of section 401 expressly states that a certifying authority must act on a section 401 certification request within a reasonable period of time, which shall not exceed one year. 33 U.S.C. 1341(a)(1). Importantly, the CWA does not guarantee that a certifying authority may take a full year to act on a section 401 certification request. The certifying authority may be subject to a shorter period of time, provided it is reasonable.

See Hoopa Valley Tribe

FERC,

913 F.3d 1099, 1104 (D.C. Cir. 2019) (“Thus, while a full year is the absolute maximum, it does not preclude a finding of waiver prior to the passage of a full year. Indeed, the [EPA]—the agency charged with administering the CWA—generally finds a state's waiver after only six months.

See

40 CFR 121.16.”). The CWA's legislative history indicates that inclusion of a maximum period of time was to “insure that sheer inactivity by the [certifying agency] will not frustrate the Federal application.” H.R. Rep. No. 92-911, at 122 (1972).

The timeline for action on a section 401 certification begins upon receipt of a certification request.

Id.

The CWA does not specify any legal requirements for what constitutes a request or otherwise define the term. The EPA has long recommended that a project proponent requiring federal licenses or permits subject to section 401 certification hold early discussions with both the certifying authority and the federal agency, to better understand the certification process and potential data needs.

The CWA does not contain provisions for pausing or delaying the timeline for any reason, including to request or receive additional information from a project proponent. If the certifying authority has not acted on a request for certification within the reasonable time period, the certification requirement will be waived by the federal licensing and permitting agencies. For further discussion, see section III.F in this preamble. The proposed revisions to the EPA's regulations in this proposal are intended to provide greater clarity and certainty and address some of the delays and confusion associated with the timing elements of the section 401 certification process.

III. Proposed Rule

This proposed rule is intended to make the Agency's regulations consistent with the current text of CWA section 401, increase efficiencies, and clarify aspects of CWA section 401 that have been unclear or subject to differing legal interpretations in the past. The Agency proposes these revisions to replace the entirety of the existing certification regulations at 40 CFR part 121. The following sections explain the Agency's rationale for the proposed rule and provides detailed explanation and analysis for the substantive changes that the Agency is proposing.

The EPA's existing certification regulations were issued almost 50 years ago in 1971, when the Agency was newly formed and the CWA had not yet been amended to include the material revisions to section 401.

In modernizing 40 CFR part 121, this proposal recognizes and responds to the changes to the CWA that occurred after the current regulations were finalized, especially the 1972 and 1977 amendments to the CWA.

See

36 FR 22487, Nov. 25, 1971, redesignated at 37 FR 21441, Oct. 11, 1972, further redesignated at 44 FR 32899, June 7, 1979; Reorganization Plan No. 3 of 1970 (creating the EPA), 84 Stat. 2086, effective Dec. 2, 1970.

Updating the existing certification regulations to clarify expectations, timelines, and deliverables also increases efficiencies. Some aspects of the existing regulations have been implemented differently by different authorities, likely because the scope and timing of review are not clearly addressed by the EPA's existing certification regulations. While the EPA recognizes that states and tribes have broad authority to implement state and tribal law to protect their water quality,

see

33 U.S.C. 1251(b), section 401 is a federal regulatory program that contains explicit limitations on when and how states and tribes may exercise this particular authority. Modernizing and clarifying the EPA's regulations will help states, tribes, federal agencies, and project proponents know what is required and what to expect during a section 401 certification process, thereby reducing regulatory uncertainty. The Agency requests comment on all aspects of this effort to modernize and clarify its section 401 regulations, including any specific suggestions on how any of the proposed definitions or other requirements might be modified to implement Congress' intent in enacting section 401.

The EPA's existing certification regulations at 40 CFR part 121 do not fully address the public notice requirements called for under CWA 1341(a)(1). The EPA solicits comment on whether the Agency should include additional procedures in its final regulations to ensure that the public is appropriately informed of proposed federally licensed or permitted projects, potential discharges, and related water quality effects. At a minimum, such procedures could include public notice and hearing opportunities, but they could also include mechanisms to ensure that the certifying authority is in a position to appropriately inform the public, as required by section 401(a)(1). Such mechanisms could focus on how and when the certifying authority is notified of potential certification requests and what information may be

necessary for the certifying authority to act on a request. If the EPA were to include such additional procedures in its final regulations, they could be the same as or similar to the procedures currently proposed to apply when EPA is the certifying authority (see proposed sections 121.12 and 121.13). The Agency also solicits comment on whether it would be appropriate or necessary to require certifying authorities to submit their section 401 procedures and regulations to the EPA for informational purposes.

A. When Section 401 Certification is Required

The EPA proposes that the requirement for a section 401 certification is triggered based on the potential for any federally licensed or permitted activity to result in a discharge from a point source into waters of the United States.

This proposal is consistent with the Agency's longstanding interpretation and is not intended to alter the scope of applicability established in the CWA. Consistent with section 401(a)(1), the EPA is proposing that:

State or tribal implementation of a license or permit program in lieu of the federal program, such as a CWA section 402 permit issued by an authorized state, does not federalize the resulting permits or licenses and therefore does not trigger section 401 certification. This is supported by the legislative history of CWA section 401 which noted that “since permits granted by States under section 402 are not Federal permits—but State permits—the certification procedures are not applicable.” H.R. Rep. No. 92-911, at 127 (1972). The legislative history of the CWA amendments of 1977, discussing state assumption of section 404, also noted that “[t]he conferees wish to emphasize that such a State program is one which is established under State law and which functions in lieu of the Federal program. It is not a delegation of Federal authority.” H.R. Rep. No. 95-830, at 104 (1977).

Any applicant for a license or permit to conduct any activity which may result in a discharge shall provide the Federal agency a certification from the certifying authority in accordance with this part.

Based on the text of the statute, the EPA proposes that section 401 is triggered by the potential for a discharge to occur, rather than an actual discharge. This is different from other parts of the Act

and is intended to provide certifying authorities with a broad opportunity to review proposed federally licensed or permitted projects that may result in a discharge to waters of the United States within their borders. This proposal does not identify a process for certifying authorities or project proponents to determine whether a federally licensed or permitted project has a potential or actual discharge. However, the EPA observes that if a certifying authority or project proponent determines after the certification process is triggered that there is no actual discharge from the proposed federally licensed or permitted project and no potential for a discharge, there is no longer a need to request certification. The EPA requests certifying authorities and project proponents to submit comment on prior experiences with undertaking the certification process and later determining that the proposed federally licensed or permitted project would not result in an actual discharge. The EPA also requests comment on whether there are specific procedures that could be helpful in determining whether a proposed federally licensed or permitted project will result in an actual discharge. Finally, the EPA requests comment on how project proponents may establish for regulatory purposes that there is no potential discharge and therefore no requirement to pursue a section 401 certification. This request is intended to solicit mechanisms for project proponents to generate a record for themselves that no 401 certification was require

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