The Trump administration is revising water quality regulations that give states veto power over energy infrastructure, initiating a battle with Democratic governors who have used the authority to block several high-profile fossil fuel projects.
The Environmental Protection Agency’s new regulations, which Administrator Andrew Wheeler signed on Monday, deal with Section 401 of the Clean Water Act, which has long given states the authority to block infrastructure projects if those projects would threaten state water quality.
Section 401 is a hallmark of the federal-state cooperation embedded in the water law. But in recent years, it has become a source of disputes as Democrat-led states have used the provision to block the construction of coal export terminals, oil and gas pipelines, and other examples of fossil fuel infrastructure.
In May, New York and New Jersey denied certification under Section 401 for a $1 billion pipeline to carry natural gas from Pennsylvania through New Jersey to New York City. The denial essentially killed the project in the near term. Williams Company said in a statement it wouldn’t refile with either state “at this time.”
The EPA’s new rules fulfill a directive from President Trump. In an April 2019 executive order, Trump directed the EPA to update regulations under Section 401, which he said were “causing confusion” and “hindering the development of energy infrastructure.” Trump set a deadline of May 10 for the EPA to issue the new rules.
Some states have abused their authority under Section 401, vetoing projects for reasons having “nothing to do with water quality” or delaying decisions for years “trapping projects in a bureaucratic Groundhog Day,” Wheeler told reporters Monday.
“We support a state’s right to make decisions based on its best interests, but our system of republican democracy does not allow for one state to dictate standards or decisions for an entire nation,” Wheeler added.
The EPA’s final regulation largely tracks with what the agency proposed in August — though it softens part of the proposal that would have allowed federal agencies to second-guess whether states’ certification decisions were within the scope of the law.
Under the final rule, the EPA will still be able to review states’ certifications for compliance with the procedural requirements of Section 401, but the “substantive” review of states’ claims will be left to the courts, an EPA official told reporters.
Blue-state attorneys general are likely to sue over the rules. Attorneys general from 22 states and the District of Columbia slammed the proposed regulations in October comments to the agency, saying the EPA’s updated approach “would unlawfully usurp” states’ authority.
“It is disappointing to say the least to see the federal government essentially try to interpret through a rule-making a clear federal grant of authority to a state in a way that tries to nullify the effectiveness of that state authority,” said David Hayes, executive director of the State Energy and Environmental Impact Center, which works with attorneys general on climate and clean energy issues.
Energy industry groups, including the National Mining Association and the American Petroleum Institute, say the EPA’s updates offer clarity to companies trying to build energy infrastructure.
For example, the regulations limit states’ consideration of certification petitions to one year, a time frame industry said has always existed in the statute but argued states have abused.
The Section 401 certification process is “an important part of the Clean Water Act. We just don’t want it to be misused,” said Katie Sweeney, executive vice president and general counsel for the National Mining Association.
Sweeney said one of the most important updates in the EPA rules is the scope of what states can consider for certification decisions. “It’s limited to issues that impact water quality,” she said. “You would think that’s self-evident, but it has not always been used that way.”
Industry groups have suggested blue states are relying more heavily on considerations such as climate change to block fossil fuel infrastructure for political reasons.
That includes a fiercely contested decision by Washington state in 2018 denying a permit for an export terminal to ship western states’ coal to China and other Asian countries. Wyoming and Montana have since asked the Supreme Court to weigh in on that decision.
The Section 401 process cost Lighthouse Resources, which owns and operates mines in Wyoming and Montana, tens of millions of dollars, the company said in comments to the EPA. The mining company said its experience with Washington’s Department of Ecology showed a “rogue agency using the 401 process as a weapon against disfavored projects.”
State attorneys general, though, said the Trump administration is attempting to tie states’ hands by unlawfully limiting what they are able to consider when denying certifications.
The Clean Water Act gives states broad leeway under Section 401 to make decisions to protect states’ water quality, but the EPA is trying to “put the squeeze” on that authority, Hayes said.
Hayes said the decisions states have made in recent years to block fossil fuel projects have all been rooted in water quality concerns despite criticism from opponents that states relied on other considerations.
Washington state, for example, cited concerns about the water quality of the Columbia River, the destruction of wetlands, harm to aquatic habitats, and tribal access to fishing sites in its denial of the Millennium Bulk Terminal, Hayes said.
New York’s Department of Environmental Conservation, in its May 15 notice denying certification for the Williams pipeline, raised concerns the construction would kick up mercury, copper, and other sediments that violate the state’s water quality standards.
However, New York also flagged climate-related considerations, saying the project would increase greenhouse gas emissions. “The continued long-term use of fossil fuels is inconsistent with the State’s laws and objectives and with the actions necessary to prevent the most severe impacts from climate change,” read the notice from Daniel Whitehead, who directs the state’s environmental permits division.
Wheeler said states “won’t be able to use Section 401 going forward citing climate change as the reason” for rejecting a project. But he didn’t say how the EPA would handle decisions like New York’s, which cite both water quality and climate change.
