EPA’s proposal to scale back state authority under Clean Water Act (CWA) section 401 to review whether federally permitted projects will harm state water quality standards is likely to prompt “lots of litigation” from states and environmentalists, if finalized, that could last for years, according to a former EPA attorney and other lawyers.
“It’s going to be a mess for a long time,” Mark Ryan, who spent 24 years as one of EPA's leading CWA experts and chief trial attorneys, said of expected litigation challenging any final CWA 401 rule.
Speaking during a Sept. 20 webinar sponsored by the Association of State Wetlands Managers, Ryan, who is now in private practice, said the proposed rule “is treading new ground,” and states and environmental groups that are expected to sue if the rule is finalized “may have a good chance of success on the merits and may succeed in getting the new rule stayed because it’s a novel, new interpretation of the law and is arguably inconsistent with Supreme Court precedent,” he said in his presentation.
Others on the webinar, like James McElfish, senior attorney at the Environmental Law Institute (ELI), added that if the administration’s plan is eventually upheld, it could open the door to permit applicants challenging conditions states seek to attach to federal permits.
EPA’s proposed rule, published in the Federal Register Aug. 22, would significantly narrow the actions states can consider when determining whether a federally permitted project will violate water quality standards, shorten the timeframe for state action on certification requests, and allow federal agencies to veto state denials of certifications, among other things.
It has already drawn criticism from several individual western states as well as the Western States Water Council, a bipartisan entity created by the Western Governors Association (WGA). And Ryan noted the WGA “is hardly a left-wing group.”
If President Donald Trump is re-elected, Ryan expects the litigation will continue well into his second term, and if the courts rule against the administration, expect continued rulemaking efforts, he said.
If the administration changes hands in January 2021, the new administration is likely to stop defending the rule in court and seek to “begin to unwind this rule” if it has been stayed, he said. If it has gone final and survived the legal challenges, it is possible that EPA will try to repeal and replace it, but that “will be a very heavy lift,” Ryan said, because any repeal will be challenged by the pipeline industry.
Additionally, if the Democrats take the White House and take control of Congress, lawmakers might seek to use the Congressional Review Act (CRA) to overturn the rule, Ryan said. But he said the Trump administration will likely work hard to avoid CRA action by submitting the final rule to Congress more than 60 legislative days before the end of the Trump administration, he said.
However, he noted the timelines for several big environmental rules have slipped and could here too even with an executive order deadline for final action by May 2020.
“This is not going to be resolved anytime soon,” Ryan said.
The webinar also included comments from Royal Gardner, director of the Institute for Biodiversity Law and Policy at Stetson University College of Law, and McElfish, who analyzed the Trump administration’s legal justification for the proposed rule and outlined the vast changes the rule would make.
Gardner called the proposed rule a “radical departure from past and present practice,” a conclusion echoed by McElfish, who said the proposed rule “repudiates nearly 50 years of state and federal practice in favor of what the agency calls a more ‘natural’ and ‘reasonable’ reading of the law” as well as repudiating appellate court decisions that rely on Supreme Court rulings on section 401.
To date, EPA’s and states’ interpretation of section 401 has been shaped by the Supreme Court’s 1994 ruling in PUD No. 1 of Jefferson County and City of Tacoma v. Washington Department of Ecology, as well as a later high court ruling, the 2006 decision in S.D. Warren Co. v. Maine Board of Environmental Protection.
In the 7-2 ruling in PUD No. 1, the majority conducted a textual analysis of section 401(d) and concluded that it is most reasonably read as authorizing additional conditions and limitations on the permitted activity as a whole, not merely “discharges” as the proposed rule plans, Gardner said.
The majority also observed that the court’s view of the statute is consistent with EPA’s current section 401 implementing regulations.
Gardner noted that Justice John Paul Stevens had issued a one-paragraph concurrence to reinforce the majority holding. “For judges who find it unnecessary to go behind the statutory text to discern the intent of Congress, this is (or should be) an easy case. Not a single sentence, phrase, or word in the Clean Water Act purports to place any constraint on a State's power to regulate the quality of its own waters more stringently than federal law might require. In fact, the Act explicitly recognizes States' ability to impose stricter standards,” Stevens wrote.
But despite the majority holding, Gardner said it appears the Trump administration is now seeking to revive the dissent in the case, issued by Justice Clarence Thomas, who wrote that the “text and structure of section 401 indicate that a State may impose under section 401(d) only those conditions that are related to discharges.”
Gardner said he reads PUD No. 1 as a ruling where the court conducted an analysis under step 1 of the Chevron doctrine, which generally requires courts to give agencies deference when they reasonably interpret ambiguous statutes, an approach supported by Stevens’ concurrence, and concluded it is not ambiguous.
But Gardner said the Trump administration is now “resurrecting Thomas’ dissent” to conduct a new analysis of the statute and raise questions about the ambiguity of the section 401.
Explaining the administration’s proposed approach, McElfish said, “EPA has concluded that the PUD No. 1 dissent’s ‘interpretation’ of 401 is reasonable, and should be implemented, while the majority’s reasoning is based on ‘what EPA now recognizes was infirm footing’ and should be discarded,” referencing phrases from the proposed rule’s preamble.
In order to “undo” PUD No. 1, EPA makes a “lengthy and creative, perhaps aggressive explanation” of why it is revoking its previous analysis, relying on Chevron combined with the 2005 Supreme Court ruling National Cable & Telecommunications Association v. Brand X Internet Services, McElfish said.
Brand X said Chevron deference trumps federal appellate decisions unless the appeals court held that the statute was unambiguous under Chevron.
Three Major Changes
EPA’s new interpretation redefines the scope of section 401 to make at least three major changes, McElfish said. These include redefining the scope of section 401 to limit states’ ability to deny or condition water quality certification; requiring states to justify their denials or conditions and to identify less stringent alternatives; and giving federal licensing and permitting agencies authority to reject state denials or conditions.
These will lead to three outcomes, McElfish said, starting with the transfer of decision-making authority from state and tribal section 401 agencies to federal permitting and licensing agencies, which may be ill equipped to address these issues or may respond to pressure from applicants to exclude state conditions or find constructive waiver.
A second outcome is the possible loss of many ordinary state certification conditions because it is uncertain whether they will fall inside the agency’s narrower scope for section 401, he said.
These include groundwater protection provisions meant to protect surface waters; construction season restrictions meant to prevent landslides, soil erosion, impairment of riparian habitat; requirements for karst surveys and dye studies; maintenance of buffers and revegetation; protection of intermittent streams; and compensatory mitigation under state law.
The third outcome is the creation of new grounds for litigation by permit and license applicants arguing that the federal agencies should have disallowed various state conditions as outside the scope of the EPA’s new regulation, McElfish said.
Additionally, the rule has the potential to limit states’ ability to enforce their 401 certification provisions, he said. Many states have taken action under both their own authority and section 401 where failures have occurred, but EPA’s preamble to the proposed rule maintains this is unlawful and that the enforcement rule is reserved to the federal agency.
EPA invites comment on this interpretation as well as whether to include the prohibition in the regulatory text. -- Lara Beaven (firstname.lastname@example.org)