On June 1, the Environmental Protection Agency (EPA) released a final rule clarifying substantive authorities and procedural requirements for water quality certifications under section 401 of the Clean Water Act (CWA). EPA’s August 2019 notice of proposed rulemaking (NOPR) (summarized in our previous post) articulated the Agency’s first-ever statutory interpretation of section 401 since its enactment nearly 50 years ago, and proposed sweeping substantive and procedural changes to its section 401 regulations in conformance with its interpretation. EPA’s final rule largely adopts the regulations in its NOPR, but makes important changes in adopting new regulations that preserve authority of states and Native American tribes exercising “Treatment as a State” (TAS) authorization to ensure that discharges from federally licensed and permitted activities meet state and tribal water quality requirements.

According to EPA Administrator Andrew Wheeler, the final rule will “curb abuses of the Clean Water Act that have held our nation’s energy infrastructure projects hostage, and put in place clear guidelines that finally give these projects a path forward.” Although legal challenges are certain to follow, the final rule, if sustained by the courts, is likely to increase efficiency, consistency, and certainty in federal licensing and permitting activities and focus state and tribal review and decision making on whether proposed projects’ discharges from point sources comply with water quality requirements.

Significant components of the final rule are summarized below.


Section 401 of the CWA requires that any applicant for a federal license or permit that may result in a discharge to navigable waters obtain a water quality certification from the appropriate state or tribal authority in which the discharge will originate. Some of the most common examples of licenses or permits that may be subject to section 401 certification are CWA section 404 permits for the discharge of dredged or fill material, Rivers and Harbor Act sections 9 and 10 permits issued by the United States Army Corps of Engineers (Corps), hydropower licenses and natural gas pipeline certificates issued by the Federal Energy Regulatory Commission (FERC), and CWA section 402 National Pollutant Discharge Elimination System (NPDES) permits where EPA administers the permitting program. Although the CWA is a federal statute, section 401 delegates to the states and Native American tribes with TAS status the authority to issue water quality certifications, so that discharges associated with the federally licensed or permitted activity satisfy state or tribal water quality requirements.

The water quality certification process under section 401 has long been a cause of delay and uncertainty for proposed infrastructure projects. To address these delays, on April 10, 2019, the President issued an Executive Order to promote energy infrastructure and economic growth. In keeping with that Executive Order, on June 7, 2019, EPA issued an updated section 401 guidance document that provides an overview of the concepts that later were introduced in its NOPR. On August 9, 2019, EPA released the NOPR.

EPA’s NOPR provided an important opportunity for the regulated community to help shape final regulations that have not been amended for nearly 50 years, and to describe the difficulties associated with the federal permitting and licensing of infrastructure projects. For example, the Edison Electric Institute (EEI) commented that adoption of the NOPR “would provide critical regulatory certainty to the electric sector as EEI’s member companies take steps to modernize and secure the energy grid and provide increasingly clean, affordable, and reliable electricity to American homes and businesses.” The National Hydropower Association (NHA) commented that hydropower projects face a unique challenge that would benefit from further EPA clarity since water flowing into a hydropower project may already be polluted, which may create uncertainty regarding whether water quality problems downstream are properly attributable to the discharge from the project. Further, NHA requested that EPA resolve the scope of the currently undefined meaning of Section 401(d) providing that certifications may include “other appropriate requirement[s] of State law.” The Interstate Natural Gas Association of America commented that the “rule is necessary to restore efficient and consistent implementation of Section 401 reviews,” noting that “while the statute recognizes the distinctive roles of the federal and state governments in the environmental review process, the balance between those roles has recently been disrupted and some states have viewed Section 401 as a means of determining which interstate pipeline projects are in the public interest and which are not.”

Following a two-month comment period during which it received thousands of stakeholder comments on the NOPR, EPA issued its final rule on June 1, 2020. While the final rule comprehensively addresses substantive and procedural requirements for implementing CWA section 401, for federal licensing and permitting applicants, the most significant features of the rule address:

  • The substantive scope of state and tribal authority to decide on whether to grant water quality certification, and the scope of any conditions included in any certification;
  • The time period allowable under section 401 for a state or tribe to decide on a request for water quality certification;
  • Procedural requirements for states and tribes to properly grant, condition, or deny a request for water quality certification;
  • The role of the federal licensing or permitting agency in reviewing a conditioned or denied water quality certification;
  • The ability of states and tribes to modify the certification or conditions once issued; and
  • Enforcement of certification conditions during the term of the federal license or permit.

Scope of Section 401 Review

In the preamble to its final rule, EPA stated that, in its view, the “scope of certification” established in section 121.3 of its new regulations “is the foundation of the final rule.” Section 121.3 of EPA’s final rule provides: “The scope of a Clean Water Act section 401 certification is limited to assuring that a discharge from a Federally licensed or permitted activity will comply with water quality requirements.” Under this new requirement, the breadth of state and tribal authority to certify and condition federal licensing and permitting activities is largely driven by two factors: (1) the discharge from the licensed or permitted activity; and (2) “water quality requirements,” a defined term under the final rule.

Discharge from the Federally Licensed or Permitted Activity

The final rule defines the term “discharge” as “a discharge from a point source into the water of the United States.” The final rule adopts a conclusion that water quality certification under section 401 “must address water quality concerns from the discharge itself, not the proposed activity as a whole.” In this regard, EPA in the final rule maintains an interpretation of section 401 consistent with Justice Thomas’s dissenting opinion in the Supreme Court of the United States’ landmark 1994 ruling in Public Utility District No. 1 of Jefferson County v. Washington Department of Ecology. Explaining that the federal regulations that guided the Court’s PUD No. 1 ruling were enacted prior to the 1972 CWA, and that the Court in PUD No. 1 lacked the benefit of EPA’s interpretation of the statute, EPA explained that it interprets section 401 water quality certification as pertaining only to point-source discharges associated with a federally licensed or permitted activity—and not the entire project proposal.

Water Quality Requirements

The final rule defines “water quality requirements” as “applicable provisions of §§ 301, 302, 303, 306, and 307 of the [CWA], and state or tribal regulatory requirements for point source discharges into waters of the United States.” Thus, state and tribal certification can include effluent limitations and standards of performance for new and existing discharge sources (CWA sections 301, 302, and 306); water quality standards under CWA section 303 (including designated uses, numeric criteria and narrative standards); toxic pretreatment effluent standards under CWA section 307; and other state or tribal regulatory requirements that apply to point source discharges.

In the final rule’s preamble, EPA acknowledged that certification conditions that states and tribes have imposed in the past “may be beyond the scope of certification as articulated in this final rule”—including, for example, “building and maintaining fish passages, compensatory mitigation, temporal restrictions on activities to mitigate hazards or protect sensitive species, pre-construction monitoring and assessment of resources, habitat restoration, tree planting along waterways, spill management plans, stormwater management plans, and facilitating public access.” In addition, EPA expressly stated in the preamble that the final rule does not “address minimum flow issues.” Rather than drawing a bright line on the types of conditions that exceed the scope of certification, EPA recognized that “there may be unique project-specific facts or circumstances, including the nature of the discharge and applicable water quality standards and related designated uses, that must inform whether a particular condition is within the scope of certification, as defined in this final rule.”

By defining “water quality requirements” in this manner, EPA in the final rule interpreted state and tribal authority under CWA as extending only to water quality concerns. EPA explained:

The imposition of conditions unrelated to water quality is not consistent with the scope of the CWA generally or section 401. There is nothing in the text of the statute or its legislative history that signals that Congress intended to impose, using section 401, federal requirements on licensed or permitted activities beyond those addressing water quality-related impacts. Indeed, Congress knows how to craft statutes to require consideration of multi-media effects (see, e.g., NEPA), and has enacted specific statutes addressing impacts to air (Clean Air Act), wildlife (Endangered Species Act), and cultural resources (National Historic Preservation Act), by way of example.

Based on this interpretation of CWA section 401, EPA determined that state and tribal certifications and conditions cannot address other environmental impacts, such as “air emissions, transportation effects, [and] climate change.”

EPA’s NOPR would have required federal agencies to review a certification action to determine whether it was within the “scope of certification,” and would have permitted the federal permitting agencies to reject certification conditions that, in their view, were beyond the scope of authority under CWA section 401. The final rule, however, clarifies that federal agencies are only to review certification actions for compliance with the procedural requirements of section 401, which are further described below.

Time Period for Section 401 Review

Relying on the plain language of section 401 and the D.C. Circuit’s 2019 decision in Hoopa Valley Tribe v. FERC, the final rule establishes that states and tribes have a “reasonable period of time,” but only up to one year to act on a request for water quality certification. In fact, the final rule establishes several procedural safeguards to ensure that the federal permitting agency, the state or tribal certifying agency, and the applicant all are aware of the beginning and ending points of the maximum one-year certification period.

For example, the final rule includes specific contents requirements for a certification request. It requires the applicant to submit the certification request not only to the state or tribal certifying agency, but also to the federal permitting agency. Moreover, the final rule requires the federal agency to establish the reasonable time period for certification—which an agency may do on a categorical or individual basis—and to notify the certifying state or tribe of the applicable time to act on the certification request, specifying “the date upon which waiver will occur if the certifying authority fails or refuses to act on the certification request.

Once the reasonable time period begins, the federal agency may extend the period at the request of the project proponent or the certifying agency, “but in no case shall the reasonable period of time exceed one year from receipt.” In the preamble to the final rule, EPA explains that one year is the “absolute outer bound” for states and tribes to act on requests for water quality certification under section 401.

This one-year, statutory deadline cannot be tolled or extended. EPA’s new regulations expressly provide that the certifying state or tribe “is not authorized to request the project proponent to withdraw a certification request and is not authorized to take any action to extend the reasonable period,” except up to a total of a one-year certification period.

EPA does recognize that in some circumstances, the project proponent may voluntarily seek to withdraw and resubmit its application; however, EPA expects that these circumstances would be “rare” and only take place if project plans “have been modified such that a new certification request is required, or if the project is no longer planned.”

Procedural Requirements for Certifications and Denials of Certification

EPA’s final rule gives certifying entities four choices upon receiving a request for certification: grant, grant with conditions, deny, or waive the certification. Except with regard to an express waiver, EPA’s new regulations include precise content requirements for each of these choices.

For example, a grant of certification must include a statement that the discharge will comply with water quality requirements. If a certifying authority grants a certification with conditions, the final rule requires that certification must include a statement explaining why that condition is necessary to ensure that the discharge will comply with water quality requirements, together with a citation to federal, state, or tribal law authorizing the condition. If a certifying authority determines that denial of certification is appropriate, the denial must include the specific water quality requirements with which the discharge will not comply, a statement explaining why the discharge will not comply with the requirements, or, if the denial is due to insufficient information, the specific information that would be needed to ensure that the discharge would comply with water quality requirements.

If the certifying agency fails or refuses to act, the federal licensing or permitting agency is required by the final rule to provide written notice to the EPA Administrator, certifying authority, and project proponent, that a waiver has occurred.

Federal Agency Determination of Waiver

The NOPR reaffirmed precedent established by the D.C. Circuit in City of Tacoma v. FERC and other cases that the federal permitting agency determines whether a state waiver has occurred. In the NOPR, EPA placed the burden on the state to comply with section 401, and specifically noted that states run the “risk [of] having [a] certification denial be set aside by the permitting federal agency” if the state exceeds the scope of its CWA authority. In a reversal of longstanding judicial precedent, including the Second Circuit’s decision in American Rivers v. FERC, EPA’s NOPR would have allowed the federal licensing or permitting agency to review and reject conditions in a state water quality certification that are beyond the scope of addressing discharges to meet state water quality standards.

The final rule did not adopt this aspect of the NOPR. Instead, and consistent with City of Tacoma, Hoopa Valley Tribe, and other precedent, EPA in the final review requires the federal permitting agency only to review procedural compliance of the certification and conditions. So long as the certification and each condition meet procedural requirements of CWA section 401 and EPA’s implementing regulations, the federal permitting agency must include the certification condition in any license or permit issued.

Modifications by Certifying Authorities

In light of the statute’s one-year time limit for acting on a section 401 certification request, EPA’s NOPR solicited comment on whether and to what extent states or tribes should be able to modify a previously issued certification under a variety of circumstances—such as, before or after the “reasonable” time limit expires; before or after the federal license or permit is issued; or to correct an aspect of a certification or its conditions remanded or found unlawful by a federal or state court or administrative body.

In the preamble to the final rule, EPA explained that its interpretation of section 401 does not permit a certifying authority to unilaterally modify a previously issued certification, neither through reopening the certification nor through other mechanisms. In declining to permit modifications, EPA noted that water quality certifications are unique in that their conditions are incorporated into a federal license or permit for implementation and enforcement, and that allowing modifications to certifications would lead to regulatory uncertainty and confusion.

Enforcement of Certification Conditions

The NOPR asserted that the federal permitting agency is solely responsible for enforcing the state or tribal water quality conditions that ultimately become part of the federal approval. In its NOPR, EPA noted that section 401 does not provide an independent regulatory enforcement role for state certifying authorities for conditions included in federal licenses or permits.

The final rule confirms that the federal licensing or permitting agency has the exclusive authority to enforce water quality certification conditions that have been incorporated into a federal license or permit. In the preamble to the final rule, the EPA addresses a comment received on the NOPR regarding section 401’s enforcement provision, explaining that “if certification conditions were enforceable independent of the federal license or permit, there would have been no need for Congress to require conditions to become part of the federal license or permit under section 401(d).”

Next Steps

The final rule will become effective 60 days after its publication in the Federal Register. In light of EPA’s new interpretation of CWA section 401 and resulting procedural and substantive regulations, litigation challenging the final rule is all but certain. If EPA’s rule ultimately is upheld by the courts, the rule may require federal permitting agencies, such as FERC and the Corps, to review and possibly amend their current regulatory programs to accommodate the final rule—for example, to determine the length of the “reasonable” time period for state or tribal certification, and whether that period should be established programmatically or on an individual, case-by-case basis.

In addition, many states and tribes with TAS authority will need to revisit their policies and procedures for processing requests for water quality certification. This may be a particular challenge for states—such as California, New York, and Washington—that have independent environmental review requirements for state action.

For more information on EPA’s final rule and CWA section 401 requirements, please contact Angela Levin, Andrea Wortzel, Byron Kirkpatrick, Brooks Smith, Catherine Little, Chuck Sensiba, Fitzgerald Veira, or Hallie Meushaw.

EPA’s final rule is available here.