2020 Final Rule narrows Section 401 application to pipeline projects

Jan. 4, 2021

The administration of President Donald Trump has criticized the manner in which some states have exercised their Clean Water Act (CWA) Section 401 authority and has taken steps to update the US Environmental Protection Agency’s (EPA) implementing regulations and guidance. On Apr. 10, 2019, President Trump issued Executive Order (EO) 13868, which, among other things, directed EPA to review Section 401 and EPA’s related regulations and guidance; issue new guidance; and propose and finalize new regulations within specific timeframes.

EPA responded to the EO by issuing updated Section 401 guidance June 7, 2019 and publishing a final rule (the 2020 Final Rule) to update regulations on water quality certification July 13, 2020. The 2020 Final Rule became effective Sept. 11, 2020, replacing EPA’s existing implementing regulations for Section 401, which were promulgated in 1971. EPA also rescinded its 2019 guidance coincident with the 2020 Final Rule’s effective date.

“EPA is returning the Clean Water Act to its original purpose, which is to review potential impacts that discharges from federally permitted projects may have on water resources, not to indefinitely delay or block critically important infrastructure,” EPA Administrator Andrew Wheeler said in an announcement of the final rule (OGJ Online, June 2, 2020).

The 2020 Final Rule includes numerous changes to existing regulation and practice that narrow the authority of certifying authorities when acting on Section 401 certification requests. Several changes address two broad policy issues relevant to the implementation of Section 401—certification timeframes and the scope of certifications. The 2020 Final Rule also includes changes regarding federal review of certifications and enforcement.

Some groups, including those representing certain energy interests, generally are in support of the rule. Other groups, including some states and state associations, oppose the changes. Five separate groups of parties have filed lawsuits in three federal district courts challenging the 2020 Final Rule. In general, the parties argue that the rule unlawfully limits the scope of certifying authorities in reviewing proposed projects, and unlawfully expands the role of federal licensing and permitting agencies in the Section 401 certification process.

The 116th Congress has engaged with CWA issues. The Senate Environment and Public Works Committee held an oversight hearing in November 2019. Legislation has been introduced in the House and Senate (H.R. 2205/S. 1087) to amend Section 401 regarding the scope of water quality impacts that certifying authorities may consider in their certification review, as well as the scope of conditions they may impose.


Congress established the CWA to “restore and maintain the chemical, physical, and biological integrity of the Nation’s Waters.” Under CWA Section 401, any applicant for a federal license or permit to conduct any activity that may result in any discharge into navigable waters (i.e., waters of the United States (WOTUS)) shall provide the federal licensing or permitting agency with a Section 401 certification.

The certification, issued by the certifying authority—usually the state in which the discharge originates, but sometimes a tribe or the EPA—attests that the discharge will comply with applicable provisions of certain enumerated sections of the CWA. These include effluent (i.e., discharge) limitations and standards of performance for new and existing discharge sources (Sections 301, 302, and 306), water quality standards and implementation plans (Section 303), and toxic pretreatment effluent standards (Section 307).

The certifying authority may grant, grant with conditions, deny, or waive certification of proposed federal licenses or permits. Activities that require such federal licenses or permits include hydropower projects licensed by the Federal Energy Regulatory Commission (FERC) and certain activities involving the discharge of dredged or fill material into WOTUS permitted by the US Army Corps of Engineers (ACE) (e.g., pipeline projects, water resource projects, mining projects, or other development).

The certification authority under Section 401 has strong ramifications. If a certifying authority denies certification, the federal license or permit is denied. If a certifying authority grants a certification with conditions, those conditions must be included in the final license or permit.

Some license and permit applicants, in recent years, have expressed frustration with how some states have exercised their Section 401 authority. Key concerns include timeframes for issuing certifications, the scope of the states’ reviews, and the type of conditions that states can impose when granting a certification.

Some have accused states of misusing Section 401 authority to block certain projects and have advocated for changes to the CWA or implementing regulations and guidance to limit states’ authority under Section 401. Others assert that state implementation is too lenient and may fail to block certain projects that have the potential to degrade water quality. Many states assert that Section 401 certification allows them to manage and protect the quality of waters within their states, and any efforts to limit state authority under Section 401 are contrary to the principles of cooperative federalism upon which the CWA is based.

Activities requiring certification

Any activity that requires a federal license or permit and may result in a discharge into WOTUS requires a Section 401 certification.1 Examples include hydropower projects requiring FERC licenses, industrial and municipal point source discharges requiring National Pollutant Discharge Elimination System (NPDES) permits that would be issued by EPA (CWA Section 402), and certain activities involving the discharge of dredged or fill material into WOTUS requiring ACE permits (CWA Section 404 and Rivers and Harbors Act Sections 9 and 10).2

Examples of activities that may require a CWA Section 404 permit include pipeline projects, infrastructure development, water resource projects, mining projects, or residential or commercial development. Note that such permits are required only for segments or portions of the project that involve a discharge of dredged or fill material into federally regulated waters.

Scope of review

Participants have debated the scope of what certifying authorities should consider when reviewing a request for certification, and in August 2018, the Senate Committee on Environment and Public Works held a hearing that included debate over the scope of considerations during certification.3 Some groups have argued that Congress intended for the review to focus on water quality impacts and assert that, in recent years, some states have overstepped their authority by also considering non-water-quality environmental impacts, such as greenhouse gas emissions. Other groups argue that Congress intended for certifying authorities to have a significant role in ensuring that the water quality in their states is protected and assert that the denials that states have issued have been well-supported and necessary to protect state water quality.

Some states have cited projected environmental impacts other than water quality in denying certain Section 401 certification requests. In 2017, the Washington Department of Ecology denied a permit application for a planned coal export terminal along the Columbia River.4 In addition to finding that the applicant did not provide “reasonable assurance” that the project would meet applicable water quality standards, the state concluded that the construction and operation of the terminal would result in significant and unavoidable adverse impacts to social and community resources, cultural resources, tribal resources, rail transportation, rail safety, vehicle transportation, vessel transportation, noise and vibration, and air quality.

Unrelated to the Section 401 certification application, a separate state agency also denied the applicant’s request for approval of a sublease of state-owned aquatic lands on which the applicant proposed to construct a portion of the project. The permit applicant has challenged the denials in both federal and state court, alleging that Washington improperly denied the permit because of an anti-coal bias and concerns about greenhouse gas emissions, in violation of the Dormant Commerce Clause and the foreign affairs doctrine. The federal litigation was dismissed in part, and all remaining claims are stayed to allow the state court litigation to proceed.5 Montana and Wyoming also are seeking review of Washington’s denial of the water quality certification in the US Supreme Court.6

The New York Department of Environmental Conservation (NYSDEC) in May 2020 denied a series of Section 401 water quality certification applications for the construction of a 400-MMcfd natural gas pipeline in Raritan Bay, the Northeast Supply Enhancement (NESE) project. The project would have supplied natural gas to Queens, Brooklyn, and parts of Long Island, NY.

Most recently, the department denied NESE an application based on proponent Transcontinental Gas Pipe Line Co. (Transco) LLC’s failure to demonstrate that the pipeline would comply with applicable water quality standards.7 The denial letter also included a qualitative assessment of the greenhouse gas emissions and climate impacts associated with the project in light of the state’s newly enacted Climate Leadership and Community Protection Act (Climate Act), which requires a 40% reduction in statewide greenhouse gas emissions. The department found that the project would result in greenhouse gas emissions from the full lifecycle of natural gas that would be transported through the pipeline; could delay the state’s transition away from natural gas and other fossil fuels; and would be inconsistent with the statewide greenhouse gas emission limits and other requirements established in the Climate Act.

While the department noted that the denial did not rest solely on the determination that the project was “inconsistent with the energy and climate policies, laws, and goals” of the state, it noted that “the State should not sacrifice its water quality, sensitive habitats, and important biological resources for a project that would have adverse climate impacts and one that runs counter to the State’s policy to significantly reduce greenhouse gas emissions by transitioning away from the use of natural gas to produce electricity.” Unlike the proponent of the Washington project, Transco has not filed a lawsuit challenging NESE certification denials.

NESE was a 26-in. OD, 37-mile pipeline project that would transport gas from Pennsylvania through New Jersey, traveling underwater in Raritan Bay and Lower New York Bay to about 3 miles offshore the Rockaway Peninsula where it would have connected to the existing Rockaway Delivery lateral.

2020 Final Rule

EPA stated in the preamble to the 2020 Final Rule that it is intended to “modernize” the Section 401 implementing regulations and “align them with the current text and structure of the CWA.”8 EPA also stated that the 2020 Final Rule provides additional regulatory procedures that “will help promote consistent implementation of CWA Section 401 and streamline federal licensing and permitting processes, consistent with the objectives of the Executive Order.”

The 2020 Final Rule includes numerous changes to existing regulation and practice that narrow the authority of states when acting on Section 401 certification requests. Several changes address two broad policy issues relevant to the implementation of Section 401: certification timeframes and the scope of certification (including both the scope of review and the scope of conditions). In addition, the 2020 Final Rule includes a new process for federal review of certifications and newly authorizes the federal licensing and permitting agencies as the enforcement authorities.

Section 401 requires that certifying authorities act on a certification request “within a reasonable period of time (which shall not exceed one year) after receipt of such request.” If a certifying authority does not act on a certification request within that timeframe, the statute provides that the certification requirements are waived, and the certification is not required for the federal licensing or permitting agency to issue the license or permit.1 The 2020 Final Rule addresses several policy issues related to certification timeframes that have prompted interest in recent years. These include what constitutes a “reasonable period of time,” when the reasonable period of time begins (i.e., when the certification “clock” starts), and under what circumstances, if any, the certification clock may restart.

EPA in its final rule cited a 2018 US Court of Appeals for the Second Circuit ruling regarding Millennium Pipeline Co. LLC’s Valley Lateral gas pipeline project (a 7.8-mile, 16-in. OD line connecting Millennium’s transmission line to a new 650-Mw powerplant), saying in part that if a state were not held to a time limit it could get away with “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.” Valley Lateral entered service later in 2018, more than 3 years after submission of its initial FERC application and more than 1 year after its planned April 2017 in-service date.

The 2020 Final Rule clarifies that the statutory timeline for certification review starts when the certifying authority receives a certification request. The 2020 Final Rule also clarifies that once a certifying authority receives a certification request, the period of time to act on a certification request does not pause or stop for any reason.9 Specifically, the certifying authority may not request that license or permit applicants withdraw and resubmit their certification requests as a means to restart the certification clock.10

Congress has provided direction regarding the scope of what certifying authorities are to consider in making a Section 401 certification decision. Specifically, Section 401(a)(1) authorizes certifying authorities to certify that a discharge to navigable waters that may result from a proposed activity will comply with specific enumerated sections of the CWA, including Sections 301, 302, 303, 306, and 307.73. Section 401(d) provides direction regarding the scope of what conditions certifying authorities may impose in granting certifications, and directs that such certifications:

“shall set forth any effluent limitations and other limitations, and monitoring requirements necessary 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, and shall become a condition on any Federal license or permit.”11

Point-source discharges

The 2020 Final Rule limits the application of Section 401 to point-source discharges into WOTUS.12 This change means that any consideration of water quality impacts from the project as a whole (other than the point-source discharge itself) is excluded from the scope of the certifying authority’s review and consideration of conditions. The certifying authority is no longer able to address water quality-related impacts from the project that are tangential to the discharge. Interested parties assert that such water quality impacts could include increased water withdrawals, groundwater pollution, increased erosion and sedimentation, increases in impervious surfaces (resulting in reduced stormwater infiltration), disconnected ecosystems, and harm to endangered species.13

Changes in the 2020 Final Rule mean that the scope of the certifying authority’s review and consideration of conditions also cannot include impacts to nonfederal waters. Some have expressed particular concern about this change in light of the final rule EPA and ACE published on Apr. 21, 2020, which narrowed the scope of waters that are defined as “waters of the United States” under the CWA.14

For example, the Navigable Waters Protection Rule narrows the definitions of certain categories of WOTUS, including the definition of tributaries and adjacent wetlands. Ephemeral tributaries (i.e., flow in response to precipitation events) were sometimes considered WOTUS under prior regulations but are excluded from the Navigable Waters Protection Rule’s definition of tributaries. Similarly, although adjacent wetlands were considered WOTUS under prior regulations, the Navigable Waters Protection Rule limits the definition to include only those wetlands that abut or otherwise have a direct surface connection to other jurisdictional waters.

The changes in the 2020 Final Rule narrow the scope of review and conditions to focus on water quality requirements, specifically excluding consideration of other non-water-quality impacts. In the preamble to the 2020 Final Rule, EPA stated that the agency is “aware of circumstances in which some States have denied certifications on grounds that are unrelated to water quality requirements and that are beyond the scope of CWA Section 401.”15 EPA then referenced, as an example, the certification denial letter from the state of New York to Millennium Pipeline, which considered among other things FERC’s failure to quantify the effects of downstream greenhouse gas emissions in its environmental review of the project.15

The preamble also states that the agency is aware that some certifications have included conditions that may be unrelated to water quality, including requirements for recreational trails, public access for recreation, or one-time and recurring payments to state agencies for improvements unrelated to the proposed project.16 EPA emphasized that the 2020 Final Rule clarifies that the scope of the certification review and the scope of conditions that are appropriate for inclusion in a certification are limited to ensuring that the discharge from a federally licensed or permitted activity will comply with water quality requirements, as newly defined in the rule.


  1. CWA §401(a)(1); 33 U.S.C. §1341(a)(1).
  2. 33 U.S.C. §1344; 33 U.S.C. §§401, 403.
  3. US Congress, Senate Committee on Environment and Public Works, “Hearing to Examine Implementation of Clean Water Act Section 401 and S.3303, the Water Quality Certification Improvement Act of 2018,” 115th Cong., 2nd sess., Aug. 16, 2018, S.Hrg. 115-344.
  4. Letter from Maia D. Bellon, Director, Washington Department of Ecology, to Kristen Gaines, Millennium Bulk-Longview LLC, Sept. 26, 2017. https://ecology.wa.gov/DOE/files/83/8349469b-a94f-492b-accad8277e1ad237.pdf
  5. Lighthouse Res. Inc. v. Inslee, 429 F. Supp. 3d 736 (W.D. Wash. 2019); Order Staying Case, Lighthouse Res. Inc. v. Inslee, No. 3:18-cv-05005-RJB, 2019 WL 1572605, at *1-2 (W.D. Wash. Apr. 11, 2019).
  6. State of Montana and State of Wyoming v. State of Washington, No. 22O152, Bill of Complaint ¶ 44 (US filed Jan. 21, 2020).
  7. Letter from Daniel Whitehead to Joseph Dean, May 15, 2020, pp. 3-13, https://www.dec.ny.gov/docs/ permits_ej_operations_pdf/nesewqcdenial05152020.pdf#page=3
  8. Federal Register, Vol. 85., No. 134, July 13, 2020, CWA Section 401 2020 Final Rule, p. 42214.
  9. 2020 Final Rule, p. 42261.
  10. 2020 Final Rule, p. 42286.
  11. 33 U.S.C. §1341(d).
  12. 2020 Final Rule, p. 42234.
  13. 2020 Final Rule, p. 42252.
  14. ACE and EPA, “The Navigable Waters Protection Rule: Definition of ‘Waters of the United States,’” 85 Federal Register 22250, Apr. 21, 2020.
  15. 2020 Final Rule, p. 42256.
  16. 2020 Final Rule, p. 42257