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EPA updates Clean Water Act rule to help pipelines get permits from states


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Essential Energy Insights - January 2021

EPA updates Clean Water Act rule to help pipelines get permits from states

The U.S. Environmental Protection Agency released the final version of a rule meant to prevent states from blocking natural gas pipelines and other infrastructure projects by denying critical water quality permits.

Section 401 of the Clean Water Act gives states authority to review whether federally approved infrastructure complies with standards set for protecting local water quality. Major pipeline projects have hit permitting roadblocks in recent years during state Section 401 reviews.

The final EPA rule released June 1 makes it more difficult for states to use their Section 401 authority to block construction.

"We want to make sure that we are limiting the 401 process just to water quality," EPA Administrator Andrew Wheeler said in a briefing with reporters. "States may very well have other avenues through the permitting process for their other concerns on a project. But we have seen too many times — particularly in recent years, particularly in the Northwest and in New York — the misuse and abuse of the 401 authority for water quality when the cited reason has nothing to do with water quality."

Wheeler added that the rule change would prevent states from citing issues such as climate change as grounds for denial in Section 401 reviews.

The final rule confines the scope of the state reviews to potential impacts on water quality. It says state regulators should not consider factors related to other environmental concerns. And it mandates that states decide on permits within a year.

But experts on the Clean Water Act and energy infrastructure development have said the rule appears destined for lengthy court battles and states opposed to infrastructure projects would still find ways to block them, particularly if Congress is unwilling to change the underlying law.

"We certainly hope they won't just deny permits for other reasons," Wheeler said.

Industry groups welcomed the rule as a check against delays. Environmental groups worried that the shake-up of federal-state dynamics on infrastructure projects would come at the expense of states, which the groups said are better equipped to assess local water quality impacts.

Attorneys general of 22 states and Washington, D.C., had asked the EPA in October 2019 to withdraw the proposed rule, arguing it would "unlawfully usurp state authority to protect the quality of waters within their borders."

"The proposed changes largely violate the Clean Water Act, will have adverse and wide-ranging consequences beyond the purported impetus for these changes, and will not fix the alleged problems EPA aims to solve," the Sierra Club and other environmental groups said in comments on the rule submitted in October 2019.

The Sierra Club said the problems remain in a statement on the final rule. "The rule change severely limits the time and tools states and tribes have to properly evaluate the effect federally permitted projects, like pipelines and other fossil fuel facilities, would have on waterways," the group said.

The American Petroleum Institute, which represents oil and gas companies, said the rule "will provide a rigorous, consistent and transparent process for water quality certifications for energy developers and manufacturers, while ensuring that the public plays an important role in the regulatory process."

"We support the Clean Water Act, and though certain states have continued to go well beyond its scope for water quality certifications, we hope the addition of a well-defined timeline and review process will provide certainty to operators as they develop infrastructure projects that meet state water quality standards," Robin Rorick, the American Petroleum Institute's vice president for midstream and industry operations, said in a statement.

The trade group for U.S. pipeline companies also supported the new rule. "While the statute recognizes the distinctive roles of the federal and state governments in the environmental review process, the balance between those roles has been disrupted by some states that have viewed Section 401 as a means to stop certain interstate pipeline and energy infrastructure projects," Interstate Natural Gas Association of America interim President and CEO Alex Oehler said in a statement. "This final rule clarifies the roles of federal, state and tribal authorities ​during the Section 401 certification process​, realigning those roles with the statute."

Congress made sure that states had a role under the Clean Water Act in approving infrastructure that could compromise water sources. But the Trump administration and the gas industry have accused some state regulators, especially in New York, of abusing the authority to block projects.

Congress also stipulated that states should complete reviews within a reasonable amount of time, not to exceed a year, or they could waive their authority to federal agencies. The Section 401 certification process has extended well beyond one year in recent cases under a practice in which states have applicants re-apply with the effect of resetting the clock.

New York environmental regulators on May 15 rejected a water permit for Transcontinental Gas Pipe Line Co. LLC's Northeast Supply Enhancement pipelines for the third time in as many years, blocking a project that would deliver more gas into downstate New York and Long Island. Days later, owner Williams Cos. Inc. said it had no immediate plans to refile but continued to believe in the fundamentals of the project.

Betsy Southerland, a career EPA official who retired as the director of science and technology in the Office of Water in 2017, said the rule would make it much more difficult for states to attach conditions to water permits to protect water resources.

"This rule represents a big constraint for states because often the first draft applications lack the details needed for them to thoroughly evaluate impacts," Southerland said in an email. "States wanted the clock to start only after they deemed the application complete, not from the moment the first draft of the application was sent to them. The rule also would limit the issues that states could use to ask for rejection or modification of the federal permit."

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