States to Regain Veto Power Over Polluting Projects, With Limits

States will soon have veto power over interstate pipelines, highways, coal terminals, and other projects that they think could pollute federally-protected water within their borders under a rule the EPA finalized Thursday that rolls back a Trump-era regulation.

But states will have less veto power over polluting projects than the Biden administration originally envisioned due to the US Supreme Court’s May ruling in Sackett v. EPA that vastly reduced the scope of federal protections for streams and wetlands considered waters of the US, or WOTUS, under the Clean Water Act.

“There will be significantly less waters under federal protection, and therefore fewer federally licensed projects that will need to go through the 401 program,” Radhika Fox, the Environmental Protection Agency’s assistant administrator overseeing the Office of Water, told reporters Thursday.

The Clean Water Act gives states the right to certify any federally-permitted infrastructure project that might discharge pollution into WOTUS. The new rule, known as the Clean Water Act Section 401 Water Quality Certification Improvement Rule, governs the state approval process.

The rule was proposed by the EPA in June 2022 when the Biden administration was planning to expand the wetlands that qualified as WOTUS. It will take effect in mid-November and scraps the Trump administration’s 2020 version of the rule, which curtailed states’ ability to object to infrastructure projects.

Fox said the EPA can’t say how many fewer wetlands and waterways would apply under the Section 401 rule following the Sackett ruling because federal jurisdiction over any given waterway or wetland is determined on a case-by-case basis.

In a statement issued by the EPA, the Democratic governors of North Carolina, Massachusetts, Connecticut, New Mexico, and Maryland, and officials from New York and Washington, hailed the new rule as key to protecting water quality within their borders.

“Section 401 of the federal Clean Water Act gives states and tribes an important role regarding federally licensed or permitted projects,” Massachusetts Gov. Maura Healey (D) said in the statement. “As Attorney General, I stood up to efforts to undermine this and now, as Governor, I’m grateful to see it restored.”

Clarifying the Proposed Rule

The original draft of the Biden rule allowed a state to determine whether “any aspect” of an entire federally-licensed pipeline or other project will comply with its water quality standards, and deny certification of the project within state borders if it chooses.

But the final rule narrows that, allowing states to only certify whether a project will “comply with applicable water quality requirements,” and limits the state’s evaluation of a project to “water quality-related impacts from the activity subject to the Federal license or permit,” including construction and operation.

EPA said the new rule limits states’ ability to delay projects by giving them six months to review a project proposal by default, with a maximum of one year.

“The rule emphasizes that states, territories, and Tribes may only consider the adverse water quality-impacts from the activity,” the EPA said in a statement. “To limit delays, the rule also provides a clear approach to defining the required contents in a request for certification.”

Legal Wrangling

Republicans have long accused states of using Section 401 to kill large fossil fuel projects.

Eight GOP-controlled states said in a Supreme Court filing in Louisiana v. American Rivers that some states abuse their Section 401 certification authority, including Washington state’s denial of the Millennium Bulk Terminals’ coal export terminal certification.

The Trump administration responded to Republican discontent over states’ use of Section 401 by finalizing a version in 2020 that hamstrung states’ ability to block projects. Then-EPA Administrator Andrew Wheeler acknowledged the purpose of the rule was to “accelerate and promote the construction of pipelines and other important energy infrastructure,” according to Suquamish Tribe v. Wheeler, a lawsuit filed in 2021 challenging the rule.

The Trump Section 401 rule has been in effect since 2020. The rule was vacated in 2021 by a judge in the US District Court for the Northern District of California, but the eight states led by Louisiana intervened and requested that the US Court of Appeals for the Ninth Circuit stay the ruling. The US Supreme Court granted the stay in April after the Ninth Circuit denied it, keeping the Trump-era rule in effect.