In 2021, the Biden Administration undertook a series of regulatory actions to review, reconsider, and reverse certain high-profile Trump-era environmental rollbacks.  For pipelines, transmission lines, terminals, and other energy infrastructure projects, these reversals posed the risk of longer project timelines and permitting hurdles.  This article provides an update on several key federal regulatory changes with potential impacts to energy infrastructure in the United States.

Clean Water Act

Defining “Waters of the United States”

Under the Clean Water Act (“CWA”), the federal government has jurisdiction over “waters of the United States” (or “WOTUS”)—a key jurisdictional term that defines the extent to which projects impacting “WOTUS” may need a federal CWA permit. Where a CWA permit is required for an infrastructure project, a host of other federal environmental review obligations—such as NEPA, Endangered Species Act, and National Historic Preservation Act reviews—are often triggered.  The CWA provides the Environmental Protection Agency (“EPA”) and the Department of the Army (together, the “Agencies”) with the authority to define WOTUS.

In 2020, toward the end of the prior administration, the Agencies adopted a narrow WOTUS definition as part of the “Navigable Waters Protection Rule.” The Biden Administration began the work of reviewing and reconsidering the NWPR while also seeking to hold litigation challenging the NWPR in abeyance.  Though most reviewing courts declined to vacate the NWPR during the Agencies’ ongoing review process, the United States District Court for the District of Arizona, in mid-2021, vacated and remanded the NWPR. A district court in New Mexico also agreed with the Arizona court’s vacatur order. 

Based on the Arizona vacatur order, the Agencies announced in the fall of 2021 that they would begin to implement the WOTUS definitional regime that was in place prior to 2015. As a result, for all practical purposes at this point, the current definition of WOTUS has effectively reverted to the original 1986 definition as supplemented by previous guidance the Agencies adopted in response to Supreme Court rulings.  However, the Agencies’ current position is contested and raises serious questions about the extent to which the Arizona and New Mexico district court orders have effect on a nationwide basis.  In December 2021, the Agencies proposed a new rule to define the scope of WOTUS in a manner consistent with the pre-2015 definitional regime.  Additionally, the Agencies have announced plans to unveil another subsequent definitional rule in the future.  In comparison to the Trump-era definition, the new Biden-era definitions are expected to rely on a broader legal definition informed by scientific data suggesting connectivity of wetlands and other areas to traditionally navigable waters.

Notably, on January 24, 2022, the Supreme Court agreed to hear a case (Sackett v. EPA) addressing the question of what the proper test is for determining whether wetlands are WOTUS.  The Supreme Court’s decision in the Sackett case will likely have significant consequences for the Agencies’ current and future rulemakings.  For projects in the near-term, the confusion over the applicable definition is likely to endure until the Supreme Court issues its ruling.  The Agencies were expected to finalize the new definitional rule in early- to mid-2022, but that timeframe may now be deferred by the Supreme Court case.  It remains to be seen whether the Agencies will continue the rulemaking process in advance of a decision by the Court or whether they will await guidance from the Court’s decision.

The 401 Certification Rule

Section 401 of the CWA prevents federal agencies from issuing a permit or license for any project that may result in any discharge into the WOTUS unless the state where the discharge occurs “certifies” that the discharge will be in compliance with the state’s water quality standards.  For infrastructure projects, “Section 401 certifications” have become an increasingly more difficult hurdle in some cases.

A Trump-era revision to the Section 401 regulations limited state authority to impose conditions as part of Section 401 certifications.  For example, the 2020 certification rule restricted states from circumventing the one-year deadline for issuing a certification decision, prohibited states from considering factors that are insufficiently related to water quality requirements, and limited the authority of states to make conditional decisions. These reforms were intended to, among other things, help promote construction of new energy infrastructure in the United States.

Last fall, the U.S. District Court for the Northern District of California vacated the 2020 certification rule and remanded it to the EPA.  EPA announced that the vacatur will have a nationwide effect and require a temporary return to the prior regulations.  EPA has indicated that a new rule is expected to be proposed in February 2022 and finalized in 2023.

Nationwide Permits

Corps of Engineers’ Section 404 permits are often necessary to build linear projects like transmission lines and pipelines crossing streams or wetlands.  The nationwide permit (“NWP”) program typically offers a streamlined process for obtaining Section 404 permits for qualifying activities, including utility line construction.  The Corps of Engineers recently announced that it has temporarily suspended the issuance of Section 404 permits that rely on water quality certifications or waivers under the 2020 certification rule, including 16 NWPs that were finalized in January 2021.  NWPs affected by the Corps’ announcement include the NWPs for oil or natural gas pipeline activities (NWP 12), land-based renewable energy generation facilities (NWP 51), electric utility line and telecommunications activities (NWP 57), and utility line activities for water and other substances (NWP 58).

NEPA Reviews

The National Environmental Policy Act (“NEPA”) requires federal agencies to assess the environmental effects of major federal actions.  In 2020, the Trump Administration substantially rewrote the NEPA implementing regulations in an effort to streamline environmental reviews, with an eye toward expediting permitting of energy infrastructure and other major projects.  In 2021, new leadership at the Council on Environmental Quality (“CEQ”) announced proposed amendments that would generally restore the provisions that were in effect before the Trump-era modifications.  Specifically, the proposed rule would (1) grant federal agencies greater discretion in developing project alternatives; (2) restore federal agency discretion to adopt NEPA procedures that are more stringent than CEQ’s regulations; and (3) require agencies to consider direct, indirect, and cumulative effects of major federal actions.  The proposed rule represents “Phase 1” of the Biden Administration’s plans to revise the NEPA regulations.  A “Phase 2” proposal that will “more broadly revisit the 2020 NEPA Regulations” is expected to be released in 2022. 

Wildlife Developments

Incidental Taking Under the Migratory Bird Treaty Act

The Migratory Bird Treaty Act (“MBTA”) prohibits the “taking” of protected bird species.  Under the traditional interpretation, the MBTA prohibited any taking—intentional, incidental, or accidental—of migratory birds resulting from lawful commercial activities, such as the construction of transmission lines or the operation of wind energy, solar energy, and oil and gas facilities. 

In the final days of the Trump Administration, the U.S. Fish and Wildlife Service (“FWS”) published a rule specifying that the MBTA does not prohibit injury to or mortality of migratory birds that results from, but is not the purpose of, an action.  In 2021, the FWS issued a final rule revoking the Trump-era MBTA take rule and published an advanced notice of a proposed rulemaking (“ANPR”) to replace it.  According to the ANPR, the FWS is considering authorizing incidental take via three primary mechanisms: (1) exceptions to the MBTA prohibitions via regulatory authorizations for noncommercial activities; (2) industry-specific general permits via a registration system; and (3) individual permits via an application system.  The FWS is considering developing general-permit-authorization regulations for commercial and governmental activities, including electric transmission and distribution infrastructure, wind energy and solar energy facilities, and some types of oil and gas infrastructure. 

Critical Habitat Regulations

The Biden Administration has published two proposed rules to rescind Trump-era changes to the regulations implementing Section 4 of the Endangered Species Act (“ESA”).

First, the FWS and the National Marine Fisheries Service have published a proposed rule to rescind a 2020 final rule adopting a definition for the term “habitat” for purposes of the ESA. Under the 2020 rule, “habitat” is defined as “the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a [listed] species.”  If finalized, the proposed rule would remove the regulatory definition of “habitat.”

Second, the FWS is proposing to rescind a final rule that created a process for excluding areas for critical habitat designation, specifying when and how FWS would conduct an exclusion analysis.  Under the 2021 proposed recission, the regulations established by the Trump-era rule would be removed.  The proposed rulemaking would apply prospectively, and any previously finalized critical habitat designation would not be reevaluated.

Conclusion

Looking ahead, 2022 will be a consequential year for regulatory changes impacting energy infrastructure projects.  Among other things, the Biden Administration is wrestling with objectives to restore more expansive environmental protections without compromising clean energy goals, which will necessitate an accelerated build-out of transmission lines and other new infrastructure.

Visit 2021 – Traditional Energy Rebounds and Increased Energy Transition, for the complete list of individual, detailed articles associated with this publication.

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