Case 3:20-cv-04636-WHA Document 173 Filed 10/21/21 Page 1 of 18
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`In re
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`CLEAN WATER ACT
`RULEMAKING.
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`This Document Relates to:
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`ALL ACTIONS.
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`No. C 20-04636 WHA
`No. C 20-04869 WHA
`No. C 20-06137 WHA
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`(Consolidated)
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`ORDER RE MOTION FOR
`REMAND WITHOUT VACATUR
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`INTRODUCTION
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`Plaintiff states, tribes, and non-profit conservation groups have challenged EPA’s Clean
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`Water Act certification rule, and now EPA moves to remand the proceedings without vacatur.
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`For the reasons stated, the rule is remanded to the agency with vacatur.
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`STATEMENT
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`The Federal Water Pollution Control Act Amendments of 1972, commonly known as the
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`Clean Water Act, is the primary federal statute regulating water pollution. Congress enacted
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`the Clean Water Act in 1972 — over then-President Nixon’s veto — but the roots of the Act
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`extend much farther back to 1899 and the Rivers and Harbors Act. That statute, often referred
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`to as the Refuse Act, primarily ensured free and open navigability of the waters of the United
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`States, but also prohibited the discharge of “refuse matter of any kind or description whatever
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`other than that flowing from streets and sewers and passing therefrom in a liquid state, into any
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`Case 3:20-cv-04636-WHA Document 173 Filed 10/21/21 Page 2 of 18
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`navigable water of the United States,” and authorized the Secretary of the Army to permit such
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`discharges under certain conditions. See 33 U.S.C. §§ 407 et seq. In 1948, following an
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`increase an industrialization throughout the country, Congress passed the Federal Water
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`Pollution Control Act (FWPCA). See generally Joel Gross & Kerri Stelcen, Clean Water Act
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`2–7 (2d ed. 2012).
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`In 1969, two events would help foster a new environmental awareness in the United
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`States and prompt the promulgation of amendments to the FWPCA: A catastrophic oil spill of
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`three million gallons of crude off the coast of Santa Barbara (creating a thirty-five-mile slick);
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`and a fire on the surface of the Cuyahoga River in northeast Ohio. A 1968 Kent State
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`University symposium on the state of the Cuyahoga River is worth briefly quoting:
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`The surface is covered with brown oily film observed upstream as
`far as the Southerly Plant effluent. In addition, large quantities of
`black heavy oil floating in slicks, sometimes several inches thick,
`are observed frequently. Debris and trash are commonly caught up
`in these slicks forming an unsightly floating mess. Anaerobic
`action is common as the dissolved oxygen is seldom above a
`fraction of a part per million. The discharge of cooling water
`increases the temperature by 10 to 15° F. The velocity is
`negligible, and sludge accumulates on the bottom. Animal life
`does not exist.
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`The Cuyahoga River Watershed: Proceedings of a Symposium Held at Kent State University
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`104 (George D. Cooke, ed., 1969); Gross & Stelcen, supra, at 7; Christine Mai-Duc, The 1969
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`Santa Barbara oil spill that changed oil and gas exploration forever, L.A. Times, May 20, 2015,
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`https://www.latimes.com/local/lanow/la-me-ln-santa-barbara-oil-spill-1969-20150520-
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`htmlstory.html.
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`Three years after these events, Congress passed the Clean Water Act. Section 101 of the
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`act expressed Congress’ goal “to restore and maintain the chemical, physical, and biological
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`integrity of the Nation’s waters.” 33 U.S.C. § 1251(a). The congressional declaration in
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`Section 101(b) recited:
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`It is the policy of the Congress to recognize, preserve, and protect
`the primary responsibilities and rights of States to prevent, reduce,
`and eliminate pollution, to plan the development and use
`(including restoration, preservation, and enhancement) of land and
`water resources, and to consult with the Administrator in the
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`Case 3:20-cv-04636-WHA Document 173 Filed 10/21/21 Page 3 of 18
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`exercise of his authority under this chapter.
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`Section 101(d) charged EPA to administer the act while Section 101(e) explicitly enshrined
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`public participation into the statutory scheme:
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`Public participation in the development, revision, and enforcement
`of any regulation, standard, effluent limitation, plan, or program
`established by the Administrator or any State under this chapter
`shall be provided for, encouraged, and assisted by the
`Administrator and the States.
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`Under Section 401 of the Clean Water Act, a federal agency may not issue a permit or
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`license to an applicant that seeks to conduct any activity that may result in any discharge into
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`the navigable waters of the United States unless a state or authorized tribe where the discharge
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`would originate issues a water quality certification or waives the requirement. EPA is
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`responsible for the certification by non-authorized tribes or when a discharge would originate
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`from lands under exclusive federal jurisdiction. Importantly, “No [federal] license or permit
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`shall be granted if certification has been denied by the State, interstate agency, or the
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`Administrator, as the case may be.” 33 U.S.C. § 1341; see also Overview of CWA Section
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`401 Certification, epa.gov/cwa-401/overview-cwa-section-401-certification (last visited Oct.
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`21, 2021). Several major federal licensing and permitting schemes are subject to Section 401,
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`such as National Pollutant Discharge Elimination System (NPDES) permits under Section 402,
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`permits for discharge of dredged or fill material into wetlands under Section 404, Federal
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`Energy Regulatory Commission (FERC) licenses for hydropower facilities and natural gas
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`pipelines, and Rivers and Harbors Act Section Nine and Section Ten permits.
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`While EPA has promulgated myriad rules to administer the Clean Water Act, iterations
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`of the administrative rule implementing Section 401 had remained, until recently, singular.
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`EPA originally promulgated 40 C.F.R. Part 121 to implement water quality certifications for
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`Section 21(b) of the FWPCA as it existed in 1971 — a year before the Clean Water Act
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`amendments to the FWPCA. See 36 Fed. Reg. 22,487 (Nov. 25, 1971), redesignated at 37 Fed.
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`Reg. 21,441 (Oct. 11, 1972), further redesignated at 44 Fed. Reg. 32,899 (June 7, 1979). EPA
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`would continue to use this rule for the Section 401 licensing scheme. In brief, 40 C.F.R. Part
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`121 as promulgated set out: (i) the minimum procedural content of a certification to facilitate
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`EPA’s administrative processes; (ii) the procedures for determining the effects of a license
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`upon other, non-certifying states; (iii) the procedures the EPA Administrator employs to certify
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`an application for a project under exclusive federal jurisdiction; and (iv) the procedures for
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`EPA consultations on obtaining a license or permit. EPA employed this procedure for
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`certifications as-is for half a century.
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`*
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`*
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`*
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`On April 10, 2019, President Trump issued Executive Order 13,868, entitled Promoting
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`Energy Infrastructure and Economic Growth. 84 Fed. Reg. 15,495 (Apr. 10, 2019). The order
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`stated: “The United States is blessed with plentiful energy resources, including abundant
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`supplies of coal, oil, and natural gas,” and, the “Federal Government must promote efficient
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`permitting processes and reduce regulatory uncertainties that currently make energy
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`infrastructure projects expensive and that discourage new investment.” To that end, Executive
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`Order 13,868 asserted that “[o]utdated Federal guidance and regulations regarding section 401
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`of the Clean Water Act . . . are causing confusion and uncertainty and are hindering the
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`development of energy infrastructure,” and instructed EPA to review and issue new guidance
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`regarding Section 401. Id. at 15,496.
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`Pursuant to the executive order, EPA revised its general Section 401 guidance in June
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`2019. Two months later, EPA published an economic analysis of existing Section 401
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`processes. That same month, in a publication dated August 22, 2019, EPA proposed an
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`updated Section 401 certification rule with extensive revisions. After a very active public
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`comment phase, EPA published the final rule in the Federal Register on July 13, 2020. The
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`rule went into effect September 11, 2020. See Economic Analysis for the Proposed Clean
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`Water Act Section 401 Rulemaking, NEPIS 810R19001A (Aug. 2019); Clean Water Act
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`Section 401 Guidance for Federal Agencies, States and Authorized Tribes,
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`www.epa.gov/sites/default/files/2019-06/documents/cwa_section_401_guidance.pdf (June 7,
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`2019); 84 Fed. Reg. 44,080 (Aug. 22, 2019); 85 Fed. Reg. 42,210 (July 13, 2020).
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`The new certification rule makes a variety of substantive changes to EPA’s procedures
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`for implementing Section 401. To state just a few examples, the new rule: (i) narrows the
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`Case 3:20-cv-04636-WHA Document 173 Filed 10/21/21 Page 5 of 18
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`scope of certification to ensuring that a discharge from a point source into a water of the
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`United States from a federally licensed or permitted activity will comply with “water quality
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`requirements” — another defined term narrowed to mean applicable provisions of Sections
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`301, 302, 303, 306, and 307 of the Clean Water Act; (ii) authorizes EPA to establish the
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`reasonable amount of time for a certifying authority to certify a request; and (iii) authorizes
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`EPA to determine whether a certifying authority’s denial has complied with the rule’s
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`procedural requirements, and to deem certifications waived if not. See 40 C.F.R. pt. 121.
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`Plaintiff states, tribes, and non-profit conservation groups, many of which had
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`strenuously objected to these and other changes to the certification rule, began suing, many the
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`same day EPA published the final rule. Three cases eventually arrived before the undersigned
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`by August 2020. The new certification rule became effective in September, and by October,
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`eight states and three industry groups intervened as defendants. Then, in November,
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`administrative momentum for the revised certification rule stalled after the election of
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`President Biden, who declared his administration’s policy:
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`to listen to the science; to improve public health and protect our
`environment; to ensure access to clean air and water; to limit
`exposure to dangerous chemicals and pesticides; to hold polluters
`accountable, including those who disproportionately harm
`communities of color and low-income communities; to reduce
`greenhouse gas emissions; to bolster resilience to the impacts of
`climate change; to restore and expand our national treasures and
`monuments; and to prioritize both environmental justice and the
`creation of the well-paying union jobs necessary to deliver on these
`goals.
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`Protecting Public Health and the Environment and Restoring Science to Tackle the Climate
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`Crisis, Exec. Order No. 13,990, 86 Fed. Reg. 7,037 (Jan. 20, 2021). The administration
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`specifically listed the certification rule as one agency action set to be reviewed, and EPA stated
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`its intent to promulgate a new certification rule in a notice published on June 6, 2021. The
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`earliest EPA will be able to promulgate a revised rule is Spring 2023 (Goodin Decl. ¶ 27). See
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`86 Fed. Reg. 29,541 (June 2, 2021); Fact Sheet: List of Agency Actions for Review,
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`www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/fact-sheet-list-of-agency-
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`actions-for-review (Jan. 20, 2021).
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`EPA now moves to remand for further proceedings without vacatur. Due to plaintiffs’
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`oppositions that requested remand with vacatur, intervenor defendants filed a motion to strike,
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`which necessitated extra briefing on that matter. After oral argument held telephonically due
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`to the COVID-19 pandemic, intervenor defendants were invited to file further briefing on the
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`vacatur issue, which they did.
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`ANALYSIS
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`1.
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`THE APPLICABLE STANDARDS FOR REMAND AND VACATUR.
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`Ambiguities in statutes within an agency’s jurisdiction to administer are, per Chevron
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`and Brand X, delegations of authority to fill the statutory gap in a reasonable fashion. Under
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`the Administrative Procedure Act (APA), a district court reviews a challenged federal agency
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`action to determine whether it is arbitrary and capricious or otherwise not in accordance with
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`law. Per the familiar taxonomy established by SKF USA, an agency typically takes one of five
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`positions when its action is challenged in federal court: (i) it may defend the decision on
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`previously articulated grounds; (ii) it may seek to defend the decision on grounds not
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`previously articulated by the agency; (iii) it may seek remand to reconsider its decision because
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`of intervening events outside the agency’s control; (iv) it may seek remand even absent any
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`intervening events, without confessing error, to reconsider its previous position; and (v) it may
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`seek remand because it believes the original decision was incorrect on the merits and it wishes
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`to change the result. SKF USA Inc. v. United States, 254 F.3d 1022, 1027–28 (Fed. Cir. 2001);
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`Nat’l Cable & Telecomm. Ass’n. v. Brand X Internet Servs., 545 U.S. 967, 980, 982 (2005);
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`Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 865–66 (1984); Cal. Cmtys.
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`Against Toxics v. EPA (CCAT), 688 F.3d 989, 992 (9th Cir. 2012) (approving SKF USA
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`taxonomy); 5 U.S.C. § 706(2).
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`An agency thus need not defend a challenged action in a district court and may instead
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`voluntarily request the court to remand the action to the agency for further proceedings. Nor
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`does an agency even need to admit error to justify voluntary remand. “Generally, courts only
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`refuse voluntarily requested remand when the agency’s request is frivolous or made in bad
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`faith.” CCAT, 688 F.3d at 992.
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`The deferential standard for reviewing an agency’s request for voluntary remand can
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`raise difficult issues when vacatur comes into play. When a district court rules that an agency
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`action is defective due to errors of fact, law, or policy, the APA explicitly instructs that the
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`court “shall . . . hold unlawful and set aside” the agency action. “This approach enables a
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`reviewing court to correct error but, critically, also avoids judicial encroachment on agency
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`discretion.” 33 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 8381
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`(3d ed. 2021); 5 U.S.C. § 706(2). Nevertheless, our court of appeals has held that, when equity
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`demands, a flawed rule need not be vacated. See CCAT, 688 F.3d at 992. Oftentimes, an
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`agency may voluntarily request remand prior to a court’s adjudication of the merits of the
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`disputed action. The caselaw here is unsettled. Leaving an agency action in place while the
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`agency reconsiders may deny the petitioners the opportunity to vindicate their claims in federal
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`court and would leave them subject to a rule they have asserted is invalid. On the other hand,
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`vacatur “of an action may allow an agency to abandon a legislative rule without going through
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`the (extensive) trouble of developing a new one.” Wright & Miller, supra, at § 8383. Our
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`court of appeals has issued the broad guidance — albeit in opinions where the agency action
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`had been found erroneous — that remand without vacatur is appropriate only in limited
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`circumstances. CCAT, 688 F.3d at 994; Pollinator Stewardship Council v. EPA, 806 F.3d 520,
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`532 (9th Cir. 2015).
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`Contrasting policy implications have led to a split in authority regarding whether a court
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`may order vacatur without first reaching a determination on the merits of the agency’s action.
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`Compare Ctr. for Native Ecosystems v. Salazar, 795 F. Supp. 2d 1236, 1241–42 (D. Colo.
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`2011) (Judge John L. Kane), with Carpenters Indus. Council v. Salazar, 734 F. Supp. 2d 126,
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`135–36 (D.D.C. 2010) (Judge Emmet G. Sullivan). Our court of appeals has not had the
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`opportunity to address this question directly, but its holding that even a flawed rule need not be
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`vacated supports the corollary proposition that a flaw need not be conclusively established to
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`vacate a rule. Other district courts in our circuit have consistently acknowledged they have the
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`authority to vacate agency actions upon remand prior to a final determination of the action’s
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`legality. See, e.g., Pascua Yaqui Tribe v. EPA, ––– F. Supp. 3d –––, 2021 WL 3855977, at *4
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`(D. Ariz. Aug. 30, 2021) (Judge Rosemary Márquez); All. for Wild Rockies v. Marten, 2018
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`WL 2943251, at *2–3 (D. Mont. June 12, 2018) (Judge Dana L. Christensen); N. Coast Rivers
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`All. v. Dep’t of the Interior, 2016 WL 8673038, at *6 (E.D. Cal. Dec. 16, 2016) (Judge
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`Lawrence J. O’Neill).
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`This order agrees with the foregoing opinions from district judges within our circuit that,
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`when an agency requests voluntary remand, a district court may vacate an agency’s action
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`without first making a determination on the merits. Vacatur is a form of discretionary,
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`equitable relief akin to an injunction. This order finds persuasive the reasoning in Center for
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`Native Ecosystems, which explains that “because vacatur is an equitable remedy, and because
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`the APA does not expressly preclude the exercise of equitable jurisdiction, the APA does not
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`preclude the granting of vacatur without a decision on the merits.” 795 F. Supp. 2d at 1241–
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`42; see also Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542–43 (1987); Coal. to
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`Protect Puget Sound Habitat v. United States Army Corps of Engineers, 843 Fed. App’x 77, 80
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`(9th Cir. 2021).
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`Our court of appeals has applied the familiar Allied-Signal test when considering vacatur
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`of agency actions found to be erroneous, and this order finds the same factors applicable when
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`considering voluntary remand prior to a conclusive decision on the merits. Allied-Signal, Inc.
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`v. U.S. Nuclear Reg. Comm’n, 988 F.2d 146, 150–151 (D.C. Cir. 1993). Under Allied-Signal,
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`the “decision whether to vacate depends on [1] the seriousness of the order’s deficiencies (and
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`thus the extent of doubt whether the agency chose correctly) and [2] the disruptive
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`consequences of an interim change that may itself be changed.” Ibid.; see also CCAT, 688
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`F.3d at 992 (adopting Allied-Signal). Allied-Signal can properly guide a vacatur analysis prior
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`to a merits determination similar to the review of a motion for a preliminary injunction. In
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`fact, the test in Allied-Signal explicitly arose from a preliminary injunction analysis. See Int’l
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`Union, United Mine Workers of Am. v. Fed. Mine Safety & Health Admin., 920 F.2d 960, 967
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`(D.C. Cir. 1990).
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`The first prong of Allied-Signal — sometimes abridged in decisions where the court had
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`made a merits determination — considers an agency action’s deficiencies in order to evaluate
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`the “extent of doubt whether the agency chose correctly.” Conclusive findings of agency error
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`are thus sufficient but not necessary for this factor to support vacatur. The first prong may be
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`measured in different ways, including: the extent the agency action contravenes the purposes of
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`the statute in question; whether the same rule could be adopted on remand; and whether the
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`action was the result of reasoned decisionmaking. Pollinator, 806 F.3d at 532; Or. Nat. Desert
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`Ass’n v. Zinke, 250 F. Supp. 3d 773, 774 (D. Or. 2017) (Judge Michael Mosman) (citing
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`Weinberger v. Romero-Barcelo, 456 U.S. 305, 314–15 (1982)); Am. Petroleum Inst. v.
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`Johnson, 541 F. Supp. 2d 165, 185 (D.D.C. 2008). Because a district court’s review of an
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`agency’s action begins and ends with the reasoning the agency relied on in making that
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`decision, the final rule and its preamble provide valuable material with which to evaluate
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`whether the agency employed reasoned decisionmaking. See CCAT, 688 F.3d at 993. As for
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`the second prong of Allied-Signal, our court of appeals has engaged in a broad analysis of the
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`potential consequences of vacatur. See id. at 994; Pollinator, 806 F.3d at 532–33.
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`2.
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`EPA AND INTERVENOR DEFENDANTS’ OBJECTIONS TO VACATUR
`AND ALLIED-SIGNAL.
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`Both EPA and intervenor defendants assert that this order cannot and should not consider
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`whether to vacate the certification rule. Their host of arguments fails to persuade.
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`First, intervenor defendants contend in a separate motion to strike that plaintiffs’
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`arguments for vacatur in their opposition briefing contravenes Federal Rule of Civil Procedure
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`7(b), Civil Local Rule 7-1(a), and the undersigned’s standing order (Dkt. No. 148 at 2). An
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`August 2021 order ensured that the parties fully briefed this issue concurrently with EPA’s
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`motion for voluntary remand (Dkt. No. 151). Upon review, this order finds that plaintiffs
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`properly addressed the issue of vacatur. EPA has moved for remand without vacatur. Yet as
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`our court of appeals has explicitly stated, “We order remand without vacatur only in ‘limited
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`circumstances.’” Pollinator, 806 F.3d at 532 (quoting CCAT, 688 F.3d at 994). EPA, in fact,
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`quoted CCAT in its opening brief, but neglected to address why the instant action is the
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`exception meriting remand without vacatur or why the default standard of vacatur stated in
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`CCAT should not apply here. EPA cannot avoid the default standard by strategically tailoring
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`its briefing and requested relief, and intervenor defendants made a strategic choice not to
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`initially file any briefing on the subject. Intervenor defendants, regardless, were granted the
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`opportunity to file supplemental briefing on the vacatur issue and Allied-Signal (Intervenors
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`Br., Dkt. No. 172). So, they have had the last word. Plaintiffs will not be faulted for
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`addressing the issues that this order must address to render a decision. See also N. Coast
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`Rivers All., 2016 WL 8673038, at *7.
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`Second, EPA and intervenor defendants argue that Allied-Signal is not the proper
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`standard here because there has been no ruling on the merits of the certification rule (Reply Br.
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`6; Intervenors Br. 8–9). As explained, Allied-Signal does not require a merits decision (and, in
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`fact, is based on the standard for a preliminary injunction). Neither EPA nor intervenor
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`defendants, it should be noted, attempt to suggest a substitute for Allied-Signal for our
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`purposes. Intervenor defendants attempt to distinguish Pascua Yaqui Tribe — a recent
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`decision from our sister court that vacated upon remand another EPA rule related to the Clean
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`Water Act — on the ground that the district court had before it the parties’ fully-briefed
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`summary judgment motions (Intervenors Br. 9). But, the court’s opinion did not rule on the
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`parties’ summary judgment motions, which were dismissed without prejudice in the docket
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`entry for the remand order. Pascua Yaqui Tribe, No. C 20-00266, Dkt. No. 99, Aug. 30, 2021.
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`Pascua Yaqui Tribe, in fact, stated that it was not reaching the merits of the agency action:
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`“[I]n the Ninth Circuit, remand with vacatur may be appropriate even in the absence of a
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`merits adjudication. Accordingly, the Court will apply the ordinary test for whether remand
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`should include vacatur.” 2021 WL 3855977, at *4.
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`Third, intervenor defendants state that plaintiffs “fail to provide any severability analysis,
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`which would be mandatory if [p]laintiffs want this Court to vacate the entire Rule” (Intervenors
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`Br. 11, emphasis added). The decision intervenor defendants cite to support this statement,
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`Carlson v. Postal Reg. Comm’n, 938 F.3d 337, 351–52 (D.C. Cir. 2019), does not necessarily
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`mandate a severability analysis, and this order is not aware of any mandatory authority that
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`requires a severability analysis. Regardless, severance is not required here because, as
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`explained below, this order finds serious deficiencies in an aspect of the certification rule that,
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`Case 3:20-cv-04636-WHA Document 173 Filed 10/21/21 Page 11 of 18
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`in EPA’s words, “is the foundation of the final rule and [] informs all other provisions of the
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`final rule.” 85 Fed. Reg. at 42,256.
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`Fourth, in a footnote in its reply brief, EPA requests additional briefing regarding the
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`scope of vacatur, citing California v. Texas, 141 S. Ct. 2104, 2115 (2021) (see Reply Br. 2 n.
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`2). EPA does not elaborate how a decision regarding standing to challenge the minimum
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`essential coverage requirement of the Affordable Care Act has any bearing on our case here.
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`Citing general statements of law does not warrant additional briefing, nor did EPA raise this
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`request at our hearing after the intervenor defendants were permitted to provide supplemental
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`briefing on the Allied-Signal analysis. This order has considered the proper scope of vacatur.
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`In sum, should remand be justified, this order will duly apply Allied-Signal as described
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`to determine whether vacatur is the appropriate remedy in this dispute.
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`3. WHETHER REMAND OF THE CERTIFICATION RULE TO EPA IS
`WARRANTED.
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`This order now considers whether to remand the certification rule back to EPA for further
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`proceedings. EPA says remand is appropriate because the request: (i) is made in good faith
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`and reflects substantial and legitimate concerns with the rule; (ii) supports judicial economy;
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`and (iii) would not cause undue prejudice to the parties (Br. 6–7).
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`Remand in this circuit, as EPA reminds us, is generally only refused when the agency’s
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`request is frivolous or made in bad faith. See CCAT, 688 F.3d at 992. The American Rivers
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`plaintiffs argue EPA’s request is frivolous because “the process EPA has laid out to address
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`[its] concerns does not demonstrate a genuine commitment to a changed rule that will address
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`all of those concerns” (American Rivers Opp. 16). This order notes some support for
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`American Rivers’ argument to deny EPA’s remand request as frivolous due to the fact that the
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`agency wholly omitted addressing vacatur until forced to by plaintiffs’ opposition briefing, but
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`will not deny remand on that basis alone. This order accordingly proceeds to consider the SKF
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`USA taxonomy of positions an agency may take on a challenge to its action.
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`EPA asserts that its remand request here falls into the fourth category of actions under
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`SKF USA — remand to reconsider a decision without confessing error (Br. 8). In this
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`situation, an agency “might argue, for example, that it wished to consider further the governing
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`statute, or the procedures that were followed. It might simply state that it had doubts about the
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`correctness of its decision.” For an action with this type of posture, SKF USA advised that a
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`district court has discretion not to remand, but “if the agency’s concern is substantial and
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`legitimate, a remand is usually appropriate.” SKF USA, 254 F.3d at 1029.
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`EPA, as explained below, has certainly expressed substantial concerns with the current
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`formulation of the certification rule (Br. 2–5). Plaintiffs have not presented evidence or
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`argument sufficient to justify departing from the default rule permitting remand. The
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`certification rule will be remanded to EPA for further proceedings.
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`4. WHETHER VACATUR OF THE CERTIFICATION RULE UPON
`REMAND IS WARRANTED.
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`This order now considers whether the Allied-Signal test supports vacatur upon remand of
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`the certification rule. Each factor is considered in turn.
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`A.
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`THE CERTIFICATION RULE’S DEFICIENCIES.
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`The first Allied-Signal factor considers the seriousness of the rule’s deficiencies, thus
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`evaluating the extent of doubt whether the agency correctly promulgated the rule. See Allied-
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`Signal, 988 F.2d at 150–51. At the hearing, plaintiff states asserted that the most glaring
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`deficiency in the current certification rule is a newly-inserted subsection defining the scope of
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`certification, which they say impinges upon the Clean Water Act’s principles of cooperative
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`federalism. See 40 C.F.R. § 121.3. We start our Allied-Signal analysis with these revisions.
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`In PUD No. 1 of Jefferson County v. Washington Department of Ecology, the Supreme
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`Court affirmed that Section 401(d) confers on states the power to “consider all state actions
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`related to water quality in imposing conditions on [S]ection 401 certificates.” 511 U.S. 700,
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`710 (1994). The majority recognized that Section 401(a) contemplates state certification that a
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`“discharge” will comply with certain provisions of the Clean Water Act while subsection (d)
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`“expands the State’s authority to impose conditions on the certification of a project” because it
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`“refers to the compliance of the applicant, not the discharge.” Id. at 711. PUD No. 1
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`concluded that Section 401(d) “is most reasonably read as authorizing additional conditions
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`and limitations on the activity as a whole once the threshold condition, the existence of a
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`discharge, is satisfied.” Id. at 712.
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`The revised scope of certification that EPA promulgated takes an antithetical position to
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`PUD No. 1 without reasonably explaining the change. The rule’s scope of certification is
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`“limited to assuring that a discharge from a Federally licensed or permitted activity will
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`comply with water quality requirements,” which the rule limits to Sections 301, 302, 303, 306,
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`and 307 of the Clean Water Act. 40 C.F.R. § 121.3. EPA may, of course, take up different
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`interpretations of Section 401, but a revised rule with unexplained inconsistencies suggests it is
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`an unreasonable interpretation that is not entitled to deference under Chevron. See Encino
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`Motorcars, LLC v. Navarro, 136 S. C