The Basics of Wetland and Stream Permitting

Under the Clean Water Act (CWA), you cannot impact a federally protected stream or wetland unless you obtain a 404 permit from the Army Corps of Engineers (ACOE).See 33 U.S.C. §§ 1344(a), 1362(7). If you trigger the need for a 404 permit, you will also need a 401 Water Quality Certification.  Ohio Administrative Code Chapter 3745-32.

After the release of the new jurisdictional rule this summer, most streams and wetlands will likely fall under federal protection (See, prior post discussing the new "Waters of the U.S. Rule").  Assuming you are dealing with federally protected wetlands or streams, what does the typical permitting process look like?

Step 1:  Wetland Stream Assessment-  If you are evaluating a piece of property (or multiple properties) for development you may want to consider a basic wetland/stream assessment.  This is not a formal determination of the exact locations of wetland on the property.  An assessment provides general information regarding the ecological issues on the property, including:

  • General estimate of the quality, size and location of wetlands on the property;
  • Quality and length of streams on the property; and
  • Presence of any endangered species habitat on the property

Gathering this information can be extremely helpful in determining the viability of development on a piece of property.  It can also assist with determining permitting timeframes.  

When evaluating between a number of different properties, assessments can also provide critically important information when deciding which property would likely be the least costly to obtain required permits and involve the shortest permitting timeframes.

Step 2:  Wetland Delineation-  This is a formal determination by a qualified wetland consultant as to the exact location, size and quality of wetlands and streams on a property.  A formal delineation is more costly than a basic assessment, but it is a required step for the permitting process.  A property owner or developer must hire a qualified wetland/stream consultant to perform the delineation.

It typically takes around two weeks to complete a wetland delineation.

Step 3:  Jurisdictional Affirmation-  The Army Corps reviews the wetland delineation report and performs a site visit typically thirty (30) days after receipt of the report.  After the site visit is complete, the Army Corps will issue a formal Jurisdictional Determination or JD.  The JD is an approval of the wetland delineation.

Step 4:  Determination of the Type of Permit Needed

After the Army Corps issues its JD, the next step is to determine the type of permit that the project will require.  The type of permit is dependent on the nature of the wetlands and the size of impacts.  Many developers try and configure their project to fall under a Nationwide Permit as described below because it is the least costly and has the quickest permitting timeframes.

Army Corps Nationwide Permit-  Industrial and commercial developments can typically impact up to .5 acre of jurisdictional wetland or 300 linear feet of stream under a Nationwide Permit (NWP).  A NWP is a streamlined permitting process and does not require the level of justification an individual permit requires. 

  • Timeframe:  3-6 months

Ohio EPA Isolated Permit-  Ohio is in the minority of states that created their own wetland permitting program for any wetlands that do not fall under federal jurisdiction (i.e. Isolated Wetlands).  After release of the "Waters of the U.S. Rule"  it is even less likely that wetlands will be classified as isolated.  If you have isolated wetlands, the application is filed only with Ohio EPA.  (Note: You can have both federal jurisdiction and isolated wetlands on the same property).  

  • Timeframe: 3 - 8 months

Individual Army Corps 404 Permit and Ohio EPA 401 Water Quality Certification-  If your project impacts more than the Nationwide Permit thresholds, it will need an individual permit.  This is the most costly, complex and uncertain permitting process.  

  • Timeframes:  12-18 months 
  • Alternatives Analysis:  Individual permits require a demonstration in the application that other locations were evaluated and the selected site is the best alternative for the project.  Alternative site configurations must also be shown to minimize on-site impacts.  The alternatives analysis can be highly subjective and the process can be very lengthy. 

Step 5:  Mitigation-  In addition to the consultant fees discussed above, a property owner/developer must also mitigate for all stream and wetland impacts (Ohio EPA Wetland and Stream Mitigation Webpage).  The regulations contain ratios of required mitigation which is tied to the quality of wetland or stream impacted (Ex: 2 to 1 or 3 to 1).  

Regulations no have a preference toward approved wetland mitigation banks where credits can be purchased to offset impacts to streams or wetlands.  To utilize a mitigation bank, credits must be available in the mitigation bank within the watershed where the project is taking place.  Wetland mitigation bank credits can cost anywhere from $30,000 to $60,000 per acre.  Stream mitigation credits can cost between $300-$500 per linear foot. 

If credits are not available, then a conceptual mitigation plan will likely need to be submitted to the Army Corps and Ohio EPA.  This could require identifying a piece of property off-site which currently is not protected.  If mitigation bank credits are not available, the cost and complexity of mitigation becomes much more significant.

Key Eligibility Issue Needs to be Decided for New Underground Storage Tank Fund

I previously posted about the new $20 million dollar cleanup fund created to address old gas stations.  The fund with be operated by the Ohio Development Services Agency (ODSA).  

The fund will provide up to $100,00 for sampling and $500,000 for cleanup of abandoned gas stations or underground storage tanks that are classified as Class C (i.e. the Bureau of Underground Storage Tanks has certified that the party responsible for cleanup is not viable).  

ODSA is currently developing program guidelines and is planning on having the program up and running some time this fall.  One major legal issue that needs to be resolved is who exactly is eligible to receive funding.  

The legislation states that the “property owner” for purposes of applying for the grant money must be “a political subdivision and an organization that owns publicly owned lands.”  The Legislative Service Commission (LSC) analysis for H.B. 64 states that a political subdivision must own the land but “publicly owned lands include land that is owned by an organization that has entered into a relevant agreement with such a political subdivision.”

What does “entered into a relevant agreement with such a political subdivision” mean? Does this mean that a private property owner (as long as they didn’t create the contamination) could enter a redevelopment agreement with a City similar to how Clean Ohio operated(i.e. the City applies for the funds, but a private entity can own the land as long as it has a redevelopment agreement with a public entity). Or, does this mean the organization must hold the property on behalf of the City for public purposes?

If ODSA ultimately decides only political subdivisions or entities that hold public land can receive funding, there may be a pretty limited pool of applicants for funding.  Such an interpretation would ultimately require a City or County to take ownership of the land in order to clean it up.   

First, many cities may not have the wherewithal to purchase or take ownership of such property even through foreclosure.  Second, many may be concerned with liability concerns since neighbors could still sue for releases of contamination.  These are the types of liability issues and costs that government typically relies upon the private sector to address.

How this issue gets decided in the coming months will be a major factor in how quickly funds are utilized and how effective the program will be in addressing these sites.

Clean Power Plan- An Ambitious Plan with Serious Legal Issues

On August 3rd, the Obama Administration and U.S. EPA released the much-anticipated final Clean Power Plan designed to curtail greenhouse gas emissions to combat climate change.  The regulations promise to be the most comprehensive, complex and costly regulatory program ever launched without specific authorization from Congress.   

How the Plan Works

The final plan calls for a 32% reduction in the amount of 2005-level carbon emissions that existing power plants must eliminate by 2030.  How does EPA achieve the reductions?

Performance Rates

EPA establishes both interim and final CO2 emission performance rates for two subcategories of fossil fuel-fire electric generating units (EGUs):

  • Fossil fuel-fired electric steam generating units (coal and oil-fired power plants); and
  • Natural gas-fired combined cycle generating units

Interim performance rates must be met between 2022 and 2029.  The final emission rate by 2030.

The EPA reviewed prior determinations made under Section 111(d) regarding "best system of emissions reduction" (BSER) that has been demonstrated for a particular pollutant and a particular group of sources by looking at technologies already being used.  

Statewide Goals

The rates were established geographically by applying three different strategies to existing fossil fuel power plants. Those building blocks include the following:

  1. Operate Existing Coal Fired Power Plants More Efficiently- reducing carbon intensity of electricity generation by improving the heat rate of existing coal-fired power plants.
  2. Switch from Coal to Natural Gas-  substituting increased electricity generation from lower-emitting existing natural gas plants for reduced generation from higher-emitting coal fired power plants.
  3. Switch from Coal to Renewable Energy- substituting increased electricity generation from new zero-emitting renewable sources (like wind and solar) for reduced generation from existing coal-fired power plants.

By applying the building blocks to the existing plants, EPA determined the average coal plant can reduce emissions in from 2,160 pounds of CO2 per MWh down to 1,305 pounds/MWh by 2030.  Natural gas combined-cycle plants can go from 894 lbs/MWh to 771 lbs/MWh by 2030.  

The emissions rates are then used to establish state wide goals based upon the mix of existing coal and natural gas power plants in the state.  

States can also elect to use a rate-based goal or a mass-based target.  With mass-based targets, the states will have a total amount of CO2 emissions in 2012 and a final goal for 2030.  In otherwords, total metric tons of CO2 emission will be calculated for the 2030 versus individual plant average emission rates.

What are some the pro's and con's of rate-based versus mass-based?  EPA believes mass-based will be slightly cheaper to comply with and will allow for emission trading.  Whereas, rate-based allow overall emissions to increase with economic growth (i.e. all power plants must average a certain carbon intensity).

State Complaince Plans

State can elect from a variety of strategies to meet these goals.  Examples of strategies include:

  • Develop renewable energy sources
  • Switch to natural gas from coal-fired power plants
  • Build nuclear or increase production from nuclear
  • Energy efficiency programs
  • Emission trading (i.e. cap-and-trade programs)

Important Changes from Draft to Final Rules

Emission reductions are phased in between 2022 and 2030.  This was in response to criticism by states that the original plan demanded reductions too quickly.

As discussed below, EPA dropped energy efficiency out of concern it weakened the legal authority for the plan. 

The final plan shows more favor toward renewable energy sources to the detriment of natural gas. The final rule calls for 28% (instead of 22%) of all power generate to come from renewable energy sources.

The final rules gave an extension to states to submit compliance plans, from 2016 to 2018.  Also, compliance periods were pushed out from 2020 to 2022.

Legal Basis for the Rules

Fifteen states, including Ohio, have pledged to challenge the legal authority for the Clean Power Plan in Court.  Nine other states have pledged to defend it.  

EPA asserts that it has broad authority under Section 111(d) of the Clean Air Act - New Source Performance Standards (NSPS)- to craft the rules.  At issue is the definition of the term "standard of performance" as used in Section 111.  Does that term apply to the plant itself or can EPA use it to set standards for each state in terms of emissions from its power sector?

Opponents argue the EPA authority under Section 111(d) is limited to requiring certain technologies be installed at the plant itself.  Opponents argue that fuel switching, renewables and a trading program are all well beyond its authority.  If the opponents are successful in their challenge, the fundamental building block of the Clean Power Plan will be eliminated.

The final rule removed one of the strategies proposed for meeting reduction goals- energy efficiency. Many commentators speculate that EPA removed this component from the plan because it was the least legally defensible under Section 111(d) authority.

Another challenge to EPA's authority will be that Section 111(d) only applies to new sources.  The Clean Air Act Section 112 provides EPA the authority to regulate existing power plants.  Section 112 covers regulation of hazardous air pollutants (HAPs) from existing power plants.

EPA argues there is ambiguity between Section 111(d) and Section 112.  Therefore, where the Clean Air Act contains ambiguity, the Agency argues it entitled to deference so long as it articulates a "reasonable interpretation" of the provision.  See, Chevron USA Inc. v. Natural Resource Defense Counsel.

Chevron was the at issue in the recent MATS decision discussed in my prior post.  In that instance, the Supreme Court held that EPA went way beyond a "reasonable interpretation" of its authority.  However, in other instances, such as the Cross-State Air Pollution Rule, the Court found the EPA did articulate a "reasonable interpretation."  Therefore, it is hard to review the prior Supreme Court cases and discern definitive guidance as to whether the Court would uphold the Clean Power Plan.

The Supreme Court has shown a willingness to support EPA's effort address climate change.  First, the Court upheld EPA determination that greenhouse gases were pollutants regulated under the Clean Air Act in Massachusetts v. EPA. Second, it upheld the major components of EPA initial greenhouse gas regulations in its Tailoring Rule- UARG v. EPA.  While the Court upheld major components of EPA's authority to address climate change, the Clean Power Plan is the most ambitious effort to date.

Making matters more difficult to predict how the Supreme Court may rule is the lack of case law interpreting EPA's authority under Section 111(d).  

MATS Decision- Supreme Court Complicates EPA's Ability to Consider Costs When Setting New Regulations

On June 29th the U.S. Supreme Court ruled in a 5-4 decision that EPA was required to consider costs of compliance when deciding whether it was "appropriate and necessary" to regulate emission of mercury and other air toxics from power plants.  (Michigan v. EPA, U.S., No. 14-46, 6/29/15).  The majority decision, written by Justice Scalia, reversed a 2014 federal appeal court decision that upheld the EPA mercury and other air toxics (MATS) rule.

The focus of the decision was not the standard itself.  Rather, the Court reviewed EPA's December 2000 finding that it was "appropriate and necessary" to regulate hazardous air pollution from power plants.  

Under the Clean Air Act, EPA was required to study "the hazards to public health reasonably anticipated to occur as a result of emissions by [power plants] of [HAPs] after imposition of [other] requirements [of the CAA]." 42 U.S.C. § 7412(n)(1)(A).  After performing the study, EPA was required to regulate HAPs if it "finds such regulation is appropriate and necessary after considering the results of the study…." Id. 

The key test for administrative deference to federal agencies is articulated in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).  The Court found EPA strayed far beyond the deference it is entitled to when it didn't consider cost in deciding whether it was "appropriate and necessary" to regulate HAPs from power plants.  

EPA estimated the annual cost of compliance at $9.6 billion.  EPA's benefits analysis performed when setting the standard only attributed $4 to 6 million in annual health benefits directly to mercury and other HAP emission reductions.  However, the Agency did conclude the true health benefit from the rule was $90 billion per year if you factor in the co-benefits from other non-HAP pollutant reductions that could occur due to the controls required for compliance.

Dissent- EPA Did Consider Costs in Setting Standards

The dissent took a much different view (Justices Kagan, Ginsburg, Breyer, and Sotamayer).  While EPA may not have considered cost in its decision to regulate, the justices noted that EPA did consider cost in the development of the final standards.  The dissenting Justices felt it was within EPA discretion to not consider costs in the preliminary stage of whether to regulate mercury emissions.

Rule Remains in Place

Despite the Court's ruling, the MATS rule remains in place.  The Supreme Court remanded the rule back to the D.C. Circuit Court of Appeals for further proceedings. The D.C. Circuit will decide if the rule is vacated, stayed  or will remain in effect while EPA reconsiders its "appropriate and necessary determination" to factor in the cost of compliance compared to health benefits.  

Open Question- Ancillary Benefits from Reductions in Other Pollutants

One of the most significant questions remaining after the decision is how EPA will perform its cost benefit analysis now that the rule has been remanded.  During oral arguments, several Justices were very critical of the EPA's cost analysis when setting the standards because it included co-benefits of reducing other pollutants as a result of controlling mercury emissions.  

In determining the health benefits from the MATS rule were approximately $90 billion annually, EPA included reductions in fine particulate matter and other pollutants (not just mercury) that are regulated under other provisions of the Clean Air Act.  EPA only attributed between $4 to $6 million in benefits directly as a result of reduction of hazardous air pollutants such as mercury.  

It will be interesting to see whether EPA revisits its conclusion that $4 to $6 million are the health benefits attributable to reduction in HAPs.  Or, will EPA try and support the rule on the basis of the co-benefits from additional pollutant reductions.

Rejection of the Whitman v. American Trucking

EPA relied heavily on the Supreme Court's prior ruling in Whitman v. American Trucking to support its decision not to consider costs in determining whether to regulate HAP emissions from utilities.   In Whitman the Supreme Court held EPA could not consider costs in setting the new ozone standard.  The Court held that the Clean Air Act is unambiguous when EPA may consider costs. The Court  said it would not infer a duty to consider cost from ambiguous language in the Act.  

It is true that the language at issue in Whitman was narrower- "requisite to protect public health...with an adequate margin of safety."  This is compared to the term at issue in Michigan -"appropriate."  However, couldn't the term "adequate margin" be broad enough to also consider costs?  

If both Whitman and Michigan are supposed to be read narrowly, as the Court suggests, then the Court has provided very little guidance as to when EPA may or may not consider costs when adopting its regulations.  

Pro's and Con's of Performing Environmental Audits

U.S. EPA and the many state EPA's have adopted environmental audit policies or laws to encourage companies to review and disclose instances of non-compliance. (See prior post- Why Businesses Should Consider an Environmental Audit?)  

Last week, I participated in a webinar discussing environmental audits.  It was a good panel discussion which explored many of the complex issues associated with performing audits and whether to voluntarily disclose non-compliance.  Below is a summary of some of the considerations when deciding whether to perform an audit and/or voluntarily disclose violations.  

Pro's of Performing an Environmental Audit or Voluntarily Disclosing Violations

  • Return to Compliance w/o Fear of Enforcement-  Audit and disclosures provide companies the ability to wipe the slate clean.  Companies no longer have to fear inspections or large penalties if the non-compliance is discovered as a result of an EPA investigation.  Audits can provide a company the ability to proactively address compliance issues.
  • Civil Penalty Forgiveness-  U.S. EPA's audit policy provides between 75% to 100% of forgiveness of gravity based civil penalties if a company performs and audit and meets EPA's nine conditions in its policy.  Many state audit laws and policies provide similar incentives.
  • Limit Likelihood of Criminal Prosecution-  Companies that voluntarily disclose violations have the potential to avoid criminal prosecution.  If the company meets EPA's audit conditions and the audit and disclosure were performed in good faith.  Also, companies must take steps to prevent recurrence of the violation.
  • Audit Report/Materials Confidential-  Many states provide a privilege over the environmental audit report and possibly the materials associated with the audit.  U.S. EPA does not provide a privilege over audit materials, but generally commits to not use the audit materials against the company.
  • Mergers/Acquisitions-  Audit policies provide even greater incentives to new owners to perform audits and make voluntarily disclosures.  EPA's new owner audit policy provides an opportunity to fix problems and make a fresh start post-acquisition.

Con's of Performing an Environmental Audit or Voluntarily Disclosing Violations

  • Not a "Shield" from Enforcement-  U.S. EPA's federal audit policy is simply guidance, not the law.  Therefore, U.S. EPA may elect to not provide penalty forgiveness.  Also, there are many exceptions under both federal and state environmental audit policies and laws.  
  • Must Be Prepared to Fix Violations Uncovered-  Generally, its not wise to perform an audit if there are insufficient funds to correct the violations once discovered.    
  • Violations Become Public-  Even if the company qualifies for state or federal civil penalty reductions or avoids a penalty all together, the violations still become public once disclosed to regulators.  Disclosures may prompt 3rd party lawsuits.
  • Limited Scope of Criminal Leniency-  There are a number of limitations and exceptions on the U.S. EPA's audit policy with regard to criminal violations.  Also, the Department of Justice has the ability to exercise independent prosecutorial discretion. (Link to DOJ factors in deciding whether to criminally prosecute).  Similar exceptions exist at the state level.
  • State and Federal Independent Enforcement Authority-  State and federal EPA's have independent enforcement authority.  Companies must choose whether to disclose violations under both State audit laws/policies as well as EPA's federal audit policy. 
  • Privilege Issues-  The privilege issues (including: a-c privilege, attorney work product and audit privilege laws) are very complex.  Careful attention must be paid to how audits are performed and their results communicated if the company wants to maintain confidentiality and privilege over related records and communications.
  • Inspection Post-Disclosure-  It is very likely that the U.S. EPA and/or the state EPA will perform an inspection of the facility following a voluntary disclosure.  Facility records and operations should be in good shape in advance of any inspection.
  • Disclosure Timeframes-  The timeframe for making a voluntary disclosure can be very short (i.e. 21 days for most violations under EPA's audit policy).  This does not provide much time for the company to make a determination as whether to voluntarily disclose.  Also, potential violations may be identified without the ability to determine whether an actual violation has taken place within the disclosure timeframes. 

 

Brownfields: $20 Million Dollar Abandoned Gas Station Cleanup Fund Enacted

As part of the 2016-2017 Operating Budget for the Ohio Development Services Agency (ODSA), a new $20 million dollar cleanup fund was created in House Bill 64 to address old gas stations around the state.  The money came from remaining Clean Ohio funds.  

Abandoned or defunct service stations have always fallen through the cracks of brownfield programs and are a very significant problem in the State.  (See the Canton Repository story "Gas Stations' owners vanish, leaving possibly hazardous eyesores")

Gas stations were never deemed large enough issues to attract incentives.  However, many times these stations are located in key development areas within a municipality.  The new fund provides an excellent opportunity for municipalities and developers to address these problematic sites.

Here are the basics of the new program:

  • Up to $100,000 in grant funds for sampling
  • Up to $500,000 for cleanup
  • Political subdivisions can directly apply for funds
  • Organizations that enter into an agreement for redevelopment with a political subdivision can also apply
  • Must be a Class C site (i.e. State has certified that the party responsible for contamination is not capable of performing the investigation and cleanup)
  • Applications are filed with ODSA
  • Applicants cannot have caused or contributed to the contamination on the property

While $20 million seems like a lot of money, I predict that this money will be used up very quickly. A current list of Class C Abandoned Gas Stations maintained by the States shows approximately 500 such sites right now.  That list will surely grow now that funding is available to help cleanup these sites. With such limited funding given the scope of the problem, it is very likely this funding will be gone very quickly.

However, many of these sites still present impediments to redevelopment.  Many political subdivisions do not want to take title to abandoned stations due to liability issues, even if grant funding for cleanup is available.  

For potential private party redevelopment, many of these sites have further complications due to title issues or back taxes and liens on the property.   Also, the sites need to have strong redevelopment potential for private parties to take ownership as well as to compete for the limited funding.  ODSA will likely require a detailed information regarding redevelopment potential as part of its forthcoming grant application process.

Liability, redevelopment and other issues are common among brownfield sites.  However, when funding is available it provides a strong incentive for parties to get creative and overcome these obstacles.  

EPA Releases "Waters of the U.S." Rule

On May 27, 2015, US EPA and the Army Corps of Engineers (ACOE) released the final version of the rule which defines federal jurisdiction over waterways (referred to as the "Clean Water Rule").  

Those who support the rule argue that it merely puts in place existing guidance and practice. Supporters also argue that the final rule will provide much needed clarity regarding wetland and stream permitting requirements.

"[The new rule] will provide the clarity and certainty businesses and industry need about which waters are protected by the Clean Water Act, and it will ensure polluters who knowingly threaten our waters can be held accountable."  President Obama

Opponents argue the rule amounts to a massive power grab by the federal government.  There is already pending Congressional action to block the rule.

“Our analysis shows yet again how unwise, extreme and unlawful this rule is,” American Farm Bureau Federation President Bob Stallman said

Background on Rule

The Clean Water Act was passed more than 40 years ago, yet the scope and reach of the Act is still being debated.  Congress created the uncertainty by limiting the Act  to "navigable waters" which is defined as "waters of the United States, including the territorial seas."  33 U.S.C. Section 1361(7)

Interpretation of the vague term- "waters of the United States"- has been left largely to guidance and the Courts.  The most significant decisions were issued by the Supreme Court in Rapanos and SWANCC. The Court found CWA jurisdiction extended to both navigable waters and any non-navigable water that had a "significant nexus" to a navigable waterway.

Following the Supreme Court decision, many determinations as to whether wetlands or streams were protected under the Clean Water Act were made on a case-by-case basis using Justice Kennedy's "Significant Nexus" Test.  The Army Corps and EPA followed with guidance documents interpreting how the Significant Nexus Test should be applied in practice.  

The case-by-case approach led to a tremendous amount of uncertainty and also a lot of litigation over application to the test.  As discussed in prior posts, the Army Corps became increasingly expansive in finding federal jurisdiction utilizing the Significant Nexus Test.  Furthermore, property owners and developers did not have a clear path to challenge the Corps determinations (called "Jurisdictional Determinations" or JDs).

While both regulators and business/property owners called for more certainty, both had very different ideas as to the scope of the jurisdictional rule.  The EPA and Army Corps erred on the side of being expansive in the federal government's jurisdiction so as to not leave out important waterways or wetlands.  The final Clean Water Rule will replace existing guidance going forward.

Structure of the Rule- Per Se Jurisdictional and Case-By-Case

The rule extends per se jurisdiction to "traditional navigable waters," "interstate waters," "territorial seas" and "impoundments thereof."  (i.e. "Traditional Jurisdictional Waters").

The rule then creates new categories of per se jurisdictional waters to include those that meet the definitions of "tributaries," "adjacent," and "neighboring" waterways. 

The definition of tributary is broadly defined as:

  • Regardless of flow (i.e. ephemeral, intermittent, and perennial streams);
  • Having a defined bed an bank;
  • Has an "ordinary high water mark:" and
  • Contributes flow either directly or through another water to a Navigable Water

 The definition of adjacent is defined as:

  • bordering, contiguous or neighboring;
  • located at the head of traditional navigable, interstate, territorial seas, or tributaries or impoundments thereof

Neighboring is defined as any water within the following proximity to a Traditional Jurisdictional Water:

  • within 100 feet of the ordinary high water mark;
  • within the 100 year floodplain but not more than 1,500 feet from the ordinary high water mark of Traditional Jurisdictional Waters; and
  • within 1,500 feet of the high tide line of Traditional Jurisdictional Waters and all waters within 1,500 feet of the ordinary high water mark of the Great Lakes.

Following the per se federal jurisdictional waters, the rule still includes the catchall Significant Nexus Test that would capture any other waters that:

  • alone or in combination with other similarly situated waters in the region, significantly affects the chemical, physical or biological integrity of a Traditional Jurisdictional Water;
  • factors used in applying the Significant Nexus Test include:  consider the function of the water in sediment trapping, nutrient recycling, pollutant trapping, transformation, filtering or transport, retention and attenuation of flood waters, runoff storage, contribution of flow, export of organic matter or food resources, and provision of aquatic habitat for species located in traditional navigable water, interstate water, or territorial sea

Waters automatically subject to the Significant Nexus Test include:

  • certain regional water resources automatically fall under the Significant Nexus Test, including:  prairie potholes, carolina bays, pocosins, western vernal pools and Texas coastal prairie wetlands
  • all waters located within the 100-year floodplain of a Traditional Jurisdictional Water and those within 4,000 feet of a high tide line or ordinary high water mark of a jurisdictional water will be subject to the Significant Nexus Test.

Non-Jurisdictional Waterways

The only clear cut non-jurisdictional waterways are those that fall within the rules explicit exclusions, which include:

  1. Ditches- including those with ephemeral flow that are not a relocated tributary or excavated in a tributary, those with intermittent flow that are not relocated tributary, excavated in a tributary or drain wetlands, and those that do not flow directly or through another water into a traditional navigable water, interstate water or territorial sea;
  2. Storm water control features and wastewater recycyling features;
  3. Erosional Features- Including gullies, rills and non-wetland swales that do not meet the definition of "tributary;"
  4. Artificial lakes and ponds created in dry land for certain specified purposes such as farming or swimming; and
  5. Construction or Mining- water filled depressions associated with these activities

Current and Pending Jurisdictional Determinations

Property owners must obtain a wetland and stream delineation using a private consultant, then they submit the delineation to the Army Corp for approval. The Corps approval of a wetland/stream delineation are call Jurisdictional Determinations or JDs.  

A JD allows a property owner or developer to rely on approved delineation for purposes of determining the location, size and quality of wetlands and streams on the property. This can assist the property owner or developer in avoiding wetland impacts or minimizing such impacts as part of development.

The Clean Water Rule will not be effective until sixty (60) days after it is published in the federal register. A key question is what happens to existing JDs that were issued before the Clean Water Rule becomes effective?  The preamble to the rule states that existing JDs will be grandfathered unless:

  1. New information warrants revision of the determination before the JD expiration period; or
  2. If requested by the applicant

What about requests for JDs that are submitted after the publication date but prior to the date the rule is effective?  The Army Corps and EPA state they do not expect to issue JDs during this period.   This summer most property owners and developers will need to wait at least sixty days before being able to obtain a JD. 

Ohio EPA Releases Draft Beneficial Use Rules...Again

Over the last decade, Ohio EPA has attempted to promulgate beneficial reuse rules a number of times. Each time the rules have been released for public comment the proposals have been met with significant criticism and the proposals never moved forward.

The crux of the issue is that Ohio lacks a defined regulatory program for recycling or reuse of certain industrial byproducts such as: spent non-toxic sand, dredgings, fly ash, bottom ash, slag, etc.  Right now any person who wants to recycle or reuse these materials can either move forward and risk Ohio EPA enforcement or seek an adhoc regulatory approval from Ohio EPA.

In a prior post from 2012, I discussed the history behind the beneficial use rules.  This is a summary from my prior post:

From 1994 until the early 2000's, Ohio EPA regulated these materials under Policy 400.007 "Beneficial Use of Non-Toxic Bottom Ash, Fly Ash and Spent Foundry Sand, and Other Exempt Waste." The policy was revoked after legal challenge was raised to EPA's authority to regulate through policy. Since revocation of Policy 400.007, Ohio EPA has not had clear guidelines for reuse of these materials.

Revocation of the policy left a regulatory vacuum. Some industry representatives take the position that the industrial materials are unregulated because Ohio EPA has not established rules. Ohio EPA takes the legal position that this material is regulated as a waste under R.C. 6111 [or as a solid waste under R.C. 3734]. Ohio EPA asserts that companies need authorizations from the Division of Surface Water [or Division of Materials and Waste Management] in order to be deemed protective of water resources.

Currently, the Agency reviews beneficial use proposals either under its current Integrated Alternative Waste Management Program (IAWMP) or Land Application Management Program (LAMP)(click here for information on both programs).  Both amount to basically permits.  However, neither program has defined standards for sampling of material prior to reuse nor are there specific regulatory standards for approving uses.  More importantly, each proposed use requires its own separate IAWMP or LAMP approval.

Split Among Industries

One of the biggest challenges Ohio EPA has faced in promulgating beneficial use rules has been a split within industry groups as to the perceived need for rules.  Some industries, such as the Steel Industry, has taken the position that they do not need a regulatory approval from Ohio EPA for beneficial reuse projects involving byproducts such as slag.  These industries have strongly opposed rules for these materials.

Other industries, such as foundries, have been very supportive of rules in order to provide regulatory certainty.  These industries believe the reuse/recycle market will grow substantially if the threat of Ohio EPA enforcement is removed through rules and permits that approve uses.

Ohio EPA's latest rule package attempts to address this split within industry by specifying the rules would apply to only specific industrial byproducts and materials:  foundry sand, water treatment residuals, waste uses as a fuel, and dredged material (i.e. sediment).

Proposal Avoids the Issue of Standards

One of the biggest issues with developing a beneficial reuse program in Ohio has been the standards imposed for approving projects.  Ohio EPA has traditionally been much more conservative than industry in identifying standards for approvals.  Industry has been harshly critical of Ohio EPA's proposed standards as overly conservative leading to little use of the program. This debate has delayed the rules for a number of years.

In an attempt to avoid this controversy, Ohio EPA's latest proposal does not identify a specific standard that will be used in reviewing projects.  Rather, the proposal simply references various options the Agency could use to evaluate proposals, including:

Public Comment Period Open on Latest Proposal

On May 14th, Ohio EPA released its latest proposed draft rules for public comment.  The public comment period is open until June 22nd.  

A complete listing of the draft rules and the business impact analysis is provided on Ohio EPA's webpage (click here).  On June 10, 2015, Ohio EPA conducted an Early Stakeholder Outreach in which it made a formal presentation regarding the rules (click here for access to Ohio EPA's powerpoint presentation).  The presentation provided a simple comparison to Ohio EPA's previous proposed rule package with very little discussion of the substantive elements of the rules.

Draft Rules- An Approval Process with Little Regulatory Certainty

It appears the Agency's latest attempt at rules main purpose is to set up a defined mechanism for regulatory approvals for recycling/reuse:

  1. Pre-Approved Uses- Certain uses that are allowed so long as they meet specifications and requirements set forth in rule.  There are very few pre-approved uses in the proposal.  These include: incorporation into construction materials such as concrete or use as a fuel.
  2. General Permits-  The next step would be for Ohio EPA to release general permits that would cover large categories of reuse.  [Two example beneficial reuse general permits are still on Ohio EPA's webpage- specific uses of foundry sand and alum sludge in topsoil]
  3. Individual Permits-  Any proposal that doesn't fall within either a pre-approved use or general permit would need an individual permit.  To obtain an individual permit the permittee would need to supply additional sampling and technical justification for its proposal.

While the regulatory approval process may be defined, the rules provide little certainty with regard to the more challenging issues such as:

  • How much sampling is requires to demonstrate the levels of contamination in the material;
  • How much sampling will be required once the project is completed;
  • What standards will be used to approve the proposed use (RSLs, VAP, etc.);
  • What conditions and/or limitations will be incorporated into general permits or individual permits

Ohio EPA asserts these main issues are left vague to provide regulatory flexibility.  However, the proposal sacrifices regulatory certainty for flexibility.  The proposal is simply delaying the bigger fights until after the rules are in place.

How Easy is it for Cities to Re-Open their CSO/SSO Consent Decrees?

For over a decade, U.S. EPA has embarked on a national enforcement strategy regarding combined sewer overflows (CSOs) and sanitary sewer overflows (SSOs) from municipal wastewater treatment systems.  As part of the enforcement strategy, U.S. EPA has entered a large number of federal consent decrees which establish deadlines for the elimination of CSOs/SSOs.  These decrees impose costs in the billions of dollars and have compliance schedules that extend over decades.

As part of those decrees, U.S. EPA requires the municipalities to adopt Long Term Control Plans (LTCPs) to address wastewater treatment plan bypasses, SSOs and CSOs.  The standards and deadlines imposed within those LTCPs, in many cases, were based upon U.S. EPA guidance from the 1990s.  

Many national organizations have been sharply critical of U.S. EPA guidance, including:  NACWA (National Association of Clean Water Agencies), Association of Clean Water Administrators (ACWA), Conference of Mayors, National Association of Counties, and the National League of Cities.  These organizations argued the 1990's guidance was outdated and demonstrated significant flaws once implemented in decrees.

Following an outcry by national organizations for municipalities, U.S. EPA revisited a number of their guidance documents to address concerns raised.  As discussed in detail below, new guidance has been released by U.S. EPA in the following areas:

  • Integrated Planning- The cost of meeting both stormwater (MS4) as well as wastewater treatment system compliance requirements;
  • Affordability-  U.S. EPA's guidance was outdated and does not allow municipalities to fully present information regarding the impact of increased sewer rates on municipalities;
  • Green Infrastructure-  U.S. EPA has increasingly supported use of green infrastructure (stormwater retention, reduction of infiltration/inflow, etc.)  to reduce the amount of grey infrastructure (storage tunnels, control strategies, etc.)

Integrated Planning

One of the major criticisms of U.S. EPA national CSO enforcement strategy is that it failed to take a holistic look at all the compliance costs faced by municipalities in meeting Clean Water Act requirements. The most significant of those costs relate to stormwater management.  

U.S. EPA finally acquiesced to this criticism allowing cities to evaluate compliance with both wastewater and stormwater requirements concurrently.  U.S. EPA released new guidance titled  “Integrated Municipal Stormwater and Wastewater Planning Approaches Framework.” Memorandum from Nancy Stoner, Acting Assistant Administrator (June 5, 2012)

While the new guidance was welcomed, many municipalities are already under court orders imposes settlements to did not consider integrated planning.  

Affordability

In 1997, U.S. EPA finalized specific guidance on assessing community financial capability
titled- “Combined Sewer Overflows- Guidance for Financial Capability Assessment and
Schedule Development”
. The purpose of the guidance was two-fold: 1) identify the types of financial information that was relevant in determining a community’s financial capability; and 2) establish a specific methodology for gauging a community’s financial capability.

The most important methodology utilized by U.S. EPA to evaluate a community's ability to afford the controls and schedule for implementing controls in its LTCP is the "Residential Indicator" (RI) factor. The 1997 guidance established the methodology for calculating RI.  

  • Total annual wastewater and CSO control costs per household as a percent of median household income (referred to as the “Residential Indicator” or “RI”)

Despite statements by U.S. EPA in its 1997 guidance and in subsequent communications that RI is but one factor in evaluating affordability, a review of federal consent decrees clearly demonstrates it is the most heavily relied upon factor in establishing compliance schedules.  

Following calculation of RI, the long term compliance deadlines are established based upon whether the community falls into a "low," "medium," or "high" burden community.  

  1. Low = normal construction schedule for all improvements;
  2. Medium = up to 10 years; and
  3. High = up to 15 years and in some cases 20 years depending upon circumstances.

One of the main criticisms of RI is that it tends to washout or dilute the true impact of higher sewer rates on the lower income segments of the community.  RI only utilizes median household income to determine the percentage of overall income dedicated to paying for sewer service.  

On November 24, 2014, U.S. EPA issued new guidance on financial capability assessments- “Financial Capability Assessment Framework for Municipal Clean Water Act Requirements.” Memorandum from Ken Kopics, Deputy Assistant Administrator Office of Water (November 24, 2014).

Under the new guidance, Cities have wider latitude to present information regarding the unique
impacts of CSO/SSO and wastewater treatment compliance costs on the local community.  U.S. EPA argues that the 2014 guidance does not "replace' the 1997 guidance on affordability, it merely clarifies what was allowable under the old guidance all along.  This statement seems disingenuous given how RI has been directly referenced in a large number of SSO/CSO federal decrees.  

Clearly, the new guidance allows cities to present information regarding the impact of sewer rates on segments of its overall population, including lower income residents.  While the guidance clearly allows such information to be presented, it does not provide an strict guidance as to how much of a burden is "too much" for low income residents.  The lack of clear standards for determining unacceptable burdens on lower income residents further complicates the ability of cities to reopen existing CSO/SSO decrees.

Green Infrastructure

Most early efforts to control CSOs utilized “gray infrastructure” which involves the use of pipes,
sewers, and other structures involving concrete and steel. A very common technique to address
CSOs or WWTP bypasses is the use of storage in tanks, basins, or deep tunnels to store wet
weather combined sewer flows. The wet weather related flows can be held in storage until the
wastewater treatment plan has the capacity to treat the stored wastewater.

“Green infrastructure” (GI) use natural processes to reduce the quantity or rate of stormwater
flows into the sewer system. Common techniques are infiltration, evapotranspiration, and
capture and use (i.e. rainwater harvesting). Green infrastructure can be utilized on a small or
large scale. Small scale techniques include rain barrels, bioswales, porous pavements, green
roofs and infiltration planters. Larger scale techniques include wetlands, riparian buffers, open
space or other techniques involving larger tracts of land.

U.S. EPA has increasingly supported the use of green infrastructure to address CSOs and wastewater treatment plant bypasses. October 2013, U.S. EPA Headquarters released the Green Infrastructure Strategic Agenda which directs EPA enforcement personnel to:

  • “Ensure all water enforcement actions consider the use of green infrastructure;” and
  • “Consider green infrastructure approaches in the development of orders and settlements
    related to SSOs, CSOs and MS4s and incorporate green infrastructure as part of
    injunctive relief were appropriate.”

U.S. EPA released additional green infrastructure guidance titled “Greening CSO Plans: Planning and Modeling Green Infrastructure for Combined Sewer Overflow (CSO) Control.” U.S. EPA Publication #832-R-14-001 (March 2014).  The new guidance strongly encourages incorporation of green infrastructure into LTCPs.

While U.S. EPA has moved aggressively toward encouraging uses of green over grey infrastructure, many decrees predated the most recent information on the benefits of green.  Cities that have LTCP that almost exclusively rely upon grey infrastructure will need to make detailed demonstrations that green approaches are equivalent if not better than existing grey infrastructure. 

Re-opening Existing SSO/CSO Consent Decrees

With all the new guidance that has been released since 2013, many municipalities who have been under existing decrees rightfully question whether they have an ability to revisit their settlements. U.S. EPA indicates that it is willing to revisit settlements:

  • U.S. EPA states that remedy and affordability determinations under existing decrees can be reexamined under EPA's new Integrated Planning Approach.  EPA states such requests must be supported "with sufficient information and analysis to determine whether an Integrated Planning Approach makes sense based on sound science and appropriate technical and financial analyses." (See, Integrated Municipal Stormwater and Wastewater Planning Frequently Asked Questions (July 25, 2013))

However, the practical reality is that cities will be required to continue to comply with their existing LTCP while concurrently generating new extensive studies to support reopening their existing decree.  Most decrees also require the municipality to petition the U.S. EPA first before requesting that the court intervene. 

In addition, as highlighted by the City of Akron's recent inability to reopen its CSO decree citing new U.S. EPA guidance, cities face significant challenges.

Nevertheless, U.S. EPA has issued so much new guidance and strongly indicated a willingness to revisit existing settlements, it will be very difficult for the Agency to not acquiesce when cities present a legitimate request that is well supported using the new guidance.  

It will be interesting to see how EPA handles these requests in the next few years given what is at stake in terms of compliance costs.   

City of Cleveland Proposes Riparian Setback Ordinance

Northeast Ohio has had the largest number of political subdivisions in Ohio enact riparian and wetland setback ordinances.  Now, the City of Cleveland is proposing to get into the act with its proposed Setback Ordinance 1555-13.   

News of the City's proposal got out this week when many property owners who could be subject to the ordinance received a standard public notice letter regard the proposed riparian setback ordinance.  I received calls with concerns regarding the potential impact.

Applying setback requirements to an urban core will present more challenges than applying them to rural areas or even in the suburbs.  As discussed below, urban areas are denser, with smaller lots which increases the impact of setback on landowners in the City.

Despite the difference in applying setback ordinances to an urban core, the City's proposal is based upon the model ordinance that had been circulated and was adopted by many suburban communities. No significant changes were made to account for the differences.

Cleveland Proposed Setback Ordinance

Here are some key elements of the proposed setback ordinance:

  • Setbacks apply to all watercourses, except the Cuyahoga Navigation Channel and lake front areas;
  • A map is referenced purporting to show which areas are covered by the setback ordinance.  However, the ordinance states that if the map is inconsistent with the definition of watercourse in the ordinance, the ordinance trumps the map;
  • River and stream setbacks are from 75 to 300 feet depending upon the size of the watercourse.  However, if the 100 year flood plain extends further, then the setback is extended to the edge of the 100 year floodplain;
  • New new structures can be constructed within the setback area without a variance; 
  • Existing structures are exempted from the the ordinance, so long as they are not abandoned for more than six months;
  • Activities prohibited within the setback include:
    • Grading or filling
    • Any disturbance of natural vegetation
    • Dredging or dumping
    • Roadways or parking lots
  • A violation of the ordinance is a criminal misdemeanor

Map versus the Ordinance- What Streams are Covered?

The ordinance includes a map which purports to show the location of all rivers and streams covered by the ordinance.  However, the ordinance makes clear that setbacks apply to all "watercourses" except the Cuyahoga Navigation Channel and Lake Erie.  

Watercourse is defined as anything with a "defined bed and bank."  By this definition even drainage ditches will be potentially deemed covered by the setback requirements.  

This has proved to be true with regard to Army Corps of Engineer jurisdictional determinations under the Clean Water Act. (Click here for article discussing controversy on Corps jurisdictional determinations). 

Some may say this fear is overblown, however, in the 404/401 permitting process many small waterways are considered federal jurisdictional streams that many in the general public would not even consider a stream. 

One way to address this issue would be to revise the definition of "watercourse" to apply the setback requirement to only perennial and intermittent streams (excluding ephemeral streams and man-made ditches).

Challenges to Applying Riparian Setback to More Urban Areas

The setback ordinance operates basically as a no build zone.  Property owners are typically concerned that the restrictions will limit the productive use of their property.  In urban areas, where lots typically are smaller, the setbacks have the potential for much greater effect on a landowner's "reasonable use" of their property.  

Studies show that parcels of 1-2 acres can be significantly impacted by relatively narrow setback requirements.  In some cities, such as Cupertino California, city planners attempted to address this concern by reducing the size of these setback based upon the lot size. Lots less than one acre in size must provide a 50-foot stream buffer zone; sites over one acre must leave 100-foot buffers. 

Not many other major cities have enacted riparian setback ordinances, one such example is the City of Atlanta's Riparian Buffer Law.  

Seeking a Variance

Construction within the setback is permissible, however, the property owner must obtain a variance. The legislation puts significant limitations on granting of variances.  Some of the grounds for granting a variance include:

  1. A parcel existing at the time is rendered unbuildable-  this is a very high standard, equating to a total taking of the parcel.
  2. Degree of hardship on the landowner weighed against the degree of hardship with respect to maintaining the setback.  This includes the availability of alternatives to the proposed structure or use.
  3. The presence of impervious cover or maintain lawns in the setback area that diminish the value of the setback.
  4. Whether the building shape or design can be modified to minimize the impact to the setback.
  5. in cases where the lot is unbuildable, the minimum variance needed to make the lot buildable.

Takings Claims under the United States Constitution

I've been often asked whether imposing setback requirements on property owners constitutes a Takings under Constitution.  The Takings Clause of Article V of the United States Constitution states that “nor shall private property be taken for public use, without just compensation.”

The general test as articulated by the U.S. Supreme Court (Pennsylvania Coal Co. v. Mahon, 260 U.S. .393, 413 (1922)) for whether government action constitutes a takings is as follows:

  1. The regulation “denies all economically beneficial or productive use of land.” Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992) (often referred to as the “Lucas test”); or
  2. The regulation, although falling short of denying all economic use of the
    land, nonetheless effects a taking upon a review of a complex set of
    factors, including: (i) the economic impacts of the regulation, including
    the extent to which the regulations has interfered with “distinct
    investment-backed expectations”; and (ii) the character of the
    governmental action, specifically whether health, safety or general welfare
    would be promoted by prohibiting particular uses of land. Penn Central,
    438 U.S. at 124-25 (often referred to as the “Penn Central test”).

The Supreme Court also has stated that when evaluating whether something constitutes a Takings you must consider the "parcel as a whole," not just the portion subject to the law or restriction.  Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002)

The City's proposed legislation tries to build in some safeguards to prevent Takings Claims.  For example, one ground for issuing a variance is whether the property is rendered "unbuildable."

Whether something constitutes a Takings under the proposed legislation will be property specific.  It will also depend upon how the ordinance is applied in practice, if it passes.  

Conclusion

Given the impacts of the proposed legislation, it is certain to attract a lot of attention.  If the setback ordinance is enacted, a entirely new regulatory program will impact development within the City.   It is also likely legal claims will be brought to either challenge the ordinance or its application to specific property.