Ohio EPA Limits Use of Expedited Wetland/Stream Permitting to Certain Areas of the State

Developments that have small impacts to wetlands (typically around 1/2 acre or less) or streams (typically around 300 feet or less) have been able to qualify for expedited permitting known as Nationwide Permits (NWP).  Projects with greater impacts must obtain individual wetland or stream permits known as a 404 Army Corps Permit and 401 Ohio EPA Water Quality Certification (click here for Basics of Wetland Permitting).

Most developers try to arrange their development projects to stay under NWP thresholds if at all possible due to the time and cost savings associated with expedited permitting, which include:

  • Time Savings- NWP time frame 3-6 months versus 12-18 months for individual 404/401
  • Costs Savings- Permitting preparation range can be from $8,000 to $15,000 or more in cost savings just in permit preparation costs

The process for developing NWPs starts with the Army Corps of Engineers proposing NWP for the entire country under its 404 Clean Water Act authority.  Each individual state has the option of placing restrictions on usage of the NWPs under its 401 Clean Water Act authority.  The NWPs once finalized are effective for five years.

On March 17, 2017, Ohio EPA finalized its 401 water quality certification for the 2017 NWP.  The 2017 new NWPs are effective from March 19, 2017 through March 18, 2022.  

Under the new 401 water quality certification, Ohio EPA has placed significant limits on the use of the expedited permits for impacts to high quality streams in Ohio.  The Agency has developed a color coded map that designates areas into three categories:

  • Ineligible Areas (Purple)- Any impacts to streams in these areas are ineligible for coverage under NWP.  Any project with stream impacts in these areas must pursue an individual 404/401 permit.
  • Possibly Eligible Area (Yellow)-  Any impacts to streams in these areas require additional work before an applicant will be eligible for a NWP.  The applicant must:
    • Take pH values
    • Perform a habitat assessment- Qualitative Assessment Habitat Evaluation Index (QHEI) or Headwater Habitat Evaluation Index (HHEI) assessment of the stream. 
  • Eligible Areas (No color code)- any proposed  impact to streams within the project area are eligible for NWP coverage.

 In Northeast Ohio, the much of the Rocky and Cuyahoga River watersheds are color coded purple (ineligible for NWPs).  These new restrictions will have significant consequences for developers and property owners throughout Ohio.

U.S. Supreme Court to Decide Whether Army Corps JDs Can be Challenged in Court

In prior posts, I have discussed the split in the federal circuit courts over whether Army Corps of Engineers (ACOE) Jurisdictional Determinations (JDs) can be challenged in Court.  A JD is the ACOE formal determination as to whether streams and wetlands are federally protected under the Clean Water Act and whether a 404/401 permit is needed prior to any disturbance or impact.

The Eighth Circuit Court of Appeals determined that an approved JD is a final agency action that can be challenged. See, Hawkes Co., Inc. et al v. Corps, Case No. 13-3067 (April 10, 2015). The Eighth Circuit Court decision reached the opposite conclusion as the Fifth Circuit in Belle v. Corps., 761 F. 3d 383 (5th Cir. 2014) which held JDs could not be challenged in Court and can only be challenged through administrative procedures before the ACOE.

On December 11, 2015, the Supreme Court agreed to hear the case due to the split in the circuits.   A decision in this case is expected some time before June 2016.  

Property owners face a Hobson choice if JDs cannot be challenged in Court.  They can defer their legal challenge and start the permitting process, forgo the development altogether or risk enforcement by proceeding without the proper permits.   

The ACOE and U.S. EPA argue that JDs do not make any final legal determinations because the property owner still has the options outlined above.  Frankly, this seems ridiculous.  There should be a legal means to argue the ACOE overstretched and asserted jurisdiction over wetlands that were outside the coverage of the Clean Water Act.  Especially when the scope of jurisdiction under the Clean Water Act is still so unclear, even after two separate Supreme Court decisions.  Why not give the property owner their day in Court?

I have heard legal scholars opine that the Court will look to the Administrative Procedures Act and will determine, from a legal perspective, JDs are not appealable.  If the Supreme Court reaches that conclusion it will be an unfortunate circumstance for property owners.  Purely from a policy perspective, their should be a way to challenge Corps decisions before a neutral third party.

Some also speculate that that if the Court does find JDs are appealable, the ACOE may simply stop issuing approved JDs.   Again, from a policy perspective that would be a very unfortunate result.

The Significant Nexus Test used to determine jurisdiction established by the Justice Kennedy in Rapanos is by no means clear cut.  It involves balancing various factors as to how closely related small water bodies are to larger water bodies.   Under the test, a waterway is evaluated to determine whether it impacts the "chemical, physical, and the biological integrity" of a navigable water. If it does impact a navigable water in that manner, then it falls under federal jurisdiction.

With such a subjective method of determining jurisdiction, property owners should be entitled to have a legal determination as to whether the wetlands or streams on their property fall under federal protection.  After receiving a legal determination, the property owner should also have a means to challenge the federal agency's determination.

Sixth Circuit Issues Stay of the Clean Water Rule

Today, the Sixth Circuit issued a stay of the Clean Water Rule in response to a challenge filed by eighteen states, including Ohio.  The issuance of a stay represents a major set back to EPA in  effort to better define the limits of federal jurisdiction under the Clean Water Act (CWA).  Unlike the stay issued by the North Dakota District Court, this stay applies to implementation of the rule nationwide.

The CWA limits jurisdiction 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. Justice Kennedy, plurality decision in Rapanos held that CWA jurisdiction extended to both navigable waters and any non-navigable water that had a "significant nexus" to a navigable waterway.

EPA issued the Clean Water Rule in attempt to better define how the significant nexus test should be applied as well as establish which waterways were exempt from coverage.  The rule was harshly criticized as an overreach by EPA. Soon after its release, the rule was challenged by a number of states and business groups.  

States sought a stay of the effectiveness of the rule while the Court considers their challenge.  The issuance of a stay prevents EPA from using the the Clean Water Rule to define federal jurisdiction over wetlands or streams.  In order to be granted a stay, the states challenging the rule had to demonstrate they were likely to win on their challenge to the legality of the rule.  In addressing this issue the Court said the following:

Meanwhile, we conclude that petitioners have demonstrated a substantial possibility of success on the merits of their claims. Petitioners first claim that the Rule’s treatment of tributaries, “adjacent waters,” and waters having a “significant nexus” to navigable waters is at odds with the Supreme Court’s ruling in Rapanos, where the Court vacated the Sixth Circuit’s upholding of wetlands regulation by the Army Corps of Engineers. Even assuming, for present purposes, as the parties do, that Justice Kennedy’s opinion in Rapanos represents the best instruction on the permissible parameters of “waters of the United States” as used in the Clean Water Act,3 it is far from clear that the new Rule’s distance limitations are harmonious with the instruction.

Now that the stay has been issued, the Army Corps of Engineers (ACOE) will have to revert back to the prior methods for issuing Jurisdictional Determinations (JDs) which were largely based on internal guidance.  

In practical experience, the ACOE has been aggressive in asserting jurisdiction over wetland and streams even before the Clean Water Rule.  However, the rule would have provided them more legal support for their determinations when they are challenged.

With the Court's grant of a stay, it seems pretty likely the rule will be overturned and EPA will have to go back to the drawing board.

Split in Circuits as to Whether Army Corps JD's are Appealable

Bringing some level of sanity to the current state of wetland and stream permitting, the Eighth Circuit Court of Appeals has determined that an approved jurisdictional determination (JD) is a final agency action that can be challenged. See, Hawkes Co., Inc. et al v. Corps, Case No. 13-3067 (April 10, 2015). The Eighth Circuit Court decision reached the opposite conclusion as the Fifth Circuit in Belle v. Corps., 761 F. 3d 383 (5th Cir. 2014)(Click here for prior blog post discussion of Belle).

What is a Jurisdictional Determination?

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). The key issue- what is a "federally protected stream or wetland?"

You might think determining what is federally protected would be an easy question to answer and there must be some easily accessible inventory of wetlands or streams. However, there is no reliable national database of wetlands and streams.  The National Wetland Inventory is based upon outdated information and is totally unreliable.

Due to a lack of such basic information, it falls upon the property owner or developer to comply with the law.  This includes ensuring that they do not impact federally protected wetlands or streams without obtaining the requisite Army Corps 404 permit and State 401 Water Quality Certification.

As a first step, many developers and property owners will hire a wetland consultant to perform a wetland delineation on the property.  The delineation is the consultant's opinion as to whether federally protected wetlands or streams exist on the property.  The delineation will also determine the size and quality of the water resources on the property.

However, the delineation is not a legal determination.  Only the ACOE can determine if wetland or streams are federally protected.  Therefore, although not required, many property owners/developers submit their wetland delineations to the ACOE for concurrence.  This is called a "Jurisdictional Determination" or JD.  See, 33 CFR 320.1(a)6)

The issue that arises is that the ACOE and consultants don't always agree as to whether a wetland or stream is federally protected.  In many instances, the ACOE can be much more aggressive in asserting jurisdiction which triggers a lengthy and costly permitting process for impacts to those water resources.

Due to significant implications of a JD, it can be in the property owner/developers interest to challenge the JD if they believe the ACOE has been overly aggressive.  Until the Eighth Circuit opinion, courts had held that JDs were not final appealable actions.

Facts of Case Highlight the Issues with the Current Wetland Permitting Process

The Eighth Circuit Court recites the factual background that led to the case.  The facts show actions by the ACOE that were aggressive and abusive toward the property owner.  The facts are worth discussing because they demonstrate that extreme frustration that some property owners experience in dealing with the ACOE and the current state of the wetland permitting process:

In March, the Corps sent a letter advising it had made a “preliminary determination” the wetland is a regulated water of the United States and, “at a minimum,” an environmental assessment would be required. At an April meeting, a Corps representative told Pierce a permit would take years and the process would be very costly. During a site visit in early June, another Corps representative told a Hawkes employee that “he should start looking for another job.”

In August, the Corps sent Hawkes a letter advising that nine additional information
items costing more than $100,000 would be needed, including hydrological and
functional resource assessments and an evaluation of upstream potential impacts. In
November, Corps representatives met with the land owner and urged that he sell the
property to a “wetlands bank,” advising that an environmental impact statement would likely be required, delaying the issuance of any permit for several years.

Making matters worse, the property owner's consultant felt that the ACOE preliminary determination that the wetlands were federally regulated was flawed.  As a result, the owner exercised its limited administrative appeal right to challenge the preliminary decision.

The Corps’ Deputy Commanding General for Civil and Emergency Operations sustained the appeal, concluding after detailed analysis that the administrative record “does not support [the District’s] determination that the subject property contains jurisdictional wetlands and waters,” and remanding to the District “for reconsideration in light of this decision.”

Despite the decision, the ACOE decided to re-issue the JD as final still concluding that the wetlands were federally protected.  When the property owner attempted to appeal the final JD, the ACOE, consistent with the Belle Case, determined there was no appeal right from a final JD.

As discussed below, the facts in this case made it very easy for the Court to reach its decision a JD is an appealable action.

Eighth Circuit Determines JD is a Final Appealable Action

The U.S. Supreme Court summarized the test for determining whether a federal agency action is a final appealable action:

As a general matter, two conditions must be satisfied for agency action
to be “final”: First, the action must mark the consummation of the
agency’s decisionmaking process -- it must not be of a merely tentative
or interlocutory nature. And second, the action must be one by which
rights or obligations have been determined, or from which legal
consequences will flow. See, Bennett v. Spear, 520 U.S. 154, 177-78 (1997)

Courts, including Belle, have determined that JDs satisfy the first prong of the test- JDs mark the consumation of the agency decision making process.  For example, the Corps’ Regulatory Guidance Letter No. 08-02, at 2, 5, described an Approved JD as a “definitive, official determination that there are, or that there are not, jurisdictional ‘waters of the United States’ on a site,”
and stated that an Approved JD “can be relied upon by a landowner, permit applicant,
or other affected party . . . for five years”

However, courts, including Belle, held that the second prong of the test was not met-  that the 
JD is not a final agency action “for which there is no other adequate [judicial]
remedy,” 5 U.S.C. § 704,

Courts had held that property owners/developers have two other adequate ways to contest the Corps’ jurisdictional determination in court -- complete the permit process and appeal if a permit is denied, or commence construction without a permit and challenge the agency’s authority if it issues a compliance order or commences a civil enforcement action.

The Eighth Circuit strongly disagreed with this view.  First it noted the time and cost of the typical 404 permitting process citing to the Supreme Court comments in Rapanos, 547 U.S. at 721, that the average applicant for an individual Corps permit “spends 788 days and $271,596 in completing the process.”  The Court said that even if the property owner completed the permitting process and then challenged the JD determination, it would never recover the lost time and money necessary to complete the permitting process.

Second, the Eighth Circuit dismissed the notion a property owner can simply initiate construction and wait to see if the ACOE tried to stop the work from progressing.  The Court noted that commencing construction without a permit and impacting wetlands or streams the ACOE determined were federally protected would expose the property owner/developer to substantial criminal monetary penalties and even imprisonment for a knowing CWA violation.

On this basis, the Eighth Circuit concluded that a JD is appealable.  It noted that to hold otherwise would allow the ACOE to be overly aggressive in asserting jurisdiction knowing the property owner/developer had no realistic legal remedy.  

There is very strong logic to the Eighth Circuit determination.  Now that there is a split in the Circuits we will see whether the Supreme Court hears the forthcoming appeal of the Court's determination.