How Quickly Can President Trump Unwind Environmental Regulations?

President Elect Trump has vowed to unwind regulations which he believes are dramatically constraining economic growth.  The Obama Administration's environmental regulations are specifically being targeted, including:  the Clean Power Plan, the Waters of the U.S. Rule and ozone regulations. His transition web-page even touts that for every one new regulation enacted his Administration will remove two old regulations.  

Billionaire investor Carl Ichan was given the position of Special Adviser on Regulatory Issues.  As reported on CNBC, Mr. Ichan said this about government regulation when his new position was announced:

"Under President Obama, America's business owners have been crippled by over $1 trillion in new regulations....It's time to break free of excessive regulation and let our entrepreneurs do what they do best: create jobs and support communities."

But just how quickly can the Trump Administration unwind environmental regulations?  What tools does the Administration have at its disposal to reduce or eliminate environmental regulation?

Federal Rulemaking Process

The rulemaking procedures for federal agencies, including U.S. EPA, are governed by the Administrative Procedures Act (APA).  While the APA imposes a formal process for adoption of new rules that naturally slows the pace of federal rulemaking, it also imposes restrictions on the ability to either remove existing regulations as well as stop regulations once they are in process.

The APA (5 U.S.C. Section 553) requires a four step rulemaking process:

  1. Issue a notice of proposed rulemaking;
  2. Receiving comments on the proposed rule;
  3. Issue a final rule; and
  4. Setting an effective date at least 30 days after publication of the final rule n the Federal Register.

Once a rule has completed this four step process, it becomes much more difficult to remove or prevent the rule from going into effect.  Below are some of the administrative, legislative and legal strategies the Trump Administration may employ to reduce and/or eliminate environmental regulation.

Executive Order to Stop Regulations in Process

On the first day of office, President Trump can have a memorandum issued directing all federal agencies, including the U.S. EPA, to freeze current rule making efforts.  Similar memorandums were issued on the first day by Bush and the Obama Administrations.  But the APA has limits on the authority to derail current rulemaking efforts.

A similar memorandum was issued on January 20, 2001, by Andrew Card, President Bush's Chief of Staff.  See, 66 Fed. Reg. 7702 (Jan. 24, 2001) The memo directed executive agencies to withdraw rules not yet published and to postpone the effective dates of public regulations. However, prior Court precedent forced agencies to go through proper APA procedures prior to withdrawing or delaying rules. 

In Natural Resources Defense Council, Inc. v. EPA, 683 F.3d 752 (3d Cir. 1982) the Court specifically addressed whether indefinite postponement of an EPA rule would violate the APA.  At issue was an EPA rule that had completed the four-step APA process with an effective date.  An Executive Order was issued to suspend the effective date of certain rules to reconsider the costs and benefits of the new rule.  The Court held that such a postponement was tantamount to rulemaking itself and the four step APA process would need to be completed to delay the effective date of the rule.

A GAO study showed that the Card memorandum resulted in the delay of the effective date of 90 rules and 15 rules still had not gone effective after one year from the date of issuance of the memorandum.  See, U.S. General Accounting Office, GAO-02-370R, Feb. 15, 2002.

While the Trump Administration can delay rules in process, past precedent shows that executive authority to stop a rule in process is does have constraints.

Slow the Pace of New EPA Regulations

The Trump Administration can also direct U.S. EPA to be cautious in adopting any new regulations. Certainly the new Administration can reduce the number of newly adopted regulations.  A similar action was taken by President Reagan through his Executive Order 12291.  The Order enacted on February 17, 1981, required all agencies perform a "Regulatory Impact Analysis" to determine if the "potential benefits to society for the regulation outweigh the potential costs to society" and the rule with the "least net cost to society" shall be enacted.

President Reagan order did reduce the number of new regulations adopted during his Presidency. However, such an Executive Order cannot prevent all new rulemaking, in particular with regard to U.S. EPA that is statutorily required to adopt certain regulations.

In fact, environmental groups often sue U.S. EPA to force adoption of new regulations.  Such suits were common during the Bush Administration.  Environmental statutes, such as the Clean Air Act and Clean Water Act, contain citizen suit provisions that authorize third parties to compel an agency to perform a mandatory act under those statutes.  See, Clean Air Act, 42 U.S.C. Section 7604(a)(2) and Clean Water Act, 33 U.S.C. Section 1365(a)(2).

However, litigation takes time.  Even if Courts agree and order the U.S. EPA to adopt statutorily mandated regulations, the Trump Administration will have the power to slow pace of newly adopted EPA regulations.

Legislative Options

The Congressional Review Act (CRA- 5 U.S.C. Section 801-808) requires federal agencies to submit rules to Congress for review.  Under the CRA, Congress has the ability to revoke rules through a special joint resolution during the 60 day period following the rules submission to Congress.

While the CRA could be used to revoke rules enacted at the end of the Obama Administration, the process to adopt a special joint resolution is required for each rule to be rescinded.  Therefore, the process is time consuming.  

As discussed in Forbes, another option is to pass legislation such as the RED Tap Act (S. 1944), which would require elimination of one rule for every new rule enacted.  

Current Litigation Involving Obama Administration EPA Rules

Challenges to two of the Obama Administration's signature environmental rules- the Clean Power Plan and the Waters of U.S..- are still pending in the Courts.  The Trump Administration could simply not put on a strong defense to rules currently being challenged.  If the Court invalidates a rule, then the Trump Administration could simply choose not to enact the rule.

Authority to Repeal Existing EPA Regulations

While the ability to delay or revoke rules in process is important, what authority does the Administration have to revoke rules that are currently in place.  Previous Administrations have learned, typically through the courts, that Presidential powers to revoke existing rules is limited.  An existing regulation can only be amended or repealed if the four step APA rulemaking process is followed.  Furthermore, the APA requires the Administration to not act "arbitrary" or "capricious" in revoking or amending a rule.  In other words, the Agency must justify its change in position.  See, FCC V. Fox Television Stations, Inc., 556 U.S. 502 (2009).

A good example of the limits on the ability to revoke prior enacted rules is the Tongass National forest exemption to the U.S. Department of Agriculture's "Roadless Rule" which limited road construction and timber harvesting in national forests.  The Roadless Rule was promulgated under President Clinton.  President Bush created an exemption to the rule that was challenged in Court as arbitrary and capricious under the APA.  After years' of litigation, the Ninth Circuit Court of Appeal overturned the exemption stating the Agency provided insufficient justification for its change in policy.  See, Organized Village of Kake v. USDA, 795 F.3d 956 (9th Cir. 2015)

Conclusion

Clearly, the Trump Administration can slow down the regulatory rulemaking process.  It can also choose not to defend rules currently being challenged in the Courts.  However, under the APA, the Administration cannot simply revoke existing rules without sufficient technical and legal justification.  

First 100 Days- Repeal of the Clean Water Rule and Clean Power Plan

In a major upset, Donald Trump wins the Presidency last night.  In less than twenty-four hours after the official concession by Secretary Clinton, people are scrambling to figure out what a Trump Presidency really means.  Because he was purposefully silent on specifics during the General Election, many are left this morning "reading the tea leaves" to figure out what the future might hold. It is no different when it comes to the future of the EPA and environmental regulations.

Clearly, President-Elect Trump intends to reduce environmental regulation.  Just how far he plans on going has yet to be seen.  However, two of the most significant EPA regulatory actions under the Obama Administration are clearly on the chopping block-  the Clean Water Rule and Clean Power Plan.

What repeal of the Clean Water Rule will mean?

The Clean Water Rule was the Obama Administration's attempt to extend the reach of federal jurisdiction under the Clean Water Act to most waters and wetlands.  To understand the reason for the Clean Water Rule it is important to review the long history that led to is promulgation by EPA.

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.  

As applied, the "significant nexus" test extends jurisdiction to small tributaries and wetlands separated from large rivers or water bodies.  Under the test, these smaller streams or wetlands fall under federal jurisdiction if impacts to the stream or wetland would affect the "chemical, physical, and the biological integrity of a navigable water."

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.  The Sixth Circuit Court issued a stay blocking implementation of the rule until the case could be heard.  

There is little doubt the a Trump Administration will repeal the Clean Water Rule as a significant overreach of federal jurisdiction under the Clean Water Act.  However, unless the rule is replaced with a new definition of "waters of the U.S." businesses and individuals will have no regulatory certainty.  Repeal of the rule will mean continuation of the status quo of vague guidance and litigation in the Courts over the extent of federal jurisdiction.  

What will be fascinating to see is whether a Trump Administration is simply satisfied with repeal of the Clean Water Rule or whether the Administration attempts to provide much needed regulatory certainty. One approach would be to limit federal jurisdiction under a new rule and rely on the states to determine which smaller streams or more isolated wetlands should be protected strictly under state law.  Ohio provides a good example of how this regulatory structure could work as it was one of the few states that passed a law protecting isolated wetlands after the Supreme Court decision in Rapanos.

Revoking the Clean Power Plan

It is also clear that the Obama Administration most significant regulatory action- promulgation of the Clean Power Plan- will be undone within the first 100 days of the Trump Presidency.  Years of technical and legal work by EPA went into development of the rule.  However, the rule was based on very tenuous legal grounds.  

After repeal, unlike the Clean Water Rule, there is virtually no chance the EPA under President Trump will replace the Clean Power Plan.  Furthermore, there is a very good chance additional climate change regulatory actions by EPA will be eliminated.  

However, despite those who forecast the end of all climate change related regulation, the Clean Air Act will still exist.  The Supreme Court has already decided that greenhouse gases are a "pollutant" under the Clean Air Act.  What this means is a likely a return the the Bush-era on climate change litigation- Blue States and environmental groups using the Courts to push for regulation or blocking attempts to repeal enacted regulations.  Litigation means less certainty for businesses, however, less regulation is a certainty as well.

Supreme Court Decides Army Corps JD's Can be Appealed

In a very significant case for property owners and developers, the U.S. Supreme Court issued its decision today that Army Corps Jurisdictional Determinations (JDs) are final agency actions which can be challenged in Court.  In U.S. Army Corps of Engineers v. Hawkes, the Court determined that JDs meet the test for final agency actions:

  1. A JD marks the consummation of the Agency's decision making process; and 
  2. JDs determine rights or obligations from which legal consequences flow

Federal Jurisdiction under the Clean Water Act

It has been well documented on this blog that whether a stream or wetland falls under the jurisdiction of the Clean Water Act (i.e. federally regulated) has been a complex issue.  There have been numerous challenges to the Army's Corps of Engineer's (ACOE) jurisdiction under the Clean Water Act.  

In a prior decision, the Supreme Court in Rapanos created the "Significant Nexus Test" as the means to determine jurisdiction.  The test involves balancing various factors as to how closely related small water bodies are to larger water bodies. Under the test, a waterway or wetland 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.

The Army Corps has been aggressive in asserting jurisdiction under the Significant Nexus Test.  The Clean Water Rule, currently under appeal before the Sixth Circuit, was the EPA's attempt to define jurisdiction in conformance with prior Supreme Court guidance.  The Rule has been challenged as going well beyond the Supreme Court's guidelines for federal jurisdiction under the Clean Water Act.

Jurisdictional Determinations (JDs)

A Jurisdictional Determination (JD) is issued by the ACOE as its determination whether particular property contains federally protected wetlands or streams.  The JD is the ACOE application of the Significant Nexus Test to the property.  Due to the ACOE aggressiveness in asserting jurisdiction, many property owners and developers have wanted to challenge JDs. 

However, a complicating issue for property owners and developers is that the ACOE had maintained that JDs were not final appealable actions that could be challenged in Court.  This left the property owners and developers with a "Hobson choice:"

  • Administratively appeal the JD which means the ACOE makes the decision as to whether the JD is valid;
  • Assert the ACOE is without jurisdiction, proceed with the development and risk enforcement with criminal sanctions or civil penalties; or
  • Comply by submitting a costly permit application (404 permit)

None of these choices were deemed attractive.  With the Court's decision in Hawkes, Courts can now hear challenges to JDs.  

Due to the subjective nature of the Significant Nexus Test, property owners and developers should be entitled challenge ACOE determinations in court.  Today's decision will likely result in a flood of challenges to JDs in federal courts.

 

Highlights from 2015 ABA SEER Spring Meeting

The Clean Power Plan and Waters of the U.S. Rule have dominated much of the discussion at the ABA's Spring Meeting of the Section of the Environment, Energy and Resources (SEER) in Chicago.  SEER is a gathering of nations prominent environmental and energy attorneys from both the private sector and government.

Waters of the U.S. Rule (WOTUS)

The WOTUS rule defines the jurisdiction of the Clean Water Act.  WOTUS was issued after the Supreme Court suggested in the Rapanos decision that the regulated community would benefit from a rule.  EPA released the rule earlier this summer.  As previously discussed in a prior post, the Sixth Circuit has issued a stay of the EPA's WOTUS rule after numerous lawsuits have been filed.  

Steven Neugeboren, Associate General Counsel, Water Law Office, U.S. EPA, discussed the Agency's development of the rule.  He emphasized that the Administrator's directive in developing WOTUS was to "follow the science."   He opined that part of the reason for all of the litigation and controversy surrounding the rule is based upon "speculation" and "fear" fostered by some in the regulated community regarding the scope of the rule.  

As an example, Mr. Neugeboren cited to public comments on the draft of the rule that argued EPA was trying to regulate puddles.  EPA responded by putting specifically in the final rule that puddles are exempt form regulation.  In response, he indicated some commented that the inclusion of the exemption was an indication EPA planned to regulate puddles all along.

Comments on the private bar during the conference have centered on the broad scope of the rule. EPA's approach in the rule was described as extending regulation to virtually every waterway and relying upon narrow exemptions to carve out instances EPA deems regulations unnecessary.  Due to the broad and vague language used in WOTUS there is tremendous uncertainty as exactly what is covered under the rule.

Are Wetland/Stream JD's Appeallable?  The Supreme Court Will Decide

As a first step in wetland/stream permitting, many developers and property owners will hire a consultant to perform a wetland and/or stream 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 consultant's delineation is not a legal determination. Only the Army Corps of Engineers (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 Eighth Circuit Court of Appeals 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 Court determined that if a JD is not appeallable a property owner is left with the Hobson choice of risking enforcement or acquiescing to the ACOE permitting process.

At the conference, a panel discussed the likelihood the the Hawkes case would be heard by the U.S. Supreme Court.  Because there has been a split in the circuits, the panelists all believed the case would likely be heard.  

Panelist Ray Ludwiszewski, attorney at Gibson, Dunn & Crutcher, offered his opinion that while the case would be heard, he believed the Court would determine a JD is not appeallable because JDs are voluntary.  He distinguished JDs to the enforcement order that was issued by EPA in the Sackett case which compelled the property owner to comply.  

Professor Richard Lazarus, Harvard, agreed that the voluntary nature of JDs may be a key factor in how the Court would rule, but he said the Court may rule JDs are appeallable because the Court, in prior decisions like Sackett, showed its "anger" over the EPA's application of the 404 wetland/stream permitting and the "heavy handed nature of government regulation" in this area.

Clean Power Plan

Not surprisingly, EPA strongly defended the legality of the rule at the conference while attorneys from the private sector questioned its legal foundation.  The biggest open issue regarding the legality of the Clean Power Plan was the scope of Section 111(D) of the Clean Air Act.   Conference participants agreed the key issue is whether EPA's authority Section 111(D) is limited to the "fence line" at a power plant or provides much broader authority to regulate the mix of energy (coal, natural gas and renewables) across the country.

Another issue discussed was the uncertainty caused by litigation  The States must file their plans to comply (referred to as a "State Implementation Plan" or "SIP") by September 2016.  The rule allows incentives to State's to file SIPs.  For example, states can get more time to develop their plans and cannot participate in a emission trading plan if they don't submit a compliance plan. Despite the incentives, states that strongly oppose the rule may elect to not file a compliance plan.  

Art Harrington, attorney from Godfrey & Kahn, discussed the uncertainty the rule is causing in his State of Wisconsin.  The implementation time lines and requirements, especially with the cloud of litigation, is causing tremendous uncertainty in the regulated community.  

Monica Trauzzi, reporter for E&ETV/E&E Publishing, commented that in her discussions with Governors and State agency air directors, the states are having conversations around development of compliance plans.   Conversations are occurring even in states strongly opposed to the plan because the utility industry has been putting pressure on states due to the uncertainty associated with failing to comply with the plan.

 

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.

Federal District Court Blocks EPA's Water's of the U.S. Rule

Last week, the U.S. District Court for North Dakota imposed a preliminary injunction against EPA's implementation of its "Waters of the U.S. Rule" which defines the waterways and wetlands regulated under the Clean Water Act.  See, North Dakota v. EPA.  The Court issued its decision despite the EPA and Army Corps’ argument that exclusive jurisdiction to hear the challenge to the rule lies with the Sixth Circuit Court of Appeals, where several similar cases are currently pending review.

In order for the Court to issue a preliminary injunction it must determine that the State of North Dakota (and other challengers) have a "likelihood to succeed on the merits" once the Court makes its final determination of the legality of the rule.  In holding that the State of North Dakota would likely succeed, the Court found that EPA went beyond the test articulated by Justice Kennedy in the Supreme Court's decision in Rapanos when developing the rule:

The Rule allows EPA regulation of waters that do not bear any effect on the “chemical, physical, and biological integrity” of any navigable-in-fact water. While the Technical Support Document states that pollutants dumped into a tributary will flow downstream to a navigable water, the breadth of the definition of a tributary set forth in the Rule allows for regulation of any area that has a trace amount of water so long as “the physical indicators of a bed and banks and an ordinary high water mark” exist.

The 13 states covered under the Court’s injunction are: Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming. Practically speaking, this means that two different standards for determining federal jurisdiction over waters exist. at least under the Sixth Circuit rules.

Two other District Court's ruled that district courts do not have jurisdiction to hear challenges to EPA’s rule defining waters of the United States because courts of appeal have original jurisdiction over “any effluent limitation or other limitation" citing § 509(b)(1) of the CWA, 33 U.S.C. § 1369(b)(1). See, Murray Energy v. EPA and Georgia v. McCarthy, et al.,

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.

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.

Science Board Weighs in on EPA's Water Jurisdiction Rule

The Science Advisory Board (SAB) has provided advice and comment on EPA's proposed rule that defines which streams and wetlands are federally regulated.  The SAB's comments are interesting in two ways:

  • Despite comments that EPA's proposal pulls under federal regulation way too many waterways, SAB believes there are too many exceptions in the EPA's proposal; and
  • The SAB seems to be frustrated with the lawyers deciding which streams, wetlands and water bodies should be regulated under the Clean Water Act.  

Background on Supreme Court Clean Water Act Decisions

Federal regulations clearly define "waters of the United States" in 40 CFR 122.2 to include "navigable waters" (i.e. those waterways used for commerce) as well as interstate waters. What has not been clear is the scope of "other waters" that fall within federal jurisdiction.

The extent of federal jurisdiction over streams and wetlands has been unclear ever since the Supreme Court issued its decisions in Solid Waste Authority of Northern Cook County v. Army Corps of Engineers, 531 U.S. 159 (2001) and Rapanos v. United States, 547 U.S. 715 (2006).

Since Rapanos, Justice Kennedy’s “significant nexus” test has been used to determine jurisdiction for streams and wetlands that fall into the "other water" regulatory classification. 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.

Since the Rapanos decision, both the ACOE and EPA have struggled to provide clear guidance as to which waterways meet the "significant nexus" test. Far too frequently, the determination has been left to case-by-case determinations that are litigated. Making matters worse, different federal courts have reached different conclusions when applying the “significant nexus” test.

Practical Issues Post Rapanos

Business and developers, for the most part, hate regulatory uncertainty.  The post-Rapanos era has provided very little certainty with regards to which waterways fall under federal regulation and need permits in order to be impacted.

Post-Rapanos, EPA and the Army Corps tend to be expansive in their interpretations of federally protected waterways when applying the "significant nexus" test.  This puts businesses and developers in the difficult position of having to choose between:

  • Even if they believe regulators are overextending their authority, do they just acquiesce and spend a significant amount of time and money to obtain permits for impacts;
  • Proceed with impacting waterways and risk criminal or civil enforcement; or
  • Attempt to litigate whether the Army Corps properly exerted its jurisdiction.

EPA Rule Defines "Waters of the United States"

In attempt to address the increasing amount of litigation and uncertainty surrounding which water bodies fall under federal regulation, EPA released is proposed rule- "Definition of 'Waters of the United States' Under the Clean Water Act".  The rule was released on March 25, 2014.

Many in the business community have commented that EPA's proposed rule provides certainty by purporting to regulate virtually all waterways

The rule proposal contains an entirely new definition of "tributary," which under the proposed rule, would be classified as jurisdictional waters with no further analysis. If the rule were finalized, it would eliminate most case-by-case decision making on federal jurisdiction. Under the proposal, a “tributary” is any waterway that meets the following characteristics:

  • Can have perennial, intermittent or ephemeral flow
  • Has a defined bed, bank and ordinary high water mark (a term defined under existing regulations)
  • Contributes flow, either directly or through another water, to as jurisdictional water
  • Or, is part of a network that drains to a jurisdictional water

The portion of the definition which states any waterway that contributes flow “directly or through another water” to a jurisdictional water, is very expansive.  Waterways with more tenuous connections to "navigable rivers" have been the subject of litigation. The proposed rule would eliminate any doubt for the vast majority of such streams and wetlands- they would be under federal jurisdiction.

SAB Believes EPA Still Doesn't Go Far Enough

While EPA's proposal has been criticized as expanding the coverage of the Clean Water Act too far, SAB's comment letter criticizes a number even the limited exemptions from jurisdiction proposed by EPA.  For example, SAB comments:

  • Drop OHWM in definition of "tributary"- The Board recommends EPA drop the requirement that a tributary must contain an "ordinary high water mark" which may be absent from many ephemeral streams.  The Board advises EPA to consider changing the wording in the definition of "tributary" to " bed, bank, and other evidence of flow;"
  • Adjacent should be determined based on connection not simply location-  SAB supports EPA's proposal to regulate adjacent waters and wetlands.  However, the Board advises EPA that adjacent waters and wetlands should not be defined solely on the basis of geographical proximity or distance to jurisdictional waters;
  • Whether to regulate "Other Waters" should not be based solely on proximity-  The Board encourages EPA to expand which waters may be regulated on the rule's catchall provision. The Board wants EPA to drop geographical proximity to "jurisdictional waters" as the key factor.  Rather, whether to regulate "other waters" should be made on a case-by-case basis;
  • Include groundwater-  The Board recommends that EPA extend regulatory coverage to groundwater;
  • Artificial Lakes or ponds-  Rather than exclude all such waters from jurisdiction, SAB points out that these bodies of water may be directly connected to jurisdictional waters by groundwater;
  • "Significant Nexus"-  The Board comments that the term "significant nexus" (the test articulated by Justice Kennedy in the Rapanos decision) is not well defined.  The Board recommends that the rule clarify this is purely a legal term, not a scientific term. 

If EPA adopted SABs recommendations most waterways would be federally regulated.  The Army Corps would also be provide wide latitude to regulate virtually any waterway.  

Photo: Ohio Non-Point Source Management Plan