The ruling in Upstate Forever and Savannah Riverkeeper v. Kinder Morgan Energy Partners, LP expands the rights of citizens groups to bring suits for penalties and injunctive relief under the Clean Water Act even when a state EPA is actively involved in addressing the issue.  Furthermore, the court ruling allows claims to be brought even when the original spill ceased and all that remains is ongoing migration from a historical spill.

Factual Background

Back in 2014, a leak occurred in the Plantation Pipe Line which runs from Louisiana to Washington, D.C.  The leak resulted in the discharge of gasoline and petroleum below ground.  While the leak was repaired quickly, cleanup has been ongoing for a number of years.  The cleanup has been supervised by the South Carolina Department of Health and Environmental Control (SCDHEC).  In 2016, environmental groups brought suit claiming the cleanup has been inadequate to prevent migration of pollution into nearby waterways.

Issues Presented

The suit raised a number of important issues:

  • Typically, where state or federal regulators have taken affirmative action to address a violation, such regulatory action bars citizens from bringing suit. Why not here?
  • When a spill has stopped do citizen groups still have authority to assert a claim?
  • Does subsurface pollution that migrates to waterways fall within the scope of the Clean Water Act as a prohibited discharge
    • The Clean Water Act regulates “point source” discharges which are “any discernible, confined and discrete conveyance,” including pipes, ditches, channels and tunnels. 33 U.S.C. § 1362(14)

Fourth Circuit Rules the Environmental Groups Could Bring Suit

The Court did not directly address the extent of state involvement in the cleanup.  However, the cleanup was only being performed in accordance with “guidance” from the SCDHEC, not under a formal judicial consent order which would bar a subsequent citizen’s suit.  While the Company was working with state regulators to cleanup the spill, the State never took formal enforcement to cutoff citizen suits.

The Court ruled the spill was not a “wholly past violation.”  While the pipeline was fixed, the spill left contaminants in the ground that were still migrating to nearby waterways.  The Court found that the pipeline was a point source and even though the pipeline was repaired, ongoing violations were occurring due to migration of contamination to waterways from the original spill. The Court held:

“The CWA’s language does not require that the point source continue to release a pollutant for a violation to be ongoing. The CWA requires only that there be an ongoing ‘addition… to navigable waters,’ regardless whether a defendant’s conduct causing the violation is ongoing.”

The Court rejected other court rulings that held such ongoing migration of pollution did constitute wholly past violations.  It distinguished this case from a prior ruling that held decomposition of lead shot was not an ongoing violations.  Conn. Coastal Fisherman’s Ass’n v. Remington Arms Co., 989 F. 2d 1305, 1312-13 (2d Cir. 1993).  With regard to the case of lead shot, in contrast to the Kinder Morgan case, the pollutants had already been deposited into a waterway.  Here, pollution was still entering nearby waterways from the historical spill.

Finally, the Court held that violations of the Clean Water Act are not limited to “direct discharges” to a waterway.  The Clean Water Act also covers “indirect discharges,” in this case pollution migrating through groundwater and entering nearby waterways.  However, the Court cautioned, the connection between a point source of pollution and a waterway must be clear (i.e. a “direct hydrological connection”).

On March 30, 2018, EPA Administrator Scott Pruitt issued a memorandum eliminating the authority of Regional Administrators to veto decisions by the Army Corps of Engineers to grant a permit for impacts to streams or wetlands.  The veto authority has been re-delegated to the U.S. EPA Administrator.

Any project that results in a discharge of dredged or fill material into waters of the U.S. must obtain a permit from the Army Corps of Engineers under 404 of the Clean Water Act (CWA).  Under the CWA, EPA is given authority to potentially veto the Army Corps issuance of a 404 permit if EPA determines it the permit will allow unacceptable impacts to waters of the U.S.

Administrator Pruitt’s memo states the change in control was to “restore regulatory certainty and promote the rule of law.”  However, the current regulatory uncertainty does not stem from vetoes of issued permits.  Rather, the regulatory uncertainty stems from the ongoing litigation associated with the Obama Administrations Waters of the U.S. Rule which defined the scope of federal jurisdiction under the CWA. (See prior post)  That uncertainty is likely to persist due to ongoing litigation in multiple courts.

EPA Spokesperson downplayed the significance of the memorandum:

This memo explains that jurisdictional determinations that raise significant issues or technical difficulties should be handled in a consistent and uniform manner, particularly during the WOTUS rulemaking,” EPA spokeswoman Liz Bowman said. “Regions will absolutely be involved in the process and work closely with the administrator’s office when doing the work to assess jurisdiction for very select, and often rare, cases.”

The authority under Section 404(c) of the CWA has rarely been used by EPA.  According to EPA’s webpage, the authority has only been used thirteen (13) times since 1970.

This week the U.S. Supreme Court ruled in Nat’l Ass’n of Mfrs. v. Dep’t of Def., No. 16-299 that district courts have jurisdiction to hear challenges to any rule that attempts to define "Waters of the United States" for purposes of determining the scope of coverage of the Clean Water Act.  As detailed on this blog previously, ever since the Supreme Court’s prior decision in Rapanos, there has been tremendous uncertainty as to which streams and wetlands fall under federal jurisdiction.

The Obama Administration attempted to end the uncertainty by through the Clean Water Rule which broadly defined the federal jurisdiction.  Even before the rule went into effect, multiple legal challenges were filed seeking to block the rule.  

Before a decision could be reached on the merits of the rule, the proper venue for challenges to the rule had to be decided.  The Sixth Circuit ruled the proper venue was in the circuit court of appeals, not district courts.  However, the Supreme Court overturned the lower court ruling sending the challenge back to district courts.  

The ruling also removes the Sixth Circuit’s injunction against administering the Clean Water Rule.  With the injunction removed, the Clean Water Rule becomes effective in all but 13 states (Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming).  These states are subject to a separate preliminary injunction which was issued by the federal district court in North Dakota. 

The Trump Administration also issued a rule to unwind the Clean Water Rule which will also likely be challenged, now in district courts.  The Administration has promised a second rule defining the scope of jurisdiction more narrowly than the Clean Water Rule.  

What the Supreme Court decision means is the district courts will likely be awash in legal challenges to both the Obama Administrations Clean Water Rule as well as the Trump Administration’s rules.  It will take years for all this litigation to percolate back up to the Supreme Court for a ruling on the merits.  In the meantime, industry and land owners will be forced to navigate uncertainty.  

The Trump Administration has promised massive deregulation, in particular reductions in environmental regulations. A major target of the Trump Administration’s deregulation agenda is the Obama Administration’s Waters of the U.S. Rule (WOTUS) which defines which wetlands and streams are federally regulated.

However, as described in this post, despite the controversy, all of the regulatory activity over the last several years really just leaves us in the status quo.

CWA Defines Jurisdictional Waters

Section 301(a) of the Clean Water Act (CWA) prohibits discharges of pollutants to “navigable waters” without a permit.  See, 33 U.S.C. Section 1311(a), 1362(a).   The CWA defines “navigable waters” as “waters of the United States…” See, 33 U.S.C. Section 1362(7)

However, what exactly constitutes “waters of the United States” has been controversial since passage of the CWA in 1972.

Supreme Court Weighs in Three Times

The Supreme Court has addressed the issue of “waters of the U.S.” on three separate occasions:

  • Adjacent waters- In the Court’s initial decision, it captured the issue of the extent of federal jurisdiction succinctly- “Between open waters and dry land may lie shallows, marshes, mudflats, swamps, bogs–in short, a huge array of areas that are not wholly aquatic but nevertheless fall far short of being dry land.  Where on this continuum to fine the limit of “waters” is far from obvious.” The Court said the term “navigable” in the statute is of little import.  The history of the CWA shows Congress intended broad regulations of waters. In this case, the Court concluded the wetlands adjacent to “waters of the U.S.” were federally regulated.  See, United States v. Riverside Bayview Homes 474 U.S. 121 (1985)
  • Habitat for Migratory Birds- The Court determined the Army Corps went too far trying to assert federal regulation over intrastate waters on the basis the waters provide habitat for migratory birds. SWANNCC v. U.S. Army Corps of Engineers, 531 U.S. .159 (2001)
  • Scalia and Kennedy Tests-  The third time the Court visited the issue it could not get five justices to agree on the extent of federal jurisdiction under the CWA.  Two tests emerged- Justice Scalia’s and Justice Kennedy’s.  Justice Scalia limited federal jurisdiction to navigable waters, adjacent wetlands and non-navigable streams that are permanent flow year round or at least seasonally. Justice Kennedy extended jurisdiction further, to any waters with a “significant nexus” to navigable waters.  Rapanos v. U.S., 547 U.S. 715 (2006)

Post-Rapanos the uncertainty and litigation continued over the extent of federal regulation.

Obama WOTUS Rule

In 2015, the Obama Administration attempted to put an end to the uncertainty by defining “waters of the U.S.” by rule (WOTUS).  Under the proposal federally regulated waters included the following:

  • Streams with perennial, intermittent or ephemeral flow
  • Defined bed, bank and an ordinary high water mark
  • Contributes flow, either directly or through another water, to a jurisdictional water
  • Part of a network that drains to a jurisdictional water
  • Excludes man-made ditches

Those opposed to the rule felt any small stream or water could meet the definition triggering federal regulation over even incidental creeks and streams or even drainage ditches.

The rules was immediately subject to over 20 legal challenges.  On October 9, 2015 the Sixth Circuit issued a stay of the effectiveness of the rule while its legality was determined.

Litigation is before the Supreme Court to determine not the legality of the rule, but the proper venue the rule can be challenged.  Despite those who argue the Trump Administration is rolling back protections of waterways, the WOTUS rule never went into effect.  Instead, we still determine the extent of federal jurisdiction using the Scalia and Kennedy tests from Rapanos.

Trump Executive Order

Despite the fact the WOTUS rule was not in effect, on February 28, 2017, President Trump issued an executive order titled “Restoring the rule of Law, Federalism and Economic Growth by Reviewing the “Waters of the U.S. Rule.”

The Executive Order had two goals:

  1. Rescind WOTUS;
  2. Issue an new rule interpreting “Navigable Waters” consistent with Justice Scalia’s test in Rapanos.

Step 1- Rescinding WOTUS

July 27, 2017, EPA proposed revocation of WOTUS.  EPA accepted public comments on the proposed rule through September 27th.

Step 2- Propose a New Definition of WOTUS

The next step will be for EPA to propose a definition of the rule that drops the Kennedy “significant nexus” test and limits jurisdiction to the test articulated by Justice Scalia.  However, similar to WOTUS, this rule will almost certainly face numerous legal challenges.

Back to the Beginning?

While the legal challenges work their way through the courts over the next several years, the law will not have changed since Rapanos was decided in 2006.  Both the Kennedy and Scalia tests for jurisdiction will be used by all circuits.

For over forty years the issue of how far to extend federal jurisdiction over waters has not been conclusively decided.  It appears this issues will not have greater clarity for the foreseeable future.

According to a Forbes article in 2016, the Federal Energy Regulatory Commission (FERC) approved almost 40 major pipeline projects across the country, covering 1,200 miles, over 14 Bcf/d of new capacity (total national consumption is around 75 Bcf/d), and over $10 billion in new investment.  Most of these new pipelines are being built in the eastern third of the U.S.  There are three major pipelines currently being constructed or will soon start construction in Ohio.

With all this new construction, a key issue is the interplay between regulation under the Natural Gas Act (NGA) administered by the FERC and State EPA environmental permitting.  In order to expedite construction and avoid duplication in regulation, the NGA preempts much of the State regulatory oversight.  

On August 18th the Federal Court in the 2nd Circuit issued a significant decision regarding state environmental permitting authority and preemption.  The case relates to the State of New York’s permitting authority under the Clean Water Act (CWA).

In Constitution Pipeline Company v. New York State Department of Environmental Conservation, the New York State Department of Environmental Conservation (NYSDEC) denied a stream/wetland permit requested by Constitution Pipeline to construct a pipeline that crossed through New York.  The dispute involved whether less water quality impacts were feasible by avoiding open cuts through streams and wetlands in favor of horizontal directional drilling which goes underneath these resources.  

During the FERC review, NYSDEC submitted comments requesting more HDDs and Constitution Pipeline submitted comments in response favoring the current plans.  FERC agreed with Constitution Pipeline and issued a certificate for the project pursuant to the NGA.  NYSDEC ended up denying the CWA 401 permit on the grounds more HDDs would result in less state water quality impacts.  Constitution Pipeline challenged the denial of the 401 in federal court arguing the NGA preempted the State since the FERC had already determined as part of its review the more HDDs were not feasible. 

The Court noted that the NGA has specific carve outs from preemption for the Clean Water Act.  The Court held that states retain their authority under the CWA and NYSDEC was within its right to deny the 401 permit.   Constitution Pipeline is looking to appeal arguing this gives the State’s veto authority over FERCs decision to approve pipeline routes.

The Trump Administration has made rollback of environmental regulations a top priority.  Through the use of Executive Orders and the Congressional Review Act(CRA), the Administration has already undone significant Obama era regulations, including the Waters of the U.S. Rule (WOTUS) and the Clean Power Plan.

The Trump Administration has also proposed significant budget cuts to EPA which could result in the reduction of 31% in federal funds to EPA and result in layoffs of 3,200 EPA workers. Budget cuts to State EPAs through reduction of state categorical grants have also been proposed. These cuts to federal funds could lead to reduced staff at State EPAs across the country.  

While the regulatory rollback and reduction in EPA staffs move forward, donations to major environmental groups around the country have surged since the election.  As reported in the Washington Times, the Sierra Club has reported an increase of 700% in donations since the election.  Across the board, green groups, like the NRDC are reporting a surge in donations.

Putting the New Money to Work

Whether it is the EPA budget reductions or EPA’s exercising enforcement discretion, most anticipate EPA federal environmental enforcement will be on the decline under the Trump Administration. While EPA may not bring suits, many long time environmental legal practitioners anticipate a surge in green groups use of citizen suit provisions to fill the void on enforcement.  

Almost all of the major federal environmental statutes include a "citizen suit" provision that allows individuals and groups harmed by environmental violations to step in the shoes of EPA and sue companies to address violations and pay civil penalties.  Such provisions are included in the Clean Air Act, Resource Conservation and Recovery Act (RCRA) and the Clean Water Act.  Why do many anticipate a surge in such suits?

  • Justify Donations– Green groups will show that increased donations are being put to work by taking enforcement to fill the void left by a less active EPA;
  • Easy Access to Monitoring Data Permit compliance and monitoring data is readily accessible online through EPA databases like ECHO or state database counterparts.  This makes it increasingly easier for green groups to identify violations that have gone unaddressed;
  • Civil Penalties-  The citizen suit provisions allow groups to assess civil penalties.  Under law, any civil penalties must go to the U.S. Treasury.  However, groups have used creative approaches like Supplemental Environmental Projects (SEPs) to direct funds to environmental improvement projects or funding local groups;
  • Attorney Fees- Perhaps the biggest incentive to utilize citizen suit provisions is the attorney fee provision.  Courts have established a low threshold for recovery of fees.  This makes it easy for groups to recover their investigatory and legal expenses in pursuing actions; and
  • Lack of Availability of the Diligent Prosecution Defense-  Not only will reductions in EPA staff and resources lead to less enforcement, it also makes it less likely that companies will be able to secure "friendly" administrative or judicial enforcement orders used to block citizen suits during notice periods.  The 60 or 90 day notice periods are meant to give time to allow for state or federal regulators to take appropriate action to resolve violations after receiving notice of a potential citizen suit (i.e. "diligent prosecution" defense).

"New" Citizen Suit Legal Theories

In is not just an anticipated increase in the number of citizen suit actions brought, most see an expansion of the types of harms such suits are used to address.  Across the country, green groups have already utilized long-standing citizen suit provisions to bring creative new causes of action, including:

  • Tennessee Riverkeeper, Inc. v 3M Company- Environmental group have brought a RCRA imminent and substantial endangerment claim against 3M for historical releases of teflon related substances (PFOA/PFOS) which are not currently regulated by EPA.  The Court denied a motion to dismiss the action;
  • Sierra Club v. Chesapeake Operating LLC- Brought RCRA imminent and substantial endangerment claim for earthquakes in Oklahoma allegedly caused by disposal of water from oil and gas extraction;
  • Conservation Law Foundation v. ExxonMobil Corp.-  Alleging imminent and substantial endangerment under RCRA due to climate change; and
  • Upstate Forever and Savannah Riverkeeper v. Kinder Morgan–  Claims brought under the Clean Water Act alleging passive migration of contaminated groundwater to surface water from an oil spill was a violation of the Clean Water Act.  The case was dismissed after the Judge ruled plaintiffs failed to allege facts demonstrating migration of groundwater constituted a "point source" under the Clean Water Act.

Suing EPA to Compel Non-Discretionary Acts

Green groups have always sued EPA to compel the Agency to promulgate regulations or take action that are required under environmental statutes. The Administrative Procedure Act (APA) allows green groups to bring suit to compel an agency action unlawfully withheld or unreasonably delayed. See, 5 U.S.C. Section 706(1).  

Because the Trump Administration will be less inclined to promulgate new environmental regulations, there will almost certainly be a major increase in suits against EPA to compel action. Unlike under the Obama Administration, which resolved many of these suits using consent orders, the Trump Administration will be far less inclined to settle.  This will inevitably lead to long and protracted litigation.  A recent article in the Legal Intelligencer by Kenneth J. Warren discusses the complications for Courts facing these suits to compel EPA to perform non-discretionary duites.

U.S. EPA released its December Environmental Crimes Bulletin.  One notable case highlighted involved the failure to  obtain and industrial pre-treatment permit for discharges to the municipal wastewater system.  As set forth in the bulletin, U.S. EPA describes the case as follows:

Thomas H. Faria, Sheffield’s former president and chief executive officer, who pleaded guilty to a felony violation of the Clean Water Act on July 8, 2014. From at least April 2004 to May 2011, under Faria’s leadership, Sheffield discharged polluted industrial wastewater from its New London factory into the municipal sewage system without the required permit and industrial wastewater treatment system. As a condition of his guilty plea, Faria resigned from the company on March 7, 2014, and no longer has any role in its operations or management. On February 13, 2015, Judge Thompson sentenced Faria to three years of probation, a $30,000 fine, and 300 hours of community service. 

As described in the bulletin, U.S. EPA states that the former president of the company was informed by consultants and its own employees that a permit and some pre-treatment was needed to legally continue the indirect discharge of industrial wastewater into the municipal system.  

Evidence the president had knowledge is what likely made U.S. EPA pursue this as a criminal case. However, keep in mind that the Clean Water Act has a criminal negligence standard. Therefore, U.S. EPA has the ability to pursue criminal charges even if it doesn’t have specific evidence that company personnel were aware of permitting requirements.  

Here is the criminal negligence provision in 33 U.S.C. § 1319

(c)Criminal penalties

(1)Negligent violationsAny person who—

(A)

negligently violates section 131113121316131713181321(b)(3)1328, or 1345 of this title, or any permit condition or limitation implementing any of such sections in a permit issued under section 1342 of this title by the Administrator or by a State, or any requirement imposed in a pretreatment program approved under section 1342(a)(3) or 1342(b)(8) of this title or in a permit issued under section 1344 of this title by the Secretary of the Army or by a State; or
(B)

negligently introduces into a sewer system or into a publicly owned treatment works any pollutant or hazardous substance which such person knew or reasonably should have known could cause personal injury or property damage or, other than in compliance with all applicable Federal, State, or local requirements or permits, which causes such treatment works to violate any effluent limitation or condition in any permit issued to the treatment works under section 1342 of this title by the Administrator or a State;
shall be punished by a fine of not less than $2,500 nor more than $25,000 per day of violation, or by imprisonment for not more than 1 year, or by both. If a conviction of a person is for a violation committed after a first conviction of such person under this paragraph, punishment shall be by a fine of not more than $50,000 per day of violation, or by imprisonment of not more than 2 years, or by both.

 

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.

On October 31, the Army Corps of Engineers ("ACOE") issued new guidance as to the types and prioritization of jurisdictional determinations (JDs).  Regulatory Guidance Letter (RGL) 16-01 "Jurisdictional Determinations" has very little new guidance in reality.  However, some key language in the RGL makes clear the real purpose behind the RGL.  

What is a Jurisdictional Determination?

A Jurisdictional Determination (JD) is an official determination of the ACOE as to whether wetlands or streams fall under federal jurisdiction pursuant to the Clean Water Act.  The Corps practice has been to issue either "Approved JDs" or "Preliminary JDs."  

An "Approved JD" is a final legal determination that there are, or that there are not, wetlands or streams under federal jurisdiction. See, 33 U.S.C. 331.2 The "Approved JD" will also identify the geographic limits of the wetlands or streams on the property.  An "Approved JD" can be either issued as a a "Stand Alone Approved JD" or it can be associated with a permit action.  

A "Preliminary JD" is used to expedite the permitting process.  It does not take as much time to issue a "Preliminary JD" because the ACOE simply presumes all the wetlands and streams on the property are jurisdictional.  By presuming all wetlands/streams are under federal jurisdiction, a "Preliminary JD" negates the need for a site visit by the ACOE which expedites the permitting process.  The "Preliminary JD" also will delineate the limits of wetlands on the property.

Hawkes Decision

In United States Army Corps of Engineers v. Hawkes the Supreme Court concluded that JDs issued by the ACOE constitute final agency action under the Administrative Procedure Act thereby allowing immediate review in Court.  This was a big win for property owners who were previously left with administrative appeals before the Army Corps of Engineers to challenge JDs.  

The fact pattern in the Hawkes decision sheds light as to why the ACOE decided to issue the regulatory guidance letter.  The landowner in Hawkes was facing a long and expensive permitting process to allow impacts to wetlands on its property.  Prior to initiating the permitting process, the landowner sought a JD with the hope the wetlands would be determined non-jurisdictional.  When the ACOE determine the wetlands were, in fact, jurisdictional the landowner sought to challenge the determination in Court rather than through an administrative appeal before the ACOE.

Now that the Supreme Court determined JDs can be challenged in Court, the ACOE was concerned that landowners would have a strong incentive to request JDs only to set up legal challenges in Court to the ACOE’s jurisdiction.

Real Purpose Behind RGL 16-01

RGL 16-01 is the first RGL issued during the Obama Administration and the first RGL since 2008.  The stated purpose of RGL 16-01 is to clarify the differences behind the an "Approved JD" versus a "Preliminary JD."  The ACOE states the clarification will help the public choose which type of JD may be appropriate for their project.  

The reality is there was little confusion between the types of JDs.  The real purpose of the JD can be found in the following sentence on the first page of the RGL:

"The district engineer should set reasonable priorities on the district’s workload and available resources.  For example, it may be reasonable to give higher priority to a JD request when it accompanies a permit request."

This statement makes clear that the ACOE will prioritize processing "Approved JD" request with a permit application versus "Stand Alone Approved JD" request.  The goal is to avoid issuing "Approved JDs" to landowners who may be making the request simply to challenge the JD in court and avoid permitting all together if the court challenge is successful.

Those seeking an "Approved JD" without submitting a permit application may be waiting a long time to get their determination.

On November 2, 2015, President Obama signed into law the Federal Civil Penalties Inflation Adjustment Improvement Act of 2015.  The law required all federal agencies to increase civil penalties with inflation. While there were previous requirements to increase civil penalties, the new law provides for more dramatic increases attributable to the following changes:

  • Requires adjustments annually instead of every four years as had been previously been required;
  • Institutes a "catch-up" period to increase penalties assuming the more accelerated schedule had previously been in place with a cap on total increases of 150% (which is quite dramatic)
  • Formula for the "catch-up" period is based on how much the October 2015 Consumer Price Index (CPI) exceeds the 1990 CPI (called the "cost-of-living multiplier")

The EPA promulgated the Civil Monetary Penalty Inflation Adjustment Rule to establish a schedule for penalty increases including implementation of the "catch up" provision.  The schedule began implementation on August 1st.  EPA described the purpose of the rule as follows:

The primary purpose of the rule is to reconcile the real value of current statutory civil penalty levels to reflect and keep pace with the levels originally set by Congress when the statutes were enacted.  

EPA’s Adjustment Rule includes the following increases (there are a range of potential penalties in the Adjustment Rule.  The ranges shown below are for some of the more common violations):

  • TSCA toxic substances violations – go from $25,000 per day to $37,000
  • RCRA-  from $25,000 per day to anywhere from $56,467 to $70,117 depending on the nature of the violation
  • Clean Air Act-  from $37,500 (set in 2009) to $44,539 for EPA administrative penalties and a maximum of $93,750 for penalties assessed by a court (the maximum increase of 150% allowed under the rule)
  • Clean Water Act- from $37,500 to anywhere from $44,539 to $51,570
  • ECPRA and CERCLA- from $37,500 to $53,907

To understand the specific penalty increases for particular violations of the statutes set forth above, consult Table 2 of 40 CFR Section19.4 of the EPA Civil Monetary Penalty Inflation Adjustments Rule.

While EPA still has discretion to seek less than the per day maximum civil penalty set forth in the Adjustment Rule, the rule shows an intent that penalties for environmental violations will be significantly larger even when EPA exercises is discretion.