On January 22, 2018, the Supreme Court ruled in National Assoc. of Manufacturers v. Department of Defense that federal district courts have original jurisdiction to hear challenges to the 2015 Obama Administration Waters of the U.S. (WOTUS) rule which defined the extent of federal jurisdiction over streams and wetlands under the Clean Water Act.  After the ruling, the Trump Administration was concerned that the 2015 WOTUS Rule may be effective before it completes it’s own process to remove the rule and promulgate its own rule defining the extent of federal jurisdiction over waters in the United States.  

On February 6th, the EPA and Army Corps of Engineers adopted a new rule which establishes an "applicability date" of the 2015 WOTUS Rule.  The applicability date as established by the rule is February 6, 2020 which will provide time for the Trump Administration to complete the process of unwinding the 2015 WOTUS Rule and adopt its own rule defining federal jurisdiction.

The effective date of the 2015 WOTUS Rule was August 28, 2015, however, the Agency’s assert that the 2015 WOTUS Rule did not establish an "applicability date."  Therefore, the EPA and Army Corps assert that, until the applicability date passes, the Agencies will define waters and wetland falling under federal jurisdiction “consistent with Supreme Court decisions and practice and as informed by applicable agency guidance documents (the 2003 and 2008 guidance documents) as the agencies have been operating pursuant to the Sixth Circuit’s October 9, 2105, order, and the North Dakota district court’s injunction.” (The North Dakota District Court issued an injunction preventing implementation of the 2015 WOTUS Rule).

The Trump Administration believes the "applicability" rule allows the regulatory interpretation of jurisdiction under the Clean Water Act in effect prior to the 2015 WOTUS Rule to remain in place.  It is very likely this rule will also be challenged on the basis the August 28, 2015 effective date of the 2015 WOTUS Rule cannot be delayed in this manner.

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.

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.

 

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.

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.,

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

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

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

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

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

Background on Rule

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

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

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

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

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

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

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

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

The definition of tributary is broadly defined as:

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

 The definition of adjacent is defined as:

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

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

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

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

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

Waters automatically subject to the Significant Nexus Test include:

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

Non-Jurisdictional Waterways

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

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

Current and Pending Jurisdictional Determinations

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

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

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

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

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

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

As discussed previously on this blog, which streams and wetlands are protected under the CWA has been in a state of flux ever since the Supreme Court issued its decisions in Rapanos and SWANCC. Whether a wetland or stream are protected by the CWA depends on the legal standard known as the "Significant Nexus Test."  

Under the test, a waterway is evaluated to determine whether impacts to it could affect the chemical, physical, and the biological integrity of a navigable water.  If the answer is "yes," then the waterway falls under the federal jurisdiction pursuant to CWA.

Making the determination is not a simple exercise.  It involves a complex evaluation of various factors.  Two experts could come to two different conclusions regarding whether a waterway falls under federal jurisdiction.

Due to the grey area surrounding this regulatory area, many businesses and developers want a preliminary determination as to whether proposed wetland or stream impacts would require a Section 404 permit.  

Under applicable regulations, the ACOE can consult with potential permit applicants prior to processing the permit application.  See, 33 CFR 325.1(b).  The regulations also authorize the ACOE to "issue formal determinations concerning the applicability of the Clean Water Act…"  See, 33 CFR 320.1(a)(6).  These "formal determinations" are called "Jurisdictional Determinations" or "JDs."   

The ACOE currently uses a form to make its Jurisdictional Determinations

 

 

 

 

 

 

 

 

 

What if you disagree with the ACOE’s JD?

Due to the complexities involved in determining whether a stream or wetland is federally protected, developers and businesses will seek a JD to determine whether regulators consider the waterway protected by the CWA.  However, what happens if you want to challenge the regulators determination that the waterway meets the Significant Nexus test?

The first step in the process is the ACOE’s administrative appeal process. See, 33 CFR 331. However, if you obtain an unfavorable result through the administrative appeal process, it appears you have little recourse in the courts to challenge the JD.

Courts have consistently ruled that JDs are not agency final actions that can be legally challenged. Many had hoped that U.S. Supreme Court ruling in Sackett may have opened up JDs to legal challenge.

Sackett Decision

In Sackett, a homeowner filled wetlands to build a residence.  U.S. EPA issued a compliance order that contained a finding that the property contained federally protected wetlands.  The order required the homeowner to restore the property or face penalties for noncompliance.  

EPA argued that the homeowner could not challenge the administrative order because it did not constitute a final agency action.  The Supreme Court disagreed, and ruled the order was a final action and could be challenged.

JDs and Sackett

After Sackett, new legal actions were brought in attempt to challenge JDs as final agency actions. However, based upon a recent case,  it appears Sackett did not change the outcome.  In Belle v. United State Army Corps of Engineers, Case No. 13-30262, the Court distinguished the enforcement order at issue in Sackett versus a JD.  

The Court held a JD is not a final action for the following reasons:

  • A JD is a notification that the property contains federally protects wetlands or streams, but it does not prevent the property owner from doing anything to its property.  The order in Sackett required restoration of the property;
  • The administrative order in Sackett imposed coercive consequences for its violation (i.e. penalties for noncompliance).  A JD does not impose any penalties;
  • The compliance order made it more difficult for a homeowner to obtain a 404 permit because there is a policy against after-the-fact permits.  The Court held that the "JD operates oppositely informing the [property owner] of the necessity of a 404 permit to avoid an enforcement action."

While the Court’s analysis of the difference between the Sackett administrative enforcement order and a JD is logical, the practical reality is that JDs do have dramatic impacts on the property owner.

The Court suggests that the ability to challenge the JD would "disrupt the regulatory review system already in place."  Namely, the property owner should file for a 404 permit and if denied, it will have legal recourse post-denial.

However, the Court’s analysis ignores the fact that a JD places the property owner into the regulatory system.  Once in the regulatory system, negative consequences result.  For example:

  1. The owner must spend significant amounts of money on a 404 permit application;
  2. The owner must wait for the ACOE to rule on the 404 permit application, which could takes months if not a year or more to obtain a determination;  
  3. After exhausting administrative appeal rights and filing a judicial action, it may be years before the owner can get a court to review whether the JD in the 404 permit decision was correct;
  4. The owner’s development plans are put on hold while the permitting and legal process unfolds;  
  5. Or, the owner can proceed with the impacts and face a potential enforcement action that includes penalties and the possibility they will never obtain an after-the-fact permit.  

The consequences outlined above seem more than significant enough, from a policy perspective, to allow challenges to JDs.  Unfortunately, the Courts don’t see it that way.

 

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

According to the 5th Circuit in Belle v. Army Corps of Engineers, nothing has changed with regard to the inability of a property owner to challenge an Army Corps of Engineers (ACOE) decision that federally protected wetlands exist on the owner’s property.  

The initial step in the federal wetland permitting process is the ACOE’s determination whether federally protected wetlands are present on a property- called the Jurisdictional Determination or JD.  The ACOE must use the "significant nexus" test to determine whether wetlands are isolated or connected to a federally protected waterway.

The "significant nexus" test arose from the Supreme Court’s determination in Rapanos v. U.S. The "significant nexus" test involves a complex evaluation of whether the wetlands significantly affect the chemical, physical and biological integrity of federally protected streams and rivers.

In the years since the Rapanos decision, the EPA and ACOE have been unable to develop clear technical guidance for the application of the "significant nexus" test.  The lack of clear guidance have left property owners with uncertainty in regards to the cost and time it would take to develop properties that contain wetlands.

A JD that concludes federally protected wetlands exist means a property owner will be required to obtain a 404 permit from the ACOE and a 401 permit from the State EPA to fill the wetlands.  The 404/401 permitting process can be long and costly.  Therefore, property owners have a strong incentive to challenge JDs if they believe the determination lacks technical support.

Nevertheless, Courts have held that JDs are not reviewable. Many had hope the Supreme Court’s determination in Sackett may serve as a basis to allow challenges to JDs.

Sackett- Compliance Order can be Challenged

In Sackett, the Supreme Court revisited the issue of what constitutes final agency actions under the Clean Water Act.  The Sacketts had filled a portion of their undeveloped property with dirt and rocks in preparation for building a house.  The U.S. EPA issued a compliance order that contained findings that the property contained wetlands with the Sackett’s had filled.  The EPA order directed the Sacketts to restore the wetlands or face penalties.

The Sacketts tried to challenge the EPA order, but EPA denied their request for hearing stating it was a non-appellable administrative order.  Both the District Court and Ninth Circuit agreed with EPA.

The Supreme Court reversed, finding the order constituted a final agency action under the Administrative Procedures Act (APA) and could be challenged.  The Court said the order was appeallable because it determined the rights and obligations of the property owner.  The Court focused on the fact the Sacketts had to restore the wetlands or face penalties for failure to comply.

The Sackett Case and Jurisdictional Determinations

In Belle v. U.S. Army Corps of Engineers, Belle Company and Kent Recycling (hereinafter "Belle") challenged the ACOE jurisdictional determination that their property contained wetlands subject to regulation under the Clean Water Act (CWA).  The District Court dismissed the suit, concluding the JD was not " final agency action" and is not reviewable.

Belle’s argued the Sackett case required the Court to determine the JD was reviewable.  The 5th Circuit agreed a JD met the first prong of the test for determining an reviewable action- consummation of the Agency’s decision making process.  However, the 5th Circuit determined a JD fails to meet the second prong-  an action "by which rights or obligations have been determined, or form which legal consequences will flow."

The 5th Circuit distinguish the JD from the Sackett Order on the following grounds:

  • The Sackett Order imposed legal obligations because it ordered the Sacketts to promptly restore their property.  The JD does not require Belle to do or refrain from doing anything on its property;
  • The Sackett Order contained coercive consequences for violating the order because the Sacketts were exposed to penalties for non-compliance.  The JD contains no such penalty scheme.
  • The Sackett Order prevented the submission of a 404 permit.  The JD, by contrast, elicits a permit application.
  • The Sackett Order determined a violation of the CWA had occurred.  A JD makes no such determination.

Practical Consequences of Non-Reviewable JDs

While there may be a sound legal rationale for the holding that JDs are not reviewable, this decision has significant practical consequences for property owners.  If an owner believes the ACOE issued a JD without proper technical support or misapplied the "significant nexus" test, the owner has little legal recourse to challenge the ACOE determination.

If the owner doesn’t believe the wetlands are protected under the Clean Water Act, they are left with the false choice of either:

  1. Filling the wetland and face significant penalties and a requirement to restore the wetlands if ACOE’s determination is upheld; or
  2. Proceed with securing 404/401 permits for the filling activity which in many cases will be very costly and slow development.

 

When does placing fill in a wetland or disturbing a stream for construction require a federal permit? Seems like this should evoke a pretty straightforward answer.  However, for more than a decade the extent of federal permitting regulations has been unclear.  Now EPA and the Army Corps of Engineers (ACOE) are attempting, once again, to try and provide a clear answer.

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 reach different conclusions when applying the “significant nexus” test. 

The ACOE and EPA have attempted to clarify through guidance federal jurisdictional waters, but those guidance documents have been vacated by the Courts (see prior post).  The courts made clear a formal rule was necessary for EPA and ACOE’s scientific interpretations to have legal force.

On March 25, 2014, EPA and the Army Corps of Engineers jointly released their proposed rule defining the terms “waters of the United States” under the Clean Water Act.  Under the proposal, the federal agencies attempt to move away from the case-by-case application of the “significant nexus” test by simply defining certain waters as under federal jurisdiction.

 Proposal Maintains Jurisdiction over Navigable Waters

Under the proposed rule, the following waters are jurisdictional by rule, with no further analysis needed:

  • Navigable waters
  • Territorial seas
  • Interstate waters
  • Tributaries of navigable or interstate waters
  • Adjacent waters and wetlands

The EPA and ACOE state they are not expanding the definition of these categories in the proposed rule.  Rather, these categories represent those waterways that have been consistently recognized as subject to federal jurisdiction in prior rule making.

Expansive Proposed Definition of Tributary

The rule proposal does contain 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.  It is these waterways with more tenuous connections to "navigable rivers" that 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.  

The tributary definition includes wetlands, lakes, ponds that contribute flow to a navigable or interstate water.  It also includes ditches, except in upland areas that don’t contribute flow to a jurisdictional water. 

The rule proposal states the connectivity demonstration can be made using aerial photos and/or USGS maps or other evidence.  However, only the connection must be demonstrated.  There does not need to be any individualized demonstration that the waterway in question impacts the chemical, physical, and the biological integrity of a navigable water. EPA argues its review of the science demonstrates the vast majority of tributaries have such impacts.

While it difficult to come up with a stream or wetland that would likely not fit the definition of tributary, the rule still proposes to a catchall provision which states jurisdiction may still be asserted over any waterway on a case-by-case basis.  The catchall provides EPA and ACOE for regulate streams and wetlands that may not meet the expansive definition of tributary.

EPA Argues Proposal Rule Supported by Science

EPA states that the proposal to expansively define tributary to automatically include most waterways without a case-by-case demonstration is supported by scientific literature.  EPA conducted a review of published peer-reviewed scientific literature- “Connectivity and Effects of Streams and Wetlands on Downstream Waters:  A Review and Synthesis of Scientific Evidence.”   In it’s review EPA concludes most waterways are interconnected and can impact water quality of larger streams and rivers.

In the proposed rule, EPA argues that its expansive definition of tributary is supported not only by science but by case law as well.  EPA discusses the various cases that have tried to address the "significant nexus" test.

Public Comment Period

A 90-day public comment period will begin once the proposal is published in the Federal Register.  The EPA states is seeks comments to its proposal as well as other ways to define which waters should be considered jurisdictional.  However, the proposal makes very clear that EPA believes its proposal is on solid ground.  

 Creative Commons photo by putneypics via Flickr