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.

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. 

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

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

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

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

Cleveland Proposed Setback Ordinance

Here are some key elements of the proposed setback ordinance:

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

Map versus the Ordinance- What Streams are Covered?

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

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

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

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

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

Challenges to Applying Riparian Setback to More Urban Areas

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

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

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

Seeking a Variance

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

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

Takings Claims under the United States Constitution

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

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

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

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

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

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

Conclusion

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

 

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.

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

This fall Ohio EPA Division of Surface Water (DSW) has been releasing a series of intertwined rule packages that govern streams and discharges to waterways.  Some business groups have said that the packages represent the most significant overhaul of water regulations in thirty years.

  To date, 3 out of 4 packages have been released:

  1. Antidegredation Rule
  2. Water Quality Standards
  3. Section 401 Water Quality Certification Rule
  4. Stream Mitigation Rule (to be released in early 2009)

No doubt the packages are highly technical and cover a myriad of issues.  But what are the implications for businesses in Ohio?

 Boiling down the packages, here are the major changes:

  • Creation of a new State Water Quality Permit for impacts to streams
  • Complete overhaul of mitigation requirements for stream impacts
  • Comprehensive tightening of standards for discharges to water ways (will result in more stringent discharge permits for businesses)
  • Standards for drainage ditch maintenance
  • Phase out of open lake disposal for dredged sediment from ship channels by the Army Corps of Engineers
  • Introduction of a nutrient standard for newly constructed or modified wastewater treatment plants

STATE WATER QUALITY PERMIT

I already discussed the new State Water Quality Permit in a prior post.  I believe Ohio would be the first state in the Country to create a state permit for impacts to streams that are not covered by the Clean Water Act.  The State is reacting to a series of Supreme Court decisions which have reduced federal jurisdiction over waterways and wetlands.

WASTEWATER DISCHARGE STANDARDS

Ohio EPA is proposing to tighten standards for some 135 chemicals.  They are also proposing to revise the human health criteria applied to NPDES discharge permits.  The more stringent standards will be incorporated into NPDES permits after they are renewed (NPDES permits have a 5 year life cycle).  Depending on the business and the nature of their discharge, the tighter standards could result in significant upgrades to wastewater treatment plants. 

The biggest question from business groups regarding the strengthening of water quality standards is….Why  now?   Many of the revised standards were part of U.S. EPA updates from 2000. 

MITIGATION FOR STREAM IMPACTS

For wetland impacts, Ohio mitigation requirements are very straightforward and are set forth in rules.  The ratios for required mitigation and the quality of wetland mitigation is all tied to the class of wetland impacted (Ohio classifies wetlands as either Class I, II or III).

Stream mitigation requirements are not straightforward.  Ohio EPA’s stream mitigation requirements have been described by developers as a "black box."   The fact is mitigation is decided on a case by case basis, and lack of consistency is a legitimate concern.  To address this longstanding issue, Ohio EPA is attempting to clearly defined mitigation requirements for streams. 

Each of the four packages contain some aspect that is relevant to stream mitigation requirements.  However, until Ohio EPA releases the main rule package on stream mitigation requirements it will be difficult to see how the pieces fit together.  However, certain aspects of the rules that have been release foreshadow what is coming:

  • Primary Headwater Habitat Designation- Ohio EPA creates this new designation and creates three classes based on the quality of the stream.  For lower classes, the focus of the designation is hydrology and not aquatic life.  This sets up mitigation requirements.  If you impact a Class I stream by moving or filling it, you will have to restore the hydrology lost as part of your mitigation.
  • "Upland Drainage" and "Water Conveyance" Designations- applies to drainage ditches (or what Ohio EPA refers to as "historically channelized watercourses").  The purpose of these new designations for ditches is to encourage better management practices, such as natural stream design when performing maintenance on ditches.  
  • "No Net Loss" Principle Applied to Streams-  A legal issue surrounds the amount of impacts that are allowed under antidegredation principles to streams versus wetlands.  For wetlands, there has been a "no net loss" that actually allows destroying an entire wetland if its value is replaced through mitigation.  There is an open legal question as to whether the same flexibility exists for streams.  Ohio EPA is proposing to settle that issue by bringing the "no let loss" principle to streams.

DRAINAGE DITCHES

A source of major controversy in Ohio has been poorly maintained drainage ditches (see the Ohio Environmental Council web page).  Through mother nature’s influence over time, drainage ditches can become valuable headwater streams. The controversy occurs when a farmer or County engineer wants to dredge a ditch for drainage or flood control that has not been maintained for many years.  Will the rules even allow them to perform that work if the stream has become a valuable resources, such as a warmwater habitat stream?

NUTRIENT STANDARDS

For the first time in Ohio, the Agency is proposing to require treatment standards for nutrients.  Nutrients, such as phosphorus and nitrogen, are one of the most significant causes of water quality impacts in the State (U.S. EPA Nutrient Website for background).  The Agency is proposing to take a step in the direction of regulating this pollutants by requiring treatment for nutrients as part of Best Available Demonstrated Control Technology (BADCT) that will apply to new wastewater treatment plants or modifications to the biological treatment process of an existing plant.

On September 12, 2008, Ohio EPA issued proposed rules that would require a new permit, called a "state water quality permit", for all dredge or fill impacts to non-federally regulated streams.  Ohio may be the first state in the country to try and expand state stream permit requirements in reaction to recent U.S. Supreme Court decisions limiting the coverage of the Clean Water Act.  As discussed below, Ohio’s effort will be controversial.

 The Supreme Court in Rapanos and SWANCC limited federal jurisdiction of the nation’s waterways based upon its interpretation of the Clean Water Act’s trigger for jurisdiction- "Navigable Waters".  In a prior post (Narrowing Federal Jurisdiction Over Waterways), I discussed the pressure mounting on States to react to federal court decisions which leave many waterways unprotected.  

Currently, Ohio EPA only requires a permit (401 permit) to fill or dredge a stream if the stream is under federal jurisdiction.   No permit is required if a stream is considered a state waterway but not a federal waterway.

In the past this approach didn’t matter much because the Army Corps had a very expansive interpretation of federal waterways.  However, with the federal authority shrinking based upon a flurry of recent federal court decisions, the State felt it could no longer allow more and more streams to go unprotected.  In reaction, they have proposed a new rule that would require a permit for dredge or fill activity on any Ohio waterway, defined as "waters of the state" under Ohio Revised Code 6111.01(H). 

While Ohio EPA’s action is understandable, after reviewing the rule, the Agency may be overcompensating.  The definition of a "water of state" is quite expansive under O.R.C. 6111.01(H), it includes:

 "…all streams, lakes, ponds, marshes, watercourses, waterways, wells, springs, irrigation systems, drainage systems, and other bodies or accumulations of water, surface and underground, natural or artificial, regardless of depth of the strata in which underground water is located, that are situated wholly or partly within, or border upon, this state, or are within its jurisdiction, except those private waters that do not combine or effect a junction with natural surface or underground waters."

I can see the lobbyists now, holding up pictures of a small puddle and arguing that Ohio EPA would require a permit for putting a few shovels of dirt in the hole.  Only problem is there is not much in the rule to refute this claim from a purely legal perspective.  The rule does not contain an exemption from permit requirements for small water bodies or deminimis impacts. 

In my experience the Agency is typically not persuasive when it argue "just trust us" to apply the regulation fairly.  As a result, there is no doubt this rule package will be very controversial. 

Other issues with the package include the following:

  1. Same Level Review for All Impacts-  While flawed, Ohio’s isolated wetland permit requirements appropriately tries to match the level of review required with the amount/severity of impact.  The proposed rule makes no such effort.  All impacts are required to submit the same amount of technical information as part of their application. Also, all projects will be reviewed within 180 days, expedited review requirements for smaller projects is not included in the rule.
  2. Drainage Ditches- Who can clean out a ditch and when has been a controversial issue in Ohio for some time.  The proposed rule would put significant limitations on when ditches can be cleaned out for purposes of flood control or drainage.
  3. Clean Fill Materials- The rule limits fill to material "free from toxic contaminants in other than trace quantities."  While this limitation often appears in 401 permits, it has always been vague.  The rule adds no clarity to what is considered "trace quantities."  For instance, arsenic is naturally occurring in most Ohio soils.  Couldn’t this limit be viewed to prohibit use of even typical Ohio farm soil as fill?
  4. All Permit Applicants Will Have to Wait-  The rule requires every applicant provide a copy of a determination letter from the Army Corps of Engineers as to whether the waters to be impacted are within federal jurisdiction.  Shouldn’t some waters be just obviously not within federal jurisdiction?  This requirement is problematic because the Army Corps has been very slow to issue jurisdictional determinations. 
  5. Ohio EPA Guidance Elevated to Legal Requirements-  The rule requires all applicants evaluate the quality of streams in accordance with a series of technical guidance developed by Ohio EPA.  While these guidance documents have been used for years in permit reviews, it certainly will be controversial to make them mandatory. 

Comments on the rule package are currently due October 27, 2008.  However, business associations  are already requesting Ohio EPA allow for more extensive public involvement in the development of the rules.

 (Photo: flickr, heather0174)