United States: Obama Administration Releases Proposed Rule On "Waters Of The United States"

Lawrence Liebesman is a Partner in the Washington D.C. office
Elizabeth Lake is a Partner and Joanna Meldrum is an Associate in the San Francisco office

HIGHLIGHTS:

  • The U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency released a proposed rule that will impact many segments of the U.S. economy, greatly expanding future permitting requirements.
  • The proposed rule will sweep in waters previously considered isolated or exempt a great distance from navigable waters, particularly impacting the arid West.

On March 25, 2014, the U.S. Army Corps of Engineers (Corps) and the U.S. Environmental Protection Agency (EPA) (collectively, the "agencies") released a proposed rule revising the definition of "waters of the United States" under the Federal Clean Water Act (CWA).1 Styled as a "clarification" and "narrowing" of the prior regulatory definition, the proposed rule appears to in fact effectively increase the reach of the CWA and represents the most expansive interpretation of CWA jurisdiction since it was enacted in 1972. The proposed rule replaces guidance issued by the Bush administration in 2007 (amended in 2008) and responds to confusion in the wake of the Supreme Court opinion in Rapanos v. United States.2 According to the agencies, the rule would only increase jurisdictional areas by 3 percent and is intended to clarify the protections for "upstream waters and wetlands that are absolutely vital to downstream communities" by "strengthening the consistency, predictability and transparency of jurisdictional determinations."3 If adopted as proposed, the practical implications of implementing this rule will be felt throughout the United States, particularly in the arid and semi-arid western states, like California.

Proposed Rule: Tributaries and Adjacent Waters, Including Wetlands, Will Be Categorically Jurisdictional

Specifically – and most dramatically – the proposed rule would effectively expand the reach of CWA jurisdiction by finding that all "tributaries" and "adjacent waters including wetlands" have a significant nexus and therefore are categorically included as jurisdictional. Under this proposed rule, CWA jurisdiction:

  • more broadly reaches ephemeral waterways (including ditches) that may flow only intermittently and indirectly over a great distance to reach a navigable water
  • allows regulators to consider all isolated waters and wetlands together within a large landscape area to support a jurisdictional determination
  • arguably could extend to otherwise exempted water bodies like construction detention ponds that ultimately drain to a navigable water

This expansion of jurisdiction could lead to a great deal of uncertainty in areas like the arid West, and will cover the full range of CWA regulatory programs.4 It will have a profound impact on many regulated activities, including home building, mining, road construction, commercial property development and water infrastructure projects. The proposed rule is 370 pages long and includes detailed scientific and legal appendices.

The agencies will seek public comment for 90 days from publication in Federal Register (expected in early April) including requesting comment on specific definitional issues. The agencies do not expect to issue a final rule until 2015 given the complex and controversial nature of the proposed rule, and the extensive comments expected. The full text of the proposed rule and background documents may be found here.

Definition of "Navigable Waters" Addressed in Supreme Court Decisions Resulting in Some Confusion

The proposed rule grew out of years of regulation, guidance and case law regarding the meaning of the term "navigable waters," which is defined in the CWA simply as "waters of the United States and the territorial seas."5 Since 1977, the Corps and EPA have interpreted that term broadly in order to meet the act's objective "to restore and maintain the chemical, physical and biological integrity of the Nation's waters."6 The agencies' broadening interpretation of jurisdictional waters has been the subject of three major Supreme Court cases. In 1985, in United States v. Riverside Bayview Homes,7 the Supreme Court upheld the inclusion of "adjacent wetlands" in the agencies' regulations,8 finding that the wetlands at issue were "inseparably bound up with" navigable waters. The agencies read that decision as sanctioning broad jurisdiction over waters and wetlands that were not directly adjacent to traditionally navigable waters, including expanding the use of the commerce clause connection provided by regulation. However, in 2001, the Court in Solid Waste Agency of Northern Cook County v. Corps9 (SWANCC) held for the first time that CWA jurisdiction could not be asserted over isolated, nonnaviagable intrastate ponds based solely on the commerce clause and presence of migratory birds.

Then, in 2006, the Court in Rapanos addressed the issue of whether CWA jurisdiction reaches wetlands adjacent to non-navigable tributaries. That case resulted in five separate opinions with no single opinion commanding a majority of the Court. Justice Scalia authored the plurality opinion, which stated that "waters of the United States" extended beyond traditional navigable waters to include "relatively permanent, standing or flowing bodies of water."10 Justice Kennedy's concurring opinion concluded that "waters of the United States" included wetlands that had a "significant nexus" to traditional navigable waters,"if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as 'navigable.'"11 However, Justice Kennedy stated that federal regulation does not extend to "wetlands' effects on water quality are speculative or insubstantial."12 (Emphasis added)

In the wake of Rapanos, the Corps and EPA instead issued guidance to further explain the Court's decision.13 The 2007 and 2008 guidance directed the agencies to develop detailed evidence of hydrological and ecological factors to assert CWA jurisdiction under both the Scalia and Kennedy tests. Despite such further "clarification," there remained a great deal of confusion among courts and agency field staff over whether the Scalia or Kennedy test applies, which led to inconsistent jurisdictional determinations across the country. It also led to claims that CWA enforcement was being harmed by the jurisdictional confusion and the evidentiary burden on the agencies.

In response to these issues, the agencies released a Draft Guidance in 2011 to clarify and simplify the process for asserting jurisdiction over waters that satisfy either the Scalia (plurality) or Kennedy "significant nexus" tests. That Draft Guidance sanctioned the use of "watershed analysis" to "aggregate" similarly situated waters and wetlands within a given watershed without requiring the kind of detailed site-specific analysis for individual tributaries and their adjacent wetlands required under the 2007-2008 guidance. However, the agencies again met resistance from many stakeholders and Congress for not pursuing rulemaking. As a result, in September 2013, EPA withdrew the proposed 2011 Draft Guidance and sent this proposed rule to the Office of Management and Budget (OMB). This proposed rule was released to the public on March 25, 2014.

Highlights of the Proposed Rule

The proposed rule replaces the prior regulatory definition of "waters of the United States"14 with the following:

  1. all waters currently used, used in the past or that may be susceptible to use in interstate or foreign commerce, including tidal waters (e.g., Mississippi River or Los Angeles River)
  2. all interstate waters, including interstate wetlands (e.g., Colorado River)
  3. the territorial seas (e.g., coastal waters up to three miles)
  4. all impoundments of waters identified in (1)-(3) above (e.g., Lake Mead)
  5. all tributaries of waters identified in (1)-(4) above (definition of tributary subject to changes in proposed rule, see discussion below)
  6. all waters, including wetlands adjacent to a water identified in (1)-(5) above (definition of adjacent subject to changes in proposed rule, see discussion below)
  7. on a case-by-case basis, other waters, including wetlands, that alone or in combination with other similarly situated waters in the region, have a significant nexus to a water identified in (1)-(3) above (other waters may include vernal pools, prairie potholes and subject to changes in proposed rule, see discussion below)

Under the proposed rule, the agencies seek to simplify the CWA jurisdictional process and to expand the legal and scientific basis of CWA regulation "up the landscape" through several key measures, including:

  • Reducing the documentation requirements and the time currently required for making jurisdictional determinations. The proposed rule sanctions the use of "desktop" information such as watershed studies, U.S. Geological Survey maps, aerial photography or other remote sensing information.
  • Classifying certain waters as "jurisdictional by rule." For the first time, the proposed rule defines "tributary" based on some evidence of flow, however indirect, to a traditional navigable water. That is, if a water has an ordinary high water mark (OHWM) or a bed or bank, even where the flow is broken up by a road, a wetland or other barrier, the proposal categorically finds that it is a "tributary" and has a "significant nexus."Similarly, waters and wetlands adjacent to tributaries (e.g., a seasonally wet pond or swale) are categorically jurisdictional. The tributary definition covers both natural and man-altered or man-made waters such as canals and ditches not otherwise excluded under the proposal. The definition potentially undermines/replaces the prior jurisdictional determination guidance used in the arid West.15
  • Expanding the existing "adjacent" definition to now include waters as well as wetlands and for the first time defining "neighboring"16 "riparian area"17 and "floodplain"18 broadly to further clarify adjacency. Under the proposed rule, waters and wetlands a considerable distance from a tributary may be "adjacent" and therefore jurisdictional if located within a riparian or flood plain area even where separated by a man-made structure like a berm. This could include areas outside FEMA's flood plain maps.
  • Allowing for a generalized scientific study to provide the basis of "significance nexus" for all classes of waters. The proposed rule defines "significant nexus" as existing when "a water, including wetlands either alone or in combination with similarly situated waters in the region (defined as the watershed), significantly affects the chemical, physical or biological integrity of water identified in (1)-(3) above." It cites to a scientific literature review conducted by the agency, the "connectivity study"19 to show that the nexus is more than insubstantial. By sweeping all tributaries and adjacent wetlands and waters as having a significant nexus, the agencies conclude that these waters, by definition, satisfy Justice Kennedy's condition that CWA jurisdiction requires more than a speculative or insubstantialeffect on navigable waters.
  • Drawing on scientific literature to support the principle that other waters in a watershed need to be considered in the "aggregate." The proposed rule directs the agencies to aggregate (e.g., combine together) "similarly situated" tributaries, their adjacent wetlands and "other waters" within a watershed that discharge into a "single point" of entry to a traditionally navigable water as meeting the "significant nexus" test. A single point of entry in the arid West could be "very large." The proposed rule relies heavily on the "connectivity" study cited above, which looks at watersheds throughout the country. An EPA science advisory board is conducting a peer review of the connectivity study with results expected in the spring of 2014.20
  • Streamlining the basis for jurisdiction by eliminating the "commerce clause" test for "other waters" and substituting significant nexus test. The proposed rule eliminates the existing regulatory provision that defines waters of the United States as including other waters on the basis of interstate or foreign commerce, and instead requires a significant nexus determination.
  • Finding that "other waters," such as isolated vernal pools, prairie potholes and pocosins, may be jurisdictional subject to case specific significant nexus evaluation assessing these waters in combination with similarly situated waters and wetlands in the same region. The proposed rule provides that such waters are "similarly situated" when they "perform similar functions and are located sufficiently close together or sufficiently close to a water of the United States so that they can be evaluated as a single landscape unit with regard to their effect on the chemical, physical and biological integrity" of a waters identified in category (1)-(3) above. Under this definition, agency reviewers will have great discretion in identifying certain waters, such isolated ponds and wetlands, and evaluating them together within a large "landscape unit." Under the proposed rule, this is the only category of waters still subject to an individual significant nexus determination. However, even for this category, the agencies are requesting comments on whether "other waters" should be categorically regulated as having a "significant nexus" based on either their location within a defined eco-subregion (like California's Central Valley) or the type of water (such as a prairie pothole).
  • Expanding the scope of the term "traditional navigable waters." Under the proposed rule, the definition of traditional navigable water now includes any water body that can support waterborne recreational use, broadly interpreting "susceptible for use" in transporting commerce. See 33 C.F.R. Part 329 (see Legal Analysis, Appendix B to proposal).

Exclusions in the Proposed Rule

The proposed rule contains a number of exclusions, including existing exclusions such as waste treatment systems, prior converted cropland, artificially irrigated areas, artificial lakes and ponds, reflecting pools, small ornamental bodies of water and water-filled depressions incidental to construction activity. The proposed rule also incorporates by reference certain exclusions in the preamble of the 1986 Corps rule including water-filled depressions excavated on dry land for the purposes of obtaining sand and gravel. It also includes additional exclusions such as groundwater, gullies, rills, non-wetland swales, and certain (very limited) ditches, as well as additional protections for ranching and agriculture. Notwithstanding the "exclusions," the proposed rule appears to indicate that even exempt water bodies could be determined to be jurisdictional; however, in such a case, the proposed rule would continue to preclude application of CWA permitting requirements to the excluded water bodies. Despite this assurance, the list of exempted discharges do not appear to reach all exempt water bodies. (See proposed rule, p. 25.) Key exclusions that are likely to be controversial include:

  • Ditches. The proposed rule excludes two types of ditches: (1) those excavated wholly in uplands, drain only uplands and have less than perennial flow; and (2) ditches that do not contribute flow either directly or indirectly to a navigable or interstate water. However, the proposed rule states that a non jurisdictional ditch may be a point source, and also states that a wetland may be considered "neighboring" and thus "adjacent" if the ditch connects the wetland to a tributary. Further, the second category appears to act more like an exception that could sweep in even ditches in the first category, if they ultimately drain to a navigable water.
  • Agriculture. The proposed rule preserves the CWA agricultural exemptions and proposes to provide further protections for agriculture by developing an interpretative rule with the Department of Agriculture to ensure that established conservation practices that protect water quality will not be subject to the CWA Section 404 permitting program.
  • Groundwater. Under the exclusions discussion, the proposed rule reiterates the agencies' long-held position excluding groundwater, including drainage through subsurface systems. However, elsewhere in the proposed rule, a shallow subsurface connection could establish "adjacency" jurisdiction. The proposed rule does not distinguish between groundwater and shallow subsurface waters.

Implications of the Proposal

Overall, the proposed rule sanctions both more "desktop" and inclusive jurisdictional determinations. It relies on broad ecological "watershed" principles and presumptions of ecological connection based on scientific literature, rather than tributary-specific data and evidence. In the arid West, this change could undermine or replace the prior jurisdictional determination manual. This could result in the inclusion of waters that theoretically meet the definition of tributary, but that in practice do not have more than a speculative or insubstantial connection to traditional navigable waters.

While the agencies claim that the scope of CWA regulation under the proposed rule is narrower than current regulations, it is likely that new types of waters will be regulated. For example, the "aggregation" principle in the regulations, along with the agencies regulation of "other waters" potentially allows field staff to sweep in ephemeral ponds and similar waters that theoretically could drain into a seasonally wet ditch that may flow a great distance to a navigable water only in storm events. The agencies could now use regional studies of large watersheds, such as the Chesapeake Bay or the California Bay Delta, could support a decision to include all "similarly situated" waters and their adjacent wetlands/other waters – no matter how remote from the main part of the Bay/Delta – on the theory that excluding any single "similarly situated" water would adversely affect the ecological integrity of that entire watershed. Such potentially unlimited regulation arguably conflicts with Supreme Court precedent in SWANCC and Rapanos that there is a limit to federal jurisdiction under the CWA.

The impact of this proposed rule could especially be felt in the arid West, with many isolated waters that are normally wet only during seasonal rain events. Under this proposal, field staff could "aggregate" normally dry vernal pools or prairie potholes that do not have any noticeable hydrologic connection to the closest navigable water by finding that they perform functions such as flood control during the wet season. Furthermore, the proposed rule includes intermittent and ephemeral tributaries with discontinuous OHWM indicators. It is not clear if properties with no visible banks, water or any other indicators could therefore fall under CWA jurisdiction if, based on a desk study, there is evidence of a tributary on nearby properties that could theoretically flow through or under the property. Rather than providing clarity to property owners, the broad reach of the definition of tributary may add confusion and frustration when regulations are imposed on land owners who have minimal or no physical evidence of water on their property.

Although the agencies note that the definition of "waters of the United States," by itself, imposes no direct costs,21 more activities will require CWA permits because of the expansion of jurisdiction. The economic impact of this would be felt as both time delays and increased cost associated with obtaining CWA permits. The agencies claim that the rule will only increase jurisdictional waters by roughly 3 percent (a fact strongly disputed by the regulated community) and point to indirect benefits in protection of ecosystems, government efficiency, reduced uncertainty and comprehensive enforcement, but acknowledge direct cost increases of $19.8 million to $52.9 million based on an increase in the number of permits required due to increased jurisdiction.22 While the agencies state that the proposed rule may provide enhanced protection of water quality in the waters of the United States, this will likely come at a cost to the regulated community.

Conclusion

This proposed rule is unprecedented in its reach and scope and will affect virtually all segments of the U.S. economy. It has already generated considerable criticism in Congress and the regulated community, while it has received broad praise from environmentalists. Affected stakeholders will need to develop and submit strong comments to hopefully lead to a final rule that lessens the impact on the regulated community.

Footnotes

1 Federal Water Pollution Control Act ("Clean Water Act"), 33 U.S.C. §1251(a).

2 See Rapanos v. United States, 547 U.S. 715 (2006); see also EPA/Corps Rapanos Guidance (2008). Available here.

3 EPA News Release - Water (3/25/14) (quoting EPA Administrator McCarthy and Assistant Army Secretary Darcy). Available here.

4 The proposed rule replaces the definition of "navigable waters" and "waters of the United States" in the Corps and EPA regulations for CWA sections 311 (oil spill program), 401 (water quality certification), 402 (NPDES discharge program) and 404 (dredged or fill material discharge permit program).

5 Clean Water Act, 33 U.S.C. §1362(7).

6 Clean Water Act, 33 U.S.C. §1251(a).

7 474 U.S. 121 (1985).

8 The current regulations define "waters of the United States" as "traditional navigable waters, interstate waters, all other waters that could affect interstate or foreign commerce, impoundments of waters of the United States, tributaries, the territorial seas, and adjacent wetlands." 33 CFR 328.3; 40 CFR 122.2.

9 531 U.S. 159 (2001).

10 Rapanos, 547 U.S. 715, 739 (2006).

11 Id. at 780.

12 Id.

13 See footnote 2, above.

14 See footnote 9, above.

15 U.S. Army Corps of Engineers, A Field Guide to the Identification of the Ordinary High Water Mark (OHWM) in the Arid West Region of the Western United States: A Delineation Manual, ERDC/CRREL TR-08-12 (2008).

16 Waters located within a riparian area or floodplain of jurisdictional waters, or waters with a shallow subsurface connection or confined surface hydrologic connection to jurisdictional waters. See proposed 33 CFR 328.3(c)(2).

17 Transitional areas between water and land where surface or subsurface hydrology influences the ecological process and plant community of the area. See proposed 33 CFR 328.3(c)(3).

18 An area bordering inland or coastal areas that is inundated during periods of moderate to high water flows. See proposed 33 CFR 328.3(c)(4).

19 See, EPA, Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence.

20 Appendix A to the proposed rule provides a detailed summary and discussion of the scientific basis for the proposed rule. It consists of a synthesis of peer-reviewed scientific literature discussing the nature of connectivity and effects of streams and wetlands on downstream waters.

21 EPA and Army Corp (March 2014) Economic Analysis of Proposed Revised Definition of Waters of the United States. Available here.

22 EPA and Army Corp (March 2014) Economic Analysis of Proposed Revised Definition of Waters of the United States, page 16. Available here.

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