LawFlash

Final Clean Water Act Rule Likely to Expand Act’s Application

June 03, 2015

Expansion could result in significantly increased costs in permitting requirements for the regulated community.

On May 27, the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (the Army Corps) released the final version of their controversial Clean Water Act jurisdiction rule. Despite assertions in the preamble that it constitutes only a clarification of existing law, the rule contains several provisions that will likely lead to expansive applications of the Clean Water Act. For example, the rule declares all “tributaries” and “adjacent waters” categorically jurisdictional in lieu of the existing case-specific analysis currently required for most intermittent and ephemeral streams. It also continues the use of a case-by-case “significant nexus” analysis for certain classes of water, but it includes a very broad definition of what constitutes a “significant nexus.” Although EPA and the Army Corps maintain that the final rule does not expand the scope of the Clean Water Act, they nonetheless predict that it will result in an increased number of positive jurisdictional determinations each year. Such an expansion in application could result in significantly increased costs in permitting requirements for the regulated community, including energy (especially oil and gas) companies, developers, and farmers.

Background

The scope of jurisdiction under the Clean Water Act has long been controversial. It is also an important issue for stakeholders, because it determines the regulatory scope of the act, including the section 402 point source discharge permit program, the section 404 dredge and fill permit program, and the section 311 oil spill prevention program. The Clean Water Act applies to “navigable waters,” which are defined in the statute as “waters of the United States, including territorial seas.” EPA and the Army Corps, the agencies charged with administrating the Clean Water Act, have sought to define the act’s scope through rulemaking and, more recently, through issuance of regulatory guidance. The definition of “waters of the United States” has also been subject to numerous legal challenges. The US Supreme Court has weighed in on the issue three times, most recently in Rapanos v. United States, 547 U.S. 715 (2006), which resulted in a fractured decision that lower courts have found difficult to apply. Against that backdrop, EPA and the Army Corps sought to promulgate a rule that clarifies the act’s scope.

EPA and the Army Corps issued a proposed version of the rule in March 2014. The agencies characterized the proposed rule as a clarification of existing law that did not alter the extent of Clean Water Act jurisdiction. Stakeholders such as farmers, industry groups, and property rights advocates felt otherwise and expressed concern that the proposed rule significantly expanded the waters over which EPA and the Army Corps would assert their authority under the Clean Water Act.

The Final Rule

Although the final rule scales back the scope of the definition of “the waters of the United States” from the proposed rule in some areas, it remains an expansive assertion of jurisdiction. The final rule establishes a framework of “bright-line” categories of waters that are always jurisdictional, categories of excluded waters that are never jurisdictional, and a remaining set of waters to be analyzed “case by case” under a “significant nexus” test. A wide variety of waters may be considered jurisdictional as part of a bright-line category or under the significant test, whereas the excluded categories of waters are relatively narrow.

The “bright-line” categories of always-jurisdictional waters in the final rule are (1) traditional navigable waters, (2) interstate waters, (3) the territorial seas, (4) impoundments to jurisdictional waters, (5) tributaries to jurisdictional waters, and (6) waters adjacent to jurisdictional waters. The “adjacent waters” category is newly created by the rule and the “tributaries” category is newly defined. The “tributaries” category includes waters that have “a bed and banks and an ordinary high water mark” and contribute flow to another jurisdictional water. In the preamble to the final rule, EPA and the Army Corps make clear that ephemeral or intermittent streams may be considered tributaries as long as they sometimes contribute flow and have the physical characteristics described in the rule. The rule defines “adjacent waters” as those waters located (1) within 100 feet of the ordinary high water mark of a jurisdictional water, (2) within the 100-year floodplain and not more than 1,500 feet from the ordinary high water mark of a jurisdictional water, or (3) within 1,500 feet of the high tide line of a jurisdictional water. Existing regulations only specified that adjacent wetlands were jurisdictional, so the final rule significantly expands the types of waters that are jurisdictional based on their proximity to other jurisdictional waters.

The final rule also creates several new categories of waters that are excluded from the definition of “waters of the United States.” Some of these exclusions, including stormwater control features and certain types of ditches, were added in response to comments about the proposed rule. But the exclusions are still narrow when compared with the types of waters that may be considered jurisdictional. Indeed, the explicit exclusions for features such as “small ornamental waters,” “swimming pools,” and “puddles” underscore the rule’s potential scope.

When waters fall into neither a bright-line jurisdictional category nor an exclusion, they will be analyzed on a case-by-case basis under the significant nexus test, which was developed in response to Supreme Court Justice Anthony Kennedy’s concurrence in Rapanos and implemented through regulatory guidance issued by the Army Corps and EPA in 2008. Under the final rule, the significant nexus test applies to (1) five specific types of waters—prairie potholes, Carolina bays and Delmarva bays, pocosins, Western vernal pools, and Texas coastal prairie wetlands and (2) waters within the 100-year floodplain or 4,000 feet of the high tide line or ordinary high water mark of another jurisdictional water. The agencies have, for the first time, provided a definition for “significant nexus” under which a water will be jurisdictional if it “significantly affects the chemical, physical, or biological integrity” of another jurisdictional water “either alone or in combination with other similarly situated waters in the region.” The rule goes on to list a number of indicators relevant to this analysis, including “nutrient recycling,” “pollutant trapping,” and “provision of life cycle dependent aquatic habitat.” Given that the evaluation will take into consideration a feature together with similarly situated features, there remains significant uncertainty about how “other similarly situated waters” will be defined.

Implications

By creating broader categories of features that will be per se jurisdictional, the final rule is likely to provide greater certainty in many cases as to the jurisdictional nature of a specific feature. That certainty, however, is likely to come at the price of expanding the number of features that will now fall within the regulatory ambit of the Clean Water Act. The certainty is also undermined by the fact that the final rule continues to apply the significant nexus test for features that do not fall into the bright-line jurisdictional/nonjurisdictional categories. Expanding the significant nexus evaluation to include consideration of “similarly situated waters in the region” is likely to also increase the areas deemed jurisdictional. Though EPA and the Army Corps do not perceive the final rule as an expansion of their jurisdiction, the agencies predict that the final rule will result in a 2.8–4.7% increase in the number of positive jurisdictional determinations per year. These additional positive jurisdictional determinations can have a tremendous effect on stakeholders who would be newly subject to Clean Water Act regulatory requirements.

One example of an industry that is likely to be affected by the final rule is the midstream oil and gas industry. Permits for midstream oil and gas projects already impose substantial regulatory requirements on the project proponent, who must identify sensitive resources such as cultural heritage sites and endangered habitats and minimize impacts to those resources. Each additional crossing of a water body declared jurisdictional under the final rule would present a set of challenges that could result in rerouting the project or other impacts to the project’s schedule or budget. As a practical matter, the interplay among permittees, state regulatory officials, and Army Corps representatives will certainly add time delays and costs to an already complex permitting regime. Such challenges will have a particularly large impact given the depressed oil and gas market, which makes it crucial that producers be able to get natural gas and other products to the marketplace in a timely and cost-effective fashion. Upstream producers will be affected by these uncertainties and costs as they seek to develop areas of production and to hold acreage for which considerable sums of money and effort have been expended.

EPA’s and the Army Corps’ applications of the final rule will likely be challenged in the near future. One area that is particularly likely to be the subject of future lawsuits is the determination of whether a nexus to another jurisdictional water is “significant.” The multifactor analysis of effects on chemical, physical, and biological integrity in the final rule seems to be open to an extremely broad interpretation by the agencies, and when combined with the agencies’ ability to consider the significance of a nexus in combination with other similarly situated waters, it could result in aggressive jurisdictional determinations. The question of exactly when a nexus is “significant” enough is thus likely to be resolved through litigation and could even make its way back to the Supreme Court.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Harrisburg
Maxine M. Woelfiling

Houston
Christopher B. Amandes

Los Angeles
James J. Dragna
Rick R. Rothman

Philadelphia
Jeffrey N. Hurwitz

Princeton
John McGahren
Christopher J. McAuliffe

San Francisco
Ella Foley Gannon
Marilee J. Allan

Washington, DC
Duke K. McCall, III
Ronald J. Tenpas
Douglas A. Hastings