Uncertainty Mounts Over Extent of Federal Control Over Construction in U.S. Waters
January 28, 2011
The extent of federal authority over construction work in “waters of the United States” is becoming even more confusing for the regulated community. Sources say the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency (EPA) are poised to release a new “guidance” document that would expand what constitutes federally-controlled waters, by revisiting U.S. Supreme Court rulings that have created competing tests to determine the scope of federal jurisdiction.
In addition, several regulatory agencies have initiated rulemakings on the critical jurisdictional terms of the Clean Water Act (CWA), which also would impact which waters and discharge activities are subject to federal control. Earlier this month, the regulatory uncertainly reached new heights when EPA – for the first time ever – “vetoed” a valid CWA Section 404 discharge permit, after the permit had already been issued. These government actions, which represent an expansive view of the federal government’s CWA authority, are being criticized by industry groups and some in Congress, and raise important legal issues that will likely be tested in the courts, as well as subjected to Congressional scrutiny.
CWA Section 404 requires contractors (and landowners) to obtain permits from the Corps before re-depositing dredged material during excavation or placing fill material in “waters of the United States,” including wetlands that are adjacent to “navigable” waters or their tributaries. Section 404(c) authorizes EPA to prohibit, restrict, or deny the discharge of dredged or fill material at defined sites in waters of the United States (including wetlands) if it finds an “unacceptable adverse [environmental] impact.”
New Section 404 Permit Guidance On the Way
In the near term, the Corps and EPA are expected to issue more “guidance” to clarify the extent of federal control over construction work in “waters of the United States.” Legal standards establishing the boundaries of jurisdictional waters, referred to as “waters of the United States,” continue to be a source of confusion, debate, and disagreement following the Supreme Court’s 2006 split decision in Rapanos, et ux., et al. v. United Statesthat set competing standards for establishing CWA jurisdiction, as well as an earlier 5-4 decision in Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers that ruled that the Corps could not regulate geographically isolated ponds.
Sources say the new guidance document will use Supreme Court Justice Anthony Kennedy’s “significant nexus” test, as outlined in his 2006 opinion in Rapanos v. United States, for determining CWA jurisdiction for Corps-issued CWA Section 404 dredge-and-fill permits. Under Justice Kennedy’s test, waters will be subject to federal control if they “significantly affect the chemical, physical, and biological integrity of other covered waters” (i.e., traditionally navigable waters, or TNW). Conversely, Justice Antonin Scalia’s plurality opinion inRapanos said that that a “continuous surface connection” between wetlands and traditional waters is required to trigger jurisdiction and regulation under the water law.
Courts, EPA, the Department of Justice (DOJ), and others have struggled to determine which of the two legal tests to use for determining whether isolated wetlands and other waters are subject to CWA jurisdiction. The Corps and EPA attempted to clarify the issue in joint guidance issued in June 2007 and revised in December 2008. This guidance, which remains in effect, finds that regulatory jurisdiction under the CWA exists over a waterbody if either the Justice Kennedy’s test or Justice Scalia’s test is met. AGC joined with organizations to submit detailed comments on the 2007 draft version and brought forth some meaningful changes, but the final version still creates uncertainty by calling for case-by-case determinations for when to apply jurisdiction to tributaries and wetlands adjacent to TNWs. The uncertainty caused by the two competing tests for jurisdiction prompted DOJ to determine that cases must meet both Supreme Court tests for determining whether waterbodies are jurisdictional before bringing an enforcement action.
The new guidance, which is currently being reviewed by the White House, would also address jurisdiction. Whether it would expand on the existing guidance or replace it is unknown and will remain so until the anticipated opportunity for public review and comment occurs and the guidance is finalized —sometime in the coming months.
Broad Support for Rule, Not Guidance
Most stakeholders are urging the federal agencies to resolve uncertainty over the scope of Clean Water Act (CWA) jurisdiction by issuing a formal regulation, not by the non-binding guidance document that they are pursing. The Waters Advocacy Coalition (WAC), of which AGC is a member, is leading a coalition of 31 industry organizations from a wide range of industry sectors seeking a rulemaking. AGC has long supported a rulemaking to better define federal jurisdiction under the Clean Water Act – click here to see AGC’s prior comment letter to EPA.
In addition, legislation has been introduced in several recent sessions of Congress to clarify that the water act should be broad in scope, but it has never come up for a vote in either chamber. The two primary champions for that legislation – Rep. James Oberstar (D-MN) and Sen. Russ Feingold (D-WI) – both were defeated in the 2010 election, leading some to call for EPA and the Corps to provide more clarity on jurisdiction because Congress is unlikely to act.
EPA Revokes Previously-issued, Valid Section 404 Permit
On Jan. 13, EPA exercised its authority under Section 404(c) of the Clean Water Act (CWA) to halt the disposal of mining waste in streams in the vicinity of the Spruce No. 1 mountaintop coal mine project in West Virginia. This EPA veto comes nearly four years after the Corps issued a Section 404 permit for the mining activity. EPA has used CWA Section 404(c) authority in 12 other instances since 1972, but this is the first time that EPA has ever vetoed a valid CWA Section 404 permit after the permit had already been issued.
EPA’s precedent-setting veto of a previously issued water permit for a controversial mountaintop mine is facing broad Congressional scrutiny, including legislation, H.R. 517, to strip EPA of its authority to veto 404 permits. Entities requiring permits for private real estate development and transportation and other critical infrastructure projects could find that, even when they are in full compliance, their permits do not provide them certainty. Just before the Spruce mine permit veto was finalized, the Waters Advocacy Coalition sent a letter to White House Council on Environmental Quality Chair Nancy Sutley requesting she block the veto. “If EPA is allowed to revoke this permit, every similarly valid Section 404 permit held by any entity … will be in increased regulatory limbo and potentially subject to the same unilateral, after-the-fact revocation,” the coalition wrote.
Regulatory Proposals May Change Definitions for Wetlands, Fill Material
The Department of Housing and Urban Development (HUD) has proposed a definition of “wetlands” for purposes of determining project impacts that may result from implementation of the Housing Trust Fund under the Housing and Economic Recovery Act of 2008. See 75 Fed. Reg. 66972, 66997-66999 item #7. The focus of the fund is to provide grants to states to build more rental housing for low-income families. HUD acknowledges that the definition is “independent of the definition of jurisdictional wetlands” used by the Corps/EPA under Section 404 of the Clean Water Act. The definition proposed by HUD is a single prong test (just need water) versus the three-prong test used by the Corp/EPA (water, soil, and vegetation). AGC joined the Waters Advocacy Coalition in submitting a letter opposing the use of different definitions for wetlands among the federal agencies.
In addition, the Corps and the Department of Defense have announced a draft revised National Wetland Plant List that will be used for wetlands delineation under CWA Section 404 and for other purposes. See 76 Fed. Reg.777, Jan. 6, 2011. The public may comments on the revised plant list, the wetland indicator status ratings of the plants, and any nomenclature changes online at http://wetland_plants.usace.army.mil/.
EPA also may soon revise its regulatory definition of “fill material,” for purposes of determining what discharges require coverage under a Section 404 permit. A 2002 revision to that definition made it easier to classify coal mining and other wastes as fill material, allowing companies to receive 404 permits rather than stricter pollutant-discharge permits under CWA Section 402.
Section 404 of the Clean Water Act prohibits construction work (i.e., any discharge of dredged or fill material) in waters/wetlands unless the project owner or operator has received approval under a Section 404 discharge permit, if the wet areas fall under federal jurisdiction. Section 404 grants the Corps authority to authorize the discharge of dredged or fill material at specified disposal sites; however, the Corps’ issuance of permits and specification of disposal sites is subject to EPA’s authority under Section 404(c) of the CWA, often referred to as EPA’s “veto” authority. Section 404(c) of the CWA authorizes the EPA to prohibit, deny, or restrict the specification or use of any waters of the United States (including wetlands) as a disposal site for the discharge of dredged or fill material if the agency determines that the discharge will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas, wildlife, or recreational areas.
CWA regulations defining waters of the U.S. and other information on the Clean Water Act is available at:http://www.epa.gov/owow_keep/wetlands/guidance/CWAwaters.html.
For EPA’s web page on its “veto authority”, go tohttp://water.epa.gov/lawsregs/guidance/cwa/dredgdis/404c_index.cfm.