Water Act Rule Poses Challenges for States

Monday, January 27, 2020

On January 23, 2020, EPA and the U.S. Army Corps of Engineers released a final Navigable Waters Protection Rule to redefine “waters of the United States” (WOTUS). This new rule repeals a Reagan-era definition rule and adopts an even more limited definition of the waters of the United States that are subject to the federal Clean Water Act. (By a previous rule, published in October and effective in December 2019, the Administration repealed the Obama-era Clean Water Rule adopted in 2015.) The result of the current rule is the narrowest reading of the Clean Water Act’s reach since the original 1972 Act, a reading narrower than any federal practice since the 1977 Clean Water Act.

The Navigable Waters Protection Rule defines waters of the United States to include only four categories of waters: “The territorial seas, and waters which are currently used, or were used in the past, or may be susceptible to use in interstate or foreign commerce, including waters which are subject to the ebb and flow of the tide; Tributaries; Lakes and ponds, and impoundments of jurisdictional waters; and Adjacent wetlands.”

Adjacent wetlands are defined as wetlands that abut, or are inundated by flooding, by the first three categories of jurisdictional waters (territorial seas and navigable waters, tributaries, and lakes and ponds). Adjacent wetlands that are physically separated from jurisdictional waters by only “a natural berm, bank, dune, or similar natural feature” or “only by an artificial dike, barrier, or similar artificial structure so long as that structure allows for a direct hydrologic surface connection between the wetlands . . . such as through a culvert, flood or tide gate, pump, or similar artificial feature” are also included. Adjacent wetlands are also jurisdictional “when a road or similar artificial structure divides the wetland, as long as the structure allows for a direct hydrologic surface connection through or over that structure in a typical year.”

A tributary “means a river, stream, or similar naturally occurring surface water channel that contributes surface water flow” to a jurisdictional water in a typical year either directly or through another jurisdictional water (a tributary, lake or pond, or adjacent wetland). A tributary must be perennial or intermittent in a typical year. Intermittent means that it has “surface water flowing continuously during certain times of the year and more than in direct response to precipitation.”

The proposed rule excludes all waters or water features not expressly included. It also excludes ephemeral streams (“surface water flowing or pooling only in direct response to precipitation”) and all non-adjacent wetlands.

The preamble to the rule assumes that many states are likely to regulate the excluded waters and wetlands in response to these changes in federal jurisdiction. Every state does have at least some authority to regulate activities that affect “waters of the state.” This may include wetlands affected by the rule. But, currently less than half of the states have their own permitting programs for freshwater wetlands.

In general, state programs covering freshwater wetlands fall into one of two categories: (1) 27 states that primarily rely on federal Clean Water Act §401 certification or that have programs that have extremely limited or occasional coverage of some waters; and (2) 23 states that have permitting programs that cover all or (more often) a defined set of freshwater wetlands and waters.

Under §401 of the CWA, states are authorized to review applications for federal permits for activities that may result in a discharge to a water of the United States to ensure that they do not violate the state’s water quality standards. In 20 states, §401 certification provides the primary or the sole mechanism by which states regulate activities in freshwater wetlands. All wetlands that are no longer subject to federal permitting will not come within a state’s §401 review process.

An additional seven states have very limited or occasional coverage of such waters. For example, six states have stream or floodplain statutes. One additional state may on a case-by-case basis require approvals for projects in wetlands that are not subject to federal jurisdiction. Many of the waters no longer covered as a result of the new rule would also be generally unprotected in these states.

The remaining 23 states have permitting programs for some or all freshwater wetlands within the state. Nine of these have permitting programs broadly covering most freshwater wetlands in the state. Eight states have permitting programs that protect many freshwater wetlands but include defined exceptions from protection based on wetland type, size, or class. Six states have established specific permitting programs for limited categories of wetlands that were not federally regulated in the early 2000s.

For some of these 23 states, especially those with comprehensive coverage, the loss of federal protection may have less effect on the protection of resources. However, several states with permitting programs have recently pulled back on state protection, and many resources could be left unregulated with changes in federal jurisdiction. For example, Wisconsin has acted to remove permitting requirements for certain activities in wetlands in “electronics and information technology manufacturing zones,” as well as permitting requirements for urban wetlands under one acre and rural wetlands under three acres under its isolated wetlands law. In the late 2018 lame-duck session, the Michigan Legislature passed restrictions narrowing the coverage of its state wetlands law. And, over the past five years, North Carolina has rolled back the types and size of wetlands covered under its isolated wetlands law, removing protection from a substantial proportion of the wetlands once covered under state law. North Carolina also passed a law barring the state from passing state protection that is more protective than federal regulations.

Further, even where states have permitting programs, loss of federal partners will leave implementation gaps that will need to be filled by state expenditures of taxpayer funds. For example, the federal government is key in delineating jurisdictional waters. If the federal government pulls back on this role, as it will because of the exclusion of many waters by rule, states would be left to fill the gap, which will require additional technical and scientific expertise.

The rule will also lead to other logistical and practical issues. Many states have joint permitting applications with the Corps of Engineers; states operate permitting programs using Corps-approved programmatic general permits, or state/federal MOUs. And Corps nationwide permits will suddenly not apply to many kinds of newly unregulated waters, leaving states needing to decide whether and how to pick up such regulatory review or to adopt their own permit schemes. Finally, the nearly half of states that have no permitting programs (where they rely on §401 certification) will lose jurisdiction over many waters.

Most of the existing state programs were adopted some decades ago, and it seems unlikely that many states will move quickly to enact laws to cover resources left unprotected under the new rule, at least over the short term. Establishing new state programs will require large investments in resources and staff. Minnesota’s relatively robust aquatic resource regulatory programs employ at least 22 people, for example, not a level that could be rapidly matched elsewhere. Other states, such as Iowa, have only one or a few staff covering the regulatory program. And, building programs takes time. In May of 2019, new procedures in California went into effect “to strengthen protection of waters of the state that are no longer protected under the Clean Water Act” and improve consistency “in requirements for discharges of dredged or fill material into waters of the state,” 10 years after the state began work on the policy.

Further, in some states, legal restrictions may impede the adoption of regulations to expand protection beyond the new federal baseline. There are many states whose legislatures have prohibited or limited regulation beyond the federal floor.

The agencies also face a number of challenges as they look to implement the new rule. One major question is the effect of the rule on the compensatory mitigation market and the viability of banks and in-lieu fee programs. The coordination will become a major challenge if the Corps and EPA drop out, or if states are left alone to determine mitigation. And the existing banks and in-lieu fee programs are likely to experience a serious drop in demand as developers can fill newly unregulated nonadjacent wetlands and headwaters without needing a federal permit. The final rule, of course, faces an inevitable slew of court challenges that will be filed in dozens of different federal district courts. The environmental impact of the new definition will be immediate, but will also depend on state responses. It is unclear whether (or where) states will fill the gap. ELI will have more analysis on the rule in the coming weeks.