Draft Section 404 Wetlands Permit Guidance Provides Federal Agencies’ Views on the Reach of the Clean Water Act
May 27, 2011

The U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency (EPA) proposed on May 2, 2011, a new draft “Guidance on Identifying Waters Protected by the Clean Water Act” (proposed guidance).  This draft guidance intends to clarify the extent of federal control over construction work in “waters of the United States,” which has been a continued source of confusion following competing decisions in two U.S. Supreme Court cases.

The proposed guidance broadly interprets the Supreme Court decisions and, if adopted, will result in significantly more federally controlled waters that would require Clean Water Act (CWA) Section 404 permits.  Contractors and land owners must obtain Section 404 permits 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. (See Observer article, January 2011, for more background information.)

The proposed guidance and related information are available on EPA’s website.  Public comments are due July 1, 2011.  The final 2011 guidance is intended to supersede a 2003 “Joint Memorandum” and a 2008 Joint Guidance memo that currently remain in effect.

Implementation of the existing 2003/2008 guidance has been a challenge for both the construction and development industries, as well as Corps field staff – leading to inconsistent application of key provisions across districts and subjective jurisdictional determinations.

The agencies’ decision to issue the 2011 guidance instead of immediately initiating rulemaking has been criticized by members of Congress and representatives from both industry and environmental interest groups.  “Any attempt to re-write the jurisdictional scope of the CWA by developing and finalizing this “guidance” ignores calls by the courts, state agencies, environmental groups and many others to proceed through the appropriate rulemaking procedures; anything less would be an unjustifiable effort to legitimize a policy that has never been sanctioned by Congress.”  (See, Waters Advocacy Coalition April 4, 2011, letter to EPA and the Corps re: an earlier draft of the proposed guidance.)

The decision to rely on a policy statement rather than a rule also runs counter to several recent federal appellate decisions giving limited deference to agency “guidance” documents.  The guidance is not a regulation; it does not impose legally binding requirements on EPA, the Corps, or the regulated community – and it will likely be challenged on that basis.

At a May 25, 2011, meeting with EPA and the Corps that AGC attended, the agencies stated that they will eventually propose revisions of existing regulations, but they were unable to provide a timeline for when they will do so.

It is also worth noting that the proposed guidance addresses the scope of the CWA’s key term “waters of the United States” for all CWA provisions that use the term, including the Section 402 National Pollutant Discharge Elimination System (NPDES) permit program, the Section 311 oil spill program, the water quality standards and total maximum daily load programs under Section 303, and the Section 401 State water quality certification process.  The existing 2003 and 2008 guidance documents are limited to CWA Section 404 determinations.

The potential impact of applying the newly proposed scope of “waters of the United States” to the NPDES permit program is seen when reviewing the draft Construction General Permit (CGP) for regulating stormwater discharges at construction sites.  Under the draft CGP, site operators must ensure that any discharges flowing through the area between the disturbed portion of the site and waters of the United States (located on or immediately adjacent to the site) are treated by an area of undisturbed natural vegetation that alone or with alternative sediment and erosion controls achieves a reduction in sediment loads equivalent to a 50 foot buffer. (See, Observer article, May 2011, for more information on the draft CGP.)  Contractors must also take into account that more waters will likely be considered “waters of the United States” when the proposed guidance is final.

Click here for an eight-page summary of the key points of the draft guidance.  Below is a short fact sheet regarding the scope and impact of the guidance on regulated entities and the public.  These documents were prepared (and are being circulated) by members of the Water Advocacy Coalition (WAC).  AGC is a long-standing WAC member and is currently working in that capacity to request an extension of time to comment on the proposed guidance and in drafting a formal industry response to the agencies.  WAC is a coalition of 31 industry organizations from a wide range of industry sectors.

FACT SHEET

The Clean Water Act Guidance Changes Agency Regulations, Increases Jurisdiction, Distorts Supreme Court Cases and is Cumbersome and Complicated

On May 2, 2011, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) issued “Guidance Regarding Identification of Waters Protected by the Clean Water Act.” The agencies also published a notice inviting comments on the guidance. 76 Fed. Reg. 24,479 (May 2, 2011). The 39-page guidance was prepared for agency field staff to use in identifying “waters of the United States” subject to Clean Water Act (CWA) regulation. The guidance applies to all CWA programs and specifically lists sections 404 (wetlands), 402 (NPDES), 311 (oil spills and SPCC plans), 401 (state water quality certifications) and 303 (water quality standards and TMDLs). The agencies are accepting comments on the guidance for 60 days, or until July 1, 2011, after which time they plan to issue the guidance in final form.

The agencies’ decision to issue guidance on this topic as opposed to a rulemaking runs contrary to the expressed views of the United States Supreme Court and the requirements of the Administrative Procedure Act (APA). Although the agencies claim in the guidance that they will initiate a future rulemaking on this issue, they give no specifics and make no commitments. By issuing guidance, the agencies shortcut critical rulemaking requirements such as responding on the record to the public’s comments, providing evidence to support the decision and engaging in reasoned decision making that can be subject to judicial review.

The Guidance Expands Jurisdiction

The agencies acknowledge that the number of jurisdictional waters “will increase” under the guidance. Guidance at 1. The acknowledgement is appropriate given that the guidance:

  • Applies a broadened view of Justice Kennedy’s significant nexus standard not only to wetlands (as Kennedy did) but also to tributaries and isolated waters;
  • Finds that a hydrological connection is not necessary to establish a significant nexus;
  • Allows the agencies to “aggregate” the contributions of all similar waters (small streams, adjacent wetlands, ditches or certain otherwise isolated waters) within an entire watershed, thus making it far easier to establish a significant nexus between these small intrastate waters and traditional navigable waters. Indeed, the agencies’ economic analysis assumes that all waters subject to this expanded aggregation principle will be jurisdictional. EA at 6;
  • Regulates all roadside and agricultural ditches that have a channel, have an ordinary high water mark and can meet 1 of 5 characteristics (2 of the 5 characteristics include a ditch that has “standing water,” or a ditch that drains a “natural water body.”);
  • Defines the “traditional navigable waters” to include all waters that support one-time recreational use. This is not the “traditional” understanding of the term “navigable waters” as used by the United States Supreme Court;
  • Gives new and expanded regulatory status to “interstate waters,” equating them with traditional navigable waters, thus making it easier to find jurisdiction for adjacent wetlands and waters judged by the significant nexus test; and
  • Makes all waters not in any of the other categories (also known as the “other waters”) subject to the significant nexus standard. According to the agencies’ economic analysis, these other waters were previously assumed “non-jurisdictional.” EA at 7. Now, 17 percent of these waters are assumed to be jurisdictional. Id.

The Guidance Is Inconsistent with the Agencies’ Regulations and the Supreme Court Decisions

  • The current regulations say nothing about ditches, but now there is a whole section of regulatory treatment and standards devoted to ditches.
  • The agencies’ regulations do not define tributaries. However, the guidance sets forth a new and broad definition that provides federal jurisdiction over most water features that have “channels,” presuming that most features that meet this “new” definition will be jurisdictional. Such a presumption is inconsistent with Justice Kennedy’s opinion in Rapanos, which requires the agencies to conduct a rulemaking to establish that classes of water are jurisdictional.
  • The guidance defines a significant nexus as anything that is “more than speculative or insubstantial,” thus, turning Justice Kennedy’s “significant” nexus into an “any” nexus standard. This “any” nexus standard is equivalent in scope to the “any hydrological connection” standard that the court previously rejected.
  • The current regulations determine jurisdiction over “other waters” based on certain specific connections to interstate commerce. The guidance replaces this standard with the significant nexus test, which as described above is overly broad.
  • The agencies’ regulations include adjacent “wetlands,” not adjacent “waters.” The guidance instead develops a new category of “other waters” and seeks to apply the term “adjacent” to those waters. This change finds no support in the Supreme Court decisions and will sweep in wet areas near other jurisdictional waters.

The Guidance Is Unlawful Because it Violates the APA

  • The agencies’ decision to define “the waters of the United States” through informal guidance rather than a notice-and-comment rulemaking violates the APA. The issuance of further guidance on this issue ignores encouragement from all of the Justices of the Supreme Court to undertake a rulemaking. Despite repeated claims by the agencies that they would conduct a rulemaking, they have not. Instead, the agencies continue to make fundamental changes to their regulations and expand their jurisdiction through guidance.
  • The agencies claim, on the one hand, that the guidance is not a rule, is not binding, and lacks the force of law. Guidance at 1. Yet, once finalized, the guidance will be used to make determinations about whether a particular water body is subject to regulation. The guidance and the economic analysis clearly acknowledge that the new guidance will increase CWA jurisdiction. The guidance has the plain effect of changing the law. Many court decisions have made clear that EPA and USACE do not have legal authority to revise their regulations without engaging in a rulemaking.

The Agencies Acknowledge the Significant Economic Impacts of the Guidance

The agencies undertook an economic analysis to provide an estimate of the possible range of indirect impacts associated with implementing the proposed guidance. Based on EPA’s own assumptions, annual costs from implementation of the guidance are estimated to be between $87 million to $171 million. In addition to these substantial costs, the guidance also will impose new land use restrictions, permitting costs, and increased delays associated with increased federal jurisdiction, none of which is reflected in the EPA cost estimates.

Conclusion

The agencies claim that the guidance will improve CWA program predictability and clarity. 76 Fed. Reg. at 24,279. But in fact, the guidance will reduce clarity and create great uncertainty by expanding jurisdiction beyond the Clean Water Act, current regulations and Supreme Court decisions, as discussed above. The agencies should withdraw the guidance and instead engage in a formal rulemaking – starting with a notice of inquiry or advanced notice of proposed rulemaking – to explore the need for changes to the current jurisdictional regulations through a more careful and deliberative process.