Efforts to clarify “Waters of the United States” halted by nationwide stay

Efforts to clarify the definition of “Waters of the United States” by new rules promulgated by the United States EPA (USEPA) and Army Corps of Engineers (ACOE) were dealt a severe blow when United States Sixth Circuit Court of Appeals issued a nationwide stay on the enforcement of those rules until further order of the Court. Those rules had gone into effect on August 28, 2015, although a Judge in the Federal District Court for the District of North Dakota had stayed enforcement of those rules in 13 states. Notwithstanding the District Court decision, the USEPA and ACOE announced that they would continue to enforce the new rules in the remaining 37 states. On October 9, 2015, a Sixth Circuit U.S. Court of Appeals panel, in a 2-1 decision, ruled that the stay should apply to all 50 states.

The impetus of the federal agencies to promulgate the new rule was driven by two Supreme Court decisions: Solid Waste Agency of Northern Cook County (SWANCC) v. ACOE, 531 U.S. 159 (2001), and Rapanos v. United States, 547 U.S. 715 (2006). The federal government had been regulating the nation’s waterways since the Rivers and Harbors Act of 1899, which required the approval of the Secretary of War for construction in, or deposition of materials into, the navigable Waters of the United States (a function the ACOE still oversees today). In 1972, Congress passed the Clean Water Act, expanding federal jurisdiction to protect not just the navigability of the nation’s waters, but also their chemical, physical and biological integrity. Under the Clean Water Act, “navigable waters” were defined as “Waters of the United States,” and Congress left it to the USEPA and ACOE to determine the scope of that term. In focusing on the chemical and biological quality of the nation’s waters, the federal agencies reached well beyond traditional “navigable” waters by exercising jurisdiction over wetlands, streams, potholes, non-navigable tributaries, and any waters the use or degradation of which would affect interstate or foreign commerce.

In 2001, in SWANCC, the Supreme Court ruled that the federal agencies could not use the Commerce Clause to expand the definition of the Waters of the United States. The ACOE had determined that isolated abandoned quarry pits that seasonally filled with water could not be drained and filled with solid wastes by a county agency without the approval of the ACOE. The ACOE claimed that these were jurisdictional waters because they were stopping points for bird migrations. The ACOE argued that migratory birds supported a one billion dollar sporting industry and, therefore, were part of interstate commerce. The Supreme Court said that the ACOE’s jurisdictional interpretation went beyond congressional intent. Such isolated waters were not “Waters of the United States,” and Congress did not intend their inclusion by way of the Commerce Clause.

In 2006, the Supreme Court in Rapanos again struck down the federal agencies’ determination of jurisdictional “Waters of the United States.” Joseph Rapanos, a Michigan developer, had drained and filled 22 acres of wetlands that he owned to construct a mall. He claimed that the wetlands were 20 miles from any traditional navigable water of the United States and, therefore, “isolated.” The ACOE claimed that despite the 20-mile distance, there was a connection between the wetlands and the navigable water through a connection of streams, wetlands and ditches. Rapanos was charged in criminal and civil actions for filling the wetlands without authority, and he appealed the civil action all the way to the Supreme Court. The Court found that Rapanos had not discharged into the jurisdictional Waters of the United States, but the decision was 4-1-4. Justice Scalia, writing for the plurality siding with Mr. Rapanos, found that the Clean Water Act confers jurisdiction over non-navigable waters only if they exhibit relatively permanent flow, such as a river, lake or stream, and have distinguishable beds, banks and ordinary high water marks, and flow downstream. Justice Scalia’s opinion said that wetlands could only be jurisdictional if there is a continuous surface water flow connection between them and a permanent water body.

Justice Kennedy, writing alone and siding with Mr. Rapanos, rejected the continuous flow standard in the Scalia opinion and said that a wetland is jurisdictional if it bears a significant nexus to a traditional navigable waterway. According to Justice Kennedy, that nexus exists where the wetland, either by itself or in combination with other similar wetlands, significantly affects the physical, biological or chemical integrity of the downstream navigable waterway.

Since the Rapanos decision, all three branches of government have wrestled with trying to determine the jurisdictional reach of “Waters of the United States.” Courts ruling on jurisdictional issues have split on whether to apply the Kennedy standard, the Scalia standard or both. To date, the Supreme Court has declined to grant certiorari for any of these decisions. Congress has unsuccessfully attempted twice to amend the Clean Water Act to clarify the definition of "Waters of the United States." The USEPA and ACOE have issued guidance documents attempting to give deference to both standards, but those efforts have only resulted in the government spending more time on case-by-case jurisdiction determinations than actually issuing permits and authorizations for impacts on jurisdictional waters.

Finally, in 2014, the USEPA and ACOE proposed a new rule intended to clarify the definition of “Waters of the United States,” particularly as it applies to streams, wetlands, ditches and isolated waters. Issuance of the rule resulted in more than 400 public stakeholder meetings, and over one million submitted public comments. The proposed rule included both the Scalia and Kennedy standards. After weighing input from the public, the final rule included specific distance limitations in determining whether waters are “adjacent” and whether a nexus is “significant.” For example, adjacent waters include waters adjacent to jurisdictional waters within a minimum of 100 feet and within the 100-year flood plain to a maximum of 1,500 feet of the ordinary high water mark. Because these distance limitations were added only in the final rule, and were otherwise not part of the originally proposed rule, the Sixth Circuit found that the rulemaking process by which the distance limitations were adopted is facially suspect. The Court found that the public did not have reasonably specific notice that the distance-based limitations were among the range of alternatives being considered in modifying the proposed rule. The Court also noted the lack of specific scientific support to substantiate the reasonableness of the changes the agencies ultimately chose. Based on these findings, the Court determined that there was a likelihood that petitioners seeking a stay would prevail on the merits of the appeal, and therefore a stay was appropriate.

In addition to these issues of administrative procedure, there is also a question of whether the proper jurisdiction for review of this regulation under the Clean Water Act is in the Court of Appeals or in District Court. The Sixth Circuit has not ruled on the jurisdictional issue, and has asked the parties for briefs. The one dissent on the three judge panel argued that it was inappropriate for the Court to grant a stay before it had determined jurisdiction. The Federal District Judge in South Dakota had already considered the jurisdictional question, and determined that he did have the jurisdiction to issue a stay.

Given these developments, property owners and developers should be mindful that if they plan projects that impact any wetlands, streams or other surface water bodies, they should start planning early and engage the services of an environmental attorney and a wetlands/streams specialist. Permits for authorization to impact streams and wetlands can be expected to take 12 to 18 months to obtain if there are jurisdictional questions involved. The merits of the federal agencies’ procedural rulemaking could take a year or more to resolve in the Federal Courts, especially with the issue of jurisdiction yet to be resolved.