Redefining Waters of the United States…Again Still Going with the Flow

On April 21, 2020, the United States Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (USACE) published their long-awaited rule clarifying the definition of the term, “Waters of the United States” (WOTUS). In a move with tremendous regulatory significance, this rulemaking—formally known as the Navigable Waters Protection Rule—significantly narrows the number of waters potentially regulated as WOTUS under the Clean Water Act (CWA) and streamlines the jurisdictional determination process, making it easier for landowners and developers to understand the federal regulatory status of water bodies and wet areas on their properties and, in turn, the potential for development constraints. The rule provides the regulated community with greater clarity on what waters and water features are WOTUS and will subject fewer waters to CWA permitting requirements. As a result, it is deemed controversial by opponents. We expect the rule will be challenged in federal district courts across the nation and may be stayed in certain locations. Accordingly, landowners and developers should carefully consider their strategies in developing properties until this regulatory uncertainty is resolved.

Background

In 1972, Congress amended the CWA with the goal of restoring and maintaining “the chemical, physical, and biological integrity of our Nation’s waters.” An integral part of the CWA was a permitting program to address discharges into “navigable waters,” which were defined in the Act as “waters of the United States.”

For many years, the scope of the waters defined as WOTUS has been confusing—particularly following the fractured United States Supreme Court decision in Rapanos v. United States (Rapanos). In Rapanos, all members of the Court agreed that the term WOTUS covered some waters that were not navigable in the traditional sense. A majority of justices, however, could not agree on the framework to evaluate whether a water feature or wetland was a WOTUS. Absent a majority opinion, EPA and USACE based WOTUS determinations on Justice Kennedy’s concurrence in Rapanos, in which he stated that for a wetland to be considered a jurisdictional water, there need only be a “significant nexus” to a traditionally navigable water. Use of this “significant nexus” test resulted in case-by-case evaluations that were both costly and time-consuming. The use of this test also undermined the goal of regulatory certainty that helps developers and businesses understand what they must do to comply with the law.

EPA and USACE implemented the “significant nexus” test through guidance documents until June 29, 2015, when the federal agencies issued a final rule redefining WOTUS (the 2015 Rule). The 2015 Rule greatly expanded federal jurisdiction by bringing more waters into the scope of WOTUS for purposes of the CWA. The 2015 Rule regulated traditional navigable waters, interstate waters, and territorial seas as WOTUS, along with tributaries and impoundments of jurisdictional waters. The 2015 Rule also included a case-by-case “significant nexus” evaluation of waters, including waters within the 100-year floodplain of certain waters or within 4,000 feet of the high water or high tide line or the ordinary high water mark of a traditional navigable water, interstate water, territorial sea, impoundment, or covered tributary. The regulatory burden imposed by the 2015 Rule was readily apparent.

The 2015 Rule was challenged in multiple federal courts, and applicability of the rule was stayed in 28 states. On February 28, 2017, President Trump issued Executive Order 13778 directing EPA and USACE to review the 2015 Rule for consistency with the administration’s policy and to rescind or revise the rule, as appropriate. The Executive Order also directed the agencies to consider interpreting WOTUS in a manner consistent with the plurality opinion in Rapanos. EPA and USACE implemented this Executive Order in two steps. First, on October 22, 2019, the agencies published a rule repealing the 2015 Rule and re-codifying the pre-existing regulations. Second, in the new WOTUS rule, EPA and USACE revised the definition of WOTUS to make it more narrow and predictable.

The Navigable Waters Protection Rule

The Navigable Waters Protection Rule (the “2020 Rule”) significantly streamlines and narrows the definition of WOTUS. It jettisons the controversial and difficult-to-apply “significant nexus” test in favor of less subjective criteria that more closely align with the plurality decision in Rapanos.

Under the 2020 Rule, to be codified at 33 C.F.R. § 328.3, there are four categories of WOTUS:

1. Territorial seas and traditional navigable waters;
2. Tributaries of jurisdictional waters;
3. Lakes, ponds, and impoundments that contribute surface water flow to a jurisdictional water in a typical year; and
4. Wetlands adjacent to non-wetland jurisdictional waters.

The 2020 Rule goes on to define non-jurisdictional waters that are not subject to regulation as WOTUS, including: any category of water not explicitly regulated; groundwater and groundwater recharge facilities; ephemeral streams—a category of special significance in the arid West; diffuse storm water runoff; and artificially irrigated areas, and artificial lakes and ponds that do not impound otherwise jurisdictional waters, among other categories specified in the Rule, as discussed further below.&

Territorial Seas and Traditional Navigable Waters

EPA and USACE made no changes to the category of territorial seas and traditional navigable waters. The agencies, however, removed “interstate waters” as a separate category of WOTUS despite its inclusion in the initial regulatory definition issued in 1973. Interstate waters remain regulated if they are covered by one of the four categories in the rule.

Tributaries of Jurisdictional Waters

As to tributaries, the 2020 Rule makes important clarifying changes. The 2020 Rule limits the types and extent of tributaries considered WOTUS. The final rule defines a tributary subject to regulation to mean “a river, stream, or similar natural occurring channel that contributes surface water flow to a jurisdictional water in a typical year.” A “typical year” is based on the normal range of precipitation and climate conditions for the relevant area over a 30-year rolling period.

Unlike the 2015 Rule, tributaries must be perennial (i.e., continuously flowing) or intermittent (i.e., flowing continuously at certain times in a typical year in direct response to something other than precipitation, like high groundwater tables or a melting snowpack) to be subject to federal jurisdiction. The 2020 Rule defines ephemeral steams to mean "surface water flowing or pooling only in direct response to precipitation" and clarifies that such ephemeral streams are not subject to regulation as WOTUS. This clarification means that typically dry washes in desert environments such as Arizona, which flow only in response to seasonal rain events, are presumptively not regulated under the 2020 Rule. This is a meaningful departure from the 2015 Rule under which dry washes and ditches throughout the arid West could have been defined as jurisdictional waters.

A tributary does not lose its jurisdictional status if it is altered or relocated as long as it continues to be perennial or intermittent and contributes surface water flow to a traditional navigable water or territorial sea in a typical year, or if it contributes surface water flow to a downstream jurisdictional water in a typical year through certain specified features, like a subterranean river, culvert, dam, tunnel, debris pile, boulder field, or other similar features.

Certain ditches can also be regulated as tributaries. In particular, a ditch is regulated if it relocates a tributary, is constructed in a tributary, or is constructed in an adjacent wetland as long as the ditch is perennial or intermittent and contributes surface water flow to a traditional navigable water or territorial sea in a typical year. Other ditches are excluded from regulation under the 2020 Rule. According to the preamble to the final rule, the burden is on EPA and USACE to determine if a ditch is regulated as a WOTUS.

Lakes, Ponds and Impoundments

The 2020 Rule regulates lakes, ponds, and impoundments as a single category for the first time. These features are now considered jurisdictional waters if they (1) are a traditional navigable water, like one of the Great Lakes or Lake Mead; (2) contribute surface water flow to a territorial sea or a traditional navigable water in a typical year either directly or through one or more jurisdictional waters; or (3) are inundated by flooding from a jurisdictional water at least once in a typical year.

A lake, pond, or impoundment of jurisdictional waters does not lose its jurisdictional status if it contributes surface water flow to a downstream jurisdictional water in a typical year through specified artificial and natural features.

Adjacent Wetlands

The final category of WOTUS includes wetlands adjacent to non-wetland jurisdictional waters. A wetland is considered “adjacent” if it:

1. Abuts (i.e., touches a side or corner of) another non-wetland jurisdictional water;
2. Is inundated by flooding from another non-wetland jurisdictional water at least once in a typical year;
3. Is physically separated from a non-wetland jurisdictional water by a natural berm, bank, dune, or similar natural feature without regard to whether there is a specific hydrological surface connection in a typical year; or
4. Is physically separated from a non-wetland jurisdictional water by an artificial structure like a road, dike, or barrier as long as the structure allows for a direct hydrologic surface connection between the wetland and the other jurisdictional water at least once in a typical year. This connection can be through a gate or culvert or even by water overtopping a road.

The definition of adjacent wetland under the 2020 Rule is narrower than the definition in the previous 2015 Rule. In the 2020 rule, a wetland is not jurisdictional just because it is “bordering, contiguous or neighboring” to another jurisdictional wetland, but instead it has to meet one of four categories of regulated wetlands. The 2020 Rule also does not allow for a “chain” of wetlands that may be connected hydrologically via groundwater, shallow subsurface flow, overland sheet flows, or non-wetland swales to be considered adjacent just because one of the wetlands is adjacent to a non-wetland jurisdictional water. Additionally, the 2020 Rule eliminates the treatment of “neighboring” wetlands as jurisdictional waters because they were within a certain distance from the ordinary high water or tide mark of a non-wetland jurisdictional water.

Non-Jurisdictional Waters

As noted, the 2020 Rule identifies certain categories of waters and water features that are not subject to regulation as WOTUS. The 12 categories of non-jurisdictional waters in the 2020 Rule include:

1. All waters not covered by the four categories of WOTUS discussed above;
2. Groundwater;
3. Ephemeral features;
4. Storm water runoff and overland sheet flow;
5. All ditches not considered “tributaries”;
6. Prior converted cropland;
7. Artificially irrigated areas;
8. Certain artificial lakes and ponds;
9. Water-filled depressions or pits excavated in connection with mining or construction or to obtain fill, sand or gravel;
10. Certain storm water control features;
11. Groundwater recharge, water reuse, and wastewater recycling structures; and
12. Wastewater treatment systems.

Clarifying that these categories are not WOTUS represents a narrowing of previous WOTUS definitions, including, for example, the specific reference to ephemeral streams as non-jurisdictional, as discussed above.

The 2020 Rule continues to define prior converted cropland (PCC) as non-jurisdictional; PCC is defined as any area drained before December 23, 1985 for the purpose of agricultural production. Per the rule, EPA and USACE will recognize PCC designations made by the Secretary of Agriculture, but EPA will have the final authority to determine if PCC has been “abandoned” and may therefore no longer qualify as non-jurisdictional if the area has reverted to wetland status. The burden, however, is on EPA and USACE to prove that a parcel previously designated as PCC is now a WOTUS.

Practical Implications of the Rule

The 2020 Rule will take effect on June 22, 2020. The rule’s future, however, is unclear because litigation will almost certainly follow once the regulation becomes effective.

Unlike challenges to regulations issued under the federal Clean Air Act, which are heard only in the DC Circuit Court of Appeals, the United States Supreme Court has held that challenges to CWA regulations must first be heard in the federal district courts. As a result, legal challenges to the 2020 Rule will likely be filed in multiple courts across the country. Just as when the 2015 Rule was challenged, it is possible that certain courts may stay the 2020 Rule pending the challenge while other courts do not. This would result in a patchwork of different permitting schemes across the country.

In light of this uncertainty, landowners and developers should consider their strategies for undertaking activities that could impact potential jurisdictional areas on their properties. While the 2020 Rule abandons the case-by-case “significant nexus” test in favor of a more straightforward approach, the agencies still have some discretion in making WOTUS determinations and, thus, care should be taken when moving forward with a project before consulting USACE. In some instances, landowners may want to request revised jurisdictional determinations from USACE in light of the 2020 Rule, especially where the prior assertion of federal jurisdiction was based on a category no longer subject to regulation, such as ephemeral streams and normally dry washes, or a category which has been significantly narrowed, such as wetlands. Landowners and developers should also work closely with state agencies to ensure that wet areas on the property—particularly ephemeral features and wetlands that may no longer be defined as WOTUS under federal law—are appropriately permitted to the extent regulated on the state level. Finally, landowners may need to consider whether certain water features in an area that may no longer be classified as a WOTUS are subject to other CWA provisions. For example, in certain instances an ephemeral stream or ditch could be considered a “point source” that requires a discharge permit.

If you have any questions regarding the 2020 Rule refining WOTUS or require advice regarding development impact waters or wetlands on property, please do not hesitate to contact your Quarles & Brady attorney or:

• Cynthia A. Faur: 312-715-2609 / cynthia.faur@quarles.com
• Jeremy A. Lite: 520-770-8739 / jeremy.lite@quarles.com
• Lauren R. Harpke: 414-277-5183 / lauren.harpke@quarles.com