Environmental, Land Use and Natural Resources Alert June 2007 Authors: Craig P. Wilson +1.717.231.4509 craig.wilson@klgates.com Christopher R. Nestor +1.717.231.4812 christopher.nestor@klgates.com K&L Gates comprises approximately 1,400 lawyers in 22 offices located in North America, Europe and Asia, and represents capital markets participants, entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For more information, please visit www.klgates.com. www.klgates.com EPa and Army Corps Respond to Rapanos Decision On June 5, 2007, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) jointly issued a long-awaited legal memorandum interpreting the Supreme Court’s June 2006 split decision in the consolidated cases Rapanos v. U.S. and Carabell v. U.S. (known as the “Rapanos” decision). The Court’s split decision in Rapanos had caused uncertainty among EPA/Corps field personnel and the general public regarding the scope of federal jurisdiction under the Clean Water Act’s section 404 program regarding discharges of dredged and fill material into waters of the United States, including wetlands. According to EPA’s website, the guidance was released to EPA and Corps field offices “to ensure nationwide predictability, reliability, and consistency in identifying wetlands, streams and rivers subject to the Clean Water Act (CWA).” The EPA/Corps guidance “reflects the agencies’ intent to provide maximum protection for the Nation’s aquatic resources under the CWA as interpreted by the Supreme Court in Rapanos.” EPA and the Corps have provided a 6-month comment period and plan to finalize the guidance within 9 months. Absent further case law, the joint legal memorandum does not appear to cause a substantial change in the legal and practical advice that K&L Gates has been providing clients in the various federal regions since the Rapanos decision. Background Section 404 of the Clean Water Act (CWA) establishes a permitting program to regulate the discharge of dredged and fill material into “waters of the United States,” including wetlands. Examples of activities that might be regulated under the Section 404 program include: placing fill or excavating in a wetland; building in a wetland; placement of riprap for erosion protection; construction of dams, dikes or bridges; stream channelization and stream diversion. EPA and the Corps jointly administer the Section 404 program. Rapanos v. United States, 547 U.S. __, 126 S. Ct. 2208, 165 L. Ed. 2d 159 (2006). The Rapanos guidance document is available on EPA’s website at the following address at www.epa.gov/owow/wetlands/guidance/CWAwaters.html. Concurrent with the release of the Rapanos guidance, the Corps and EPA have issued a jurisdictional determination documentation form and instructions to field personnel along with a memorandum establishing coordination procedures to be followed for new jurisdictional determinations. In addition, a series of questions and answers provides additional information. The memorandum and question and answer document are available on EPA’s website at the above address. 33 U.S.C. § 1344. Environmental, Land Use and Natural Resouces Alert In Rapanos, the Supreme Court addressed the scope and extent of CWA Section 404 jurisdiction over “waters of the United States” including “wetlands.” The Court vacated lower court decisions that had broadly interpreted this term to include any area where water existed and ultimately could flow to a truly navigable water, regardless of how minimal the connection. The Rapanos decision, however, created uncertainty as to the precise limits of federal regulatory jurisdiction under the CWA, both for purposes of wetland regulation and broader water quality regulation. In a 4-1-4 split decision, a plurality of four justices concluded that federal jurisdiction should not attach to a wetland unless (1) the adjacent channel contains a water of the United States (i.e., a relatively permanent water body connected to traditional interstate, navigable waters), and (2) the wetland has continuous surface connection with that water, making it difficult to determine where the water ends and the wetland begins. Justice Kennedy concurred with the result, but on the basis of a broader test requiring only a “significant nexus” between the area to be regulated and traditional navigable waters, with that “significant nexus” to be judged on the basis of whether the area to be regulated significantly affects the chemical, physical and biological integrity of other covered waters. As a result of the Rapanos decision, both EPA and Corps jurisdiction over areas such as intermittent streams, drainage ditches and wetlands not directly connected with surface waterways had been thrown into considerable doubt. standard is satisfied.” From that legal premise, the Rapanos guidance indicates that the scope of federal jurisdiction under the CWA’s Section 404 program will be as follows: The agencies will assert jurisdiction over the following waters: •T raditional navigable waters, which includes all the waters described in 33 C.F.R. § 328.3(a)(1), and 40 C.F.R. § 230.3(s)(1); •W etlands adjacent to traditional navigable waters, including adjacent wetlands that do not have a continuous surface connection to traditional navigable waters; •N on-navigable tributaries of traditional navigable waters that are relatively permanent where the tributaries typically flow year-round or have continuous flow at least seasonally (e.g., typically three months); and •W etlands that have a continuous surface connection to such tributaries (e.g., those that are not separated by uplands, a berm, dike, or similar feature). The agencies will decide jurisdiction over the following waters based on a fact-specific analysis to determine whether they have a “significant nexus” with traditional navigable waters: •N on-navigable tributaries that do not typically flow year-round or have continuous flow at least seasonally; The EPA/Corps Guidance The EPA/Corps Rapanos guidance relies upon the legal premise that, when there is no majority opinion in a Supreme Court case, controlling legal principles may be derived from those principles espoused by five or more justices. Thus, according to EPA and the Corps, “regulatory jurisdiction under the CWA exists if either the plurality’s or Justice Kennedy’s or more background on the Rapanos decision and F interpretation of Section 404 by the federal courts, see K&L Gates Environmental Alert, Supreme Court Decides What Waters Are Subject to Clean Water Act Jurisdiction, June 2006, available at the K&L Gates Newsstand, www.klgates.com/ newsstand/search.aspx. See Rapanos guidance at 3, citing authorities. •W etlands adjacent to such tributaries; and •W etlands adjacent to but not directly abutting a relatively permanent non-navigable tributary (e.g., separated from it by uplands, a berm, dike or similar feature). I d. (emphasis added), citing Rapanos, 126 S. Ct. at 2265 (Stevens, J., dissenting) (“Given that all four justices who have joined this opinion would uphold the Corps’ jurisdiction in both of these cases – and in all other cases in which either the plurality’s or Justice Kennedy’s test is satisfied – on remand each of the judgments should be reinstated if either of those tests is met.”) June 2007 | Environmental, Land Use and Natural Resouces Alert The agencies will apply the “significant nexus” evaluation as follows: •A significant nexus analysis will assess the flow characteristics and functions of the tributary itself and the functions performed by all wetlands adjacent to the tributary to determine if in combination they significantly affect the chemical, physical and biological integrity of downstream traditional navigable waters; •S ignificant nexus includes consideration of hydrologic factors, including the following: volume, duration, and frequency of flow, including consideration of certain physical characteristics of the tributary; p roximity to the traditional navigable water; s ize of the watershed; average annual rainfall; and average annual winter snow pack. •S ignificant nexus also includes consideration of ecological factors, including the following: P otential of tributaries to carry pollutants and flood waters to traditional navigable waters; P rovision of aquatic habitat that supports a traditional navigable water; P otential of wetlands to trap and filter pollutants or store flood waters; and M aintenance of water quality in traditional navigable waters. •T he following geographic features generally are not jurisdictional waters: S wales or erosional features (e.g., gullies, small washes characterized by low volume, infrequent, or short duration flow); and D itches (including roadside ditches) excavated wholly in and draining only uplands and that do not carry a relatively permanent flow of water. In considering how to apply the significant nexus standard, the agencies have focused on the “integral relationship” between the ecological characteristics of tributaries and those of their adjacent wetlands, which according to the agencies, “determines in part their contribution to restoring and maintaining the chemical, physical and biological integrity of the Nation’s traditional navigable waters.” According to the agencies, “the ecological relationship between tributaries and their adjacent wetlands is well documented in the scientific literature and reflects their physical proximity as well as shared hydrological and biological characteristics.” Additionally, the agencies contend, the flow parameters and ecological functions that Justice Kennedy described as most relevant to an evaluation of significant nexus “result from the ecological inter-relationship between tributaries and their adjacent wetlands.”10 Whether, and to what extent, the “significant nexus” test articulated by the Rapanos guidance comports with the comparable test articulated by Justice Kennedy’s concurring opinion in Rapanos, will likely be the subject of considerable debate. Justice Kennedy provided very little guidance to the agencies and regulated community as to how his “significant nexus” test would or should be applied in practice, stating only that: “. . . the Corps’ jurisdiction over wetlands depends upon the existence of a significant nexus between the wetlands in question and navigable waters in the traditional sense. The required nexus must be assessed in terms of the statute’s goals and purposes. Congress enacted the law to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters,” 33 U.S.C. § 1251(a), and it pursued that objective by restricting dumping and filling in “navigable waters,” §§ 1311(a), 1362(12). With respect to wetlands, the rationale for Clean Water Act regulation is, as the Corps has recognized, that wetlands can perform critical functions related to the integrity of other waters--functions such as pollutant trapping, flood control, and runoff storage. 33 CFR § 320.4(b)(2). Accordingly, wetlands possess the requisite nexus, and thus Rapanos Id. 10 Id. guidance at 8. June 2007 | Environmental, Land Use and Natural Resouces Alert come within the statutory phrase “navigable waters,” if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as “navigable.” When, in contrast, wetlands’ effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term “navigable waters.” ... When the Corps seeks to regulate wetlands adjacent to navigable-in-fact waters, it may rely on adjacency to establish its jurisdiction. Absent more specific regulations, however, the Corps must establish a significant nexus on a case-by-case basis when it seeks to regulate wetlands based on adjacency to nonnavigable tributaries.”11 Although there is likely to be debate over the implementation of Justice Kennedy’s substantial nexus test in the Rapanos guidance, one aspect of the guidance appears fairly certain: the fact-intensive analysis required for substantial nexus evaluations likely will result in increased costs (e.g., experts, site visits, etc.), potential disputes, and delay for projects seeking Section 404 approvals involving wetlands adjacent to non-navigable tributaries. The Rapanos guidance purports to focus only on jurisdictional determinations in the context of the CWA’s Section 404 program and, specifically, those provisions of the EPA and Corps regulations at issue in the Rapanos decision – 33 C.F.R. §§ 328.3(a)(1), (a)(5) and (a)(7) and 40 C.F.R. §§ 230.3(s)(1), (s)(5), and (s)(7). According to EPA, it “may issue additional guidance concerning the effect of Rapanos on other CWA programs that use the common ‘waters of the U.S.’ definition, such as the NPDES program under Section 402.”12 apanos, 126 S. Ct. at 2248, 2249 (Kennedy, J., R concurring) (emphasis added). 12 S ee Corps and EPA Responses to the Rapanos Decision, Key Questions for Guidance Release, at ¶7, available on EPA’s website at the above address. The Rapanos guidance does not supersede the agencies’ January 2003 guidance interpreting the Supreme Court’s decision in Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, 531 U.S. 159 (2001) (‘‘SWANCC’’), wherein the Court held that the Corps had exceeded its authority in asserting CWA Section 404 jurisdiction over isolated, intrastate, non-navigable waters under 33 C.F.R. § 328.3(a)(3), based on their use as habitat for migratory birds. EPA and the Corps will continue to evaluate jurisdiction over isolated wetlands and streams “on a case-by-case basis.”13 The question and answer document accompanying the guidance indicates that agencies will continue to apply all of their regulatory tools in order to meet the “no net loss” of wetlands goal in the Section 404 permit program. 14 Rulemaking is among several actions the Bush Administration is considering in response to the Rapanos decision.15 Any decision to pursue new rulemaking will, according to the agencies, be “collaborative,” as will any substantive work on developing any new rules to establish a revised regulatory definition of “waters of the US.”16 EPA and the Corps have provided for a six month comment period on the Rapanos guidance “to allow us to immediately rely on the guidance for consistent implementation of the decision, and also allow the public to provide comments, case studies, and experiences with the use of the guidance.” Upon publication of the notice of availability in the Federal Register, comments can be submitted to docket EPA-HQ-OW-2007-0282 through www.regulations. gov. The agencies will, within nine months from the date of issuance, either reissue, revise or suspend the guidance.17 In the interim period, the Rapanos guidance will, hopefully, allow the agencies to begin clearing the backlog of jurisdictional and permitting decisions that has been building since the Rapanos decision, although progress in this regard may be slow given the fact-intensive analysis required to satisfy the significant nexus test. 11 13 14 15 16 17 I d. at ¶8. Id. at ¶9. Id. at ¶11. Id. Id. at ¶3. 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