On January 24, 2017, a federal district court judge in Minnesota enjoined the Army Corps of Engineers (Corps) and Environmental Protection Agency (EPA) from asserting Clean Water Act (CWA) jurisdiction over 150 acres of isolated peat wetlands. The decision is the final chapter in the long saga of the Hawkes case, which was remanded by the Supreme Court to the district court last year. The Supreme Court’s 2016 decision held that Corps’ Jurisdictional Determinations (JDs) constitute final agency action and are judicially reviewable under the Administrative Procedure Act.
On the heels of this development—and in light of the recent change in presidential administration—this Legal Alert provides an update on several key issues related to the CWA 404 program, under which the Corps and EPA regulate the discharge of dredged or fill material into “waters of the United States,” including wetlands.
The recent ruling in Hawkes offers regulated entities some hope that the concept of “isolated” wetlands not being subject to federal regulation under the CWA 404 program still has some teeth. At issue in Hawkes was a plan to mine peat from 150 acres of wetlands located 90 river miles and 40 aerial miles from the nearest navigable water, the Red River. To establish a hydrologic connection, water from the peat wetlands must flow under a county road via two culverts, onto neighboring wetlands, through a linear drainage feature, into an upland man-made ditch, into an unnamed seasonal tributary, before finally reaching the Middle River, which then flows into the Red River, some 90 miles away. Despite this circuitous path, the Corps twice found a “significant nexus” between the wetlands at issue and the Red River not demonstrating of any actual chemical, physical, and biological connection between the wetlands and the Red River. Relying on the Corps’ own Administrative Appeal Decision, the district court held there was insufficient evidence to support the Corps’ significant nexus finding. The court took the Corps to task for its “transparently obvious litigation strategy” of delay and highlighted the continued concern about the uncertain reach of the CWA, its draconian penalties, and the fact “most property owners [are left] with little practical alternative but to dance to the EPA’s [or to the Corps’] tune.” This decision should provide helpful metrics for both the Corps in supporting significant nexus determinations and the regulated community in evaluating Corps decisions.
The Hawkes decision comes amid uncertainty about the ultimate reach of the CWA. The new Clean Water Rule adopted in June 2015 (a/k/a “WOTUS” Rule)—which seeks to clarify the jurisdictional scope of the CWA—has been stayed pending resolution of litigation in various venues. Last week the Supreme Court granted certiorari to review whether federal district or appellate courts have jurisdiction to hear challenges to the rule. Just this Wednesday, the Sixth Circuit agreed to stay its consideration of the challenge pending a ruling from the Supreme Court, which is likely to come this spring. Layered on top of these judicial developments, there has been talk under the new administration of rescinding the Clean Water Rule entirely. Thus, it appears the uncertainty that surrounded the Clean Water Rule during the Obama Administration will persist. Until the Clean Water Rule challenges are resolved, it is important for regulated entities to remember that the Corps’ existing 1986 WOTUS rule and its post-Rapanos 2008 Guidance—which governed the “significant nexus” determination in the recent Hawkes decision—remain in place and is what the Corps (and EPA) will continue to rely on to make “jurisdictional determinations” and carry out the CWA 404 program.
On January 6, 2017, the Corps published its new and renewed 404 Nationwide Permits (NWPs), which authorize projects with relatively smaller impacts on CWA-regulated streams and wetlands, as it is obligated to do every five years. The NWPs, which constitute the heart of the 404 program, were scheduled to take effect on March 19, 2017, but they appear to be covered by the “60-day Regulatory Freeze Pending Review Memo” recently announced by Reince Priebus, which would suspend their effective date two days (March 21, 2017), unless the administration suspends them further. The regulated community has generally been supportive of the NWP program, because it allows projects to proceed in a streamlined manner while ensuring environmental protection. For this reason, it seems unlikely that the new administration will block the new NWPs, even though they were promulgated by the Obama Administration. The recent Executive Order expediting environmental reviews and approvals for high priority infrastructure projects would appear to support letting the NWPs go forward. If the new NWPs are suspended, however, after the current NWPs expire on March 18, 2017, arguably all projects that would have otherwise qualified for a NWP would then require an onerous “individual” 404 permit, which would create massive burdens and delays for the Corps, EPA, and the regulated community.
Notwithstanding these developments, the CWA 404 program has remained in relatively constant form since 2008—warts and all. The new Clean Water Rule is mired in litigation and could be scrapped in its entirety. Meanwhile, the existing NWPs are likely to be renewed this March, and the Corps’ existing 1986 WOTUS rule and post-Rapanos 2008 guidance remain in place to guide EPA and Corps jurisdictional determinations. Surprisingly, the courts—most recently and significantly through the Hawkes cases—have provided the only clarity to stakeholders by offering a mechanism to raise jurisdictional challenges and providing parameters for significant nexus determinations. In the end, despite the controversy that has long swirled around the CWA 404 program, it appears unlikely to change in any material fashion any time soon—the one caveat being further suspension of the recent NWP renewal rule, which as we note, seems unlikely.
If you have questions regarding any of these developments or other aspects of the CWA 404 program, please contact the authors of this alert or other members of the DGS Environmental Group.