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Three Significant Clean Water Act Developments

April 24, 2020

In the last two weeks, three major developments occurred that will significantly affect regulation under the Clean Water Act (CWA), the primary federal law regulating wetlands and water quality nationwide. These developments—coming from both the courts and federal agencies—will significantly affect how the CWA may hereafter be applied.

  • First, a U.S. District Court in Montana issued a sweeping decision under Section 404 of the CWA that purports to invalidate and enjoin the use of Nationwide Permit 12 (NWP 12), the widely-used general CWA § 404 permit for construction of pipelines and other utility lines across regulated waterbodies, for all projects anywhere in the country.
  • Second, the Trump Administration published its long-anticipated “Navigable Waters Protection Rule” in the Federal Register, defining what constitutes Waters of the United States (WOTUS) that are regulated under the CWA, which is narrower in scope than both the 2015 rule promulgated by the Obama Administration and the pre-2015 rule now in effect.
  • Third, the Supreme Court issued a decision in County of Maui, Hawaii v. Hawaii Wildlife Fund, et al. (No. 18-260) in which the majority held that a CWA discharge permit is required where “the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from [a] point source into navigable waters [i.e., WOTUS].”

Each of these developments could have far-reaching implications for operators regulated under the CWA. In general terms, the 2020 Rule (assuming it withstands anticipated legal challenges) is seen as favorable for industry and other regulated entities, while the two judicial decisions are perceived as problematic for such entities. Each development is described in more detail below.

District Court Vacates CWA § 404 Nationwide Permit 12

On April 15, 2020, the federal District Court in Montana ruled in Northern Plains Resource Council v. Army Corps of Engineers, involving a challenge to the Keystone XL pipeline, that the U.S. Army Corps of Engineers’ (Corps) failed to properly consult with the appropriate wildlife agencies under the Endangered Species Act (ESA) when it issued CWA § 404 Nationwide Permit 12 (NWP 12). The court vacated use of NWP 12 for this project until the Corps and the Environmental Protection Agency (EPA) satisfy applicable ESA consultation requirements, but deferred whether the Agencies also failed to satisfy other environmental laws (e.g., CWA § 404 and the National Environmental Policy Act). This ruling specifically halts the Keystone XL pipeline project but also purports to enjoin future use of NWP 12 under Section 404 of the CWA for any project across the entire country.

The U.S. has asked the Court to clarify that its decision applies only to the XL Pipeline or only in Montana, and a ruling on that request is expected soon. The U.S. and XL proponent will likely also seek to appeal the Court’s ruling to the Ninth Circuit, both on its scope and basic conclusions, but such an appeal is likely at best to take several months.

NWP 12 is a streamlined general 404 permit that authorizes certain activities required for the construction, maintenance, repair, and removal of utility lines and associated facilities within a WOTUS, including “any pipe or pipeline for the transportation of any gaseous, liquid, liquescent, or slurry substance, for any purpose.” The vast majority of pipelines, gathering lines, electric lines, and other utilities constructed in or across regulated WOTUS have been authorized under this streamlined permit. Thus, invalidation of this widely used permit could have significant impacts on the energy and utilities industries, among others. Much will depend, however, on: (a) whether this decision is either limited by the District Court or, if not, will be upheld on appeal; (b) whether the Agencies, if necessary, will be able to duly satisfy ESA requirements (among others, e.g., NEPA and CWA); (c) whether courts consider the ruling to have any effect outside Montana; and (d) if it stands, how the Agencies ultimately will interpret and implement the decision.

For now, the Corps has suspended all use and approvals of NWP 12 nation-wide, until the scope and validity of this ruling can be resolved. The Corps has put on hold roughly 360 pending notifications from entities seeking approval for pipelines and other projects under NWP 12, according to Corps spokesman Doug Garman on April 23rd. The Trump administration is expected to challenge the ruling in the near future, but use of NWP 12 would appear to be unavailable until this matter is resolved, unless the Corps changes its interim position.

The ruling is prospective only, so projects that have already commenced or been completed under NWP 12 and/or that have received notification from the Corps (following preconstruction notification) that the project is authorized to proceed under NWP 12 arguably will not be impacted. On the other hand, projects that have not commenced or completed construction, are not under contract for such construction, and/or have not received Corps authorization may need to evaluate and obtain CWA § 404 authorization through other avenues, such as under other NWPs or individual 404 permits. Unless this ruling is overturned or limited, or the Corps can satisfy these demands for ESA consultation, it is also expected that other NWPs will be challenged on these same grounds.

2020 “Navigable Waters Protection Rule” Finalized

On April 21, 2020, the long-expected final “Navigable Waters Protection Rule” (2020 Rule) was published in the Federal Register. The 2020 Rule redefines the nature and scope of “WOTUS”—i.e., the waterbodies the Agencies have authority to regulate under the CWA. This serves as the Trump Administration’s final step in replacing the Obama Administration’s definition of WOTUS set forth in the 2015 Clean Water Rule. The 2020 Rule will go into effect on June 22, 2020, unless the rule is judicially challenged and stayed by one or more federal courts. Judicial challenges to the rule are expected. But judicial responses to such challenges—e.g., whether a stay will be issued, whether challenges will be upheld at the district or circuit level, and whether challenges will result in inconsistent state-by-state rulings—are more uncertain and complicated. As a result, operators potentially subject to regulation under Section 404 or any other CWA program should carefully evaluate whether and to what extent this 2020 Rule or the pre-2015 framework may be in effect in at a given time.

The 2020 Rule closely aligns with the four-justice plurality opinion authored by Justice Scalia in Rapanos v. United States, 547 U.S. 715 (2006), and would cover fewer waters than either the 2015 Clean Water Rule or the pre-2015 rules now in effect. Generally, the 2020 Rule identifies four categories of waters that will be regulated: (1) the territorial seas and traditional navigable waters; (2) perennial and intermittent tributaries to those waters; (3) lakes and ponds, and impoundments of jurisdictional waters; and (4) wetlands that are adjacent and connected by a surface flow to jurisdictional surface waters. The rule also identifies 12 specific categories of waters or features that are expressly excluded from regulation, including groundwater, which sets up for a potential clash with the new Supreme Court ruling described below.

Among other things, if it takes effect, the 2020 Rule will eliminate or reduce the regulation of:

  • Ephemeral water and drainages (which will affect many areas in the West);
  • Wetlands with no surface connection to regulated surface waters;
  • Interstate waters; and
  • Certain ditches.

Additional information and analysis on the 2020 Rule are provided in DGS’ January 27, 2020 legal alert.

SCOTUS Expands Scope of CWA to Certain Discharges to Groundwater

On April 23, 2020, the Supreme Court issued its decision in County of Maui, Hawaii v. Hawaii Wildlife Fund, et al. The 6-3 majority opinion held that CWA NPDES permitting requirements apply not only to direct discharges from point sources to regulated surface waters, but also to discharges of pollutants that “indirectly” reach navigable waters (e.g., after traveling through groundwater) when the discharge is “the functional equivalent of a direct discharge from the point source into navigable waters.” Op. at 18 (emphasis added). Justice Kavanaugh filed a concurrence, and Justices Thomas (joined by Gorsuch) and Alito filed dissenting opinions.

The majority rejected a test applied by the Ninth Circuit, which held that CWA permitting requirements apply when pollutants are “fairly traceable from a point source to a navigable water.” Id. at 3. In establishing the “functional equivalent” test, the majority indicated that determining when a discharge to groundwater (or other indirect discharge) requires an NPDES permit must be determined on a case-by-case basis by applying multiple factors, including (but not limited to): (1) transit time, (2) distance traveled, (3) the nature of the material through which the pollutant travels, (4) whether the pollutant is diluted or chemically changed as it travels, (5) the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source, (6) the manner by or area in which the pollutant enters the navigable waters, and (7) the degree to which the pollution (at that point) has maintained its specific identity. Id. at 16. “Time and distance will be the most important factors in most cases, but not necessarily every case.” Id. Going forward, the impact and application of this decision will be fleshed out by lower court “decisions in individual cases,” and EPA guidance (e.g., via “grants of individual permits, promulgation of general permits, or the development of general rules”). Id. at 17.

This decision will have little effect on CWA permitting in states that have NPDES delegation because most have broader definitions of regulable “State Waters,” which often include groundwater. That said, it will affect the CWA citizen suit provision, other non-delegated federal programs, and non-delegated or fully-delegated states.

Also, of note, Justice Breyer stated that the Court did not award “Chevron deference” to EPA’s interpretation of the statute. The Chevron doctrine historically has provided a framework for when courts will defer to an agency interpretation of the law, requiring that judicial deference is appropriate where the agency’s interpretation is not unreasonable and where Congress has not spoken directly to the issue. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984). Justice Breyer declined to apply Chevron in this instance because “[n]either the Solicitor General nor any party has asked us to give … Chevron deference to EPA’s interpretation of the statute,” and “to follow EPA’s reading would open a loophole allowing easy evasion of the statutory provision’s basic purposes [which is] neither persuasive nor reasonable.” Id. at 12. All nine justices, including the three dissenters, agreed with this conclusion. Whether this decision results in a weakening of the Chevron doctrine remains to be seen; but, if that is the case, the Maui decision could have implications for administrative law that stretch far beyond the CWA and environmental law generally.

The Environmental Group of Davis Graham & Stubbs LLP works to ensure compliance, minimize potential exposure to environmental liability, and win cases when litigation arises. Please contact Mave Gasaway or Zach Miller if you would like to discuss these CWA developments or other water quality matters of concern to your company.

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