EPA Sets Stage for Massive 2014 Control Grab

Upon reading the 331-page EPA draft science report entitled Connectivity of Streams and Wetlands to Downstream Waters; A Review and Synthesis of the Scientific Evidence (External Review Draft), in my opinion it is only reasonable to conclude that the EPA is setting up an attempt to greatly expand its jurisdiction over real estate use–be that for farming, ranching, housing, drilling, developing, or any other -ing that could affect any molecule of surface water in the United States.  And let’s not be coy here; this is not about controlling water; it is about controlling what the EPA and US Army Corps of Engineers get to control once they control water.

Even more troubling is the process the EPA is using in this instance, namely what the process says about the likely substance of the rule.  Normally, in situations such as this, the EPA would do the following in this particular order:

1.     complete an external review draft study;
2.     send the draft to a Science Advisory Board panel for review and comment;
3.     change the study based on the board’s comments;
4.    publish the study for public comment;
5.    finalize the study based on public comments;
6.    draft a proposed new regulation, based on the finalized study, and send it to the Office of Management and Budget for review (which takes around 90 days);
7.    publish the proposed new regulation for public comment;
8.    change the proposed rule based on comments, and adopt the rule.

But in this case the EPA seriously compressed the timeframe by doing this:

1.    On September 17, 2013, it:
A.     completed a proposed new regulation defining “waters of the US” and sent it to the Office of Management and Budget for the 90 day review (90 days was Dec. 17) (step #6!); and
B.     published the study for public comment (step #1 above).

Notice that the EPA drafted a rule based on a draft study, without taking into consideration any changes that may be made to that study due to the Science Advisory Board’s review, or public comment.  Rhetorical question-how could the EPA have done this without prejudging the conclusions of the report, the final outcome of the rulemaking, or both?  Then the EPA:

2.    Sent the draft report, along with the 1,632 public comments it received, to the Science Advisory Board for a peer review of the report; the Board held its meeting to review those materials December 16-18, 2013 (step #2 above).

And so all that is practically left is for the EPA to publish the proposed regulation for public comment, finalize the Connectivity report, and adopt the final rule.  The EPA compressed an 8 step process to 5 steps, with simultaneously occurring and overlapping time periods.  Do you think there’s a reason for the hurry?

And now to the substance of this new proposed regulation.

The Clean Water Act requires persons to obtain permits from the US Army Corps of Engineers prior to disturbing “navigable waters,” generally known as Section 404 “dredge and fill” discharge permits.  The standard for granting a permit is quite subjective.  US Supreme Court Justice Scalia has written that, in the permitting process, the “Corps exercises the discretion of an enlightened despot, relying on such factors as ‘economics,’ ‘asthetics,’ ‘recreation,’ and ‘in general, the needs and welfare of the people.’”

The Clean Water Act defines “navigable waters” as “the waters of the US…”  What is and is not “waters of the US” has long been notoriously difficult to determine, mostly because the definitions in the Clean Water Act were either omitted or terribly drafted by Congress, and the Corps has intentionally kept them vague as a defensive means to protect their jurisdiction.  And so historically the Corps uses every way to expand its jurisdiction to the outer limit of Congress’s commerce power.  These efforts are then followed by lawsuits to rein in those constructions.

There are three cornerstone US Supreme Court cases that interpret the limits of EPA jurisdiction granted by the Clean Water Act.  And now, perhaps due to some ill advised comments by US Supreme Court Justice Kennedy in the third installment, it appears we are headed for a fourth.  In the most recent case (a 2006 case over wetlands), the justices split 4-4-1, with Justice Kennedy being the 1.  The landowner won the judgment, but there was no majority opinion as to why.

Justice Kennedy came up with a unique way to define the jurisdictional limits of the Corps under the Clean Water Act.  He put forth a “nexus” argument for wetlands, writing that wetlands are “navigable waters” if they possess the requisite nexus, alone or in combination with similarly situated lands in the region, to significantly affect the chemical, physical, and biological integrity of other covered waters understood as navigable in the traditional sense, i.e. either navigable in fact or readily susceptible of being rendered so.  Justice Kennedy said “Absent more specific regulations, the Corps must establish a significant nexus on a case-by-case basis when seeking to regulate wetlands based on adjacency to non-navigable tributaries…”

And now by all appearances the US Corps and EPA have set the stage to take Kennedy’s “significant nexus” concept (now called “connectivity”) to the outer limit of Congress’s power to regulate commerce with just such a more specific regulation.

Bear in mind that, as of 2002, the average applicant for an individual Section 404 permit spent 788 days and $271,596 in completing the permit process.  Also as of 2002, the public and private sectors were spending over $1.7 billion obtaining wetlands permits! Imagine what that figure must be 12 years later.

Unfortunately these costs cannot be avoided. The Clean Water Act is one of the most onerous federal environmental statutes, imposing criminal liability as well as steep civil fines on a broad range of ordinary industrial, commercial, and land development activities.  For example, on December 19, 2013, the EPA announced a settlement with a Chesapeake Energy subsidiary for Clean Water Act violations, whereby Chesapeake will pay an estimated $6.5 million to remediate 27 sites, AND pay a $3.2 million penalty.

It seems to me that the Corps and EPA have written the new “waters of the US” regulation for the purpose of switching Justice Kennedy’s vote in the next case, from supporting the landowner to supporting the new rule.  Even if the next decision comes down 4-4-1, if Justice Kennedy rules for the new rule on any basis, the new rule will stand.

This new rule may also affect Section 402 National Pollutant Discharge Elimination System (NPDES) permits, the Section 311 oil spill program, Section 303 water quality standards, and Section 401 water quality certification.

What potential problems could this new rule cause?  For everyone, the location of future land disturbances, and education of employees and contractors to follow the new rules on job sites.  And it will cost time (which is money) and money.  For energy companies, where to locate pad sites, frac ponds, pipelines, access roads, and where to divert surface water.  For farmers, the ability to use fertilizer products, dig and change ditches, swales and waterways for irrigation, drainage or flood control.  Developers may be hit the hardest, with increased uncertainty over the need for a permit for construction of streets and roads, installation of utilities, grading and improving lots, installing amenity ponds, water features, erosional and other flood control features, not to mention the NPDES permits.

There will be one more opportunity to affect the substance of this new rule, by preparing and filing comments on the proposed rule when it is issued, which could come any day now.  So lock and load.

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