Water Quality: Wading Into Trading

Posted on November 28, 2017 by Ridgway Hall

For over 20 years EPA has been promoting water quality trading – with particular emphasis on nutrients and sediment – as a way to improve water quality at reduced costs. Trading is based on the simple proposition that if Party A can reduce a pollutant at a lower per-unit cost than Party B, who needs to reduce its discharges of that pollutant, it is more economically efficient for Party A to reduce its discharges below what is required by law, and sell the additional reduction, or “credit”, to Party B. If the price is less than what Party B would otherwise pay and more than it costs Party A to make the reduction, B will save money and A will make money. 

The focus is on nitrogen, phosphorus and sediment because these pollutants have for many years been leading causes of water quality impairment and, in the case of nutrients, adverse effects on human health when the resulting algae blooms release toxins and harmful bacteria.  In 2016 EPA reported that nutrient-caused algae blooms were on the rise, causing fish kills, contamination of fish and shellfish, and beach closures, resulting in significant damage to local economies and impairments to human health. The biggest source of these pollutants is farming operations. Trading seems especially well-suited to help reduce polluted runoff from farms because their per unit cost of removing nutrients is far lower than for wastewater treatment plants. Finally, because farm runoff is a nonpoint discharge, it is not regulated under the Clean Water Act. Regulation is left to states. While many states require farms to have nutrient management plans, because the states have limited resources to inspect and enforce, finding incentives to stimulate a market-driven solution has obvious appeal.

So why are there so few trading programs in place? The GAO attempted to find the answers in its report Water Pollution: Some States Have Trading Programs to Help Address Nutrient Pollution, but Use Has Been Limited (October 2017). The report addresses (1) the extent to which nutrient trading programs are being used, (2) how EPA and the states oversee these programs, and (3) what factors affect participation in trading.  As of 2014, eleven states had some form of trading programs: California, Connecticut, Florida, Georgia, Idaho, Minnesota, North Carolina, Ohio, Pennsylvania, South Carolina and Virginia. Most of the trading was being done in Connecticut, Pennsylvania and Virginia, so GAO focused primarily on these programs.

All three of these states established their trading programs through legislation and implementing regulations. All three allow point-source to point-source trading, but as of 2014 only Pennsylvania allowed non-point sources to generate credits. Virginia appears to be moving in that direction through pending regulatory amendments.  Connecticut uses a general permit that allows 79 point sources in the Long Island Sound watershed to trade nitrogen credits through a Nitrogen Credit Exchange Program. Each year plants that are not meeting their discharge limits can buy credits from plants who are below their required limits.

Virginia allows trading of nitrogen and phosphorus credits between point sources.  Most but not all sales are through a Nutrient Credit Exchange Association, which is privately run in consultation with the state, and provides tracking of credit generation and sales.  Pennsylvania allows a point source to buy credits generated by nonpoint and point source dischargers. It has a credit exchange, PENNVEST, but most trades are outside it.  The state keeps a registry of credits generated, sold and used. During 2014, there were 39 trades in Connecticut, 151 in Pennsylvania, and 31 in Virginia.

Trading programs are managed by the states, with oversight by EPA to be sure that both the elements of the trading program and individual permits that incorporate trades comply with the Clean Water Act. Those who buy credits said that the benefits of doing so include reduced cost of compliance, risk management (credits can be used to address plant failures which cause noncompliance), and flexibility in timing technology upgrades. 

GAO cites two primary disincentives to trading. First, if water quality criteria are written in narrative form, permits are also often written in narrative form, so it is difficult to determine whether or when use of a credit might be helpful. While EPA has been pressing states to adopt numerical criteria for nutrients, GAO reported that as of 2017 only 6 states had them.  I believe that this problem can be mitigated by including numerical water-quality based effluent limits (WQBELS) in NPDES permits even when the criteria element of a water quality standard is narrative.  I don’t know how widely this is done, but typically a total maximum daily load (TMDL), which is required for water bodies not meeting water quality standards, is expressed in numerical terms, and that provides the basis for WQBELs. GAO observed that the Ohio River Basin Interstate Water Quality Trading Project allows trading among sources in Ohio, Kentucky and Indiana, but almost no trading has occurred because there are no numerical limits in the water quality standards or a TMDL.

The second reason given by stakeholders to GAO for limited trading is the difficulty in determining the water quality benefits of a best management practice (BMP), which is what is installed on farmland to reduce runoff. Models do exist for converting the benefits of BMPs, such as vegetated buffers, no-till farming and cover crops, to numerical pollution reduction on an annual basis, but these are only estimates, and lack the precision that a point source discharger looks for in deciding whether to buy a credit from a farmer. EPA has recommended the use of an “uncertainty factor”, such as 2:1, by which a buyer of 100 nitrogen credits would have to buy 200 credits. This could be modified upwards or downwards based on site-specific conditions. It is still an estimate, and any trading program will need to apply a dose of adaptive management if it wants nonpoint source trading to get up and running.  The potential cost savings are sufficiently great that such an uncertainty ratio would not by itself, in most cases, discourage trading.

Several other factors, not discussed by GAO, also tend to discourage nonpoint source trading. There is the uncertainty of the buyer, who will rely on the credit to meet its NPDES permit terms: what if the BMP on which the credit is based fails? This is a particular concern for public utilities, whose managers and ratepayers may not want the utility relying for compliance on a set of BMPs over which the utility has no control. On the farmer side, what if the farmer invests substantial sums in BMPs to generate credits, but there turns out to be little or no market for them? Several states and some financing institutions are exploring ways to create a market to jump start the process, and we will likely see more on that. Finally, there is an inherent reluctance to be among the first in what is still largely an experimental program – especially if it is being run by a government agency.

It is no coincidence that two of the three most active programs, Pennsylvania and Virginia, are in the Chesapeake Bay watershed, where a numerical multi-state TMDL has been in place since 2010. (That TMDL was discussed in my blog article EPA Issues Biggest TMDL Ever for the Chesapeake Bay Watershed, posted March 4, 2011.) At this writing Maryland, also in the Chesapeake watershed, is developing a trading program which will include nonpoint source trading and will be run jointly by the Maryland Departments of Environment and Agriculture.  The only way the goals of the Chesapeake TMDL will be achieved is through major reductions of the nitrogen, phosphorus and sediment released by farms. In a future post, I will explore those three programs in more detail.

AN UNDERGROUND RIVER RUNS THROUGH IT

Posted on November 8, 2017 by Andrew Goddard

Environmental groups have for years sought greater regulation of coal ash waste from coal-fired power plants.  It turns out an old-fashioned Clean Water Act (CWA) citizen suit is sometimes a more effective tool.

In August, Judge Waverly Crenshaw, of the U.S. District Court for the Middle District of Tennessee, ordered the Tennessee Valley Authority to “wholly excavate the ash waste disposal areas” at the Gallatin Steam Plant and “relocate the excavated coal ash to a lined impoundment with no significant risk of discharge to waters of the United States.”  TVA estimates that this will take 24 years at a cost of $2 billion.  The least surprising aspect of this case: TVA has filed a notice of appeal.

How?  In 2015, the Tennessee Clean Water Network and the Tennessee Scenic Rivers Association filed a CWA citizen suit claiming that groundwater flowed through two ash pond areas and then to the nearby Cumberland River was an unpermitted point source.  Judge Crenshaw’s 125-page opinion in support of the Order includes this diagram showing one zone of earth penetrated only vertically (by storm water) and one penetrated both vertically and laterally (by storm water and groundwater):

 

This pretty much sums up the central issue in the case:  Is the groundwater flow through the lower part of coal ash landfill, picking up contaminants and transmitting them laterally to the Cumberland River, regulated by the CWA?

In his lengthy opinion, Judge Crenshaw found that the CWA does regulate groundwater where there is a direct and immediate hydrologic connection if plaintiffs are able to “prove a link between contaminated groundwaters and navigable waters.”  TVA argued that the CWA cannot reach discharges enabled by infiltration of rainwater that was not channeled by human act because they are not point sources, but Judge Crenshaw found that the ultimate question regarding point source is whether the pollutants were discharged from a discernable, combined, and discreet conveyance by any means.  He found that the entire ash dewatering complex was a discernible, combined and discreet manmade concentration of waste and that it was a “conveyance” because it is “unlined and leaking pollutants,” and thus is by definition “conveying pollutants.”

It takes a lot for a judge to impose $2 billion of costs on a public utility.  His displeasure with how the problem had been addressed over the past several decades was palpable.  He wrote that the older of the two coal ash sites

“…offers a grim preview of what it means to leave an abandoned unlined coal ash waste pond in place next to a river.  [It] has not been a waste treatment facility for over forty-five years. It has been ‘closed’ for almost twenty years.  Still, water infiltrates it.  Still, it leaks pollutants.  Still, counsel for TVA and counsel for environmental groups are locked in conflict about what can and should be done about it. … As long as the ash remains where it is in either site, there is every reason to think that the dangers, uncertainties and conflicts giving rise to this case will survive another 20 years, 45 years or more.  While the process of closure by removal would not be swift, it would, at least, end.” 

With that, he ordered that TVA remove the coal ash to an appropriate lined site that will not discharge into waters of the United States.

There was one bit of good news for TVA: because of the cost of the chosen remedy, Judge Crenshaw decided not to assess penalties. 

Not every argument was about such large costs.  TVA’s objection to the plaintiffs’ request for attorney’s fees and costs included an objection to caviar included in a claim for $200 for food and snack items purchased from Kroger before and during the trial.  The plaintiff’s response included a receipt showing the “caviar” purchase was $16.24 of “Texas Caviar,” and attached Kroger’s recipe therefor.  It is devoid of fish eggs but does include chopped cilantro.  The recipe is available through PACER here.

Looking for Shelter under the Permit Shield

Posted on October 4, 2017 by George House

As a follow up to Kenneth Gray’s post on PFASs, the PFAS situation in the lower Cape Fear River of North Carolina is a new battleground for the Clean Water Act NPDES permitting process.  GenX is a product that DuPont, and now Chemours, began manufacturing in or about 2010 as a substitute for PFOA of Parkersburg fame.  When GenX is used in other processes at the same plant facility, it is released in the process wastewater as a byproduct.  While testing Chemours discharge for GenX, two other perfluorinated compounds, identified by EPA as PFESA Byproducts 1 and 2, were discovered.

The Department of Environmental Quality (DEQ) of North Carolina sued Chemours (spin-off of DuPont) on September 7, 2017 and sought injunctive relief from the North Carolina Superior Court for an order requiring Chemours to, “immediately cease discharging the substances identified as PFESA Byproduct 1 and PFESA Byproduct 2  . . . from its manufacturing process into the surface waters . . . and, to continue to prevent the discharge of process wastewater containing GenX into the waters of the State.”   DEQ alleged among other things that Chemours and its predecessor DuPont, “failed to timely disclose to DWR (the permitting authority) the discharge of GenX and related compounds into the Cape Fear River” and, “In particular, none of the DuPont and Chemours NPDES permit applications referenced ’GenX’ or any chemical name, formula, or CAS number that would identify any GenX or related compounds in the Facility’s discharge.”  Further, DEQ alleged, “Part of the permit applicant’s burden . . . is to disclose all relevant information, such as the presence of known constituents in a discharge that pose a potential risk to the human health.” 

By letter from counsel dated September 8, 2017, Chemours responded, “The NPDES permit specifically describes the portion of the Fayetteville Works’ complex that generates the PFESA’s and, in accordance with well- and long-established NPDES permitting practice as construed and ratified by the courts, this is sufficient for the discharges to be covered by the permit . . . . chemical substances did not have to be enumerated by name in Chemours’ NPDES permit in order to be covered under the permit, so long as the process from which they were generated was described in the permit.”  Chemours further stated that this situation, “characterizes the circumstances that also prevail at countless permitted facilities throughout North Carolina and the rest of the United States, where numerous untested and unregulated trace-level compounds are present in permitted discharges”.

North Carolina courts will now have to grapple with the issues presented in Piney Run Pres. Ass'n v.Cnty. Comm'rs that was recently cited with approval in S. Appalachian Mt. Stewards v. A&G Coal Corp., both Fourth Circuit cases, and rule upon the issue of how much information a permit applicant must disclose to successfully avail itself of the “permit shield.”

PFAS – NOT JUST ANOTHER “EMERGING” CONTAMINANT

Posted on September 19, 2017 by Kenneth Gray

No longer emerging, Per- and Polyfluoroalkyl Substances (PFASs) have exploded on the environmental and toxic tort landscape in 2016 and in 2017.  Cognoscenti will recall U.S. EPA phase-out initiatives dating back to 2000, EPA Drinking Water Health Advisories set in 2009 and the TSCA action plan of the same year, the 2012 EPA drinking water monitoring rule, and even a blog in this very space “way back” in 2011.

Why have PFASs recently been compared to asbestos and PCBs for potential costs and impacts?  And why will they continue to be significant even if there is no further federal regulation in the near term?  Here’s why:

·        The compounds have many uses in many products and were therefore manufactured or used (and released) at a large number of facilities. Commercial products included, among others, cookware, food packaging, personal care products, and stain resistant chemicals for apparel and carpets.  Industrial and commercial uses included photo imaging, metal plating, semiconductor coatings, firefighting aqueous film-forming foam, car wash solutions, and rubber and plastics.  Sources include landfills.

·        PFASs are highly mobile and highly persistent in the environment, and so will be present for many decades.

·        The EPA Drinking Water Health Advisory level was reset (lower) in 2016 at 70 parts per trillion (ppt).

·        EPA estimates that 6.5 million people are affected by PFASs in public water systems, which does not include any impacts to smaller water systems or private wells.

·        More and more public water systems are voluntarily testing for PFASs – and more states are compelling testing.

·        Airborne releases of PFASs have contaminated groundwater and surface water.

·        They’re ubiquitous in the environment and present in human blood.  PFASs are also found in fish, and thus fish advisories are being set by states. 

·        California has proposed listing PFASs under Proposition 65 based on reproductive toxicity.

·        Many U.S. Department of Defense properties (and former properties) were the sites of PFAS releases in firefighting foam, and DOD is ramping up additional testing on its facilities.  

·        Toxic tort lawsuits have been filed over PFAS contamination in Parkersburg, WV; Decatur, AL; Merrimack, NH; and Hoosick Falls, NY. More lawsuits are likely.

·        Several Attorneys General are reportedly considering lawsuits on behalf of the citizens of their states.

It may only be the end of summer, but can you sense a snowball?

Is Tier 3 Coming to a High Quality Waterbody in Your State?

Posted on August 16, 2017 by Eric Fjelstad

The Alaska Department of Environmental Conservation (ADEC) has taken on the task of defining a process to designate so-called Outstanding National Resource Waters.  These are often called “Tier 3” waters.  A quick recap of the Clean Water Act’s antidegradation regulations.  Under relevant EPA regulations, waters which do not meet water quality standards are classified as Tier 1 waters.  Waters which meet or exceed water quality standards are classified as Tier 2 waterbodies.  The best waters - Tier 3 waters - are defined by EPA in 40 CFR 131.12(a)(3) as follows:

Where high quality waters constitute an outstanding National resource, such as waters of National and State parks and wildlife refuges and waters of exceptional recreational or ecological significance, that water quality shall be maintained and protected.

The regime has proven controversial in Alaska because it would apparently impose a “no degradation” prohibition on new and expanded discharges.  The term “degradation” is not defined in EPA’s regulations which leave open the question whether Tier 3 allows for any detectable pollutants. 

The State of Alaska is blessed with an abundance of high quality waters.  It also is a resource development state, and many projects occur in areas with high quality waters.  Conservation groups argue that Alaska’s water resources should be protected before they are compromised through development.  Development interests believe Tier 3 is just another regulatory initiative to stop projects.  ADEC has struggled to implement a Tier 3 regime, finding few friends in industry and conservation corners as it works to develop a program.  Amongst the questions ADEC has grappled with. 

· What criteria should be employed to screen potential Tier 3 candidates?  Alaska has many high quality waters and the debate has centered on whether the waterbody should be truly exceptional or unique by Alaska standards versus exceptional or unique compared to the Lower 48. 

· How much information should be in the proposal?  Conservation groups generally favor a streamlined proposal process.  For example, a few paragraphs on why a waterbody merits Tier 3 status, along with information on the basic social and economic implications of the designation.  Industry stakeholders argue that a Tier 3 designation effectively imposes a “no discharge” regime on an entire watershed and should be rigorously evaluated in a study akin to an environmental impact statement with the costs to be borne by the proponent. 

· Who should make the designation?  Conservation groups argue a Tier 3 decision should be made by ADEC or by an administrative commission and be reviewable in the courts.  Industrial stakeholders believe a Tier 3 designation is fundamentally a political decision, comparable to establishing a state park or wildlife refuge, and should be made by elected officials in the legislative process. 

· How would the “no degradation” standards work in practice?  ADEC has indicated that temporary discharges with minor impacts would be permissible under Tier 3.  However, ongoing discharges would be prohibited, even if the discharge complied with water quality standards at the “end of the pipe.”  There are unresolved questions how Tier 3 would apply, if at all, to nonpoint sources of pollution.

· Can a Tier 3 designation be changed?  There has been no clear statement from EPA on whether a Tier 3 designation could be changed.  The regulatory grapevine has yielded mixed signals with some suggesting a Tier 3 designation would be permanent.

EPA’s one sentence regulation leaves much to the imagination, and stakeholders would benefit from greater clarity from EPA in its regulations.  Given the open questions and the potentially significant restrictions a Tier 3 designation places on waterbodies, it is not a surprise that Alaska is struggling to define a rational Tier 3 process.  

WOTUS Washington Two-Step

Posted on August 8, 2017 by Rick Glick

The Trump Administration has begun rulemaking to undo the controversial rule defining “waters of the United States” or WOTUS.  In the July 27 Federal Register, EPA and the Army Corps of Engineers jointly announced that it is proposing a two-step process.  The first would be to rescind the 2015 WOTUS rule, and the second would replace it with something aligned with the Administration’s thinking.  As reported here, on February 28, 2017, President Trump issued an executive order directing the agencies to change direction. 

The Clean Water Act confers federal jurisdiction over “navigable” waters, which are defined as “waters of the United States.”  The agencies, courts and property owners have since struggled to elucidate that vague definition, particularly in the context of wetlands.  A divided Supreme Court, in Rapanos v. U. S., offered competing definitions.  Justice Scalia, writing for a plurality of the Court, would require running water, whereas Justice Kennedy in a concurring opinion, looked to whether a “significant nexus” exists between the waters or wetlands at issue and a navigable waterway.

The Obama Administration’s WOTUS rule attempted to bring clarity to the scope of federal jurisdiction, with an emphasis on the Kennedy approach.  Under President Trump’s executive order, the new rule is to follow Justice Scalia’s view of WOTUS.

During the interim between step one (rescission) and step two (replace), we will have to muddle along as before.  The Federal Register notice states:

The agencies would apply the definition of “waters of the United States” as it is currently being implemented, that is informed by applicable agency guidance documents and consistent with Supreme Court decisions and longstanding practice.

Simply stated, that means continuing uncertainty.  It will probably take some years before a new replacement rule can be developed under the deliberate process required by the Administrative Procedures Act.  If the reaction to the Obama WOTUS rule is any guide, the replacement rule will face many legal challenges, which could also take years to resolve, probably at the Supreme Court.  Thus, it is unlikely that there will be binding policy change during the first term of the Trump Administration.

In the meantime, it is useful to remember that the states are free to adopt their own definitions of jurisdictional wetlands, which many have done or in the process of doing.  States with strong environmental protection traditions—such as Oregon, California and Washington State—can be expected to assert jurisdiction, perhaps where the federal government does not.

The Annual Texas Environmental Superconference—Austin in August?

Posted on June 26, 2017 by Jeff Civins

The Texas Environmental Superconference is one of a kind. Held each year in Austin in sweltering early August, this conference consistently sells out, attracting over 500 participants from the public and private sectors.Indeed, now in its 29th year, it was the winner of the first American Bar Association Section of Environment, Energy & Resources (ABA SEER) award for Best State or Local Bar Environment, Energy and Resources Program of the Year.

The key to the conference’s popularity is its unabashed willingness to integrate humor into content--with annual themes, skits, quizzes, prizes, and, for the past several years, even a conference song.Past themes have included Yogi Berra quotes (“It’s like déjà vu all over again”); Clichés (“The best thing since sliced bread”); Shakespeare (“Much Ado About Pollution”); “Star Wars (“May the farce be with you”); and Willie Nelson songs (“On the Road Again”).Dwarfing all other past conferences, though, was the Disney movie-themed conference, which featured the song “SuperconferenceAustinTexasExpialidocious” and is the subject of 2 You Tube videos. (introductory remarks and conference song).

Speakers generally weave the conference themes into their presentations and, on occasion, even appear in costume.For example, an EPA chief of enforcement appeared as Harry Truman in the politically-themed conference, “Join the Party,” and as Darth Vader, in the Star Wars-themed program. And an EPA General Counsel appeared as a tiara-wearing Wonder Woman in the super hero-themed program.A former EPA Regional Administrator and TCEQ Chairman appeared variously as the Beatles, the Odd Couple, Game Show contestants, and Yoda and Luke Skywalker.

This year’s conference – to be held on Thursday-Friday, August 4-5, 2017 – has as its theme board games and is entitled “Let the Games Begin.”The Wednesday evening session on enforcement is entitled “Trouble.”Registration is at Environmental Superconference-2017.

Participants look forward to attending each year for the chance not only to experience a fun and informative program, but also to network and to informally discuss issues of concern with other environmental professionals representing diverse perspectives, e.g., private and public sectors; regulators, regulated community, and environmental organizations; legal and technical professionals; and local, state, and federal governments.

The conference is organized by the Environmental and Natural Resources Law Section of the State Bar of Texas, in conjunction with other environmental professional organizations, including ABA SEER, the Air & Waste Management Association—Southwest Section, the Water Environment Association of Texas, the Texas Association of Environmental Professionals, and the Environmental Health and Safety Audit Center.Proceeds from the conference are used to fund environmental internships, student writing awards, and section outreach programs.

Thanks to a generous contribution from Supporter, EARTHx (formerly Earth Day Texas), the Superconference this year is offering –and last year offered--scholarships for employees of non-profit organizations with environmental matters as a significant focus.

The Annual Texas Environmental Superconference is the answer to the question, why come to Austin in early August?

THE CUYAHOGA RIVER MAKES NEWS AGAIN: A POSTSCRIPT

Posted on May 31, 2017 by Michael Hardy

On May 11, 2017, I published a blog piece about the efforts of the Army Corps of Engineers to circumvent the State of Ohio’s “anti-degradation” water quality rules for the disposal of contaminated sediments from portions of the Cleveland Harbor and Shipping Channel.  Instead of dry land disposal in Confined Disposal Facilities (“CDF”), the Corp cited its own “Federal Standard” that justified, in its view, “open lake disposal” in Lake Erie at considerable cost savings.  The United States District Court ruled on May 5, 2017 that action was “arbitrary and capricious” under the Administrative Procedure Act.  The District Court showed no deference to the Corp’s “scientific” efforts to create its own rules in contravention to Ohio’s water quality standards.

The controversy arose in the context of the disposal of the contaminated sediments in the shipping channel of the Cuyahoga River, which makes up the last six miles of the River ( the northern end spilling into Lake Erie).  The River travels approximately 85 miles in total and drains nearly 815 square miles in four counties.  Just several miles south of the shipping channel is the 33,000 square acre Cuyahoga Valley National Park, with a number of significant tributaries feeding the River.  These upstream waters provide significant sand and gravel loadings to the northern reach of the River.

Recognizing that it could not afford to build a new $150,000,000 CFD, the Port of Cleveland looked for ways to reduce the sediment loading upstream of the navigation channel.  Adapting innovative “green” technology, the first of its kind at a port like Cleveland’s, the Port installed a “bed load interceptor” machine in the water about five miles upstream of the Shipping Channel that captures the sediment and extracts the clean sand for disposal into onsite piles.  With less sediment coming downriver, the Port hopes to extend the life of the existing CDF for another 30 years. The collected sand has a financial value for use in composting, construction, landscaping and road fill.  Here is a link to a recent The Plain Dealer(Cleveland.com) article that describes the technology, as well as its costs and resultant savings in dredging/disposal costs, and that depicts the process and the location of the interceptor.

The Port of Cleveland’s success with the interceptor has prompted other ports to examine the application of the technology to their locations, including a port on Lake Superior and sites in the Mississippi River delta.

The Cuyahoga River Makes News Again

Posted on May 11, 2017 by Michael Hardy

To many environmental law veterans, the name of the Cuyahoga River triggers memories.   The 1969 fire on that River galvanized major reforms to the water pollution laws of the United States.

As I sit in my 36th floor office and look out the windows in several directions, I can see most of the upper Cuyahoga River course through the “Industrial Flats” as it winds from the Cleveland Harbor north on Lake Erie to the large Arcelor Mittal steel plant nearly six miles downriver.  Known as the “crooked river” by Indian lore, it has many oxbows and switchbacks with colorful names like “Collision Bend” and “Irishtown Flats”.  Home to rowing teams, large tugs, iron ore freighters, and sand and gravel barges, it is a busy river requiring constant upkeep through dredging.

The Cuyahoga River has made remarkable progress since the 1969 fire, with many targeting the fifty-year anniversary of the fire for the removal of its “impaired” classification.  But the River still suffers from years of industrial and municipal sewage disposal.  Although a variety of fish have returned, it should not be surprising to know that slightly elevated PCBs remain in the sediments, a fact that complicates the dredging and disposal of the spoils.  Therein lies the newest chapter in the River’s history.

Congress has funded the dredging of the Cuyahoga River for nearly 40 years and, in 2015, allocated resources to the Army Corps of Engineers (Corps) for that year.  Accordingly, the Corps filed an application with the Ohio Environmental Protection Agency (OEPA) for a water quality certification under Section 401 of the Clean Water Act before commencement of the dredging project.  The OEPA, concerned over elevated levels of PCBs in some of the dredging spoils, authorized the dredging to proceed, provided the Corps disposed of all the dredged material in on-site “confined disposal facilities” (CDFs).  Based on sampling and analysis it conducted, the Corps agreed to utilize a CDF for the sediments dredged from the Cleveland Harbor, but objected to the required use of a CDF for the spoils coming from the “Upper Channel” of the River.  Calculating what it called a “Federal Standard” to identify less costly alternatives, the Corps proposed instead to use “open lake disposal” for those materials, which immediately drew the opposition of the OEPA and Ohio Department of Natural Resources.  The Corps argued that the use of a CDF for those spoils would add nearly $1,300,000 to the cost of the project.  The Court wanted the “Federal Standard” to override Ohio’s anti-degradation water quality rules and other initiatives designed to improve the health of Lake Erie.  Instead of an administrative appeal of the OEPA conditional certification, the Corps gave the State an ultimatum – either find a “non-federal source” for the added costs or forfeit the Congressionally authorized dredging.  Because of the potential dire economic consequences to the steel mill and other businesses, the State sued the Corps and obtained a preliminary injunction.  The District Court sided with the State and ordered the dredging to commence, with the responsibility for the incremental costs to be determined in subsequent proceedings.

On May 5, 2017, the District Court issued a 52-page Opinion finding that the Corps’ actions were “arbitrary and capricious” under the Administrative Procedure Act. State of Ohio v. The United States Army Corps of Engineers, U.S.D.C. N.D.Ohio Case No. 1:15 – CV 629.  Among other things, the Court found that the Corps’ elevation of its so-called “Federal Standard” to supersede duly promulgated water quality standards of Ohio exceeded the Corps’ authority. The Corps could not make up its own rules to evade its obligations to comply with properly adopted environmental standards or to fulfill Congressional mandates to dredge the entirety of the Cuyahoga navigation channel and use a CDF to manage the spoils.  Accordingly, the District Court ruled that the Corps must absorb the added costs of the on-land CDF disposal.

Channeling Scalia in a New WOTUS Rule

Posted on March 24, 2017 by Donald Shandy

By now, most of the readers of this blog have heard about or read President Trump’s Executive Order directing the EPA to re-evaluate the “Waters of the United States” Rule.  This announcement brought cheers from farmers, developers, and many industry groups who had opposed EPA’s Clean Water Rule (aka “WOTUS rule”) and groans, moans, and other choice words from environmental NGOs, wetlands specialists, and supporters of the WOTUS rule.  There are many articles written about what this executive order means and other articles speculate at what a new rule from a Scott Pruitt led EPA may look like under a Scalia-based definition of “navigable waters” when all of this shakes outs.

Being an Oklahoman and having interaction with Scott Pruitt over the years when he was Attorney General, I decided to take a look back at Justice Scalia’s plurality opinion in Rapanos v. United States, to see I if could piece together a couple of key components I would expect to see in a new WOTUS rule.  I note at the outset that the executive order does not require the EPA to use Justice Scalia’s definition of “navigable waters”; only that EPA “shall consider interpreting the term ‘navigable waters’ . . . in a manger consistent with” Justice Scalia’s definition in Rapanos.  However, having observed Administrator Pruitt making arguments on behalf of the State of Oklahoma as Attorney General, I would be surprised if he does not channel Justice Scalia into the new rule.

There are two points in Justice Scalia’s opinion in Rapanos that stand out.  First, he rejected the Army Corps of Engineers’ interpretation of “waters of the United States” under a Chevron step two analysis, stating that the “Corps’ expansive interpretation of that phrase is not ‘based on a permissible construction of the statute.’”  The CWA uses the phrase “navigable waters” and traditionally, that phrase applies to “relatively permanent bodies of water.”  Further, Justice Scalia pointed to language in the CWA that categorized channels and conduits that typically carry intermittent flows separately from “navigable waters.”

Second, Justice Scalia concluded that Congress’ use of “waters of the United States” did not “authorize [an] intrusion into such an area of traditional state authority as land-use regulation.”  Justice Scalia criticized Justice Kennedy’s “significant nexus” test because it failed to account for the “primary state responsibility for ordinary land-use decisions.”  In Justice Scalia’s opinion, by taking a narrow view that the only purpose of the CWA was to “clean up the waters of the United States,” and that anything affecting the chemical, physical or biological integrity of those waters should therefore be jurisdictional, Justice Kennedy employed “the familiar tactic of substituting the purpose of the statue for its text [and] freeing the Court to write a different statute that achieves the same purpose.”  Thus, Justice Scalia thought any interpretation of “waters of the United States” must account for the traditional role of the states in determining land use.

In looking at these two components of Justice Scalia’s plurality opinion and reflecting on Administrator Pruitt’s viewpoint when he was Attorney General of Oklahoma, it appears that Justice Scalia and Administrator Pruitt may be aligned when it comes to how the CWA should overlay with states’ role of land-use decisions.  I think we can expect Administrator Pruitt to champion and strengthen the notion of cooperative federalism and increasing the role of the states in crafting the new water rule.  If Pruitt’s EPA takes heed of Justice Scalia’s plurality opinion in Rapanos, I think we will see more involvement by the states in crafting the language of the rule and a narrower definition that could lead to more certainty in jurisdictional determinations.

POTUS, SCOTUS & WOTUS: What Do They Have in Common With Michael Stipe and Jack Black?

Posted on March 15, 2017 by Jeff Thaler

Then-candidate Donald Trump’s unauthorized use of REM’s 1987 song, “It’s the End of the World as We Know It (And I Feel Fine)”, during a 2015 campaign rally sparked a sharp objection by the band’s Michael Stipe. Flash forward to 2017 and now-President Trump has been flexing his executive powers in a number of legal fields; for many environmental, energy or immigration lawyers it’s the end of the regulatory world as we knew it for decades, and they are not feeling so fine.

Executive Orders (EOs) raise classic constitutional law issues of the separation of powers, in that they often are used for “executive legislating” even though there is no explicit constitutional authority for them. EOs also blur traditional regulating lines, because they are not issued with public notice or comment, and usually state that they do not “create any right or benefit enforceable at law or in equity by any party against the United States.”

An EO can have the force of law, however, if the EO is based on either the Constitution or a statute, per the Supreme Court’s 1954 Youngstown decision. That is why one must carefully read each EO to determine the grounds of its authority, and then whether it is possibly contrary to a) existing laws or b) constitutional provisions such as due process or equal protection.

Facing an uncooperative Congress, POTUS Obama came to rely on EOs in his last two years in office (see this prophetic 2015 School House Rock episode). POTUS Trump took to EOs right out of the gate. The two Trump EOs that have garnered the most publicity and outcry deal with immigration restrictions The first EO was challenged in numerous courts, and the 9th Circuit issued on February 9 the first appellate decision on a Trump EO. Interestingly, and instructive for future litigants and legal counsel, the first issue addressed by the 9th Circuit, and the one they discussed the most, was . . . standing. The court then moved on to reviewability, and only briefly due process and equal protection. The complaint’s count on violating the Administrative Procedure Act for not following proper rulemaking proceedings was not even discussed in the ruling.

Trump issued two EOs of more relevance to environmental and energy lawyers. First was the January 30, 2017 EO entitled “Reducing Regulation and Controlling Regulatory Costs”, aka the add-one-subtract-two, no-increase-in-incremental-costs [undefined]- of-regulations EO. That was followed by the February 2, 2017 Interim Guidance of the OMB implementing (and implicitly amending) the EO by limiting it to “significant regulatory actions”—i.e. those of $100 million or more of annual effect on the economy. A week later the EO and IG were both challenged in federal court in D.C. as violating the APA, separation of powers, the Constitution’s “Take Care Clause”, and as being ultra vires. Plaintiffs referenced in part OSHA, TSCA, the ESA and CAA, and other energy/environmental laws as being inconsistent with the EO’s requirement that a new rule can only be promulgated if its cost is offset by the elimination of two existing rules. The EO ironically signals the possible demise of cost-benefit analysis —first mandated by then POTUS Ronald Reagan by an EO in 1981—by disallowing consideration of the economic benefits of a regulation when weighing its costs.

Many more EOs are promised in the coming weeks concerning a variety of environmental and energy laws and regulations. Early in the wave was the February 28, 2017 EO with the majestic name of “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ [aka WOTUS] Rule”. This EO directs the EPA to review the WOTUS Rule while keeping in mind the national interest of “promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of the Congress and the States under the Constitution.” Since WOTUS was a final rule published in the Federal Register, it can only be repealed and replaced by a new rule that goes through full notice-and-comment rulemaking, not simply by a non-legislative guidance or policy statement.

One who lives by the EO sword can slowly die from it too. POTUS Obama did not submit for approval to Congress the Paris Climate Change Agreement of 2016, calling it an “executive agreement”, thus POTUS Trump does not need Congressional approval to undo it. The Agreement terms do not allow withdrawal by a party before November 2019. However, the U.S. could withdraw from the overarching United Nations Framework on Climate Change with one year notice, if the Senate approves, and that in effect would undo our Paris “commitments”. And as a practical matter, the current Administration could also just choose not to implement the Paris obligations, because there is no binding duty to hit the emission reduction targets.

In sum, we live in interesting times.   Although Jack Black has said of this Administration that “It’s the end of the world”, for College members and their clients it’s the start of some fascinating new adventures in regulation and litigation. Stay tuned. 

WOTUS, We Hardly Knew Ye

Posted on March 2, 2017 by Rick Glick

With a flourish of his pen, on February 28, President Trump signed an Executive Order  aimed at dismantling the ill-fated Waters of the United States (WOTUS) rule.  The rule was the latest attempt by EPA and the Army Corps of Engineers to bring some clarity to the limits of federal authority under the Clean Water Act.  Clarity in this area has been elusive, and though many were unhappy with the rule, no one benefits from the current state of confusion.

The uncertainty begins with the Clean Water Act, which Congress said applies to “navigable” waters and then helpfully defined navigable to mean “waters of the United States.”  The agencies and the courts have struggled ever since to figure out when wetlands are jurisdictional.  The courts have not helped.  In Rapanos v. U.S., a 5-4 majority of the Supreme Court found the Government had overreached, but could not agree as to why.  Justice Scalia, writing for a plurality of the Court, would limit jurisdiction to “relatively permanent, standing or continuously flowing bodies of water,” excluding intermittent or ephemeral channels and most drainage ditches.  In a concurring opinion, Justice Kennedy invoked a “significant nexus” test whereby jurisdiction should apply if a hydrologic connection between a wetland and a navigable water could be demonstrated.  Later courts have tried to follow both tests, with mixed results.

Justice Scalia’s test is a lot easier to apply:  If you can see the water or the land goes squish under your feet, there is jurisdiction.  Justice Kennedy’s test requires a case-by-case review and exercise of professional judgment.  The WOTUS rule focused more on the Kennedy test to indicate how the Government would make its jurisdictional determinations.

Without getting into detail that now is mostly moot, the rule generated about one million public comments and lots of litigation—17 District Court complaints and 23 petitions to various Circuit Courts of Appeal.  It seemed certain that the Supreme Court would get another opportunity to declare the law of WOTUS.

No doubt the Court will get that chance, but in a drastically different context.  The president’s Executive Order has no legal effect, other than to get the process started.  The Obama Administration’s WOTUS rule was subject to years of notice and comment before adoption, and the Trump Administration’s revisions will have to go through the same process.  No doubt they will be as controversial and will also be fiercely litigated.  That will take a very long time to play out, and won’t likely be completed during a Trump first term. 

In the meantime, property owners still would like to develop their property, and the Government still has to apply the law.  The Trump Executive Order gives direction that a new WOTUS rule should follow the Scalia test, but that doesn’t reflect the way jurisdictional determinations are made today.  Suffice to say that the Kennedy significant nexus test will still be in play for the near to intermediate term, and a prudent developer will include a wetlands determination as a key part of the due diligence for the project.

Rifle Shots – Unleashing the Power of the Tweak

Posted on February 24, 2017 by JB Ruhl

Here’s a thought exercise: I’ll give you a budget of 25 words (including conjunctions, articles, and all the other little ones). You use up a word by either deleting, adding, or replacing one in an existing federal environmental or natural resources statute. How much could you transform the field of practice with just those 25 word edits? The answer is, quite a lot.

When we think of statutory reform, we usually think big, right on up to “repeal and replace.” But after more than 25 years of very little legislative action on federal environmental and natural resources statutes—the National Wildlife Refuge Improvement Act, Sustainable Fishing Act, and the recent Toxic Substances Control Act reforms are a few exceptions since the 1990 Clean Air Act amendments—much rides on the accumulations of judicial and agency interpretations of the meaning of a word here and a phrase there. As we enter a period of potential legislative volatility in this field, therefore, the rifle shot may be just as much in play as the nuclear bomb.

Like any statutory reform, rifle shots can make regulatory statutes either more or less regulatory. For example, one could add “including carbon dioxide” or “excluding carbon dioxide” in just the right place in the Clean Air Act and with those three words put an end to a lot of debate and litigation. Given the current political climate, however, it’s reasonable to assume any rifle shot would be aimed at reducing regulatory impacts. But even with just 25 words in the clip, one could transform the impact of several regulatory programs before running out.

For example, delete the words “harm” and “harass” from the statutory definition of “take” in the Endangered Species Act (ESA) (16 U.S.C. 1532(19)) [LINK 1] and you have a very different regulatory program. Much if not most of the land use regulation impact under the ESA stems from the inclusion of those two words; without them, the ESA’s prohibition of unpermitted take would restrict actions like hunting, killing, shooting, and wounding, but could not reach indirect “harming” from habitat modification.   Of course, the interagency consultation program under Section 7 (16 U.S.C. 1536(a)(2)) [LINK 2] would still be in place, prohibiting federal agencies from taking actions that “jeopardize” the continued existence of species. But just add “substantially” before “jeopardize” and the practical effect of that prohibition is greatly reduced.

I’ve managed to transform the ESA, vastly reducing its regulatory impact, with just three word tweaks. Twenty-two to go. Here are some more examples.  I’ll let readers evaluate the impacts.

·         Speaking of evaluating impacts, the environmental impact review process of the National Environmental Policy Act (NEPA) can really slow things down (42 U.S.C. 4332(B)). [LINK 3] To “streamline” the process, add the word “direct” before “environmental impact” in subpart (C)(1), which would eliminate the current practice of requiring analysis of indirect and cumulative impacts, and delete subpart (C)(iii), which requires agencies to evaluate “alternatives to the proposed action,” to remove a factor that bogs down much NEPA litigation. (Six more words down, sixteen to go.)

·         Heard all the commotion about which “waters” are subject to the Clean Water Act? Clear that up by changing the statutory definition of “navigable waters” (33 U.S.C. 1362(7)) [LINK 4] to read “waters of the United States subject to navigation.” That would be pretty extreme—it would remove most wetlands from jurisdiction—so one could control how far jurisdiction extends over wetlands by adding and their adjacent wetlands.” This would draw the line much closer to navigable water bodies than current interpretations reflected in Supreme Court opinions and agency regulations—Rapanos and the Water of the United States Rule become history. (Seven more words down, nine to go.)

·         And if you also want to put to rest the question whether the Clean Water Act applies to groundwater, edit the front end of the definition to read “surface waters.” (Another word down, eight to go.)

·         The Circuits are split over whether the Migratory Bird Treaty Act’s list of prohibited activities (16 U.S.C. 703(a)), [LINK 5] which includes to “take” or “kill,” sweeps within the statute’s reach any “incidental” taking or killing—injury or mortality that is not the direct purpose of the activity, such as strikes by wind turbines. Easy to solve! Add the word “purposeful” before the list of prohibited activities. (Another word down, seven to go.)

·         And, while we’re at it, let’s go ahead and add “excluding carbon dioxide” to the Clean Air Act definition of “air pollutant” (42 U.S.C. 7602(g)). [LINK 6] Adios, Clean Power Plan. (Three more words down, leaving just four to go.)

I’ll leave it to readers to think about how to use the last four words. The point here is that the system of environmental and natural resources law has become quite fragile. With Congress out of the picture for so long, courts and agencies have built up an interpretation infrastructure under which a single word or phrase often carries a tremendous burden of substantive and procedural program implementation. As a consequence, a mere tweak here and there can have dramatic effects on the program.

Granted, anyone who closely follows the statutes tweaked above will quickly appreciate the impact of any of the tweaks, and I’ve chosen some powerful examples unlikely to slip by any such experts. But subtler tweaks buried deep in a larger bill could more easily fly below the radar.

It remains to be seen whether Congress takes this rifle shot approach or goes bigger.  Rifle shots don’t eliminate or “gut” entire programs, which may be the current congressional appetite, but the above examples show the potency of this approach. I for one will be keeping my eyes out for rifle shots in bills every bit as much as I will be following the big bomb reform efforts. Do not underestimate the power of the tweak!

It’s Getting Hot in Hells Canyon

Posted on February 2, 2017 by Martha Pagel

The state of Oregon has turned up the heat in Hells Canyon.  The burning question, so to speak, is whether a state can require passage and reintroduction of anadromous fish as a condition of certification under Section 401 of the Clean Water Act for relicensing of an existing hydroelectric project.  The issue gets hotter because the particular project involved  -- the Hells Canyon Complex (“HCC”), owned by Idaho Power Company (“IPC”) -- is located on the Snake River, which forms the border between Oregon and Idaho.  The State of Oregon has issued a draft 401 certification with detailed conditions for passage and reintroduction of anadromous fish into a tributary on the “Oregon side” of the river.  Idaho is opposed to reintroduction of any fish species above Hells Canyon Dam, leaving IPC in the middle.

Making a very long and complicated story short, for more than 13 years IPC has been working with state and federal agencies and stakeholders toward relicensing of the HCC.  The project consists of three developments, each with a dam, reservoir, and powerhouse.  In 1955, FERC issued a 50-year license with recognition that construction of the project would block fish passage and eventually lead to extirpation of anadromous fish above the dams.  As a result, the initial FERC license included mitigation conditions to offset fish impacts, and additional mitigation was provided under a subsequent settlement agreement. 

After more than a decade of studies, meetings, and negotiations, it looked like IPC and the states were on track for general agreement as to the terms and conditions of compatible, but separate 401 certifications to be issued by Oregon and Idaho – except as to the issue of fish passage and reintroduction. Despite Idaho’s objections, the Oregon Department of Environmental Quality (ODEQ) issued its draft 401 certification for public comment on December 13, 2016.  The draft relies on a number of existing state water quality standards as the legal basis for requiring fish passage and reintroduction, though none of the standards is directly on point. ‎

Public comments on the proposed 401 certification are due February 13.  Objections relating to the fish passage and reintroduction conditions are likely to focus on whether such conditions are generally within the scope of 401 certification for FERC-licensed hydroelectric projects, and, if so, whether Oregon’s specific water quality standards provide a sufficient regulatory basis for the proposed ODEQ action.  ‎The comments may also raise questions about the baseline for mitigation and whether impacts to fish due to construction of the project – as opposed to on-going operations -- have already been fully mitigated.  And then there’s the question of Idaho’s opposition. 

ODEQ will consider the comments before issuing a final 401 certification decision.  If the states are unable to resolve their differences over the passage and reintroduction issue, it’s likely to get a lot hotter in Hells Canyon. 

And finally, a disclosure that the HCC relicensing issues hit close to home for ACOEL:  I am part of a team representing IPC, and other College members are very much involved on both sides of the issue.  There’s a lot we won’t be able to talk about at the next annual meeting! 

“Reports of My Death Are Greatly Exaggerated”

Posted on January 27, 2017 by Robert M Olian

So said Mark Twain (actually, he didn’t), and now the same can be said for EPA’s rule exempting water transfers from NPDES permitting requirements. When I last addressed this topic nearly three years ago in “Ashes to Ashes; Waters to Waters – The Death of EPA’s Water Transfer Rule”, a federal district court had just vacated the rule seeking to clarify EPA’s position that transfers of water between navigable bodies of water do not require NPDES permits. See Catskill Mountains Chapter of Trout Unlimited, Inc. v. United States Environmental Protection Agency (SDNY, 3/28/2014)

Displaying a prescience that would make Carnac the Magnificent proud, I closed that earlier post with the assertion that “the only certainty is that litigation over the Water Transfer Rule will continue to flow.” I am therefore personally pleased to report that flow it has, the Second Circuit having now overturned the district court decision in a 2-1 opinion issued on January 18, 2017. The majority opinion upheld EPA's interpretation of the Clean Water Act to exempt water transfers, finding it was a “reasonable construction of the Clean Water Act supported by a reasoned explanation” and was entitled to deferential review under the Supreme Court’s Chevron doctrine.

 Not content to rest on my laurels, I’m going to make another prediction. The Second Circuit won’t agree to rehear en banc and, if certiorari is sought, the Supreme Court won’t take the case. All of which means that, except perhaps for one last post to gloat yet again about my ability to see into the future, this is the last you’ll hear about litigation over the water transfer rule.

Trump Greenlights Keystone and Dakota Access Pipelines, but the Battle is Far From Over

Posted on January 26, 2017 by Patrick A. Parenteau

President Trump wasted no time making good on his promise to reverse President Obama’s efforts to reduce greenhouse gas emissions and move U.S. energy policy towards cleaner energy sources.  On January 24 Trump signed two executive memoranda, one inviting TransCanada to resubmit its application to build the 800,000 barrel a day Keystone XL pipeline from the Canadian oil sands to the Gulf Coast; the other directing the Army Corps of Engineers to expedite the review and approval of the Dakota Access Pipeline (DAPL) to carry approximately 500,000 barrels per day of crude oil from the Bakken shale in North Dakota to oil markets in the United States. But a close reading raises some sticky legal and economic issues that will have to be resolved before the oil starts flowing.  [LINKS to Keystone and DAPL Memos]

In announcing the Keystone Memo, Trump said that approval was contingent on TransCanada’s  willingness to “renegotiate some of the terms” – including perhaps a commitment to use US steel and a share in any profits. The problem is that tar sands oil is not only the dirtiest fuel on the planet, it’s also the most expensive to extract. To be profitable oil prices need to be above $80 per barrel; today they sit around $52, and it is unlikely they will rise much higher in the foreseeable future given the competition from shale oil and the fracking boom that is flooding the market in the US. The break-even point for Bakken shale oil is $29 per barrel. Seventeen major oil sands projects were canceled after oil prices crashed in 2014, as companies took major losses. Major investors in the oil sands have begun to leave, including Norway-based Statoil, which pulled out of the oil sands in December 2016. So cutting a deal to the President’s liking may be harder than it looks.

Assuming the deal goes down, the Keystone Memo issues several directives to clear the way for the project. It directs the State Department to make a final decision within 60 days of the date TransCanada re-submits its application, and it further specifies that “to the maximum extent permitted by law” the final supplemental EIS issued in 2014 shall satisfy the requirements of NEPA as well as the consultation requirements of the Endangered Species Act, and “any other provision of law that requires executive department consultation or review.” The Keystone Memo also directs the Corps of Engineers to use Nationwide Permit 12 to summarily authorize the stream crossings needed to complete the project. These fast track measures are sure to be tested in court by the opponents who are not about to let their hard won victory be snatched away without a furious fight—in the courts as well as in the streets. While courts have ruled that the presidential permit itself is not reviewable, there is presumably no bar to challenging the decisions of the Corps and the Department of Interior that are necessary to complete the project.

The DAPL Memo directs the Secretary of the Army and the Chief of the Corps of Engineers to “review and approve in an expedited manner, to the extent permitted by law and as warranted, and with such conditions as are necessary or appropriate, requests for approvals to construct and operate the DAPL, including easements or rights-of-way to cross Federal areas under section 28 of the Mineral Leasing Act.” The Memo also instructs the Secretary to consider whether to rescind the memorandum issued by the Obama administration requiring preparation of an EIS on DAPL’s   request for an easement to cross Lake Oahe, and to deem the previously-issued Environmental Assessment sufficient to satisfy NEPA.

The Standing Rock protest over DAPL has become an historic confrontation that has united an Indigenous land-and-water movement and climate activism to confront a fossil-fuel corporation protected by a militarized police force.  At one point in December thousands of veterans arrived to provide a safe space for the protesters who call themselves “water protectors.” Litigation filed by the Standing Rock Tribe and other tribes challenging the Corps’ issuance of permits under the Clean Water Act and Rivers and Harbors Act is pending in federal district court in the District of Columbia.  Judge Boasberg denied a preliminary injunction but has yet to rule on the merits of the case. At the moment, the court is considering DAPL’s motion for summary judgment to declare that the project already has all of the approvals it needs and the Corps should not be able to reverse its earlier decision that an EIS was not required. Though the Justice Department has vigorously opposed this move, it will be interesting to see whether the Trump administration adopts a different posture. In any event, the Tribe has raised serious questions about whether the Corps properly evaluated threats to its water supply intake and alternative routes that would lessen the risk. One of the allegations invokes environmental justice concerns arguing that the project was re-routed away from Bismarck in response to concerns about threats to its water supply. The Tribe has also raised novel questions about whether granting the easement would violate treaty rights under the 1851 Treaty of Fort Laramie.

At the hearing on DAPL’s motion for summary judgment, Judge Boasberg acknowledged the uncertainty about what the new administration might do but observed that “It’s not my business to guess.” For now the rest of us will have to guess at what the final outcome of this epic confrontation that has galvanized indigenous peoples from all over the world will be.

The DOJ Environment Division and State Joint Enforcement

Posted on January 25, 2017 by John Cruden

As I reflect on my tenure as Assistant Attorney General, I have been especially proud of the Division’s cooperation with state and local governments in matters encompassing all aspects of the Division’s work – affirmative and defensive, civil and criminal. When we combine forces with our state and local partners, we leverage the resources of multiple sovereigns and, ultimately, achieve more comprehensive results for the American people.

In 2016, we had unprecedented success in civil enforcement with states, due primarily to the record‐breaking settlement with BP in the Deepwater Horizon Oil Spill litigation. In April 2016, the trial court entered the final consent decree in the litigation, thereby resolving civil claims of the United States and the five Gulf Coast states against BP. The claims arose from the 2010 blowout of the Macondo well and the resulting massive oil spill in the Gulf of Mexico. BP will pay the U.S. and the five Gulf States more than $20 billion under the consent decree, including: 1) a $5.5 billion civil penalty; 2) more than $8.1 billion in natural resource damages; 3) $600 million in further reimbursement of clean‐up costs and some royalty payments; and 4) up to $6 billion in economic damage payments for the Gulf States or their local units of government. This resolution is the largest settlement with a single entity in Department of Justice history; it includes the largest civil penalty ever awarded under the Clean Water Act, the largest ever natural resources damages settlement and massive economic damages payments to our state partners.

And, just this month we announced our plea agreement and civil consent decree with Volkswagen.  In addition to the combined $4.3 billion penalty, corporate felony plea, and individual prosecutions, the previous civil consent decrees also provide $2.7 billion to all states for projects they select from the CD options to offset NOx pollution caused by the illegal car emissions.  When the various settlements with VW are combined, and their value estimated, it approaches $20 billion. 

Our state connections were vital to our criminal work. Cooperation ranged from providing training to state partners to close coordination in wildlife and pollution investigations.  Prosecutors from ENRD’s Environmental Crimes Section presented at several events where state investigators learned of opportunities and methods for developing wildlife and environmental crimes cases, either in concert with federal counterparts or independently. Our prosecutors also trained their counterparts on the Division’s recently acquired authority over worker safety matters.

But environmental enforcement is not where ENRD’s work with state and local partners ends. We also are working with our counterparts at the state and local level in a relatively new area of responsibility for the Division – civil and criminal enforcement of federal laws that provide for humane treatment of captive, farmed, and companion animals across the United States. In July 2016, ENRD and the Office of Justice Programs co-hosted a roundtable discussion on Animal Welfare Enforcement. We were joined by more than 100 leaders in the area, including representatives of federal agencies, states and local governments, as well as researchers, scientists and others in the animal welfare field. The roundtable allowed us to focus collectively on information sharing, organizational strategies and cooperation in animal welfare enforcement.

Finally, ENRD continued to develop and enhance relationships with our state counterparts by participating in several forums designed to share experiences and expertise. In the spring of 2016, for example, I had the honor of being the first ENRD Assistant Attorney General invited to speak to the annual meeting of the Environmental Council of the States, the national association of state and territorial environmental agency leaders. I joined colleagues from EPA, New Mexico and academia to discuss innovative ways to measure the success of environmental enforcement. ENRD attorneys also partnered with the National Association of Attorneys General to present webinars on topics of mutual interest, such as e‐discovery, and share expertise regarding federal bankruptcy law in the context of environmental cases. Finally, just this week we collaborated with the National Association of Attorneys General to publish Guidelines for Joint State/Federal Civil Environmental Enforcement Litigation, which is now available on the DOJ website.

As I depart from the Division, we are in good shape. In December, the Division accepted an award by the Partnership for Federal Service, which ranked the ENRD as the #2 best place to work in all of the federal government, as well as the best place to work in the Department of Justice. With more than 300 Federal agency subcomponents competing, our new rank places us well into the top 1% of all Federal workplaces.

TRUMP POWER: PROSPECTS FOR DE-REGULATING (AND UN-ENDANGERING?)

Posted on November 18, 2016 by Richard G. Stoll

Q&A

Q:  What two things do Jeb Bush, John Kasich, Marco Rubio, Rand Paul, Chris Christie, Carly Fiorina, Mike Huckabee, Bobby Jindal, Ted Cruz, and George Pataki have in common?

A:  (1) None of them ever claimed that climate change is a Chinese hoax; and 
(2)  Every one of them promised to revoke the Obama Clean Power Plan (CPP) if elected.

How Bad Is Bad?

I’ll come back to the CPP.   But first, the question so many are asking:  how terrible is Mr. Trump’s election going to be for the environment?  Let me begin by reminiscing.  In 1980, I was in EPA’s Office of General Counsel when the “killer trees” President was elected.  I don’t remember actual tears in the office the next day, but people were pretty distressed and many were threatening to leave the agency.

Things really did look bad for a while.  Remember Anne Gorsuch Burford, Rita Lavelle, James Watt and many others with similar agendas?  But then remember the intense and angry public reaction when it appeared that core environmental protections for clean air and clean water were in jeopardy.  These people were forced out of office.  William Ruckelshaus returned at the top of EPA, and the ship was essentially righted.

With that history as a guide, I don’t think the Trump Administration (disclosure:  I neither supported nor voted for him) will try to make any significant changes to the vast bulk of protective air, water, waste, etc. rules now on the books.  I once calculated there are over 20,000 pages of EPA regulations in the C.F.R.  That’s millions of words.  I think that after four years of a Trump Administration, fewer than 1% of those words will be deleted or amended.

Top Target

Now back to the CPP.  I am pretty sure that will fall into the 1%.  Others have written about what might happen to the CPP on judicial review and I won’t try to add to that guessing game.   The key thing to remember is that the CPP is currently stayed by the Supreme Court, and that stay will remain in effect until any final Supreme Court disposition – which will be many months from now.

There is a good chance that the Trump EPA will not wait for any final judicial review but rather will soon undertake a rulemaking to revoke at least the more far-reaching and controversial elements of the CPP (i.e., the provisions “going beyond the fence-line” to force wind and solar in place of coal).  As explained in one of my recent blogs, there would be no need to develop a new factual record in such a rulemaking.  So this process may take a couple of years, but for much of that time the CPP will remain blocked by the Supreme Court stay and the earliest CPP standards aren’t scheduled to take effect until 2022. 

As also explained in my blog, thanks to a recent 3-0 D.C. Circuit opinion authored by Judge Merrick Garland (and the Supreme Court precedent that he relied upon), those in the Trump EPA should have smooth sailing on judicial review if they take the time to clearly articulate their policy and legal rationale.

And what would public reaction be to such actions?  Cutting the most controversial parts out of the CPP would not jeopardize the legal basis for core clean air and water protections as the early Reagan cutbacks were perceived to do.  So even if revisions to the CPP provoke lots of noise from traditional public interest groups opposing any cut-backs in GHG regulation, that noise may not resonate much with  a general public much more interested in jobs, health care,  and public safety. 

Un-endanger Me?

Public reaction could be far different, though, if – as indicated in some press reports --  the Trump EPA were to go beyond significantly cutting back on the CPP and deploy a nuclear option:  reversing the Obama EPA’s 2009 GHG “endangerment finding.”  By doing this EPA would be trying to free itself of any obligation to regulate GHGs under the Clean Air Act.  (Note:  I am not addressing the more limited August 2016 aircraft emission endangerment finding.)

I think such a reversal would be extremely unwise.  First, I think it would be far more vulnerable on judicial review than a significant CPP cutback.  Reversing the finding would require the building of a massive new factual record.  And with the growing scientific consensus that man-made GHGs are causing at least some adverse effects, even conservative judges may have difficulty upholding such a decision.

Second, having EPA in effect deny there is any climate problem from air emissions could more easily foment the kind of intense and angry public reaction that the early Reagan EPA suffered.   Recall from the above that none of the other Republican candidates gunning for the CPP ever said global climate was a Chinese hoax.

Finally, I believe such a reversal is entirely unnecessary as a legal matter.  As long as EPA keeps some form of GHG controls on the books, it will have carried out its legal obligations stemming from the endangerment finding.  Nothing in the CAA or any judicial decision requires that the degree of GHG regulation be driven by an endangerment finding.  There is nothing remotely like the MACT mandate to achieve limits being met by the best 12% in a source’s category.  In short, EPA does not need to touch the endangerment finding to accomplish the goal of amending the CPP to remove its more far-reaching and controversial provisions.

More Targets and Concerns

Getting back to the basic question of how much the Trump EPA may change things, there will certainly be more rules targeted in the 1% -- the Obama Clean Water Rule for almost sure.  And there are valid concerns about how much EPA’s funding and enforcement efforts may be cut back even if most rules stay on the books.  Spoiler alert:  I may do blogs on these topics soon.

But my main concern for  people at the Trump EPA now is that they remember what happened when the Reagan EPA tried to de-regulate in a manner that was perceived as threatening core values of clean air and clean water.

One Certain Thing: Water Should Be Clean

Posted on September 30, 2016 by Peter Van Tuyn

The Environmental Protection Agency’s use of its Clean Water Act 404(c) authority has received a fair amount of attention of late.  Congressional hearings, court cases, media attention and, of course, Erik Fjelstad’s recent ACOEL blog.

EPA used this authority in the Mingo Logan coal mining-related situation after a 404 permit had been issued and the permit-regulated dredge and fill activities had been underway for some time.  There is no doubt, as Erik points out, that uncertainty on the durability of a permit for a continuing dredge or fill activity, whether it be for coal mining or something else, is not ideal.

That said, there should be a way to revisit a permit if the impact of a continuing dredge or fill activity is severe and was not fully appreciated at the time of permitting.  This is one situation that Congress sought to address in 404(c), and, in my opinion, without it, the integrity of the Clean Water Act to achieve its purpose of protecting waters of the United States would be at risk.  Indeed, without such authority, those 404(c) permits for ongoing activities would look a lot like property rights.  At the same time, this is not a common situation:  EPA has finalized only two post-permit 404(c) actions.   

Most common, though still rare, is EPA’s use of 404(c) authority to place restrictions on a 404 permit while the U.S. Army Corps of Engineers is processing a 404 permit application.  In this time window, permit applicants know that there is uncertainty regarding whether and how their projects might go forward.  EPA initiated the 404(c) process 29 times during the Corps’ permitting process, resolved eighteen without need for final 404(c) action, and came to final 404(c) action eleven times. 

The final time window in which EPA can exercise its 404(c) authority occurs before a landowner or project proponent applies for a 404 permit.  In one case EPA was confronted with a landowner who had three parcels of land in the Florida Everglades which he was planning on filling.  As a start, he applied to the Corps for a 404 permit for two of those parcels.  Using its 404(c) authority, EPA precluded the applied-for fill activity on all three parcels.  Additionally, in the Mingo Logan example first introduced above, EPA not only addressed the existing permits in its decision, but noted that no future and similar 404 permits should subsequently be issued for those waters.   

There is also one pending 404(c) action covering this pre-permit time window.  It concerns the headwaters of Bristol Bay, Alaska, where a mining company has explored the copper, gold and molybdenum “Pebble” ore deposit.  This large ore deposit underlies the largest wild salmon fishery in the world, which has supported the subsistence activities and culture of local people for thousands of years, a commercial fishery for over 130 years (in which the 2 billionth fish was caught this summer!), and a “bucket list” sport fishery.  In this instance, EPA has proposed salmon-protective restrictions for 404 permits related to the mining of this ore deposit.   

Should EPA finalize the Bristol Bay-related 404(c) proposal, the mining company could expect to get a 404 permit only if it included EPA’s restrictions.  In this context, the mining company would have certainty before it applies for a 404 permit as to the applicability of those restrictions to its fill activity.  Some have complained that EPA is overreaching in proposing to exercise this authority in advance of a permit application.  For my part, this seems like the most ideal time for all interested parties – local people and the mining company most of all – to find out about such restrictions.

For what it is further worth, EPA has revisited some of those final 404(c) actions to allow for some dredge and fill activities.  And notably, eleven of the thirteen final 404(c) actions occurred during Republican administrations (Reagan – 9, Bush I – 1, Bush II – 1).  So if politics was involved in the actions, it didn’t fit the stereotype.

 

Disclosure:  Bessenyey & Van Tuyn, L.L.C. represents a client that supports EPA 404(c) action to protect Bristol Bay’s wild salmon from the proposed Pebble mine.  

New Tools for Water Quality Trading

Posted on September 26, 2016 by Ridgway Hall

For well over a decade states and stakeholders have been trying to develop water quality trading and offset programs to facilitate compliance with the Clean Water Act.  The goal of “trading” is to allow a discharger who can cost-effectively reduce pollutants to a lower level than legally required to sell the resulting “credit” to another source whose per-unit cost of reducing that same pollutant is greater. The “credit” is the amount of reduction achieved by the credit generator beyond compliance. The result is more cost-effective compliance. 

An “offset” involves using a “credit” to offset a new or increased discharge to a water body which is not achieving water quality standards (often referred to as “impaired”) for that pollutant.  Without such an offset, any new discharge to an impaired water body is illegal, because it would exacerbate the standards violation. Typically the credit or offset is incorporated into the permit of the user, and is thereby enforceable.

Recognizing these benefits, EPA supports trading, and issued a policy and guidance memo in 2003.  One of the most promising opportunities for trading is the reduction of nitrogen, phosphorus and sediment, which are causing water quality problems across the country.  Farms typically have nonpoint source discharges of all three of these pollutants, and can reduce the volume much more cost-effectively than a municipal or industrial point source, which is the typical buyer. However, efforts to establish trading programs have run into problems, such as determining a measurable “baseline” compliance level for a nonpoint source credit generator before a credit can be generated. Nonpoint sources typically use “best management practices” (BMPs) to achieve pollution reductions representing their fair share of loading allocations for the water body to which they discharge. Before a farmer can generate a credit, his “fair share”, or baseline, must be both determined and met.

Additional problems include protecting local water quality where the credit is used, verifying the implementation of a credit, and accounting for uncertainty in the amount of pollution reduction which a BMP implemented at a non-point source will actually achieve. As a result, while many states have tried to establish such programs, including the development of regulations, very few have been successful. 

To address these problems, EPA over the past 3 years has issued 8 “technical  memoranda” (TMs) which set forth EPA’s “expectations” for the contents of an effective trading program within the Chesapeake Bay watershed. This is, in effect, a pilot.  The reason for the focus on this 64,000 square mile watershed is that in 2010 EPA published the biggest total maximum daily load (TMDL) ever issued under the CWA, which sets forth pollutant loading allocations which must be achieved throughout the watershed in order to achieve compliance with applicable water quality standards. I described this TMDL in a previous post entitled EPA Issues Biggest TMDL Ever for Chesapeake Watershed, posted on March 4, 2011. Faced with huge costs to achieve the reductions, many of the states are looking at trading.

To maximize the likelihood that such trades will be carried out in compliance with the CWA, EPA issued the TMs for use by the Bay states in designing their programs. They address baseline determination, duration of credits, components of a credit calculation, protection of local water quality, accounting for uncertainty of the water quality benefit of a BMP, representative sampling, verification and certification (including inspections and public availability of all relevant documents), and accounting for growth (including need for an “offset” program). The “credit calculation” TM addresses, among other things “additionality” (the requirement that any trade must result in a net reduction of pollution) and “leakage” (when a pollutant load reduction at one location indirectly causes an increase in pollution elsewhere). These can be accessed on EPA’s “Trading and Offsets in the Chesapeake Bay Watershed” web site. They are not regulations or even “official agency guidance” (says EPA), and do not have the force of law. They do set forth EPA’s “expectations”.  EPA officials have said that each state trading program will be reviewed for consistency with these TMs.

For those around the country who are trying to design and implement trading programs, these TMs can be enormously helpful.  They are fairly brief (typically 6 to 12 pages), clear and concise.  And who among us would not support more cost-effective reduction of pollution?

Section 101(f) of the Clean Water Act: Common Sense to Further a Common Purpose

Posted on September 9, 2016 by William Green

Section 101(f) of the Clean Water Act (CWA) creates a “national policy” that “to the maximum extent possible” the Act “shall” be implemented in a manner that “prevent[s] needless duplication and unnecessary delays at all levels of government.”  (33 U.S.C. § 1251(f))  Although this and the other overarching goals in § 101 of the Act were “no exercise in boilerplate rhetoric,” (William Harsha, Jr. (Ohio), Congressional Record 16520 (Jun. 3, 1976)) they are typically ignored.  Instead of ignoring § 101 of the CWA, however, a strong argument can be made that courts should remand or even vacate an agency’s action if it can be shown that such an action needlessly duplicates or unnecessarily delays efforts to “restore and maintain the chemical, physical, [or] biological integrity of the Nation’s waters. (33 U.S.C. § 1251(a)) This would further Congress’s intent as codified in §§ 101(a) & (f) of the CWA.

Consider the ongoing controversy about the recent “Waters of the United States” rule (Rule).  (80 Fed. Reg. 37,054 (Jun. 29, 2015)) Many have said much about this Rule, focusing on lofty constitutional arguments, erudite discussions of which and when Supreme Court opinions control, and the finer points of APA jurisprudence.  But few have argued that the automatic implementation of its increased jurisdictional scope would contravene § 101(f).  Because the Rule seeks to increase the federal government’s jurisdiction under the CWA, without more, coverage of the Act’s regulatory requirements would immediately attach to previously non-jurisdictional waters.  This inextricable link of new jurisdiction and implementation could lead to disruptive delays and associated problems. 

When, for example, the hundreds of ditches that form a sprawling municipal separate storm sewer system become jurisdictional, various implementation requirements would be triggered – noncompliance with which could lead to administrative and civil penalties and criminal liability.  In this and many other instances, the sudden applicability of CWA requirements could have the unintended consequence of actually impeding ongoing efforts to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.”  

The shift of focus from traditional waters of the United States to stormwater conveyances could divert and dilute scarce local government resources.  This could delay meaningful water quality improvements for the lakes and rivers people actually use to swim and fish, and use for potable water could become more difficult to attain and then sustain. Such delays would serve no environmental benefit and would be especially unjustified where local governments only use those stormwater conveyances for stormwater management or for treating discharges from them into traditional waters of the United States.  Indeed, until promulgation of the Waters of the United States Rule, stormwater conveyances have historically been excluded from the CWA’s jurisdictional reach.        

It thus seems that the directives of §101(f) should be taken into account in litigation judging the appropriateness of the Waters of the United States Rule.  This would ensure that the Rule is implementable in a fashion that satisfies §101(f)’s common sense mandate to “prevent needless duplication and unnecessary delays” in furtherance of the fundamental goal of “restor[ing] and maintain[ing] the chemical, physical, and biological integrity of the Nation’s waters.”

William H. Green thanks Mohammad O. Jazil for his contributions to this post.

EPA’s Mighty Power

Posted on August 5, 2016 by Eric Fjelstad

In Mingo Logan Coal Company v. EPA, the D.C. Circuit recently upheld EPA’s use of its “veto” authority over an Army Corps of Engineers permit to fill jurisdictional waters for the Spruce Mine in West Virginia.  Section 404(c) of the Clean Water Act provides EPA authority to “deny or restrict the use of any defined area for specification (including the withdrawal of specification).”  This authority was described by the court in Mingo Logan as “a mighty power and its exercise will perhaps inevitably leave a permittee feeling as if the rug has been pulled out from under it.” 

The salient facts in Mingo Logan involved a Section 404 permit for a “mountaintop removal” coal mine.  After a 7-year EIS, the Corps issued the permit in 2006.  EPA expressed reservations with the permit, but communicated to the Corps that it “had no intention of taking [its] Spruce Mine concerns any further from a Section 404 standpoint.”  But times change – and so do administrations – and in 2009 EPA asked the Corps to suspend, revoke, or modify the permit.  After the Corps refused to do so, EPA began the 404(c) process, which led to a final decision in January 2011 to withdraw the specification for two (of three) disposal sites covered under the permit. 

On appeal, Mingo Logan argued that EPA did not consider the company’s sunk reliance costs (a point EPA conceded).  Even though 404(c) does not explicitly denote costs as a factor in EPA’s decision-making, the court stated that an agency “should generally weigh the costs of its action against its benefits.”  Unfortunately for Mingo Logan, the court found that the company had not appropriately raised the issue of reliance costs before EPA or the district court. 

The Mingo Logan decision is a bitter pill for developers, interjecting an additional element of uncertainty into a Section 404 regulatory process that is already challenging and subject to shifting political winds.  As noted at this site, the agencies and courts have struggled with the jurisdictional reach of Section 404 and when a party can challenge the government’s actions.  Key take-aways from Mingo Logan include:

First, 404(c) battles are not for the faint of heart.  EPA has successfully used the authority twelve times since the passage of the CWA.  Every attempt to stop EPA through litigation has ultimately failed. 

Second, Mingo Logan clarifies that a Section 404 permit can be withdrawn years after its issuance.  The decision will serve to undermine confidence in the integrity of the permitting process in the United States. 

Last, Mingo Logan highlights the inherent problems of shared EPA/Corps responsibility.  Defenders of 404(c) will note that this “mighty authority” is rarely used.  Although true, it misses the point that the effects of 404(c) are, in fact, regularly felt by the regulated community.  The ability to say “no” gives EPA significant leverage – behind the scenes -- in the permitting process. 

Query whether we would have a better, and more effective, Section 404 permitting process if all of the authority and responsibility for permitting were vested in a single agency – either the Corps or EPA.

Whither WOTUS?

Posted on July 18, 2016 by Rick Glick

In June 2015, the Environmental Protection Agency and the Army Corps of Engineers released a rule to define “waters of the United States,” affectionately referred to as WOTUS.  This definition goes to the scope of federal jurisdiction over wetlands and other waters that are not obviously free flowing and navigable.  An in-depth analysis of the rule can be found here

The rule hasn’t exactly played to rave reviews.  It attracted over one million comments.  Many complained the rule represents gross government overreach.  Others criticize the rule for not being protective enough.  The rule is also the subject of multiple challenges around the country, some filed before the rule was officially released.  The lead case is now pending before the United States Court of Appeals for the Sixth Circuit.  The Court of Appeals accepted original jurisdiction over a challenge to the rule based, in part, on the failure of the rule’s “distance limitations” to comport with good science, and on the inconsistency of the final rule with the proposed rule.  The Court of Appeals thought enough of petitioners’ arguments that it stayed implementation of the new rule.

On this first anniversary of the rule, we thought a brief summary of the controversies surrounding the rule and current status might be helpful.  The attached article, newly published in The Water Report, attempts to do just that.  Many thanks to Diego Atencio, a third year law student at the University of Oregon and a summer associate at DWT, for his assistance in writing the article.

Does the Clean Water Act Cover Discharges To Or Through Groundwater?

Posted on June 15, 2016 by David Buente

An issue that has recently come to the forefront of Clean Water Act (“CWA”) jurisprudence in numerous district courts across the country and which is currently before the Ninth Circuit is whether the discharge of pollutants into groundwater which is hydrologically connected to a surface water is regulated under the CWA.  The CWA prohibits discharges from point sources to navigable waters, defined as “waters of the United States,” unless they are in compliance with another provision of the Act, such as the National Pollutant Discharge Elimination System (“NPDES”) permitting program.  Whether discharges to groundwater hydrologically connected to a surface water body fall under this prohibition is a question with far-reaching consequences for facilities as varied as coal ash basins, slurry pits, retention ponds, and hydraulic fracturing wastewater ponds, all of which could theoretically be deemed to be in violation of the CWA under this hydrological-connection theory if they leak into groundwater at all.

As a preliminary matter, there is no question that isolated groundwater itself is not a water of the United States regulated under the CWA.  First, multiple courts, including several circuit courts of appeals, have held that groundwater is not “waters of the United States.”  Second, the legislative history surrounding the CWA indicates clearly that Congress considered setting standards for groundwater or explicitly including it in the NPDES permitting program and decided against such an approach.  Finally, in the rule, now stayed by the Sixth Circuit, which EPA and the Army Corps of Engineers promulgated last year defining the term “waters of the United States,” the agencies explicitly stated that they had “never interpreted” groundwater “to be a ‘water of the United States’ under the CWA.”  80 Fed. Reg. 37073

The hydrological connection issue is not a new one; both the Seventh Circuit in 1994 and the Fifth Circuit in 2001 determined that discharges to groundwater which is hydrologically connected to waters of the United States are not regulated under the CWA or the Oil Pollution Act (“OPA”) (courts have typically interpreted the term “navigable waters” to have the same meaning under both acts).  In the past few years, however, the frequency of opinions on this topic has increased, and district courts have been very much split on this issue.  Some courts and commentators have dubbed this theory of regulation the “conduit theory,” with the idea being that the groundwater serves as a conduit between the point source and the water of the United States. 

Three district courts have recently rejected the conduit theory.  In 2014, in Cape Fear River Watch, Inc. v. Duke Energy Progress, Inc., the Eastern District of North Carolina confronted the issue of whether seepage from coal ash basins at one of the defendant’s power plants, alleged to contain contaminants and to carry those contaminants through groundwater into a lake, was a discharge prohibited by the CWA.  The court emphatically held that “Congress did not intend for the CWA to extend federal regulatory authority over groundwater, regardless of whether that groundwater is eventually or somehow ‘hydrologically connected’ to navigable surface waters.”  As justifications for its holding, it cited the CWA’s dearth of language actually referring to groundwater, its legislative history, and the 2006 Supreme Court case on the meaning of waters of the United States, Rapanos v. United States, in which the plurality opinion and Justice Kennedy’s concurrence appeared to reflect a limited construction of the term.  The following year, in 2015, the District of Maryland came to a similar conclusion in Chevron U.S.A., Inc. v. Apex Oil Co., Inc.  The court held that “even if it is hydrologically connected to a body of ‘navigable water,’” groundwater is not regulated under the OPA, also citing the language of the CWA, its legislative history, and Rapanos.  Likewise, in 2013, in Tri-Realty Co. v. Ursinus College, the Eastern District of Pennsylvania concluded that “Congress did not intend either the CWA or the OPA to extend federal regulatory authority over groundwater, regardless of whether that groundwater is eventually or somehow ‘hydrologically connected’ to navigable surface waters.”

Other recent district court opinions, however, have come to the opposite conclusion.  In 2014, in Hawai’i Wildlife Fund v. County of Maui, the District of Hawaii confronted the issue of whether the County would need a NPDES permit to discharge waste into underground injection wells when plaintiffs contended that some of the injected wastewater eventually finds its way to the Pacific Ocean.  The district court concluded that “liability arises even if the groundwater…is not itself protected by the Clean Water Act, as long as the groundwater is a conduit through which pollutants are reaching navigable-in-fact water.”  The district court also cited Rapanos in support of its argument.  That case is now before the Ninth Circuit on appeal, and the Department of Justice recently filed an amicus brief supporting the argument that there is CWA jurisdiction where pollutants move through groundwater to jurisdictional surface waters if there is a “direct hydrological connection” between the groundwater and surface waters.  Likewise, in 2015, in Yadkin Riverkeeper v. Duke Energy Carolinas, LLC, the Middle District of North Carolina held that it had jurisdiction over claims where “pollutants travel from a point source to navigable waters through hydrologically connected groundwater serving as a conduit between the point source and the navigable waters.”  That court based its determination in part on the idea that taking an expansive view of the types of discharges which the CWA prohibits is most in line with the statute’s purpose.  A few weeks later in Sierra Club v. Virginia Electric and Power Co., the Eastern District of Virginia, citing Yadkin Riverkeeper, held that a CWA citizen suit against Dominion Virginia Power using the conduit theory should survive a motion to dismiss.

The line of cases rejecting CWA jurisdiction over discharges to groundwater which is hydrologically connected to surface waters of the United States gets it right.  As the legislative history proves, Congress considered regulating discharges to groundwater and rejected such an approach.  This decision is reflected in the language of the statute.  Moreover, in Rapanos, the Supreme Court restricted the factual scenarios under which a wetland could be considered a water of the United States, thus revealing that a majority of the justices on the Court favored a narrower jurisdictional reach under the CWA.  Finally, to accept the “conduit theory” would be to write the “point source” requirement out of the statute.  As described above, a discharge must come from a point source, which the CWA defines as a “discernible, confined and discrete conveyance.”  Groundwater seepage seems to be about as far from a “discernible, confined and discrete” source as it gets, resembling nonpoint source pollution like stormwater runoff.

Following the Yellow Brick Road…

Posted on June 2, 2016 by LeAnne Burnett

The Pacific Legal Foundation (PLF) fairly boasts that it lived up to its tag line “Rescuing Liberty from Coast to Coast” by following its 2012 Supreme Court victory in Sackett v. EPA with its May 31, 2016 victory in United States Corps of Engineers v. Hawkes Co., Inc.  In both Clean Water Act cases the PLF represented the property owners on appeal, arguing that the particular agency action was final, subject to judicial review.  The Supreme Court agreed both times.  Some boasting is due. 

The particulars of each case flow from disputes about the scope of “navigable waters” under the Clean Water Act.  Neither case resolved the merits issue.  Both cases considered only whether the dispute may be brought to court by challenging a pre-enforcement agency action. 

The Sacketts filled in a half acre of their 2/3-acre residential lot near Priest Lake, Idaho with dirt and rock in preparation for building a home.  EPA served a compliance order advising the Sacketts that they violated the Clean Water Act by filling in waters of the United States without a Section 404 dredge and fill permit.  The Order unilaterally prevented further construction and required the Sacketts to remove the fill material then restore the wetland pursuant to an EPA Restoration Work Plan. 

The Sacketts tried to challenge EPA’s order, but were told by EPA, then by the District Court, that they had no right to challenge the order until EPA attempted to enforce it.  The Ninth Circuit Court of Appeals affirmed, setting the Sacketts squarely on the horns of their dilemma.  Disregarding the unilateral compliance order subjected the Sacketts to potential fines of up to $75,000 per day.   Complying with the order meant spending hundreds of thousands of dollars to carry out the EPA’s Restoration Work Plan, and never getting to build on their property. 

The U.S. Supreme Court granted cert, and Justice Scalia, authoring the decision concluded that the compliance order met the Bennett two-prong test for reviewability:  (1) no adequate remedy other than review under the Administrative Procedures Act, and (2) no statute, in this case the Clean Water Act, precluded that review.  Justice Alito, concurring, declared:  “The position taken in this case by the Federal Government -- a position that the Court now squarely rejects -- would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees.” And later:  “In a nation that values due process, not to mention private property, such treatment is unthinkable.”    

The Hawkes case, four years later, is the same song, second verse.  This time the U.S. Army Corps of Engineers (USACE) issued the offending decision -- a jurisdictional determination (JD) that waters of the United States existed on 530 acres from which Hawkes Co., Inc. (Hawkes) and its affiliated companies planned to mine for peat.  Hawkes provides peat for golf courses and sports fields, and mining peat on the 530 acres would extend the life of its peat mining business by ten to fifteen years.  The USACE concluded that the property was connected by a “relatively permanent water” (a series of culverts and unnamed streams) that flowed into the Middle River and then into the Red River of the North, a “traditional navigable waterway” about 120 miles away.  With the USACE determination, Hawkes needed a permit to harvest peat.  Moreover, USACE advised that before it issued a permit, it would require additional hydrological and functional resource assessments and an evaluation of upstream potential impacts, the cost of which would exceed $100,000.

Using an analysis, discussed in my colleague’s post Sending a Message on WOTUS, the Court concluded that a JD satisfied both prongs of Bennett, and affirmed the Eighth Circuit, remanding the Hawkes companies to District Court of Minnesota - Minneapolis with the right to litigate the jurisdictional determination, same as the Sacketts.  When the Supreme Court ruled favorably on their case the Sacketts were remanded to the Idaho District Court, where their court battle continues.  Presumably, the battle will continue with the Hawkes’ companies as well. 

At the heart of each battle is whether or not the property actually contains “Waters of the United States.”  Following the procedural “yellow brick road” won’t get anyone out of Oz -- not until a clear definition of waters of the United States emerges.