Legal Corner: Where, Oh Where, Will All the Wetlands Go?

By Stanley A. Millan & Elise M. Henry

The battle over how to define federal waters began in the early 1970s and continues today. As a result of changing policy and legal uncertainly, it is a challenge for anyone to determine what qualifies as a “water of the United States” (WOTUS). Whether an inland wetland is considered a WOTUS is the most challenging determination to make under federal guidance and regulations. Determining what is a tributary (generally considered a WOTUS) versus a ditch (generally not a WOTUS) is troublesome, too. The confusion began when Congress defined “navigable waters” broadly in 1972 in the Clean Water Act (CWA) as “waters of the United States.” They left the word “navigable” out, making a race horse a seahorse. If only Congress had spoken more clearly, we would have had a more consistent picture for wetlands destiny.

Is this Wetland a WOTUS?

The designation of wetlands is based on federal criteria of soils, vegetation, and water. Hydric, poorly drained soils are classified by the Natural Resources Conservation Service (NRCS). Hydrophilic vegetation designation is based on regional plant lists by the U.S. Army Corps of Engineers (COE). Hydrology designation is based upon site observation. All of these classifications are made under “normal circumstances,” not abnormal drought or flooding scenarios. To the near certain surprise of a layman, you don’t need to wear hip boots to find a wetland. They can be in your back yard, appearing just like dry land. An expert’s viewpoint is needed to determine whether a piece of land is in fact a wetland.

Once a piece of land is designated a wetland, the next question is whether the wetlands are federally regulated or not (states can always regulate wetlands under their police power. Feds are somewhat more limited by the Commerce Clause). The federal agencies (COE and Environmental Protection Agency (EPA)) began regulating wetlands that were “adjacent,” broadly meaning neighboring or bordering, to

traditional flowing waters. Then they categorically stretched adjacency to a wetland connected by a simple ditch, many miles distant from flowing waters. Then, after Supreme Court cases in 2006 (Rapanos, et al.), the agencies deemed wetlands, even those isolated from flowing waters, as regulated on a case-by-case basis if they had a speculative, “significant nexus” with flowing waters – hydrology, habitat, storm storage, pollutant trapping, etc.

President Obama’s WOTUS rule in 2015 supported the “significant nexus” view strongly. Litigation following the Obama rule created an imbroglio that split the nation into states where the WOTUS guidance that applied before the Obama rule became effective continued to stand, and states where the OBAMA rule applied.

A New Hope

In an effort to resolve the confusion surrounding WOTUS, President Donald Trump proposed a new rule in February 2019 to replace the Obama rule that negates the “significant nexus” test and reverts back to a pure adjacency test that requires a wetland to about a flowing water before regulation attaches (this is proposed step 2 in the rulemaking). This may or may not clear up the imbroglio.

The newest proposed rule would regulate the following waters as WOTUS: traditional navigable water, flowing tributaries, impoundments, and wetlands abutting these three waters. Excluded from regulation would be most ditches, most prior converted croplands, interstate waters that otherwise do not meet the traditional definition of navigable waters, isolated wetlands, ephemeral streams, etc.

The new proposed rule also affects the designation of wetlands that were converted to cropland prior to 1985 (prior converted cropland, or “PCC”). Under prior guidance, PCC was unregulated as long as the cropland was “farmed” at least once every five years. The new proposed rule expands the type of activity that is considered farming to include haying or pasturing. So large PCC areas that would have been considered abandoned and subject to regulation under the old policy may now be available for development without a 404 permit under the CWA.

Other CWA Programs

Besides wetland jurisdiction, the new proposed WOTUS rule affects CWA jurisdiction over oil spills and end of the pipe discharges. If oil is spilled from a facility into a tributary lacking physical markings that would indicate it has flowing water (like beds, banks, and ordinary high water marks) or into a ditch, the regulatory status of which is difficult to determine, operators will become confused over reporting requirements for that spill. More certainty is still needed.

Red Tape Regulation and Regulatory Creep

The retraction of regulatory jurisdiction means federal deregulation of many wetlands. However, in reality, the agencies deny very few wetland permits, so, as a practical matter, they actually protect wetlands with red tape. Cease and desist orders, permits, public notices, comments, appeals, litigation, and finally expensive compensatory mitigation tie up developers, farmers, states, etc. when wetland regulations apply. Once caught up in the regulatory web, a host of coordination statutes apply too, such as the National Environmental Policy Act, Endangered Species Act, and National Historical Preservation Act. Then only the FAST Act for transportation projects or Executive Order 13766 for infrastructure projects can “fast track” select permits. However, regardless of relaxed WOTUS rules, rogue regulators can be expected to re-interpret rules to create jurisdictional creep whenever they can. And getting the Corps out of one’s hair does not eliminate state regulators, but they can be more friendly rivals than the Feds.

Meanwhile, the Trump Administration repealed the broad 2015 Obama WOTUS rule on Sept. 12, 2019 (a final step 1 in the rulemaking), while leaving intact 2008 agency guidance on “significant nexus” along with the earlier, narrower 1980 WOTUS rule. With the broad guidance, there may be no discernible difference between the resurrected 1980 rules and the Obama rule until a final replacement WOTUS rule is promulgated later this year. The saga continues.

Stanley Millan is special counsel and a member of the Litigation Practice Group of Jones Walker LLP. He divides his practice between transactional, compliance and dispute-resolution matters involving environmental issues and government contracts.

Elise Henry is an associate in the Litigation Practice Group of Jones Walker LLP, which provides counsel, advice and support to many of the world’s largest corporations, as well as to prominent local and regional companies. Henry focuses on environmental regulatory compliance and litigation.

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