By Jeryl L. OlsonPatrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis: Last week before his departure USEPA Administrator Pruitt notified the regulated community that he had directed the Agency to update regulations governing the Agency’s use of Section 404(c) veto power in permitting discharges of dredged or fill materials under Section 404 of the Clean Water Act.

The U.S. Environmental Protection Agency’s (USEPA) current regulations implementing Clean Water Act (CWA) section 404(c) allow the Agency to veto at any time during the permitting process a permit issued by the U.S. Army Corps of Engineers (USACE) under CWA section 404(a) that allows for the discharge of dredged or fill material at permitted sites.  USEPA has historically taken the position that it can preemptively veto a permit before, during or after a 404(a) application is filed or a permit is issued.

In a memorandum last week, USEPA Administrator E. Scott Pruitt directed the Office of Water to develop a proposed rulemaking that would end USEPA’s preemptory and retroactive 404(c) veto power. Administrator Pruitt said that it was his goal to refocus EPA “on its core mission of protecting public health and the environment in a way that is fair and consistent with due process.”  He continued that EPA “must ensure that EPA exercises its authority under the Clean Water Act in a careful, predictable, and prudent manner.”

Administrator Pruitt indicated that the “regulations were last revised nearly 40 years ago“ and “EPA’s regulations should reflect today’s permitting process and modern-day methods and protections, including the robust existing processes under the National Environmental Policy Act.”

Accordingly, the memo directs USEPA’s Office of Water to develop a proposed rulemaking that would consider the following changes:

  • Eliminating the USEPA authority to initiate the section 404(c) process before a USACE 404(a) permit application has been filed with the USACE or a state, otherwise known as the “preemptive veto.”
  • Eliminating the authority of USEPA to initiate the section 404(c) veto process after a USACE 404(a) permit has been issued by the USACE or a state, otherwise known as the “retroactive veto.”
  • Requiring a Regional Administrator to obtain approval from USEPA Headquarters before initiating the section 404(c) veto process over a USACE 404(a) permit.
  • Requiring a Regional Administrator to review and consider the findings of an Environmental Assessment or Environmental Impact Statement prepared by the USACE before preparing and publishing notice of a proposed determination.
  • Requiring USEPA to publish and seek public comment on a final USEPA determination before such a determination takes effect.

We have previously blogged on related wetlands topics, including Supreme Court to Decide if Army Corps Initial Jurisdictional Determination to Regulate Wetlands Under CWA is Ripe for Judicial Review, Sackett v. EPA: Supreme Court Decides Unanimously In Favor Of Landowners, and New Wetlands Definition.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Kay R. Bonza, and Craig B. Simonsen

EPA SignSeyfarth Synopsis: The EPA and Army Corps of Engineers have proposed to rescind the 2015 Clean Water Rule defining “Waters of the U.S.,” and recodify the pre-existing rule, then engage in a subsequent rulemaking to re-evaluate and revise the definition of WOTUS presumably intended to decrease in the number of water bodies subject to EPA permitting obligations.

The U.S. Environmental Protection Agency and the Army Corps of Engineers have published a proposed rule on the “Definition of “Waters of the United States” – Recodification of Pre-Existing Rules.”

We had previously blogged about the EPA’s monumental final rule, in June 2015, expanding the definition of “Waters of the United States” (WOTUS) under the Clean Water Act, thereby increasing the number of water bodies subject to protection by the EPA through permitting obligations. The final rule was based on EPA’s Science Advisory Board’s draft scientific report, “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence.” EPA/600/R-11/098B (September 2013).

In commenting on the proposed rule to rescind the WOTUS rule, EPA Administrator Scott Pruitt said, “we are taking significant action to return power to the states and provide regulatory certainty to our nation’s farmers and businesses …. This is the first step in the two-step process to redefine ‘waters of the U.S.’ and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public.”

The proposed rescission follows President Trump’s February 28, 2017, Executive Order on “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ Rule.”  The effect of the rescission would be to recodify the regulatory text that was in place prior to the 2015 Clean Water Rule and that is currently in place as a result of a U.S. Court of Appeals for the Sixth Circuit’s stay of the 2015 rule. Therefore, according to the EPA press release, this action, when final, “will not change current practice with respect to how the definition applies.”

EPA also notes that the agencies have begun deliberations and outreach on the second step of the rulemaking involving a reevaluation and revision of the definition of WOTUS in accordance with the Executive Order.

The regulated community — industry, municipalities, developers, builders, and a host of others — should watch and monitor this rulemaking effort closely.  While this initial step will recodify the pre-existing rule, the subsequent rulemaking to re-evaluate and revise the definition of WOTUS presumably is intended to reduce the number of regulated water bodies constituting “waters of the United States,” thereby decreasing permitting obligations, or subjecting fewer entities to permitting requirements as a result of a narrower definition of WOTUS.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Patrick D. Joyce, Jeryl L. Olson, and Craig B. Simonsen

Blog - Fracking WaterSeyfarth Synopsis: With significant objection from Industry, EPA has issued its Final Report on whether hydraulic fracturing activities can impact drinking water resources under certain circumstances.

The U.S. Environmental Protection Agency published its controversial final report on “Hydraulic Fracturing for Oil and Gas: Impacts from the Hydraulic Fracturing Water Cycle on Drinking Water Resources in the United States.” In the report, which has already been subject to great objection from Industry, EPA issued its finding that hydraulic fracturing (fracking) activities in the U.S. may have impacts on the water lifecycle, affecting drinking water resources. The Agency had put out a draft of the report for public comment in June 2015, which we blogged on at that time. 80 Fed. Reg. 32111.

The report was prepared at the request of Congress. Its purpose was to follow water resources used for fracking through the entire water cycle from water acquisition, to chemical mixing at the well pad site, to well injection of fracking fluids, to the collection of fracking wastewater (including flowback and produced water), and finally, to wastewater treatment and disposal. EPA claimed that the study “identified conditions under which impacts from hydraulic fracturing activities can be more frequent or severe.” The report also identified “data gaps [that] limited EPA’s ability to fully assess impacts to drinking water resources both locally and nationally.” The final conclusions were based on review of over 1,200 cited sources.

In response to EPA’s report, the American Petroleum Institute (API) blasted the EPA’s “abandonment of science in revising the conclusions to the Assessment Report….” API and the fracking industry requested changes to EPA’s Draft Report that EPA did not incorporate in the Final Report. As a result, API Upstream Director Erik Milito said, “the agency has walked away from nearly a thousand sources of information from published papers, technical reports and peer reviewed scientific reports demonstrating that industry practices, industry trends, and regulatory programs protect water resources at every step of the hydraulic fracturing process.”

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

US Supreme Court Capitol Hill Daytime Washington DCSeyfarth Synopsis: The Supreme Court decided that Army Corps’ jurisdictional determinations are judicially reviewable. This decision leaves open the question of whether other types of administrative decisions are immediately judicially reviewable.

In a significant victory for owners of private property, the Supreme Court of the United States (SCOTUS) decided this week that an Army Corps of Engineers (Corps) jurisdictional determination (JD) is a final agency action judicially reviewable under the Administrative Procedure Act (APA).  U.S. Army Corps of Engineers v. Hawkes Co., Inc., et al., No. 15-290, 578 U.S. ____ (May 31, 2016).

The issue presented was whether a so-called “approved” jurisdictional determination — the government’s determination that a wetland is regulated under the Clean Water Act (CWA) thereby requiring a permit to dredge or fill — is immediately reviewable. The Hawkes decision builds on the holding of Sackett v. EPA, 132 S. Ct. 1367 (2012) (see our earlier blog on the Sackett decision) where SCOTUS concluded that an EPA compliance order issued under the CWA requiring that a developer cease its filling activity of an allegedly regulated wetland was judicially reviewable. SCOTUS rejected the Government’s contention that the landowner has to await EPA’s judicial enforcement of that order.

Following Sackett, the Circuit Courts of Appeal have split as to whether a landowner receiving a JD finding the wetland to be CWA-regulated is final and reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiffs sought to mine peat from wetland property. The Corps upset that plan when it issued an approved JD that the property constituted “waters of the United States” (WOTUS), requiring the plaintiffs to obtain a permit to discharge dredged or fill materials into these “navigable waters.” Approved JDs present a definitive statement that waters of the United States are, or are not, present. The Corps also issues “preliminary” JDs that only tell a landowner that waters of the United States “may” be present. Preliminary JDs were not at issue in this case. An approved JD is binding upon the Corps and EPA. For example, where the JD concludes that a CWA-regulated wetland is not involved, it provides the landowner with a “safe-harbor” for five years, under which it is free to develop its property without need to obtain a permit. For this reason, SCOTUS concluded that the JD affects the plaintiffs’ rights and obligations and has legal consequences, making it reviewable.

This SCOTUS determination could have heightened importance in the context of the EPA’s and the Corps’ recent release of the Final Clean Water Rule: Definition of “Waters of the United States.” We blogged about this new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making a challenge to the Corps’ Jurisdictional Determinations more likely now that SCOTUS has decided that they are judicially reviewable.

The Hawkes decision also leaves open questions of whether other types of administrative decisions are immediately judicially reviewable. In a related Law360 Expert Analysis (Water Case Shows Justices Warm To Review Of Fed. Agencies), Andy Perellis notes that “there is potentially a universe of agency actions such as guidance documents or opinion letters that in the past have evaded judicial review that may be reviewable because those agency determinations have immediate consequences.”

Supreme CourtSeyfarth Partner Andrew H. Perellis is quoted in this Law360 expert analysis, High Court Water Case Could Put Target On Agencies’ Backs (March 29, 2016).

The pending Supreme Court case, U.S. Army Corps of Engineers v. Hawkes Co. Inc. et al., no. 15-290, involves what constitutes a final agency action reviewable under the Administrative Procedure Act. We had previously blogged about this appeal, and its relation to Sackett v. EPA, 132 S. Ct. 1367 (2012). See our earlier blog on the Sackett decision. The case pertains to whether a “jurisdictional determination” regarding a wetland regulated by section 404 of the Clean Water Act is immediately reviewable in court. It is a follow-up case to the Supreme Court’s 2012 Sackett decision holding at a compliance order issued under Section 404 is immediately reviewable.

The Law360 article notes that “landowners and the U.S. Army Corps of Engineers will square off Wednesday at the U.S. Supreme Court in a test of when exactly a party may challenge the Corps’ determination that it has jurisdiction over a wetland — a case that could open government agency decisions up to more challenges across the board.”

In the analysis, Perellis concludes that “one of the key considerations for the high court will be to what extent there are real, tangible consequences in terms of what the property owner can or cannot do with a property following the issuance of a jurisdictional determination.”

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

Supreme CourtThe Supreme Court of the United States (SCOTUS) agreed on Friday to review an important Clean Water Act (CWA) decision issued by the Eighth Circuit in Hawkes Co., Inc., et al. v. U.S. Army Corps of Engineers, No. 13-3067 (April 10, 2015).

The issue presented for SCOTUS is whether an Approved Jurisdictional Determination — the first step in the wetlands permitting process — is immediately reviewable. The Supreme Court showed similar interest in  Sackett v. EPA, 132 S. Ct. 1367 (2012). See our earlier blog on the Sackett decision.  At issue in Sackett was an EPA compliance order issued under the CWA requiring that the developer cease its filling activity of an allegedly regulated wetland. Later, rather than sooner, judicial review can leave the landowner open to considerable expenses.

In Sackett, SCOTUS found the compliance order to be reviewable once issued, so that the landowner did not have to await EPA’s judicial enforcement of that order. Following Sackett, the courts have split as to whether  an Approved Jurisdictional Determination is similarly reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiff sought to mine peat from wetland property. The U.S. Army Corps of Engineers (Corps) upset that business plan when it issued an Approved Jurisdictional Determination that the property constituted “waters of the United States” (WOTUS), and therefore the company was  required to obtain a permit to discharge dredged or fill materials into these “navigable waters.”

Review of the Approved Jurisdictional Determination was brought before the District Court. The District Court concluded that an Approved Jurisdictional Determination, although the consummation of the Corps’ decisionmaking process, was not a “final agency action” subject to judicial review within the meaning of the Administrative Procedure Act, 5 U.S.C. § 704. While the appeal of that decision was pending before the Eighth Circuit, a panel of the Fifth Circuit reached a similar conclusion. Belle Co., LLC v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), cert. denied, 83 U.S.L.W. 3291 (U.S. Mar. 23, 2015) (No. 14-493).

The Eighth Circuit concluded that the District Court (as well as the Fifth Circuit in Belle) “misapplied the Supreme Court’s decision in Sackett v. EPA, 132 S. Ct. 1367 (2012),” and reversed the District Court opinion.

The SCOTUS determination could have heightened importance in the context of the EPA and the Corps recent release of its Final Clean Water Rule: Definition of “Waters of the United States.” We had blogged about the new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making challenges to the Corps’ Approved Jurisdictional Determinations more likely if SCOTUS determines that such a determination is judicially reviewable.

By Patrick D. Joyce and Craig B. Simonsen

Blog - Fracking WaterThe U.S. Environmental Protection Agency released a draft assessment study last week showing that hydraulic fracturing (“fracking”) activities in the U.S. may have potential impacts on the water lifecycle, affecting drinking water resources. 80 Fed. Reg. 32111 (June 5, 2015).

The report, Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources (External Review Draft), prepared at the request of Congress, follows the water used for fracking through the entire water cycle from water acquisition, to chemical mixing at the well pad site, to well injection of fracking fluids, to the collection of fracking wastewater (including flowback and produced water), and finally, to wastewater treatment and disposal. Dr. Thomas A. Burke, EPA’s Science Advisor and Deputy Assistant Administrator of EPA’s Office of Research and Development, noted that “EPA’s draft assessment will give state regulators, tribes and local communities and industry around the country a critical resource to identify how best to protect public health and their drinking water resources.”

While EPA’s study, which included over 950 sources of information, found specific instances where well integrity and waste water management related to fracking activities directly impacted drinking water resources, the number of instances found were “small compared to the large number of hydraulically fractured wells across the country.”

The study identified specific vulnerabilities to drinking water resources including:

  • Water withdrawals in areas with low water availability;
  • Fracking conducted directly into formations containing drinking water resources;
  • Inadequately cased or cemented wells resulting in below ground migration of gases and liquids;
  • Inadequately treated wastewater discharged into drinking water resources; and
  • Spills of fracking fluids and fracking wastewater, including flowback and produced water.

The study noted that while there were few instances of drinking water contamination cause by fracking, this may be due to a lack of pre- and post-fracturing data on water quality and the inaccessibility of some information on fracking activities.

The draft study will be finalized after review by the Science Advisory Board and public review and comment. Public teleconferences are scheduled on the draft report, on September 30, 2015, October 1, 2015, and October 19, 2015. Public face-to-face meetings will be held on October 28, 2015, October 29, 2015, and October 30, 2015.

Public written statements for the teleconferences or for the face-to-face meetings should be received by the EPA Docket,  No. EPA–HQ–OA–2015–0245, by August 28, 2015.

By Jeryl L. Olson, Andrew H. Perellis and Patrick D. Joyce

The EPA and Army Corps of Engineers recently released its Final Clean Water Rule: Definition of “Waters of the United States.”

We had previously blogged about the Agency’s draft of the proposed rule that was distributed in November, 2013 as well as a “clarification” of the proposed rule distributed in March, 2014.

EPA claims that the Final Rule does not create any new or different regulatory requirements and is only a “definitional rule” that clarifies the scope of the “waters of the United States” under the Clean Water Act in light of the U.S. Supreme Court cases in U.S. v. Riverside Bayview Homes, 474 U.S. 121 (1985), Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (SWANCC), 531 U.S. 159 (2001), and Rapanos v. United States (Rapanos), 547 U.S. 715 (2006).  Many commentators and experienced environmental practitioners, however, believe that the rule expands federal jurisdiction.  Challenges to the rule are expected, and the courts will have another say in determining the extent to which federal jurisdiction can extend to “waters,” including wetlands and ephemeral streams that are isolated, or otherwise not directly adjacent to what is considered to be a traditional navigable water or tributary to a traditional navigable water.

The Final Rule identifies three basic categories of jurisdictional waters (“the Big Three”) for which the scope of federal jurisdiction largely is not in dispute. These include:

  • Traditional navigable waters
  • Interstate waters
  • The territorial seas

Additionally, tributaries to the above, and wetlands adjacent to either tributaries or to the Big Three are considered to be regulated waters of the United States.

In addition, the Final Rule identifies a category of waters subject to case-specific analysis to determine whether they are jurisdictional.  The following six types of waters are jurisdictional if the satisfy the “significant nexus” test and therefore “significantly affect the chemical, physical, or biological integrity of traditional navigable waters, interstate waters, or the territorial seas in the region:”

  • Prairie potholes
  • Carolina and Delmarva bays
  • Pocosins
  • Western vernal pools in California
  • Texas coastal prairie wetlands
  • Waters within the 100-year flood plain and that are within 4,000 feet of the tide line or the ordinary high water mark of a traditional navigable water, interstate water, the territorial seas, impoundments, or covered tributary (“similarly situated waters”)

Finally, the Final Rule identifies the following waters that are specifically excluded from jurisdiction:

  • Waste treatment systems and wastewater recycling structures on dry land
  • Prior converted cropland
  • Ditches with ephemeral or intermittent flow that are not a relocated tributary or excavated in a tributary and ditches that do not flow into another water
  • Irrigated lands that revert to dry land
  • Artificial lakes such as stock watering ponds, irrigation ponds, settling basins, rice fields, log ponds, and cooling ponds and artificial reflecting pools or swimming pools on dry land
  • Depressions incidental to mining or construction that may become filled with water
  • Erosional features, including gullies, rills, and ephemeral features such as ephemeral streams that do not have a bed and banks and ordinary high water mark
  • Puddles
  • Groundwater
  • Stormwater control features constructed to convey, treat, or store stormwater on dry land

The final rule differs from the proposed rule in some respects, three of which are noted below.

First, the proposed rule defined “floodplain” and “riparian area” in very scientific terms.  The final rule abandons this approach.  Instead, EPA uses a 100-foot measure from the ordinary high water mark in lieu of the term “riparian area.” Also, instead of just using the term “floodplain,” EPA now defines adjacent waters as being a maximum of 1,500 feet from the jurisdictional water and within the FEMA 100-year floodplain.

Second, unlike the proposed rule, the scope of the case-by-case significant nexus analysis now has a geographic limit.  Under the final rule, to be potentially subject to regulation, the water must be within 4,000 feet of the ordinary high water mark of a tributary and within the FEMA 100-year floodplain.

Third, the final rule clarifies the scope of regulation over ditches.  As proposed, a ditch is somewhat more narrowly regulated, and is jurisdictional only where it is (1) an ephemeral or intermittent ditch excavated in a tributary or constructed in order to relocate a tributary or (2) an intermittent ditch that drains wetlands directly into another jurisdictional water.

The final rule is complex and the regulated community should seek legal advice in determining how the new rule may apply in particular situations.

By Patrick D. Joyce, Philip L. Comella, and William R. Schubert

The U.S. Environmental Protection Agency’s Office of Inspector General, in a February 5, 2014 memorandum, stated that it intends to evaluate how federal and state regulation of the hydraulic fracturing (fracking) industry has protected water resources and managed potential threats. “EPA’s Oversight of Hydraulic Fracturing Impact on Water Resources.”

Currently the states are the primary regulators of the fracking industry.  While the federal government has had limited involvement in fracking regulation, the EPA has been conducting impact studies on fracking for several years.

On a related note, the EPA just released its revised guidance for fracking activities that use diesel fuels.  79 Fed. Reg. 8451 (February 12, 2014). The Revised Guidance: Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels: Underground Injection Control Program Guidance #84 (EPA 816-R-14-001, February 2014), indicates the Agency’s position on how the Underground Injection Control “Class II” requirements, authorized under the Safe Drinking Water Act, should apply to fracking operations using diesel fuels. The Guidance is intended to be taken along-side of another concurrently issued memorandum, “Implementation of the Safe Drinking Water Act’s Existing Underground Injection Control Program Requirements for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels.”

In some states the use of diesel fuels in fracking operations is already heavily regulated – or prohibited altogether (see, e.g., § 245.870 of the draft Illinois regulations, which we previously blogged about). Because the Safe Drinking Water Act specifically excludes the injection of fluids or propping agents other than diesel fuels from regulation, the new EPA guidance will have little or no impact on the fracking activities in those states.

By Jeryl L. Olson, Philip L. Comella, and William R. Schubert

Over a year ago the Department of the Interior released a draft of a proposed rule governing hydraulic fracturing (fracking) on public lands.  We blogged about the details of that version of the proposal upon its unofficial release.

After withdrawing the original draft based on concerns of overregulation and potentially intrusive disclosure requirements, the Department of the Interior has drawn up a new plan.

Key Updates:

Key updates to this new version of the proposed rule include, in the Department’s words:

“(1) The use of an expanded set of cement evaluation tools to help ensure that usable water zones have been isolated and protected from contamination; and

(2) More detailed guidance on how trade secrets claims will be handled, modeled on the procedures promulgated by the State of Colorado.”

30-Day Public Comment Period:

The proposed rule was published in the Federal Register (78 Fed. Reg. 31636) on May 24, 2013, with a 30-day public comment period.