Yesterday, the State Water Board adopted stringent new permit requirements for development projects in California that may impact wetlands or other surface waters. These new requirements have been in the works for a decade, but the Trump administration’s proposed rollback of federal wetland laws provided the impetus for adoption this year. Continue reading →
An executive order signed by President Donald Trump in February may have major large impact on the way that wetlands are regulated at the federal level. The executive order rescinds a Clean Water Rule put in place during the Obama administration. To find out how this change could impact wetland regulation at both the federal level and in California, GlobeSt.com sat down with Scott Birkey, partner at Cox, Castle & Nicholson, for an exclusive interview.
GlobeSt.com: How has the Trump administration affected wetland regulations on a federal level?
Scott Birkey: This story is still being written, but the new administration started setting the stage last February when Trump issued an Executive Order asking the two federal agencies that regulate wetlands on the federal level, the Army Corps of Engineers and the Environmental Protection Agency, to review and essentially rescind the Clean Water Rule established during the Obama administration. By many accounts, the Rule expands the scope of those agencies’ permitting jurisdiction over wet features, even those features that arguably wouldn’t be considered wetlands in any normal sense of the word. The real turning point in this saga is yet to come, but we have a pretty good idea of what it will look like. The Order includes a seemingly innocuous paragraph that could trigger sweeping changes in the way wetlands will be regulated at the federal level. It requires the agencies to interpret the phrase “navigable waters” consistent with the views of Justice Scalia, who relied on Webster’s dictionary to conclude “waters” are “relatively permanent, standing, or continuously flowing bodies of water.” Compared to the Clean Water Rule and all other prior iterations of the wetland regulations, this view reflects a significant restraint on the agencies’ wetlands permitting authority.
GlobeSt.com: How might this affect the Obama administration’s Clean Water Rule?
Birkey: The wheels are already in motion to jettison and replace the Obama-era Clean Water Rule with regulations that would significantly restrain the federal government’s scope of permitting authority over the fill of wetlands. What’s somewhat ironic is that the Clean Water Rule emerged to help clarify, at least ostensibly, the confusion created by a string of well-known wetland regulation cases decided by the Supreme Court. As a practical matter, I doubt that Scalia’s more commonsensical approach to defining “waters,”—which in turn establishes the sideboards for the agencies’ jurisdictional reach—will itself be that easy to implement, regulate, or enforce. We’re sure to see more litigation over this wordplay. This all may sound inane, but the fact is that tagging the phrases “navigable waters” or “waters of the United States” to wet features on a piece of property proposed for development can saddle that project with permitting hurdles that could result in significant time delays and costs.
GlobeSt.com: What does this mean for wetland regulations in California?
Birkey: I and others have written elsewhere that the guiding principle here is nature abhors a vacuum. What we’re likely to see is the state becoming more emboldened to fill regulatory gaps created by the new federal administration’s pullback from regulating wetlands. This is almost a certainty, given that the state has been working for over a decade on a set of wetland regulations that would specifically apply to those wetlands that are not classified as federal “waters of the United States” subject to permitting authority under the Clean Water Act. The State Water Resources Control Board issued a preliminary draft of the regulations in July 2017. The Board anticipates approving the regulations by winter 2017, which under normal circumstances is fairly aggressive in light of the controversy the regulations have generated, but because of the federal pullback from wetland regulations, that timeframe could be an almost certainty. Put simply, this federal pullback likely will result in a state pushback, where California acts more aggressively to ensure the wetlands left behind after Trump’s re-write of the wetland regulations will be regulated by the state.
GlobeSt.com: Can we expect another layer of regulatory oversight in the state?
Birkey: Absolutely, and that’s really the point of the state’s new wetland regulations. To be fair, the state previously has had the ability to regulate wetlands deemed “waters of the state.” But the state’s new wetland regulations will create a permitting mechanism almost identical to the federal permitting regime, mirroring the relatively onerous and time-consuming protocols currently used by the Corps to process wetland fill permits. So, for example, we can expect to see the state requiring applicants to justify their project is the “least environmentally damaging practicable alternative,” or “LEDPA,” an almost magical, albeit clunky, formulation that’s needed before a wetland fill application can be approved. The process to reach this determination requires significant documentation and environmental analysis, including a boundary delineation of the wetlands, an assessment of off-site and on-site alternatives to the proposed project, a review of the project’s other environmental impacts, and a description of compensatory mitigation to offset the project’s impacts. This level of processing and documentation is a sea change from what we’re used to seeing in the state. And so, from that perspective, the new regulations are effectively another layer of regulatory oversight in the state.
GlobeSt.com: How will this regulatory change affect developers with ongoing projects, and what do developers need to know?
Birkey: The draft regulations include a placeholder for their effective date, and so we don’t know yet when they’ll apply. For developers with projects proposing wetland fills after the effective date—get ready! You’ll see a new and heightened level of state agency scrutiny bringing with it increased compliance costs and time delays. Those of us familiar with the Corps’ permitting process know how onerous it can be to obtain a Section 404 permit—think wetland delineations, application forms, environmental review compliance, alternatives analyses, mitigation proposals. Imagine a nearly identical process at the state level. Another troublesome aspect is that it’s not yet clear how the new regulations will apply to projects that are also subject to the federal wetland permitting process. For some projects, there could be an inefficient duplication of agency efforts where, to give an extreme example, an applicant may be required to produce two alternatives analyses—one for the federal permitting effort and another for the state. This example and others I could give suggest we’re likely to see analysis inconsistencies and agency confusion as the new regulations roll out. Not helpful for a state still struggling to meet housing and other construction demands.
The Trump administration has been busy chipping away at Obama-era regulations. As of July 2017, Donald Trump has issued over forty Executive Orders and dozens of Presidential Memoranda and Proclamations. The intent of many of these is to remove regulatory burdens on developers, the agriculture industry, and business more generally. One of Trump’s primary targets has been environmental regulations, and wetland regulations in particular have been in the crosshairs. Trump has followed through on a campaign promise to revisit – with an eye toward rescinding – the Obama administration’s Clean Water Rule. That federal pullback from wetland regulations may have unintended consequences in California, which is on the cusp of promulgating new wetland regulations of its own.
From their very inception, federal wetland regulations promulgated pursuant to the Clean Water Act have been a target of controversy and consternation. No one on either side of the spectrum has been happy, and standing in the middle of this regulatory angst are the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers, the two agencies tasked with regulating the fill of wetlands for development pursuant to the Clean Water Act. As with most controversial regulations, the wetland regulations evolved over the years, swinging like a pendulum from protective to not-as-protective, as a result of litigation brought by environmentalists and industry interests.
But the real twists and turns of this saga have been punctuated by sporadic pronouncements by the U.S. Supreme Court.
The Court’s most recent decision on wetland regulations came in the form of a fractured opinion in which no majority view emerged. That case, Rapanos v. United States, involved a challenge to the Corps’ determination that a permit was required to fill wetlands slated for development of a mall. The landowner argued that the Corps was overreaching and had no jurisdiction over his wetlands because they were not “waters of the United States,” a term of art that once applied to a wetland gives EPA and the Corps the ability to exercise their permitting authority. The U.S. Supreme Court gave us little to no unifying guidance on what constitutes “waters of the United States.” Of crucial importance now, however, is the plurality opinion authored by the late Justice Antonin Scalia. Citing Webster’s New International Dictionary: Second Edition, Justice Scalia adopted a literal approach to the definition of “waters of the United States,” and declared that the agencies’ jurisdiction under the Clean Water Act includes only relatively permanent waters and wetlands with a continuous surface connection to relatively permanent waters.
In the wake of Rapanos, EPA and the Corps provided some informal guidance to landowners and developers on how the agencies would apply the Rapanos decision. The Clean Water Rule adopted by EPA and the Corps in 2015 emerged from this guidance and from efforts by the agencies to evaluate proposed definitions of “waters of the United States.” The Rule was controversial from the beginning, and it quickly became enmeshed in litigation because of its (both real and perceived) expansion of the agencies’ jurisdiction. The Rule soon became a political target as the 2016 election year got into full swing. Trump fully embraced the issue, and said on the campaign trail in May 2016 that “we’re going to rescind all the job-destroying Obama executive actions including . . . the Waters of the U.S. rule.”
That promise was fulfilled on June 27, 2017. In response to an Executive Order issued by Trump earlier this year, EPA and the Corps formally announced the proposed rescission of the Clean Water Rule and re-codification of the regulations that existed prior to the Rule. According to the Federal Register Notice announcing the rescission, the agencies intend to follow this action with formal rulemaking to “conduct a substantive re-evaluation of the definition of ‘waters of the United States.’” Thus far, no hard-and-fast timeline has been offered for when that proposed “re-evaluation” will be available.
We may not know when it will be available, but we have a good idea of what it will look like. Trump’s Executive Order previewed the substance of the new definition. The Order makes it clear: the agencies must take into consideration Justice Scalia’s opinion in the Rapanos case. This means it is likely the new definition will focus on more literal interpretations of “waters,” which in turn means a much more narrow view of EPA’s and the Corps’ scope of jurisdiction under the Clean Water Act.
In short, the new rule likely will reflect a significant federal pullback on regulating wetlands.
What does this mean for wetland regulations in California? This question is particularly relevant now because a federal pullback on wetlands regulations is sure to contribute to a perfect storm of events currently unfolding in Sacramento.
For over a decade, the State Water Resources Control Board has been working on a wetland protection and regulation policy to address some of the uncertainty created at the federal level by the U.S. Supreme Court. Rapanos and other Court decisions, most notably Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, or “SWANCC,” created “gaps” in the overall regulation of wetlands by establishing the bright line rule that intrastate, non-navigable, and isolated waters are not “waters of the United States” subject to EPA’s and the Corps’ jurisdiction. Instead, these waters are considered “waters of the State of California,” or simply “waters of the State,” and they are subject to a separate permitting regime established by the State’s Porter-Cologne Water Quality Control Act.
The State Board’s draft wetland policy – recently renamed the State Wetland Definition and Procedures for Discharges of Dredged or Fill Materials to Waters of the State – is a quantum leap in the Board’s wetlands permitting and regulation regime. As its title suggests, the policy proposes a formal definition of “wetlands,” which is not currently defined or applied with any consistency across the natural resource statutes in California. In addition, the policy proposes a permitting process that mimics the onerous, costly, and time consuming process used by the Corps for authorizing wetland fill under the Clean Water Act.
A 2016 draft of the policy received numerous comments objecting to the State Board’s proposed definition of wetlands and permitting process. Notably, the U.S. Army Corps of Engineers raised serious objections to the State Board’s putative authority to issue the policy, citing federal preemption and issues related to the policy’s consistency with its own wetland permitting program under the Clean Water Act. Other commenters raised issues related to the definition of wetlands being too vague, arbitrary, and irrationally expansive, and the process for permitting wetland fills as being too cumbersome and costly.
The State Board responded to these comments and issued a revised draft of the policy on July 21, 2017. Unfortunately, many of the issues raised by the commenters remain unresolved. The Board’s timeline for final approval of the policy is aggressive, particularly given what will likely be a controversial and highly charged approval process. According to its website, the policy is expected to be adopted by the Board sometime “Winter 2017.”
What may motivate the State Board to meet this aggressive timeline, and to charge ahead with a policy many view as vague, onerous, and duplicative, is the federal wetland regulations pullback. In effect, the federal pullback may be responsible for a California pushback.
Nature abhors a vacuum. As the Trump administration narrows the federal government’s ability to regulate wetlands, the State Board may use its new wetland policy to fill the regulatory void that will be created. It can be dangerous to prognosticate too much, but in light of California’s generally pro-environmental politics, one thing is virtually certain – the State will be emboldened to fill the “Trump Gap,” as some of us in the industry have been referring to it, as the federal government begins to pull back from wetland regulations. Somewhat ironically, in California we can expect yet another layer of regulatory oversight as a result of this federal pullback. Stay tuned.