Would you consider this a “Water of the United States” subject to the Clean Water Act?

Well think again, because under a new rule, even a dry streambed or channel could be considered a “Water of the U.S.” and thus subject to the Clean Water Act.  This broad definition could have a significant impact on many different industries including real estate, construction, manufacturing, mining, energy, agriculture and others.

The good news is that the Sixth Circuit issued a nationwide stay of this rule that was poised to broadly increase the government’s jurisdiction and regulation of waters and wetlands.  The stay will likely remain in place during the pendency of the Sixth Circuit lawsuit, which is currently mired in a battle over jurisdiction.

Background

On May 27, 2015, the Environmental Protection Agency and the U.S. Army Corps of Engineers released a final rule broadly defining “waters of the United States.” This is a crucial term because it determines which waters are governed by the Clean Water Act, and thus subject to the Act’s permitting requirements. This new definition encompasses many non-navigable waters and tributaries that flow only occasionally. If allowed to take effect, this defining rule will significantly impact numerous industries by increasing permitting requirements, resulting in greater expense and delays.

Tributaries

One major issue with the new rule is its definition of “tributaries,” which are automatically “waters of the United States,” i.e., jurisdictional waters, under the rule.  “Tributaries” are defined as any landscape feature with a bed, bank, and ordinary high water mark that contributes flow directly or indirectly to a navigable water, interstate water, or territorial sea.  Whether the origin of the water is natural, man-altered, or manmade does not matter.  It likewise does not matter if there are natural or manmade breaks, such as bridges, pipes, or boulder fields, so long as the bed, bank, and high water mark can be identified upstream from the break.  This means that ditches and land that are dry most of the year could be interpreted to meet the definition of tributary and be subject to the Clean Water Act.

Other Waters and the Significant Nexus Test

Under the new rule, waters that are not per se jurisdictional are considered “other waters” and will undergo a case-by-case analysis to determine whether they qualify as a “water of the United States.”  Such “other waters” may be regulated if the water itself, or when combined with other similarly situated waters in the region, has a “significant nexus” to traditional navigable waters, interstate waters, or territorial seas.  “Significant nexus” is defined to mean that the water “significantly affects the chemical, physical or biological integrity of” a traditional navigable water, interstate water, or territorial sea.  This vague test will likely expand federal jurisdiction and make it difficult to anticipate which “other waters” will be subject to the Clean Water Act.

In the permitting context, the “significant nexus” test will likely result in additional time and expense.  The onus is on the permit applicant to show that a water is non-jurisdictional.  To satisfy this burden under the “significant nexus” test, an applicant will need to, among other things, (1) identify the nearest navigable waters, interstate waters, and territorial seas; (2) identify other potentially “similarly situated” waters, which may not be located on the applicant’s property; (3) determine the size and function of the water and the “similarly situated” waters; and (4) hire a third party to conduct this work and prepare a detailed report.  Unfortunately, landowners are left with little guidance to determine precisely what constitutes a “significant nexus,” making it difficult and expensive to comply with the rule as a practical matter.

Litigation Challenging the Rule

The rule originally went into effect on August 28, 2015, and has been challenged in lawsuits across the country.  In August 2015, the North Dakota District Court stayed the enforcement of the rule in 13 states (Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming).  On October 9th, in a separate lawsuit filed in the Sixth

Circuit, the Court of Appeals concluded that the petitioners challenging the rule had demonstrated a substantial likelihood of success on the merits, and thus stayed the rule nationwide.1

Also at issue in the Sixth Circuit case is a procedural question of whether the appellate court has original jurisdiction to decide challenges to the rule or if such cases must first be brought in district court.  On February 22, 2016, the Court ruled, in a fractured opinion, that it has jurisdiction to proceed with the lawsuit.  However, on February 29th, petitioners filed a petition for rehearing en banc, requesting that the Court reconsider its decision on the jurisdictional issue.  The nationwide stay should continue to remain in effect while the petition for rehearing is pending.

This jurisdictional question is important not merely as a matter of procedure, but because the Court’s ruling on jurisdiction will effectively decide whether the nationwide stay remains in effect.  If the Sixth Circuit does not stray from its original decision that it has jurisdiction, the stay will remain in place.  If, on the other hand, the Court grants the petition for rehearing and ultimately concludes that is does not have jurisdiction, the stay will be lifted and the rule will immediately go into effect in all but the 13 states involved in the North Dakota litigation.

Given these numerous legal challenges, the future of the rule is unclear.  If the rule is struck down by the courts, it will be a victory for numerous industries.  If the legal challenges to the rule fail, these industries will be faced with expanded Clean Water Act jurisdiction and permitting requirements that will most likely drive up the time and cost of doing business.