There are a handful of legal and regulatory issues on the horizon in 2015 that are worth watching. Some of these issues, like the U.S. Environmental Protection Agency’s (EPA’s) Cooling Water Rule and the U.S. Army Corps of Engineers’ and EPA’s Clean Water Act jurisdictional rule, have been around for a while and new chapters are due to unfold. Others, like the Financial Capability Assessment for Municipal Clean Water Act, are new this year. Each of these has the potential to produce significant effects on the regulated community.

Finalization of Clean Water Act Jurisdiction Rule

In April of 2014, EPA and the Corps of Engineers issued a draft rule seeking to clarify the scope of what qualifies as a water of the United States and is subject to Clean Water Act (CWA) permitting. The draft rule’s critics, and there are many, believe the draft rule goes too far in extending the reach of CWA jurisdiction. EPA has given a target date of April 2015 to finalize the rule.

In the agencies’ estimate of changes between the current Rapanos guidance and the new rule, they found the following:

  • 98 percent of streams are currently jurisdictional – under the new rule, it’s 100 percent.
  • 98.5 percent of wetlands are currently jurisdictional – under the new rule it’s 100 percent.
  • 0 percent of other waters are currently jurisdictional – under new rule, it’s 17 percent.

The biggest controversy exists over the category “other water” as a result of changes in the new rule from adjacent “wetlands” to adjacent “waters” and accompanying definitions of “floodplains” and “riparian areas.” Within these areas, waters and wetlands are considered to have a significant nexus to navigable waters and will be jurisdictional.

Senator John Barasso has announced that he will introduce legislation to try and block the rule from being finalized. In the house, a bill (HR 5940) has already been introduced that aims to block the rule from becoming final. If these bills pass, President Obama’s willingness to use his veto power will be tested. If the rule is finalized, it will certainly draw litigation as several industry and agricultural groups have indicated their willingness to challenge the rule for being an overreach under the CWA.

Water Transfer Rule

EPA’s Water Transfers Rule, first promulgated in 2008, will be the subject of a 2nd Circuit ruling in 2015 that could have far-reaching effects on transfers of water from one body of water to another. The Water Transfers Rule exempts simple water transfers that have no intervening industrial or agricultural components from one water body to another, from the National Pollutant Discharge Elimination System (NPDES) permitting requirements of the CWA. If such transfers do require permits, then many water supply projects that move water from one river to another could be required to obtain NPDES permits.

A New York federal district court judge held last spring that the rule was unlawful because EPA had not provided a reasoned explanation for the Water Transfers Rule and remanded the rule to EPA for further review. Specifically, the court did not find that EPA had satisfactorily explained how the rule was consistent with the environmental quality provision of the CWA. EPA appealed to the 2nd Circuit and briefing is underway, with oral arguments expected in the spring.

Court: Manure is “Discarded Material” Posing “Imminent and Substantial Endangerment” to the Environment

On January 14, 2015, Judge Thomas Rice of the U.S. District Court for the Eastern District of Washington issued an order granting partial summary judgment in an action under the Resource Conservation and Recovery Act (RCRA). The judge ruled:

Plaintiffs have demonstrated that no reasonable trier of fact, upon reviewing the record here, could dispute that Defendants’ excessive application of manure onto agricultural fields, untethered to the DNMP or the fertilization needs of the crops; and storage and composting of manure in ways that result in dangerous accumulations of nitrate in the environment, transformed its manure, an otherwise beneficial and useful product, into a discarded material and thus a RCRA solid waste.

Order at p. 96

The judge further found that the “discarded material” posed an “imminent and substantial endangerment” to the environment and to people who might drink the water.

Plaintiffs commenced the RCRA lawsuit in February 2013, based on allegations that defendants’ manure management practices constitute open dumping of solid waste and cause an imminent and substantial danger to public health and the environment through elevated levels of nitrates in underground drinking water. Plaintiffs allege that manure is improperly managed and stored, and over-applied to agricultural fields. In March 2013, the EPA exercised its regulatory power under the Safe Drinking Water Act (SDWA) and entered an administrative order on consent with defendants to address nitrates found in groundwater.

Trial on the remaining issues has been scheduled for March 23 in Yakima, Wash.

Financial Capability Assessment Framework for Municipal Clean Water Act Requirements

On November 24, 2014, the EPA released its new Financial Capability Assessment Framework for Municipal Clean Water Act Requirements. The adoption of the new framework, two years in the making, included participation and comment from the National Association of Clean Water Agencies (NACWA) and the U.S. Conference of Mayors.

The key elements of EPA’s approach will be applied to implementation schedules in permits and enforcement actions. In addition to incorporation of the Combined Sewer Overflows: Guidance for Financial Capability Assessment and Schedule Development (FCA Guidance) (EPA 832-B-97-004), the framework includes the following key elements:

  1. A continuum of financial capability
  2. Consideration of all CWA costs
  3. Consideration of SDWA obligations as additional information about a permittee’s financial capability
  4. An opportunity for communities to demonstrate how the CWA work included as costs in the financial capability assessment will be implemented

The new framework is a departure from reliance on a benchmark of 2 percent of median household income (MHI) for wastewater and combined sewer overflows (CSO) and is expected to better address the balance required between clean water mandates and affordability for municipalities.

Safe Drinking Water Act

EPA announced in 2014 that it expects to publish a draft of the fourth drinking water contaminant candidate list (CCL-4) in early 2015. CCL-4 is a long-awaited list of microbial and chemical contaminants that are known or anticipated to occur in public water systems, but that are not subject to any proposed or promulgated national primary drinking water regulations. The nomination period for proposed contaminants ended on June 22, 2012. EPA advised that it will provide a 60-day public comment period on the proposed CCL-4 and that CCL-4 may require future regulation under the Safe Drinking Water Act.

EPA and Stormwater in 2015

EPA’s 2014-2016 National Enforcement Initiative lists the reduction of stormwater pollution as the agency’s first initiative (along with keeping raw sewage out of the nation’s waters). Although EPA abandoned its national post-construction stormwater rulemaking in 2014, the agency will continue its efforts to manage and control stormwater discharges through municipal separate storm sewer system permits (MS4 permits) in 2015.

To that end, the agency recently revised its guidance on establishing Total Maximum Daily Load (TMDL) Waste Load Allocations (WLAs) for stormwater sources and NPDES permit requirements based on those WLAs. Under this latest guidance, EPA will no longer use flow as a surrogate for pollutants in discharge limits. The agency will focus on numeric pollution standards for receiving waters (designed in large part to quantify the success of best management practices) rather than effluents limits that would apply directly to the stormwater discharges. It remains to be seen, however, how the agency and the states issuing NPDES permits will incorporate the new guidance into permit conditions.

Cooling Water Intake Rule

EPA issued the final Cooling Water Intake Rule in August of 2014.

The rule, which is required under Section 316(B) of the Clean Water Act, is focused on reducing fish mortality from impingent and entrainment at water intake structures. Environmental groups have pressed for mandatory closed-cycle cooling and nationally applicable standards. The rule allows for more site-specific flexibility to meet the impingent and entrainment reduction goals, but each project will have to go through the process on a case-by-case fact-specific basis. As the rule will affect approximately 1,200 electric utilities and large manufacturing sites, the potential costs of compliance are very high.

Industry groups and environmental groups are both challenging the rule as being either too strict or too lax, depending upon the perspective of the plaintiff. These cases have been consolidated into one case, Cooling Water Intake Structure Coalition v. EPA, which is being heard in the 2nd Circuit Court of Appeals.

Industry groups estimate that the rule as drafted will cost hundreds of millions of dollars in existing plant improvements.

Power Plant Effluent Limitation Guidelines

For the first time in 33 years, EPA expects to issue in September 2015 new and updated effluent limitation guidelines (ELGs) for wastewater discharges from power plants. These guidelines will focus on the discharge of toxic metals, including mercury, selenium and zinc from approximately 1,200 facilities. EPA estimates that the cost of compliance could be as high as $954 million with virtually all sectors of the economy bearing some portion of that price tag. Unless the current proposal is strengthened, environmental groups will likely challenge the ELGs. Upset by what they viewed as relaxation of the standards in the original proposal, environmental groups filed two suits last summer under the Freedom of Information Act, seeking both technical data claimed to be confidential and information on meetings held by the Office of Management and Budget that resulted in changes to the proposed guidelines. When finalized, the ELGs could have an impact on the regulation of coal ash ponds and landfills under EPA’s recently issued coal combustion residuals rule to the extent that discharges from those units are classified as point sources.