On December 11, 2018, the Environmental Protection Agency (“EPA”) and the Department of the Army (together, “Agencies”) released their much-anticipated Notice of Proposed Rulemaking (“Proposed Rule”), which if adopted would scale back the jurisdictional reach of the Clean Water Act (“CWA”) by narrowing the definition of “Waters of the United States” (“WOTUS”) to include only those waters that are oceans, rivers, streams, lakes, ponds, and wetlands, and their “naturally occurring surface water channels.” The practical implications of the Proposed Rule for hydropower project owners and energy project developers are that ephemeral streams and many ponds and ditches used in agricultural, industrial, and construction activities would no longer be within the jurisdictional reach of the CWA, alleviating the requirement for and uncertainty surrounding permitting requirements and related mitigation measures.

In 2015, the Obama Administration’s EPA promulgated an expansive new definition of WOTUS (“2015 Rule”), which significantly increased the jurisdictional reach of waters afforded CWA protection from the prior rule, adopted in 1986. The 2015 Rule was estimated to envelop nearly 60 percent of the nation’s waterbodies as it provided coverage for waterways and wetlands that had a “significant nexus” to traditionally jurisdictional waters. This reasoning followed Justice Kennedy’s plurality opinion in Rapanos v. United States (“Rapanos”).

The new Proposed Rule will still provide coverage for traditionally navigable waters, meaning those waters that could be traveled by boat either naturally or with improvement. However, the Proposed Rule adopts the reasoning of the late Justice Antonin Scalia’s plurality opinion in Rapanos, which described the reach of the CWA as limited to those waters with a “continuous surface connection” with a traditional navigable water that makes it “difficult to determine where the ‘water’ ends.” Based on Scalia’s plurality in Rapanos, the Proposed Rule describes narrowly defined categories of connected surface waters and explains how, if adopted, the jurisdictional status of the CWA will be affected for each category:

• Impoundments: The Proposed Rule does not change the current reach of the CWA concerning impoundments. A break in a traditionally navigable water for a dam or hydropower project will not automatically transform this waterway into a non-jurisdictional body. • Interstate Waters: The 2015 Rule interpreted WOTUS as including waterbodies that span state lines. The Proposed Rule provides that the interstate nature of a waterbody will not automatically provide for the classification of that water as WOTUS. Instead, interstate waters must qualify as “navigable waters” or possesses the requisite surface connection under the Proposed Rule to be considered WOTUS. • Tributaries: Under the Proposed Rule, tributaries remain a category of jurisdictional waters subject to the CWA, but are redefined to mean a “river, stream, or similar naturally occurring surface water channel that contributes perennial or intermittent flow to a traditional navigable water or territorial sea in a typical year either directly or indirectly through other jurisdictional waters, such as other tributaries, impoundments, and adjacent wetlands or through water features . . . so long as those water features convey perennial or intermittent flow downstream.” The Proposed Rule is seeking comment on whether only perennial features should be covered by the CWA or if intermittent flows should also be afforded coverage. • Lakes and Ponds: The Proposed Rule announces that certain lakes and ponds will continue to be considered WOTUS; however, the proposal replaces Justice Kennedy’s case-by-case Rapanos assessment of “significant nexus” to analyze the relationship between, for example, a particular lake or pond with downstream waters. Instead, the Proposed Rule identifies a category of certain lakes and ponds due to their contribution of perennial or intermittent flow to navigable waters, including: (i) traditionally navigable waters, and (ii) lakes and ponds “that can contribute flow to [a traditionally navigable water] either directly or through a tributary, jurisdictional ditch, another jurisdictional lake or pond, an impoundment, an adjacent wetland, or through a combination of these waters.” • Wetlands: The Agencies are not proposing under the Proposed Rule to change the definition of “Wetlands”; the Proposed Rule seeks to refine, however, the reach of jurisdictional wetlands. Under the Proposed Rule, jurisdictional wetlands will only be those wetlands that are adjacent to “traditional navigable waters” or other WOTUS categories. Thus, wetlands that are adjacent to intermittent tributaries, for example, might be excluded from the definition of WOTUS, shrinking the number of wetlands that receive CWA treatment.

The Proposed Rule also announces eleven exclusions from the definition of WOTUS, including the following:

• Groundwater: The Proposed Rule excludes groundwater, including groundwater drained through a subsurface drainage system. • Artificially Irrigated Areas: The Proposed Rule excludes areas that are artificially irrigated primarily for agriculture, including fields flooded for rice or cranberry growing, that would revert to upland if irrigation of that area were to cease. • Stormwater Control Features and Diffuse Stormwater Runoff: The Proposed Rule excludes “stormwater control features excavated or constructed in upland [a defined term] to convey, treat, infiltrate, or store stormwater run-off” as well as “diffuse stormwater run-off such as directional sheet flow over upland.” • Ditches: The Agencies propose to define “Ditches” as “artificial channels used to convey water.” Jurisdictional ditches are channels that are traditionally navigable, constructed in a tributary, constructed in a jurisdictional wetland, or satisfy the definition of a tributary. Non-jurisdictional ditches are all other ditches. • Prior Converted Cropland: This category has been excluded from WOTUS since 1993 and would continue to be excluded by the Proposed Rule. • Artificial Lakes and Ponds: Unless otherwise covered by a WOTUS category or maintaining the necessary direct surface connection, artificial lakes and ponds constructed in upland are excluded by the Proposed Rule. • Water-Filled Depressions: The Proposed Rule excludes water-filled depressions created in upland and “incidental to mining or construction activity, and pits excavated in upland for the purpose of obtaining fill, sand, or gravel.” • Wastewater Recycling Structures: The Proposed Rule would exclude wastewater recycling structures constructed in upland. • Waste Treatment Systems: Waste treatment systems have been excluded from the WOTUS definition since 1979, and they would continue to be excluded under the Proposed Rule; however, waste treatment systems are now expressly defined for the first time in the Proposed Rule. Waste treatment systems include all components of the system, “including lagoons and treatment ponds (such as settling or cooling ponds), designed to convey or retain, concentrate, settle, reduce, or remove pollutants, either actively or passively, from wastewater prior to discharge (or eliminating any such discharge).”