California regulators approve broader wetland definition and new procedures in wake of federal rollback: for developers, what to expect next

In an Interpretive Statement released on April 12, EPA made clear it will not consider groundwater a conduit for pollutants to reach Waters of the United States (WOTUS) from a point source in evaluating discharge permit violations under the Clean Water Act (CWA). This statement came just three days before the close of the comment period for the EPA's proposed WOTUS Rule, which will require a direct hydrological surface connection between wetlands and navigable WOTUS for the CWA to apply.

Between these two rules, if there were ever a question about the EPA's current position on the "hydrological connection theory" for WOTUS, it's been answered.

As the EPA zigs, however, California is zagging. EPA may be finalizing more restrictive limits on the CWA's jurisdiction, but California's top water agency, the State Water Resources Control Board, has finalized a definition of "wetlands" that will maintain the broader status quo and may cover even more habitat in the state. In taking this step, California is saying it regards as irrelevant the ultimate outcome of the WOTUS debate, the EPA's position on enforcing discharge permits, and even the future US Supreme Court decision on these issues in Cty. Of Maui v. Hawaii Wildlife Fund, et al.

This new definition of wetlands was inspired by California's landmark "no-net-loss" Wetlands Policy, which, along with the State Board's new wetland delineation procedures governing dredged or fill materials, has been years in the making. Once fully promulgated, the definition of wetlands in California will expressly include saturated areas "caused by groundwater, or shallow surface water, or both" and a permit process will be required before the wetland may be disturbed or filled.

As we previously reported here, developers, builders, agriculture and private property owners should pay attention and understand how these new state regulations will affect future projects and existing property rights in California. The new regulations should take effect in approximately 12 months, so planning opportunities remain to obtain permits under the existing regime and to plan ahead for future project needs in 2020.

California's wetland definition

Under the new State Wetland Definition, an area is considered wetland if:

under normal circumstances, (1) the area has continuous or recurrent saturation of the upper substrate caused by groundwater, or shallow surface water, or both; (2) the duration of such saturation is sufficient to cause anaerobic conditions in the upper substrate; and (3) the area's vegetation is dominated by hydrophytes or the area lacks vegetation.

The definition is intended to protect wetlands in arid portions of the state, even if they lack wetlands vegetation, so long as there is enough standing water. This is far more expansive than the EPA's interpretation in its proposed WOTUS Rule. Under California's rule, developers in California looking to discharge dredged or fill material, even into wetlands isolated from surface water, will need to follow the State Board's procedures and submit the appropriate application.

Proposed "Waters of the United States" Rule

On February 14, 2019, EPA and the United States Army Corps of Engineers published for public comment a proposed rule defining the scope of federal waters regulated under the Clean Water Act. The proposal defines "adjacent wetlands" under the CWA as wetlands that abut or have a direct hydrological surface connection to other "waters of the United States" in a typical year. A "direct hydrologic surface connection" occurs as a result of inundation from a jurisdictional water to a wetland or via perennial or intermittent flow from a jurisdictional water.

Under the proposed rule, wetlands physically separated from other waters of the United States are not covered as "waters of the United States" or WOTUS. The public comment period for the proposed rule closed on April 15th. The text can be found here.

With the specific callout for a "surface connection," the proposed Rule will leave little room to argue connectivity by way of groundwater. To eliminate any doubt, the EPA's Interpretative Statement details the EPA's position that any pollution discharges into WOTUS through groundwater are categorically excluded from CWA regulation. The Statement concludes that "the best, if not the only, reading of the CWA is that Congress intentionally chose to exclude all releases of pollutants to groundwater from the NDPDES program, even where pollutants are conveyed to jurisdictional surface waters via groundwater." The Statement then goes on to present a detailed interpretation of the CWA's text, structure, legislative history, and judicial decisions believed to be "lacking in prior Agency statements on this issue."

The EPA's Statement and proposed WOTUS Rule, if implemented and promulgated as drafted, would exclude California wetlands that have connectivity to navigable waters or are impacted by way of pollutants traveling through groundwater. As described above, California's State Board aims to address that exclusion.

What to expect: procedures for discharges of dredged or fill material in California

The State Board also specified new and supplemental procedures for the submission, review and approval of applications for activities that could result in the discharge of dredged or fill material to any wetlands or waters of the state. A new "alternative analysis" and additional public comment time are built into the procedures, thus affording California Regional Water Quality Control Boards extended time to review applications and respond to public comments.

Developers should be aware that these new procedures, which will be implemented nine months from approval by the Office of Administrative Law (or in approximately one year), will add noticeable delay to the application and approval process. Because the procedures incorporate a combination of state and federal requirements, and in some instances may involve a case-by-case discussion with regional boards, the application and approval process may be lengthy and subject to uncertainty in the early months of its implementation. Developers should think carefully about and plan for this issue now, so that such procedures are considered in future development plans.