Waters of the U.S. Rule Will Significantly Expand Federal Authority

The U.S. Army Corps of Engineers (Corps) and the U.S. Environmental Protection Agency (EPA) issued a final rulemaking on Jan. 18, 2023, revising the definition of "Waters of the United States" (WOTUS) within the Corps¹ and EPA² regulations, pursuant to the Clean Water Act (CWA), 33 U.S.C. § 1251 et seq (the WOTUS Rule).³

As indicated in previous Holland & Knight alerts, the WOTUS Rule is the culmination of a long-anticipated rulemaking process to define the geographic reach of the agencies' authority in regulating streams, wetlands and other water bodies under the CWA. (See Holland & Knight's previous alerts, "Biden Administration Begins Process of Revising Waters of the U.S. Rule," Aug. 6, 2021, and "Proposed 'Waters of the U.S.' Rule Would Reduce Scope of Clean Water Act Jurisdiction," Dec. 20, 2018.) The WOTUS Rule replaces the Trump Administration's 2020 Navigable Waters Protection Rule (NWPR),⁴ which was one of the most controversial rulemakings of the Trump Administration's environmental regulations and was viewed by the Biden Administration as a significant reduction in clean water protections.

On the other hand, the NWPR was embraced by the regulatory community as providing regulatory clarity and a welcome check on agency overreach. In 2021, the NWPR was set aside after numerous court challenges, and a request to remand and vacate the NWPR was made in several courts. In contrast, the newly issued WOTUS Rule is a sweeping expansion of federal jurisdiction that will allow the federal agencies to regulate virtually any wetland or stream. It also requires a complex analysis that may make landowners simply concede jurisdiction.

Summary

According to the preamble to the WOTUS Rule, in "developing this rule, the agencies considered the text of the relevant provisions of the Clean Water Act and the statute as a whole, the scientific record, relevant Supreme Court case law, and the agencies' experience and technical expertise after more than 45 years of implementing the longstanding pre-2015 regulations defining 'waters of the United States.'" 88 Fed. Reg. at 3004. In effect, the WOTUS Rule reanimates a prior rulemaking attempt by the Obama Administration that had also been set aside during a change in administration (i.e., replaced by the NWPR), and as compared to the NWPR, the WOTUS Rule significantly expands the scope of wetlands and streams that are regulated under the CWA.

The WOTUS Rule relies on the standards set forth in the U.S. Supreme Court's decision in Rapanos v. United States, 547 U.S. 715 (2006) (Rapanos). The agencies had two different standards to choose from – the "significant nexus" standard expounded on by Justice Anthony Kennedy's concurring opinion in Rapanos, and the "relatively permanent" standard as set forth in the Rapanos plurality opinion. Interestingly, the WOTUS Rule chose to regulate based on both standards. As described in the preamble, the "significant nexus standard refers to the test to identify waters that, either alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity of traditional navigable waters, the territorial seas, or interstate waters," which are "traditionally navigable waters" identified in the text of the CWA. 88 Fed. Reg. at 3006. However, the WOTUS Rule appears to ignore the fact that the Supreme Court is presently considering the "significant nexus" standard in a fully argued case. Sackett v. EPA, No. 21–454.⁵ Thus, it remains to be seen if the WOTUS Rule will have any resiliency. If, as expected, the Supreme Court strikes the "significant nexus" standard, it will be back to the drawing board on the important question of the scope of federal authority over wetlands and streams. Indeed, the same day the rule was published in the Federal Register, it was challenged by the State of Texas and several trade groups in the U.S. District Court for the Southern District of Texas.

Regulatory History Prior to the 2023 WOTUS Rule

In 1975, the Corps issued regulations defining WOTUS to include not only actually navigable waters, but also tributaries of such waters, interstate waters and their tributaries, non-navigable intrastate waters whose use or misuse could affect interstate commerce, as well as freshwater wetlands "adjacent" to other jurisdictional waters.⁶ The term "wetlands" is separately defined as "those areas that are inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions."⁷ Hence, once it has been determined that a wetland is present (due to the three parameters of soil, vegetation and hydrology), the next step is to determine if it is jurisdictional by being "adjacent" to another regulated water. The WOTUS Rule provides the test for adjacency as well as for whether a stream is connected to a traditionally navigable water.

There have been numerous attempts by the court to address the definition of WOTUS. In United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985), the Supreme Court held that a definition of "Waters of the United States" encompassing all wetlands adjacent to other bodies of water over which the Corps has jurisdiction is a permissible interpretation of the Act. In Riverside Bayview, the court upheld jurisdiction over wetlands immediately adjacent to and "inseparably bound up" with Lake Michigan in order to meet the broad goals of the CWA to "restore and maintain the chemical, physical and biological integrity of the Nation's waters." 474 U.S. at 134-35. Since Riverside Bayview, there have been numerous attempts to further define which wetlands are "adjacent" to navigable waters, with Rapanos being the most recent (and Sackett pending).

The Rapanos opinion was a split decision that left some room for debate. The "relatively permanent" test set out by Justice Antonin Scalia for the plurality requires a permanent hydrologic connection to traditionally navigable waters, thereby excluding channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall. In order for an "adjacent" wetland to be considered jurisdictional under this test, it must have a continuous surface connection with the navigable water, making it difficult to determine where the "water" ends and the "wetland begins." Hence, the Scalia opinion provides that only those relatively permanent, standing or continuously flowing bodies of water "forming geographic features" that are described in ordinary parlance as "streams, oceans, rivers and lakes" qualify as Waters of the United States that are subject to regulation under the CWA. Rapanos at 739. Scalia's opinion specifically excludes from CWA jurisdiction "channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall." Rapanos at 739.

On the other hand, the test set out by Justice Kennedy, in concurrence, does not require such a permanent hydrologic connection. Rather, Justice Kennedy would require a finding that a wetland possesses a "significant nexus" necessary for restoring and maintaining the chemical, physical and biological integrity of navigable waters. Id. at 732. Under Kennedy's significant nexus test, the parameter is "if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as 'navigable.'" Rapanos at 780.

As explained in the preamble to the WOTUS Rule, for the first decade following the Rapanos decision, the agencies relied on guidance and interpretation of the 1986 regulations, which held that "jurisdiction exists if a water meets either the relatively permanent standard or the significant nexus standard." 88 Fed. Reg. at 3014.

In 2020, the Trump Administration set aside an Obama Administration rule that never became effective because it was issued at the very end of that administration and was ultimately replaced with the NWPR. The NWPR relied exclusively on the "relatively permanent" standard, requiring a connection between wetlands and traditionally navigable waters. The NWPR also allowed the agencies to assert jurisdiction over perennial and intermittent tributaries but not those that are "ephemeral."⁸ The NWPR included a list of "non-jurisdictional" waters that are specifically excluded from the definition of WOTUS and stated that all waters not specifically identified as "jurisdictional" are not jurisdictional.⁹ It was embraced by landowners for providing relative ease of application and for reducing federal burdens.

The NWPR was being actively litigated when Joe Biden won the 2020 presidential election. Rather than defend the NWPR, the U.S. Department of Justice (DOJ) requested a voluntary remand in order to propose a replacement. When initially announcing the intent to revise the rule on June 9, 2021, EPA Administrator Michael Regan stated that the agencies determined that the NWPR definition put in place by the Trump Administration "is leading to significant environmental degradation."

The 2023 WOTUS Rule

The preamble to the WOTUS Rule attempts to argue that the NWPR was inconsistent with the CWA, arguing primarily that the "NWPR did not appropriately acknowledge or take account of the effects of a changing climate on the chemical, physical, and biological integrity of the nation's waters," and that the exclusions were too broad. 88 Fed. Reg. at 3015-18. But, acknowledging that there were two opinions in Rapanos, the WOTUS Rule allows the agencies to assert jurisdiction over waters that meet either the "significant nexus" or the "relatively permanent" standard. 88 Fed. Reg. at 3020.

Specifically, the WOTUS Rule defines "waters of the United States" to include the following:

1. traditional navigable waters, the territorial seas, and interstate waters (i.e., paragraph (a)(1) waters)
2. impoundments of "waters of the United States" (i.e., paragraph (a)(2) impoundments)
3. "tributaries" to traditional navigable waters, the territorial seas, interstate waters, or paragraph (a)(2) impoundments when the tributaries meet either the relatively permanent standard or the significant nexus standard (i.e., jurisdictional tributaries)
4. wetlands "adjacent" to paragraph (a)(1) waters; wetlands adjacent to and with a continuous surface connection to relatively permanent paragraph (a)(2) impoundments or jurisdictional tributaries when the jurisdictional tributaries meet the relatively permanent standard; and wetlands adjacent to paragraph (a)(2) impoundments or jurisdictional tributaries when the wetlands meet the significant nexus standard (i.e., jurisdictional adjacent wetlands)
5. intrastate lakes and ponds, streams or wetlands not identified in paragraphs (a)(1) through (4) that meet either the relatively permanent standard or the significant nexus standard (i.e., paragraph (a)(5) waters)

40 C.F.R. § 120.2(a)(1)-(5)

There are also numerous definitions that further describe these five categories of waters.

The WOTUS Rule sets forth what would be considered the "significant nexus" standard for "tributaries," "adjacent"¹⁰ wetlands and "streams" as waters that "either alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity of waters identified in paragraph (a)(1)." 40 C.F.R. § 120.2(a)(3)(ii); 120.2(a)(4)(iii); 120.2(a)(5)(ii). Building on that definition, a "significant affect" is defined as meaning "a material influence on the chemical, physical, or biological integrity of" the (a)(1) "traditionally navigable waters." 40 C.F.R. § 120.2(c)(6).

Functions and Factors Under the Significant Nexus Standard

To determine whether waters, "either alone or in combination with similarly situated waters in the region, have a material influence on the chemical, physical, or biological integrity of" the traditionally navigable waters, the WOTUS Rule requires consideration of a wide array of "functions" such as: "contribution of flow; trapping, transformation, filtering, and transport of materials (including nutrients, sediment, and other pollutants); retention and attenuation of floodwaters and runoff; modulation of temperature; provision of habitat and food for aquatic species located in traditionally navigable waters"; as well as "factors" such as distance from a navigable water, frequency, duration, magnitude, timing and rate of hydrologic connections, including shallow subsurface flow, size, density or number of waters that have been determined to be similarly situated, landscape position and climatological variables such as temperature, rainfall and snowpack.¹¹

As indicated in the preamble, this mind-numbing number of criteria to consider is based on a 2015 "Science Report"¹² from the Obama Administration that is frequently cited for the theory that all waters are connected. See 88 Fed. Reg. at 3006-07. For example, the preamble states that "in identifying wetlands, the agencies will ordinarily consider all wetlands within a wetland mosaic collectively." 88 Fed. Reg. at 3093. Thus, a wetland can be "adjacent" by virtue of its relationship to other wetlands in the mosaic as opposed to actual proximity, because the agencies consider the area a "single ecological unit." Id. The agencies will also look for a "shallow subsurface hydrologic connection," such as sharing an aquifer even where a surface connection is not present. Id. If the wetland in question is separated from the navigable water by more than a single man-made barrier, the agencies will then look for a significant nexus. 88 Fed. Reg. at 3094. "For example, if a wetland is divided by a road, a culvert could maintain a hydrologic connection. The agencies may also consider if a subsurface hydrologic connection is maintained, using indicators such as hydric soils, the permeability of the artificial structure, and/or the permeability of the soils below the artificial structure." This could render the traditional test of "adjacency" meaningless. What was once seen as "isolated" wetlands may not be so clear if a groundwater connection can be found.¹³

WOTUS Rule Exclusions

The WOTUS Rule specifically excludes the following specific categories of waters:

1. waste treatment systems
2. prior converted cropland designated by the secretary of agriculture (subject to a "change of use" reversion)
3. ditches (including roadside ditches) excavated wholly in and draining only dry land and that do not carry a relatively permanent flow of water
4. artificially irrigated areas that would revert to dry land if the irrigation ceased
5. artificial lakes or ponds created by excavating or diking dry land to collect and retain water and that are used exclusively for such purposes as stock watering, irrigation, settling basins or rice growing
6. artificial reflecting or swimming pools or other small ornamental bodies of water created by excavating or diking dry land to retain water for primarily aesthetic reasons
7. water-filled depressions created in dry land incidental to construction activity and pits excavated in dry land for the purpose of obtaining fill, sand or gravel (subject to a "abandonment" reversion)
8. swales and erosional features (e.g., gullies, small washes) characterized by low volume, infrequent or short-duration flow

40 C.F.R. § 120.2(b)(1)-(8)

This list of exclusions is much shorter than the NWPR and has clauses that allow the agencies to recapture jurisdiction under certain circumstances. For example, when assessing the jurisdictional status of a ditch, the agencies will evaluate the entire reach of the ditch to determine if it has relatively permanent flow, consistent with the reach approach for tributaries. 88 Fed. Reg. at 3113. Moreover, tidally influenced ditches are jurisdictional because they are "subject to the ebb and flow of the tide." 88 Fed. Reg. at 3104.

Landowner Burden Under the WOTUS Rule

Section IV.C.10 of the preamble provides "additional guidance to landowners on jurisdictional determinations." 88 Fed. Reg. at 3130-35. While providing certain "steps" a landowner can take to determine if a jurisdictional water is present or a permit is required, the "guidance" mostly parrots back the definitions under the WOTUS Rule and sets forth the process to obtain a jurisdictional determination and a permit. Clearly, a sophisticated consulting firm will be required to work through issues such as the significant nexus test. As recognized in the preamble, the NWPR placed the burden on the agencies to determine if a water was subject to their jurisdiction. 88 Fed. Reg. at 3061. Now, the WOTUS Rule suggests that the landowners also bear the burden to evaluate the scope of jurisdiction, with few bright lines. 88 Fed. Reg. at 3089. This is especially true when asking for an exclusion or an exemption. 88 Fed. Reg. at 3105.¹⁴ Needless to say, this is a significant change to require a private individual to prove that the water is not under federal jurisdiction, rather than relying on the government to prove that it is regulated.

Conclusion

The 2023 WOTUS Rule represents a substantial expansion of jurisdiction over streams and wetlands. The "significant nexus" test is a consultant's dream – requiring consideration of multiple "functions" and "factors" with no clear guidance from the agency. Hopefully, at the very least, a comprehensive guidance will be following (as followed Rapanos). But, that may be cold comfort to landowners who are likely faced with high costs, delays and the inevitability of jurisdiction. Yet, the Supreme Court looms in the rearview mirror. Although the administration appears unconcerned by the pending outcome in Sackett, that decision could mean that the WOTUS Rule is short-lived. It came as no surprise that the rule was challenged on the day it was published in the Federal Register. Unfortunately, this means more uncertainty for the present time.

Notes

1 33 C.F.R. Part 328 (2022).

2 40 C.F.R. Part 120 (2022).

3 88 Fed. Reg. 3004-3144 (Jan. 18, 2023) (the "WOTUS Rule").

4 The Navigable Waters Protection Rule: Definition of "Waters of the United States" 85 Fed. Reg. 22250 (April 21, 2020).

5 The preamble only mentions Sackett once and does not address the potential significance if the Supreme Court strikes the "significant nexus" standard. 

6 40 Fed. Reg. 31320 33 CFR § 323.2(c) (1978).

7 33 C.F.R. § 328.3(c)(4) (1982).

8 The term "intermittent" means continuous flow during certain times of the year and more than in direct response to precipitation (e.g., seasonally when the groundwater table is elevated or when snowpack melts). 33 C.F.R. §328.3(c)(5)(2020). The term "ephemeral" means "surface water flowing or pooling only in direct response to precipitation (e.g., rain or snow fall)." 33 C.F.R. §328.3(c)(3)(2020). The central distinction between regulated "perennial," "intermittent" and non-jurisdictional "ephemeral" waters appears to be whether or not there is predictable, continuous surface flow occurring in the same geographic feature year after year. 85 Fed. Reg. 22275.

9 33 C.F.R. § 328.3(b)(1)-(12)(2020).

10 Adjacent means bordering, contiguous or neighboring. Wetlands separated from other waters of the United States by man-made dikes or barriers, natural river berms, beach dunes and the like are "adjacent wetlands." 40 C.F.R. § 120.2(c)(2).

11 40 C.F.R. § 120.2(6)(i) "functions" and 40 C.F.R. § 120.2(c)(6)(ii) "factors." 

12 EPA Office of Research and Development, "Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence."

13 While the agencies acknowledge that groundwater is not covered under the CWA, they assert that a groundwater connection can maintain jurisdiction over separated waters. 88 Fed. Reg. at 3015.

14 "While the requestor is not required to provide information regarding applicability of the exclusions to the agencies during the jurisdictional determination process, it is to their benefit to do so because the person asserting that a water is excluded or that a person's activities are exempt under the Clean Water Act bears the burden of proving that the exclusion or exemption applies." 88 Fed. Reg. at 3015.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.