Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

Developers have cheered in recent years as the Supreme Court has tightened its standing rules. In a decision issued on Friday in National Association of Home Builders v. EPA, the Court of Appeals for the District of Columbia may have hoist the developers on their own petard. 

After EPA and the Army Corps of Engineers issued a determination that two reaches of the Santa Cruz River constitute “traditional navigable waters” under the Clean Water Act, the National Association of Home Builders sued. The complaint appears to have attached declarations referring to individuals who own property along tributaries of the two reaches, and who asserted that they are have applied for permits under the CWA. None of this was enough for the Court, which made four important points:

·         The NAHB itself did not have organizational standing. The Court made clear that an organization does not have standing unless it has credibly asserted that the challenged action “’perceptibly impaired’ a non-abstract interest.”

·         NAHB’s effort to assert representational standing for its members generally failed, because it contained no assertions linking this site-specific TNW determination to any broader impacts that would affect developers away from the Santa Cruz River.

·         NAHB’s effort to assert standing on behalf of owners in the vicinity of the Santa Cruz River failed because none of the declarations filed with the complaint alleged any harm specifically tied to the issuance of the TNW determination.

·         NAHB did not have “procedural standing” to challenge the agencies’ failure to provide notice and an opportunity to comment before issuing the TNW determination. Quoting from the Supreme Court decision in Summers v. Earth Island Institute, the Appeals Court stated that “deprivation of a procedural right without some concrete interest that is affected by the deprivation – a procedural right in vacuo – is insufficient to create Article III standing.” As the Court further noted, allegations of procedural violations may be relevant in assessing the redressability issue, but they cannot loosen the requirement that plaintiffs demonstrate that they have suffered a substantive injury traceable to the procedural violation.

The NABH decision appears plainly correct in light of Supreme Court standing jurisprudence. Moreover, it does not substantially narrow access to the courts. In fact, I think it provides a useful roadmap regarding the types of declarations that will be required to establish standing for developers. What it does make clear is that the courts are not simply discouraging environmental plaintiffs in their standing jurisprudence. Instead, the courts are discouraging each side equally – or at least requiring the same demonstrations from developers as well as environmentalists.

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I posted recently that EPA actually seems to be listening to comments from the regulated community and has changed course in some cases in response to those comments. The release by EPA and the Army Corps yesterday of their long-awaited revised guidance implementing the Supreme Court’s Rapanos decision confirms that EPA is in listening mode. Although I am not normally a fan, this new version seems an appropriate use of guidance.

First, it is not a unilateral effort to expand agency jurisdiction. Instead, it responds to the Supreme Court Rapanos decision. Given the lack of a majority decision, Rapanos certainly left both regulators and the regulated community scratching their heads. Moreover, although one of my concerns about guidance is that it can ossify, that is not the case here. The new guidance replaces EPA’s prior Rapanos guidance, issued in 2008.  EPA is entitled to conclude that the prior guidance did not accurately reflect the limits of CWA jurisdiction after Rapanos.

Significantly, in response to substantial pre-issuance pressure to shelve the guidance and instead pursue notice and comment rulemaking, EPA and the Corps have agreed both to take comment on this guidance and to undertake formal rulemaking. Thus, the guidance will serve only to clarify EPA’s and the Corps’ current interpretation pending issuance of a rule.                                                         

On the merits, the guidance seems to be a reasonable interpretation of Rapanos. Everyone knows that Justice Kennedy’s “significant nexus” test is not a model of clarity – that’s why guidance is appropriate. Regulated industries benefit from greater clarity – even if more wetlands will be found to be jurisdictional – because uncertainty imposes its own costs. While the American Farm Bureau Federation has already complained about the new guidance, I think we need to distinguish between complaints about the guidance per se and complaints which really go to the scope of the CWA itself. 

If the guidance itself is too long for you, EPA has provided a useful summary. The summary of the summary? The following waters are protected by the Clean Water Act:

• Traditional navigable waters
• Interstate waters
• Wetlands adjacent to either traditional navigable waters or interstate waters
• Non-navigable tributaries to traditional navigable waters that are relatively permanent, meaning they contain water at least seasonally
• Wetlands that directly abut relatively permanent waters

In addition, the following waters are protected by the Clean Water Act if a fact-specific analysis determines they have a "significant nexus" to a traditional navigable water or interstate water:

• Tributaries to traditional navigable waters or interstate waters
• Wetlands adjacent to jurisdictional tributaries to traditional navigable waters or interstate waters
• Waters that fall under the "other waters" category of the regulations. The guidance divides these waters into two categories, those that are physically proximate to other jurisdictional waters and those that are not, and discusses how each category should be evaluated.

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I’m beginning to feel like a broken record, but the drumbeat of the anti-guidance crowd is not letting up. Earlier this week, the Waters Advocacy Coalition, which is a group of farm and industry trade groups, sent a letter to EPA and the Army Corps of Engineers, requesting that EPA and the Corps withdraw their plan to issue further guidance on the interpretation of “navigable waters” post-Rapanos. It’s not surprising that this group would oppose the guidance. What is most interesting – and persuasive – about the letter, though, is this quote from the draft guidance itself:

the agencies expect that the number of waters found to be subject to the CWA jurisdiction will increase significantly compared to practices under the 2003 SWANCC guidance and the 2008 Rapanos guidance.

To me, it would seem a defining characteristic of guidance that it not alter the jurisdictional scope of laws and regulations. That’s what laws and regulations are for. Guidance, on the other hand, to the extent is does have a role, is to guide those affected by regulation, to assist them in their understanding of legal requirements – not to change the scope of those requirements. I think that, by inclusion of this sentence in the draft guidance, EPA and the Corps have made the strongest possible argument against issuing the guidance. 

Perhaps even more notable was the resolution passed last week by the Environmental Council of the States objecting to EPA’s use of interim guidance and rules. Specifically, the resolution states that

EPA should minimize the use of interim guidance, interim rules, draft policy and reinterpretation policy and eliminate the practice of directing its regional or national program managers to require compliance by states with the same in implementation of delegated programs.

EPA should not use its objection authority when based entirely or in part on interim guidance, interim rules, draft policy or reinterpretation policy.

ECOS, of course, is generally on EPA’s side of the fence. The resolution is powerful evidence that EPA’s use of guidance is not simply to facilitate understanding of applicable laws and regulations, but as a substitute for the regulatory process itself – as a way to impose new binding rules.

Taken together, the ECOS resolution and the text of the proposed revision to the post-Rapanos guidance make a compelling case that EPA’s use of guidance has strayed far from true guidance and is in fact often an end-run around the regulatory process.

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Last week, I discussed EPA’s efforts to “muddle through” on climate change in the absence of comprehensive legislation. This week, I think it’s the Clean Water Act’s turn. If there were any regulatory situation which required some serious muddling through at the moment, interpretation of the Supreme Court’s Rapanos decision almost is a match for the current climate mess. As most of my readers know, Rapanos was a 4-1-4 decision which left EPA, the Corps, developers and environmentalists fairly equally perplexed

Most stakeholders have assumed that Kennedy’s concurring opinion, requiring a “significant nexus” between wetlands and traditional navigable waters before those wetlands are subject to jurisdiction under the CWA, is the law of the land at this point. That is the approach adopted in the Rapanos Guidance issued by EPA and the Corps in 2007. 

A recent decision by the 4^th Circuit Court of Appeals, in Precon Development Corporation v. Army Corps of Engineers, illustrates just how muddled post-Rapanos interpretation has become. The decision in Precon – reversing the District Court – found that the Corps had not built a record sufficient to establish that the wetlands which Precon sought to develop were jurisdictional under the CWA. 

There were two technical issues in Precon. Precon lost what one might have thought would be the more significant issue – the Corps’ finding that, although only 4.8 acres were really at issue in this case, and Precon’s entire development includes 166 acres of wetlands, 448 acres of “similarly situated” wetlands would be examined for a substantial nexus to navigable waters. Precon ultimately won, however, because the Court concluded that the Corps’ record did not contain enough physical evidence to support its determination that a significant nexus exists between the 448 wetland acres and the downstream navigable water. 

The Court’s conclusion raised two issues of broad concern to stakeholders. First, the Court granted little deference to EPA’s conclusion on the significant nexus issue. The Corps argued that its conclusion that there was a significant nexus between the site wetlands and the downstream navigable waters was a factual conclusion. However, the Court concluded that the significant nexus determination was not factual. The Court stated that:

The question is instead whether the Corps’ findings were adequate to support the ultimate conclusion that a significant nexus exists. This legal determination is essentially now a matter of statutory construction, as Justice Kennedy established that a “significant nexus” is a statutory requirement for bringing wetlands adjacent to non-navigable tributaries within the CWA’s definition of “navigable waters.”

Well, this is certainly a nice question of administrative law. The significant nexus issue may now be the ultimate legal question. Nonetheless, I would guess that most wetlands scientists and hydrologists would say that this is largely a factual question. Even if the agency is applying its judgment to answer that question, it’s the type of judgment that requires technical expertise – expertise to which courts have traditionally deferred.

The second of the Court’s important pronouncements was that it would not give the EPA/Corps Rapanos Guidance deference under Chevron. Why not?

Because – although it could – the Corps has not adopted an interpretation of “navigable waters” that incorporates this concept through notice-and-comment rulemaking, but instead has interpreted the term only in a non-binding guidance document.”

Isn’t it timely, then, that EPA and the Corps sent a draft new Rapanos guidance to OMB in December, and GOP leadership in the House is proposing language in a continuing resolution that would preclude EPA from using any funds “to implement, administer, or enforce a change to a rule or guidance document pertaining to the definition of waters under the jurisdiction of the Federal Water Pollution Control Act (33 U.S.C. 1251).” Perhaps EPA and the Corps should take half a loaf. Why not agree to shelve the guidance and instead proceed with notice-and-comment rulemaking to clarify Rapanos? At least then the Courts might grant EPA and the Corps more deference in implementation.  It’s already been almost five years since Rapanos was issued. EPA and the Corps can hardly argue that it’s necessary to go the guidance route because they don’t have the time to proceed through the full regulatory process.

Enough muddling through. Take the time to do it right and issue regulations. Then, maybe the muddle will abate. (Can one abate a muddle?)

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As readers of this blog know, the question of guidance v. regulation is one near and dear to my heart. I generally disfavor guidance, because I think it offers none of the protections of the regulatory process and almost none of the flexibility that guidance is supposed to provide. Two issues are of particular concern. First, guidance is not supposed to announce new rules – only clarifying interpretation of existing rules. However, we all know what a slippery slope that can be. Second, notwithstanding the purported flexibility of guidance, how often do regulators on the street – those actually using the guidance, rather than those writing it – treat guidance exactly like regulations and expect the regulated community to follow it to the letter?

The problem was brought to the forefront again recently by the decision in National Mining Association v. Jackson, in which Judge Reggie Walton in the District Court for the District of Columbia stated that EPA’s mountaintop mining guidance likely exceeded EPA’s authority. Although Judge Walton denied plaintiffs’ request for an injunction because they had not demonstrated irreparable harm, he made clear that the plaintiffs are likely to prevail on the merits. Addressing the core issues I noted above, he stated that the EPA mountaintop mining guidance

Qualified as final agency action because, despite the representation that it is an interim document, it is nonetheless being applied in a binding manner and has been implemented in its current version even though the EPA continues to receive comments about it. Therefore,… it appears that the EPA is treating the Guidance as binding.

Judge Walton went on to conclude that the various documents at issue constitute “legislative rules because they seemingly have altered the permitting procedures under the Clean Water Act by changing the codified administrative review process.” He also found that the documents exceeded EPA’s authority, because they ignored “EPA’s limited role in the issuance of Section 404 permits.”

Relatively hard on the heels of the National Mining Association decision, Daily Environment Report this week covered efforts by industry groups to prevent EPA from issuing guidance interpreting the Supreme Court’s Rapanos decision regarding the scope of Clean Water Act jurisdiction over “waters of the United States.” I’m sorry, but does anyone think that such “guidance” would not be treated in practice as having the finality of regulation? If, under such guidance, certain types of situations are considered to be “waters of the United States,” does anyone doubt that such situations will be subject to CWA permitting requirements 100% of the time? 

Agencies officials generally make two arguments in favor of guidance. One is simply to ask for recognition of the practical reality that getting formal notice and comment rulemaking accomplished is very difficult and often impractical in the modern world. The second is that guidance provides flexibility. However, if the regulators want the rest of us to recognize the practical realities involved in promulgating regulations, then they must recognize the practical reality that guidance almost always immediately ossifies and that those implementing it treat it as gospel. There is often little in it for the regulated community.

Until Rand Paul succeeds in dismantling the modern administrative state, the debate will continue.

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In an statement this week likely to send chills down the spine of developers, EPA Administrator Jackson called on Congress to provide a clearer definition of wetlands subject to permitting authority under the Clean Water Act. As most readers know, the 2006 Supreme Court decision in Rapanos v. United States narrowed the scope of regulatory jurisdiction over wetlands. Unfortunately, the absence of a majority decision in Rapanos means that, at this point, no one knows quite how much narrower. I think that most observers at least triangulate around Justice Kennedy’s concurring opinion, which stated that waters or wetlands with a “significant nexus” to waters that are navigable in fact should be subject to regulation. However, uncertainty abounds.

Uncertainty imposes significant costs on regulated entities (not to mention EPA and the Army Corps of Engineers). Therefore, a statutory fix that simply eliminated uncertainty would probably be welcomed by the regulated community. Of course, the devil is in the details. If the uncertainty is eliminated by subjecting any land that is ever wet to the CWA, such legislation would probably not be welcomed by developers.  Jackson’s statement that “I believe that the country benefits from something broader rather than narrower” is not likely to assuage developers’ concerns.

Time will tell whether compromise is possible in order to eliminate uncertainty that benefits no one.

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