By Roland Murphy for AZBEX
“A good compromise is when both parties are dissatisfied” – Larry David.
If David’s quote is true, the Biden administration’s recent revision to the Waters of the U.S. Rule (also known as the Clean Water Rule) as the follow-up to a May U.S. Supreme Court ruling on the extent of federal powers under the 1972 Clean Water Act may be considered nearly perfect.
Environmentalists and their political supporters are decrying the update, saying it will irrevocably harm wetlands, watersheds and water supplies. Development industry groups say the revision fails to provide important definitions, enshrines uncertainty and bureaucratic impediments to vital projects, and fails to fully address the scope and spirit of the SCOTUS ruling.
Whatever one’s position, the new “final rule” ensures wrangling over water policy and its development impacts will remain a hot button issue into the next election and beyond.
The WOTUS Rule
The WOTUS Rule was published in 2015 by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers and expanded federal oversight of water resources, including enhanced authority over development on private land.
The regulation was presented as a clarification of federal water protections under the Clean Water Act of 1972 and described as a means of more consistently defining and implementing federal protections over resources. The primary issue of contention was the Rule’s expanded definitions of what constituted a waterway subject to federal jurisdiction.
The original act’s language applied to “navigable waterways” and established oversight authority under the Interstate Commerce Clause of the U.S. Constitution. Supreme Court cases in 2001 and 2006 expanded the Act’s reach to include areas that were no longer navigable or consistently flowing but that could be dredged and restored. Those decisions generated additional confusion and led to the 2015 rule.
In the 2006 case, Rapanos v. United States, a developer filled more than 20 acres on a property he owned that was between 10 and 20 miles from the nearest navigable waters without obtaining a state environmental quality permit. The Court ruled in the developer’s favor, but concurring opinions issued three different tests to determine what circumstances were covered or not covered under the Clean Water Act.
Claims and issues were left to be decided on a case-by-case basis. Under the Obama administration, the EPA proposed new guidelines in 2011 that clarified and expanded the covered water sources under federal jurisdiction, with the EPA administrator and an assistant Army secretary signing the new rule in 2015.
Claims of unconstitutional overreach were vocal and immediate. The development community was particularly concerned because the new rule included “ephemeral waterways”—which may only flow during periods of exceptionally heavy rainfall—and non-adjacent wetlands—which are freestanding areas that, again, only connect to another water source during occasional rainy periods.
Such areas, particularly ephemeral waterways, are common in Arizona, particularly in the desert southern half of the state, and several development proposals were impacted.
To build projects on un- or under-developed land, owners, including private homeowners, were required to secure permits from the U.S. Army Corps of Engineers, a long and expensive process that included multiple studies, evaluations and revisions.
Environmental groups included challenges to the review process or findings as part of protracted opposition efforts. In a strategic policy to extend opposition efforts and make projects prohibitive in terms of time and expense, opponents often filed their challenges consecutively—waiting for a ruling on one challenge before filing the next—rather than concurrently, where the entire set of challenges would be evaluated simultaneously by their respective oversight bodies.
Given the time and degree of detail required under WOTUS Rule reviews, the policy was viewed as a valuable tool by development opponents. Consequently, only the largest and most expansive of projects, such as the Hudbay Minerals Copper World/Rosemont Mine development south of Tucson and El Dorado Holdings’ $1B The Villages at Vigneto master plan in Benson, had the resources and tenacity to deal with the process.
In 2017, the Trump administration began work to revise the rule, calling it “a massive power grab” that harmed landowners from major developers down to individual farmers. Following a series of smaller actions, a proposed revision was published by EPA and USACE in early 2019, and Trump announced the rule had been repealed in early 2020, triggering a series of lawsuits.
In mid-2021, the Biden administration announced it would undo the Trump repeal and reinstate the 2015 version of the rule, which it did in January of this year.
Normally, a procedural and policy issue as ideologically divisive as the WOTUS Rule could be expected to ping-pong between administrations in near perpetuity. However, the Supreme Court issued a ruling in May regarding a case that originated from a 2007 EPA order against Chantell and Michael Sackett, an Idaho couple that sought to backfill part of their 0.63-acre property to build a new home. The EPA halted construction, alleging the couple would need a WOTUS permit because the site contained wetlands that were near a ditch that fed into a nearby lake. Failure to comply would have resulted in penalties of more than $40K per day. The Sacketts filed a lawsuit against the EPA findings.
The case went back and forth across various courts for years before SCOTUS ruled in May that the Clean Water Act’s “use of ‘waters’… refers only to ‘geographic[al] features that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes’ ’ and to adjacent wetlands that are ‘indistinguishable’ from those bodies of water due to a continuous surface connection.”
Citing a series of precents and administrative rulings, the Court held EPA and USACE had overreached in applying the WOTUS rule to projects beyond their jurisdiction. The Biden administration and environmental groups decried the ruling but were left without much additional legal recourse.
The Latest Update
On Aug. 29, the administration released an update to the rule that was narrowly crafted to ensure compliance with the SCOTUS ruling in Sackett. Among other findings, the new rule requires wetlands to be more clearly and consistently connected to other waterways for WOTUS to apply and significantly limits federal jurisdiction in waterways cases under the Interstate Commerce Clause.
The updated rule was not given a public input period, as would normally be the case, and is considered final. The Associated Press quoted EPA Administrator Michael Regan as saying the agency had no choice but to revise the rule after the SCOTUS ruling. “While I am disappointed by the Supreme Court’s decision in the Sackett case, EPA and Army (Corps of Engineers) have an obligation to apply this decision alongside our state co-regulators,” Regan said.
Since it was revised to address specific problems stated in the Court ruling, the new rule went into effect immediately. An Army spokesperson said cases that were paused between the Sackett decision and the publication of the new rule would now resume.
The updated rule is generally seen as a win for the development community. Rose Law Group Founder and President Jordan Rose said, “This ruling should have major implications on property owners throughout Arizona, some of whom have been prevented from developing their land because of the approach to wetland protection. Now, development can occur.”
The administration’s surface-level compliance, however, has raised complaints from both the environmentalist and development communities, particularly regarding the lack of public input in crafting and adopting the language.
Environmental groups say they were deprived of the opportunity to voice their concerns and to help craft the language in such a way as to mitigate the ruling’s potential impacts.
Development groups, including Associated Builders and Contractors and the National Association of Home Builders, issued statements saying the new rule fails to completely address the restrictions set forth in the Sackett case and will continue to draw out the development process for projects because of its built-in uncertainty.
ABC’s VP of Regulatory, Labor and State Affairs Ben Brubeck said, “…this rule, issued without meaningful opportunities for input from the construction industry and other stakeholders, will contribute to continued regulatory uncertainty and unnecessary delays for critical infrastructure projects across the nation. ABC urges the Biden administration to issue broader revisions to WOTUS in full compliance with the Supreme Court’s decision.”
NAHB Chairman Alicia Huey was more blunt and scathing in her official statement and specifically addressed how the new rule’s perceived failings will contribute to the nation’s ongoing housing affordability crisis. “The amended WOTUS rule represents a blow to housing affordability. It assures continued uncertainty regarding federal jurisdiction as established by the Supreme Court’s recent Sackett decision that made clear the federal government only has authority over relatively permanent waterbodies. By failing to provide a definition of a ‘relatively permanent’ waterbody, the Biden administration set the stage for continued federal overreach, bureaucratic delays during the wetlands permitting process, and regulatory confusion for home builders and land developers. It will directly result in continued regulatory barriers to affordable housing as single-family and multifamily developers struggle to find the developable land necessary to produce the new affordable housing units this nation desperately needs.”
While the revised rule covers the core points of the Supreme Court ruling, it leaves significant ripples of uncertainty pulsing across national water preservation and development policy. The only thing that can be said with certainty is the new final rule will probably not, in reality, be final, and more litigation will follow as both sides seek to either regain or expand their policy footholds.
In the interim, it appears the only definition that all the wrangling has thoroughly confirmed is David’s definition of “a good compromise.”