Waters of the United States – What a Mess
On April 15, the comment period ended on a joint proposal by the United States Environmental Protection Agency (EPA) and United States Army Corps of Engineers (USACE) to revise the definition of a key term under the Clean Water Act (CWA), waters of the United States (WOTUS). If the current administration can get out of its own way, it may be able to finalize the proposal before the 2020 election. In the meantime, the lack of a CWA statutory definition has created confusion, with two different standards to be applied in different parts of the country, as energy developers and agency staff are forced to search through competing rules and court decisions to plug the hole. Sadly, the tougher standard generally applies in those parts of the country, including the Northeast, where it is already difficult for pipelines to receive their permits.
For pipeline developers, the term is most impactful due to its appearance in Section 404 of the CWA, which establishes a program to regulate the discharge of dredged or fill material administered by the USACE. In addition, the historic interpretation of “navigable waters” or those subject to Section 401 review is also subject to change as it has typically been defined as WOTUS. In a more fortunate turn of events, for the purposes of completing a review of water use and quality for its environmental reports, applicants proposing natural gas projects before the FERC are subject to a different definition of waterbody. And this definition will not be impacted by the WOTUS rulemaking.
Today, we look at the history that has led to this divide in the country, when it might be resolved and what that could mean for projects currently pending before FERC.
The WOTUS Timeline
During both the Obama and Trump administrations, the WOTUS rule has been subject to executive and judicial action.
- On June 29, 2015, the EPA and USACE issued a new rule that significantly modified the WOTUS definition, which was challenged in court by a number of Republican Attorneys General, including Oklahoma’s Scott Pruitt.
- On August 27, 2015, the U.S. District Court for the District of North Dakota enjoined the applicability of the 2015 Rule in the 13 states that had sought relief from the court.
- Then, on October 9, 2015, the U.S. Court of Appeals for the Sixth Circuit stayed the 2015 rule nationwide. As a result, the rules that existed prior to 2015 remained in place, while litigation continued through the 2016 presidential election.
- President Trump appointed Oklahoma’s Attorney General Pruitt as the Administrator of the EPA, and issued an Executive Order on February 28, 2017 directing the EPA and the USACE to “publish for notice and comment a proposed rule rescinding or revising the [final 2015] rule.”
- Despite this clear direction from the president, no such rule was proposed until almost a year later when the Supreme Court ruled, on January 22, 2018, that the U.S. Courts of Appeal, including the Sixth Circuit, did not have jurisdiction over challenges to the rule. As a result, the Supreme Court effectively dissolved the nationwide stay of the 2015 rule.
- In an effort to essentially reinstate the judicial stay by regulatory action, the EPA and the USACE finalized a rule in February 2018 that attempted to delay the effectiveness of the 2015 rule until February 6, 2020 rather than the effective date, August 28, 2015, of the original 2015 rule. This delay of the 2015 rule was challenged by Democratic Attorneys General in various actions across the nation, which resulted in the U.S. District Courts for the District of South Carolina and the Southern District of Washington enjoining and vacating the 2018 delayed effectiveness rule.
- Initially, the Trump administration appealed those decisions to the Fourth and Ninth Circuits, but, on March 8, 2019, withdrew its appeal before both of those courts.
These circumstances have resulted in uncertainty and a lack of consistency across the country, with the rules that existed before the 2015 rule being applied in some states and the 2015 rule being applied in others. Ironically, one of the few Republican states in which the Obama-era rule is still in effect is in former EPA Administrator Scott Pruitt’s home state of Oklahoma, home to many projects, including ONEOK’s planned Arbuckle II Pipeline, a 530-mile NGL line slated to be in service by 2020.
Source: https://www.epa.gov/wotus-rule/definition-waters-united-states-rule-status-and-litigation-update
Status of New Agency Rules
In an effort to change the 2015 rules as quickly as possible, the EPA and the USACE have chosen to pursue a two-step process. The first step would be to simply repeal the 2015 rules and follow the guidance that existed prior to the adoption of the 2015 rule. The second step would then be to adopt a new standard to replace the 2015 rule and the pre-2015 guidance.
The first step of the process, the repeal of the 2015 rule, was originally proposed by the EPA and USACE on July 27, 2017. That rule, once final, would re-codify the regulations that existed before the 2015 rule to provide regulatory certainty while the agencies engage in a second rulemaking to revise the WOTUS definition. Almost one year later, on June 29, 2018, the agencies issued a supplemental notice about its proposed repeal because it had failed to discuss aspects of its proposed repeal in adequate detail. The comment period for that proposal ended on August 13, 2018, but the agencies have yet to issue a final rule.
The EPA and USACE did not propose the regulation to implement the second step, redefining WOTUS, until February 14, 2019. This is the proposed regulation for which the public comment period ended on April 15. Over 4,000 comments were filed in response to the proposed rule, many of which were provided by individual members of the public. Major public interest groups, including Earthjustice, the League of Conservation Voters, the Sierra Club and the Southern Environmental Law Center, among others, filed a joint comment seeking to extend the comment period by at least 145 days and highlighting the potential environmental impacts. The energy industry generally, and the oil and gas sector in particular, including exploration and production companies, on the other hand, were supportive of the proposed rule and applauded the clarity it provided.
Whether the “step one” or “step two” rules will be adopted and become effective before the 2020 election is open to question at this point, especially since both are likely to be challenged by Democratic Attorneys General, which means the confusion described above is likely to continue.
Section 404 Permits
The USACE Section 404 review is often completed well after the review of the Certificate application has been initiated. To gain more insight on the impact of the USACE review on project timing, in particular delays to construction, contact our team.
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