Last month, the U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) announced they were moving forward with a much-needed rulemaking to clarify which waters are protected under the Clean Water Act (CWA). Enforcement of the law has been hindered by years of uncertainty about agencies' regulatory jurisdiction over certain wetlands and waterways. On Sept. 17, agencies submitted a draft joint rulemaking for interagency review that would provide greater clarity and help ensure vital waters are covered by the CWA. However, protracted review processes and industry pushback could further extend the uncertainty and leave some waters unprotected.

Jurisdictional Uncertainty Leaves Water Quality at Risk

The Clean Water Act provides for the restoration and protection of water bodies, but it applies only to "navigable waters" of the United States. Determining which waterways meet this definition has been challenging and contentious. The CWA's broad language has historically been interpreted expansively, covering many surface waters and wetlands. But two U.S. Supreme Court decisions issued in 2001 and 2006 created uncertainty about the CWA's scope and the jurisdiction of the regulatory agencies charged with enforcing it. As EPA's recent blog explains, "the confusion centers on questions surrounding small streams and wetlands—some of which only flow after precipitation or dry up during parts of the year—and what role they play in the health of larger water bodies nearby or downstream."

The rulings left many streams, creeks, and isolated wetlands vulnerable to contamination by polluters who asserted that those waters were not covered by the CWA. In the wake of the 2006 decision, Bush administration agencies issued an ineffective guidance document that attempted to clarify federal enforcement obligations. In 2008, an investigation by the House Oversight and Transportation Committees concluded that there had been a drastic deterioration in EPA's enforcement program that was directly attributable to the 2006 Supreme Court decision and the Bush agencies' subsequent guidance. Documents obtained from the agencies indicated that hundreds of violations had been abandoned or delayed. EPA regulators later estimated that more than 1,500 major pollution investigations were discontinued or shelved between 2006 and 2010, according to The New York Times.

In 2011, the agencies finally issued new draft guidance intended to clarify the scope of the CWA, but the final version of the guidance document was never published. The 2011 draft was broader in scope than the Bush-era guidance, which the agencies concluded did not make full use of CWA authority as interpreted by the Supreme Court. EPA submitted the final guidance to the White House Office of Information and Regulatory Affairs (OIRA) for review in February 2012, where it languished for over 18 months. On Sept. 17, 2013, EPA withdrew the action.

New Regulatory Proposal Reflects Latest Science

On the same day the guidance was withdrawn, EPA replaced it with the proposed rule. EPA also released a draft science report on the latest peer-reviewed literature concerning how streams and wetlands connect to larger water bodies and affect downstream waters. The report finds that streams are connected to, and have important effects on, downstream waters regardless of size or how frequently they flow. The report also finds that wetlands are integrated with streams and rivers and strongly influence downstream waters.

The draft report will be subject to peer review and public comment before being finalized. According to EPA, any final regulation on CWA jurisdiction will be based on the final scientific assessment. Issue expert William Buzbee wrote that the report could provide a powerful response to CWA opponents' criticisms of the clarifying regulation.

Industry Attacks on Rule Start Early

Soon after EPA and the Corps sent the draft joint rulemaking to OIRA, the National Federation of Independent Business (NFIB) alleged that EPA failed to comply with statutory obligations. In a Sept. 24 letter to OIRA, NFIB claimed that the rule will have a significant economic impact on small businesses and EPA was therefore required to follow certain procedural requirements under the Regulatory Flexibility Act (RFA). The letter demanded that OIRA send the draft rule back to the agency for a small business impact analysis and review panel.

The RFA, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), requires EPA to conduct an initial regulatory flexibility analysis (IRFA) and small business review panel at the proposed rule stage if the proposed rule will have a significant economic impact on a substantial number of small entities. When an agency publishes a proposed rule, it must either certify that the rule will not have a significant impact or publish an IRFA. According to EPA's latest regulatory agenda, it has not yet determined whether a regulatory flexibility analysis is required. Further, since EPA has not yet published the proposed rule, NFIB's claims are at best premature.

NFIB is adamant that the rule will have a significant economic impact on "virtually all small businesses," even though the contents of the draft rule are not yet public. The industry group assumes it is similar to the guidance document that languished at OIRA (thanks in part to industry opposition). In fact, that guidance was expected to produce more benefits than costs by protecting streams and wetlands that support fishing and hunting, filter sediment and contaminants, reduce flooding, and contribute to drinking water supplies. A preliminary analysis of the potential indirect economic impacts associated with the guidance indicated that while more wetlands would be covered by permitting requirements, adding some costs, the benefits to the public would substantially outweigh those costs. According to one estimate, the indirect costs of potential wetlands mitigation would be in the range of $63 to $185 million, while the value of the benefits provided range from $162 to $368 million.

Although NFIB's letter assures that it "is not asking EPA to abandon this rulemaking," the additional procedures it requests would certainly lengthen the timeline of the rulemaking process. Small business review panels are supposed to be completed within 60 days, but the actual lengths can vary. Some panels have been completed within two months, while others have taken over a year.

The Long Road Ahead

Even if EPA certifies that the rule does not trigger a regulatory flexibility analysis, a number of other processes have the potential to complicate and delay the rulemaking. The draft must survive OIRA review, an often opaque process that historically has resulted in lengthy regulatory delays. The prospect for a lengthy regulatory review process is likely, given that OIRA held 19 meetings on the agencies' non-binding guidance, some even before the draft guidance document was released. The specific content of stakeholders and OIRA discussions at those meetings is not publicly available, but participants included industry trade associations, environmental groups, and other agencies.

The proposed rule is likely to receive even more attention. Once published, it will be open to public comment. Collecting and considering public comments could take a significant amount of time, especially considering that the draft guidance received 230,000 comments.

In addition, the agencies cannot complete a final rule until EPA completes a final scientific assessment. EPA will publish a final report after considering public comments and the results of an external review of the draft document by the EPA's Science Advisory Board. The Science Advisory Board will hold its first meeting in mid-December. Unfortunately, EPA has not issued an expected timeline for the scientific assessment or the proposed rule, but time is of the essence.

According to previous reports, about 117 million Americans get their drinking water from sources fed by waters that could be excluded from the CWA because of jurisdictional uncertainty. When waters that impact the health of drinking water sources and waterways critical to recreation and commercial activities are not protected, the consequences are severe. In just one example provided by EPA,

"Crude oil was discharged into Edwards Creek, an intermittent stream near Talco, Texas (Titus County). Under existing guidance, EPA did not attempt to pursue enforcement of this violation because it was too complex to prove the water was protected under the Clean Water Act. No clean up was required under the Clean Water Act. More than 50 percent of residents in Titus County get their drinking water from sources dependent on these kinds of creeks."

The body of recent scientific evidence linking the importance of streams and wetlands to the health of larger water bodies underscores the need for the rule to have a broad scope in order to fully protect the health of our nation's waters under the CWA. To accomplish this objective, it is imperative that EPA and the Corps proceed without delay and industry interference in developing this much needed clarifying rule.

UPDATE (03/25/2014):  The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers issued a proposed rule today clarifying which “waters” are protected under the Clean Water Act, according to an EPA news release. The proposal clarifies protection for streams that flow intermittently, such as after a rain or seasonally, as well as wetlands near rivers and streams. For waters with less certain connections to downstream waters, the agencies will conduct a case-by-case evaluation to determine coverage. This rule, once finalized, will ensure protections for streams and wetlands that feed into downstream waterways and provide drinking water to more than 117 million Americans. Following today’s announcement, the agencies will publish a formal notice in the Federal Register, triggering a 90-day notice-and-comment period. EPA and the Army Corps also plan to host multiple discussion sessions with stakeholders throughout the nation. More information about the proposal and opportunities to get involved are available here.