Patrick G. Rowe

Projects on Waters - Latest Legal Developments

September 2016

Patrick G. Rowe

Published in The Daily Journal of Commerce

Developing a project on or near a body of water requires navigation of numerous regulatory requirements. This article analyzes recent legal developments affecting these projects. 

Waters of the United States

The Clean Water Act (CWA) governs "waters of the United States." There are two primary permitting programs under the CWA – the National Pollutant Discharge Elimination System (NPDES) and the Section 404 "dredge and fill" programs. The former requires a permit for discharge of a pollutant into "waters of the United States," while the latter regulates the placement of dredged or fill material into "waters of the United States" (e.g., fill for development and water resource projects such as dams). How "waters of the United States" is defined affects, among other matters, facility siting, utility availability, and the cost and timing of development.

In June 2015, the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) published a controversial final rule amending the definition of "waters of the United States." The rule was intended to make identification of waters protected under the CWA more consistent and easier to understand. However, many observers perceived the rule as expanding the federal government's regulatory reach to cover more waters than covered previously. Among other issues, opponents raised concerns that farming, homebuilding and commercial development in or near these waters will require a Section 404 and/or NPDES permit when they didn't need one previously.

Numerous parties across the country filed challenges to the rule. Thirteen states sued the EPA in federal court in North Dakota, and the court there issued an injunction temporarily blocking the rule in those states. Eleven other states filed suit in federal court in Atlanta. The EPA and USACE intended to proceed with enforcement of the rule in the rest of the country, but in October 2015, in a separate lawsuit, a federal appeals court in Cincinnati blocked the rule from taking effect in any state. In late August, the court in Atlanta ordered a stay of the challenge in that court, thus allowing the legal battle to play out in the U.S. Court of Appeals in Cincinnati.

The rule presently remains stayed from taking effect nationwide pending resolution of claims that it is illegal. As of late August, the EPA and USACE were battling a request by states, industry groups and environmentalists that the court in Cincinnati require the agencies to turn over additional documents that purportedly would inform the court's decision regarding the legality of the rule. Bottom line: This is a slow-moving train, but one to keep an eye on.

Supreme Court decision

The Supreme Court recently issued a decision that should be celebrated by any construction industry professional who has sought or may wish to seek a "jurisdictional determination" from the USACE. As noted above, the CWA requires property owners to obtain a permit from the USACE before placing dredged or fill material into waters of the United States. Because it's sometimes difficult to tell whether a given body of water is within the CWA's reach, the USACE offers "jurisdictional determinations" to parties seeking clarification before they undertake an often arduous permitting process.

Since the passage of the CWA, these jurisdictional determinations could not immediately be challenged in court because they were not deemed to be a "final agency action." Thus the USACE and courts required the persons affected by the jurisdictional determination to go through the entire permitting process before they could go to court. As a result, the property owner could spend significant sums of money (hundreds of thousands of dollars in some cases) to get a permit that may not have been necessary in the first place.

On May 31, in U.S. Army Corps of Engineers v. Hawkes Co., the Supreme Court corrected this situation in an 8-0 decision, holding that an approved jurisdictional determination by the USACE definitively stating the presence or absence of waters of the United States on a particular property is a final agency action judicially reviewable under federal law.

Proposed permit changes

An individual CWA dredge and fill permit is required in cases where a discharge will potentially have significant impacts to a body of water. For discharges that will have only minimal adverse effects (most projects), a general permit is usually suitable. General permits are preferred because they are issued with little if any delay or paperwork.

Earlier this summer the USACE proposed changes to 18 of the existing 50 nationwide permits (NWPs) that it issues and proposed two new ones. A table summarizing the changes and proposed new NWPs is available at:

The USACE is reviewing public comments received on the proposed revisions and is seeking to make the final NWPs effective by March 19, 2017.

Increased max civil penalties

In a rule that took effect Aug. 1, the EPA increased the maximum daily penalties it may assess for environmental violations that occurred any time after Nov. 2, 2015. Any violation of an environmental statute enforced by the EPA, including the CWA (as well as the Clean Air Act, Toxic Substances Control Act, Resource Conservation and Recovery Act, Emergency Planning and Community Right-to-Know Act and the Comprehensive Environmental Response, Compensation and Liability Act) may now result in a penalty that is up to 150 percent higher than the previous daily maximum.

For example, the maximum penalties the EPA can impose under certain provisions of the CWA have increased from $25,000 to $51,570 per day for each violation.

This maximum daily penalty increase will likely affect settlement negotiations with the EPA over alleged environmental violations, potentially making resolution of EPA enforcement actions more costly and time-consuming. Additionally, state environmental agencies may decide to increase their own maximum penalties to keep pace with the EPA.

Related Practice Areas

Real Estate and Land Use

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