On May 25, 2023, the United States Supreme Court again weighed in on what is to be considered a "water of the United States" ("WOTUS") under the Clean Water Act ("CWA") in Sackett v. EPA, 143 S. Ct. 1322 (2023). The fundamental holding in Sackett is that the only wetlands qualifying as WOTUS are waters that are indistinguishable from traditionally navigable waters and that have a continuous surface connection to those waters.
Critically, the decision, authored by Justice Samuel Alito, disposed of the "significant nexus test," which since 2006 has been used to determine whether a wetland was protected or "jurisdictional" under the CWA. Waters subject to the CWA can require those engaging in dredge and fill activities impacting such water to obtain a CWA Section 404 permit. Importantly, the Court was clear that the burden to establish whether a water falls under the EPA and/or the U.S. Army Corps of Engineers' (USACE) CWA authority is now on the agencies, instead of on the entity seeking to conduct an activity impacting such waters. In Sackett, the high court limited the reach of the CWA to wetlands "adjoining" larger bodies of water, instead of those wetlands that are "adjacent" (interpreted by the Court as having a continuous surface connection) as is defined in 33 C.F.R. § 328.3(c)(2), to those relatively permanent or "traditional" navigable waters, i.e., rivers, lakes, estuaries, and oceans. Further, wetlands "separated from other waters of the United States by man-made dikes or barriers, natural river berms, beach dunes, and the like" are no longer considered "adjacent wetlands." And to the chagrin of technical water professionals, the Court struck from consideration actions having a "significant affect" on "the chemical, physical, or biological integrity of waters," which is a fundamental purpose of the CWA.
On the one hand, environmental groups argue that the Sackett decision makes many acres of wetlands at risk of pollution and could compromise drinking water sources. On the other hand, industry groups claim that the Sackett decision is a win for private property rights and limited government. Notably, all nine Supreme Court justices agreed that the EPA and USACE overstepped their authority with respect to the Sackett plaintiffs. Regardless of who stands to gain and lose from Sackett, what is clear is that the EPA, USACE, and the various states must now quickly adjust to the change in the law. The EPA and USACE published an amendment to a January 18, 2023 proposed rule that they believe conforms with the Sackett decision and removes all reliance on the significant nexus test. The rule took effect immediately upon publication in the Federal Register on September 8, 2023. Importantly, USACE Section 404 Permit issuance have been delayed due to Sackett but may resume in the near future now that the agencies have issued the rule.
Beatty & Wozniak P.C.'s various clients develop energy projects in the Mountain West and Texas and have closely followed the developments impacting the WOTUS rule. To date, several states have taken the following positions in the face of regulatory uncertainty with respect to water use, water permitting, and energy project development in light of the Sackett decision.
New Mexico's Reaction to Sackett
New Mexico's waters are uniquely impacted by Sackett for two primary reasons: First, the nature of NM's waters are unique for WOTUS analysis purposes. It is estimated that only 7% of NM's waters flow year-round, meaning as much as 93% of New Mexico's waters are intermittent or seasonal. The rest are ephemeral, meaning that they flow when there is heavy rain. Second, New Mexico has historically relied on the CWA to protect its waters because it has no authority to regulate pollution discharge into surface water and also has no wetland permitting program. And while federal protection is likely to still apply to pollution from wastewater plants, construction, and agriculture activities, it is unclear and even unlikely that this protection will apply to the many tributaries that feed the larger NM water bodies. New Mexico is considering developing its own permitting scheme to fill the void left by Sackett, however, the adoption of such a scheme is likely to take years and require additional funding from the New Mexico legislature. New Mexico will also have to seek approval from the EPA to administer its own water permitting program, which will require the NM legislature to pass an NMED approved resolution. NMED estimates that it could take as long as seven years for NM to implement a surface water permitting program, including hiring an estimated forty four full-time employees at a cost of almost $6M per year. In the interim, NMED has issued notices and guidance to industry, including all 3,950 holders of federal discharge permits in NM, that the Sackett decision does not mean that they must not obtain other permissions and permits to protect state waters.
Colorado's Reaction to Sackett
Colorado is also likely to adopt regulations requiring permits to engage in dredge and fill activities for its wetlands, irrespective of whether those wetlands have historically been considered WOTUS. Like NM, many of CO's waters are ephemeral or intermittent in nature. It will fall to the Water Quality Control Division of the Colorado Department of Public Health and the Environment ("CDPHE") to help guide state water policy. On June 20, 2023, CDPHE submitted an Interim Supplemental Budget Request to provide temporary regulation over CO's wetlands. However, like NM, CO must also begin the process of getting permitting authority from the EPA and passing an adequate statutory framework to enable it to fill the void left in CO's regulations following the Sackett decision.
Texas's Reaction to Sackett
Texas has a large number of wetlands and compared to other jurisdictions, some of the least protective regulations. However, prior to Sackett, even TX relied on the EPA for permitting dredge and fill activities. Nevertheless, TX has taken the position that EPA's authority to protect seasonal streams and wetlands is too broad in a lawsuit filed earlier in 2023. On April 6, 2023, a federal judge in North Dakota blocked the January 2023 EPA rule from going into effect in Texas and 23 other states. Accordingly, the Sackett decision is more welcome in TX than in other jurisdictions. Texas and other states will undoubtedly seek to further limit the reach of the EPA and USACE by seeking further limitations to their latest iteration of the rule. Industry groups will undoubtedly challenge the EPA and USACE's new rule in court—leaving the full and long-term impact of Sackett on states like Texas unanswered.
Conclusion
The WOTUS definition was never workable from a practical standpoint across all of the varied circumstances surrounding US waters. And while there is unlikely to be broad nation-wide clarity any time soon, it is more likely that states will implement their own statutory and regulators regimes tailored for their unique waters, which long-term, could provide the clarity industry craves and the protections public waters deserve. Each state will go to different lengths to protect their respective waters. It will be incumbent on those seeking to develop energy projects that might impact a state's water to carefully determine how that state's regulatory framework has changed or will change to determine the impact of those changes on energy project development and water protection.
Originally published Sep 20, 2023
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