Archive for the 'Environmental' Category

(Re)Defining “Waters of the United States” Under the Clean Water Act – Part II: The States Strike Back

By: Erik S. Mroz

If my job as a lawyer does not work out, I may be able to make a living telling the future. Back in February, I advised our readers to keep an eye on a proposed rule defining “Waters of the United States” (or “WOTUS Rule”). Written by the U.S. Environmental Protection Agency (“EPA”) and the Army Corps of Engineers (“ACE”), the WOTUS Rule defines (and arguably expands) EPA’s and ACE’s jurisdiction under the federal Clean Water Act (“CWA”). I concluded that article by stating: “Assuming the proposed rule goes final … we should expect a new round of CWA litigation.” The final WOTUS Rule was issued by EPA and ACE on May 27, 2015; and, as of this writing, a majority of states (27) have already sued the federal government to stop the WOTUS Rule in its tracks.

As explained previously, Under the CWA, federal jurisdiction (the power of EPA and ACE) to regulate impacts to surface water is limited to the “Waters of the United States.” The term “Waters of the United States” is vaguely defined to include navigable waterways and associated wetlands. Whether a watercourse or wetland can be defined as a “Waters of the United States” determines whether it is subject to NPDES permitting, Section 404 Dredge and Fill permitting, and whether an activity can be subject to a citizen’s suit under the CWA.

Under the WOTUS Rule, traditional navigable waters will remain subject to CWA jurisdiction. The controversies arise from new definitions and standards for other per se jurisdictional waters and other waters considered jurisdictional on a case-by-case basis. Under the WOTUS Rule, “tributaries” are considered per se jurisdictional waters. The term is defined expansively to include natural and man-made waters, and includes streams, canals and ditches. “Adjacent waters,” which are also per se jurisdictional, are waters “bordering, contiguous or neighboring” a jurisdictional water, including tributaries. “Neighboring” waters are broadly defined to include:

  • All waters located within 100-feet of the ordinary high water mark of a jurisdictional water;
  • All waters located within the 100-year floodplain of a jurisdictional water and not more than 1,500 feet from the ordinary high water mark of such water; and,
  • All waters located within 1,500-feet of the high tide line of a jurisdictional water.

“Ordinary high water mark” is defined in the WOTUS Rule as a “line on the shore established by the fluctuations of water and indicated by physical characteristics such as a clear, natural line impressed on the bank, shelving, changes in the character of soil, destruction of terrestrial vegetation, the presence of litter and debris, or other appropriate means that consider the characteristics of the surrounding areas.”     Commentators note that this expansive definition may allow the agencies to use their discretion to expand the CWA’s reach over per se jurisdictional waters to previously unregulated areas and potentially leaving the regulated community guessing as to what its regulatory obligations actually are.

The WOTUS Rule also includes two new categories of waters that may be considered jurisdictional under the CWA on a case-by-case basis if there is a “significant nexus” to a traditionally navigable water. This means that some areas, which are not per se jurisdictional, may nevertheless be subject to CWA jurisdiction as determined by the agencies on a case-by-case basis. The first category includes the following specified waters: “Prairie potholes,” “Carolina bays and Delmarva bays,” “Pocosins,” “Western vernal pools,” and “Texas coastal prairie wetlands.” The second new category is defined to include all waters located within the 100-year floodplain of a traditionally jurisdictional water and all waters located within 4,000 feet of a high tide line or ordinary high water mark of a jurisdictional water, including all tributaries and impoundments of tributaries.

The WOTUS Rule went final on May 27, 2015. On June 29, 2015 the WOTUS Rule was published in the Federal Register. Under federal law, the WOTUS Rule is to become effective on August 28, 2015.

As of this writing, four lawsuits, filed by twenty-seven states[1], have been filed challenging the WOTUS Rule. In the various complaints, the states allege that the WOTUS Rule exceeds the agencies’ authority under the CWA, extends the agencies’ authority beyond the limits of federal power, violates state sovereignty under the 10th Amendment to the U.S. Constitution, violates procedural mandates under the National Environmental Policy Act, is arbitrary and capricious and otherwise in violation of the Administrative Procedures Act. The states are asking the courts to invalidate the WOTUS Rule and block its implementation.

The complaints also indicate a concern for the regulated community. For example, the Texas complaint includes a flowchart to determine whether an area is subject to regulation under the WOTUS Rule:

For a landowner, including a state, to determine whether a particular water feature is subject to the Federal Agencies’ jurisdiction (and, therefore, subject to permitting requirements under the CWA), the landowner would be forced to perform – or, more likely, pay an expert to perform – the following analysis:

Step 1

Landowner must determine the location of the ordinary high water mark of the nearest traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, as defined by the Final Rule;

arrowStep 2

Landowner must determine whether any part of the feature at issue is within 100 feet of the ordinary high water mark or within 1,500 feet of the high tide line. If so, then the entire water feature is subject to federal jurisdiction. If not, the landowner can proceed to Step 3

arrowStep 3

Landowner must determine where the 100-year floodplain is located and whether any part of the feature at issue is within the 100-year floodplain of a traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, as defined by the Federal Rule. If so, proceed to Step 4. If not, proceed to Step 5.arrow

Step 4

Landowner must determine whether any part of the feature at issue is within 1,500 feet of the ordinary high water mark of the water found in Step 3. If so, then the entire feature at issue is subject to federal jurisdiction. If not, Landowner must proceed to Step 5.arrow

Step 5

Landowner must determine whether any part of the feature at issue is within 4,000 feet from the ordinary high water mark of a traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, as defined by the Final Rule. If so, proceed to Step 6. If not, still proceed to Step 6.arrow

Step 6

If any part of the feature at issue is within the 100-year floodplain of a traditional navigable water, interstate water, or territorial sea or within 4,000 feet from the ordinary high water mark of a traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, as defined by the Final Rule, Landowner must then have a case-by-case significant nexus analysis performed on the feature at issue and the relevant water.arrow

Step 7

If the Federal Agencies determine that the feature at issue has a significant nexus to the relevant traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, the feature is subject to federal jurisdiction. If the Federal Agencies determine that the feature does not have a significant nexus to the relevant traditional navigable water, interstate water, territorial sea, impoundment of a jurisdictional water, or tributary, the feature at issue is not subject to federal jurisdiction.[2]

The Texas complaint concludes this analysis, stating:

It is unrealistic for the Federal Agencies to expect that landowners will possess the expertise, patience, and resources to employ this onerous test to determine whether their land can fall under the Final Rule’s definition of “adjacent waters.” Nor should the states and their taxpayers be forced to spend funds for such onerous jurisdictional determinations. Moreover, it is unrealistic for the Federal Agencies to expect that such a complicated standard con be applied predictable and consistently across the nation[3].

By filing these lawsuits, the states hope to stop the WOTUS Rule in its tracks. It remains to be seen how the Courts will respond to the various challenges and how long this process will take. The saga continues.

Erik S. Mroz is an attorney with Drewry Simmons Vornehm, LLP and practices in the areas of Environmental Law, Regulatory Matters, Insurance Coverage, and Litigation.  With three offices across the State of Indiana, Drewry Simmons Vornehm, LLP was originally founded as a boutique law firm focusing on the construction industry, including public and private owners, design professionals, general and trade contractors, construction managers, material suppliers, insurers and sureties.  With the growth of the law firm, Drewry Simmons Vornehm, LLP has expanded its legal practice to meet the wide-ranging needs of its clients. To speak with Mr. Mroz or another Drewry Simmons Vornehm, LLP attorney, please call us toll-free at 1 (866) 938-4848.

[1] Ohio in The State of Ohio v. United States Army Corps of Engineers, et al., Case No. 2:15-cv-02467-EAS-NMK (S.D. Ohio); North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, Wyoming, the New Mexico Environmental Department and New Mexico State Engineer in States of North Dakota, et al. v. United States Environmental Protection Agency, et al., Case No. 15-59 (Dist. ND); Texas, Louisiana and Mississippi in State of Texas, et al. v. United States Environmental Protection Agency, et al., Case No. 15-cv-162 (S.D. Tex.); and Georgia, West Virginia, Alabama, Florida, Kansas, Kentucky, South Carolina, Utah, Wisconsin and Indiana in State of Georgia, et al. v. Regina A. McCarthy, Administrator of the United States Environmental Protection Agency, et al., _________ (S.D. GA).
[2] Complaint, pp. 17-18.
[3] Complaint, pp. 18-19.

All rights reserved. These materials may not be reproduced without written permission from Drewry Simmons Vornehm, LLP. These materials are designed and intended solely to provide general information with regard to the subjects matters covered herein, and should not be used as a substitute for professional service in specific situations. If legal advice or other expert assistance is required, the services of a professional should be sought.

The Fine Line Between Conditional Permits and Governmental Takings

By: Erik S. Mroz

Property owners and developers take notice.  The recent U.S. Supreme Court decision in Koontz v. St. Johns River Water Management District (June 25, 2013) has broadened a property owner’s right to bring Constitutional challenges to common conditions found in land-use and development permits.

In Koontz, a property owner sought to develop a 3.7-acre portion of a 14.9-acre tract of land located in Florida.  The property contained wetlands areas making the project subject to the permitting requirements of both the Florida Water Resources Act and the Warren S. Henderson Wetlands Protection Act.  Taken together, these statutes allow the government to impose permitting conditions in order to mitigate the risk of damage to wetlands.  While the permitting requirements at issue in Koontz arise under Florida law, the U.S. Supreme Court’s opinion is not specific to Florida and has national implications.

In 1994, the property owner applied for the requisite permits to begin the project.  To mitigate environmental effects caused by the development, the owner proposed deeding an 11-acre section of the 14.9-acre tract to the government as a conservation easement.  The government responded that the 11-acre conservation easement was inadequate and countered that it would approve the permit only if the owner agreed to one of two alternatives: (1) The owner agrees to reduce the size of the development to 1 acre and deed the remaining 13.9 acres to the government as a conservation easement; or (2) The owner could proceed with the 3.7-acre development with the 11-acre conservation easement, as originally proposed, but only if the owner also agrees to fund improvements to government-owned land several miles away.

The owner rejected the government’s mitigation demands as excessive and filed suit under Florida law, which allows owners to recover “monetary damages” if an agency’s action is “an unreasonable exercise of the state’s police power constituting a taking without just compensation.”  This is a state law variant of the Fifth Amendment’s “takings” clause:

No person shall be … deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation.

Two previous U.S. Supreme Court rulings have defined the permissible scope of land-use conditions under the federal “takings” clause.  In Nollan v. California Coastal Comm’n., 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), the Court held that “a unit of government may not condition the approval of a land-use permit on the owner’s relinquishment of a portion of his property unless there is a ‘nexus’ and ‘rough proportionality’ between the government’s demand and the effects of the proposed land use.”

In Koontz, the U.S. Supreme Court was faced with a different question that was not expressly answered by Nollan and Dolan.  As noted by Justice Alito, writing for the majority:

The [government] believes that it circumvented Nollan and Dolan because of the way in which it structured its handling of a permit application submitted by [the property owner]…  The [government] did not approve his application on the condition that he surrender an interest in his land.  Instead, the [government], after suggesting that he could obtain approval by signing over such an interest, denied his application because he refused to yield.

Despite the government’s attempt to side-step the Constitution, the U.S. Supreme Court found that the government’s action was subject to the “nexus” and “rough proportionality” requirements of Nollan and Dolan.  Again, Justice Alito, writing for the majority:

We have said in a variety of contexts that “the government” may not deny a benefit to a person because he exercises a constitutional right . . . Those cases reflect an overarching principle, known as the unconstitutional conditions doctrine, that vindicates the Constitution’s enumerated rights by preventing the government from coercing people into giving them up.

* * *

Nollan and Dolan “involve a special application” of this doctrine that protects the Fifth Amendment right to just compensation for property the government takes when owners apply for land-use permits.

                                                                          * * *

Nollan and Dolan . . . allows the government to condition approval of a permit on the dedication of property to the public so long as there is a “nexus” and “rough proportionality” between the property that the government demands and the social costs of the applicant’s proposal.  Our precedents thus enable permitting authorities to insist that applicants bear the full costs of their proposals while still forbidding the government from engaging in “out-and-out . . .  extortion” that would thwart the Fifth Amendment right to just compensation.

In other words, under Nollan and Dolan, a government can require an exaction of property as part of its approval of a land-use permit.  The government, however, must be able to show that there is a nexus between the exaction and the proposed development.  Any exaction must be proportional to the impact of the project.  Otherwise, the permit conditions rise to the level of a Fifth Amendment taking and the government is constitutionally required to provide just compensation.

Koontz broadens the holdings of Nollan and Dolan to situations where the government denies a permit because the owner refuses to accede to the government’s demands:

The principles that undergird our decisions in Nollan and Dolan do not change depending on whether the government approves a permit on the condition that the applicant turn over property or denies a permit because the applicant refuses to do so.

Koontz further broadens the holdings of Nollan and Dolan to situations where the government is demanding a payment of money in lieu of surrendering property:

Such so-called “in lieu of” fees are utterly common place, and they are functionally equivalent to other types of land use exactions.  For that reason . . . so-called “monetary exactions” must satisfy the nexus and rough proportionality requirements of Nollan and Dolan.

Koontz has broadened a land developer’s rights to raise Constitutional challenges to common conditions found in land-use and development permits.  It is unclear how states and local governments might attempt to modify their existing permit systems in light of this decision.  Developers are advised to seek the assistance of an experienced attorney to assist in negotiating permits where the government is demanding an exaction of property or monetary payment in return for a permit approval.

Erik S. Mroz is an attorney with Drewry Simmons Vornehm, LLP and practices in the areas of Environmental Law, Regulatory Matters, Insurance Coverage, and Litigation.  With three offices across the State of Indiana, Drewry Simmons Vornehm, LLP was originally founded as a boutique law firm focusing on the construction industry, including public and private owners, design professionals, general and trade contractors, construction managers, material suppliers, insurers and sureties.  With the growth of the law firm, Drewry Simmons Vornehm, LLP has expanded its legal practice to meet the wide-ranging needs of its clients. To speak with Mr. Mroz or another Drewry Simmons Vornehm, LLP attorney, please call us toll-free at 1 (866) 938-4848.


Daniel M. Drewry

Daniel M. Drewry

Daniel M. Drewry

About This Blog

The DSV Construction Law Blog is hosted by Daniel M. Drewry. Dan is a Partner with the law firm Drewry Simmons Vornehm, LLP and concentrates his practice in the areas of Construction Law and Litigation, and Labor & Employment Law.

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