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US EPA water rule cuts costs for energy facilities but faces murky legal future

The Trump administration's final replacement for the Obama-era Clean Water Rule, published in the Federal Register April 21, would ease permitting obligations for energy infrastructure significantly.

But just like the rule it replaced, the ultimate fate of the Navigable Waters Protection Rule, or NWPR, will depend upon the outcome of a likely large number of court challenges and an upcoming presidential election.

The NWPR is intended to resolve a question that has long vexed landowners, developers, activists and the courts: what bodies of water are subject to federal jurisdiction as "waters of the United States" under the Clean Water Act.

Hundreds of cases and dozens of courts have attempted to discern the intent of Congress when lawmakers added that phrase to the 1972 act, the U.S. Environmental Protection Agency, U.S. Army Corps of Engineers and U.S. Department of Defense noted in jointly issuing the new rule.

While lawsuits challenging the NWPR are sure to follow, its issuance marked the last regulatory step in a yearslong effort to repeal the Clean Water Rule that was launched just a few months after President Donald Trump took office in 2017.

The Obama administration's Clean Water Rule was largely aimed at resolving uncertainty created by a U.S. Supreme Court ruling in 2006 in Rapanos v. United States that forced district and circuit courts to choose from one of two jurisdictional tests authored by Justices Antonin Scalia and Anthony Kennedy.

Kennedy wrote a concurrence holding that waters and wetlands are federally jurisdictional when they share a "significant nexus," while Scalia and a plurality of justices took a more narrow view by maintaining those water bodies must share "a continuous surface connection" to receive Clean Water Act protections. Lower courts have generally favored Kennedy's test, in part because it is more deferential to federal authority, according to a 2018 Harvard Law Review article.

Relying on hydrological science to determine what waters share a significant nexus, the Obama-era Clean Water Rule sought to clear up further uncertainty by defining key terms such as "tributaries" and "neighboring." When the rule was finalized in 2015, the EPA estimated it would create between $158.4 million and $465.0 million in annual compliance costs and produce between $338.9 million and $572.3 million in annual benefits.

With legal challenges to the Clean Water Rule pending across the country, Trump in March 2017 directed the EPA and Army Corps to review the regulation through the lens of Scalia.

Fewer permits for coal mines, power facilities

The NWPR largely reflects a proposed definition of a U.S. water unveiled in December 2018. The EPA estimated that the new rule will allow companies to avoid spending between $109 million and $513 million annually under the Clean Water Act's Section 404 permitting program. But those savings will come at the expense of losing between $55 million and $173 million in annual public benefits.

The final rule would specifically reduce the number of avoidance, minimization and mitigation measures required by Section 404 permits and cut down on the future number of those permits issued. Section 404 permits are required to undertake dredging and filling activities where Clean Water Act jurisdiction applies.

With regard to energy-related infrastructure, an EPA analysis of U.S. Army Corps data showed that the new rule would primarily benefit coal mining and electric power facilities. It would also favor pipelines, oil and gas extraction facilities, and natural gas distribution infrastructure.

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"This definition strikes a reasonable and appropriate balance between federal and state waters and carries out Congress' overall objective to restore and maintain the integrity of the nation's waters in a manner that preserves the traditional sovereignty of states over their own land and water resources," the agencies said in the final rule.

Overall, the revised definition could eliminate Clean Water Act protections from at least 51% of all wetlands and at least 18% of streams covered by the Obama-era rule, according to maps compiled by the U.S. Geological Survey.

In January, a review by the EPA's Science Advisory Board concluded the agencies' 2018 proposal "decreases protection for our nation's waters" and did not fully incorporate a 2015 report from the EPA emphasizing that the functional connectivity of waters is more than a matter of surface geography.

'This all comes down to the election'

The Supreme Court has declined on multiple occasions to revisit the thorny jurisdictional issues that flowed from its Rapanos decision, noted Mark Ryan, who spent 14 years specializing in Clean Water Act law as regional counsel for EPA Region 10. However, he predicted that the Trump EPA will invite the high court to take a fresh look if given the chance.

"My supposition is that the EPA is banking on getting back in front of the Supreme Court on this, which means it all comes down to the election," Ryan said in an April 21 interview. Former Vice President Joe Biden, the presumptive Democratic nominee for president, will almost certainly withdraw the rule if elected, he said.

Further complicating the matter is a January 2018 ruling by the Supreme Court in which the justices unanimously held that challenges to the Obama-era Clean Water Rule must originate in district courts. That means legal challenges to the NWPR will need to follow the same route, creating a possible scenario in which the rule is stayed in some states but takes effect in others.

"The whole idea with this rule was to create certainty, but this is about as far from certainty as you can get," Ryan said.

Ryan, who helped author the Obama-era regulation, also predicted that the NWPR is unlikely to survive judicial review in the lower courts because it relies exclusively on the Scalia test. "The four circuits that have looked at it have all uniformly rejected the Scalia test as the sole basis of jurisdiction," he said.

Meanwhile, a coalition of state attorneys general has already challenged the Trump administration's September 2019 rule formally repealing the Clean Water Rule.