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You are here: Home » Resources » Articles » WOTUS Update: EPA & USACE Final Rule

October 4, 2023

WOTUS Update: EPA & USACE Final Rule

By Katie Morgan, EP, PWS

Project Risk Profiles Shifted: Impact on Lenders, Borrowers, and Developers

While there are many moving pieces in the works, the final rule clarified that effective immediately, USACE districts have resumed issuance of all AJDs nationwide under the applicable regulatory regime. The adjustments in regulations change the risk landscape for projects involving or impacting water bodies and wetlands, necessitating a careful reevaluation of project risk profiles. Projects are expecting delays because of backlogs, new implementation processes, and procedures. The good news is projects are being processed, and the new rule provides some clarity on future federal oversight of jurisdictional waters.

On August 29, 2023, the U.S. Environmental Protection Agency (EPA) and United States Army Corps of Engineers (USACE), together “the agencies”, issued a final rule to amend the “Revised Definition of ‘Waters of the United States’” rule, published in the Federal Register on January 18, 2023. This amendment was necessary because of the decision by the U.S. Supreme Court in the case of Sackett v. EPA, which invalidated certain parts of the January 2023 WOTUS rule.

In response to the Supreme Court’s decision, in the case of Sackett v. EPA case, the agencies revised and clarified key aspects of the regulatory text to align with the Court’s interpretation of the Clean Water Act. This updated rule, titled “Revised Definition of ‘Waters of the United States’; Conforming,” was officially published in the Federal Register and went into effect on September 8, 2023. This regulatory change ensures consistency and compliance with the Court’s ruling, providing clarity for businesses and stakeholders involved with water-related regulations.

Operative Definition of "Waters of the United States" (WOTUS)

       Image Credit: EPA

Of note, the January 2023 Rule, as amended by the conforming rule, is not currently operative in certain states and for certain parties due to litigation on the January 2023 Rule. The agencies are implementing the January 2023 Rule, as amended by the conforming rule, in 23 states, the District of Columbia, and the U.S. Territories (shaded green below). In the other 27 states and for certain parties (shaded purple below), the agencies are interpreting “waters of the United States” consistent with the pre-2015 regulatory regime and the Supreme Court’s decision in Sackett until further notice.

Key WOTUS Amendment Updates Since Our Last Blog

Since our last update, the agencies’ amendments changed the parts of the 2023 definition of “waters of the United States” that are invalid under the Sackett decision. The most notable updates include:

  1. Significant Nexus Test Removal: The rule eliminates the significant Nexus test when determining which tributaries and other bodies of water qualify for federal protection.
  2. Adjacency Test Revision: The criteria for the adjacency test when identifying federally jurisdictional wetlands has been revised, providing greater clarity and removing the significant nexus standard. The revised definition of an adjacent wetland now means “having a continuous surface connection.”
  3. Interstate Wetlands Clarification: It’s now clear that interstate wetlands are not classified as interstate waters.
  4. Additional Waters Specification: The rule clarifies the types of features that can be considered under the “additional waters” category; removing the significant nexus standard and removing wetlands and streams from the text of the provision.

Project Risk Profiles Shifted: Impact on Lenders, Borrowers, and Developers

These WOTUS changes significantly impact project risk profiles:

  1. Tributary Criteria Shift: The new rules alter how tributaries are defined and regulated. Previously, they could be connected through a significant nexus to regulated waters. Now, tributaries must meet stricter criteria, being “relatively permanent, standing, or continuously flowing bodies of water.” This change means that some water bodies, such as ephemeral ones that flow only after rain events and lack sustained groundwater input for a season or more, will no longer be subject to regulation. This adjustment can affect projects that interact with these water bodies, potentially altering their risk profiles.
  2. Adjacent Wetland Requirements: The definition of adjacent wetlands is now more precise, requiring a “continuous surface connection” to waters considered “waters of the United States.” Wetlands separated from these waters by barriers, like berms, will no longer be regulated. These “isolated” wetlands, no longer regulated by the USACE, can impact project risk profiles, particularly those projects involving or affecting these wetlands.
  3. Interstate Wetland Regulation: Wetlands that cross state lines can no longer be regulated solely based on their interstate nature. They must now satisfy the adjacency test to fall under Corps jurisdiction. This change can alter the risk profiles of projects involving such wetlands, as they may no longer be subject to the same regulatory oversight.

These adjustments in regulations have the potential to change the risk landscape for projects involving or impacting water bodies and wetlands, necessitating a careful reevaluation of project risk profiles.

Projects with a federal nexus, utilizing federal funding, federal mortgage insurance, federal permitting, or other federal decision-making, are still subject to Executive Order 11990: Protection of Wetlands. Under this EO each Federal agency must provide leadership and take action to minimize the destruction, loss or degradation of wetlands, and to preserve and enhance the natural and beneficial values of wetlands. Each agency, to the extent permitted by law, must avoid undertaking or providing assistance for new construction located in wetlands unless the head of the agency finds: there is no practical alternative to such construction; the proposed action includes all practical measures to minimize harm to wetlands that may result from such use. In making this finding the head of the agency may take into account economic, environmental, and other pertinent factors (Section 2(a)). Each agency must also provide the opportunity for early public review of any plans or proposals for new construction in wetlands (Section 2(b)).

The amendments to the January 2023 Rule do not change the existing exclusions from the definition of “waters of the United States”.

Navigating The Stream: USACE Permitting Updates and Decision Timelines

Now that the conforming rule has become effective, the nationwide pause on issuance of certain approved jurisdictional determinations (AJDs) is now lifted in entirety. Effective immediately, USACE districts have resumed issuance of all AJDs nationwide under the applicable regulatory regime. Additional regulatory guidance letters from USACE on how to apply the new rule have not been issued, and it remains uncertain if or when guidance will be issued from USACE.

  • Where the January 2023 Rule is not enjoined, the agencies are implementing the January 2023 Rule, as amended by the conforming rule.
  • In the jurisdictions and for the parties where the January 2023 Rule is enjoined, the agencies are interpreting the phrase “waters of the United States” as consistent with the pre-2015 regulatory regime and the Supreme Court’s decision in Sackett.

Delays with processing requests with USACE are still expected as the USACE regional offices work through the backlog of requests submitted over the past several months and new requests submitted under the most recent rule. To clarify how recent changes impact decisions related to “waters of the United States.” Here’s what you need to know:

  1. Timing Matters: The agencies’ actions are governed by the definition of “waters of the United States” that is in effect at the time the Corps completes an AJD, not by the date of the request for an AJD.
  2. Previous AJDs: Decisions made under the 2020 Navigable Waters Protection Rule (NWPR) before August 30, 2021, won’t be revisited unless they meet specific criteria outlined in RGL 05-02. This applies to decisions that weren’t linked to permit requests.
  3. Decisions Under Different Rules: Similarly, decisions made under the January 2023 Rule or the rules before 2015, if unrelated to permit actions, won’t be reopened unless they meet RGL 05-02 criteria.
  4. Requesting a New AJD: However, if you received a decision under the 2020 NWPR, the January 2023 Rule, or pre-2015 rules before the Sackett decision, and you want it reconsidered under the current rules (January 2023 Rule as updated on August 29, 2023, or pre-2015 rules in line with Sackett), you can request a new decision based on the current regulatory framework.
  5. Implications of the new rule for programs: administered through states, such as Section 401 water quality certification, and National Pollutant Discharge Elimination System (NPDES) permits will vary based on the policies and interpretations of each state (Creed et all 2017).

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