What is the Legal Case Against EPA’s Water Rule?

Holstein cow grazes by a pond in Lancaster, NH.
Photo credit: Bloomberg.

by Sean Hackbarth, Contributing Author: Now more than ever, every time it rains, one Indiana farmer fears his land will be declared a federally-regulated body of water:After a recent rainfall, Charlie Houin looked out over one of his cornfields in Marshall County as a clear stream of water flowed beneath him. With the summer's high rain levels flooding fields, drainage systems and the streams that carry excess water away are crucial for farmers to maintain healthy crops.

But Houin, and farmers across the country, are now in a fight for control over these small waterways -- battling a new rule in the Clean Water Act opponents say will be overly burdensome and costly to the agriculture industry.

... Houin said he not only sees this as one of the EPA's biggest land grabs in history, but he's worried the permit process is going to be crippling when he needs to repair ditches, waterways and drainage systems for his farm. When you have only one chance a year at the planting season, he said, having farmland and waterways tied up in an approval process will be costly.Worry about federal overreach isn't limited to farmers and ranchers. Many other businesses also oppose the agencies' regulatory overreach.

This has driven business groups to take EPA and the Army Corps of Engineers to federal court.

The U.S. Chamber, the National Federation of Independent Business, the Portland Cement Association, the Tulsa Regional Chamber, and the State Chamber of Oklahoma filed suit to stop the new Waters of the U.S. (WOTUS) which dramatically expands the definition of federally-regulated "navigable waters" covered by the Clean Water Act.

They make the case that the water rule gives the federal government unprecedented and unconstitutional regulatory authority over nearly every body of water in the United States and undercuts state and local government sovereignty.

Here's a breakdown of their argument.

Violates the Clean Water Act
The plaintiff's argue that the new waters definition goes beyond its authority under the Constitution and the Clean Water Act, because it "confers jurisdiction to the Agencies over waters that are not 'navigable waters.'"

Under the Clean Water Act the federal government has jurisdiction over only "navigable waters."

Initially that was defined as bodies of water where interstate transportation or commerce could take place. However, over the decades, the regulatory creep set in and that definition broadened from lakes and rivers bordering states (literally interstate waters) to include tributaries and wetlands that abut regulated water bodies. WOTUS is the latest expansion.

Through the water rule, "thousands of miles of intrastate waters that have no substantial effect on interstate commerce" are now under federal regulation, the plaintiffs note. This includes wetlands, streams, ditches, ponds, and bodies that only occasionally hold water.

This broad federal jurisdiction is what has farmers, ranchers, home developers, other businesses upset.

To understand the plaintiffs' legal argument, you need to know about a 2006 Supreme Court case, Rapanos vs. United States. In it, the court established two tests for determining if a body of water falls under federal jurisdiction.

The first is "continuous surface connection." In his plurality decision, Justice Antonin Scalia wrote that the Clean Water Act requires that a body of water have a "continuous surface connection" to another federally-regulated body for federal regulators to have jurisdiction.

The second is "significant nexus," found in Justice Anthony Kennedy's concurring opinion. In order to be considered a navigable water, a body of water must "significantly affect the chemical, physical, and biological integrity" of "waters that are or were navigable in fact or that could reasonably be so made."

The water rule fails both tests, the plaintiffs explain:[C]ountless waters, wetlands, and normally dry lands will be classified as 'waters of the United States' despite their complete detachment--both on a surface level and on a chemical, physical, and biological level--to any navigable water.
The Matrix Defense
One example of how EPA fails to meet these tests is by employing something I call the "Matrix Defense." EPA claims it can determine a federally-regulated tributary to a body of water simply with the use of computer "desktop tools that provide for the hydrologic estimation of a discharge sufficient to create an ordinary high water mark." Virtual reality trumps physical reality, as the filing explains:"In other words, if a computer model suggests that a feature has enough flow to create a bed and bank and ordinary high water mark, the Agencies can determine that that feature is a 'tributary,' even if the physical indicators have not been observed in the field."Neo could stop bullets, but he didn't have that this kind of power.

Unfortunately for EPA, this tactic doesn't satisfy either Justice Scalia's continuous surface test or Justice Kennedy's significant nexus test.

WOTUS is Unconstitutional
The water rule doesn't just violate the Clean Water Act. The plaintiffs argue it also violates the 10th Amendment, which states:The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.State governments have the authority to regulate land and water in their states. The Clean Water Act affirms that states have "the primary responsibilities and rights ... to plan the development and use ... of land and water resources."

However, with the water rule, the federal government claims regulatory authority over nearly every body of water in America. Waters, including ditches, canals, ponds, and wetlands, as far as 4,000 feet from a navigable water can be regulated by the federal government.

This violates the 10th Amendment. As the plaintiffs state:The Supreme Court requires a 'clear and manifest' statement from Congress to authorize [such] an unprecedented intrusion into traditional state authority.State and local government sovereignty gets squeezed as the federal government expands its reach.

EPA Avoided Looking at the Economic Effects on Small Businesses
Not only does the water rule conflict with the Constitution and the Clean Water Act, regulators didn't follow the proper rulemaking process.

The plaintiffs point out that EPA ignored the Regulatory Flexibility Act (RFA) which requires federal agencies to analyze the effects of proposed regulations on small businesses, organizations, and governments.

EPA claims it didn't have to do this because the water rule "will not have a significant economic impact on a substantial number of small entities," and it "will not affect small entities to a greater extent than the existing regulations."

The Small Business Administration's Office of Advocacy disagreed:[T]he Clean Water Act and the revised definition proposed in this rule directly determine permitting requirements and other obligations. It is unquestionable that small businesses will continue to seek permits under the Clean Water Act. Therefore they will be subject to the application of the proposed definition and the impacts arising from its application.The "fundamentally flawed" rulemaking process drove SBA to ask EPA to "withdraw the rule and that the EPA conduct a Small Business Advocacy Review panel before proceeding any further with this rulemaking."

EPA ignored the SBA along with similar comments from the U.S. Chamber and other business groups and went ahead with finalizing the new definition.

It's Hard to Know How to Obey the Law
Finally, the water rule is too vague. If people can't understand the regulation, how are they supposed to behave lawfully? The water rule "fails to provide fair notice of what conduct is prohibited by the civil and criminal provision of the Clean Water Act and grants overly broad enforcement discretion to" federal regulators, writes the plaintiffs.

To see how this applies in the real world, let's go back to Charlie Houin's story:The water rule states that a "tributary must show physical features of flowing water -- a bed, bank and ordinary high water mark -- to warrant protection," as well as connecting to a larger body of water.

Discussing the rules with The Tribune, Houin stood near one of his small waterways that, he said, he has always thought of as a ditch and has never had regulatory issues with. But based on the EPA's definition, Houin's small "ditch" could be considered as a tributary because it has continually flowing water that empties into the nearby Yellow River.

This is a major problem, [Justin Schneider, senior policy adviser for the Indiana Farm Bureau] said, because no matter what a farmer may think a waterway is, it comes down to the EPA's interpretation. A farmer could be in violation and not realize it, he said, calling it "an issue with potential for big repercussions." Beyond having to obtain expensive federal permits, the Indiana Attorney General's Office said farmers could face civil penalties up to $37,500 a day for violating the new rule.Citizens "cannot reasonably determine based on the face of the relevant statutes and regulations what is required of them," plaintiffs state.

Let's step beyond how the water rule violates the Constitution and ignores federal law. It also will shower uncertainty over every property owner.

An economy can't function effectively if people fear that taking some ordinary action like filling in a ditch will require costly permits or unleash the fury of federal regulators.

The easier path to take is to not invest in and improve one's business. Don't build an addition to a factory that could employ more people. Don't build a housing development and increase the housing supply for families. Don't touch that gully the rain cut in the corn field. Instead, let it go fallow.

That may satisfy a bureaucrat in Washington, D.C., but it means frustration for Americans having to live under those rules.
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Sean Hackbarth is a policy advocate and Senior Editor at U.S Chamber of Commerce. He twitters at @seanhackbarth and is a contributing author at the ARRA News Service.

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