Water rule

EPA Water Rule Stuck in Limbo as Courts Weigh In

For the past year, industry interests have decried the administration’s water rule as a federal power grab affecting millions of acres of water around the country. While the assertion may be a stretch, the realities of which types of water bodies will receive federal protection is confusing at best.

Both the Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) have assured the public that if you didn’t need a federal permit before, you will not need one now. Despite these assurances, careful analysis of the regulation and supporting documents tell a different story. Buried in the economic analysis submitted by the EPA is a figure that proves the rule is in fact an expansion of existing authority and will increase the amount of permits that will be required by about three percent – not exactly the millions of acres reported by naysayers, but clearly an expansion over the status quo.

Just how the regulation will affect development will depend on a number of factors, but the largest one may be in which part of the country you reside. The northeastern states largely appear unaffected, but as you move further west and south, you will definitely notice an increase in federal protections. For NAIOP members, that will mean a surge in dredge and fill permits – known as 404 permits – in certain states for development projects. Acquiring one of these permits is a time-consuming and oftentimes costly process, which further exacerbates the anxiety many feel regarding EPA increasing its authority.

As more and more industries complained about the new regulations to their elected officials, a slew of legislation has been introduced in this Congress to curtail the rule’s impact. The House of Representatives has already passed a bill that would force the EPA and Corps to go back to the drawing board to rewrite the regulation from scratch with more input from states. There is a similar proposal in the Senate, but the Senate leadership is betting on a seldom-used procedural move called the Congressional Review Act. The Act allows Congress to vacate a rule within the first 60 days of its implementation with a majority vote. In the Senate, it only requires a 50-vote threshold, as opposed to the 60 votes normally required to overcome a filibuster.

While the Congressional Review Act has a good probability of passing both chambers of Congress, the chances that President Obama will not veto a bill eliminating one of his signature environmental legacy rules are slim. If and when he does veto Congress’ attempts to override the water rule, there are not enough votes to override it.

In the midst of Congress grappling with finding the numbers need to stop the increase of federal protections for bodies of water, the courts have stepped in and temporarily halted the rule from being implemented. The Sixth Circuit Court of Appeals, following a similar injunction from a federal District Court, have issued a stay on the agencies from implementing the rule until they have a chance to sort out a few important issues. The first: Which court has jurisdiction? While seemingly only procedural, this decision will have a dramatic impact of the future of the regulation.

The Appeals Court will decide in December if they have jurisdiction over the rule, or if it should be handled by the District Courts. If they decide they do have jurisdiction, the issue could be handled one way or the other in a relatively short time span. If they decide that the District Courts have jurisdiction, we will see this drawn out through the judicial process, probably for years, before it is finally decided.

In the event that the rule moves forward, there is some good news. NAIOP has negotiated to exclude many of the more onerous aspects of the rule that were initially proposed. By working with the EPA from the onset, we were able to effect several changes that will help protect our members’ interests. Those changes include several exemptions listed below that will not be regulated:

  • Ditches that do not flow year-round and are not created in a wetland, drain a wetland or relocate a tributary of a navigable water.
  • Settling basins used during construction activities.
  • Erosional features that do not have a bed, bank and ordinary high-water mark.
  • Stormwater control features constructed to convey, treat or store stormwater that are created on dry land.
  • Low-impact development features, such as rain gardens.

While these changes are technical in nature, they represent fixes to the parts of the regulation that would have done the most harm to developers. If this rule does become implemented, NAIOP members will be grateful that sharper edges of the rule have already been filed down. If the rule is invalidated by the courts, then it will be up to the new administration to figure out how to move forward. This is yet one more reason to vote in 2016!

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