How the ESA, Streambed Alteration Agreements, and the Clean Water Act Are All Curtailing the Exercise of Water Rights
Recent court cases and regulatory changes have had major effects on the ability to for diverters to exercise their water rights, even those long-held. At the ACWA 2015 Fall Conference held in December, a panel of lawyers discussed the issues, touching on the Endangered Species Act, Streambed Alteration Agreements, the new ‘Waters of the US' rule, and more.
Seated on the panel were attorneys Andrew Hitchings, David Ivester, and Susan Hori. The panel was moderated by Jennifer Buckman with ACWA’s Legal Affairs Committee.
ANDREW HITCHINGS: The Endangered Species Act and water rights
Mr. Hitchings began with a refresher on the basics on the federal Endangered Species Act which was enacted in 1973 to protect listed species and their habitats. “Some commentators have referred to the federal ESA as the ‘pitbull’ of environmental statutes because of its very straightforward language and the way that it can be enforced both by federal agencies as well as through citizen suits,” he said.
The key primary federal agencies that handle ESA implementation, such as listing decisions, consultation with action agencies, and preparing recovery plans, are NOAA Fisheries which is responsible for marine species and anadromous fish, and the US Fish and Wildlife Service which is responsible for terrestrial and freshwater fish.
In 1982, the ESA was amended to add section 2(c)(2), which stated, ‘It is further declared to be the policy of Congress that Federal agencies shall cooperate with State and local agencies to resolve water resource issues in concert with conservation of endangered species.’ “That was amended at that time because of the significant disputes that were occurring involving water rights and water supplies,” he said. “It does use the word ‘shall’ even though it is stated within the context of congressional policy. There’s very few cases that interpret that, but there’s been a recent case that has, and there’s a petition before the US Supreme Court to address that.”
ESA Section 4 sets forth the procedures and criteria for listing species as endangered or threatened, and for the identification of critical habitat for listed species, he said. “There is a significant disconnect that is occurring between listing the species and actually designating critical habitat; the vast majority of species that have been listed still don’t have designated critical habitat for them yet.”
ESA Section 7 is the area that most water agencies are probably familiar with because of the duty to consult on any projects that have a federal nexus, Mr. Hitchings said. “If there is permitting, other federal approval, or federal funding, there’s the requirement that the federal agency associated with that as the action agency has to consult if there are potential impacts to listed species. The substantive requirement is that the federal agencies have to ensure that their actions will not jeopardize listed species or adversely modify designated critical habitat.”
“Pursuant to ESA regulations that have been promulgated, Section 7 only applies to actions in which there is discretionary federal involvement or control,” he noted. “That issue has started to arise in several cases recently after the US Supreme Court’s 2007 decision in National Association of Home Builders versus Defenders of Wildlife.”
Once there is the requirement to consult under Section 7(a)(2), the action agency will prepare a biological assessment describing the proposed action, and it will provide that to either service, whoever has jurisdiction, which will determine whether it’s likely to adversely affect listed species; this is formal consultation, he said. As a result of that, the service ultimately will prepare a biological opinion, and that will either be a jeopardy opinion that the action could cause jeopardy or a non-jeopardy opinion. If it’s a jeopardy opinion where there’s an adverse effect on the species or adverse modification, the service has to identify reasonable and prudent alternatives or RPAs to avoid jeopardy, he said.
The biological opinion would also authorize any incidental take and can include an Incidental Take Statement as part of the biological opinion to provide coverage to the entities that are operating under the project. Then ultimately, the action agency decides whether it’s going to go forward with the project; if it goes forward, how it’s going to proceed and how it’s going to implement the RPAs that are issued by the consulting agency, he said.
ESA Section 9 is the provision that prohibits take. “If the ESA is the pitbull of environmental statutes, this is probably the sharpest tooth on the pitbull,” Mr. Hitchings said. “It applies to everyone; criminal and civil penalties are available and injunctive relief is available to prevent a take of listed species. Take is defined very broadly as ‘harass, harm wound, capture, and kill.’ Habitat modification in and of itself can constitute a take; regulations define harm as an act including significant habitat modification or degradation which actually kills or injures fish and wildlife. That take can be permitted however through the section 7 consultation or under Section 10 under habitat conservation plan.”
The ESA also has a citizen suit provision, so pursuant to Section 11, private citizens and organizations can sue to enforce the ESA under both section 7 and section 9, and they can also challenge listing decisions, he noted. “Many of the ESA lawsuits and the case law that you see out there are the results of actions filed as citizen suits, and a significant issue is the fact that prevailing plaintiffs are entitled to recover reasonable attorney fees and costs if they prevail in any ESA action.”
Mr. Hitchings then turned to how the ESA interacts with water rights, and how it can limit the exercise of established rights or limit new water projects where new water rights need to be obtained for them. Water use and development can have a significant effect on species and riparian habitat by cutting off access; by performing regular maintenance activities that agencies need to do to exercise their water rights, and by the depletion of instream flows that can affect habitat, he said.
Mr. Hitchings noted that the listed species under the ESA does lean heavily towards aquatic species. “There were over 1300 species listed as of 2013, and if you add those up, many of them are aquatic species or directly or indirectly affected by aquatic resources and dependent on their ecosystems,” he said. “The listing process plays a large role in exacerbating conflicts between the species needs for water, once that species listed, and the needs to develop that water for human uses.”
Many water rights continue to have a federal nexus as water users are constantly have to address continuing maintenance and operations requirements. “Often they require a federal permit,” he noted. “Often agencies are looking for federal funding for new projects or system improvements; and then there are water supply contracts and renewals, particularly under the CVP that are subject to ESA consultation. Then there’s a gamut of other permits and approvals from the Corps and the Bureau and other federal agencies.”
Mr. Hitchings then discussed some case studies that he said demonstrate how the ESA is operating in a manner to curtail water rights.
Case: United States of America v. Glenn-Colusa Irrigation District, 788 F. Supp. 1126 (E.D. Cal. 1992)
“Our firm serves as general counsel for Glenn-Colusa Irrigation District (GCID); we were not general counsel at the time that this case ultimately ended up in an injunction in the Eastern District, but some commentators call this the high water mark of ESA Section 9 enforcement against a water user,” he said.
The Glenn-Colusa Irrigation District is 150,000 acre district in the Sacramento Valley with over 1000 landowner farms. GCID has water rights that date back to 1883 on the Sacramento River; they have pre-1914 claims exceeding 1 MAF and a settlement contract with the Bureau for 825,000 acre-feet.
Mr. Hitchings gave the facts of the case. Throughout the District’s history, they had several different fish screens installed to address impacts on fish. In 1972, the Department of Fish & Game installed a screen that ultimately was not performing, and substantial mortality was still occurring. In 1989, GCID applied for a dredging permit from the Corps that required ESA section 7 consultation with NMFS regarding the effects on endangered winter-run salmon. NMFS issued a BiOp that included an ITS providing that a permit could be issued allowing continued pumping, if an effective new fish screen were installed; GCID, however, did not obtain an ITP. In 1991, the United States sued to enjoin GCID from pumping water from the Sacramento River in violation of the ESA where GCID’s fish screens were entraining listed salmonids. The court found that GCID violated the ESA and granted the injunction.
Specifically, the district court found that the ESA should not yield to state water rights: ‘The [ESA] provides that federal agencies should cooperate with state and local authorities to resolve water resource issues regarding the conservation of endangered species. This provision does not require, however, that state water rights should prevail over the restrictions set forth in the Act. Such an interpretation would render the Act a nullity. The Act provides no exemption from compliance to persons possessing state water rights, and thus the District’s state water rights do not provide it with a special privilege to ignore the Endangered Species Act. Moreover, enforcement of the Act does not affect the District’s water rights but only the manner in which it exercises those rights.’ (Id. at 1134.)
“ESA section 2(c)(2) discussed it not in an express holding necessarily, but it did state that with regard to that section, it provides no exemption from compliance to persons possessing state water rights and so the district’s water rights do not provide it with any expressed special privilege,” Mr. Hitchings explained. “It shows you how in this intersection with water rights, the ESA is a significant limiting overlay on them.”
“As a result of the litigation, GCID ultimately entered into a stipulated judgment and proceeded over the course of several years following to install a new fish screen at a cost of approximately $80 million,” Mr. Hitchings said. “It’s one of the largest flat plate fish screens in the world; it’s 1300 feet … so you can see the effect of what happens with these ESA enforcement actions under Section 9.”
Case Study: Garden Highway Mutual Water Company, Feather River, Sutter County, CA
GHMWC has senior water rights on the Feather River that date back to 1920, and has operated its river diversion pumps at the same location since then. In the last 30 years, the main channel of the Feather River has migrated substantially and sand bars have moved in, and as a result, they’ve needed to do maintenance dredging in order to be able to exercise their diversions.
The annual maintenance requires a Rivers and Harbors Act section 10 permit from the Corps (as well as a SAA from Cal DFW), and this federal nexus triggers ESA section 7 compliance. As a result of the Corps-NMFS consultation that was required in order to obtain the RHA section 10 permit, GHMWC has been required to undertake numerous new avoidance measures during the maintenance work, and to plan for and install a fish screen within a certain amount of time.
GHMWC’s Corps permit and the SAA issued via the Cal DFW have fixed durations, so every time they need to be extended or renewed, you can get back into a reconsultation loop, he said.
NRDC v. Jewell, 749 F.3d 776 (9th Cir. 2014), cert. denied, 135 S.Ct. 676 (2014) (USBR Contract Renewal Case—Discretionary Actions Under Section 7(a)(2)
Mr. Hitchings noted that this case is still pending. The 9th Circuit in 2014 in an en banc opinion addressed that section 7(a)(2) discretion issue as to whether an agency had sufficient discretion with regard to contract renewals. The Ninth Circuit sitting en banc reversed and found that the Bureau retained some discretion under the original contracts to act in a manner that would benefit the endangered delta smelt, and that the Bureau was therefore required to engage in section 7(a)(2) consultation prior to renewing.
“That’s been remanded to the district court now,” Mr. Hitchings said. “We are back in front of Judge O’Niell in Eastern District Court. It’s stayed until December 15th while that reinitiation occurs with the FWS.”
“In this case, 11 years after the action has been filed, the plaintiffs have indicated that they intend to amend their complaint to add salmonid claims against the Bureau for its alleged failure to consult with NMFS on salmonid issues,” he continued. “They’ve also indicated they intend to pursue a claim under Section 9 on the basis that the settlement releases for the settlement contractors exceeded the amount that was needed for temperature control and that depleted cold water storage that resulted in habitat modification which caused mortality to species in 2014 and 2015, so we will see how that plays out. The federal defendants and the contractors are vigorously defending against that action.”
Aransas Project v. Shaw, 756 F.3d 801 (5th Cir. 2014), reh’g en banc denied, 774 F.3d 324 (2014) (Prado J., dissenting), cert. denied, 135 S.Ct. 2859 (2015) (Whooping Crane Case – Section 9 Habitat Modification Taking Claim)
“I like to call this the ‘If You Give a Mouse a Cookie’ case,” said Mr. Hitchings. “This is the whooping crane case out of the Fifth Circuit. In this case, the Aransas project sued the Texas Commission on Environmental Quality which is the equivalent of the State Water Board.”
The Aransas Project claimed that TCEQ’s issuance of permits to divert water depleted the availability of water, and in turn crane food sources, to such a degree that 23 cranes were harmed, harassed, and eventually killed. The Aransas Project claimed that the permits, when coupled with the then-current drought, reduced water inflow to the estuary, which caused an increase in salinity, and reduced the abundance of crane food sources.
The District Court ultimately granted the request for an injunction prohibiting the equivalent of the State Board from issuing water rights permits until they consulted and had a biological opinion. The Fifth Circuit reversed, and found that the District Court incorrectly went through the proximate cause analysis where they had to show harm, and it found that in the face of multiple natural, independent, unpredictable and interrelated forces, proximate cause and foreseeability were lacking as a matter of law.
“In this Section 9 context, you still have to prove some type of forseeability and proximate cause, particularly in the habitat modification claim, and here there were a lot of attenuated steps you had to go through to get there,” he said.
Bear Valley Mut. Water Co. v. Jewell, 790 F.3d 977 (9th Cir. 2015), petition for cert. filed (U.S. Sept. 22, 2015) (No. 15-367) (Critical Habitat Designation – ESA Section 2(c)(2) and NEPA Issues)
Numerous municipalities and water districts in the Inland Empire that divert water from the Santa Ana River challenged FWS’ final rule designating certain land along the river as critical habitat for the Santa Ana Sucker. The designated land includes dams, water diversion facilities, bridges, wastewater treatment plants, flood control structures, and residences. The plaintiffs were concerned that the designation will result in substantial reductions in locally available water supplies, and cause adverse impacts on water rights, flood control activities, and infrastructure.
“Water agencies challenged it because it designated thousands of acres along the Santa Ana River corridor for the purposes of Santa Ana sucker,” he said. “They participated in detail in the comment period. Ultimately the final rule by Fish and Wildlife Service said that the designation would require the release of water from upstream facilities in high quantity and velocity and would permit only some portion of current water diversions to be accommodated.”
The Ninth Circuit affirmed district court’s decisions that: (1) the FWS satisfied its statutory obligation under ESA section 2(c)(2) to cooperate with state and local agencies to resolve water resources issues; (2) the critical habitat designation was not arbitrary and capricious; and (3) any claims under the National Environmental Policy Act (NEPA) were barred.
“The Ninth Circuit upheld the designation that was denied a rehearing on bond; there’s now a petition for a writ of cert pending before the Supreme Court on the ESA Section 2(c)(2) question, whether they were required to cooperate state and local water agencies, and we expect that will be presented to court for conference in early January,” said Mr. Hitchings.
“You can get pretty jaded with these types of limitations and it’s kind of hard to feel some positives,” he said. “There is another approach to address this while vigorously defending your water rights. A lot of agencies are looking at what kind of proactive projects can they undertake to actually benefit the species that isn’t just about increasing flows, but where you can have habitat benefits and maybe greater benefits than taking water away from the project.”
In the Sacramento Valley, a number of the districts have undertaken the Sacramento Valley salmon recovery program as a means to benefit salmon in the region. The projects being pursued under the program are also consistent with the objectives of NMFS’ Recovery Plan for the Sacramento River. Two examples of projects that have been recently completed are Glenn Colusa Irrigation District’s Painter’s Riffle project and RD 108’s Knights Landing Outfall Gate Project. Mr. Hitchings discussed each in turn:
Painters Riffle: This project is just south of Redding, about 60 miles north of GCID’s district boundaries. A slug of gravel from a large storm event had plugged spawning bed habitat that was constructed in 1986. It had never been fixed, even though it was listed as a high priority action in NMFS’s recovery plan. “GCID went through all the permitting on its own, took its own staff and maintenance folks up there, spent about $300,000 and they’ve restored this riffle, and this year, so far, there are salmon redds in certain areas,” he said. “This is going to be a significant improvement. There’s limited habitat this year with the drought, so this is an exciting project and will probably have much more benefit than just requiring flows for flows sake.”
Knight’s Landing Outfall Gate: Reclamation District 108 undertook the Knight’s Landing Outfall Gate Project. The Colusa Drain drains a significant portion of the Sacramento Valley, eventually flowing into the Sacramento River. Fish can take a wrong turn and head up the drain where there is an outfall gate and there’s no way for them to connect back into the Sacramento River. “This is a DWR facility; it used to have an electric barrier that would prevent fish from going up there; that failed in the 1970s and was never replaced,” he said. “It’s been designated a high priority action but nothing’s occurred on it. RD 108 on its own decided to go outside of their district service area and commit several hundred thousand dollars towards permitting to get this done. What they designed are these picket weirs that raise and lower with the stages of the water below the outfall gates, and that is a positive fish barrier to prevent these fish from going up into the drain. That was just finished last month.”
“So in closing, I want to say there is going to continue to be significant curtailment and limitations on water rights under the ESA unless it’s amended substantially or repealed which I don’t see happening,” Mr. Hitchings said. “There’s going to be a need to address those limitations; there’s one way to address it through permitting, there’s another way to address it through proactive projects. Hopefully the species will recover and that will put less pressure on exercising water rights.”
“Thank you very much.”
For more information …
- Aransas Project v Shaw
- Andy Hitchings ESA Water Rights Memo
- NRDC v. Jewell
- United States v Glenn-Colusa Irrigation District
DAVID IVESTER, How CDFW May MESA You–And Streambed Alteration Agreements Too
“If the Endangered Species Act is the ‘pitbull’ of environmental regulation (and I’m not sure what the Clean Water Act is) … this program typically has not caused all that much trouble over the years,” began David Ivester. “It was enacted in 1961 and amended several times since, the most recent in 2003. While it’s changed a bit in various aspects, its general features have remained consistent throughout. Since we’ve been talking about the language, it’s important to get that.”
The operative provision of the statute is in Section 1600 of the Fish and Game code that says that an entity may not substantially divert or obstruct the natural flow of, or substantially change or use any material from the bed channel or bank of any river, stream, or lake unless it first notifies the Department of Fish and Wildlife; the Department is then charged with identifying if there is any existing fish or wildlife resource that is using that stream and whether that resource would be substantially adversely affected by the proposed activity. If it finds that the resource would be adversely affected, and very often it does, it then proposes a streambed alteration agreement that includes reasonable measures to protect that fish and wildlife resources. Then there is a negotiation process and perhaps an arbitration process in an effort to reach agreement or finality in a streambed alteration agreement.
“Until recently, with a few exceptions this program didn’t really involve much controversy – at least not as much as the Corps of Engineers regulatory program or the regional water board’s associated program, but two recent changes have changed that – one dealing with the geographic jurisdiction of the Department under this program and another dealing with its activity jurisdiction,” he said.
The program’s geographic jurisdiction concerns rivers, streams, and lakes – not all waters, just these three specific types, Mr. Ivester said. “The Department’s general counsel said long ago it applies to lakes but it doesn’t apply to ponds. What’s the difference between a lake and a pond? The considered legal opinion of the general counsel was that ‘lakes are bigger than ponds.’ He didn’t specify any particular size, but it was something to be determined on a case by case basis in the context of a particular landscape, so that just makes it much easier.”
With rivers being big streams, there hasn’t been much talk about that, so most of the focus has been on what does ‘stream’ mean in this context, he said. “As it turns out, there is a well settled meaning of streams in the law,” he said. “In 1987, there was a challenge to the constitutionality of what was then section 1603, now 1602, on the basis of it being unconstitutionally vague. The court basically injected the common law definition of stream into the statute and said the legislature intended to use that definition in the statute and therefore it was not unconstitutionally vague. They pointed to the definition of stream in the common law being that it’s commonly understood as being a water course having a source and a terminus, and banks and channel through which waters flow at least periodically. Moreover, a stream bed is commonly understood as the hollow or channel of a water course, the depression between the banks worn by the regular and usual flow of the water; it includes the lands below the ordinary high water mark, and the ordinary high water mark is a key concept in that.”
“About two months later, the Fish and Game Commission adopted Section 1.72 of Title 14 of the California Code of Regulations, defining stream in much the same terms and definitely referring to a bed and a channel and banks,” he said.
In February of 2014, a staff person from the Department of Fish and Wildlife and a professor from CSU Fresno wrote the report, Mapping Episodic Stream Activity. The report was commissioned by the California Energy Commission to deal with the siting of various energy projects, he said.
“It’s piece of work,” said Mr. Ivester. “It’s basically a science report written by a couple of scientists that comes to legal conclusions. First, the geomorphologist who wrote the report brushed aside Section 1.72 of the California Code of Regulations, saying that it was developed to address a specific sportfishing problem and is not generally used by the Department of Fish and Wildlife and ‘does not apply’ to section 1602 – No citation, nothing, just saying, ‘we know this regulation is out there, but it just doesn’t apply.’”
“They then rejected all other what they termed obsolete guidance or criteria for identifying and defining streams,” he continued. “The ordinary high water mark – out; stream size – out; duration of flow – out; connected to other waters – out; banks – out. The geomorphologists writing the report told us that the source of this notion was unknown; they obviously not read Rutherford or the common law, but anyway, as far as they were concerned, it was out. The final criterion that they looked at was the absence of aquatic life, and that too was out, so at the end of the day, they concluded that there really isn’t any definition of stream, and assumed that that they gave them a free hand in making one up – which they did. That’s what the MESA report is basically all about.”
“I won’t go into all of the technical details of this mapping process, number one, because I don’t understand it, and number two, it doesn’t really matter, because it doesn’t conform to the law anyway; it dispenses with the law,” he said.
Mr. Ivester presented a graphic taken from the MESA report, noting that the MESA delineation should correspond to the pink area; consultants using the conventional method delineated the stream as the blue areas. “You can see it’s quite a dramatic difference,” he noted.[Slide 43, 44] He then presented another example, this from an alluvial fan. “There are lots of places where the water would flow, not very often frankly, but it will flow in these channels; there’s the MESA stream delineation and as you can see, there are more … and much larger.”
He said there are two legal flaws with this new approach: one substantive and one procedural. “Number one, it simply does not correspond to the actual law that exists that the folks writing this report were seemingly not aware of,” he said. “Number two, procedurally, if the Department actually uses this MESA methodology to define its jurisdiction, then that is effectively an unlawful, underground regulation that is being implemented contrary to the Administrative Procedure Act.”
Mr. Ivester said that the issue remains live and ongoing; the issues have been brought to the attention of the Department, and at least initially, the Department is not stepping away from the MESA report. “They issued a memo that just said that they weren’t telling our staff that they have to use it to define the Department’s jurisdiction; it’s just one of many things that might be considered. That’s still up in the air.”
“I should also add that this issue goes far beyond the arid regions,” Mr. Ivester said. “The underlying theory of the report, ie that there really isn’t any existing law and the Department can sort of make up it’s own along the way, applies all across the landscape.”
He then turned to activity jurisdiction. Section 1602 refers to ‘substantially divert or obstruct the natural flow of waters along with a lot of other things, he said. “The issue was recently raised and decided in the Court of Appeal case was whether 1602 requires notification of simply the act of extracting water from a river, stream, or lake without physically altering the bed, channel, or bank. For decades, the Department has applied the program only to activities that substantially alter the bed, channel, or bank and not to mere extractions of water. That changed, at least in Siskiyou County in 2005; it led to a lot of discussions and ultimately the Siskiyou County Farm Bureau sued, seeking declaratory relief. They won in the trial court with declaration that the statute really applied only to activities that physically altered the bed, bank, or channel of the stream.”
“The Department appealed; that’s where I became involved and I managed to lose the case on appeal,” he said. “In June of 2015, the court held that the plain meaning of the word divert as used in the section embraces diversions of water without alteration of the streambed. That decision is now final. Now I could go into all details about the reasoning, but in one sense it doesn’t really matter all the much anymore … The important thing at this stage is to start talking about the implications of this decision, because it frankly it radically changes the law, or if you agree with the Court of Appeal, the way the long existing law is going to be applied compared to the way it was applied in the past, particularly with respect to water rights. It subjects tens of thousands of existing diversions or diverters to the notification requirement and perhaps to streambed alteration agreement restrictions, and if things don’t go right in all that regard, perhaps to civil or criminal enforcement actions.”
“Landowners must now first decide whether their diversions are substantial, within the meaning of the statute and thus whether they are required to notify the department; obviously there could be disagreements with the Department or others about that. After notification, the Department needs to identify existing fish and wildlife resources, or identify whether there would be one that would be substantially adversely affected by the diversion, and if so, propose a streambed alteration agreement that would have reasonable measures designed to protect that resource. These measures may limit the diversions, notwithstanding water rights, that may allow for more water to be diverted.”
There are also CEQA considerations, he pointed out. “The way the Department operates the program now, it cannot ultimately enter into a streambed alteration agreement without first completing CEQA review,” he said. “Usually with the streambed alteration agreement program, the local agency is the lead agency on the CEQA and the Department just makes use of the lead agency’s CEQA document. In this context, the Department may find itself as the only agency that is around that would have to perform the CEQA review, and that’s going to be a challenge.”
“Of course, there’s a negotiation process about what limitations are reasonable and necessary and all of that, there’s the possibility of arbitration if agreement can’t be reached, judicial review if at the end of the day, there’s dissatisfaction with the result, and then there’s the process of renewal,” he continued. “Streambed alteration agreements generally don’t extend more than 5 years. There’s a provision for that, but there’s always the possibility even on the more extended term agreements that they may be pulled back, so there will be cycles of these agreements over time.”
“So with this expanded jurisdiction over activities that don’t involve alteration of the stream bed, the term ‘streambed alteration agreement’ is now a misnomer because the program applies to things that don’t alter the streambed,” Mr. Ivester concluded.
For more information …
- Methods to Delineate Episodic Stream Processes
- Over the top (of the banks): The California Department of Fish and Wildlife and its claims of expanded streambed jurisdiction, article from the California Land Use Law and Policy Reporter
- Siskiyou County Farm Bureau vs. Department of Fish and Wildlife, Court of Appeal opinion
SUSAN HORI: You Mean Just Having a Water Right Isn’t Good Enough: The Clean Water Act
“If the ESA is the pitbull, then I view the Clean Water Act as the lead dog in all of this because it really is the regulatory driver that triggers the ESA compliance,” Susan Hori began. “It is the regulatory mechanism that basically any project that touches water, whether it’s a diversion or whether it’s a water development project, anything that touches water in any way is going to require compliance with the Clean Water Act.”
“The title of this panel was, ‘You mean having a water right is simply not enough?’” she said. “This portion of the presentation is more appropriately titled, ‘You mean, that’s a water?’”
Ms. Hori said the overview would address two statutes: the Rivers and Harbors Act, and the Clean Water Act, both of which are overseen by the Corps of Engineers. The regulatory and permitting decisions for the majority of water projects are going to be handled at the district division; California is divided into a number of districts and those decisions and the appeal to the South Pacific division located in San Francisco, she said.
She started with the Rivers and Harbors Act, noting that a section 10 permit is required for construction of structures in navigable waters. The term ‘navigable waters’ for the purposes of the Rivers and Harbors Act in section 10 jurisdiction includes waters that are presently used or more importantly, particularly in California where you see a lot of development and a lot of modification of historic waters, waters that may have been used in the past or may be susceptible for use to transport commerce, she said.
“In situations where you may have either levees, dikes, or other structures that have cutoff waters on certain areas or channelized waters, if there is a potential for removal of that dike and to go back to measuring its historic reach, that language basically means that something like an artificial structure or a manmade structure such as a levee could result in a wider broader jurisdiction than just what we may see currently on the ground,” she said. “This is governed by Section 10 of the Rivers and Harbors Act and the permit is issued by the Corps of Engineers.”
The other permit to mention is a Section 408, which is a permit under the Rivers and Harbors Act for alterations and modifications to Corps projects such as flood control channels and levees. “It’s called 408, but it’s really tied to Section 404 of the Rivers and Harbors Act,” she said. “Why one permit is called Section 10 and the other one is called Section 408, it’s beyond me, but 408 has become a regulatory tool that the Corps is using to look more carefully at projects that involve any of the Corps flood control channels and its projects.”
Ms. Hori said that the Section 408 permit has come up in recent projects, and the timeframe for processing 408 permits is quite long, compared to how long the permit processing usually takes for 404 and Section 10 permits. “I bring this up as a cautionary note so that if you have any projects that affect federal structures, to be advised of the 408 process and to get started on that sooner rather than later,” she said.
“The big dog here under the Clean Water Act is 404, which is the permit that is required for the discharge of dredge or fill materials into navigable waters of the US,” she said. “Navigable waters does not necessarily mean that you can float a boat in it.”
The prior definition, set out at 328.3 of the Code of Federal Regulations is still in effect, she said. It includes a number of various types of waters of the US than can be subject to regulation; in addition to traditional waters and tributaries – the ones you can float a boat in, they also include intrastate lakes, rivers, streams, wetlands, intermittent streams, wetlands adjacent to waters, and ephemeral streams. “So you don’t necessarily have to have water flowing through it at all times,” she said. “It also includes waters which are currently used, used in the past, or may be susceptible for use in interstate or foreign commerce.”
Ms. Hori noted that is this last provision about water be used for interstate or foreign commerce is the key provision that led to a decision by the US Supreme Court in 2001 called the Solid Waste Agency of Northern Cook County (SWANCC) versus the Corps of Engineers, which dealt with the question of the definition of the waters of the US and which ultimately led to this new definition of waters that came out this year. She explained that the case involved the application of the definition of waters to isolated ponds that were located in an abandoned sand and gravel mining pit that the solid waste agency wanted to use as a new landfill; the sand and gravel pit had areas where rainfall accumulated, and on occasion, migratory birds would land in the pits.
“The Corps of Engineers asserted jurisdiction over those pits under the commerce clause,” she said. “Remember, this is not an interstate water, it was not a wetland, it was clearly isolated and intrastate as it was located solely within Illinois and it was not connected to any navigable waters. Despite this, the Corps asserted jurisdiction under the commerce clause because of the fact those pits were used by migratory birds who landed in them periodically and as a result, the Corps said that constituted ‘waters of the US’ because of the exercise of the application of the commerce clause.”
“So after 2001, isolated ponds such as vernal pools and isolated waters in the state of California were not subject to regulation under Section 404,” she said. “However, immediately after the SWANCC decision came out, the State Water Resources Control Board did issue an opinion saying that although the Corps is not regulating isolated waters, the state does reserve the right to regulate waters and to require permits for that. That’s happened in my experience only on a fairly isolated and case specific basis.”
The second major case is the 2006 U.S. Supreme Court’s Rapanos decision that dealt with Michigan wetlands that were near ditches and manmade drainages that eventually drained into traditional navigable waters. “The question again was whether or not the Corps could assert jurisdiction over those wetlands and there was a plurality decision with a number of justices taking different interpretations of what a waters of the US should be,” she said. “The Supreme Court ultimately rejected the government’s theory that it’s any wetland that has any connection to a water. They also rejected Rapanos’s limited theory that it should only be limited to traditional navigable waters, ie waters that you can float a boat in, and what eventually became the rule that was adopted by the Corps and all the regulatory agencies was Justice Kennedy’s decision. As in so many water rights and environmental decisions, Justice Kennedy, his decision was really what became the focus of the regulatory agencies and the environmental organizations as to what is the ‘waters of the US.’”
“What Justice Kennedy said is that a ‘water of the US’ can be considered regulated under Section 404 even if it’s not navigable, so long as it has a significant nexus to traditional navigable waters, and that nexus is something that means that you must have a significant effect on the chemical, physical, or biological integrity of those waters and that the connection not be remote or insubstantial,” she said. “As a result of that decision, the Corps issued guidances in 2008 and 2012 as to how significant nexus should be defined, and because of the fact that there has been questions about what should be significant nexus. This led to the development of a new definition of ‘waters of the US’ that was first published in April of 2014.”
After the new definition was published, the Corps received over a million comments in response. “There was a study that went into looking at each one of those comments – how many of them were form comments, how many were repeated comments, and out of that, despite the fact a majority of the comments that were received were either form comments of repeated comments sent in a by number of state agencies, there were at least 200,000 unique substantive comments made on that rule. So it was incredibly controversial when it came out and it’s still incredibly controversial, even after the final rule was published which occurred earlier this summer.”
“The rule became effective on August 28 and within a day or so, it was the subject of a number of lawsuits filed by both states as well as environmental organizations and industry organizations,” Ms. Hori said. “It was a rule that was an equal opportunity offender in terms of the fact that it made no one happy.”
The new definition included western vernal pools in California as part of what is a ‘water of the US’. Ms. Hori reminded that in the SWANCC case, the Supreme Court held that isolated intrastate waters should not be subject to 404 jurisdiction. “This rule, in my opinion, by including western vernal pools, directly contradicts that holding in the SWANCC case, and so waters that for the last 14 years have not been regulated by the Corps in California are now subject to potential regulation under the new definition.”
The new definition also expanded the definition of adjacency to include a new concept called neighboring waters. “So as part of an adjacent water, we now look to see what is a neighboring a water, and if you have a neighboring water, that may bring the area into regulatory control by the Corps,” Ms. Hori said. “Neighboring waters means all waters that are located within 100 feet of the ordinary high water mark of waters which are currently used or used in the past or susceptible for use in interstate or foreign commerce, interstate waters and territorial seas as tributaries to those waters. The neighboring waters also includes all waters that are located within 1500 feet of a high tide line of those waters, so there has been a geographical expansion in terms of what is considered adjacent through the concept of neighboring waters that is embedded in this new rule.”
The new rule also includes a new category of waters that encompass waters that are a certain distance from the primary waters, with primary waters being territorial seas, interstate waters, and waters that are currently used in traditional and navigable, or used in interstate commerce, and those waters that have a significant nexus to primary waters if they are within 4000 feet of the high tide line or ordinary high water mark of the traditional navigable waters, she said.
The new rule also redefines what a tributary is, and that expands jurisdiction to streams that may or may not necessarily have a continuous flowing drainage because it includes waters where there may be constructed or natural breaks, so long as upstream of the break, you can identify a bed and bank. It also added a similarly situated analysis to case-specific significant nexus analysis where there is a likelihood that there are waters that function together to affect downstream water integrity, and therefore bring again a broader set of waters into the ambit of the 404 program.
“There was a number of regulatory creep and expansions of definitions that were embedded in this new rule,” Ms. Hori said. “As a result of this rule, a number of lawsuits were filed. They were eventually all consolidated in front of the Sixth Circuit, and on October 9, the Sixth Circuit issued an opinion which basically held that the rule should be suspended. The court went through the various components and granted them the injunction, and identified within their opinion, the idea that they felt that the opponents to the new rule did have a probability of demonstrating success in litigation and therefore issued the injunction.”
“What the court found was that there was a substantial possibility of success on the merits, and the court found that the possibility of success was due to the fact that the distance limitations, the 1500 feet and the 4000 linear feet that were embedded in the rule were not harmonious with the Rapanos decision about significant nexus,” she said. “Also a number of components of the new rule were actually not included within the draft rule that went out in 2014 that generated many of those comments, and because of that, the Corps felt that the rule making process itself may have some flaws in it and therefore granted the injunction.”
In response, the Corps and the EPA issued a joint memorandum on November 16 in which they both agreed that they would suspend the rule and comply with the Court’s decision. “They said that they still believed that the new rule will be ultimately upheld, but that for the time being, jurisdictional delineations should use the prior definition and apply the 2008 and 2012 significant guidance documents in determining what is a ‘water of the US,’” she said.
Ms. Hori then turned to the Clean Water Act and the 404 process. It’s important to know that the Corps applies a three parameter test and both natural as well as manmade wetlands can be subject to regulation. “Most importantly, because our state has both the inland as well as the coastal jurisdiction, what’s really important for those of you who do have water districts or counsel clients within the coastal zone is that the Corps definition of wetlands does not apply in the coastal zone, so what you may think is not a wetland elsewhere in the state, could be a wetland in the coastal zone,” she said. “That’s a problem that many developers and projects have run into in dealing with the Coastal Commission as to what they think a wetland is versus what the Corps thinks a wetland is.”
Ms. Hori noted that there are two types of permitting: nationwide permits and individual permits. “There are 50 categories of nationwide permits which are categories of activities that the Corps has approved,” she said. “There is a streamlined permit process for nationwide permits. You still have to comply with NEPA and you have to still comply with Fish and Wildlife Service and the Endangered Species Act Section 7 consultation process, but it does move faster than the individual permit process. The individual permit process requires public interest review, compliance with the 404(b)(1) guidelines and the fact that with individual permits, the EPA does have the ability to come in and veto an Corps decision.”
“Because we need to be cautious on behalf of our clients, there are violations and penalties under the Clean Water Act,” Ms. Hori advised. “The Borden Ranch case was an infamous case involving the plowing of an area in which the Corps asserted that there was waters; they went back and forth during the course of one day, and as a result of that, the Corps said that each movement across the field resulted in a violation so to go back and forth 358 times in one day, that was 358 violations, so just FYI regarding the Corps enforcement powers.”
“Lastly, every 404 permit requires compliance with Section 401, which means that you must obtain a water quality certification from the regional board or the State Water Resources Control Board; it is implemented by the regional board in California and it addresses water quality issues,” she concluded.
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Questions and answers
Question: On the ‘Waters of the US’ rule, there were a couple different court decisions. Everyone raced to the court as soon as they published the rule. The first court decision said we suspend WOTUS only in our area, the sixth circuit has said, no we think we’re going to issue an injunction, and now the Corps and EPA have suspended it nationwide at this point … ?
“Yes, there were a couple of decisions,” replied Ms. Hori. “The first one that was issued in late September was actually issued out of North Dakota and it was for a lawsuit brought by 13 states. California was not a part of that lawsuit. In that situation, the judge said, yes, it will apply only to the 13 states that were part of the petition. Then a number of the cases were consolidated in the Sixth Circuit, and the Sixth Circuit issued their injunction and at the close of the opinion, said that this would apply nationwide. Because it is in an injunction posture, there’s going to be additional proceedings on the merits.”
Moderator Jennifer Buckman asked Andy Hitchings about the status of the Bear Valley Mutual Water Company case.
“There are two questions presented in that case to the US Supreme Court,” Mr. Hitchings said. “One is, is the duty to cooperate with state and local agencies over water resources, is that a substantive obligation? In this case, the water agencies claim is that all fish and wildlife service enabled the agencies to do is the normal comment process, that the standard within Section 2(c)(2) is elevated, it’s in a different section; the comment process under rulemaking is in Section 4, it has the mandatory word ‘shall’ in there. There’s been very little case law on the interpretation of what that requires of the consulting agency. This second issue was the allegation that NEPA was required on the rulemaking for the designation of critical habitat; the Ninth Circuit relied on an earlier opinion that said, no NEPA doesn’t apply in the context of designating critical habitat, but the Tenth Circuit has found directly opposite to that and actually was dismissive of the prior 9th Circuit case on that. So we have a split in the two circuits on that which is another basis for the court potentially taking the case. The briefing is finished next week, the plaintiff agencies have their reply brief due next week, and it looks like it’s going to be set for conference around the first week of January.”
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