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Environmental Law Update
Environmental Law Update Editor : Rafe Petersen, Holland & Knight LLP, 2099 Pennsylvania Ave., N.W., Suite 100, Washington, DC 20006–6801, rafe.petersen@hklaw.com.
Environmental Law Update provides information on developments in environmental law as it applies to property, probate, and trust matters. The editors of Probate & Property welcome information and suggestions from readers.
Court Strikes Clean Water Act Rule Regarding Scope of Activities Requiring Permits
On January 30, 2007, Judge James Robertson, for the U.S. District Court for the District of Columbia, issued an opinion regarding the scope of activities regulated under section 404 of the federal Clean Water Act (CWA). National Association of Home Builders v. U.S. Army Corps of Engineers, No. 01-0274, 2007 WL 259944 (D.D.C. Jan. 30, 2007). Section 404 requires permits from the U.S. Army Corps of Engineers for any “discharge” (that is, “addition” of “dredged or fill material” into “waters of the United States” including wetlands). In a sweeping decision that set aside what is commonly known as the “Tulloch II” rule, the court took strong issue with the Corps’ and the Environmental Protection Agency’s (EPA) view that the CWA authorizes these federal agencies to require permits for mechanized earthmoving and other excavation activities. The court sent a strong message to the federal agencies that they had once again overstepped the limits of their authority by enacting a rule that attempted to regulate all earthmoving activities in regulated waters regardless of whether such activities actually resulted in a “discharge” of a pollutant.
The District Court’s Opinion
The ruling was actually the second time that the federal courts have held that the Corps and EPA have overreached their authority by attempting to regulate activities that do not result in “additions” of material into regulated waters—which is a statutory prerequisite for the agencies to regulate an activity. In 1998, the D.C. Circuit invalidated the first “Tulloch” Rule (“Tulloch I”), which was issued after the Corps entered into a settlement agreement over an enforcement action related to draining of wetlands without a permit (Tulloch was the name of the Corps district engineer who was named in the complaint). The D.C. Circuit held the 1993 rule improperly allowed the agencies to assert jurisdiction over virtually any activity conducted in regulated waters, including those that merely resulted in “incidental fallback” of soil (the small amounts of soil that fall from a dredge bucket during excavation activities). See National Mining Association v. U.S. Army Corps of Engineers, 145 F.3d 1399 (D.C. Cir. 1998) (NMA). The court noted that the straightforward statutory term “addition” cannot reasonably be said to encompass the situation in which material is removed from the waters of the United States and a small portion of it happens to fall back. Because incidental fallback represents a net withdrawal, not an addition, of material, it cannot be a discharge.
Id. Observing that the “overriding purpose” of Tulloch I “appears to be to expand the Corps’s permitting authority to encompass incidental fallback and, as a result, a wide range of activities that cannot remotely be said to ‘add’ anything to waters of the United States,” id.at 1405, the court overturned the rule. The court then indicated that a “reasoned attempt” to draw a “bright line between incidental fallback on the one hand and regulable redeposits on the other . . . would merit considerable deference” and upheld the lower court’s injunction. Id.
The Corps and EPA issued Tulloch II in 2001 in response to the NMA opinion. Tulloch II defined unregulated “incidental fallback” for the first time. Significantly, the rule stated that the agencies “regarded” all mechanized earthmoving activities as regulated unless project-specific evidence was provided demonstrating that such activities resulted in no more than “incidental fallback.” The rule was immediately challenged by the National Stone Sand and Gravel Association, the American Road and Transportation Builders Association, the Nationwide Public Projects Coalition, and the National Association of Home Builders. Collectively, these associations alleged that the agencies had once again overstepped the limited scope of their authority.
In its January 30 ruling, the court held that the Corps and EPA had failed to properly address the issues raised by the 1998 opinion of the D.C. Circuit. The court ruled that EPA and the Corps failed to heed the earlier ruling by not coming up with a clear “bright line” test that distinguished between deliberate redeposit of material (sidecasting of material, for example), which is properly regulated, and “incidental fallback,” which cannot be regulated. NAHB, 2007 WL 259944 at *3.
The court offered insight into the most significant flaws of Tulloch II, which defined unregulated “incidental fallback” as
The redeposit of small volumes of dredged material that is incidental to excavation activity in waters of the United States when such material falls back to substantially the same place as the initial removal. Examples of incidental fallback include soil that is disturbed when dirt is shoveled and the back-spill that comes off a bucket when such small volume of soil or dirt falls into substantially the same place from which it was initially removed. 33 C.F.R. § 323.2(d)(2)(ii).
Id. at *2 (codified at 33 C.F.R. § 323.2(d)(2)(ii) and 40 C.F.R. § 232.2(2)(ii)). The court held that “by defining incidental fallback partly in terms of volume, the EPA and the Corps appear to have done exactly what they were warned not to do.” Id. at *3. Citing to the D.C. Circuit’s opinion that struck down Tulloch I, the court stated that “[t]he difference between incidental fallback and redeposit is better understood in terms of two other factors: (1) the time the material is held before being dropped to earth and (2) the distance between the place where the material is collected and the place where it is dropped.” Id.
The court was also troubled by the fact that the rule was based on a blanket statement that the agencies “regard” all mechanized earthmoving equipment as resulting in a discharge of dredged or fill material (that is, everything is regarded as regulated). See id. at *3. Under Tulloch II, the regulated community would have to provide “project specific evidence” to prove that no more than “incidental fallback” would take place (with incidental fallback being defined by the agencies in the very narrow manner discussed above). In what is best described as a slap at the agencies, the court stated that the rule’s “coy explanation,” that the project-specific evidence requirement “is not intended to shift any burden” onto the regulated community, “essentially reflects a degree of official recalcitrance that is unworthy of the Corps.” Id. The court also noted that the agencies “cannot require ‘project-specific evidence’ from projects over which they have no regulatory authority.” The court issued a nationwide injunction against enforcing the rule and remanded it back to the Corps and EPA. Id.
Life After Tulloch II
The agencies did not appeal Robertson’s ruling (although environmental groups who were intervenors did). Therefore, the injunction against the Tulloch II rule means that it cannot be enforced in any way (unless the environmental groups are successful on appeal). The agencies will no longer be able to “regard” all mechanized land clearing and earthmoving as regulated unless project-specific evidence proves otherwise and they now have no operative definition of “incidental fallback.” In the absence of any rule defining what kinds of excavation activities are regulated, parties intending to engage in excavation activities without going through the section 404 permit process are entering a period of uncertainty not unlike the period following the overturning of Tulloch I in 1997. The agencies are likely to quickly issue interim guidance to the field offices about what the agencies believe is still regulated.
In the interim, one useful guide is the preamble to the 1986 Corps regulations. In that document, the Corps discussed whether excavation activities would be considered regulated “additions” of material. It states that “if there are tests involved, we believe they should relate to the dredging operator’s intent and the result of his dredging operations. If the intent is to remove material from the water and the results support this intent, then the activity must be considered as “normal dredging operations” that are not subject to section 404. 51 Fed. Reg. 41,210 (Nov. 13, 1986). Further, it is probably prudent to carefully consider the time and distance factors that Judge Robertson found applicable in determining if a particular excavation activity is a regulated redeposit or an unregulated incidental fallback. Companies should not assume this overruling of Tulloch II provides a “license” to conduct wholesale land clearing and earthmoving activities without regulation. That is, parties should assume that significant earth movement from one location to another within a wetland, even if associated with excavation activities, will likely be regulated. Again, considerable case law remains valid concerning regulation of activities such as sidecasting and leveling of land. Finally, one should assume the government will be looking for test enforcement cases to “fill the gaps” until the agencies take further regulatory action.
