# SUMMARY

Small Entities Outreach Meeting

on the Proposed Rule for Redefining Waters of the United States under the Clean Water Act

Hosted by

US Environmental Protection Agency

October 15, 2014

## Meeting Participants

Farming/Agriculture: Ashley Macdonald National Cattlemen's Beef Association

Kevin Menchey National Cotton Council Don Parrish American Farm Bureau Federation Construction and Development:

Scott Berry The Associated General Contractors of America

Tom Farasy Terra Verde Associates Abigail Jagoda International Council of Shopping Centers

Owen McDonough National Association of Home Builders

Jerry Passman Louisiana Home Builders Association

Leah Pilconis Associated General Contractors of America

Megan Prieto Granite Commercial Real Estate

Ed Smariga Buckeye Development, LLC Manufacturing: Chip Yost National Association of Manufacturers

Small Government Entities: Judy Bock Carlsbad Soil and Water Conservation District

Stacy Wright City of Farmers Branch Mining :
Laura Skaer American Exploration and Mining Association

Pamela Whitted National Stone, Sand, and Gravel Association Fertilizer and Pesticide Application: Allison Donaghy Responsible Industry for a Sound Environment

Laurie Flanagan D.C. Legislative and Regulatory Services

Tom Simpson Water Stewardship, Inc.

Power : Dorothy Kellogg The National Rural Electric Cooperative

Association Theresa Pugh American Public Power Association

Other : Tom Delaney Professional Landcare Network (PLANET)

Kia Dennis SBA Advocacy Robert Hella nd Golf Course Superintendents

Government :
Laura Bachle EPA/OW
Connie Bosma EPA/OW/OWM Tiffany Crawford EPA/OW/OWOW David Evans EPA/OW Erin Flannery

- Keith EPA/OW/OWM
Brian Frazer EPA/OW/OWM
Russ Kaiser EPA/OW/WD Ken Kopoc is EPA/OW Stuart Levenbach and Vlad Dorjets

OMB Gregory Peck EPA/OW/IO
Gautam Srinivasan EPA /OGC Jenny Thomas
EPA /OW/WD3



## Introduction

The U.S. Army Corps of Engineers (Corps) and the Environmental Protection Agency (EPA) have developed a proposed rule defining the scope of waters protected under the Clean Water Act (CWA), in light of the U.S. Supreme court cases, particularly decisions in Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers ( SWANCC ); and Rapanos v. United States and Carabell v. United States (Rapanos) . The agencies are undertaking this rulemaking with the goals of increasing CWA program predictability, timeliness, and consistency by increasing clarity regarding the scope of “waters of the United States” covered under the Act, and would enhance protection for the nation’s aquatic resources consistent with science and the law.

Waters, including wetlands, found to be “waters of the U.S.” under the Act and relevant case law are subject to CWA requirements. Waters that do not meet this definition are not subject to CWA

pr ovisions. Exhibit 1 identifies the CWA programs that rely on the definition of “waters of the U.S.”, along with the government entities that are responsible for administering the programs. The CWA establishes oil spill prevention programs (Section 311); requires permits for pollutant discharges (Section 402); requires permits for the placement of dredged or fill material in waters of the United States (Section 404); calls for states to set standards for meeting water quality goals and develop plans to restore polluted waters (Section 303); establishes state roles in certifying that federal permits will not violate state water quality standards (Section 401); and provide tools for the federal government, states,
and communities to enforce the law.

Exhibit 1. Clean Water Act Programs that rely on the Definition of “waters of the United States.”4

Recent court rulings and interpretations of water laws have sparked confusion and increased uncertainty regarding which waters are prote cted under the Clean Water Act, especially for headwater
streams and wetlands.

As requested by a diverse group of stakeholders including the agriculture community, environmental and conservation groups, and state and local governments, the EPA and the Cor ps are seeking to provide clarification via notice and comment rulemaking as to what waters are and are not jurisdictional and thus under the purview of the CWA. The agencies understand that case

- specific decisions concerning whether or not a waterbody is subject to the CWA may affect small entities who may, as a result, need to determine whether or not authorization is necessary to discharge pollutants into waterways. The lack of clarity and case

- by

- case determinations made necessary by SWANCC and Rapanos have resulted in delays and confusion which the agencies are eager to address in their rulemaking to reduce impacts on the public, including small entities. Small entities also benefit from the functions provided by intermittent , ephemeral and headwater streams and wetlands, such as purifying water and reducing potential treatment costs, reducing flood flows, and assuring reliable and constant supplies of water.

The overall geographic scope of the proposed regulation is narrower than it was before SWANCC
and Rapanos , when the current rule was written. The agencies recognize and agree that the effect of the Supreme Court decisions was to narrow the geographic reach of the Act and th e proposed rule reflects
that. The scope of the regulations as proposed is n arrower than the scope of the existing regulations. The agencies expect, however, that in clarifying the reach of waters under the Act, the proposed rule is likely to result in a slight increase in waters found jurisdictional compared to current practice under the 2008 guidance. The agencies expect the increase to be small, if at all, and occur in the context of improving the process of making jurisdictional determinations more quickly, more predictably, and with greater national consistency. Overall, smal l entities (and other regulated groups) have emphasized to EPA the importance of clarity, predictability, and consistency for their businesses and for the American
taxpayer. In addition, the proposed rule is not designed to “subject” any entities of any si ze to any specific regulatory burden. Rather, it is designed to clarify the statutory scope of “the waters of the United States, including the territorial seas” (33 U.S.C. § 1362(7)), consistent with Supreme Court precedent.

Additional background on CWA j urisdiction and relevant case law is included in Attachment 1.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice

- and

- comment rulemaking requirements under the
Admini strative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substan tial number of small entities. Small entities include small businesses, small organizations, and small governmenta l jurisdictions. After considering the economic impacts of this proposed rule on small entities, the agencies have certified that this proposed rule will not have a significant impact on a substantial number of small entities.5

EPA convened a meeting on October 15, 2014, to exchange information with small entities that

may be interested in this action. The meeting was led by representatives from within EPA’s Office of
Water and was not intended to serve as a small business advisory review panel as defined in Section 609(b) of the RFA

. This document includes a summary of comments made by meeting participants. The meeting agenda is included as Attachment 2.

Once completed, the final summary for this outreach meeting will be incl uded in the rulemaking
record. Meeting participants were also encouraged to provide specific written comments to EPA directly to ensure that their concerns are captured accurately. EPA is prepared to consider additional changes to the proposed rule in response to public comments, inclu ding any comments from small entities.

It is important to note that the findings and discussion in this summary are based on the
information available at the time this summary was drafted. The EPA and the Corps are continuing to conduct analyses relevant to the proposed rule, and additional information may be developed or obtained during the remainder of the rulemaking process.



## Opening Remarks by EPA
Ken Kop o c is
, D eputy Assistant Ad ministrator EPA Office of Water (OW)

, welcomed participants
and expressed how important it was to EPA and the Corps to get feedback on the proposed rule from small entity owners and representatives . He noted that EPA has conducted over 350 meetings with

st akeholders, including many with small business owners and small entity representatives. He announced that the comment period was extended until November 14, 2014, in part

, to allow interested parties to more fully review the report by the Science Advisory Board on the adequacy of scientific and technical basis for the Proposed Rule. He reiterated the Agency’s commitment to issuing a
final rule in 2015.

Following these opening remarks, Russell Kaiser, EPA Office of Water, provided some background informatio n about the proposed rule and the associated court cases as described in
Attachment 1.



## Summary of Comments from Small Entity Participants

At the time of the meeting , the most recent public statement of policies relating to defining
“waters of the U.S.” was the proposed rule dated April 21, 2014. M any commenters referred to that
document as a reflection of the agencies’ likely policy choices and as a general baseline for comments. There were no written materials provided by participants at the meeting.

Call for a SBREFA Panel
Several small entity participants suggested that EPA , the Corps, and small entities would benefit
from convening a small business advisory review panel ( SBREFA panel ) , regardless of the determination by EPA and the Corps that the proposed rule would not impact a significant number of small entities.
Two participants noted that the October 15 th meeting did not “meet the letter or spirit” of th e SBREFA6

requirements and d id not substitute for a SBREFA panel

. It was recommended that EPA and the Corps follow the recommendations of the Small Business Advocacy office on this matter.

General Need for Jurisdictional Clarity
T he primary concerns raised by small entity participants were related to the need for more clarity in determining which bodies of water are jurisdictional and which are exempted from jurisdiction under the proposed rule

. Participants cited severa l examples of why jurisdictional clar ity i s important for small entities, including the following:

 Lack of clarity can lead to “ legal loopholes ” that can be used by some individuals or organizations to stop development or other business activities

.

 Land purchasers often have limited time and access to conduct land analyses, so they may not be able to adequately make jurisdictional determinations in the time available. This can make it difficult to decide on whether to make land purchases and to deter mine the appropriate land price.

 For some businesses (e.g

. , gravel excavation), there is a perception that all of their work may be subject to case

- by

- case determination s , which will add time and expense to projects.

 Uncertainty serves as a deterrent to development

, because it adds to potential risk . This will serve to slow down the pace of economic recovery . (States like New Hampshire that rely on property taxes will be particularly hard hit.)

The lack of clarity largely stemmed from definitions and appl ications of key terms such as tributaries, ditches, adjacency, and aggregated or similarly situated (aggregated) waters. Participants recommended that EPA provide more clear and concise definitions of key terms. They also noted that it would be helpful to have a field

- specific guide. The guide could include a list of different aquatic resources as well as pictures to illustrate what is and is not jurisdictional. T he more guidance and specificity EPA can provide, the easier it will be to avoid jurisdictional questions and issues.

Jurisdictional Status of Ditches A few participants raised questions about t he potential jurisdiction of ditches. In particular, participants asked about the concept of seasonal flow. Previously, if a ditch had met the Scalia test ( if it was a perennial or intermittent that had more than seasonal flow ) it was considered jurisdiction al . The
new rule moves away from “seasonal” in defining jurisdictional waters and uses only the term

“ perennial ” to assess flow

. The “seasonal” terminology is also used in the 2 008 Guidance, which adds to
the confusion.

While discussing ditches, participant s also raised questions about exclusions in the context of
duration and connection to non

- excluded waters. I t is unclear whether a ditch that is excluded is always excluded or whether it can become jurisdictional at some point in the life of a project (e.g., a ditch that later becomes a wetland because it is no longer maintained and takes on more natural characteristics).
It is also not clear wh ether an excluded ditch could become jurisdictional if it connects other jurisdictional waters.7

Aggregated Water Bodies Some participants expressed concern about the impact of aggregated water bodies on different industries. One participant asked about ho w the concept of aggregated water bodies or common landscapes applies to linear projects that have several crossings of individual water bodies. There was concern about whether or not utilities would still be able to operate under a general permit if these waters are aggregated. In particular, there is a perception that individual water bodies would be combined and considered a single water body.

Other participants were concerned about how this concept might impact development projects. If a developer is buying a property, it is unclear how a developer would know if there are jurisdictional issues associated with other parcels that may impact the purchased property if it is part of an aggregated feature. This is of particular concern for projects that inco rporate new stormwater techniques that lack maintenance and could eventually turn into jurisdictional waters. In addition, developers may not know whether a property that they are developing is part of an aggregated feature even though they may conduct the ir due diligence.

Finally, one participant asked whose responsibility it is to notify a property owner (who may have owned their land for many years) if a water body on their property is now part of some aggregated
feature.

Participants provided the fol lowing suggestions in response to the concerns raised about this topic:

 When a jurisdictional determination is made based on similarly situated waters, there should be a communication that goes out to notify those who may be impacted by that determination.

 EPA should develop a Q ue stion & A nswer document or guidance for specific industry sectors
when the final rule is issued.

 There should be a transition period in the enforcement schedule to allow time for affected industries to understand the requirements and move towards full compliance.

Definition of Tributary Participants were interested in how EPA defined tributaries. There were concerns that the definition of tributary expands jurisdiction over current practice
, it will increasingly affect how people
use their land. The y see the new rule as expanding the definition, which would create problems especially for small business owners who do not have as many resources as larger companies do. E ven if the EPA and a regu lated entity are in agreement that a body of water is not jurisdictional, vagueness in defining the term could make room for third parties to find reasons to argue that it is indeed jurisdictional.

Adjacency Several participants had questions regarding wh at waters adjacent to a floodplain would be jurisdictional. The rule is currently not clear , and there is no additional definition of an adjacent water or any limit to how far a water resource must be from a floodplain to no longer be considered8

jurisdictional. Placing limits on the jurisdictional area adjacent to a floodplain or mapping them would clarify exactly which waters would be jurisdictional based on adjacency

. Rule Seen as Expansionary While EPA has held that the rule would increase exe mptions and free bodies of water from jurisdiction, meeting participants felt that the rule would do exactly the opposite. Th is perspective is based largely on the definitions of key terms. For example:

 The term water is described in a footnote of the prop osed rule in a way that seems broader than in the past. The reference to biological connection in particular could make many more waters jurisdictional.

 The concept of adjacency is not well articulated, and it is unclear what adjacent waters would be juri sdictional under the new rule (e.g., an entire riparian area or just a portion).

 The reference to “shallow subsurface water connection ” is also unclear and could force some companies to seek case

- by

- case jurisdictional guidance on all of their projects

.

T he conflicting viewpoints could be remedied if the rule was made more specific so everyone can easily determine which waters are jurisdictional and how many new aquatic resources will fall under government jurisdiction after the new rule is in effect.

Lack of Clarity Related to Municipal Separate Storm Sewer Systems (MS4s) One participant emphasized that there was significant confusion about what is or is not regulated under an MS4 permit. Small entities are particularly impacted by this. It was recommende d that MS4s be included in the waste treatment exemption.

Possible Effect

s on Development & Small Businesses One participant described the proposed rule as “business unfriendly,” and m any participants expressed concerns about the potential negative impact s on business and development. For example, jurisdictional waters tend to devalue land. This means that developers and business owners may be hesitant to purchase land or build on land because of the risk that property may become devalued because of new ju risdictional determinations

.
Businesses that require permits such as pesticide applicators may be reluctant to do their work because of fear and uncertainty related to the proposed rule. Until they get more clarity, they may be
reluctant to act. In the ca se of pesticide applications, this may result in public health impacts if pesticide applicators are reluctant to spray for disease

- bearing insects out of concerns over whether or not they are in compliance or concerns about citizen action suits.

The golf industry expressed concern that the proposed rule could result in a “taking” under the Constitution because many of their properties would not be able to engage in their normal activities if the rule was made final as written. They therefore would face th e real risk of going out of business. If the rule is not changed, water bodies that were previously not jurisdictional under the Clean Water Act would now become jurisdictional, affecting activities done, over or near those water bodies. There is no9

gua rantee that a business can get a CWA permit, and the consequences for failing to have a permit can
be severe.

How the Rule will be Implemented Meeting participants raised concerns regarding whether or not bodies of water would be grandfathered

. For example, a water body could have been determined to be non

- jurisdictional and
then become subject to jurisdiction when the rule is released. The question is whether the jurisdiction will change or if the jurisdictional determination will apply to the l ife of the determination.

Participants were concerned that this rule would lead to an increase in case

- by

- case determinations of jurisdictionality. This will require some companies to hire consultants and engineers to make these determinations, but many smaller businesses do not have the necessary resources to acquire these services. This means that small operators may not have the capacity to make these
determinations. Similarly, one participant expressed concern that small businesses would face (with
in creased frequency) the burden of proving on a case

- by

- case basis the application of certain exclusions from the “waters of the US” definition (e.g., water

- filled depressions created incidental to construction). Old maps and aerial photos may be the only sources available to identify historic conditions in order to resolve alleged violations of federal CWA laws. Small business operators may not have the resources available to produce this type of information.

Several participants also noted that there is a broad network of organizations and individuals involved in implementing the proposed rule. EPA needs to not only make sure it has the resources to implement the rule, but it also needs to provide its state and local partners with the resources they need to understand it and implement it consistently. This is already playing out in one state that has decided to change the point of compliance for one entity’s permitted discharge. The change is being made as a result of evolving understanding of the definit ion of “waters of the U.S.”10



## Attachment 1: Background

Clean Water Act programs are applicable to all “navigable waters” which are defined in the statute as the “waters of the United States, including the territorial seas.” The definition of “waters of the United States” is used in the implementation of all CWA programs including Sections 303, 311, 401, 402, and 404. The EPA is charged with overseeing implementation of all Clean Water Act programs, including Section 404. The Army Corps of Engineers ad ministers the Section 404 program for discharges of dredged or fill material into jurisdictional waters, and makes the majority of jurisdictional determinations. 1

After the Clean Water Act was amended in 1972, the EPA and the Corps promulgated regulatory d efinitions of “waters of the U.S.,” and by 1979 EPA’s definition looked substantially similar to what it is today. In 1982, the Corps adopted EPA’s definition. The regulations define “waters of the U.S.” as including waters that are:

 traditionally navigab le

 interstate

 could affect interstate commerce if used, degraded, or destroyed

 territorial seas

 impoundments of jurisdictional waters

 tributaries of jurisdictional waters

 wetlands adjacent to jurisdictional waters.

The agencies’ regulatory definition of “w aters of the U.S.” includes exclusions for waste treatment systems and prior converted cropland.

The U.S. Supreme Court addressed the scope of waters of the United States protected by the CWA in United States v. Riverside Bayview Homes , 474 U.S. 121 (198 5), which involved wetlands adjacent to a traditional navigable water in Michigan. In a unanimous opinion, the Court deferred to the Corps’ judgment that adjacent wetlands are “inseparably bound up” with the waters to which they are adjacent, and upheld t he inclusion of adjacent wetlands in the regulatory definition of “waters of the United States.” The Court observed that the broad objective of the CWA to restore the integrity of the nation’s waters “... incorporated a broad, systemic view of the goal of m aintaining and improving water quality .... Protection of aquatic ecosystems, Congress recognized, demanded broad federal authority to control pollution, for ‘[w]ater moves in hydrologic cycles and it is essential that discharge of pollutants be controlled a t the source.’ In keeping with these views, Congress chose to define the waters covered by the Act broadly.” Id. at 133 (citing Senate Report 92

- 414).

The issue of CWA regulatory jurisdiction over “waters of the United States” was addressed again by the S upreme Court in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) (SWANCC) . In SWANCC, the Court (in a 5

- 4 opinion) held that the use of “isolated” nonnavigable intrastate ponds by migratory birds was not by i tself a sufficient basis for the exercise of federal regulatory authority under the CWA. The Court noted that in the Riverside case it had “found that Congress’ concern for the protection of water quality and aquatic ecosystems indicated its intent to regulate wetlands ‘inseparably bound up with the “waters” of the United States’” and that “[i]t was the

1 States and tribes may be approved to administer the Clean Water Act Section 404 program. Michigan and New Jersey currently implement the 404 program.11

significant nexus between the wetlands and ‘navigable waters’ that informed our reading of the CWA” in that case. Id. at 167, 167. SWANCC did not directly address other parts of the regulatory definition of “waters of the United States.”

Five years after SWANCC

, the Court again ad dressed the CWA term “waters of the United States” in Rapanos v. United States , 547 U.S. 715 (2006). Rapanos involved two consolidated cases in which the CWA had been applied to wetlands adjacent to nonnavigable tributaries of traditional navigable waters . All Members of the Court agreed that the term “waters of the United States” encompasses some waters that are not navigable in the traditional sense. A four

- Justice plurality in Rapanos interpreted the term “waters of the United States” as covering “rel atively permanent, standing or continuously flowing bodies of water. . .” id. at 739, that are connected to traditional navigable waters, id. at 742, as well as wetlands with a continuous surface connection to such water bodies, id. The Rapanos plurality noted that its reference to “relatively permanent” waters did “not necessarily exclude streams, rivers, or lakes that might dry up in extraordinary circumstances, such as drought,” or

“ seasonal rivers, which contain continuous flow during some months of th e year but no flow during dry months . . . .” Id . at 732 n.5.

Justice Kennedy’s concurring opinion took a different approach than Justice Scalia’s. Justice Kennedy concluded that the term “waters of the United States” encompasses wetlands that “possess a ‘significant nexus’ to waters that are or were navigable in fact or that could reasonably be so made.” Id. at 759 (Kennedy, J., concurring in the judgment) (quoting SWANCC , 531 U.S. at 167). He stated that wetlands possess the requisite significant nex us if the wetlands, “either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’” 547 U.S. at 780. Kenne dy’s opinion notes that such a relationship with navigable waters must be more than “speculative or insubstantial.” Id. The “significant nexus” test for CWA jurisdiction that Justice Kennedy’s opinion applied to adjacent wetlands also can and should be app lied to other categories of water bodies (such as tributaries to traditional navigable waters or interstate waters, and to “other waters”) to determine whether they are subject to CWA jurisdiction, either by rule or on a case

- specific basis.

In Rapanos
, the four dissenting Justices, who would have affirmed the court of appeals’ application of the pertinent regulatory provisions, concluded that the term “waters of the United States” encompasses, inter alia, all tributaries and wetlands that satisfy either the plurality’s standard or that of Justice Kennedy. Id. at 810 & n.14 (Stevens, J., dissenting). Neither the plurality nor the Kennedy opinion invalidated any of the regulatory provisions defining “waters of the United States.” When there is no majori ty opinion in a Supreme Court case, controlling legal principles may be derived from those principles espoused by five or more justices. Thus, regulatory jurisdiction under the CWA exists over a water if either the plurality's or Justice Kennedy's standard is satisfied.

The two Rapanos standards have been difficult to put into practice for both the regulated community who seek permits and for agency field staff. EPA and the Corps proposed draft guidance to provide clearer, more predictable guidelines fo r determining which water bodies are protected by the Act. Many comments received on the proposed guidance urged the Corps and EPA to update their regulation defining waters of the U.S. Supreme Court justices in the Rapanos decision similarly urged rulema king.12 Small Entities Meeting on the

Waters of the United States Proposed Rulemaking

AGENDA

October 15, 2014, 1:30 PM

– 4:00 PM

US EPA Headquarters Room 3233 William Jefferson Clinton East

Call

- in Number 1

- 866

- 299

- 3188 conference code: 2025662468

Objectives

• Provide invited small entity representatives with background and information about the Clean Water Act and the Waters of the United States Proposed Rule

• Review responses to comments from the 2011 small entity outreach engagement

• Solicit in put from participants on their questions, concerns and suggestions regarding the Proposed Rule

Agenda

1:30

– 1:45 Welcome, Introductions and Meeting Guidelines (Facilitator)

1:45

– 2:30 Opening Remarks and Presentation by US EPA

2:30

– 3:45 Open Discussio n (Facilitator)

Participants will be invited to ask clarifying questions about the opening presentation and provide comments on the Proposed Rule. Participants will be encouraged to think about the following:

 What aspects of the Proposed Rule do you find p articularly confusing or problematic? Why?

 What suggestions do you have for how the Proposed Rule could be clarified or improved?

 What impacts do you anticipate the proposed rule having on your business in terms of your need to file for a Clean Water Act p ermit?

 What benefits do you see that might result from the Proposed Rule as written?

3:45

– 4:00 Wrap

- Up, Next Steps (Facilitator)