Source: http://acoel.org/2011/12/default.aspx
Timestamp: 2019-04-26 12:47:39+00:00

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The cover of Time magazine’s recent issue on inventions depicts a motorized hummingbird, a mini-machine, enabled by nanotechnology, that can mimic the bird’s flight capability and conduct surveillance operations. Other nanomaterial inventions --using particles at the scale of one billionth of a meter-- include an industrious particle that can hunt down and kill cold viruses. Amen to that. As the science of nanomaterials continues to amaze, how are we doing on the governance front to be ready to manage its potential risks to health and the environment?
The departure of Steve Owens, EPA Assistant Administrator for Prevention, Pesticides, and Toxic Substances, concludes a notable effort to address governance issues in the nano realm; but at the end of 2011, major initiatives to obtain the information needed for a credible oversight program remain incomplete. Under the prior administration, EPA requested voluntary submittal of data from nanomaterial producers. About 30 organizations submitted data on 130 materials. Not surprisingly, only a handful accepted the invitation to conduct voluntary testing for EPA. The results satisfied no one. Under Mr. Owens, EPA developed a package of proposed rules under the Toxic Substances Control Act (TSCA) including a Section 4 test rule, a significant new use rule under Section 5 addressing nanomaterials based on chemical substances listed in the TSCA inventory and a Section 8(a) information gathering rule. These proposals have been under review at OMB’s Office of Regulatory Information and Review (OIRA) for over a year.
Meanwhile, OIRA, along with the Office of Science and Technology and the Office of the Trade Representative, issued a 5 page memorandum in June, 2011, to provide policy guidance for the multiple federal agencies dealing with nanomaterials under legal oversight authorities. The memorandum describes the many benefits of nanomaterials, while also acknowledging the need for further scientific work on health and environmental issues as a predicate for appropriate risk management actions. The only sign that the writers recognize any legal issues complicating action under TSCA or other statutes is a statement that some statutes may limit mandatory reporting or information gathering to circumstances “where a risk or harm has already been identified,” TSCA’s well known catch-22 in establishing test rules. This observation is followed by a Delphic reference to agencies’ need “to explore other legally available means to obtain the information necessary to assess risk and possible harms.” What this means for EPA’s pending proposals is anybody’s guess.
Information reporting rules for nanomaterials are not easy to develop. EPA must define categories of materials to be reported on, the types of products and facilities to be covered, and the level of detail on product composition and potential impacts from emissions or disposal needed to understand exposures while minimizing the burden of reporting. In other countries such as France and Canada, efforts to set mandatory reporting rules have been bedeviled by definitional issues. France has also faced the challenge of, harmonizing its rules with the European Union’s chemical regulation scheme. Canada’s Health Agency recently issued a policy statement with a working definition for nanomaterial for use in data reporting at some future time under its existing legal authorities.
EPA’s ability to obtain basic information on the production and use of important categories of nanomaterials remains a prerequisite for minimal oversight of the nanomaterials industry offering some assurance to the public that if health or environmental risks are identified by research, they can be addressed without undue delay. The program begun by Mr. Owens ought to move forward for public review and comment.
According to news reports of the December 21 opinion rendered by the European Court of Justice, the ECJ’s decision upheld imposition of the European Union’s Emission Trading Scheme (“ETS”) upon non-EU airlines that take off or land at airports in an EU member state. However, those news reports fail to note what the ECJ did not decide.
In December 2009 the Air Transport Association of American and three US member carriers brought suit in the UK against the UK Secretary of State for Energy and Climate Change to reverse inclusion of non-EU airlines in the EU ETS. They argued that such inclusion violated the US/EU Open Skies Agreement precluding the signatories from imposing import restrictions, taxes, duties, and similar fees and charges on fuel used by air carriers in international air transport. They also argued that such inclusion violated the Chicago Convention and the Kyoto Protocol.
The Chicago Convention provides for adoption of international standards and recommended practices on air navigation “safety, regularity, and efficiency” by the International Civil Aviation Organization (ICAO), a United Nations specialized agency that oversees civil aviation. The ICAO has adopted aircraft noise and engine emission standards in Annex 16 to the Convention. The Chicago Convention also provides for resolution of signatory country disagreements over interpretation or application of the Convention and its Annexes by decision of the ICAO Council which can then be appealed to an arbitral tribunal or to the Permanent Court of International Justice (now the International Court of Justice). The Kyoto Protocol in turn provides for signatory states to address limitations on or reductions to greenhouse gas emissions from aircraft fuels through the ICAO.
For several years member signatories to the Chicago Convention have been considering mechanisms to address greenhouse gas emissions from commercial carriers. Spurred on by EU plans to impose its ETS on non-EU airlines, the ICAO hopes to have a mechanism in place by the end of 2012 for ICAO decisionmaking at its 2013 meeting. At the present time a number of market based mechanisms are being considered, including some form of emission trading, carbon taxes on fuel use, levies on departing passengers and cargo, and carbon offsets. The EU has said that it would exempt non-EU carriers from the EU ETS if they adopt “equivalent” measures.
In its decision the ECJ concluded, in the context of the UK court’s preliminary ruling, that it cannot examine the validity of the ETS under the Chicago Convention because the EU (as opposed to the EU member states who would perform their obligations under that Convention) was not a signatory to, and thus not bound by, the Chicago Convention. It also concluded that the Kyoto Protocol provisions for addressing greenhouse gas emissions from aviation fuel through the ICAO “cannot . . . be considered to be unconditional and sufficiently precise” to be relied upon by the plaintiffs in contesting application of the EU ETS. Thus, its rulings were limited to consideration of the Open Skies Agreement and customary international law. With respect to the former, the ECJ concluded that the tax and fee exemption for aircraft fuel used by carriers engaged in international travel between the EU and the US does not prohibit implementation of the EU ETS. The court likewise concluded that the EU Directive imposing the ETS was valid under customary law principles.
It remains to be seen what path the plaintiffs, or other interested countries or carriers, may choose to take regarding the court’s interpretation of the Open Skies Agreement and customary international law as they apply to the EU ETS. Even more interesting is the question of how the ECJ interpretation relates to the decisionmaking power vested in the ICAO. It is of course possible that the ICAO will implement “equivalent” measures for addressing greenhouse gas emissions before any further judicial decision is rendered. Nevertheless, additional legal action is highly likely, given the number of interested parties.
To encourage Brownfields development, Congress amended Superfund to add three transactional defenses to potentially responsible party liability: (1) innocent purchaser (IP); (2) bona fide prospective purchaser (BFPP); and (3) contiguous property owner (CPO). These defenses have shared prerequisites that include: (1) that all appropriate inquiry (AAI) have been performed pre-closing; (2) that specified continuing obligation be performed post-closing; and (3) that, in the case of BFPP and CPO, there be no “affiliation” between the purchaser and a potentially responsible party and, in the case of IP, that the act or omission of the third party giving rise to the contamination not have occurred in connection with a contractual relationship with the IP.
The purpose of this posting is: (1) to provide context as to how the transactional defenses and their prerequisites relate to each other, as well as to the third party defense; (2) to identify some recent guidance regarding two of those prerequisites--an ASTM standard relating to "continuing obligations" and an EPA memorandum relating to "no affiliation"; and (3) to critique the “no affiliation” discussion of Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 746 F. Supp. 2d 692 (D.S.C. 2010), a recent case that has garnered much attention.
The 17th Conference of the Parties (COP 17) under the United Nations Framework Convention on Climate Change (UNFCC) ended last Sunday, December, 11, 2011, in Durban, S.A. Some commentators have condemned the outcome as a sham that allows nations to continue emitting greenhouse gases (ghgs) at will for the indefinite future; others have celebrated it as a major step toward binding emissions limits for both developed and developing nations. Only time will prove which view is correct.
In force since 1994, with over 190 parties, the UNFCC established the objective of stabilizing concentrations of ghgs in the atmosphere “at a level that would prevent dangerous anthropogenic interference with the climate system,” which the current consensus translates as an increase of no more than a 2 degrees Celsius (2C) above pre-industrial levels. The UNFCC made a sharp distinction between the commitments of developed countries (listed in Annex 1 of the agreement and often referred to as “Annex 1 countries”) and those of developing countries, including major greenhouse gas emitters such as China and India. The UNFCC obligated only developed countries to take steps to limit their greenhouse gas emissions, and that obligation was unquantified and unenforceable.
The 1997 Kyoto Protocol quantified emission reduction targets for Annex 1 countries and included a provision for holding Annex 1 parties accountable for missing their targets. Nevertheless, the Protocol addresses less than one-third of global ghges. Those outside its jurisdiction include not only the United States, the world’s second largest ghg emitter, but also China and India, now the world’s first and third largest ghg emitters respectively.
Developing countries’ resistance to binding limitations has been formidable, based on their claim to economic development comparable to that already enjoyed by Annex 1 countries and on their smaller historic contribution to increased ghg concentrations. But at Durban, that resistance cracked, with help from a bit of lawyerly wordsmithing. An early draft of the decision document outlining a “platform for enhanced action” called for negotiation of an agreement to reduce ghg emissions in the form of “a protocol, another legal instrument or a legal outcome under the [UNFCC] applicable to all Parties.” Reportedly India had insisted on including “legal outcome” in this wording in order to make room for voluntary commitments. That brought objections from others insisting on binding commitments from all parties. In the negotiating huddle, someone suggested “outcome with legal force” as an alternative, and the parties bought it. The Washington Post identifies the source of the key compromise language as State Department lawyer Susan Biniaz. With that inspired piece of lawyering, she opened the door to the next phase of global climate change negotiations.
There is still much uncertainty going forward. The agreement reached at Durbin is only an agreement to negotiate and is itself non-binding, as economist Robert Stavins has pointed out. The targets remain to be negotiated. Non-binding “pledges” of reductions through 2020 previously submitted by the parties would affect future emissions only modestly. The United Nations Environmental Programme estimates that, even if carried out, these pledges would fall well short of reductions consistent with limiting global warming to 2C. And finally, there is the uncertainty about the key phrase – “outcome with legal force.” Does it resolve differences, pointing the way toward binding commitments while giving developing nations some cover, or does it merely paper over disagreements about the nature of the undertakings expected of the parties that will emerge again in force when the negotiations get serious? Time will tell, but at least the lawyer’s work has given us room to hope.
For many years, the Great Lakes community has identified invasive species as one of the most serious threats to the largest system of surface fresh water in the world. Well over 180 species are present already, and include such types as sea lamprey, zebra mussels, quagga mussels, round gobies, and many more causing hundreds of millions of dollars of damage each year. Even with all the concern over the current invaders, much more anguish has developed because of the threat from Asian carp, more specifically silver and bighead carp.
The Asian carp were introduced to fish farms in the southern United States in the 1970’s to remove algae and plankton from catfish ponds. Along the way, through flooding and other means, they escaped into the rivers, and have been eating and reproducing their way north over the years. The U.S. Army Corps of Engineers have erected an electric barrier about 40 miles from Lake Michigan on the Chicago Sanitary and Ship Canal, linked to the Illinois River, to stop the further movement. Although it appears the barrier is having an effect, there is evidence to suggest the carp have already gone beyond and are threatening Lake Michigan.
When this evidence became public in late 2009, Michigan went to the U.S. Supreme Court to seek a reopening of an old multi state consent decree over water diversion from Lake Michigan to Illinois. The Court refused to hear the matter, but Michigan and other states have gone to Federal district court in the Northern District of Illinois for injunctive relief to close the locks that separate Lake Michigan from the Chicago Area Waterway System. The district court denied the injunction, and the Seventh Circuit upheld the denial, but appeared to leave the door open to the plaintiffs if action is not taken quickly enough.
The U.S. Army Corps of Engineers is undertaking a large study called the Great Lakes and Mississippi River Inter-basin Study to look at all possible connections between the two watersheds, and consider all possible ways to stop the movement of the carp. The Great Lakes and Mississippi River communities are both concerned that this will take too long. To address this concern, the Great Lakes Commission and Great Lakes and St. Lawrence Cities Initiative have undertaken an expedited study funded by six foundations looking just at the Chicago Area Waterway System and the option of re-establishing the divide between the two basins by separating them with an earthen barrier that would prevent any flow of water or movement of aquatic species in either direction.
The situation presents a number of interesting public policy and legal issues. How seriously do we need to take invasive species? How much emphasis should be placed on the prevention of introductions of new species to new areas, and how much certainty in the risk analysis should be required to take action? How much disruption of commerce is acceptable? What level of legal showing should be required to get an injunction?
The U.S. Environmental Protection Agency (EPA) published on August 16, 2011, the final Toxic Substances Control Act (TSCA) Chemical Data Reporting (CDR) Rule, previously referred to as the Inventory Update Reporting (IUR) Modifications Rule. 76 Fed. Reg. 50816. The rule authorizes EPA to collect and disclose information on the manufacturing, processing, and use of commercial chemical substances and mixtures listed on the TSCA Inventory. The CDR Rule also sets the upcoming submission period from February 1, 2012, to June 30, 2012, and will include submission of chemical production information from 2010 and chemical production, processing, and use information from 2011.
The rule is significant for three reasons.
First, the rule’s impact is enormous. Thousands of businesses are affected and include, among others, chemical substance manufacturers and importers, chemical substance users and processors that may manufacture a byproduct chemical substance, utilities, paper manufacturing, primary metal manufacturing, and semiconductor and other electronic component manufacturing.
Second, this is not your grandmother’s rule. EPA is requiring electronic reporting of CDR information, making the compilation, analysis, and release of these data more efficient, more immediate, and definitely more difficult. Chemical detractors, competitors, and the plaintiffs’ bar will have more rapid and easier access to comprehensive chemical production and use information.
Third, failed reporting consequences are harsh. CDR/IUR reporting infractions have been a target rich enforcement area for EPA for years. Omitted chemicals and/or facilities are subject to steep fines that rack up quickly. Criminal sanctions apply to submitters making “knowing and willful” false confidentiality claims.
Smart businesses see this rule for what it is -- a TSCA compliance obligation and an invitation to competitive and reputational disaster if mishandled. Read the rule, understand EPA’s objectives, and start now to prepare for the June 30, 2012, deadline. More information is available here and here.
Sophisticated buyers of contaminated and potentially contaminated property (and their counsel) typically take pains to satisfy the Superfund (CERCLA) defenses for Bona Fide Prospective Purchasers (BFPPs) and Contiguous Property Owners (CPOs). In 2011, buyers readily understand and conduct due diligence (including the now-ubiquitous ASTM Phase I reports) and, when necessary, comply with “continuing obligations” attendant to owning contaminated property (the subject of other recent entries in this blog).
A sometimes-overlooked element of these CERCLA defenses requires that buyers not have an “affiliation with any other person that is potentially liable” under CERLCA. EPA has weighed in with a publicly released memo issued on September 21st, Enforcement Discretion Guidance Regarding the Affiliation Language of CERCLA's Bona Fide Prospective Purchaser and Contiguous Property Owner Liability Protection. This new guidance covers the two exceptions to the “no affiliations” requirement expressly added to CERCLA, and also addresses four common scenarios where the affiliation issue can arise.
The memo is to assist EPA personnel in exercising their enforcement discretion—on a site-specific basis. Why now? In this blog on March 22, 2011, ACOEL Fellow Linda C. Martin reported on the troubling case known as “Ashley II”, in which a U.S. District court rejected the BFPP defense, in part, because a liability release between the seller and buyer created a disqualifying “affiliation.” The decision is troubling because sellers and buyers often indemnify and release each other from environmental liabilities. The case, involving private parties, is now on appeal.
In this guidance, EPA disagrees with the general notion that indemnifications will create a disqualifying relationship, although the Agency could have directly taken issue with the Ashley II decision. To its credit, the United States has not been aggressive in finding disqualifying “affiliations” to date (at least as reflected in published judicial decisions). The public statement of the Agency’s views should not only confirm the government’s litigation posture, but also assist courts taking up the issue in private cost-recovery actions.
EPA’s Draft Guidance for 1-Hour SO2 NAAQS SIP Submissions has been out for public comment since this fall and, after an extension published on October 28, 2011 at 76 FR 66925, the comment period will close December 2, 2011. Many parts of this draft guidance may trigger comments, but one particularly troubling aspect from a programmatic perspective is EPA’s discussion in Appendix B of infrastructure SIP requirements under Clean Air Act Section 110(a)(2).
Section 110 of the Clean Air Act requires states to prepare plans for implementation, maintenance and enforcement of the National Ambient Air Quality Standards (NAAQS) and to submit those plans to EPA for approval. The statute specifies in general terms the required content of these State Implementation Plans (SIPs). EPA has issued regulations at 40 CFR Part 51 that address the requirements for SIP submittals. When changes to the NAAQS occur such that the state will need to update its SIP to show how it will attain and maintain the new or revised NAAQS, EPA’s regulations allow states to certify that their existing approved infrastructure SIPs are adequate to address the elements of Section 110 and then focus on specific changes to address the new or revised standard.
The particularly disturbing portion of EPA’s draft guidance is the discussion of how to address existing approved SIP provisions that treat excess emissions from startup, shutdown and malfunction events in a manner that EPA views to be inconsistent with agency guidance, or how to address variance and director’s discretion provisions that EPA says “do not comport with EPA policy.” Guidance, at B-3. EPA says it is “discussing options for resolving these issues” and notes that it has negotiated a settlement agreement to specify a deadline of August 31, 2012 to respond to a Sierra Club petition over SSM provisions in 39 states. EPA then goes further: “Therefore, as general guidance, EPA can advise that states not make infrastructure SIP submissions that rely on previously approved but potentially flawed provisions.” Id., at B-4.
There are mechanisms under the Clean Air Act to address deficiencies in SIPs – guidance from EPA to ignore approved SIP provisions is not one of the options. As the Supreme Court recognized in General Motors Corp. v. United States, 496 U.S. 530, 540 (1990), the existing SIP that has been approved under Section 110 of the Clean Air Act is the legally enforceable SIP. In that enforcement action, the issue was the ability to enforce an existing SIP provision where a revision had been adopted by the state and EPA had not acted on the request to approve the revision in a timely manner. The suggestion in the draft guidance that existing approved SIP provisions be ignored based on EPA policy does not comport with the Clean Air Act or case law.
After several years of rapidly escalating offset prices, the South Coast Air Quality Management District (SCAQMD) has launched a major effort to consider near- and long-term reforms to the offset component of its nonattainment new source review (NSR) program (under 11/15/11 “New Source Review Roundtable Discussion on Emission Offsets” heading).
Congress added the offset requirement as part of the 1977 amendments to the Clean Air Act (CAA). The idea was to ensure that new economic activity would not thwart progress made by states as they executed their state implementation plans (SIPs). Under the CAA offset requirement, major new and modified stationary sources are required to offset their projected net emission increases by reducing surplus emissions from other sources. As predicted during the most recent Congressional overhaul of the Clean Air Act in 1990, however, increased stationary source regulation, tighter major source definitions (e.g., 10 tons per year in the South Coast), and higher (greater than 1:1) offset ratios have finally squeezed some regional offset markets to the point where the offset program now impedes even the cleanest economic growth.
In the South Coast, for example, stationary source emissions have become an ever-diminishing part the overall emissions inventory (e.g., <10% of VOC emissions). And there are virtually no remaining surplus control opportunities for stationary sources; so the only source of traditional offsets has been the shutdown of existing facilities. Under the South Coast rules, however, even those reductions are not made fully available as offsets until they are first discounted to current control (i.e., lowest achievable emission rate, or LAER) levels. The drastically shrinking pool of available offsets has caused the price of offsets to rise to unprecedented levels. PM10 offsets, for example, hit a peak price in 2009 of $350,000 per daily pound of emissions. Recent VOC offsets have cost more than $2,400 per pound, NOx more than $50,000 per pound, SOx more than $12,500 per pound and CO more than $5,000 per pound. All of these numbers far exceed the $10,000 per ton upper bound contemplated as control costs to comply with the EPA’s 1997 standards for ozone and fine PM. See Presidential Memorandum, “Implementation of Revised Air Quality Standards for Ozone and Particulate Matter (“There is a strong desire to drive the development of new technologies with the potential of greater emission reduction at less cost. It was agreed that $10,000 per ton of emission reduction is the high end of the range of reasonable cost to impose on sources. Consistent with the State’s ultimate responsibility to attain the standards, the EPA will encourage the States to design strategies for attaining the PM and ozone standards that focus on getting low cost reductions and limiting the cost of control to under $10,000 per ton for all sources.”). 62 Fed. Reg. 38421, 38429 (July 16, 1997).
The net effect of the scarce offset supply and astronomically high prices has been to slow regional economic development to a crawl. For example, offsets to support new natural-gas fired power plants, necessary to back up the state’s renewable power program, have been almost impossible to find and have cost from $50 to $200 million per plant. Other facilities have faced daunting offset costs as well. The District’s cost estimates include several shocking numbers, including $12-77,000 for emergency backup generation for a police station, $106-234,000 for a gasoline service station, up to $358,000 for a printing facility, $178-435,000 for an auto body shop, in excess of $1 million for a food processing facility (e.g., a tortilla fryer and oven), from $1-2 million for a sewage treatment plant expansion, well over $1 million for a hospital boiler and $78-115 million for landfill gas recovery. Although California has led the national clean energy investment effort, without material reform the SCAQMD will almost certainly be unable to offset emissions from the desired low-carbon biofuel or biomass-based renewable electricity projects in the region. The offset requirement thus threatens to prevent much of the cleanest form of economic growth in the region.
The SCAQMD has identified a handful of near-term adjustments to its NSR program that could reduce the demand for offsets. These include, for example, the use of an annual rather than peak monthly averaging period to calculate the offset need. Increasing offset supply will be much more difficult, however. That is because almost all as-yet-untapped strategies (e.g., identifiable mobile and area source reductions) have been identified and targeted as part of the region’s long-term SIP and thus may to some extent be ineligible as a supply of offsets.
The time has long since come for the District to replace the current offset program with an alternative (such as a clean technology fund) that can continue to improve air quality by accelerating, rather then impeding, clean technology development in the South Coast. In addition to satisfying air quality improvement needs, rapid clean technology development also is needed to employ an ever-growing regional population and to meet the state’s ambitious clean energy and carbon reduction goals. There is a win-win strategy to be found. But it will require frank acknowledgement that the Clean Air Act offset program has served its purpose and now impedes, rather than aids, progress. Most stakeholders are ready to work together to find a better mousetrap to promote rapid investment where and when we most need it. We need it immediately in Southern California and the South Coast deserves enormous credit for launching this critical and timely reform effort.
On August 18, 2011, the Chickasaw and Choctaw Nations filed a lawsuit, in federal court in Oklahoma City claiming that they, rather than the State of Oklahoma, have regulatory authority over the water resources within their original tribal boundaries which comprise almost one-fourth of the State. The source of their claims is the 1830 Treaty of Dancing Rabbit Creek, in which the federal government agreed to convey the lands to the Nations, in fee simple, to entice the Nations to move west of the Mississippi from their aboriginal homelands.
In support of their position, the Nations point to the fact that the State, in its lawsuit against the poultry industry for alleged pollution to the Illinois River Watershed, recently stipulated that the Cherokee Nation (as one of the "Five Tribes") had "substantial interests" in the watershed. The Nations also rely upon the case of Choctaw Nation v. State of Oklahoma, in which the U.S. Supreme Court held that the Tribes own the riverbed of the Arkansas River as it flows across their treaty lands. The Nations also contend that the State previously recognized the Nations' water rights when it negotiated a compact with the Nations to apportion out-of-state water sales revenues. Lastly, the Nations remind the State that, as a precondition to being admitted to the Union, the State of Oklahoma agreed that it would never assert jurisdiction over the Nations' lands or affairs.
One of the main issues underlying the lawsuit is, of course - money. The Nations are upset that the State recently sold water storage rights in Lake Sardis to the Oklahoma City Water Utility Trust, thus paving the way for water to be transported from tribal lands to provide water to several municipalities in central Oklahoma, without consulting or sharing revenues with the Nations. Moreover, the temporary moratorium on out-of-state sales while the State studied water availability is about to end, meaning the State could move forward with out-of-state sales of waters located within the tribal territories without sharing the revenues with the Nations. A 2002 proposed compact had resolved this issue, agreeing to revenue share 50%/50% on such sales, however, the Oklahoma Legislature never approved the compact.
The Nations say they want to talk - sovereign to sovereign - to try to resolve the problem. However, the Nations contend that the State has spurned all such efforts. The Governor responded, claiming that the filing of the lawsuit while she was out of town promoting Oklahoma as the go to place to live and do business was a surprise and not helpful to either side's interests.
Neal McCaleb, a spokesman for the Chickasaw Nation, has said, "most people think tribal rights and tribal sovereignty in general is some kind of ancient relic from the past that really doesn't have any relevance to the issues today, like water, and that's not the case." One hundred and eighty-one years later, the Nations' water claims under the 1830 Treaty of Dancing Rabbit Creek are finally going to court.
The Supreme Court’s last determination of what wetlands are subject to the Clean Water Act and hence may not be filled without a permit left behind a matted mess. In Rapanos v. United States, the 4-1-4 opinion, articulated two tests for when a wetland constitutes a water of the United States. In the plurality opinion, wetlands must have “a continuous surface connection to bodies that are waters of the United States.” Justice Kennedy’s swing vote decision for the plurality’s remand, stated that, while there needed to be a connection, it would be sufficient if there was a “significant nexus” with the waters of the U.S.; that is, it would be sufficient if the wetlands, alone or in combination with other lands in the region, would significantly affect the chemical, physical and biological characteristics of the U.S. waters. So which test should be applied?
Since Rapanos, the Seventh and Eleventh Circuits have found that Justice Kennedy’s test must be met, under a weakest-link theory – it is the narrowest grounds for the Supreme Court’s decision in Rapanos. On the other hand, the First, Eighth and recently the Third Circuits have held that if the wetlands can meet either test set forth in Rapanos, then the fill would be in violation of the Clean Water Act.
In order to "clarify" things, EPA and the Corp of Engineers issued a proposed guidance document, to help identify waters subject to Clean Water Act jurisdiction The Agencies added that the proposed guidance would result in more waters being brought within their jurisdiction - a statement that is the political equivalent of poking a bear with a stick. Predictably, the proposed guidance quickly came under attack as being an attempt by EPA and the Corp to expand their jurisdiction and to promulgate rules without following proper procedure.
Perhaps there is more to the letter than a gentle reminder that the Agencies shouldn't consider mocking the law. If EPA promulgates the rule rather than issues a guidance, the inevitable challenge will be much more difficult because of the deference (frequently referred to as Chevron deference) that will attach to the rule. Deference is a powerful weapon in any agency's arsenal and anyone who seeks to diminish the power of an agency would do well to find a way to challenge that deference. In this case, the letter is preemptively making the case that if the final rule looks like the guidance, it proves that EPA prejudged the outcome, that the rule should be thrown out and that it would be a "mockery" to allow deference to save it. Given the recent decisions regarding agency deference, it just might work. And if it does, letter-writing will be back in vogue.
In United States v. Donovan, 2011 U.S. App. LEXIS 22026 (3rd Cir., Oct. 31, 2011), the Third Circuit became the latest Circuit Court of Appeals to weigh in on . the Army Corps of Engineers' regulatory authority over wetlands under the Clean Water Act in the wake of the Supreme Court's splintered decision in Rapanos v. United States, 547 U.S. 715 (2006).
In Donovan, the United States brought an enforcement action for filing wetlands without first obtaining a permit from the Corps of Engineers. The district court granted summary judgment in favor of the federal government, finding that, under the "continuous surface connection test" articulated by the plurality opinion in Rapanos v. United States, 547 U.S. 715 (2006), or the "substantial nexus test" laid out by Justice Kennedy in his concurring opinion in Rapanos, the wetlands in question were subject to regulation under the CWA. The court imposed civil penalties and granted the government's request for injunctive relief.
On appeal Donovan argued that because the multiple opinions in Rapanos did not provide any governing standard, pre-Rapanos case law should govern whether the wetlands on his property were subject to the CWA. The Third Circuit rejected this argument and concluded that either the plurality's test or Justice Kennedy's test could be used to determine the CWA's jurisdictional reach over wetlands. Because the wetlands met either test, the Corps' exercise of jurisdiction was proper.
The Third Circuit needed to cobble together a governing standard for jurisdiction over wetlands because in Rapanos no one standard commanded majority support. In Rapanos, the Court considered whether wetlands, which lie near ditches or man-made drains that eventually flow into traditional navigable waters, constitute "waters of the United States" within the meaning of the CWA. Justice Scalia, in a plurality opinion in which three other Justices joined, concluded that "the waters of the United States" as used in the CWA "includes only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams[,] . . . oceans, rivers [and] lakes.'" 547 U.S. at 739. Importantly, the plurality opinion noted that the phrase "does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall." Id. With regard to wetlands, the plurality opined that "only those wetlands with a continuous surface connection to bodies that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and wetlands, are 'adjacent to' such waters and covered by the [Clean Water] Act." 547 U.S. at 742.
Justice Kennedy concurred in the judgment but struck out on a different path. In his view, the Corps of Engineers' jurisdiction over wetlands "depends upon the existence of significant nexus between the wetlands in question and navigable waters in the traditional sense." 547 U.S. at 779. "Wetlands possess the requisite nexus, and thus come within the statutory phrase 'navigable waters,' 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.'" Id.
Justice Stevens, in an opinion joined by three other justices, dissented. In the dissenters' view, the Court should have deferred to the Corps' interpretation of its jurisdiction under the CWA. Under the Corps' interpretation, wetlands are subject to its jurisdiction if they are adjacent to tributaries of traditionally navigable waters and thus fall within the term "waters of the United States."
The Third Circuit concluded that a majority of the Supreme Court would have supported the exercise of the Corps' jurisdiction under either the plurality’s "continuous connection test" or Justice Kennedy’s "substantial nexus test".. The Third Circuit pointed out that the dissenting opinion said they would uphold the Corps' jurisdiction in all cases in which either the plurality's test or Justice Kennedy's test is satisfied. The Third Circuit joined the First Circuit (United States v. Johnson, 467 F.3d 56 (1st Cir. 2006)) and the Eighth Circuit (United States v. Bailey, 571 F.3d 791 (8th Cir. 2009)) in concluding that either test is sufficient. The Seventh Circuit (United States v. Genke Excavating, 464 F.3d 723 (7th Cir. 2006)) and the Eleventh Circuit (United States v. Robison, 505 F.3d 1208 (11th Cir. 2007)) have concluded that because he was the “swing” vote for the decision, only Justice Kennedy's substantial nexus test should be used to determine jurisdiction. The remainder of the circuits that have considered the issue have declined to specify which Rapanos test or tests should be applied.
From what appeared to be a hopelessly fragmented Supreme Court decision, the lower courts have managed to fashion two governing tests for jurisdiction over wetlands. These tests will continue to control for the foreseeable future until they are superseded by Congressional action or agency rulemaking.

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