After years of drought, the El Niño storms have been bringing much-needed rain and snow to California–albeit in quantities significantly less than we hoped for thus far. In addition to the anticipated snowpacks, flowing rivers, and replenished reservoirs, the California landscape has been marked by the return of ephemeral vernal pools, which may appear as seemingly insignificant ponds or puddles.

However, under the Clean Water Rule (“CW Rule”) which was promulgated mid-last year, and which defines which waters are “jurisdictional”—meaning, protected as “waters of the United States” under the Clean Water Act (“CWA”)—the reach of federal jurisdiction may include those seemingly insignificant ponds or puddles.

If such a pond or puddle is deemed a “vernal pool” that is covered by the CWA, then the pond or puddle is subject to a myriad of CWA regulatory requirements, including the federal prohibition on discharges of pollutants except in compliance with the CWA (§ 301), the requirement to obtain a permit prior to discharge (§§ 402, 404), water quality standards (§ 303), oil spill liability and oil spill prevention and control measures (§ 311), certification of compliance with State water quality standards (§ 401), and enforcement (§ 309).

This may seem like a whole lot of fuss about what may appear to be nothing more than large mud puddles.

The CW Rule specifically includes western vernal pools as potentially jurisdictional under the CWA and specifies how jurisdiction is to be determined. In sum, western vernal pools may be deemed jurisdictional waters of the United States on a case-by-case basis depending on whether combined networks of vernal pools “significantly affect” the integrity of other jurisdictional waters. This is in contrast to the five classes of waters which are deemed per se jurisdictional, or “jurisdictional by rule” under the CW Rule: traditional navigable waters, interstate waters, the territorial seas, tributaries, and “adjacent” waters (as defined).

The CW Rule describes “western vernal pools” as

shallow, seasonal wetlands that accumulate water during colder, wetter months and gradually dry up during warmer, drier months;

and

seasonal wetlands from the Pacific Northwest to northern Baja California, Mexico associated with topographic depressions, soils with poor drainage, mild, wet winters and hot, dry summers.

Although the CW Rule does not categorically include western vernal pools as “waters of the United States,” the CW Rule categorizes them as waters that may be deemed waters of the United States when a case-specific determination has found a significant nexus between the pools in question and jurisdictional waters of the United States.

The significant nexus standard stems from a series of United States Supreme Court opinions, including Rapanos v. United States, 547 U.S. 715 (2006), which set forth several tests for determining when waters may be deemed “waters of the United States.” In a fractured 4-1-4 decision, Justice Kennedy concluded in a concurring opinion that waters could be jurisdictional if they either alone or in combination with similarly situated waters in the region, “significantly affect the chemical, physical, or biological integrity” of traditional navigable waters, interstate waters, or the territorial seas.

Under the CW Rule, western vernal pools are deemed “similarly situated” for purposes of the significant nexus standard, and must therefore be considered as a whole rather than individually in making jurisdiction assessments. Specifically, they are to be analyzed as a group in the watershed that drains to the nearest traditional navigable water, interstate water, or the territorial seas when making a case-specific analysis of whether these waters have a significant nexus to traditional navigable waters, interstate waters, or the territorial seas. This is theoretically true irrespective of distance from jurisdictional waters, although to the extent that vernal pools are “adjacent” (as defined in the CW Rule) to jurisdictional waters, then they would automatically be deemed jurisdictional by rule which would obviate the need for a case-specific determination.

Under the prior regulatory scheme, western vernal pools were not specifically enumerated as a subclass of potentially jurisdictional waters, and it was unclear how they were to be evaluated (including whether they were to be evaluated separately or as a network). This left stakeholders—predominantly those in the Central Valley where western vernal pools are most commonly found—scratching their heads over jurisdictional determinations. See, e.g., Borden Ranch Partnership v. United States Army Corps of Engineers, 261 F.3d 810 (9th Cir. 2001) (reversing district court’s findings of liability with respect to isolated vernal pool in the Central Valley).

Despite the CW Rule’s potential for significant new designation of jurisdictional waters, the CW Rule states that it does not purport to add any additional CWA permitting requirements. For example, with respect to agriculture, the CW Rule does not affect any of the exemptions stated in CWA section 404(f), including exemptions for “normal farming,” ranching, and forestry activities. That said, the Economic Analysis document accompanying the CW Rule indicates that the CW Rule will result in an approximately 3% to 5% increase in claimed CWA jurisdiction compared to the current field practice.

The CW Rule has been challenged on multiple grounds, and is presently stayed nationwide. Shortly after the CW Rule was issued, enforcement of the CW Rule was stayed in the Sixth Circuit (In re: Environmental Protection Agency and Department of Defense, Final Rule: Clean Water Rule: Definition of “Waters of the United States) pending a determination by the court on jurisdiction to review the rule. As a result, federal regulators have not been implementing the CW Rule, and are instead using the 1986 regulations and associated guidance (those in effect prior to August 28, 2015) in making jurisdictional determinations. Just last month, however, in a fractured 2-1 decision, a three-judge panel found that the Sixth Circuit has jurisdiction to hear challenges to the CW Rule.

The stay will fuel uncertainty as vernal pools begin to form throughout California this spring as to whether specific vernal pools will be considered “waters of the United States.” This may be a source of significant frustration for those with development, grading, or other plans for land that could impact vernal pools.

When compounded with the possibility that threatened or endangered species may be lurking within vernal pools (such as the threatened fairy shrimp that have historically emerged when vernal pools begin to fill), vernal pools can present a complicated and expensive set of environmental challenges.

This may seem like a whole lot of fuss about what may appear to be nothing more than large mud puddles. Nevertheless, property owners must exercise caution before they disturb those pools, as the penalties under the CWA can be significant.

David E. Cranston

Real Estate Considers Role In State Cap-and-Trade System

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