This term the NFIB Small Business Legal Center is closely following two important Clean Water Act (CWA) cases that will affect the rights of small business landowners. These cases are all the more important in light of the Environmental Protection Agency and Army Corps of Engineers’ recently promulgated a rule (“Waters of the United States Rule” or “WOTUS”), which purports to expand the jurisdictional reach of the CWA. Of course we have our own lawsuit challenging the WOTUS Rule, but it will be quite some time before that case works its way through the appeals process. In the interim, the Supreme Court’s decision in Hawkes v. Army Corps of Engineers will most certainly affect many small business landowners. And the Supreme Court’s decision as to whether to take up the Farm Bureau’s petition for certiorari in American Farm Bureau Federation v. Environmental Protection Agency will affect far more.
Hawkes v. Army Corps of Engineers
On Friday the Supreme Court agreed to hear arguments in Hawkes v. Army Corps of Engineers—a case that we think raises an important issue for landowners who are concerned that their property may contain (or may be said to contain) wetlands covered by the CWA. As we’ve explained previously, the CWA prohibits the discharge of pollutants, or the draining or filling of any areas considered jurisdictional “waters of the United States.” Accordingly, if your property is deemed to contain jurisdictional waters, there is virtually nothing you can do with it—not unless you apply for a very costly federal permit. And if you should violate the CWA, you face ruinous penalties of $37,500 per day.
But if the Environmental Protection Agency and Army Corp of Engineers have wrongfully asserted jurisdiction over your land—you should be able to contest their jurisdiction in court. Right? Well, not according to the EPA and Army Corps.
For years EPA and Army Corps have taken the outlandish position that landowners have no right to challenge their assertion of jurisdiction—not until either (a) EPA/Army Corps brings an enforcement action asserting that the landowner has violated the CWA; or (b) the landowner has applied for [and been denied] a CWA permit. But of course there would be serious due process problems with denying landowners the right to contest an assertion of jurisdiction until after they have exposed themselves to potential liabilities. And it would be downright absurd to require a landowner to apply for a permit that he or she doesn’t believe is needed. To be sure, a CWA permit is only necessary if the land is in fact jurisdictional. Thus it would make no sense to apply for a CWA permit if you believed your property was not subject to CWA jurisdiction—especially given that these permits cost on average approximately $270,000.
But depending on what the Supreme Court says in Hawkes, EPA and Army Corps may soon be forced to stop their shenanigans, and to allow landowners a day in court to contest their assertions of jurisdiction in the future. If things turn out the way we hope, a landowner should be able to request a formal jurisdictional assessment from Army Corps, and should then be able to challenge an assertion of jurisdiction in court. In our view, a landowner should have every right to contest an illegal assertion of jurisdiction over his or her land.
American Farm Bureau Federation v. Environmental Protection Agency
The National Federation of Independent Business has also been following the Farm Bureau’s challenge to EPA’s proposed Total Maximum Daily Load (TMDL) Rule for the Chesapeake Bay watershed. We joined with the Chamber of Commerce and other concerned industry groups in urging the Supreme Court to take this case because EPA’s approach would effectively federalize basic land use and zoning issues in areas that are beyond the jurisdictional reach of the Clean Water Act. Accordingly, we are urging the Supreme Court to grant certiorari in American Farm Bureau Federation v. Environmental Protection Agency.
Under the Clean Water Act it is possible to apply for a special permit to be allowed to make certain discharges into the waters of the United States. These National Pollutant Discharge Elimination System (NPDES) permits are issued only under stringent conditions that the permit holders must ensure that their discharges are compliant with TMDL standards, under which the state (or EPA) sets maximum limitations on how much of any specific pollutant may be discharged into a specific waterbody. And the TMDL standard is set so as to ensure that the water can meet specified standards for health and recreation.
Suffice it to say that all of this is highly technical. But traditionally TMDL restrictions only applied to NPDES permit holders. Of course, state and local land use authorities could impose additional land use restrictions to prevent run-off of pollutants into navigable waters during storms, which might in theory help the state maintain water quality standards. But EPA has never been authorized to regulate land use decisions—not unless someone is proposing to dredge, fill or drain jurisdictional waters.
To be sure, EPA has been repudiated in courts for seeking to regulate storm water run-off in the past. This is because EPA simply lacks jurisdiction under the CWA to regulate anything beyond “waters of the United States.” Accordingly, we are asking the Supreme Court to review, and to strike-down, EPA’s TMDL for the Chesapeake Bay because it purports to regulate basic land use decisions that should be left to state and local officials.