December 09, 2019

State Assumption of Section 404 Permitting: The Ongoing Evolution of Cooperative Federalism under the Clean Water Act

Christopher Brooks

Section 404 of the Clean Water Act (CWA) regulates the discharge of dredged or fill material into waters of the United States. The 404 permitting program is traditionally administered by the U.S. Army Corps of Engineers (Corps), but 404(g) establishes a process by which a state or tribe may request authority from the Environmental Protection Agency (EPA) to administer its own dredge and fill permit program.

In order to assume administration of 404 permitting a state must develop its program to meet specified criteria. Critically, state programs must be at least as stringent as the federal program and regulate all the same activities with adequate administration and enforcement capacity. Although the state assumption program has existed since 1977, only two states—Michigan and New Jersey—have assumed 404 permitting authority to date.

Complexity, Cost, and Confusion

There are several likely reasons why so few states have successfully assumed 404 authority. The strict guidelines requiring consistency with the federal 404 program present challenges for individual states to process and enforce permits without adequate funding to support 404 program implementation. There is currently no specific source of federal funding available to help states afford the costs of assuming 404 authority.

Additionally, there remains confusion about the scope of waters that may be assumed by states. Section 404(g)(1) describes waters that are non-assumable by a state or tribe, including tidal waters and waters that have been used in the past, or are susceptible for use in interstate commerce, and any wetlands adjacent to such waters. Waters retained by Corps under 404(g)(1) align roughly with the traditional jurisdictional authority under section 10 of the Rivers and Harbors Act (RHA), but the precise definition of non-assumable navigable waters remains unclear. Thus, defining the scope of assumable waters remains the key to determining the administrative division of 404 authority between the Corps and a state or tribe.

In light of this ongoing confusion in 2015 the Assumable Waters Subcommittee of the National Advisory Council for Environmental Policy and Technology (NACEPT) released a report providing EPA with recommendations for clarifying the administrative division of 404 authority between the Corps and a state or tribe. The majority view from the NACEPT report recommends that the Corps should retain permitting authority for all waters traditionally covered under RHA section 10, and any adjacent wetlands, but excluding a subset of RHA waters covered based on historic use in commerce. The report advises that Corps jurisdiction should be retained over adjacent wetlands based on an administrative boundary line negotiated between the individual state and the Corps. Absent terms negotiated in a memorandum of agreement (MOA) the default administrative boundary line between waters retained by the Corps and those assumable by the state should be 300 feet.

The limits of adjacency and the precise scope of assumable waters remains open to interpretation as the NACEPT report is advisory and there have been no significant judicial interpretations of the language of 404(g)(1). The extent of waters assumable by states or tribes moving forward remains subject to a state by state negotiation process with the Corps, guided by the recommendations of the NACEPT report.

A third sticking point for states seeking assumption is ensuring that states implement their programs in compliance with other federal environmental laws. The Corps issuance of a 404 permit constitutes a “federal action” subject to environmental reviews under statutes such as the National Environmental Policy Act, the Coastal Zone Management Act, the Endangered Species Act (ESA), and many others.

Consistency with the ESA has proven to be a particular challenge for states. When issuance of a federal 404 permit might jeopardize a listed species, the Corps must engage in a “section 7 consultation” with the Fish and Wildlife Service or other federal agencies to ensure that the federal action will not jeopardize the continued existence of the listed species. 16 U.S.C. § 1536(a)(2). State permitting programs are not automatically subject to the section 7 consultation process and therefore states seeking 404 permitting authority must develop their own programs to ensure compliance with the ESA. As a practical matter this means states must enter into an MOA with EPA and the Fish and Wildlife Service outlining a detailed coordination process integrating ESA requirements into state programs.

Potential Benefits Motivating States to Seek Assumption

In addition to the uncertainty related to the process of state assumption, there is also ongoing debate about the potential benefits of state administered programs. Advocates of state 404 assumption say it is in line with the long tradition of cooperative federalism in managing water resources under the CWA. Former Director of the EPA's Wetlands Program David Evans believes that “a sincere desire to exert leadership in managing the state and tribal resources is generally the strongest motivator” for states or tribes that may explore section 404 assumption. David Evans, Clean Water Act §404: What Is It? How Does it Work? What Are the Benefits?, 31 National Wetlands Newsl. (2009). Proponents of state assumption argue that state programs will help clarify and streamline the permitting process, making it more efficient by reducing the amount of time it takes to issue permits and eliminating duplication between state and federal wetland permitting processes. Moreover, state 404 programs can improve aquatic resource protection by ensuring that state-specific needs are directly addressed.

Others argue the underlying motives driving states to seek assumption are not to improve permitting efficiency and better protect aquatic resources, but rather to weaken environmental protections. Lance D. Wood, assistant chief council for environmental law and regulatory programs at the Corps asserts that the primary benefits of state assumption “go to development interests that hope to eliminate legal protections for aquatic resources provided by the federal §404 program, replacing them with state laws and programs that over time can be politically controlled and weakened.” The ECOS Proposal for Expanded State Assumption of the CWA §404 Program: Unnecessary, Unwise, and Unworkable, 39 ELR 10209 (Mar. 2009).

Even without authority to administer 404, states retain power to exert control over federal permitting through the 401 water quality certification process, whereby states can condition approval of federal permits to ensure compliance with state water quality standards. That power may be diminished by an EPA rulemaking proposal released in August 2019 aimed at clarifying the substantive and procedural rules for state water quality certifications currently found at 40 CFR §§ 121.1–121.3. The new rules would limit both the scope of review under 401 and the amount of time states have to review a certification request to no more than one year, or shorter periods of time as the Corps deems “reasonable.” EPA Proposed Rule, Updating Regulations on Water Quality Certification, Docket ID No. EPA-HQ-OW-2019-0405, Aug. 22, 2019.

The role of state 401 water quality certification programs are greatly diminished after state assumption since any conditions can be included in the state-issued permit. Section 401 certification would only be triggered for activities in jurisdictional waters retained by the Corps under 404(g)(1), or for other federally licensed or permitted projects. Recently proposed rules constraining state powers under 401 to veto or condition federal 404 permits, if adopted, could result in increasing state interest in 404 assumption.

Ongoing Processes in Arizona and Florida

Many states have considered assumption since 1977, including Oregon, Alaska, Minnesota, Kentucky, Wisconsin, and Maryland. Two states, Florida and Arizona, are actively engaged in the process of seeking section 404 assumption.

In April 2018 the Arizona state legislature passed Senate Bill 14931, giving the state authority to engage in rulemaking necessary to assume 404 authority. Ariz. Rev. Stat. § 49-256. In August 2019 Arizona developed a “road map” and convened stakeholder meetings and tribal listening sessions. A draft rule is expected soon and the state agency officials plan to submit an official assumption request to EPA by June 2020.

Florida seems to be even closer to successfully assuming 404 authority. The Florida state legislature passed House Bill 7043 in 2018 authorizing the state to develop rules to seek assumption and is currently engaged in negotiation with Corps and EPA. ESA integration is a particularly significant hurdle for Florida since the state has the third highest number of ESA-listed species in the United States––130 in total. USFWS Environmental Conservation Online System, available at https://ecos.fws.gov/ecp0/reports/species-listed-by-state-report?state=FL&status=listed.

Ultimately, the 404 assumption process remains complex and expensive, with considerable uncertainty for states to navigate. Settling questions in Arizona and Florida of which waters may be assumed and how to ensure ESA compliance will likely dictate whether more states seek to assume 404 permitting administration in the future.

Christopher Brooks

Christopher Brooks is an environmental attorney and professor with appointments at Vermont Law School and the University of Vermont Rubenstein School of Environment and Natural Resources.