December 04, 2018 Articles

The Boundaries of State Assumption of Wetland Permitting Authority Get Tested

There are demonstrated pros and cons to a delegation program authorized by section 404(g).

By Ted Warpinski and Chris Meuler

Under section 404(g) of the Clean Water Act (CWA), the federal government may delegate authority to a state to administer a state’s own dredge-and-fill permitting program in lieu of the permitting program administered by the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers.

Proponents of such a delegation program typically cite increased efficiency and more effective allocation of federal and state agency resources as benefits. States may also be incentivized by increased local control and the ability to integrate more local concerns and regulations into the review process. Similarly, permit applicants have the potential benefit of dealing with only one regulator.

But even where a state has assumed permitting authority, a federal oversight component remains because the state must still provide the EPA and the Corps with notice and an opportunity to comment on wetland permit applications that would otherwise be under federal jurisdiction. If a federal agency objects, the state must resolve the objection or else jurisdiction transfers back to the federal agencies.

State Reluctance to Assume Authority

Despite the benefits of the delegation program, states have been reluctant to assume authority under section 404(g), with a common reason being the impact on the state budget. So far, only two states—Michigan and New Jersey—have assumed wetland permitting pursuant to section 404(g).

Our home state of Wisconsin has reviewed the feasibility of assuming the federal wetland program on more than one occasion. In a 1991 report, the Wisconsin Department of Natural Resources (WDNR) noted that there are some potential benefits in an assumption program but concluded that there is a low feasibility for implementation given inadequate jurisdiction and limited funding and staffing. In a 2007 report, the WDNR posited that the annual budget increase for assuming jurisdiction would be over $1 million and that at least 16 new full-time employees would be required to assume wetland permitting. The study also questioned the utility of assumption, noting that wetland permit coordination between Wisconsin and federal agencies is already occurring.

Michigan: Challenge to Proposed Back Forty Mine Project

A current example of the mechanics of an assumption program is the wetland permit for the Back Forty Mine project proposed by Aquila Resources in Michigan’s Upper Peninsula. As Michigan has adopted a section 404(g) program, the Michigan Department of Environmental Quality (MDEQ) has taken the lead on wetland permit issues associated with this proposed sulfide mine. The project requires filling several acres of wetlands. As contemplated by the CWA and the regulations promulgated regarding the delegation of authority, the EPA and the Corps have received the required opportunity to comment. Earlier this year, the EPA provided substantial comments on the proposed permit and ultimately objected to it. In early June, the EPA determined that its objections had been resolved based upon permit conditions imposed by the MDEQ, and the MDEQ then granted a wetland permit for the Back Forty Mine project.

The Back Forty Mine project is complicated by the fact that the proposed mining site is located adjacent to the Menominee River, which serves as a boundary water between Wisconsin and Michigan. A property owner and the Menominee Tribe, which has its origins in the area, have challenged the underlying mining permit. Furthermore, a Wisconsin-based citizen group (represented by the authors), as well as the nearby property owner and the Menominee Tribe, is administratively challenging the recently issued wetland permit before the Michigan Office of Administrative Hearings (OAH).

But, for purposes of this article, what is perhaps more interesting is the fact that the Menominee Tribe also filed an action in the U.S. District Court for the Eastern District of Wisconsin challenging the EPA’s authority to delegate permitting authority to Michigan as it relates to the Menominee River and its adjacent wetlands. In the federal lawsuit, the Menominee Tribe brought claims under both the citizen suit provision of the CWA, 33 U.S.C. § 1365(a)(2), and the Administrative Procedure Act, 5 U.S.C. 701 et seq. The claims rest in large part on the exception in section 404(g) that does not allow delegation of permitting for waters and adjacent wetlands that are or could be used in interstate commerce:

The Governor of any State desiring to administer its own individual and general permit program for the discharge of dredged or fill material into the navigable waters (other than those waters which are presently used, or are susceptible to use in their natural condition or by reasonable improvement as a means to transport interstate or foreign commerce shoreward to their ordinary high water mark, including all waters which are subject to the ebb and flow of the tide shoreward to their mean high water mark, or mean high water mark on the west coast, including wetlands adjacent thereto) within its jurisdiction may submit to the Administrator a full and complete description of the program it proposes to establish and administer under State law or under an interstate compact. . . .

33 U.S.C. § 1365(a)(2), at tit. IV, § 404(g) (emphasis added).

The federal agencies and Aquila (which had intervened) moved to dismiss for failure to state a claim. At the hearing on the motion in early August, the court requested supplemental briefing on the relationship (if any) between navigable waters under section 10 of the Rivers and Harbors Act and retained waters under section 404(g). Shortly after the supplemental briefing was completed, the Menominee Tribe moved to amend its complaint to add claims based on the EPA’s decision to withdraw its objections to the permit application. The motions are awaiting a decision from the court.

Wisconsin: Challenge to Wastewater Discharge Permit

There are implications beyond just the proposed Aquila mine. For instance, the Wisconsin Supreme Court grappled with an advocacy group’s challenge to a wastewater discharge permit issued by the WDNR for a proposed mill in Green Bay, Wisconsin. Anderson v. Dep’t of Natural Res., 796 N.W.2d 1 (Wis. 2011). The EPA delegated authority to the WDNR to issue wastewater permits, and one of the permit challenges in Anderson addressed whether the permit complied with federal requirements.

The WDNR denied challengers a public hearing on the federal issues, and that decision was affirmed by the circuit court. The court of appeals reversed, but the Wisconsin Supreme Court disagreed and affirmed the WDNR’s decision.

One of the primary reasons that the supreme court gave for affirming was that the challengers could always seek federal court review of the federal issues. Then-Chief Justice Abrahamson issued a dissent that raises some legitimate issues over, as she phrased it, whether current and “future challengers have an effective forum in which to express their concerns that terms in a state-issued permit do not comply with federal law.” These are among the issues that are playing out now in the Back Forty Mine permitting process.

Conclusions

There are demonstrated pros and cons, for both applicants and the government, to a delegation program authorized by section 404(g). Despite the delegation program authorized by section 404(g), which gives states wetland permitting authority, being in place for decades, only two states are participating in the program. A number of issues regarding the scope of the delegation and challenge procedure have not been addressed yet—however, they are at the forefront of the proposed Back Forty Mine’s application process.

Ted Warpinski is a shareholder and Chris Meuler is an attorney at Davis & Kuelthau’s offices in Green Bay and Milwaukee, Wisconsin.


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