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Probate & Property

March/April 2024

Land Use Update - Regulating Development in Wetlands

Daniel R Mandelker

Summary

  • The Section 404 Dredge and Fill Permit and What It Means.
  • Requirements for Section 404 Dredge and Fill Individual Permits
  • Section 404 program often triggers a permit approval process that is complicated, costly, and lengthy.
Land Use Update - Regulating Development in Wetlands
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Your client is a developer and tells you she applied to the county for a permit for a mixed-use commercial and residential project. The county said that her development complied with the county zoning ordinance but that she must first obtain a Section 404 dredge and fill permit because the US Army Corps of Engineers (the Corps) made a jurisdictional determination that her development is located in “waters of the United States.” Your client asks for your advice.

The Section 404 Dredge and Fill Permit and What It Means

Wetlands are transitional areas between aquatic ecosystems and uplands that include salt and freshwater marshes, swamps, wet meadows, bogs, fens, and potholes. Wetlands cover 5.5 percent of the land in the 48 contiguous states. Most are freshwater.

Wetlands are an integral part of the aquatic environment. They reduce flood peaks by storing and conveying stormwater and temporarily retaining pollutants during rainstorms. They are important to groundwater recharge and essential to wetland-dependent fish and wildlife. They are attractive locations for development because they are near water, and their flat surfaces reduce infrastructure costs. Wetlands are regulated by federal and state governments.

Section 404 of the federal Clean Water Act provides that the Corps “may issue permits … for the discharge of dredged or fill material into the navigable waters at specified disposal sites.” 33 U.S.C. § 1344. Your client needs a dredge and fill permit because her development requires dredging and filling, which is typical in wetlands development. There are no statutory criteria for deciding when a dredge and fill permit should be issued.

The Corps shares administration of the Section 404 program with the Environmental Protection Agency (EPA). The Corps issues the Section 404 permits. EPA develops and interprets additional policy, guidance, and environmental criteria for evaluating permit applications and has a rarely-exercised statutory permit veto authority.

The Section 404 Dredge and Fill Permit Program

The first issue your client must consider is whether the Corps correctly decided that her property is located in wetlands. Both EPA and the Corps define wetlands as “areas that are inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.” 40 C.F.R. § 120.2(c)(1). Your client can appeal the jurisdictional determination, but an appeal is costly and time-consuming and may not be successful.

If your client does not appeal the jurisdictional determination, she can apply for a general permit that is available nationally for activities substantially similar in nature and that cause only minimal individual or cumulative environmental effects. 33 C.F.R. § 323.2(h). An individual permit is not required. Almost all Section 404 permits are general permits, but your client’s project probably does not qualify because it is a major land development that needs an individual permit.

Requirements for Section 404 Dredge and Fill Individual Permits

Corps regulations contain “evaluation factors” the Corps uses “as appropriate” to decide whether it should issue a Section 404 individual permit. 33 C.F.R. § 336.1(c). These factors include water quality, the unnecessary alteration or destruction of wetlands, endangered species, and fish and wildlife. An EPA regulation additionally requires all general and individual permits to comply with other federal environmental and similar laws, including the Endangered Species Act and the National Environmental Policy Act. 40 C.F.R. § 230.10(b). The Corps grants thousands of individual permits a year, usually with remedial conditions.

A Corps regulation gives some effect to local land use plans and regulations: “Where officially adopted state, regional, or local land use classifications, determinations, or policies are applicable, they normally will be presumed to reflect local views and will be considered in addition to other national factors.” 33 C.F.R. § 336.1(c)(11)(ii). Though somewhat ambiguous, this regulation apparently means that the Corps will usually accept “local land use classifications, determinations, and policies” but that they are just one factor the Corps considers in its decision. Compliance with county zoning does not necessarily mean that the Corps will grant your client a Section 404 permit.

Practicable Alternative Requirement

An EPA regulation provides an additional requirement. The Corps can issue a dredge or fill permit only if there is no “practicable alternative to the proposed discharge which would have less adverse impact on the aquatic ecosystem, so long as the alternative does not have other significant adverse environmental consequences.” 40 C.F.R. § 230.10(a)(1). An alternative is “practicable” only “if it is available and capable of being done after taking into consideration cost, existing technology, and logistics in light of overall project purposes.” Id. § 230.10(a)(2). The regulation does not explain how the Corps should apply these factors, although technology usually is not important. Practicable alternatives “identified and evaluated” in a “planning process” shall be considered “as part of the consideration of alternatives.” Id. § 230.10(a)(5).

Alternatives analysis is front-loaded, powerful, and costly. Off-site alternatives usually are not practicable, such as an off-site location for the mixed-use development your client proposes. Alternatives usually are on-site with required project modifications that minimize environmental effects, such as a smaller parking lot to avoid the loss of wetlands or a different on-site location for development. Well-presented projects are approved, but getting agreement depends on the level of detail, the geographic scope of a proposed project, and the size of alternatives. See my article, Practicable Alternatives for Wetlands Development Under the Clean Water Act, 48 Env’t L. Rep. 10894 (2018).

Public Interest and Significant Degradation Requirements

The Corps must consider two additional requirements once it makes the practicable alternatives decision. One is a “public interest” requirement, which usually is not a problem. For most permit applications, a presumption exists that “a permit will be granted unless the district engineer determines that it would be contrary to the public interest.” 33 C.F.R. § 320.4(a)(1). The Corps makes the public interest decision through a balancing process that requires “consideration” of several factors, including conservation, economics, and wetlands. The Corps will “normally accept” decisions by state, local, and tribal governments on “land use matters” unless there are “significant issues of overriding national importance.” Id. § 320.4(a)(2). The public interest regulation also includes “general criteria” that have additional factors the Corps must consider, such as the “beneficial and detrimental effects on the public and private uses to which the area is suited,” and includes a somewhat different practicable alternatives requirement. Id.

EPA guidelines prohibit Section 404 permits “which will cause or contribute to significant degradation of the waters of the United States.” 40 C.F.R. § 230.10(c). This requirement presents a problem only for large projects with complex issues, such as your client’s project.

The Jurisdictional Issue

The Clean Water Act applies only to “navigable waters,” defined as “waters of the United States.” 33 U.S.C. §1362(7). The regulations use this definition. 40 C.F.R. §328.1. How courts interpret the statutory term decides when wetlands trigger the Section 404 permit program. The Supreme Court had struggled with the jurisdictional issue for some time. See, e.g., Rapanos v. United States, 547 U.S. 715 (2006).

Sackett v. EPA (II), 598 U.S. 651 (2023), resolved the controversy. In a questionable narrow decision, it substantially reduced the jurisdiction of the Clean Water Act. Accepting the Rapanos plurality opinion, the Court adopted a water-based interpretation that held that the statute applies only to wetlands that are “as a practical matter indistinguishable from waters of the United States,” such that it is “difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” Wetlands must have “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.” Isolated wetlands “separate from traditional navigable waters” are not included, a major exclusion. “Neighboring” wetlands are no longer included as “adjacent” wetlands.

The Court rejected as “particularly implausible” an EPA rule providing that adjacent wetlands are included if they possess a “significant nexus” to traditional navigable waters, a rule proposed by Justice Kennedy in his Rapanos concurring opinion. The Court held that the rule was inconsistent with the text and structure of the statute and clashed with the “background principles” of statutory construction. By substantially extending the statute’s jurisdiction, the EPA rule usurped the recognized residual authority of states to regulate wetlands. The Court also claimed that the significant nexus rule failed constitutional vagueness by giving little notice to landowners of their statutory obligations.

Revised Jurisdictional Regulation

After the Court decided the Sackett decision, EPA and the Corps of Engineers issued a revised rule to implement it. 88 Fed. Reg. 61694-01 (2023). The rule defines “waters of the United States” as wetlands adjacent to “[r]elatively permanent, standing or continuously flowing bodies of water identified in … this section and with a continuous surface connection to those waters.” 40 C.F.R. § 120.2(a)(4)(ii). The revised rule deletes the “significant nexus” test and redefines “adjacent” as having a “continuous surface connection.” Id. § 120.2(c)(5). “Neighboring” wetlands are no longer included. Your client may need a new jurisdictional determination that decides whether her project is covered by the statute.

State Wetlands Statutes

Narrowed federal jurisdiction means that state wetlands laws have a larger role in wetlands protection. Every state regulates wetlands to some degree, and state programs are diverse. Some states regulate wetlands by considering the effect of a federal permit on wetlands when they decide whether to issue the state water quality certification approval that federal permits require. Other states have a statute that requires a state agency permit for development in wetlands or, like the federal law, for dredging and filling.

Statutory approval criteria for state permits may require consideration of the “public interest” or the “policy” of a wetlands law. The North Carolina statute is an example of a more specific statute that requires the state agency to consider the “significant adverse effect” of development on specified environmental resources. N.C. Gen. Stat. § 113-229(e). The permit may include “conditions as may be reasonably necessary to protect the public interest with respect to the factors enumerated” in the statute. Id. See Environmental Law Institute, State Wetland Protection: Status, Trends & Model Approaches (2008), http://tinyurl.com/2p8ssmtu.

Conclusion

Sackett diminished federal jurisdiction over wetlands development, but when it applies, the Section 404 program often triggers a permit approval process that is complicated, costly, and lengthy. Many developers avoid wetlands to evade this process, and your client may make this decision. Simplification and clarification of the statute and its regulations are required to identify the issues important to wetlands protection that should be considered in a simplified permit process. 

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