NFIB’s Lawsuit to Block EPA’s Regulatory Land Grab

Date: July 13, 2015

In 1972, Congress enacted the Clean Water Act (CWA), which prohibits the discharge of pollutants into “waters of the United States.” As a result, landowners must obtain a costly federal permit to build, grade, landscape, dredge, drain, or add fill to any portion of land containing “waters of the United States.” Landowners operating without a federal permit risk shock and awe penalties for any non-exempt use of affected portions of their land.

Unfortunately it’s not always easy to identify jurisdictional waters. Take for example the Sackett family who had to fight all the way to the Supreme Court in 2011 for the right to challenge EPA’s assertion of jurisdiction over their property. They had begun construction on their dream home in the panhandle of Idaho when they received a seize and desist letter from EPA threatening $37,500 per day in fines for allegedly laying a foundation in an area that the Sacketts believed to be non-jurisdictional—as well as a threat of an additional $37,500 per day in fines if they should fail to comply with EPA’s demands.

And now everyday folks—like the Sacketts—will face heightened risks because the Environmental Protection Agency and the Army Corps of Engineers have issued a joint rule purporting to define “waters of the United States” in a manner that radically expands CWA jurisdiction throughout the country. Finalized on May 26, 2015 the Waters of the United States (WOTUS) Rule will indisputably result in an expansion of federal regulatory power over private property. EPA and Army Corps have sought to downplay the extent of this regulatory land grab in public statements—while speaking out of the other side of their mouth in proclaiming that the Rule provides new protections for one third of America’s waters. Meanwhile, EPA has released maps of newly affected areas that show at least 8.1 million miles of newly regulated rivers and streams. In the State of Kansas alone the Rule will result in a 400% expansion of CWA jurisdiction—from 32,000 miles of covered rivers and streams to 134,000.

This has immediate consequences for small business owners throughout the nation—including many members of the National Federation of Independent Business. It means that small business landowners now risk ruinous penalties for engaging in routine land use practices in newly affected areas. It means that these landowners will—in most cases—have to forsake any meaningful use of affected areas because the costs of pursuing necessary federal permits are astronomical. And it means that these small business landowners suffer an immediate devaluation in land values. For all of these reasons, the National Federation of Independent Business has joined with the U.S. Chamber of Commerce, the Oklahoma State Chamber of Commerce, the Tulsa Chamber of Commerce and the Portland Cement Association in filing suit to enjoin EPA and Army Corps from enforcing the WOTUS Rule.

NFIB released this announcement of the lawsuit earlier today. Here is a top-line explanation of why we think the courts should strike down the WOTUS Rule:

The Rule Illegally extends Clean Water Act Jurisdiction Beyond What the Law Allows

The WOTUS Rule illegally extends the CWA beyond what Congress authorized with enactment of the law, and beyond what the Constitution allows. It is worth remembering that the Supreme Court has already chided EPA and Army Corps twice for overreaching. First, in S.W.A.N.C.C. v. Army Corps of Engineers the Court held that the Agencies overreached in seeking to assert regulatory authority over any water that migratory birds might use. To regulate waters under the CWA, the Agencies must be able to show that there is a meaningful connection to interstate waters and the mere fact that birds visit a wet spot is not enough to justify federal regulation.

And, once more, in Rapanos v. United States the Agencies were rebuffed for overreaching. Again the Supreme Court emphasized that—for constitutional reasons—the Agencies must demonstrate that there is a meaningful connection to “traditional navigable waters” to justify an assertion of regulation over alleged jurisdictional waters. The only trouble was that the Court offered two different tests for determining what is and is not a jurisdictional wetland or water.

A plurality of the Court held that there must be a continuous surface connection from traditional navigable waters, making it difficult to determine where a body of water ends and the wetland begins, to assert jurisdiction over a wetland. But Justice Kennedy was the decisive vote, and he set forth a slightly different test. Justice Kennedy’s test would extend CWA jurisdiction to any wetland with a significant nexus to navigable waters—taking into account numerous factors.

In the wake of Rapanos, the regulated community and regulators alike have had difficulty making sense of these two tests. To assist with regulatory predictability, the Agencies released a guidance document in 2008. Then in 2012 the Agencies proposed a new guidance. As NFIB explained in its comments opposing the WOTUS Rule, the 2008 guidance was more-or-less faithful to the Rapnos precedent in its attempt to help determine CWA jurisdiction. By contrast, the 2012 guidance radically mischaracterized the Rapanos tests to justify expanding CWA jurisdiction. Although the 2012 guidance was abandoned, the WOTUS Rule radically expands jurisdiction in the same manner the 2012 guidance—once more, mischaracterizing the Rapanos tests.

EPA Finalized the Rule Without Considering the Impact on Small Business

The Regulatory Flexibility Act (RFA) requires federal agencies to consider the direct effects of their regulations on small businesses and to consider alternatives if a regulation would impose significant impacts on the small business community. But EPA and Army Corps have flatly ignored these requirements—not withstanding NFIB’s protestations and a sternly written letter from the Small Business Administration urging the Agencies to take small business concerns seriously.

Instead, they have certified that there will be no significant impacts for small businesses—even going so far as to claim that the WOTUS Rule actually results in a benefit to small business. Unfortunately the Agencies chose to finalize the rule without listening to the small business communities’ vocal concerns, and apparently without taking seriously anything that opposition had to say. That is too bad because this prevented the Agencies from getting quality input from small business stakeholders. And now we have no choice but to fight to ensure that federal agencies will take small business concerns seriously.

How Will the WOTUS Rule Affect You?

Landowners are now prohibited from using portions of their land deemed jurisdictional under the WOTUS Rule. There are a few exceptions, which—for example—allow for longstanding farming practices to continue. But, for any new development, or even something as basic as landscaping, a federal permit is now required. And unfortunately those permits are difficult to obtain.
On average a CWA permit costs in excess of $270,000. Unfortunately, small business and individuals of modest means simply do not have the resources to jump through these hoops. As such, our lawsuit against EPA and Army Corps is hugely important.

If you are concerned that you may be affected by the WOTUS Rule, tune into NFIB Small Business Legal Center’s webinar at noon on July 15, 2015. And, for more information about what NFIB is doing to fight back—both on the legal front and in Congress—visit NFIB’s WOTUS Rule Action Page.

Related Content: Legal - Blog | Legal | Property Rights

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