The Federal “Waters of the United States” Rulemaking

At A Glance

On May 27, 2015, the US EPA and Army Corps of Engineers issued a final Clean Water Act (CWA) Rule, attempting to clarify the jurisdictional reach of that federal statute over surface water within the United States.  The rule is in response to uncertainty on this issue created by two murky US Supreme Court decisions which provided little clarity to federal courts or entities regulated by the CWA.  Observers on all sides of this issue doubt that this complex rulemaking will resolve this matter.  Rather, Congress and interested parties are girding for years of protracted debate that could easily end where this began – back at the US Supreme Court.  The new rule hinges upon the definition of a controversial CWA term known as “Waters of the United States” (WOTUS).  The rule takes effect on August 25, 2015 unless Congress or the courts intervene.

A vernal (temporary) pool in Connecticut.

Issue Defined and How the Rule Works

In 2001 and 2006, the US Supreme Court (USSC) handed down two decisions more narrowly interpreting the jurisdictional reach of the CWA than either federal agencies or lower courts had previously done.  All stakeholders (the government, farmers, businesses, environmental NGOs, recreational water users, and land owners) have since struggled with the uncertainty over what types of waters are actually affected by the Act.

Essentially, WOTUS describes the interconnectedness of bodies of water (such as tributaries, wetlands, or impoundments, especially in rural areas) to other bodies of water that have obvious CWA protection (navigable rivers, lakes, streams, and seas).  The premise for expanding WOTUS is that if the former bodies of water “feed” the latter groupings, then the CWA would apply.  As a result, the new WOTUS rule holds that if there is some degree of nexus between these secondary water bodies to primary ones, it makes sense for the scope of CWA to be read inclusively.

Because the two USSC decisions created more uncertainty surrounding nexus between bodies of water, USEPA and the Army Corps of Engineers attempted, via this rulemaking, to clarify the status of various surface waters that might be connected to one another.  The practical effect of the WOTUS rule creates an almost across-the-board classification of surface waters to be subject to CWA jurisdiction, including permit and other requirements if pollutant discharges have or might occur.

A seasonal spring stream

As one might expect with a rulemaking laden with numerous significant legal implications, the final rule is riling more people than it satisfies.  Environmental groups are generally pleased with the final outcome, while many others including agriculture, businesses, and private landowners regard this rule as yet another example of regulatory overreach by an out-of-control federal government.

The rule seeks to define when a significant nexus with the WOTUS exists.  Although premised upon the two USSC rulings mentioned above, US EPA and the Corps also incorporated their own science, expertise, and experience.  The rule identifies an array of regional water bodies that will be assessed to determine if the WOTUS applies.  These include prairie potholes, Carolina and Delmarva bays, seasonal pocosins and western vernal pools, Texas coastal prairie wetlands, and water bodies within 100-year floodplains, or within 4,000 feet of high tide or high water marks of navigable or interstate waters and territorial seas.  Impoundments or tributaries are also to be assessed.  Where a nexus is established, WOTUS then would apply.

The rule continues to exclude waste water treatment systems and prior converted cropland from the WOTUS. It also exempts some ditches, artificially irrigated lakes, ponds, reflecting or swimming pools, small ornamental waters, depressions, gullies, rills, puddles, and groundwater, storm-water controls, and some wastewater recycling structures.  The rule doesn’t affect dredge and fill exemptions or the National Pollutant Discharge Elimination System.

Relevance to Tesoro

Although much attention has been directed by the refining sector toward expansive USEPA rulemakings under the federal Clean Air Act, an equally troubling development involves the jurisdictional scope of the CWA.  Many believe that water quality and availability will be the next natural resource suite of issues that will impact the energy industry writ large.

As a general rule of thumb, approximately one barrel of water is needed to process one barrel of petroleum.  Tesoro primarily uses water for cooling, steam generation, and production purposes.  Additionally, some air pollution control devices utilize water to remove sulfur oxides and particulates from exhaust streams.  Some water used in these processes can ultimately become waste water.  Waste water that has hydrocarbon or oil content is treated to meet or exceed regulatory requirements prior to returning it to the environment.  Tesoro is committed to protecting the environment by maintaining effluent concentrations to be within or below federal, state, and local limits.  Efficiency is also an important factor relative to water usage.  With this in mind, Tesoro also successfully reduced its water discharge amounts in 2013 from 2012 levels.

The new WOTUS rule could impact our refining and logistics operations.  The rule’s wetlands expansions could affect projects at our Anacortes, Kenai, Mandan, and Martinez facilities if portions of our properties are deemed “hydraulically connected” to surface waters that are subject to CWA jurisdiction.  In the logistics arena, our pipelines within or near bodies of water covered by the WOTUS rule could also be affected.  Construed broadly, the new rule significantly expands the jurisdictional reach of the CWA into a host of federal agency permitting decisions that could delay projects by injecting additional uncertainty (and costs) into the review process.

Current Status/Prognosis

USEPA’s WOTUS rule became ripe for judicial review on July 13 and has an effective date of August 25, 2015. To date, 27 states have filed suit to block the new rule and numerous stakeholder groups on both sides of the issue have also filed lawsuits.  Simultaneously, Congress has demonstrated strong interest in reining in this regulation.  The U.S. House is addressing this issue via stand-alone legislation and could also do so within the FY2016 Appropriations process.  In the House, efforts to curb this rule are supported by a bipartisan majority.  The Senate may pursue a similar path later this year; while there is also bipartisan support in that chamber to roll back the WOTUS rule, it is unclear if opponents can muster the requisite 60 votes to close debate.  Regardless of the legislative outcomes, it appears this rule is headed for protracted litigation that is eventually destined for the US Supreme Court.  Whether or not the rule’s implementation is delayed pending the completion of that journey will be up to the lower federal courts.  Tesoro is closely involved in the legislative activities and will be updating this page to reflect new developments.