Supreme Court Ruling Narrows Scope of Clean Water Act: Kole Kelley Shares Insights on Navigating the Murky Legal Waters

Wetlands provide a habitat for thousands of species of aquatic and terrestrial plants and animals and are valuable for flood protection, water quality improvement, shoreline erosion control, natural products, and recreation. In May 2023, the United State Supreme Court limited federal oversight of millions of acres of wetlands previously understood as protected under the 1972 Clean Water Act (“CWA”) in Sackett v. Environmental Protection Agency. In September 2023 the EPA and Corps of Engineers amended the regulatory definition of “waters of the United States” to conform to Sackett.

Safeguards to ensure waters no longer under federal oversight are adequately protected now fall more heavily to the states. We checked in with Kole Kelley, Associate in Fennemore’s Denver office, for insights on federal, state and local regulations.

1.The Supreme Court’s Sackett decision ruled that for tributaries to qualify for protection as waters of the United States, or WOTUS, they must be “relatively permanent” and for wetlands to qualify for protection as waters of the United States, they must be adjacent to navigable waters with a continuous surface connection so as to be “indistinguishable” from those navigable waters. Isn’t this an even murkier legal definition that will further fuel litigation for accurate interpretation?

Although the Sackett decision aimed to clarify regulatory standards, it may paradoxically result in another round of litigation and regulatory uncertainty due to the inherent ambiguities in terms like “relatively permanent” and “indistinguishable.” Litigation will aim to define the parameters of the new terms of art and provide examples for the regulated community moving forward on the federal level.

On the state level, more than anything what we expect to see, and what we are already seeing, is increased urgency to implement regulations and clarity in the regulatory structure related to dredge and fill activities that now are no longer under federal oversight. With the new regulatory landscape following the Sackett decision, some bodies of water are “gap waters” now, meaning they do not fall within the federal regulatory regime. States must decide whether and how to respond to the more limited federal role.

2.We understand that Colorado is one of the few states where there is no program to regulate dredge and fill activities and to require industryto avoid, minimize, and offset any harm to “gap waters”resulting from their projects?  Is that true?

Colorado is one of 24 states that relied primarily on the federal CWA for protection of wetlands.  Following the Sackett decision, the Colorado General Assembly passed House Bill 24-1379, which charges the Water Quality and Control Commission (“WQCC”) with promulgating rules by December 31, 2025 to implement a state dredge and fill discharge authorization program.[1]

Colorado defines “state waters” more broadly than the Sackett defined “waters of the United States.” Colorado “state waters” are defined as “any and all surface and subsurface waters that are contained in or flow in or through this state, including wetlands,” with a few minor exceptions.[2]  Colorado law prohibits discharges of pollutants into state waters without a permit.[3]  Although Colorado administers a Section 402 permitting program, as delegated by the EPA, and grants discharge permits to discharge pollutants regulated under 33 U.S.C. § 1342, Colorado had not opted to assume Section 404 authority and operate its own permitting program for the discharge of dredged or fill material into waters.  The State chose to rely on the Army Corps of Engineers Section 404 permits to authorize dredge and fill activities that impact waters of the United States.  Under Colorado law, “each permit issued pursuant to the federal act shall be deemed to be a temporary permit issued under this article which shall expire upon expiration of the federal permit.”[4]

With the narrowing of what is considered a water of the United States in the Sackett decision, the Colorado General Assembly passed H.B. 24-1379 to fill the gap left for the waters that had previously been understood to fall under the Section 404 structure.  The General Assembly instructed the WQCC to create an authorization program that will issue authorizations for dredged or fill activity for state waters, and exempts waters from the authorization program that fall within federal jurisdiction and have a Section 404 permit.   

3.What impact does the lack of regulation have on development in Colorado?

From a purely academic standpoint, the gap in regulations would mean that there should be more flexibility to operate.  However, that is not what we are seeing in practice.  Because of the pending legislation and the hesitancy to act because of the uncertainty regarding the parameters of the forthcoming implementation rules, dredge and fill activities related to these “gap waters” have actually slowed following the Sackett decision.  With HB 24-1379 being signed in May, there is now at least confirmation that Clean Water Policy 17 is the governing policy within the state until January 2025.

Clean Water Policy 17 was approved on July 6, 2023, to address the “gap waters” following Sackett and outlines the state’s approach to managing “gap waters” until the state dredge and fill authorization program is fully implemented. Clean Water Policy 17 allows the Water Quality Control Division (“WQCD”) of the Colorado Department of Public Health and Environment to exercise enforcement discretion for certain discharges that are not covered by federal permits. This discretion is granted based on specific criteria to ensure that water quality is maintained. For projects that do not qualify for enforcement discretion, the WQCD may issue temporary authorizations. These authorizations are subject to conditions designed to protect public health and the environment and can be granted for up to two years.

Starting January 1, 2025, and effective until the rulemaking is finalized, and the resulting rules are fully implemented, the WQCD will recognize compliance with the applicable terms of the nationwide and regional general permits issued by the United States Army Corps of Engineers, even for waters that are not subject to federal jurisdiction. Applicants seeking authorization for the discharge of dredged or fill material into state waters that are not subject to federal jurisdiction will need to submit to the WQCD any preconstruction notifications required under the applicable nationwide or regional general permit. If the general permit for the project would require compensatory mitigation, the applicant must obtain a temporary authorization.

In the meantime, most are awaiting the notice of rulemaking and draft initial rules issued by the WQCC.  There is an expectation that there will be a rush to WQCC to be a part of the rulemaking, assuming that the WQCC will follow its typical rulemaking process, to ensure interests are properly represented and that interested parties preserve standing in the case that they need to challenge the new rules created.

4.Based on experience, how can the likelihood of adverse enforcement action be mitigated?

The likelihood of adverse enforcement can be mitigated at the individual level by creating a culture of compliance for projects.  State regulations are being drafted pursuant to H.B. 24-1379, with Clean Water Policy 17 filling the gap until at least January 2025.  The best way to set your projects and companies up for success is to begin establishing a culture of compliance with thorough environmental audits that analyze and identify any impacts to the “gap waters.” Once the impacts are known, planning can begin to ensure compliance with Clean Water Policy 17.

Most important from a proactive standpoint, be on alert for the notice of rulemaking from the WQCC to take advantage of opportunities to participate in the rulemaking.  The only way to ensure that proper input is considered is to provide accurate input from across affected industries.  Being a formal participant in the rulemaking also creates standing for members to challenge the rules later should the need arise.

Lastly, have legal counsel review all project plans, permits, and environmental assessments to ensure compliance with relevant laws and regulations.

Kole Kelley is an attorney with a background deeply rooted in Colorado agriculture and natural resources.  He is adept at developing project strategies; navigating the federal, state, and local permitting processes; and monitoring the ongoing governmental rulemakings that impact the underlying regulatory structure for his clients’ projects. Kole was named to the Denver Business Journal, Who’s Who in Agriculture, Water Resources Law, 2021.

---

[1] See § 25-8-205.1(4)(a)(I) in H.B. 24-1379 at page 10.

[2] C.R.S. § 25-8-103(19) as revised by H.B. 24-1379, at page 26; see also § 25-8-205.1(3)(t) as revised by H.B. 24-1379 at page 10.

[3] C.R.S. § 25-8-501(1); see also C.R.S. § 25-8-103(15); see also 25-8-205.1((a) as enacted by H.B. 24-1379 at pages 19-20.

[4] C.R.S. § 25-8-501(1).