California's Bold Step Forward Into the Contentious World of Wetlands Regulation

In April the California State Water Resources Control Board unanimously approved a comprehensive new legal framework for protecting California’s wetlands modeled on the wetlands protections in the federal Clean Water Act.

In April 2019, the California State Water Resources Control Board (State Board) unanimously approved a comprehensive new legal framework for protecting California’s wetlands. California has lost approximately 90% of its historic wetland areas, which have important water quality, species habitat and other environmental and economic benefits. The new rules, in development for about 15 years, are designed to “fill the gap” in preserving California’s wetlands as the federal courts (and more recently the Trump Administration) have, in the view of California’s regulators, been rolling back federal wetlands protections.

California has never had its own comprehensive wetlands protection law. Rather, like almost all states, it has relied primarily on its role in the Section 404 wetlands program of the federal Clean Water Act (CWA). Under the “Section 401 certification” process, the U.S. Army Corps of Engineers must formally consult with a state during the Section 404 process, and the state has the right to impose permit conditions to ensure that the state’s water quality standards are protected. With few exceptions, the Corps must incorporate these conditions into the federal wetlands permit. Although California also had some procedures for protecting “waters of the state,” they were interpreted and applied inconsistently by the Regional Water Boards.

The scope of CWA jurisdiction, which often focuses on the Section 404 wetlands program, has been hotly contested for decades in the courts, Congress, the regulatory agencies and the public arena. Beginning in 2001, in a series of high-profile U.S. Supreme Court decisions (primarily Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001), and Rapanos v. United States, 547 U.S. 715 (2006)), the Court held that the scope and application of the wetlands regulations issued by the Corps and U.S. Environmental Protection Agency were overbroad and did not cover areas such as isolated wetlands and water in former mining pits. These restrictive interpretations prompted the State Board to determine that the Section 404 program no longer adequately protects California’s wetlands and that a targeted state program was necessary. Recent regulatory proposals by the Trump Administration heightened these concerns.

California’s new rules are the culmination of this process, which involved considerable give and take with the environmental community, farming interests, real property developers, public agencies and other stakeholders. The resulting program is designed to function in tandem with Section 404’s provisions. The new wetland definitions generally rely on the same three-parameter test used for Section 404 purposes (the presence of water, hydric soils and wetland vegetation), but they provide more variances to capture additional wetland areas that are not now, or may not in the future be, covered by federal law.

One important feature of the new wetlands rules (officially known as “Procedures”) is that they are purposely integrated with the federal wetlands definitions and CWA procedures to ensure as much consistency as possible between the two programs. Thus, the Section 404 and California wetlands permits can be pursued at the same time using many of the same technical standards and legal tests familiar to wetlands practitioners.

From a property development viewpoint, the new California program needs to be viewed as essentially a parallel state wetlands permit system that should be pursued in coordination with any required federal wetlands permit. In situations where no “waters of the state” outside of federal jurisdictional waters are present, the process should be relatively quick. However, in the common situation where additional “waters of the state” are present, separate Regional Water Board review, approval and issuance of a wetlands authorization will need to occur. It remains to be seen how effective and/or onerous this process will be after it takes effect in early 2020.

From a practical viewpoint, potentially serious concerns may arise from two provisions. First, one critical part of Section 404 is the Nationwide Permit (NWP) program, which allows an applicant to utilize published permits with set terms and mitigation measures for particular types of projects if the project meets each permit requirement. The common maximum amount of “fill” allowed by almost all NWPs is one half-acre, meaning that any proposal to fill more than that amount must undergo the more complicated Corps “individual permit” process. In the new California Procedures, the corresponding acreage limit for “waters of the state” is only 0.2 acres of fill, which will in many situations require a more elaborate state process than the federal permit review, which injects uncertainty into the outcome.

This difference implicates a second set of provisions, involving an “alternatives analysis” governed by the Least Environmentally Damaging Practicable Alternative (LEDPA) standard, which requires a wetlands permit applicant to demonstrate that the project it wants to build qualifies as the LEDEP, which essentially creates a presumption against an applicant’s project unless it can make the requisite showing. In contrast, in the Section 404 program, this alternatives analysis is not required for the use of a published NWP, but California now appears to be planning to apply this higher standard to any project that will fill over 0.2 acre of state waters.

All in all, the long gestation time for these new Procedures appears to have resulted in a better regulatory framework than in early drafts. The Board listened and responded to diverse viewpoints and undoubtedly benefited from observing how the clash of competing visions of wetlands regulation at the federal level played out in the courts and regulatory arenas. The final Procedures are certainly not perfect and, as with many new regulatory frameworks, the manner in which they are implemented will be critical to their success. California has now launched itself into the contentious world of wetlands regulation and the new program will hopefully provide a reasonable, efficient and cost-effective way to accomplish California’s wetlands protection goals.

Skip Spaulding is an environmental law partner in Farella Braun + Martel’s San Francisco office and provides counseling, permitting and litigation services involving federal and state wetlands issues.

Reprinted with permission from the May 9, 2019 issue of The Recorder. © 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.