When a Lie Goes Unpunished: Due Diligence Is Critical

Along about 1981, Lawrence Marshall decided to buy up land in South Texas around Uvalde. He eventually ended up with 6,828.2 acres at a cost of $2,047,985.16. Then, he went to building a hunting lodge, roads, game proof fencing, machine shops, deer feeders and barns. I like this guy. These extras cost $820,534.90. Then, he stocked the ranch with exotic deer, sheep and goats.

Alas, an outbreak of anthrax in 1987 killed some of the animals, and in 1991 Marshall decided he’d better sell the ranch. It took awhile, but finally in 1996 Marshall sold the ranch to Gilmore-Barclay, Ltd., a real estate investment limited partnership, for the bargain basement price of $822,000, $616,500 of which he seller-financed non-recourse. In April of 1997, Gilmore-Barclay, Ltd., sold the ranch to M. F. Kusch, for $1.2 million, consisting of $298,049.62 in cash and assumption of the non-recourse note. Later that same year, there was another outbreak of anthrax on the ranch that again killed many animals.

Kusch didn’t bargain for anthrax, so he sued everybody in sight: Marshall, Gilmore-Barclay, Ltd., its general partner Terracotta Land Company, Inc., and both real estate brokers involved in the sale to Kusch.

And so to court everyone went. Fraud, Deceptive Trade Practices, and Conspiracy were the themes. Everybody settled out before trial except for Marshall. The jury found that Marshall had committed fraud and violated the DTPA, awarding $369,502 in actual damages, $3 million in punitive damages, additional damages in the amount of $737,004, plus pre-judgment interest, post-judgment interest, and attorneys fees. Ouch. Right about then, it looked like the settlement option was the best way to go. And so, at that point Marshall did the only rational thing to do, which was to appeal.

Marshall’s problems stemmed from some comments he had made way back in 1996 to the effect that there was no anthrax on this land. Those comments were made to the broker for Gilmore-Barclay, Ltd. In 1997, those comments were repeated by that broker to Kusch’s broker. I can imagine Marshall’s lawyer saying “you don’t want this case to go to trial, because your defense is going to be “I lied about the anthrax but it makes no difference that I lied,” not exactly a compelling defense. Kusch had to be licking his chops once he got the case to the jury.

But Kusch had problems of his own. Fraud requires:

(1) a material misrepresentation;

(2) that was either known to be false when made or was asserted without knowledge of its truth;

(3) which was intended to be acted upon; and

(4) which caused injury.

Under Texas law, a misrepresentation does not have to be made directly to the relying party, it can go through intermediaries such as brokers. But it must, at some point, reach the relying party. The relying party, in other words, must have heard something he relied on. Which brings us back to Kusch’s problem: Kusch never asked, nor was affirmatively told, anything about anthrax. Since the misrepresentation was never communicated to Kusch, he had nothing to rely on, and so Marshall could not be liable to Kusch for fraud as a matter of law. In other words, the trial court should never have entered a verdict against Marshall based on fraud. That settlement option wasn’t looking so good right about now.

Next up was “fraud by omission.” Kusch claimed he was the beneficiary of Texas law of fraudulent omission, which is basically as follows: a seller of real estate is under a duty to disclose material facts that would otherwise not be discoverable by the exercise of ordinary care and diligence on the part of the purchaser, or that a reasonable investigation and inquiry would not uncover. The court disposed of this argument rather quickly: that duty is owed from buyer to seller. Kusch was indeed the buyer, but Marshall wasn’t the seller. And so it’s Marshall 2, Kusch 0, with one huge battle to go, the infamous DTPA.

Marshall took the same tack on the DTPA: “even though I misrepresented the anthrax, nothing I said made it to Kusch’s ears so I’m not liable.” Kusch countered that Marshall’s misrepresentation was connected to his transaction due to the non-recourse note and lien on the property. Interestingly, both parties here relied on the very same case to argue the exact opposite meaning.

The court decided that Marshall’s benefit came from his sale of the property to Gilmore-Barclay, Ltd. That the note was later assigned to and assumed by Kusch made no difference in that benefit; it didn’t connect the note and lien to Kusch’s purchase transaction. There being no connection, and no privity of contract (Kusch didn’t buy the property directly from Marshall), the DTPA didn’t apply to this case as a matter of law. Game, Set, Match. Now, finally, a settlement definitely looked like not the way to go in this case.

For those of you interested in some sort of reckoning for Marshall, answering for his misrepresentation in some way, don’t forget that Marshall still had to pay his attorneys fees incurred in this matter, which probably were fairly substantial. And he had to deal with the emotional torment of uncertainty which is inherent for all parties in litigation.

This case illustrates how critical it is for buyers of property to conduct adequate due diligence. What is adequate due diligence? It is a review and analysis that turns up every material fact that impacts a land’s fair market value and how the buyer intends to use the property in the future. Land situated in urban areas or subject to multiple uses and zoning requires even more due diligence.

In this case, whatever due diligence Kusch undertook wasn’t enough. He got stuck with some land with a history of anthrax, which probably will affect the fair market value of that land for some time in the future. He may have grossly overpaid for the land. The red flag was there to prompt additional questions-why didn’t Kusch ask probing questions until somebody mentioned the word “anthrax”?

Marshall v. Kusch, Case No. 05-00-01791-CV, Texas Court of Appeals for the Fifth District, Dallas, Texas, August 22, 2002


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Livestock Emissions: Capture that Biogas!

If you think city folk are the only ones getting hit by the slew of new EPA proposed rules, you don’t know…manure. The EPA has been trying to figure out how to require farmers and ranchers to change their cattle management processes to better “capture” the methane emitted by cattle, in the forms of cow burps, flatulence and manure. All in the name of reducing greenhouse gasses (GHG). Here’s the story.

In March of 2014 the Obama White House announced a strategy to reduce cattle methane emissions, alleging they make up almost 9% of all GHGs emitted as a result of human activity in the US. How can cattle emissions possibly be human activity? Because all agriculture is deemed human activity, and cattle are agriculture. There are around 88 million cattle in the US. A typical cow emits around 250-300 liters of methane each day. Multiply that out, and the numbers say that the GHGs cattle emit when they burp, fart and crap produce more methane gas than landfill sites, natural gas leaks, or even fracking.

There is even such a thing as a Cow of the Future project. It is run at the Innovation Centre for US Dairy in Illinois. They think the answer to reducing cattle GHG is a combination of good diet and good digestion: anti-methane gourmet grains processed by the best possible bovine digestive system selective breeding can produce. Imagine how expensive that diet would be!

There is also a National Biogas Roadmap on the way. This is a joint effort between USDA, EPA and the U.S. Department of Energy set for release in June of 2014. The Roadmap will outline voluntary strategies to accelerate adoption of methane digesters and other cost-effective technologies, with a goal to reduce U.S. dairy sector greenhouse gas emissions by 25 percent by 2020.

This Roadmap is intended to speed installation of biogas digesters in slaughterhouses, dairies, and ranches to capture methane gas released by the cows’ manure. The methane can then be used on-site as natural gas, or converted into electricity, at least that’s the theory. There are already 2,000 biodigesters in operation across the country. Another 12,000 of these digesters are planned for agricultural, landfill and wastewater sites.

So far, these biogas digesters can only capture biogas from manure. No one has apparently invented the biogas digester that can also capture cow burps and flatulence, but I can just imagine seeing one of those in action sometime in the near future.

In 2008, as part of its advanced notice of proposed rulemaking to regulate GHGs under the Clean Air Act, the EPA considered regulating agriculture-related emissions, which would have required farmers to purchase expensive permits. It was estimated that these regulations would have cost medium-sized dairy farms with 75 to 125 cows between $13,000 and $22,000 a year per head, and medium-sized cattle farms with 200 to 300 cows between $17,000 and $27,000 per year per head. That’s between a minimum of $975,000 per year for the 75 cow operation, to a maximum of $8.1 million per year for 300 cows. You know those costs would mostly have been passed on to the consumer. And we’d all be eating more chicken, pork, and fish by now. Maybe even some tofu as well.

Beyond its environmental hazards, dairy cow methane gas has been responsible for some strange incidents in recent months. On January 27, 2014, in the town of Rasdorf, Germany (Central part of that picturesque country), 90 dairy cows were minding their own business, happily flatulencing and burping away inside a shed, when a static electricity charge ignited the methane, which spurted a flame or two, nearly blew off the roof, and burned one of the cows (talk about wrong place, wrong time-he only had 89 chances to be right).

And during the first week of April, 2014, a Boeing 747 carrying 400 dairy cattle in the confines of its pressurized hold (not the brightest idea, it turns out) made a ‘mayday’ call and emergency-landed at London’s Heathrow Airport. Sensors onboard mistook heat which built up from cattle methane (again, burps and flatulence) for a catastrophic fire onboard. Now that’s some potent exhaust!

Some experts have suggested that significantly reducing the number of cattle would be the most effective solution. Now, it seems to me there would really be only one way to do this. Eat more cows than are replaced.

So be on the lookout for the National Biogas Roadmap this summer (2014). It may just mean that more beef is what’s for dinner!

Non-Jurisdictional Waters in the EPA’s Draft “waters of the US” Rule; Clean Water Act

In the newly proposed rule to re-define “waters of the United States” for purposes of determining which waters (and land areas) are within the jurisdiction of the Clean Water Act, the EPA also proposes to exclude certain waters defined in the draft rule. This post will summarize these non-jurisdictional waters.

These exemptions will become very valuable, and I can foresee fierce disputes over whether a water feature comes within one of these exemptions, because the EPA proposes to let the exclusions trump any language of inclusion elsewhere in the proposed rule. The non-jurisdictional waters are:

(i) Waste treatment systems, including treatment ponds or lagoons, designed to meet the requirements of the CWA.

(ii) Prior converted cropland, although the final authority regarding CWA jurisdiction would remain with EPA notwithstanding any other Federal agency’s determination of an area’s status as prior converted cropland.

(iii) Ditches that are excavated wholly in uplands. This means ditches that: (1) at no point along their length are excavated in a jurisdictional wetland (or other water); (2) drain only uplands; and (3) have less than perennial flow. To meet this exclusion the ditch must meet all three sub-parts at all times.

(iv) Ditches that do not contribute flow, either directly or through another water, to a water used or susceptible to being used in interstate or foreign commerce, or interstate waters and wetlands, or the territorial seas, or any impoundments of any of these waters.

(v) The following “features”:

(A) Artificially irrigated areas that would revert to upland should application of irrigation water to that area cease;

(B) Artificial lakes or ponds created by excavating and/or diking dry land and used exclusively for such purposes as stock watering, irrigation, settling basins, or rice growing;

(C) Artificial reflecting pools or swimming pools created by excavating and/or diking dry land;

(D) Small ornamental waters created by excavating and/or diking dry land for primarily aesthetic reasons;

(E) Water-filled depressions created incidental to construction activity;

(F) Groundwater, including groundwater drained through subsurface drainage systems; and

(G) Gullies and rills and non-wetland swales.

Now let’s look at some statements included in this draft rule that define “gullies”, “rills” and “swales.” Put aside for the moment any preconceived notions of these terms, or how they may be defined in other contexts.

Gullies. Gullies are relatively deep channels that are ordinarily formed on valley sides and floors where no channel previously existed. The two main processes that result in the formation of gullies are downcutting and headcutting, which are forms of longitudinal (incising) erosion. These actions ordinarily result in erosional cuts that are often deeper than they are wide, with very steep banks, often small beds, which typically only carry water during precipitation events. Gullies are younger than streams in geologic age and typically lack an ordinary high water mark (OHWM). They are commonly found in areas with low-density vegetative cover or with soils that are highly erodible. EPA notes that some ephemeral streams are called ‘‘gullies’’ when they are not gullies in the technical sense.

Rills. Rills are formed by overland water flows eroding the soil surface during rain storms. Rills are less permanent on the landscape than streams and typically lack an OHWM.

Swales. Swales are non-channelized, shallow trough-like depressions that carry water mainly during rainstorms or snowmelt. Swales typically lack the OHWM that is characteristic of jurisdictional streams. Swales may also be considered wetlands if they fit that definition. Wetland swales would also be analyzed either as adjacent waters or as “other waters”, depending on whether they meet the proposed definition of “adjacent.”

Finally we come to “puddles” which, you will note, is not included in the list of excluded waters. Supposedly this is not because EPA considers puddles jurisdictional, it is because EPA now thinks ‘puddles’ is an insufficiently precise hydrologic term. So while you may still call your favorite Poodle Puddles, using the term in this rule would be contrary to the stated goals of increased clarity, predictability, and certainty. The EPA was also concerned that listing puddles could have created the misunderstanding that anything larger than a puddle was jurisdictional, which is not the intent of this rule.

Now, remember that the overall concept behind this draft rule is that all waters in a basin that have a “significant nexus” or connection with a traditional “waters of the US”, are also waters of the US. While this section defines non-jurisdictional waters, the EPA still plans to use non-jurisdictional waters to connect other waters together.

Exclusion as a “waters of the US” is not a complete pass under the CWA. Some of these geographic features (ditches, rills, gullies) may function as ‘‘point sources’’ under CWA section 502(14), such that discharges of pollutants to waters through these features may be subject to other CWA regulations (e.g., CWA section 402).
The EPA is specifically requesting comments to more clearly define the differences between jurisdictional waters and non-jurisdictional waters, including these proposed defined terms. Please see my separate blog post compiling the issues on which the EPA is specifically requesting comments throughout the entire draft rule.

So here’s where the water really turns to mud on these non-jurisdictional waters. Can you and nine other people of normal but different intelligence and experience, exercising normal discernment, look at the same property and come to the exact same conclusion about which parts of the property are jurisdictional? And remember, the fine for being wrong could be a cool $75,000 per day. If not, then maybe there are some changes you could suggest to the EPA in the form of written comments to this rule.


How to Comment on the EPA’s “Waters of the US” Proposed Rule; Clean Water Act

UPDATED 2014-10-08: On April 21, 2014, the EPA published its draft rule redefining “waters of the US” for purposes of the Clean Water Act.  The 90 day comment period closes July 21, 2014 October 20, 2014 November 14, 2014.

The best source of information about the mechanics of filing the comments, and the substantive rule, may be found at:


The process is very simple.  You can create a PDF document of your comments and upload it on this page.  Your comments will be available to the public, and you can see all other comments filed. While it is possible to upload a document in other formats than PDF, such as Word, I strongly suggest you use PDF so it cannot be easily manipulated by others.

The Docket ID number for this rule project is EPA-HQ-OW-2011-0880, and the official proposal is in 79 Fed. Reg. 22,188 (April 21, 2014), but you can most easily access it on the website referenced above.

In fact, in my opinion this website’s design and function is superb, certainly at the other end of the spectrum from all the negative criticisms made about the health care website.

While I don’t have high expectations that comments which are radically different than the draft rule will successfully persuade the EPA to change its draft, I think it is important to understand that comments have other important effects.  The ultimate purpose of filing comments is to bring about change, and that change may come in any number of different ways.  They give you the opportunity to communicate with others who have a similar perspective.  Comments identify you to allies that otherwise may never know you.  Your comments will encourage others that have like concerns.  Your comments may inspire others to incorporate your ideas with theirs as they move forward with further challenges to the rule.  And your comments may be useful in future lawsuits filed against the rule.

Just remember, the deadline to file comments is July 21, 2014.  Other of my blog posts describe the substance of the proposed rule, summarize some of my concerns with this proposed rule, and one lists the issues on which the EPA has specifically requested comment.  If you file comments to this rule proposal, I’d appreciate it if you would Email me a copy when you do, to mark@texasenvironmentallaw.com.

Comments EPA Wants on its Proposed “Waters of the US” Rule

I originally intended this post to be a list of the issues on which the EPA and USACE have specifically requested comments in the draft rule proposing to redefine “waters of the US” for purposes of the Clean Water Act.  But the list is too long for a post.  So I will instead provide a very broad overview of the comments the agencies hope you will file.  If you want the full compilation, please send an Email to mark@texasenvironmentallaw.com and I will send you that PDF.

The agencies see the world of water in three categories: (1) those clearly subject to CWA jurisdiction; (2) those clearly not subject to CWA jurisdiction; and (3) “other waters”, the jurisdiction of which must be determined on a case-by-case basis.  In the most general terms, the agencies want a rule that eliminates as many of these class-3 “other waters” as possible.

On one hand, the agencies want to write a rule that provides predictable, consistent “yes” or “no” answers to the jurisdictional question, reasoning that this certainty is more efficient for both the regulators and the regulated.  Without countervailing considerations, such a rule would be fairly easy to write.

But on the other hand, the agencies want to include as a “water of the US” every water the federal government has power to regulate under the Commerce Clause, in order to fulfill their CWA responsibilities.  Since the exact outer limit of Commerce Clause power is clear as mud, these two highest priorities are incompatible from the get-go.

Within these priorities, the agencies have proposed a series of new and pre-existing defined-water-feature terms.  They generally want comments as to how the rule could better differentiate between these terms, which include “tributaries”, “wetlands”,“ditches”, “gullies”, “rills”, and “swales.”  They seem to want a specific water feature to clearly fit only one of these definitions.  Obviously, these types of comments are more in the wheelhouse of hydrologists and environmental consultants.  However, the definition of “tributary” also tests the outer boundaries of Commerce Clause jurisdiction.

This draft rule also includes old and new defined terms that describe how one water feature relates to other water features.  These terms include “adjacent”, “region”, “neighboring”, “riparian area,” “floodplain”, “bordering” areas, and waters with a “significant nexus” to other waters in the relevant watershed/basin.  I think these definitions seem to mostly answer the question “do I [the agency] have legal jurisdiction over this water feature?”  These are blended legal and scientific queries.

In regard to the case-by-case category of jurisdiction, i.e. “other waters with a significant nexus”, the agencies want as many suggestions as possible which propose to identify classes and categories of waters within this category that could instead be jurisdictional or non-jurisdictional by rule.  The agencies will even consider different rules for different areas of the country.  For example, the agencies are considering whether to determine by rule that prairie potholes, Carolina and Delmarva bays, pocosins, Texas coastal prairie wetlands, and western vernal pools, either alone or in combination with ‘‘other waters’’ of the same type in a single point of entry watershed, have a significant nexus and are jurisdictional (or, perhaps, non-jurisdictional).

Finally, in their ideal world, the agencies want a rule that “rolls with the changes.”   By this I mean they want a rule that automatically expands their CWA jurisdiction in the future as new scientific research identifies more connections between water features.  If this rule proposal hasn’t challenged you enough yet, this concept should get your noodle gyrating.

As I said at the outset, this is a very, very broad overview of what types of comments the agencies hope you will file.  For the more complete compilation (which has much more detail), please send an Email to me at mark@texasenvironmentallaw.com and I will forward you my list.

The Substance of the Draft EPA “Waters of the US” rule; Clean Water Act

In prior blog posts I’ve explained different aspects of this new draft rule that proposes to re-define the term “navigable waters” in the Clean Water Act.  In this post I will (finally) address the substance of the draft rule, including the challenges presented by the general theory of the rule and the text of the rule. And I am going to try to do this all in layman’s terms, with the occasional wit and sarcasm.

First, a bit of context to help understand the draft rule.  The purpose of the Clean Water Act is to attain or maintain a certain water quality of those waters to which the Act applies, i.e. clean water.  The Clean Water Act establishes several different processes that must be followed when humans do something that affects, or may affect, the clean-ness of water.  For one of these processes, the Clean Water Act makes it illegal for anyone to affect navigable waters without first obtaining a permit from the US Army Corps of Engineers.  These are often referred to as “dredge and fill permits” but don’t let that tag fool you.  Thou shalt not disturb navigable waters without a permit.

A brief word on disturbing water. It’s not limited to what would make water less clean in the common sense.  It includes anything that affects the water-dirt, rock, heat, etc.  And the disturbance can come from practically any activity, from turning a shovel of dirt, or landscaping, or operating a dairy farm or other agricultural business, or oil and gas exploration and drilling activities, fracing, etc.  The Clean Water Act only excludes two things from its coverage even though they may disturb water: agricultural stormwater discharges and return flows from irrigated agriculture.

One of the most vexing questions created by this legislation has always been, and still is, to what waters does it apply?  We’ve always understood that it applies to only surface water (groundwater is not navigable).  And we’ve always understood that it applies to large rivers like the Mighty Mississippi, which is clearly navigable.  But at what point does a water become not navigable waters?  And where, exactly, does a navigable water end and land begin?  These are the questions this new draft rule is intended to answer.

Not surprisingly, the EPA wants to expand the definition of “navigable waters” to the greatest extent possible, by including as “navigable waters” everything the federal government could lawfully regulate under the Commerce Clause of the US Constitution.  And that certainly seems to be the EPA’s intent with this new draft rule.

The Commerce Clause.  Congress has the power to make all laws necessary and proper to regulate commerce among the States and with the Indian Tribes.  The powers not delegated to Congress by this provision are reserved to the States.  Back in the old days the federal power to regulate commerce was limited to interstate commerce-stuff that crossed state lines, like that trailer full of Coors Beer in Smokey and the Bandit.  Regulation of commercial activity that stayed inside one state, intrastate commerce, was reserved to that state.

But over time our federal government successfully argued, over and over, that more commercial activity was actually interstate, or affected interstate commerce, and so today basically all commercial activity is considered interstate commerce which Congress can regulate.  So let’s see how this draft rule proposes to bring all that power to real estate around you and me, because ultimately this new rule is about real estate more than water.

First, suspend your common sense as you interpret this.  The rule is not intended to make common sense, it’s to grab land.  Land, not just water.

The Clean Water Act applies to waters used in interstate or foreign commerce, territorial seas, waters that flow from one state to another (interstate waters), and the wetlands adjacent to all these waters.  Wetlands still means areas 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.  Examples include swamps, marshes, bogs, and such.  So far, so good.  If you see water on land, a red flag appears and you at least know to ask the question.

Now to begin the illogical.  The EPA wants to add all tributaries of all these waters, which practically writes the word “navigable” right out of the statute.  Some tributaries have a bed and banks and an ordinary high water mark which practically directs the flow of water into a navigable water.  But EPA proposes to include as tributaries wetlands, lakes, and ponds even if they lack a bed, a bank, or an ordinary high water mark, if they contribute flow to a navigable water, whether directly or indirectly.  How do lakes and ponds contribute flow to a navigable water?  Seems to me it’s called the hydrological cycle which could, in theory, pull into this definition every lake and pond except those specifically excluded in the Clean Water Act.  Notice there is no requirement that the water actually be capable of moving goods in interstate commerce.

But wait, there’s more.  If something could be a tributary as described above, it does not lose its “qualification” as a tributary if, for any length, there are one or more man-made breaks (such as bridges, culverts, pipes or dams), or one or more natural breaks (wetlands, debris piles, boulder fields, or a stream that flows underground) so long as a bed and banks and an ordinary high water mark can be identified upstream of the break.  The way I read this, altering one of these bridges, culverts, pipes, dams, debris piles, boulder fields, or underground streams in a natural break would affect a “navigable water” and require a permit.  So parts of tributaries don’t actually have to connect to navigable water to be subject to the Clean Water Act.

And yes, there’s still more.  These tributaries can be natural, man-altered, or man-made.  They include waters such as rivers, streams, lakes, ponds, impoundments, canals, and certain ditches.  So now, someone could take dry land not otherwise subject to the Clean Water Act, and cause it to become navigable waters by constructing a stream, lake, pond, canal or ditch.  Can you imagine ever being able to remove a water from Clean Water Act jurisdiction?  Jurisdictional creep.  Addition easy, subtraction not so much.

Tributaries don’t even have to contain water all the time, either.  Many features, like dry arroyos and mountain channels, have beds and banks even though they only flow when it rains or the snow melts.  If you see any dry bed and bank on a piece of land you might want to buy, beware.

Now, for every “water” identified by any of the above criteria, add bordering or contiguous waters.  Next, Fonzi jumps the shark.  You didn’t think he’d already jumped, did you?

The EPA wants to add “neighboring” waters.  Neighboring waters include areas (note that “areas” could be land) bordering waters where surface or subsurface hydrology directly influence the ecological processes and plant and animal community structure (these are termed “riparian areas”).  These riparian areas are transitional areas (i.e. land) between aquatic and terrestrial ecosystems that influence the exchange of energy and materials between those ecosystems.  They don’t have to be connected to surface water-they can be connected to groundwater and thus not be visually adjacent to any surface water whatsoever.  Any chance a normal non-expert human being could visually identify a riparian area?

There’s still more.  Neighboring waters also include areas (again, possibly dry land) bordering inland or coastal waters formed by sediment deposition from such water under present climactic conditions which are inundated during periods of moderate to high water flows.  This is termed “floodplain.”  But in times of drought, which describes most of Texas much of the time, these areas will not be obvious.

All of the waters and land identified so far would be automatically covered by the Clean Water Act and any activity on those waters or land would require a permit.  It is the EPA’s position that they are doing us a favor by clarifying that all these waters and non-water areas (land) are subject to Clean Water Act jurisdiction, which is why I said in a prior post that, in relative terms, they propose to solve a concern over a hangnail by amputating an arm.

So now we come to the case-by-case determinations to further expand the lands and waters covered by this new draft rule.  Waters and wetlands, either alone or in combination with other similarly situated waters in a watershed that drains to the nearest sea, or water used or capable of being used in commerce, or water that flows from one state to another, that significantly affects the chemical, physical, or biological integrity of one of these waters or wetlands, may be covered by the Clean Water Act also.  These areas are not adjacent to a water or wetland but they have a “significant nexus” to already-covered waters, wetlands and areas.  The connection must be more than speculative or insubstantial.  They include waters and wetlands that perform similar functions and are located sufficiently close together or sufficiently close to a navigable water that they can be evaluated as a single landscape unit with regard to their effect on the chemical, physical, or biological integrity of a navigable water.

Put this in the context of enforcement.  You disturb your land (or you hire someone else to).  EPA shows up and claims the land is regulated under the Clean Water Act because some feature of the land has a “significant nexus” to a navigable water located somewhere in the same watershed as your land.  You basically now have to stop working on the land, and file a court action where the EPA has to prove that your land has a significant nexus to a navigable water.  This practically means you have to invest some time and money to disprove the significant nexus.  Experts.  Lawyers.  Time.  Time.  Time.  Appeals perhaps.  EPA does not necessarily have to win, they just have to outlast you.

And in all likelihood you will be fighting this battle with the risk of being fined up to $75,000 per day for every day the land was disturbed without a permit, until you restore the land, until you win the case, making the fine retroactively disappear.  No pressure.

Over a decade in the making, in my opinion the rule, once finalized, will literally redefine the landscape of federal water pollution regulation, impacting laws governing wetlands fill, water discharge permits, oil spill liability, spill contingency planning, hazardous substance spill response, and more.  It will impact municipalities, states, and industry of every type, from natural resource extraction like energy and mining, to construction and development and beyond.

What to do?  Try to change the form of the final rule by filing comments to the draft rule.  Some of the best comments will be your story-how will this rule affect you and your business?  Be as specific as possible.

Work with an association that will file comments to this draft rule.  For example, I work with the Dallas Builders Association.  Share your story with those at the association who are working on this.  It could help them write their comments.

Contact your federal congressmen and senators.  Share with them your story about how this draft rule will affect you.  Ask them to sponsor legislation to rein in the EPA on this rule.  There are already legislative efforts underway.

Contact me with any questions, or if I may be of service, and stay tuned for future developments.