The Nickel Report

With the federal government shutdown finally over after five weeks, the long-term effects are likely to have a lingering impact on regulatory and permitting programs for months to come. Even those federal agencies that were fully funded during the shutdown, such as the US Army Corps of Engineers (Corps), were stymied in their ability to undertake routine day-to-day operations during the lapse in appropriations. This post highlights two examples of the shutdown’s implications for regulatory reform and permitting in the natural resources arena.

First, one of the key regulations targeted for regulatory reform by the Trump administration is the 2015 “Waters of the United States” Rule (2015 WOTUS Rule). The 2015 WOTUS Rule sets forth the Environmental Protection Agency’s (EPA) and Corps’s interpretation of a seminal statutory term—“the waters of the United States”—that establishes the geographic scope of the Agencies’ jurisdiction for all Clean Water Act (CWA) regulatory programs. Just after entering office, on February 28, 2017, President Trump signed an Executive Order setting into motion a process for the Agencies to review, rescind, and/or review the 2015 WOTUS Rule. 80 Fed. Reg. 37,054 (June 29, 2015). Consistent with this directive, the Agencies proposed, in July 2017, to repeal the 2015 WOTUS Rule and replace it with the prior regulatory definition of WOTUS. A supplemental notice of proposed rulemaking was published in June 2018, with the public comment period closing on August 13, 2018. According to the Fall 2018 Unified Agenda, the Agencies anticipated issuance of a final rule repealing the 2015 WOTUS Rule by March, 2019. But work on the final repeal was delayed as a result of the shutdown, likely postponing issuance of any final rule repealing the 2015 WOTUS Rule beyond the Agencies’ target.

Meanwhile, on December 11, 2018, the Agencies introduced a revised definition of WOTUS to clarify federal authority under the CWA. That proposal was made available on EPA’s website, but has yet to be published in the Federal Register, which will trigger a 60-day comment period. The Agencies’ Unified Agenda targets a final rule defining WOTUS by the end of 2019; but, again, the duration of the shutdown could complicate that endeavor, potentially pushing issuance of a new rule into 2020.

Second, the shutdown has serious implications for the Corps’ permitting program. The Corps was fully funded during the government shutdown, but many of the other federal agencies with which the Corps is legally required to coordinate and consult before issuing CWA permits and jurisdictional determinations (JDs) were not funded or staffed. For example, many Corps nationwide permit (NWP) verifications and individual permits (IPs) require Section 7 Endangered Species Act (ESA) consultation with the National Marine Fisheries Service (NMFS) and/or the US Fish and Wildlife Service (FWS). Staff at these agencies were furloughed for over five weeks, and, thus, the Corps was unable to complete necessary evaluations and finalize permit decisions for certain JDs and NWP verifications and for all IPs, mitigation banking prospectuses, and other activities that require coordination and consultation. As of January 9, 2019, 1,265 general permits and 929 IPs were stalled pending completion of ESA consultation. The number of outstanding permits is likely substantially greater by now and rising! Now that the government is fully funded, the Corps and other agencies will address the backlog, but it will take time to catch-up. The impact of these delays is problematic as it means that project applicants may miss the ability to bid on projects, funding deadlines, and certain construction work windows. Commercial and residential developers, infrastructure projects, and “mom and pop” operations that rely on Corps permits may be forced to endure costly delays.

These examples are just a small snapshot of the impacts of the historic shutdown in the natural resources arena. Agency funding lapses can have significant consequences, and the recent lapse affected not only the administration’s regulatory reform efforts, but business, economic growth and development, and routine day-to-day operations across the country.