New Arrival!

You may have noticed I haven't posted anything in a while. I assure you it is not out of a lack of interest, but rather because my wife and I just welcomed our first child into the world. Because of this I have been taking a short vacation from blogging which will probably continue for another week or so. I look forward to returning to the discussion of water issues and thank you for your patience in the interim.

Clean Water Restoration Act Unconstitutional?

The Pacific Legal Foundation recently issued a press release putting forth the argument by attorney Reed Hopper that the Clean Water Restoration Act (CWRA) is unconstitutional. (Thanks to Aquafornia for picking this up) Mr. Hopper is the Principle Attorney for the Pacific Legal Foundation, and represented the petitioner (the winning side) in the Rapanos case.

Is Mr. Hopper correct? Pacific Legal’s press release doesn’t contain much specific information on the reasons for his position – so I asked him. In response to an e-mail inquiring into the basis for his position, Mr. Hopper kindly provided me with a copy of his July 17, 2007 testimony before the Subcommittee of Water Resources and Environment. In that testimony he addresses a previous (though substantively identical) version of the CWRA, and discusses the constitutional problems he sees with it.

Mr. Hopper raises two compelling questions in his testimony: 1) whether the inclusion of non-navigable waters within the CWRA exceeds Congress’ authority under the Commerce Clause; and 2) whether the definition of ‘waters of the United States” which extends “to the fullest extent that these waters…are subject to the legislative power of Congress under the Constitution.” is an effective abdication by Congress of its legislative responsibilities. (S. 787, §4(3)).

As Mr. Hopper points out, the Supreme Court has held,

[W]e have identified three broad categories of activity that Congress may regulate under its commerce power. First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce.

U.S. v. Lopez, 514 U.S. 549, 558-559 (1995)(citations omitted). Under which of these three categories, if any, do non-navigable intrastate waters (and activities that effect them) fit? Mr. Hopper contends that they do not fall within either of the first two categories and thus must fall within the third – that they “substantially affect” interstate commerce – for the CWRA to be constitutional. Mr. Hopper makes a compelling case that they do not, as they facially have nothing to do with interstate economic activities.

As to the argument that Congress is essentially abdicating its legislative responsibilities to the courts, I am not sure that I agree. I do however agree that the language is an explicit invitation for litigation over the “fullest extent” of Congress’ legislative power. But, given the inevitability that the constitutionality of the CWRA will be litigated whether or not the language is there, this is probably an argument of little moment.

If the CWRA is passed into law by Congress I do not doubt that Mr. Hopper, or some other attorney, will have an opportunity to argue these questions before the Supreme Court. But, Mr. Hopper’s position, and the Supreme Court’s decision in Rapanos, leaves me with a question. Is the analysis factually out of date?

The discussion over the constitutionality of the CWRA focuses on water as a means of conveyance, like a road or rail line. This is understandable in the context of the Clean Water Act’s reference to “navigable” waters. But ever increasingly water is considered – first and foremost – a resource. Further, it is a resource that is regularly shipped across state lines by a multi-billion dollar bottled water industry. It is also a resource that the States themselves are fighting over, sometimes to the point of litigation. Water has become a commodity. And it is a commodity that is critical to innumerable industries (see this article for examples).

It is not hard for me to imagine that activities that affect apparently “intrastate” bodies of water or wetlands would have a deleterious effect on the availability of water within a State, and thus affect the pattern of commerce relating to – or dependant on – water. Any individual instance may have a negligible impact overall, but that is irrelevant. In Maryland v. Wirtz, 392 U.S. 183 (1968) the Supreme Court noted, “[t]he Court has said only that where a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence." Id. at 197, n. 27. If water is viewed as a pervasive commodity, then an argument can be made that a regulatory statute governing its treatment bears a “substantial relation” to commerce.

Clean Water Closer To Restoration

As readers will be aware from my prior posts (both of which can be found here), a bill entitled the "Clean Water Restoration Act" is wending its way through Congress. Well, as discussed in this New York Times editorial, the bill may start wending a little faster. The Obama administration has written to the House and Senate committees considering the bill urging that they approve the legislation. Some of the urgency may derive from efforts to polish the United States' environmental credentials in advance of the December climate change talks in Copenhagen.

Water and Risk

There is an interesting article just published by Risk Management Magazine entitled “Water, Water Everywhere … But Not Enough for Business.” Much of the information in the article is familiar to those who follow water issues, though increased public awareness is always a good thing. But, the article does address an interesting issue I have not seen discussed elsewhere – namely the impact water scarcity has on the insurance industry.

Many people reading this may think “so what?” Most people don’t think about insurance issues in their day to day lives. Yet insurance coverage, or lack thereof, can have a major impact on both individuals and businesses. Its availability can ameliorate catastrophe, and its unavailability can make a business venture impossible.

Insurance companies are experts at evaluating risk – or at least they need to be if they want to stay in business. As is made clear by the examples in the article, water scarcity is a risk that insurance companies need to start evaluating. All is not gloom and doom however. With every crisis comes opportunity, and water scarcity is no different. The article quotes Roman Hohl, an insurance director at Swiss Re who suggested that tradable water rights, “could be an opportunity for the insurance sector-insuring companies that have water rights but can't exercise them, for example.” I found this interesting given that a number of States in the American Southwest are already in the position have having more “paper rights” than available water.

Other than the insurance questions, the article discusses particular industry segments that make intensive use of water as well as some of the initiatives those in those industries have taken to reduce their water usage. Ms. Holdbrook leaves us with a question however, “All these efforts represent positive steps in overcoming the risks related to water scarcity. But are they enough?”

What do you think?

The New Electorate

I just read an interesting article over at the Guardian regarding the Chevron annual meeting and an expected vote “on a resolution urging management to assess the company’s compliance with the environmental laws of every country in which it operates.” The article is primarily concerned with a growing green ethic in the “extractive industry” (oil, gas, and mining companies). But I am struck by the Chevron vote itself.

We are all familiar with the idea of political lobbying. Environmental groups and industry groups play tug of war with each other - the rope consisting of state and federal politicians. Yet there is another kind of elected official in this country – the director of a publicly traded corporation. The elections that put them into and out of office are often held behind closed doors. Many are dominated by large, often institutional, shareholders. But at the end of the day, and however removed, ownership of many large companies is held by individuals.

Most people don’t consider that when they own shares in a company, they own a say in how that company should be operated – and consequently moral responsibility for its actions. As hard as environmental groups lobby our publicly elected officials, I am surprised they don’t lobby the privately elected ones more diligently. I sometimes get the feeling that many environmental groups simply see corporations as the “enemy”, and look no deeper. How much could these groups achieve by directing at least some of their efforts at swaying corporate shareholders and educating them about the influence they wield?

Today, corporate directors are concerned first and foremost with corporate profitability – that is their job after all – because they believe it will please their constituents. Chevron’s constituents may have just signaled that profitability alone is not enough.

** A quick follow-up. Check out this article discussing the meeting. A great discussion about the ability of Chevron's shareholders to promote change in the way the company operates.

**Yet another update. Chevron's shareholders rejected the resolution calling for management to assess its compliance with environmental laws.

Legislative Sabotage?

Controversy has erupted in Florida with the recent approval of Senate Bill 2080 by the Florida legislature. The purported purpose of the bill was to encourage water conservation by making it easier for homeowners to replace vegetation – like St. Augustine grass – with vegetation that requires less water.

According to some, the bill has been sabotaged.

At the last minute the bill was amended to provide sweeping power to the executive directors of Florida’s five water-management districts. If Governor Crist signs the bill into law, those five individuals will have the power to unilaterally approve water-use and wetland destruction permits for large projects without formal input from either the relevant water district governing boards or the public.

So why sabotage? Well, it turns out that no one seems to know how the amendment made it into the bill. According to Senate records, the amendment was added by one of the bill’s sponsors – Senator J.D. Alexander. Senator Alexander is apparently not commenting, but his co-sponsor, Senator Carey Baker, says the records are wrong and that neither he nor Senator Alexander knew of the amendment until after they voted for the bill. What?

Some have called for Governor Crist to veto the bill. Senator Carey says that if the Governor does not, then he will work during the next session to fix it. The concern is that concentrating this sort of authority in five people makes the permitting process highly susceptible to pressure from both politicians (who approve the hiring of the directors) and business interests seeking permits.

The arguments against the amendment are obvious and clichés about power corrupting spring easily to mind. But I am still struck by the fact that no one can seem to identify where the amendment came from. Senator Baker seems to suggest that it may have slipped into the bill accidentally. How does that happen without anyone noticing?

Rapanos Redux

Two weeks ago I posted an entry about the Clean Water Restoration Act (“CWRA”). Shortly thereafter, at the request of U.S. Representative James Oberstar, the EPA issued a report containing the anecdotal comments of various regional EPA and U.S. Army Corps of Engineer officials regarding the Supreme Court’s decision in Rapanos. That decision serves as one of the rallying points for supporters of the CWRA, who claim that it has limited the scope of federal jurisdiction under the Clean Water Act and caused confusion among government agencies as to what jurisdiction actually does exist.

The upshot of the report is that there is unverified anecdotal evidence that uncertainty associated with the Rapanos decision has increased costs to the EPA (and to some extent the Army Corps of Engineers) associated with evaluating and bringing enforcement actions. The report specifically states that nationwide the Rapanos decision has affected approximately 489 enforcement actions, “such that formal enforcement was not pursued as a result of jurisdictional uncertainty, case priority was lowered as a result of jurisdictional uncertainty, or lack of jurisdiction was asserted as an affirmative defense to an enforcement action.” (See Report, p. 1) This report supports the notion that some resolution of the confusion caused by Rapanos, such as the CWRA, is needed.

Whether Rapanos improperly limited jurisdiction under the Clean Water Act or reigned in out of control jurisdiction is a question of perspective. That the Rapanos decision has caused confusion is not. This is evident in the split of the various U.S. Courts of Appeal over which of the three tests propounded by the Supreme Court should be controlling. (See e.g. United States v. Cundiff, 555 F.3d 200, 207 (6th Cir. 2009)(“Parsing any one of Rapanos's lengthy and technical statutory exegeses is taxing, but the real difficulty comes in determining which--if any--of the three main opinions lower courts should look to for guidance.”)

Indeed, the Sixth Circuit in Cundiff discusses the dilemma and current divisions among Circuit Courts quite succinctly:

In its short life, Rapanos has indeed satisfied any "bafflement" requirement. The first court to decide what opinion was controlling decided to ignore all of them and instead opted for earlier circuit precedent which it felt was clearer and more readily applied. United States v. Chevron Pipe Line Co., 437 F. Supp. 2d 605, 613 (N.D. Tex. 2006). The Courts of Appeals have not fared much better. The Ninth Circuit has stated that Justice Kennedy's test applies in most instances, Northern California River Watch v. City of Healdsburg, 496 F.3d 993, 1000 (9th Cir. 2007), while the Eleventh Circuit has held that the Act's coverage may be established only under his test. United States v. Robison, 505 F.3d 1208, 1219-22 (11th Cir. 2007). By contrast, the First and the Seventh Circuits, though differing somewhat in their analyses, have followed Justice Stevens' advice and held that the Act confers jurisdiction whenever either Justice Kennedy's or the plurality's test is met. United States v. Johnson, 467 F.3d 56, 60-66 (1st Cir. 2006); United States v. Gerke Excavating, Inc., 464 F.3d 723, 725 (7th Cir. 2006).

Cundiff, at 208. The Sixth Circuit was able to dodge the dilemma in Cundiff by ruling that Clean Water Act jurisdiction existed under all three tests in that particular case. Other Circuits have similarly dodged the bullet thus far, while presumably hoping that either the Supreme Court or Congress will act to resolve the confusion.

Rapanos is not the first splintered decision issued by the Supreme Court, and the Court has provided some guidance to lower courts for exactly this eventuality, “When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds….’" Marks v. United States, 430 U.S. 188, 193 (U.S. 1977). This test essentially invites the lower courts to guess how the Supreme Court justices would vote if the case were before them. Unfortunately, the plurality and Kennedy tests enunciated in Rapanos each flatly reject the other. This is complicated by the dissenting Justices who command four votes and held that jurisdiction exists under either test. Thus:

Although "in most cases in which [Justice Kennedy] concludes that there is no federal authority he will command five votes (himself plus the four Justices in the Rapanos plurality)," in other cases Justice Kennedy "would vote against federal authority only to be outvoted 8-to-1 (the four dissenting Justices plus the members of the Rapanos plurality) because there was a slight surface hydrological connection."

Cundiff, at 210 (citations omitted). Given the confusion among the courts, it is not difficult to see why the Army Corps of Engineers and EPA are having trouble with Rapanos.