Blogs

By Robert E. Holden and Monica Derbes Gibson

The Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers have released long-awaited guidance addressing jurisdictional determinations under the Clean Water Act (CWA) in the wake of Rapanos v. United States, 126 S. Ct. 2208 (2006).  There is general agreement that Rapanos limited the reach of the CWA, but the Court did not articulate a clear standard for determining whether or not a wetland or body of water is covered by the CWA.  In the guidance, EPA and the Corps explain how they will approach jurisdictional determinations in light of the Rapanos decision.  Click here to view the guidance.  The agencies will take public comments on implementation of the guidance until December 5, 2007.  Comments may be submitted online at  www.regulations.gov, to Docket No. EPA-HQ-OW-2007-0282, or by email to [email protected], with the docket number in the “subject” line. 

In 2006, the Supreme Court decided two consolidated cases involving the Corps’ authority to require dredge and fill permits under CWA § 404 for discharge into wetlands having only indirect connections to navigable waters.  Rapanos v. United States, and Carabell v. United States, 126 S. Ct. 2208 (2006).  The Corps had asserted jurisdiction over the wetlands as “adjacent wetlands” under 33 C.F.R. § 328.3(a)(7), the definition of “waters of the United States,” and the property owners objected.  The Supreme Court issued five separate opinions:  one plurality opinion, two concurring opinions, and two dissenting opinions.  The plurality opinion stated that “adjacent wetlands” of “waters of the United States” must have a continuous surface connection to a “water of the United States” and that the “water of the United States” must be a relatively permanent body of water connected to traditional interstate navigable waters.  In a concurring opinion, Justice Kennedy set out a different test:  that in order to fall within CWA jurisdiction, an “adjacent wetland” must have a “significant nexus” to traditionally navigable waters.  Because the Court did not agree on a single standard, Rapanos has made it more confusing to ascertain whether a wetland or non-navigable waterway is under the jurisdiction of the CWA. 

In an effort to resolve some of the confusion, the Corps and EPA have developed and issued guidance to EPA regions and Corps districts charged with implementing Rapanos.  U.S. EPA and U.S. Army Corps of Engineers, Clean Water Act Jurisdiction Following the U.S. Supreme Court’s Decision in Rapanos v. United States & Carabell v. United States, June 8, 2007.  The guidance observes that “[w]here there is no majority opinion in a Supreme Court case, controlling legal principles may be derived from those principles espoused by five or more justices.”  Guidance at 2.  Under this approach, “regulatory jurisdiction under the CWA exists over a water body if either the plurality’s or Justice Kennedy’s standard is satisfied.”  Id. 

The agencies will continue to assert jurisdiction over traditional “navigable waters”:  waters that are currently used, or have been used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters that are subject to the ebb and flow of the tide.  Guidance at 4-5.  Also, wetlands adjacent to traditional navigable waters will be subject to EPA and Corps jurisdiction.  Id. at 5.  Regulations of EPA and the Corps define “adjacent” as “bordering, contiguous, or neighboring.”  According to the guidance, “Rapanos does not affect CWA jurisdiction over wetlands that are adjacent to traditional navigable waters because at least five justices agreed that such wetlands are ‘waters of the United States.’”  Id.

A second category of waters, non-navigable tributaries of navigable waters, is subject to CWA jurisdiction when the tributary is “relatively permanent.”  Id.  Tributaries that ordinarily flow year-round or that have at least a continuous seasonal flow would be considered “relatively permanent.”  Id. at 6.  Tributaries that flow only in connection with precipitation events and intermittent streams that do not flow year-round or have continuous seasonal flow would not be considered “relatively permanent.”  Id.  Adjacent wetlands having a continuous surface connection with a relatively permanent, non-navigable tributary are subject to CWA jurisdiction.  Id. 

Finally, the agencies will perform case by case analyses to determine whether the following types of waters have a “significant nexus” with a traditional navigable water:

·        non-navigable tributaries that are not relatively permanent;

·        wetlands adjacent to non-navigable tributaries that are not relatively permanent; and

·        wetlands adjacent to, but not directly abutting a relatively permanent tributary (e.g., separated from the tributary by uplands or a berm, dike, or other similar feature).

Id. at 7.  The “significant nexus” analysis will consider hydrologic and ecologic factors to determine whether the wetland or non-navigable tributary significantly affects the chemical, physical, and biological integrity of the traditional navigable water.  Id.   The guidance states that swales or erosional features such as gullies generally would not be considered “waters of the United States.”  Id. at 11.  Also, ditches that are located in uplands and that do not carry a relatively permanent flow of water generally are not “waters of the United States.”  Id.  However, even if a gully or ditch does not have a significant nexus with a navigable water, the tributary may be considered a point source discharging pollutants into the navigable water, and therefore may be under CWA jurisdiction.  Id.

By Collette Ross

The Louisiana legislature has amended Louisiana Revised Statute § 44:104(E) to allow a notice of a mineral lease to be recorded for public records purposes instead of the full lease.  Filing a memorandum or extract of a mineral lease was formerly permitted by Louisiana Revised Statute § 9:2721.1, but that section was repealed on July 1, 2006.  The current legislation resolves this problem. As to mineral leases, in addition to other requirements under § 44:104, the notice shall include the primary term of the lease and any additional period during which the lease may be maintained by the payment of rentals. The amendment of § 44:104(E) took effect on June 18, 2007.  Click here to view the Act amending this statute.

Under Louisiana Civil Code article 2681, leases are binding on third parties only if filed in the public records.  Formerly, a party not wanting to disclose all terms of a mineral lease to the public could file a memorandum or extract of the lease under Louisiana Revised Statute § 9:2721.1, instead of filing the entire lease.  However, the repeal of § 9:2721.1 on July 1, 2006 left parties unable to file a memorandum of a mineral lease for public records purposes.  Prior to the amendment, § 44:104 allowed recordation of a notice of lease or sublease, but expressly did not apply to “mineral leases that are subject to the provisions of the Louisiana Mineral Code.”  Thus, the repeal of § 9:2721.1 effectively forced a party to record the entire mineral lease.  The amendment to § 44:104(E) resolved this problem by changing the substantive law to permit the recordation provisions contained in § 44:104 to apply to mineral leases.  Section 44:104(E) now provides that “[t]his section shall apply to mineral leases that are subject to the provisions of the Louisiana Mineral Code.”  

The Eastern District of Louisiana recently held that insurance claims for damage to a Gulf of Mexico production facility will not support federal court jurisdiction under the Outer Continental Shelf Lands Act.  Accordingly, the district court remanded the case of LLOG Exploration Co. v. Certain Underwriters at Lloyd’s, 2007 WL 854307 (E.D. La. 3/16/07), to state court for lack of federal jurisdiction.  LLOG sued its insurers for property damage and business interruption losses to several Gulf of Mexico production facilities resulting from Hurricanes Katrina and Rita.  The insurers removed to federal court, asserting federal jurisdiction under the OCSLA, which provides that “the district courts of the United States shall have jurisdiction of cases and controversies arising out of, or in connection with … any operation conducted on the outer Continental shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf, or which involves rights to such minerals.”  43 U.S.C. § 1349(B)(1).  The insurers argued that the case affected the production of minerals because LLOG sought recovery under its business interruption coverage for loss of production during the period of recovery from the storms.  Judge Livaudais ruled that OCSLA jurisdiction was unavailable because “[t]he insurance coverage dispute does not affect or alter the progress of production activities on the OCS, nor does it threaten to impair the total recovery of federally owned minerals from the OCS.”  Click here to view the opinion.

In preparation for hurricane season, which began on June 1, the Minerals Management Service has established a web site that brings together extensive hurricane-related information and resources. The web site is designed to describe and explain improvements instituted since Hurricane Season 2005, when Hurricanes Katrina and Rita cut a destructive path through the Gulf of Mexico, Louisiana and Mississippi. These operational enhancements focus on personnel safety, environmental protection, and energy security, and include reporting procedures for offshore operators.  These practices were developed in collaboration with industry and many of the new requirements have already been implemented.  The website will be updated throughout the season with all available information regarding hurricane activity related to Gulf of Mexico energy operations.  Click here to visit the site.

By Jonathan A. Hunter

MMS has announced proposed amendments to its deep gas royalty relief regulations under the Energy Policy Act of 2005. The proposed rule, “Royalty Relief – Ultra-Deep Gas Wells on Outer Continental Shelf (OCS) Oil and Gas Leases; Extension of Royalty Relief Provisions to OCS Leases Offshore of Alaska, 1010–AD33,” would extend existing deep gas royalty relief provisions to more OCS leases, provide additional royalty relief for certain wells on OCS leases in the Gulf of Mexico (GOM), and expand authority to grant royalty relief to leases offshore of Alaska.  The proposed rule extends deep gas royalty relief to GOM leases in 400 meters of water (up from the current limit of 200 meters), and would increase the royalty suspension volume to 35 Bcf for qualifying ultra-deep wells at least 20,000 feet total vertical depth subsea  in less than 400 meters of water.  The additional relief will only be available in years when the annual NYMEX natural gas price is at or below $4.47/MMBtu expressed in 2006 dollars.  MMS will accept comments on the proposed rule through July 17, 2007.  Click here to read the Notice.