If federal authority ebbs, will states take the lead on regulating upstream water quality?

Since 1972, the Environmental Protection Agency has regulated discharges of pollution to “waters of the United States.” The meaning of that phrase, however, has been anything but clear. In recent years, the Supreme Court has urged the agency to adopt a clear, authoritative definition.

EPA has proposed a definition that would focus federal attention on larger, navigable waters, rather than trying to regulate every headwater stream and ditch in the country. This marks a sharp departure from the proposal’s 2016 predecessor—which has been struck down by several courts. That earlier effort asserted broad federal authority based on the scientific fact that small, upstream waters ultimately affect large, downstream ones.

Figure 1 The Hydrologic Cycle

Public comment on the current proposal closed this week. Many of those comments focused on the legal question whether EPA has interpreted its authority too broadly or narrowly to comport with the statute and the Constitution. That’s not surprising, given how frequently this issue has led to litigation.

But there’s also an important policy question at stake. The choice is not whether EPA will regulate these waters or no one will. Instead, this definition affects where federal primacy ends and state primacy begins. In a comment filed on behalf of the GW Regulatory Studies Center, PERC Senior Fellow Jonathan Adler argues that EPA:

should focus on those areas where there is the greatest federal interest, including those areas where federal regulation is most necessary to supplement the environmental protection efforts of state, local and tribal governments and non-governmental entities. Such a focus is likely to maximize the value of federal regulation under the CWA and facilitate greater environmental protection efforts by non-federal actors.

Several states opposed to these changes are, ironically, proving this point. California, for instance, has responded to the proposal and other recent federal changes to environmental rules by taking on greater responsibility for protecting the environment within its borders. It is reforming its state wetlands regulations to fill the gap left by the federal rule change.

Other states may choose to pursue water quality improvements in other ways. But this is one of the benefits of federalism, not a bug. California may prefer traditional command-and-control regulations. Other states may see an opportunity to innovate by developing a market scheme. By letting each state experiment, we can discover new, better ways to achieve environmental ends. But that depends on there being a clear limit to federal authority, leaving states with flexibility to make their own decisions.

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