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Breaking Down the Economics of Obama’s Waters of the U.S. Rule
June 5, 2014

The Obama Administration is currently attempting to expand the federal government's power under the Clean Water Act (CWA). EPW Republicans are concerned with the way this Administration's water-related policies threaten our nation's economy, families, farmers, and small business owners. Click here to read more.

In late March 2014, the Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) announced the proposed "waters of the United States" rule, which defines various terms, including "tributary," "adjacent waters," and "neighboring waters" that would fall under federal authority under the Clean Water Act. These definitions greatly expand the federal government's power over ditches, floodplains, and other areas through which water may flow. Along with the proposed rule, EPA and the Corps released an economic analysis, which claims that the proposed rule would result in a 2.7% increase in jurisdictional waterbodies and only 1,332 acres of land across the country would be subjected to new permitting requirements.

Independent analysis shows that the EPA and Corps severely underestimated the economic impacts of the proposed rule. Specifically, a review of Agencies' economic analysis by Dr. David Sunding, founding director of the Berkeley Water Center and Professor in the College of Natural Resources at the University of California, Berkeley, shows significant shortcomings in their methodology, which undermines the credibility of the agencies' economic analysis.

Below are notable issues regarding the Agencies' economic analysis:

Uninformed Methodology

As Dr. Sunding points out, EPA and the Corps repeatedly rely on statistical methods that do not account for the actual rulemaking or how the Clean Water Act really works. For example, in reaching the conclusion that 1,332 acres of land would be impacted, the Agencies failed to recognize that numerous waters never previously subject to the CWA's permitting requirements would become subject to federal authority under the proposed rule. The Agencies also focused narrowly on the CWA's section 404 dredge and fill program, when in fact, the law contains numerous other regulatory schemes that would be expanded under the proposal.

Outdated, Unreliable Data

EPA's and the Corps' use of the 2009-2010 time period as a baseline to estimate the impacts of the proposed rule is misleading.

To determine how jurisdiction might change for the newly defined categories of waters, EPA and the Corps relied on narrow data sets from 2009-2010. During those two fiscal years, a number of regulated entities, including landowners, were not required to apply for Section 404 permits under the CWA. However, under the proposed rule, landowners and developers would have to consider all water and wetlands, including ditches and puddles, as being under federal jurisdiction, therefore dramatically increasing the number of permit applications.

Additionally, 2009 through 2010 was at the height of the financial crisis. According to Dr. Sunding's review, construction and land development slowed significantly, as did the number of relevant permit applications and permit filings. Statistically, these two years are not representative of what the proposed rule would do and lowered the estimated impacts.

Lack of Transparency

EPA and the Corps have not shared or made public much of the underlying data used to estimate the impacts of the proposed "waters of the United States" rule. This is not atypical for the Agencies. However, considering the numerous weak points in their economic analysis, it is inappropriate to justify the proposed "waters of the United States" rule, which will have a significant economic impact across the country, with secret data and flawed methodologies.

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