Researchers Say Flawed Methodology Was Used to Justify Weakening the Clean Water Act, Agencies Failed to Account for Transboundary Pollution

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In a new research analysis published in “Science,” nine scholars including David Keiser, associate professor of resource economics, contend that a new federal water rule enacted in 2020 does not adequately account for transboundary pollution across state lines.

One of the government’s rationales for enacting the new rule, which removed millions of acres of wetlands and millions of miles of streams from federal protection, was an assumption that states would fill gaps in federal oversight. The research analysis by Keiser and his co-authors suggests this may not occur.

In late March, President Joe Biden proposed a $111 billion investment in water infrastructure. He said his administration will also modernize regulatory review and revisit the Donald Trump-era decision to remove protections from wetlands and intermittent streams. But reversing that decision could be challenging: thirteen states sued to block the Obama-era Clean Water Rule, seventeen states and several environmental organizations sued to block the Trump-era replacement (the Navigable Waters Protection Rule), and defining the protected waters of the United States has been the subject of debate for decades.

The Environmental Protection Agency and the Army Corps of Engineers repealed the Clean Water Rule in 2019, which clarified which bodies of water fell under federal protection from pollution under the 1972 Clean Water Act. In 2020, the agencies replaced that rule with the Navigable Waters Protection Rule, which removes isolated wetlands and ephemeral and intermittent streams from federal protection.

The rule change reduces restrictions for developers, agricultural operations, oil and gas companies, and mining companies to dredge, fill, divert and pollute ephemeral streams and isolated wetlands.  According to a 2017 staff analysis by the EPA and the Army Corps, the new rule leaves more than half of U.S. wetlands and 18% of U.S. streams unprotected, including 35% of streams in the arid West. 

“Our article discusses an important aspect of the economic analyses that supported the repeal and replacement of the Obama-era Clean Water Rule,” says Keiser, co-lead author of the paper. “We highlight that one key aspect of these analyses has little precedent in cost-benefit analysis.”

As they developed the rule, the EPA and the Army Corps of Engineers considered water quality as a “local public good.” This runs counter to scientific research that shows that even ephemeral streams and isolated wetlands are connected to larger watersheds, meaning what happens upstream affects waterways downstream, increasing the risk of flooding, diminishing water quality, and causing other problems that don’t stop at state borders. The article finds that the narrower definition of water quality skewed cost-benefit analyses in a way that favored removing regulations.

The agencies based their cost-benefit analyses on the assumption that leaving streams and wetlands unprotected won’t cause any harm to water quality in many states, because those states will rush in to protect waterways as needed.

“The EPA and Army Corps of Engineers assume that many states will fill the regulatory gaps left by the Trump-era Navigable Waters Protection Rule,” Keiser says. “This may not be far-fetched for some states like Massachusetts, but others are quite a bit more questionable. For instance, Florida, Georgia, Kansas and Iowa, along with ten other states, challenged the federal government in court over the 2015 Clean Water Rule. These states, along with many others, are now apparently projected to reverse course and increase regulatory coverage over many waterbodies in their states. We show that this exercise of trying to forecast state responses contradicts best practices and could be used to weaken other important environmental statutes.”

The study found that half of the states that the agencies said will protect the affected wetlands and streams sued to overturn the earlier Clean Water Rule, so these states’ decisions to protect isolated wetlands and ephemeral streams going forward would be a 180-degree change in position, the authors say.

“We cannot speculate that states will fill gaps in federal oversight,” said Sheila Olmstead, a professor of public affairs at the University of Texas at Austin and co-lead author of the paper. “When the agencies zeroed out the benefits and costs of this action in 31 states, assuming those states would enact laws that do not exist, they violated best practices in benefit-cost analysis. The Biden administration has said it will review the practice of analyzing regulations’ economic impacts, and this would be an important thing for them to look at.”