The Obama administration yesterday sent its proposal to increase the number of waters, streams and wetlands receiving federal pollution protection to the White House Office of Management and Budget for final review.

The so-called guidance, if finalized, would supplant policy issued during the George W. Bush administration that pivoted off two muddled Supreme Court decisions to significantly curtail the total miles of streams and acres of wetlands that fell under the federal government's regulatory jurisdiction under the Clean Water Act.

Environmentalists cheered the incremental step forward for what they view as a long-sought, scientifically sound reinterpretation of the Clean Water Act, while industry officials blasted the guidance as a federal power grab that would trample property rights and further empower what they call an out-of-control U.S. EPA.

If finalized, the policy could have broad implications in stream and wetland protection and on the agriculture, homebuilding, mining and oil industries, all of which have cited the fragile economic recovery in pressing the White House to exercise regulatory restraint.

"This isn't just an academic matter," said Joan Mulhern, senior legislative counsel for the environmental group Earthjustice. "Whether or not and when this policy is implemented has a huge effect on the health of the nation's waters."

Today, groups are wondering whether OMB will move quickly to approve the guidance and whether EPA will follow up with an attempt to write new regulation that would further cement its interpretation of the 1972 water law.

Sources from both industry and environmental groups said they suspected EPA had done little more than tweak the draft before sending it yesterday to OMB for final review.

"All the signals are that it's going to be extremely expansive," said Don Parrish, senior director of regulatory relations for the American Farm Bureau Federation. "We think it will blur the distinction between regulating land and regulating water."

On the day the guidance was released in draft form in April 2011, EPA Administrator Lisa Jackson told reporters that federal jurisdiction would expand, although not significantly.

"This is not some massive increase, as far as we can tell," Jackson said (E&ENews PM, April 27, 2011).

EPA later released an analysis that pegged the cost-benefit ratio of the guidance at nearly 1-to-2, estimating that 2,517 acres of wetlands -- or 5 percent of the current total -- would be newly subject to mitigation. Stream miles subject to mitigation would increase by 2 percent, or by 9.3 miles, EPA said.

The analysis estimated costs at between $87 million and $171 million, while ecological benefits of improved water supplies, flood control and wildlife habitat, among others, would be worth between $162 million and $368 million, EPA said.

More than 200,000 public comments were received by EPA since the agency released its draft of the guidance to mixed reviews from environmentalists, some of whom said the agency did not go far enough (Greenwire, Aug. 4, 2011).

The American Petroleum Institute was among the industry groups that challenged the guidance, calling it a misinterpretation of the Supreme Court's rulings and assailing the cost-benefit analysis as "guesswork."

A key component of the new policy is that small streams and wetlands can be considered together, or in the aggregate, in determining whether they play a significant role in the health of a watershed.

The logic is that even though damaging or polluting a small tributary stream may have little effect on the overall health of a large waterway, damaging or polluting all streams would. As such, even small tributary streams and wetlands should be afforded protection based on the value that others like them -- on the whole -- lend to the total watershed.

Even though the guidance is "imperfect," according to Mulhern, the change alone merited approval.

"To me, that step is significant enough in and of itself to warrant full support of the Obama administration's actions today," Mulhern said.

EPA made significant efforts to reach out to state associations in preparing the final draft -- in part because many states are charged with implementing these policies on the ground by issuing determinations on behalf of the U.S. Army Corps of Engineers and EPA of what qualifies as a federally protected wetland.

Peg Bostwick, senior staff policy analyst with the Association of State Wetlands Managers, one of the groups consulted, said the draft guidance did not go far enough in clearly delineating where federal jurisdiction starts and stops.

"This is a good try, but it really doesn't go far enough in drawing that bright line," Bostwick said.

What comes next?

Today, conflicting rumors are swirling about what's next. Some sources said OMB is expected to issue a speedy approval of the decision, while others said the policy is likely to stall at this review stage.

While an executive order affords OMB 90 days to review the policy before it is finalized, White House reviews of some controversial policies have been known to stretch on for a year or more.

EPA said further action on the guidance could be delayed, Bostwick said. "It was a very brief statement: that further action on that might be postponed," she said.

Environmentalists, however, said they anticipated a prompt review, since the guidance had been put out in draft form nearly a year ago and was subject to public comment -- unnecessary steps, given that agencies can issue guidance at any time without warning.

"There's nothing in there that hasn't been already pretty thoroughly vetted," said Jan Goldman-Carter, wetlands and water resources counsel at the National Wildlife Federation.

"I've heard from pretty senior people at EPA that they expect an expedited review at OMB, and there's no reason for it not to be," said Mulhern of Earthjustice.