Supreme Court Makes Jurisdictional Determination on Clean Water Act Rule

HIGHLIGHTS:

• U.S. Supreme Court ruled unanimously – on narrow procedural grounds – that the courts of appeals do not have original jurisdiction to hear challenges to the Clean Water Act (CWA), the Obama Administration's 2015 rule defining "Waters of the United States" (2015 WOTUS Rule).
• The ruling upends the nationwide stay issued by the U.S. Court of Appeals for the Sixth Circuit Court that is currently enjoining implementation of the WOTUS Rule.
• To avoid a patchwork of potential inconsistent implementation of the CWA and a flood of district court cases, the Trump Administration took action to extend the applicability date of the 2015 WOTUS Rule by two years, keeping in place pre-2015 agency practices while it pursues its rescind and replace rulemaking actions.

The U.S. Supreme Court on Jan. 22, 2018, issued a unanimous opinion in National Association of Manufacturers. v. Department of Defense, No. 16-299, 583 U.S. ___ (2018), holding that the federal district courts, not the federal courts of appeals, have sole original jurisdiction to hear legal challenges to the Clean Water Act (CWA) "Waters of the United States" rule (2015 WOTUS Rule) promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) in June 2015. As a result, numerous challenges to the WOTUS Rule that were consolidated in the U.S. Court of Appeals for the Sixth Circuit will be dismissed and the Sixth Circuit's nationwide stay of the WOTUS Rule will be lifted. Existing challenges to the WOTUS Rule before various federal district courts will be reanimated, which could result in different holdings with some jurisdictions implementing the WOTUS Rule and some working under the prior rules.

To provide "continuity and regulatory certainty" and to maintain the status quo, the EPA and the Corps acted quickly in response to the Supreme Court ruling by signing on Jan. 31, 2018, a final rule that added an applicability date to postpone implementation of the WOTUS Rule for two years from the date the final rule is published in the Federal Register. By delaying the applicability date, the 2015 WOTUS Rule cannot be immediately re-implemented once the Sixth Circuit lifts its nationwide stay and the Trump Administration has bought time to implement its own rulemaking to rescind and revise the 2015 WOTUS Rule, which was initiated in early 2017.

Background

One of the most controversial of the Obama Administration's environmental regulations, the WOTUS Rule sets forth the geographic reach of the agencies' authority to regulate streams, wetlands and other water bodies pursuant to the CWA. Many viewed the WOTUS Rule as a vast overreach of federal jurisdiction and it was challenged by states and private interests in multiple district courts across the country. Many parties simultaneously filed protective petitions for review in various federal courts of appeals to preserve their ability to challenge the WOTUS Rule should their lawsuits before the district courts be dismissed for lack of jurisdiction. The actions before the federal courts of appeals were consolidated and transferred to the Sixth Circuit. In October 2015, the Sixth Circuit issued a nationwide stay of the WOTUS Rule. Prior to the nationwide stay, the U.S. District Court for the District of North Dakota had also stayed the Rule in 13 states.¹

Supreme Court Decision

The question before the Supreme Court was not the legality of the WOTUS Rule, but the narrow issue of which courts – the federal district courts or the federal courts of appeals – had jurisdiction to consider the challenge to the CWA regulations. While most challenges under the CWA must be filed in federal district courts, CWA Section 1369(b)(1)(F) provides seven categories of actions that may be initially challenged in federal courts of appeals. Hoping to keep the challenge to the WOTUS Rule before the Sixth Circuit, the Obama Administration argued that the Rule fell within two of the seven categories as a "effluent limitation or other limitation under [CWA] section 1311" or an action "issuing or denying any permit under [CWA] section 1342." The Supreme Court disagreed, finding that the WOTUS Rule merely announced a regulatory definition of a CWA term and neither created CWA effluent limitations or issued or denied a CWA permit.

Effect of Ruling

The case will be remanded back to the Sixth Circuit, which will dismiss the consolidated challenges to the WOTUS Rule for lack of jurisdiction. Consequently, the nationwide stay of the WOTUS Rule will be dissolved and existing challenges to the WOTUS Rule before various federal district courts will be reanimated. Thus, there will be a period of uncertainty as the courts take back jurisdiction over the challenge. Further uncertainty could occur as district courts may then make inconsistent determinations, and the CWA could be implemented inconsistently across the United States.

Short-Term Administrative Fix

To avoid a period of uncertainty as the district courts take back jurisdictions over the challenges to the WOTUS Rule, the EPA and Corps on Jan. 31, 2018, signed a final rule that adds an "applicability date" to the WOTUS Rule, essentially delaying its implementation for two years from the date of Federal Register publication. By delaying implementation of the WOTUS Rule, the agencies intend to pre-empt the potential inconsistent re-implementation of the WOTUS Rule across the country. In its place, the agencies will continue to rely on the pre-2015 regulatory definitions, agency guidance documents, and Supreme Court decisions that they have been using since the Sixth Circuit ordered the nationwide stay on Oct. 9, 2015.

This strategy will undoubtedly spawn new litigation, as the agencies' final rule acknowledges that prior public comments have questioned the agencies' authority to extend the applicability date of a final rule after the rule's effective date has been reached. Further, it could be argued that this action is tantamount to a repeal requiring public notice-and-comment rulemaking under the Administrative Procedure Act (APA). Before the ink on the new rule was dry, New York Attorney General Eric Schneiderman announced that he will lead a multistate lawsuit challenging the Administration's delay of the 2015 WOTUS Rule. Several environmental nonprofit groups have announced similar intentions.

Long-Term Solution

The action to delay implementation of the 2015 WOTUS Rule buys the Trump Administration time to complete its rulemaking to rescind and replace the WOTUS Rule, which was announced first on Feb. 28, 2017, in President Donald Trump's Executive Order on Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the "Waters of the United States" Rule, which directed the agencies to begin the process of rescinding or revising the WOTUS Rule (see 82 Fed. Reg. 12497).

Promptly following the Executive Order, on March 6, 2017, the EPA and the Corps announced their intent to pursue a rulemaking to review the WOTUS Rule (see 82 Fed. Reg. 12532). On July 27, 2017, the agencies issued a proposed rule to repeal the WOTUS Rule as part of a "two-step" process to rescind and revise the underlying definition of "Waters of the United States" (see 82 Fed. Reg. 34,899). The EPA received thousands of comments on this proposal. Given the lift of the nationwide stay and the uncertain legality of adding an applicability date to the WOTUS Rule, it is safe to assume that the rescission action will now be fast-tracked.

Although the second step – revising the definition of "Waters of the United States" – has not yet been noticed, both the Executive Order and the July 27, 2017, proposed rule indicate that the revised WOTUS Rule will be written in a manner that takes into consideration the principles expressed by the late Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006). The Scalia opinion provides that "only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams, oceans, rivers and lakes,'" that are connected to navigable-in-fact waters, are subject to regulation under the CWA. Justice Scalia's opinion specifically excludes from CWA coverage "channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall."

While the Supreme Court's recent decision and the EPA and the Corps' anticipated final rulemaking are dominating legal headlines, the immediate practical effect for the regulated community is that the practices the Corps has used to evaluate CWA jurisdiction since the nationwide stay – and even longer before that – will likely continue uninterrupted for at least the near future. 
   

Notes

¹The states subject to this stay are North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, Wyoming and New Mexico.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.