Recent Court Decision and EPA/Corps Actions Affect Fate of Clean Water Rule

A major skirmish in the long-running legal battle over the scope of protected waters under the federal Clean Water Act (“Act”) has just ended with the U.S. Supreme Court decision in National Association of Manufacturers v. Department of Defense.  The Supreme Court settled the dispute about which federal courts have jurisdiction under the Act to hear challenges to the Clean Water Rule (“CWR”).  That rule, issued by EPA and the Army Corps of Engineers, redefined the term “waters of the United States” (“WOTUS”) as used in the Act.  On a different front, recent actions by EPA and the Corps serve to delay the effective date of the CWR to avoid conflicting implementation of the CWR during pending litigation.  Although these recent developments are largely procedural, each may cause the litigation to last even longer, and so their implications are potentially far-reaching for all interested parties.  

Understanding why the dispute over federal court jurisdiction arose helps to explain the Court’s decision and its ripple effects for implementation of many aspects of the Act.  The Act describes waters to be protected from unpermitted discharges as “navigable waters,” a term that is then defined perfunctorily as “waters of the United States, including the territorial seas.”  Major elements of the Act that hinge at least in part on the WOTUS definition include the National Pollutant Discharge Elimination System (“NPDES”) permitting program for wastewater and stormwater discharges, the federal wetland dredge and fill permitting program, and oil and hazardous substance spill response and liability.  The meaning of WOTUS is therefore critical to proper implementation of the Act and has great consequences for regulated parties.  Over the years, EPA and the Corps had defined WOTUS by regulation, resulting in litigation that culminated in 2006 with the confusing plurality decision by the U.S. Supreme Court in Rapanos v. United States and subsequent lower court case decisions applying Rapanos in various ways.  

EPA and the Corps eventually issued the CWR in 2015 to redefine WOTUS based on their approach to resolving and implementing Rapanos.  Thirty-one states and various other parties, including the National Association of Manufacturers (“NAM”), promptly challenged the CWR in different federal district courts.  The U.S. District Court for the District of North Dakota then stopped the CWR from taking effect in thirteen states.  Some parties (but not NAM) also filed protective alternative challenges in different federal circuit courts.  The circuit court cases were consolidated at the Sixth Circuit Court of Appeals; no such consolidation has occurred at the federal district court level.  The Sixth Circuit stayed the effectiveness of the CWR nationwide until it had decided the matter.  As a result, the pre-CWR definition of WOTUS and related Rapanos-based agency guidance have remained in play.  EPA and the Corps have argued that the circuit courts, rather than the district courts, have original jurisdiction under the Act to hear the challenges, because the CWR (a) has the “practical effect” of an effluent limitation or other limitation issued pursuant to certain sections of the Act, and (b) is “functionally similar” to an action to issue or deny a permit pursuant to section 402 of the Act, which establishes the NPDES permitting program.  The agencies also argued that starting in the circuit courts would serve the goal of judicial economy by being more efficient and resulting in greater national uniformity of judicial treatment of the issue.  Many other parties, including NAM, disagreed.  NAM later intervened in the Sixth Circuit and appealed its holding that it had original jurisdiction. 

In National Association of Manufacturers v. Department of Defense, the Supreme Court unanimously overturned the Sixth Circuit and rejected the agencies’ statutory arguments as contrary to the Act’s plain language and clear intent.  The Court also found that the Act does not contemplate the judicial economy sought by the agencies as to challenges to the CWR.  Accordingly, the Court held that the district courts have original jurisdiction to hear the CWR challenges.  However, the Supreme Court did not rule on the merits of the CWR, leaving that for the district courts to untangle first.  Without original jurisdiction, the Sixth Circuit now likely needs to lift its nationwide stay of the CWR, but the earlier North Dakota district court injunction could come back to the fore.  Given the number of CWR challenges in various district courts, different decisions may ensue from around the country.  These may be appealed by losing parties to the circuit courts and, in turn, to the Supreme Court.  That would put the substance of the CWR before the Supreme Court for the first time and likely cause it to revisit the scope of WOTUS once again.  The whole process would likely take at least several years.

Now intersecting with the current litigated challenges to the CWR are recent regulatory actions by EPA and the Corps.  These actions create a different track for the CWR that could alter the pending litigation’s direction.  Pursuant to an executive order issued by President Trump, these agencies proposed in July 2017 to repeal the CWR and revert the definition of WOTUS back to pre-CWR regulation.  In light of the Supreme Court’s decision and Sixth Circuit’s anticipated repeal of its nationwide stay of the CWR, EPA and the Corps just finalized a rule delaying the CWR’s effective date to February 6, 2020.  This move is intended to ensure the pre-CWR definition of WOTUS is applied nationally while the proposed rescission (and expected proposed replacement) of the CWR unfolds.  Of course, the final iterations of these regulatory actions may also be challenged by parties who favor the CWR.

The dynamic litigation and regulatory fronts indicate that the true fate of the CWR will remain unclear for some time.  Meanwhile, many wait for reasonable certainty about what WOTUS really means and, in turn, about how much of their property is regulated waters and whether their discharges or dredge or fill activities require permits under the Act.  Even with such uncertainty at the federal level, regulated parties should remember that state laws often protect and regulate surface waters and discharges distinctly from the Act or may do so more stringently than the Act (as may local ordinances in some situations), so they need to keep an eye on how these issues are handled at all levels of government.

Definition of “Waters of the United States” – Addition of an Applicability Date to 2015 Clean Water Rule, 83 Fed. Reg. 5200-5209 (February 6, 2018) (extending CWR applicability date).

National Ass’n of Mfrs. v. Dep’t of Defense, 583 U.S. ___, ___ S.Ct. ___, 2018 WL 491526, No. 16-299 slip op. (January 22, 2018).

Definition of ‘‘Waters of the United States’’—Recodification of Pre-Existing Rules, 82 Fed. Reg. 34899-34909 (July 27, 2017) (proposed rule to rescind CWR).