On January 22, 2018, the United States Supreme Court issued its unanimous ruling in National Association of Manufacturers v. the Department of Defense, et al., No. 16-299. The decision resolves the issue of the proper court for judicial review of the Clean Water Rule (Rule) issued by the Environmental Protection Agency (EPA) and the Corps of Engineers (Corps).
This article will provide some background about the Rule and legal challenges, information about the Supreme Court’s ruling, and highlight some of the uncertainties created in the wake of the decision.
Background and Legal Challenges
Under the Clean Water Act (CWA), navigable waters are defined as “the waters of the United States.” 33 U.S.C. §1362(7). Under 42 U.S.C. §1344 (also known as CWA Section 404), a permit is required for “the discharge of dredged or fill material into the navigable waters.”
The Rule provides a regulatory definition of the term “waters of the United States.” 80 Fed. Reg. 37054 (June 29, 2015). Among other things, the definition is utilized by the EPA and the Corps to determine the jurisdictional reach of the CWA for permitting under CWA Section 404. The Rule was originally slated to become effective on August 28, 2015.
After the Rule was issued, there were numerous challenges in federal district courts around the country. These cases were not consolidated in any single court. Some courts dismissed the challenges, finding that the courts of appeal had jurisdiction. Of particular note, one district court in North Dakota ruled that it did have jurisdiction. North Dakota v. EPA, 127 F.Supp. 3d 1047 (ND 2015). That court issued an injunction, staying the implementation of the Rule but only in the thirteen states that were parties to the litigation.
In addition to the challenges in federal district court, there were also numerous challenges in various courts of appeal. These challenges were ultimately consolidated in the Sixth Circuit Court of Appeals, which issued a nationwide stay of the Rule. In re: EPA and Department of Defense Final Rule, 803 F.3d 804 (6th Cir. 2015). It also issued a ruling stating that it had jurisdiction under the CWA to address the substantive challenges to the Rule. In re: Department of Defense, 817 F.3d 261 (6th Cir. 2016). The latter ruling was before the Supreme Court.
EPA and the Corps issued a Notice of Intent to Review and Rescind or Revise the Clean Water Rule. 82 Fed. Reg. 12532 (March 6, 2017). Additionally, EPA and the Corps proposed to add an applicability date for the Rule as “two years from the date of final action on this proposal.” 82 Fed. Reg. 55542 (November 22, 2017).
The Supreme Court’s Ruling
Under the Clean Water Act, judicial review of six enumerated actions by EPA “may be had by any interested person in the Circuit Court of Appeals of the United States for the Federal judicial district in which such person resides or transacts business which is directly affected by such action upon application by such person.” 33 U.S.C. §1369(b)(1) (Section 1369). Under this provision, if EPA’s action falls within one of the six enumerated situations, jurisdiction for judicial review of that action vests in the appropriate appellate court. However, if the EPA action does not fall within one of the six enumerated situations, review must be in a federal district court under the Administrative Procedure Act. 5 U.S.C. §704.
As noted above, the Sixth Circuit decided that it had jurisdiction to review the Rule under Section 1369. The National Association of Manufacturers sought a review of that decision, arguing that district courts had jurisdiction because the Rule did not fit within any of the six enumerated actions under Section 1369.
EPA’s position at the Supreme Court was that jurisdiction is proper in the court of appeal because the Rule fit within two of the actions enumerated in Section 1369. The two portions of Section 1369 relied on by EPA are: Subsection E, which states: “in approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title”; and Subsection F, which states “in issuing or denying any permit under section 1342 of this title.”
Justice Sotomayor wrote the opinion for a unanimous court. In the opinion, she addressed EPA’s arguments on Subsection E and Subsection F, disagreeing with EPA on both.
EPA argued that the Rule fit within Subsection E as the issuance of the Rule was an approval or promulgation of “any effluent limitation or other limitation under section 1311.” Section 1311 is entitled “Effluent Limitations” and makes unlawful any discharge of any pollutant except in compliance with the Clean Water Act. 33 U.S.C. §1311(a). EPA’s argued that its action in issuing the Rule amounted to the promulgation of an “other limitation” under Section 1311 because the Rule establishes the “geographic scope of limitations under Section 1311.” Opinion, p. 9. However, the Supreme Court noted that “other limitations” follows and must be read in conjunction with “effluent limitations,” ultimately concluding that “an ‘other limitation,’ at a minimum, must also be some type of restriction on the discharge of pollutants.” Opinion, p. 9.
EPA also tried to argue that the use of the term “any” in Subsection E means that “any” limitation of any type is included within the scope of Subsection E. The Court rejected the argument, stating that such an expansive reading read out of the statute the phrase “effluent limitation or other” (which would leave just the phrase “any limitation” in Subsection E) and that the use of the term ‘any’ could not expand the scope of the section beyond limitations relating to the discharge of pollutants.
EPA also argued that the Rule fit within Subsection F as the issuance of “any permit under section 1342 of this title.” The Court simply stated that the Rule does not relate to the issuance of permits under Section 1342, and as the statutory text is clear, Subsection E is not applicable. The Court then goes on to reject EPA’s alternative argument based on a prior case involving the EPA veto of a state-issued permit that agency actions under the Rule are ‘functionally similar’ to issuing permits. However, the Rule “in no way resembles the EPA’s veto of a state-issued permit” as it “makes no decision whatsoever on individual permit applications.” Opinion, p. 16. Additionally, EPA’s argument “is completely unmoored from the statutory text.” Id. Congress could have written the statute broadly, but did not.
Based on the rejection of EPA’s arguments, the Court held that the Clean Water Act does not allow original appellate jurisdiction to hear challenges to the Rule. It reversed the Sixth Circuit’s opinion and instructed it to “dismiss the petitions for review for lack of jurisdiction.” Opinion, p. 20.
The Uncertain Aftermath
Usually, a decision on jurisdiction resolves confusion instead of creating it. Here, though, two issues immediately arise. First, what about the nationwide stay issued by the Sixth Circuit? Second, in which district court should the case be heard? Unfortunately, there are no clear answers at this time.
The stay is in effect “pending further order of the” Sixth Circuit. In re: EPA, 803 F.3d at p. 809. Thus, the stay should remain in effect at least until the Sixth Circuit issues its order dismissing the petitions for review for lack of jurisdiction. EPA has asked for the Sixth Circuit to wait until February 16 before dismissing the matter.
Once dismissed, though, the only stay in effect will be the 13-state stay issued by the district court in North Dakota v. EPA. Unless it is broadened or another district court issues a nationwide stay, the Rule is “on the books” (as the Supreme Court notes at p. 8) and will go into effect outside of the 13-state area. One alternative is for EPA to issue the proposed rule delaying the effective date of the Rule for two years. This time frame should provide EPA the time to complete its review and re-write of the Rule.
Additionally, there are multiple pending district court cases in addition to the North Dakota v. EPA case. One such case in Georgia was revived by the Eleventh Circuit on January 24, 2018 in the wake of the Supreme Court’s decision. The Eleventh Circuit ordered that the district court proceed to address the substantive challenges to the Rule asserted in that case. The many district court cases may advance independently, potentially leading to a variety of inconsistent results. It is also possible that these cases will be consolidated into one case.
Only time will tell whether a single district court or multiple district courts will hear the case, whether a nationwide stay will be issued, whether EPA will postpone the effective date, and whether EPA will rescind the entire Rule and issue another one. Until then, uncertainty prevails.