The Right Result for The Sunshine Project

By John B. King (John B. King was a member of Formosa’s legal team, submitting portions of the briefs at the district court and First Circuit.)

The Louisiana First Circuit has issued a sweeping decision affirming and upholding the issuance of air emission permits by the Louisiana Department of Environmental Quality (LDEQ) for the Sunshine Project, Formosa’s $9.4 billion petrochemical facility located in St. James Parish (the Facility). RISE St. James, et al v. LDEQ, 23-0578 (La. App. 1 Cir. 1/19/24), — So.3d —, 2024 WL 207859 (the Decision). In doing so, the First Circuit reversed the legally deficient decision of the district court, which had adopted “almost verbatim” the suggested written reasons submitted by the Opponents to the Project.

A. Facts

FG LA LLC (known as Formosa) sought to construct a petrochemical complex that would take ethane and propane, convert them into ethylene and propylene, and ultimately create high density polyethylene, linear low-density polyethylene, ethylene glycol, and polypropylene. Formosa choose a site in St. James Parish that was designated for industrial use, which was surrounded by industrial and agricultural uses, and which was about one mile from the nearest community on the west bank of the Mississippi River.

As a major source of air emissions, Formosa submitted applications to LDEQ to construct and operate the Facility. LDEQ reviewed the applications, which included the required air quality modeling. A public hearing was held and thousands of public comments were received.

In January 2020, after a review of the applications and all the public comments, LDEQ issued fifteen air emissions permits to construct the Facility. LDEQ issued a Prevention of Significant Deterioration (PSD) Permit and fourteen Title V Permits (the Permits), which together authorized the construction and operation of the Facility. LDEQ also issued a 182-page Basis for Decision and Public Comments Response Summary (Response to Comments), which provided, in detail, LDEQ’s reasons and rationale for granting the Permits. The PSD Permit also provided a detailed discussion of the Best Available Control Technology and the air quality modeling performed by Formosa. [1]

Several environmental organizations, such as RISE St. James, the Louisiana Bucket Brigade, and the Sierra Club (the Opponents), sought judicial review of LDEQ’s decision to issue the Permits. In very general terms, the Opponents argued that:

LDEQ violated the Clean Air Act due to its use of significant impact levels (SILs) to determine that the Facility’s emissions did not cause or contribute to a violation of the National Ambient Air Quality Standards (NAAQS);
LDEQ violated its constitutionally mandated duties as the public trustee of the environment; and
LDEQ failed to properly consider environmental justice issues, such as the alleged disparate impact on Black and minority members of nearby communities.

The appeal was assigned to District Judge Trudy White, now retired. After the matter was briefed and argued before her, she requested that all parties submit draft Written Reasons, in Word format, for her review. In September 2022, she issued her own Written Reasons for Judgment in which she vacated the Permits and remanded the entire matter back to LDEQ. Judge White’s Written Reasons for Judgment were an “almost verbatim” adoption of the draft Written Reason submitted by the Opponents.

LDEQ and FG appealed Judge White’s decision to the First Circuit. After an oral argument to a three-judge panel and another oral argument in front of a five-judge panel (which included the original three), the First Circuit issued its Opinion (the Decision). The First Circuit reversed Judge White’s decision and fully reinstated the Permits.

B. The Decision

The Decision is a detailed and lengthy explanation of the facts, the arguments by the parties, the applicable law, and LDEQ’s reasoning and rationale. For almost every issue before it, the First Circuit noted the LDEQ’s stated basis for its decision on that issue, the support in the record for that decision, and the vast discretion afforded LDEQ in permitting matters. In doing so, the First Circuit highlighted the need for a complete administrative record and a robust discussion of the issues by LDEQ in its Basis for Decision and Response to Comments.

There are several important aspects to the Decision. This article will include a discussion of the main ones: the standard of review, the Clean Air Act issues, and certain issues associated with the scope and application of the public trust doctrine.

1. The Standard of Review

The standard of review refers to the guiding principles to be applied by a court in reviewing a decision made by an administrative agency or a lower court. A lax or broad standard of review tends to provide a reviewing court with more latitude to overturn a lower court’s decision. By way of contrast, a more restrictive or narrow standard of review cabins or constrains a reviewing court as it reviews the lower court decision.

The Opponents argued that the First Circuit must give deference to the district court’s decision and factual findings. The First Circuit rejected this notion and applied the standard of review set out in Save Ourselves and Save Our Hills.

First, the First Circuit “reviews the findings and decision of the DEQ and not the decision of the district court” and “no deference is owed to the factual findings or legal conclusions of the district court.” Second, the First Circuit “should not reverse a substantive decision of DEQ on its merits unless it can be shown that the decision was arbitrary or that DEQ clearly gave insufficient weight to environmental protection in balancing the costs and benefits of the proposed action.” The test for determining whether an action was arbitrary or capricious is whether the action was taken “without reason,” a test that “imposes a significant limitation on judicial review.” Third, “considerable weight” must be given to LDEQ’s construction and interpretation of the statutory scheme it is entrusted to administer as well as its construction and interpretation of the rules and regulations under its authority.

When taken together, these principles provide a more restrictive or narrow standard of review. They impose a “significant limitation” on a reviewing court, which is prevented from reversing a substantive decision by LDEQ unless it was arbitrary (i.e., without reason) or there was insufficient weight provided to environmental protection. Throughout the Decision, the First Circuit applied this standard of review and found that the administrative record provided more than sufficient reasons for LDEQ’s decisions.

2. The Clean Air Act Issues

The Clean Air Act issues relate to the modeling effort conducted by Formosa and the use of SILs (or significant impact levels) to determine that the Facility does not cause or contribute to a violation of the National Ambient Air Quality Standards (NAAQS).

Formosa conducted what the First Circuit described as “extensive air modeling.” Formosa conducted a preliminary impact analysis, a full impact analysis, and detailed refined modeling. The modeling was done in accordance with federal and state guidelines.

However, the model did predict exceedances of 24-hour PM2.5 and 1-hour NO2 NAAQS. Based on those exceedances, the Opponents claimed “that the mere existence of a modeled exceedance violates the Clean Air Act.” The First Circuit simply stated, “we disagree,” finding that the “existence of a predicted modeled exceedance is merely one step in the modeling process.” Because of the modeled exceedances, Formosa followed the approvable air quality modeling procedures and conducted the required detailed refined modeling which showed that the modeled exceedances “are caused by off-site sources.”

The First Circuit also approved the use of SILs as part of the modeling effort to determine whether emissions “cause or contribute”: to a violation of the NAAQS. The NAAQS are health-based standards set by EPA at levels requisite to protect public health with an adequate margin of safety.

Under the Clean Air Act, emissions are not allowed to “cause or contribute’ to a violation of the NAAQS.

The Opponents mounted a vigorous challenge to the use of SILs to make this determination. They essentially claimed that any contribution to a violation, regardless of its size, violated the Clean Air Act. The First Circuit found that LDEQ’s “use of SILs in the PSD program is supported by its interpretation of the Clean Air Act itself, case law interpreting the Clean Air Act, and the regulations and guidance promulgated or issued by the EPA pursuant to the Clean Air Act. Thus, DEQ had a reasonable basis for incorporating the use of SILs in its PSD program, and its use of SILs is neither erroneous nor arbitrary and capricious.”

The First Circuit noted that entire purpose of the PSD program was to prevent “significant” deterioration of air quality and that EPA had incorporated SILs into their own regulations. Importantly, the First Circuit recognized that the use of SILs is based on EPA’s “longstanding policy” and even cited to EPA’s guidance documents. It also noted that LDEQ had incorporated the guidance memoranda “into the administrative/permit record as justification for the use of EPA’s recommended SILS in its PSD program” and “considerable weight” must be given to an agency’s

construction and interpretation of the statutory scheme that it administers and to its own rules.

To reach these conclusions, the First Circuit relied extensively on the documents in the administrative record and LDEQ’s articulation of its reasoning as set out in the Basis for Decision and Response to Comments. Because the record supports LDEQ’s reasoning, the First Circuit could not say that LDEQ’s decisions, such as the use of SILs, were ‘without reason’ and thus arbitrary.

3. The Public Trust Issues

At the district court and in the First Circuit, the Opponents grouped or styled the rest of their arguments as violations of the public trust doctrine. Essentially, they argued that LDEQ did not fulfill its duty as the public trustee because LDEQ failed to consider a variety of issues raised by the Opponents that they claimed should have been considered as part of the public trust analysis.

The public trust doctrine emanates from the Louisiana Constitution and generally requires that LDEQ, as the primary agency tasked with protecting the environment, articulate in written findings its consideration of three basic issues: whether the potential and real adverse environmental effects of the proposed project have been avoided to the maximum extent possible; a balancing (a cost-benefit analysis) of the environmental impact costs against the social and economic benefits of the project demonstrating that the latter outweighs the former; and whether alternative projects, alternative sites, or mitigating measures offer more protection to the environment without unduly curtailing non-environmental benefits. The consideration of these issues does not mandate a specific result; instead, LDEQ is afforded a great deal of discretion and latitude in individual matters.

Several of the main issues associated with the public trust doctrine are discussed below.

a. Environmental Justice

LDEQ and Formosa argued that the inclusion of environmental justice concepts in permitting decisions is not mandated by any constitutional provision, statute, regulation, or policy. In this regard, the First Circuit disagreed with LDEQ and Formosa, finding that “the directives from the Louisiana Supreme Court in Save Ourselves, which require consideration of economic, social, and other factors, broad enough to include an analysis of environmental justice, as defined by the EPA.” (Citation and punctuation omitted.)

Based on this decision, then, the consideration of environmental justice concerns is a part of the public trust review. However, as such, LDEQ’s consideration of these issues and its conclusions should be entitled to the “rule of reasonableness” and the same “room for a reasonable exercise of discretion” afforded other components of the public trust review, as set forth in Save Ourselves. In other words, if LDEQ articulates its reasons and there is support in the administrative record for those reasons, LDEQ should not be deemed to have acted arbitrarily (i.e., without reason).

Even so, LDEQ did conduct an extensive environmental justice analysis which was articulated in the Basis for Decision and Response to Comments. The First Circuit summarized LDEQ’s environmental justice analysis, ultimately finding that “we cannot say that [LDEQ’s] decision was in violation of its public trust duty or that its environmental justice analysis was arbitrary and capricious or otherwise without reason.” Indeed, there was “ample documentation in the administrative record” to support LDEQ’s conclusions.

Several key points were made by LDEQ which were highlighted by the First Circuit. First, LDEQ found that emissions from Formosa would not cause or contribute to a NAAQS violation and so the permits “do not allow for air quality impacts that could adversely affect human health or the environment.” EPA had previously regarded compliance with the NAAQS as presumptively protective “and that emissions of a pollutant meeting the NAAQS should not be viewed as ‘adverse’ under Title VI of the Civil Rights Act.” Although EPA did away with that rebuttable presumption, “the determination of whether there were ‘adverse’ impacts was ‘still intrinsically linked to whether a given area is compliant with the NAAQS.’”

Second, LDEQ addressed the alleged cancer risks from emissions of toxic air pollutants, primarily ethylene oxide, as to potentially affected Black and minority populations in the surrounding community. While LDEQ noted that there had been declines in the emission of toxic air pollutants and that there would be no ‘fenceline community,” the First Circuit specifically noted LDEQ’s use and reliance on data from the Louisiana Tumor Registry. That data, which include actual cancer incidences and deaths, indicted that cancer did not affect Black men or women in a significantly different manner. For example, rates “rates for all cancers combined for [W]hite men, [B]lack men, and [B]lack women do not differ significantly from Louisiana rates.”

Third, the First Circuit addressed claims that a disparate impact was created by emissions from the Facility, finding that LDEQ “specifically considered the impact of emissions on the nearby Black and minority communities.” LDEQ had found that there was no adverse impact, that overall emissions had significantly declined, that cancer rates were not significantly different based on data from the Louisiana Tumor Registry, that Formosa sought a site as far away from all people, regardless of race, and that the Facility was at least a mile from residential communities. It concluded that the fact that the Facility “is situated near a minority community alone is insufficient to establish a disproportionate effect on a minority community,” citing a prior case. As a result, and based on these findings, the First Circuit found that “even if there was evidence of an ‘adverse impact,’ there was no evidence of a ‘disparate impact.’”

Finally, the First Circuit highlighted LDEQ’s conclusion regarding the substantial limitations of the use of the EJScreen, as set forth by EPA itself. For example, EJScreen should not be used “to quantify specific risk values for a selected area” and that the screening-level results supplied by the EJScreen “do not, by themselves, determine the existence or absence of environmental justice concerns in a given location.” The Opponents had touted the EJScreen data to establish that “there is a ‘disparate impact’ or a disproportionate effect on a minority community.” The First Circuit supported LDEQ’s determination “based on specific directives from the EPA” that the EJScreen “information remains unsuitable for the use to which the [Opponents] are trying to use it: to quantify specific risk values for a selected area and as a basis for agency decision-making regarding the existence or absence of environmental justice concerns.”

b. Cumulative Impact Analysis

The Opponents argued that LDEQ failed to require Formosa to model the cumulative or combined

impact of all of its toxic air pollutants. The First Circuit rejected this argument.

The issue had come up in a prior matter (In re: Petroplex, 2010-1194 (La. App. 1st Cir. 3/25/11), 2011 WL 1225871). In that case, a similar argument was made but the First Circuit did not require such modeling because modeling was done in accordance with approval protocols and the facility emissions were lower than the ambient air standards. As a result, additional cumulative modeling was not required.

Similarly, Formosa conducted extensive air modeling in accordance with EPA’s and LDEQ’s approved modeling guidance and protocols. That modeling effort showed, like the modeling effort in Petroplex, that no ambient air standard for any toxic air pollutant would be exceeded. As a result, the First Circuit could not say that LDEQ’s “decision not to require Formosa to model the cumulative or combined impact of all of its toxic air pollutants was arbitrary and capricious or in violation of its duty under the public trust doctrine.”

c. Alternative Sites

Formosa conducted a robust alternative sites analysis in which sites were eliminated because they were located in what, at the time of site selection, was to be a non-attainment area. A facility to be constructed in such an area must purchase offsets in the form of expensive emission reduction credits. In this case, the amount of offsets that would be required to be purchased by Formosa “effectively precluded construction of the complex” because the requisite number of credits were not available.

The Opponents argued that the elimination of the non-attainment sites was arbitrary. The First disagreed, stating that LDEQ “had a reason, supported by the administrative record, to find that the five sites in Ascension Parish were not feasible alternative sites for the proposed Formosa complex.” As a result, LDEQ’s analysis of alternative sites was not arbitrary.

C. Conclusion

The First Circuit’s decision upholding LDEQ’s issuance of the Permits provides a powerful precedent and multiple arguments for LDEQ and permittees who seek to fend off judicial challenges to LDEQ’s decision to issue a permit. However, there are two main “takeaways” from this decision:

LDEQ should provide robust and detailed reasons for its decision to grant the permit in a Basis for Decision, Response to Comment, and/or other permit documents; and
The administrative record should be replete with sufficient evidence to support any and all such reasons.

Here, the administrative record included a vast amount of information to support LDEQ’s decision, much of which was supplied by Formosa as part of the permit process. In turn, LDEQ provided detailed reasons for its conclusions and the decision to issue the Permits. As a result, and faced with such a record and reasoning, the First Circuit could clearly find, and did find, that the decision was not arbitrary (i.e., without reason).

A copy of the decision can be found here.

[1] LDEQ later issued a Supplemental Basis for Decision in response to an order by the district court.

Enough is Enough

The Corps of Engineers refuses to accept the Supreme Court’s decision in Sackett v. EPA, which substantially reduces the scope of Corps’ jurisdiction over ‘adjacent wetlands.’ The Corps’ “unwillingness to concede its lack of regulatory jurisdiction” prompted the Fifth Circuit to emphatically state “enough is enough” in a recent decision related to adjacent wetlands.

The Clean Water Act regulates the discharge of dredged or fill material into navigable waters. 42 USC §1344(a) (Section 404). Navigable waters are defined as “the waters of the United States, including the territorial seas.” 42 USCA §1362(7).

In Sackett, the Supreme Court held that Corps’ jurisdiction under the Clean Water Act “extends to only those wetlands with a continuous surface connection to bodies that are waters of the United States in their own right, so that they are indistinguishable from those waters.” Sackett, 143 S. Ct. at 1344. The Court also explained that the Corps must establish “first, that the adjacent [body of water constitutes] … ‘water[s] of the United States,’(i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” Sackett, 143 S. Ct. at 1341.

The Corps has refused to accept this holding and the limitations on its jurisdiction as established by the Supreme Court. The Corps’ current position is that a ‘continuous surface connection’ exists when wetlands are connected to a jurisdictional water by a discrete feature like a non-jurisdictional ditch, swale, pipe, or culvert. Further, a continuous surface connection does not require a constant hydrologic connection. The EPA and Corps echoed this view in guidance released in November 2023 in the form of a PowerPoint presentation.

However, there are two problems with the Corps’ current position. First, the case relied on by the Corps in the November 2023 Guidance does not support its claim. Second, the Fifth Circuit just held that the Corps’ November 2023 Guidance on this point is wrong.

In the November 2023 Guidance, at p. 48, the EPA and the Corps rely on “prior EPA practice” and a Sixth Circuit case, US v. Cundiff, 555 F3d 200 (6 Cir. 2009), for this position. However, that case does not specifically make that statement. The Court actually stated: “Although the term ‘continuous surface connection’ clearly requires surface flow, it does not mean that only perpetually flowing creeks satisfy the plurality’s test.” Cundiff, 555 F3d at p. 212. The Court went on to discuss seasonal flow “and like water bodies.” Waterways with seasonal flow can be relatively permanent waterways. Further, one waterway, the South Channel, provided a continuous surface connection between the wetlands at issue and a traditional waterway (the South Channel had flow for all but a few weeks a year). So, the EPA’s and Corps’ statements regarding non-jurisdictional waters based on Cundiff, if any, are likely dicta.

On Dec. 18, 2023, the Fifth Circuit decided the case of Lewis v. US (2023 WL 8711318), which negates the EPA’s and Corps’ position in the Fifth Circuit. Wetlands on two tracts in Livingston Parish were at issue. The tracts are described as grass-covered, majority dry fields with gravel, logging, and timber roads on the sides of each tract. The owners harvested and managed timber on the tracts. As to the first tract (the east tract), waters flowed through roadside ditches to an unnamed tributary (which flowed intermittently), to Colyell Creek (a relatively permanent waterway), and then to Colyell Bay, a traditional navigble waterway about ten to fifteen miles away. As to the second tract (the west tract), water flowed through roadside ditches to Switch Cane Bayou, to Colyell Creek, and then Colyell Bay.

At the district court level (2020 WL 4798496), the court was reviewing an approved jurisdictional determination (AJD) initially issued in 2017 after an administrative appeal. The 2017 AJD found jurisdictional wetlands, noting the above connections to the traditional navigable waterway. The Plaintiffs argued that there was no jurisdiction under Rapanos (including the Scalia test as to adjacency). At some point in the district court proceedings, the Corps “acknowledged that the land in question does not meet the adjacency requirement set forth under the Scalia test. Accordingly, it provides no basis for CWA jurisdiction.” The district court also found that there was no jurisdiction under the significant nexus test. The matter was remanded back to the Corps.

After remand, the Corps applied the 2020 Navigable Waters Protection Rule to the wetlands on both tracts. The Corps indicated in a 2020 AJD that there were no jurisdictional wetlands on the west tract but found wetlands on the east tract by “connecting (a) roadside ditches and (b) a culvert to (c) an unnamed non-‘relatively permanent water’ tributary, then to (d) Colyell Creek (a ‘relatively permanent water’) several miles away, and ultimately to (e) the traditionally navigable waterway of Colyell Bay ten to fifteen miles from the Lewis property.”

Upon review by the Fifth Circuit and based on these facts, the Court found: “There is no ‘continuous surface connection’ between any plausible wetlands on the Lewis tracts and a ‘relatively permanent body of water connected to traditional interstate navigable waters.’ Recall that the nearest relatively permanent body of water is removed miles away from the Lewis property by roadside ditches, a culvert, and a non-relatively permanent tributary. In sum, it is not difficult to determine where the ‘water’ ends and any ‘wetlands’ on Lewis’s property begin—there is simply no connection whatsoever. There is no factual basis as a matter of law for federal Clean Water Act regulation of these tracts.” Thus, the Fifth Circuit found no continuous surface connection, even though there was a ditch, a culvert, and a non-relatively permanent tributary.

The Lewis decision highlights several important points. First, the Corps admitted under these facts that there was no jurisdiction under the Scalia test in Rapanos (the very same test adopted in Sackett). Second, there was no continuous surface connection even when water may flow through ditches, a culvert, and a non-relatively permanent tributary. Finally, the Sackett holding relating to a determination of where waters ends and wetlands begins was specifically incorporated into the Lewis decision.

As a result of the Lewis decision, non-jurisdictional features (ditches, culverts) and non-relatively permanent waterways are not continuous surface connections and cannot serve to link wetlands on a property to a relatively permanent waterway. On this point, the November 2023 Guidance is not consistent with the Fifth Circuit’s strict and straightforward application of Sackett in the Lewis decision.

The Supreme Court Narrows Corps’ Jurisdiction Over Wetlands

The U.S. Supreme Court substantially narrowed the scope of jurisdiction over wetlands under the Clean Water Act (CWA) through its decision in Sackett v. EPA. The decision relies heavily, if not exclusively, on its prior decision in Rapanos v. US. But, despite the clear language of Sackett, it remains to be seen whether the Corps or EPA will fully adhere to the decision.

Brief Background

The Corps of Engineers is authorized under the CWA to issue permits “for the discharge of dredged or fill material into the navigable waters.” 33 USCA §1344(a), also known as CWA Section 404. The CWA defines “navigable waters” as “waters of the United States.” 33 USCA §1362(7). The proper scope of this definition is critically important in determining the geographic extent of jurisdiction and whether a permit is needed to discharge dredged or fill material.

The initial regulatory definition of ‘waters of the United States’ (or WOTUS) in 1974 was based on the definition of traditional navigable waters (TNW), which are waters that were or had been navigable-in-fact or which could reasonably be so made. Courts recognized, though, that the CWA intended the scope of WOTUS to be broader than the historical reach of jurisdiction. After that recognition, the Corps continually expanded jurisdiction, culminating in the 1986 regulatory definition.

The 1986 regulatory definition included TNW, but also waters that could affect interstate or foreign commerce, impoundments of those waters, tributaries of those waters and, importantly, wetlands adjacent to any of those types of waters. Adjacent meant bordering, continuous, or neighboring, and specifically included wetlands separated from other WOTUS by man-made dikes or barriers, natural river berms, and the like.

The Supreme Court issued opinions in 1985 and 2001 regarding the proper scope of WOTUS. First, it upheld jurisdiction over wetlands adjacent to TNW when those wetlands “actually abutted” the TNW. US v. Riverside Bayview Homes, 474 US 121 (1985). Second, it held that jurisdiction did not extend to non-navigable, intrastate, isolated ponds are not ‘navigable waters’ merely because they serve as habitat for migratory birds. Solid Waste Agency of Northern Cook County v. Corps, 531 US 159 (2001).

The Supreme Court again attempted to define the proper boundaries of jurisdiction in 2006 in Rapanos v. US, 547 US 715 (2006). Justice Scalia wrote an opinion asserting that WOTUS only included relatively permanent, standing, or continuously flowing bodies of water and, to be an ‘adjacent’ wetland, the wetland needed a continuous surface connection such that there is no clear demarcation between waters and wetlands. However, that opinion did not command a majority of the Court. Justice Kennedy, in his famous concurrence, asserted there needs to be a ‘significant nexus’ to the TNW, which exists if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters understood as navigable.

After the Rapanos decision, expansive interpretations of WOTUS were the norm. Guidance issued by the Corps and EPA asserted jurisdiction not only over all the waters specified in Justice Scalia’s opinion, but also over all waters that had the remotest possibility of meeting the ‘significant nexus’ test set forth in Justice Kennedy’s concurrence.

The Obama Administration issued the Clean Water Rule in 2015, which expanded the scope of jurisdiction through the wholesale adoption of Justice Kennedy’s ‘significant nexus’ test. The Clean Water Rule was heavily litigated and, based on several injunctions, was only applicable in about half of the country.

The Trump Administration tried to restrict jurisdiction when it came to power in January 2017. It issued the Navigable Waters Protection Rule, which followed Justice Scalia’s opinion in Rapanos. However, that rule was also litigated and was summarily abandoned by the Biden Administration when a district court in Arizona vacated the rule. The Biden Administration went on to adopt its own expansive version of the definition in March 2023.

Sackett v EPA

In 2004, Michael and Chantell Sackett purchased a lot in Idaho, on which they planned to build a modest home. After they did some work on the property, the EPA issued a compliance order (CO) to them, which lead to the Supreme Court’s first Sackett decision. Sackett v EPA, 566 U.S. 120 (2012). In that decision, the Supreme Court held that the CO was an appealable agency action.

Thereafter, the Sackett’s argued that the proper scope of the Corps / EPA’s jurisdiction was set out by Justice Scalia in Rapanos. The government argued that its more expensive view was correct. The Ninth Circuit sided with the government. Sackett v. EPA, 8 F.4th 1075 (9th Cir. 2021). However, the Supreme Court agreed to hear the case and decide whether the Ninth Circuit “set forth the proper test for determining whether wetlands are “waters of the United States” under the Clean Water Act.” On May 25, 2023, the Supreme Court issued its decision.

The Supreme Court recounted some of the regulatory history noted above. It noted that EPA took an “expansive view of the CWA’s coverage of wetlands.” In fact, the Supreme Court noted the “agencies maintain that the significant-nexus test has been and remains sufficient to establish jurisdiction over ‘adjacent’ wetlands. And by the EPA’s own admission, ‘almost all waters and wetlands’ are potentially susceptible to regulation under that test.” Contrary to the agencies’ expansive interpreation, the Supreme Court viewed the CWA’s geographic reach as much narrower.

As to waters, the Supreme Court noted: “Although we have acknowledged that the CWA extends to more than traditional navigable waters, we have refused to read ‘navigable’ out of the statute, holding that it at least shows that Congress was focused on ‘its traditional jurisdiction over waters that were or had been navigable in fact or which could reasonably be so made.’”

The Supreme Court specifically adopted the restrictive view of ‘waters’ pronounced in Rapanos: “we conclude that the Rapanos plurality was correct: the CWA’s use of ‘waters’ encompasses ‘only those relatively permanent, standing or continuously flowing bodies of water ‘forming geographic[al] features’ that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes.’” It is also important to note that, in discussing the relatively permanent standard, the Rapanos court stated: “The phrase does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall.” Rapanos, 126 S.Ct. at p. 2225.

The Supreme Court also identified the scope of jurisdiction over adjacent wetlands. It acknowledged that “some wetlands qualify as ‘waters of the United States.’” Sackett, 143 S.Ct. at pp. 1338-1339.

The Supreme Court agreed with the Rapanos formulation regarding the adjacent wetlands over which the CWA provides jurisdiction: “In Rapanos, the plurality spelled out clearly when adjacent wetlands are part of covered waters. It explained that ‘waters’ may fairly be read to include only those wetlands that are ‘as a practical matter indistinguishable from waters of the United States,’ such that it is ‘difficult to determine where the ‘water’ ends and the ‘wetland’ begins.’” That occurs when wetlands have ‘a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that there is no clear demarcation between ‘waters’ and wetlands.’ We agree with this formulation of when wetlands are part of “the waters of the United States.’”

To be adjacent, the wetlands “must be indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA.” Further, “wetlands that are separate from traditional navigable waters cannot be considered part of those waters, even if they are located nearby.”

The actual holding is as follows:

In sum, we hold that the CWA extends to only those wetlands that are ‘as a practical matter indistinguishable from waters of the United States.’ Rapanos, 547 U.S., at 755, 126 S.Ct. 2208 (plurality opinion) (emphasis deleted). This requires the party asserting jurisdiction over adjacent wetlands to establish ‘first, that the adjacent [body of water constitutes] … ‘water[s] of the United States,’ (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.’

As to the surface connection, the Court did note that “temporary interruptions in surface connection may sometimes occur because of phenomena like low tides or dry spells.” Further, a landowner cannot carve out wetlands from federal jurisdiction by illegally constructing a barrier on wetlands otherwise covered by the CWA. According to the Supreme Court, whenever the EPA can exercise its statutory authority to order a barrier’s removal because it violates the Act (e.g., was constructed in a jurisdictional wetland), that unlawful barrier poses no bar to its jurisdiction.

It is also important to note which wetlands were not included within the scope of jurisdiction under the CWA. The concurrences by Justice Kagan and Justice Kavanaugh make it clear.

First, Justice Kagan noted that the Corps had for many years included even those wetlands “separated from a covered water only by a man-made dike or barrier, natural river berm, beach dune, or the like.” Justice Kagan pointed out that the majority opinion was “excluding all the wetlands in [this] category” and thus “narrow[ing] the scope of” the CWA. Justice Kavanaugh’s concurrence had similar language.

Second, the Supreme Court noted that EPA’s “’significant nexus’ theory is particularly implausible” and “the EPA has no statutory basis to impose it.” Justice Kavanaugh stated that he agreed “with the Court’s decision not to adopt the ‘significant nexus’ test for determining whether a wetland is covered under the Act.”

Corps’ Response

The Corps / EPA have indicated that that they “will interpret the phrase ‘waters of the United States’ consistent with the Supreme Court’s decision in Sackett.” Of course, they do not have much of a choice as the Supreme Court is the final arbiter of the proper scope and interpretation of federal laws. Despite their statement, though, history suggests that the Corps / EPA will attempt to apply and/or interpret Sackett in such a manner as to assert as much jurisdiction as possible.

For example, the agencies could state that they have jurisdiction up to the ordinary highwater mark and over any wetlands within that boundary or to the extent of the wetlands originating within that boundary. That interpretation coincides with their current geographic reach. However, such an approach would not always be compatible or in line with Sackett’s pronouncement that the wetlands must be indistinguishable from the adjoining waters such that there is no clear demarcation between the two.

The Corps informed Congress that it may issue a final rule reflecting the Sackett decision as opposed to issuing guidance. The Corps indicated that quickly issuing a rule will be more efficient. Regardless, the Corps is no longer issuing approved jurisdictional determinations and some are not issuing preliminary jurisdictional determinations. Further, permitting has slowed as applicants are waiting to see whether their property contains jurisdictional waters under the to-be-issued rule or guidance.

Nevertheless, the Supreme Court decision provides a much-needed clarification as to the CWA’s geographic reach and the scope of ‘waters of the United States.” Hopefully, the Corps / EPA will truly adhere to the decision so that the clarity provided by Sackett can be relied on by landowners.

Same Old WOTUS

EPA and the Corps of Engineers have finalized their latest iteration of the definition of ‘waters of the United States.’ It is seemingly straightforward, consisting only of a list of jurisdictional waters, exclusions, and internal definitions. Although the agencies claim that the new definition “provides clear rules of the road” regarding the scope of jurisdiction, the agencies incorporate prior expansive jurisdictional principles into the rule.

The history of the regulatory definition of WOTUS is one of ever-increasing regulation of the nation’s waters. The original definition was relatively narrow, generally including traditional navigable waters (TNW). That definition was struck down by a federal district court, who held that the Congress intended to regulate more than TNW in enacting the Clean Water Act. Since then, and even though the statutory definition in the Clean Water Act has not changed, the agencies have embarked on a decades-long effort to increase the scope of jurisdiction.

The Supreme Court’s decision in the 2006 Rapanos case only served to fuel the regulatory expansion of jurisdiction. Justice Scalia enunciated a narrow view of the scope of jurisdiction, generally limiting jurisdiction to TNWs, relatively permanent tributaries, and truly adjacent wetlands. Justice Kennedy, in his concurring opinion, generally included additional waters and wetlands that had a “significant nexus” to TNWs. After Rapanos, the agencies issued a guidance document (the Rapanos Guidance) which incorporated both views. Not surprisingly, the Rapanos Guidance includes a rather expansive view of what constitutes a ‘significant nexus.’

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Hazardous Substance Response Plans Are Coming

Over thirty years after the requirement was first included in the Clean Water Act and after a suit was filed to force EPA to act, EPA has published a proposed rule relating to planning for worst-case discharges of hazardous substances. The comment period is open to May 27, 2022.

The Clean Water Act was amended by the Oil Pollution Act of 1990. As part of that amendment, a provision was added requiring the issuance of regulations mandating that certain facilities prepare and submit a plan “for responding, to the maximum extent practicable, to a worst case discharge, and to a substantial threat of such a discharge, of oil or a hazardous substance.” CWA Section 311(j)(5); 33 USCA 1321(j)(5). Of course, both the EPA and the U.S. Coast Guard have promulgated various regulatory requirements relating to discharges of oil, such as those in 40 CFR Part 112, as well as some requirements relating to hazardous substances. However, according to EPA, no single program covered all the requirements of CWA Section 311(j)(5).

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The 2015 WOTUS Rule Is Repealed

The EPA and the Corps of Engineers have taken the first of two steps to repeal and replace the definition of ‘waters of the United States’ promulgated by the Obama Administration in 2015 (the 2015 Rule). The definition establishes the jurisdictional reach of the EPA and Corps under the Clean Water Act to regulate navigable waterways, tributaries, and their adjacent wetlands. The 2015 Rule had been widely criticized as being overly expansive because more waterways, tributaries, and wetlands were considered to be subject to jurisdiction.

When it was published, the 2015 Rule spawned lawsuits in multiple district courts and appellate courts, ultimately resulting in a patchwork of regulation. In 22 states, the 2015 Rule applied, but in the rest of the states, the pre-2015 rule applied. When the Trump Administration took office, it vowed to repeal the 2015 Rule (Step One) and replace it (Step Two) with a new definition that would clearly define where federal jurisdiction begins and ends in accordance with the CWA and Supreme Court precedent. The Step Two proposal for a new definition was published in December, 2018. Continue reading “The 2015 WOTUS Rule Is Repealed” →

EPA’s 500th Day Victory Lap

On the 500^th day of the Trump Administration, EPA touted its “notable policy achievements,” highlighting nine such achievements in a “promises made, promises kept” format. However, some of the noted achievements are works in progress and perhaps need more concrete results before a ‘mission accomplished’ banner is hung at EPA headquarters.

The nine ‘achievements’ listed by EPA include: withdrawing from the Paris Climate Agreement, ensuring clean air and water, reducing burdensome government regulations, repealing the so-called “Clean Power Plan,” repealing the Waters of the United States Rule, promoting energy dominance, promoting science transparency, ending ‘sue and settle,’ and promoting certainty to the auto industry. Continue reading “EPA’s 500th Day Victory Lap” →

Clean Water Rule Jurisdiction Resolved in National Association of Manufacturers v. the Department of Defense But Uncertainty Prevails

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. Continue reading “Clean Water Rule Jurisdiction Resolved in National Association of Manufacturers v. the Department of Defense But Uncertainty Prevails” →

EPA Unveils Framework For Industry Input on Regulations

Since the beginning of the Trump administration, many of the rules issued by the Obama administration, such as the Clean Power Plan and the Clean Water Rule, have been targeted for review. Scott Pruitt and EPA have been in roll-back and repeal mode. However, with the newly announced Smart Sectors Program, EPA seems to be taking a positive approach to dealing with industry and the regulated community instead of merely dealing with previously issued rules. Continue reading “EPA Unveils Framework For Industry Input on Regulations” →

The Clean Water Rule Gets A Well-Needed Review

The EPA continues to implement the de-regulatory agenda of President Trump. One rule that is now being reviewed for repeal and revision is the Clean Water Rule. Many felt that the Rule went well beyond the scope of the Clean Water Act and regulated private property that had not been previously subject to regulation. As a result, they support EPA’s and the Corps’ current efforts to repeal the Rule and revise it to a more traditional view of the Clean Water Act’s jurisdictional reach. Continue reading “The Clean Water Rule Gets A Well-Needed Review” →