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.

Environmental Roadblocks to Petrochemical Projects

The petrochemical industry has long flourished in Texas and Louisiana. Most viewed the positive benefits of the industry, such as job creation, economic growth, and the payment of state and local taxes, as outweighing the potential negative effects of the industry’s emissions or discharges. Over time, those emissions and discharges have been substantially reduced due to regulatory controls, advancements in control technologies, recycling and waste minimization, and a desire by industry to reduce its overall pollution footprint.

During the campaign, Mr. Biden said he wanted to “end fossil fuel.” Well financed environmental groups, now supported by and aligned with sympathetic personnel in regulatory agencies, seem to take this to heart and actively oppose any industry utilizing fossil fuels. The petrochemical industry, from producers, to pipeline companies, to refineries, and to manufacturers, have borne the brunt of this opposition, both in litigation and public opinion. These organizations and agencies actively use any argument or theory available to hinder and erect roadblocks to any new project or any expansion of an existing project.

An important arrow in the quiver has become environmental justice. Although the concept has been around for decades, environmental justice has been elevated to a top priority by the EPA under the Biden Administration. Over the last two years, EPA has infused the concept into its rulemaking, enforcement actions, permitting decision, remediation efforts, and grant awards to the public. EPA has also affirmatively signaled to groups opposing industry that it will take action against industrial facilities opposed by the groups.

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Carbon Capture. Use and Sequestration Is Set for Massive Growth

To reach President Biden’s ambitious goal of net zero carbon dioxide (CO2) emissions by 2050, the United States will likely have to capture and permanently sequester significant quantities of CO2. It is no surprise, then, that the Biden Administration has taken steps to enhance and support carbon capture, use, and sequestration (CCUS) efforts.

CCUS generally refers to a set of technologies that capture CO2 at its source, such as a petrochemical facility or a power plant using coal or natural gas. In some instances, CO2 is used in industrial processes or as a feedstock for production of useful commercial products. Captured CO2 has long been used for enhanced oil recovery (EOR) projects. Alternatively, CO2 may be compressed, transported (usually through pipelines), and then injected for permanent sequestration thousands of feet underground in deep rock formations.

EPA reports that 35.1 million metric tons (MMT) of CO2 was used in EOR in 2021, with about 5 MMT used in the food and beverage industry. Only about 7 MMT were sequestered in 2021. Cumulatively, only about 39 MMT have been sequestered since the greenhouse gas reporting rules have been in place. 

However, recent initiatives should increase these numbers dramatically. The Inflation Reduction Act significantly raised the 45Q tax credit for sequestration, expanded the definition of qualified entities, and allowed credits to be directly monetized in certain circumstances. The Bipartisan Infrastructure Bill provided billions to develop large-scale commercial projects and supporting infrastructure.

Creating incentives is important, but these CCUS projects face very involved and laborious permitting requirements. A permit is required to inject CO2 as a Class VI well. The Class VI permitting rules include multiple regulatory requirements designed to safely inject and sequester CO2, some of which are not required for other classes of injection wells. For example, other classes of injection wells have a regulatorily fixed area of review while Class VI have an area of review delineated using computational modeling which projects the extent of the lateral and vertical migration of the CO2 plume. 

Additionally, because the Underground Injection Control (UIC) Program is a federal program, EPA is the permitting authority but many states have their own permitting programs. As a result, an applicant must submit a permit application to EPA and the state. However, to address this problem, a state may seek primacy from EPA to administer the UIC Program in the state. Louisiana and Texas are seeking primacy and, once obtained, only one application will need to be filed. 

Pipelines carrying CO2 may cross wetlands or waters of the United States, requiring permits from the Corps of Engineers. Interestingly, some environmental groups are opposed to carbon sequestration as a tool to address climate change because it fosters the continued use of fossil fuels and, according to some groups, allows fossil fuel users to ‘greenwash’ their environmental accomplishments. Ironically, some groups are using environmental justice principles, another priority of the Biden Administration, as grounds to oppose the placement of CO2 pipelines.

The Biden Administration, industrial concerns, and CCUS companies are all motivated to increase the amount of CO2 that is used or sequestered. The convergence of these interests will likely spark growth in the CCUS industry and assist in reducing the amount of CO2 that is emitted to the atmosphere.

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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The Focus On Environmental Justice

Although the concept of environmental justice has been around for decades, it has never been more pervasive. Since the advent of the Biden Administration, EPA has infused environmental justice principles into all its activities. It has also invigorated and encouraged citizen groups to file complaints alleging environmental justice issues.

Since January 2021, EPA has issued multiple pronouncements related to environmental issues in permitting, compliance, and remediation matters. For example, in August 2022, EPA released guidance entitled Interim Environmental Justice and Civil Rights in Permitting Frequently Asked Questions. In it, and for the first time, EPA suggested that a “permit denial may be the only way to avoid a Title VI violation” if there are no mitigation measures an agency can take to address disparate impacts. 

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The New ESG Wave

Environmental, social, and governance (ESG) is a broad and not well-defined term that seems to have become associated with non-financial factors investors use to measure an investment or a company’s sustainability. Companies that may have ignored, resisted, or ‘green-washed’ ESG disclosures may be forced into such disclosures by large investors or the government. It may prove impossible to not be caught up in the coming wave of ESG requirements, both private and public.

As its name implies, there are three ‘pillars’ of ESG. An exact definition of each is difficult as each has been generally described to include any number of factors or criteria. The environmental pillar relates to the impact a company may have on the environment, such as its carbon footprint, including its direct and indirect greenhouse gas emissions, the chemicals involved in its manufacturing processes, or its overall stewardship of natural resources. The social pillar relates to a company’s relationships with its stakeholders or how it deals with people within the company and in the broader community, including diversity programs, hiring practices, and even how a company advocates for social good with its supply chain partners or in the wider world. The governance pillar refers to how a company is led and managed, including how leadership’s incentives are aligned with stakeholder expectations and the types of internal controls which exist to promote transparency and accountability by leadership.

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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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