In a unanimous decision and opinion delivered by Justice Sotomayor on January 22, 2018, in National Association of Manufacturers v. U.S. Department of Defense, the United States Supreme Court (“SCOTUS”) held that challenges to the June 29, 2015 regulation defining the term “waters of the United States” (“WOTUS”) must be filed in the federal district courts. The Court reasoned that the plain text of the judicial review provisions set forth in 33 U.S.C. §1369(b)(1) of the Clean Water Act does not authorize direct challenges to this regulation (the 2015 WOTUS Rule) in the U.S. Circuit Court of Appeals and, therefore, such challenges must be filed in the federal district courts.
Some parties did file appeals to the 2015 WOTUS Rule in various U.S. District Courts, while other parties sought to expedite review of the 2015 definition by filing appeals in various Circuit Courts. The appeals to the Circuit Courts were consolidated in the Sixth Circuit, which issued a nationwide stay of the effectiveness of the WOTUS Rule, but it is likely that this stay will be dissolved because SCOTUS has held that the Sixth Circuit lacked jurisdiction to hear the appeal. Thus, it appears that this 2018 SCOTUS decision will further delay any final development of a valid definition of WOTUS.
The U.S. District Court in North Dakota did stay the effectiveness of the Rule in 13 states (Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, and Wyoming) but the North Dakota District Court’s injunction would not bar any effort to apply the 2015 Rule in other states. Other challenges to the Rule are likely, which would likely result in further stays. Also, the U.S. Environmental Protection Agency (“EPA”) and the Army Corps of Engineers (“COE”) published a proposed rule in the Federal Register on November 22, 2017, that would establish an “Applicability Date” for the 2015 WOTUS Rule that would be two years after the publication of such a final rule. On January 31, 2018, EPA and COE announced that they finalized this proposed two-year postponement, but the final rule was not yet published in the Federal Register as of February 2, 2018.
Meanwhile, EPA and COE currently plan to apply the definition of WOTUS that was in effect prior to the 2015 Rule and to develop a revised definition of WOTUS. However, it is also possible that one or more states or environmental groups might challenge the new “Applicability Date,” seek to stay its effect pending the outcome of such a challenge, and also seek to apply the 2015 Rule to any allegedly controversial projects.
This chaotic situation has arisen from a series of efforts to extend federal jurisdiction under the Clean Water Act. In 1972, sweeping amendments to the Act prohibited the discharge of pollutants into navigable waters except under conditions authorized by the Act. In the 1972 amendments, the term “navigable waters” was defined to mean WOTUS. Since then, EPA and COE have struggled to define and apply that term, including three regulations promulgated in 1977, 1986/88, and 2015. The 2015 WOTUS Rule was intended to address judicial opinions on the definition of WOTUS, including opinions issued by SCOTUS in 2001 (Solid Waste Agency of Northern Cook County v. Army Corps of Engineers) and in 2006 (Rapanos v. United States).
Over the years, the agencies have sought to expand the potential scope of WOTUS from only waters that were navigable in fact to most surface waters and adjacent wetlands throughout the nation—except for certain categorical exclusions described in the 2015 WOTUS Rule, such as swimming pools and puddles. See Slip Opinion at p. 5; 33 C.F.R §328.3(b)(4); and 80 Fed. Reg. 37105. Also, for many years, EPA’s enforcement policy had a chilling effect on any aggrieved party’s right to challenge such jurisdictional determinations because it was generally believed that there was no opportunity for pre-enforcement review of such jurisdictional determinations. In some instances, EPA increased the pressure to accept unfavorable jurisdictional determinations by delaying enforcement to accumulate larger potential penalties, and even issued administrative orders to double the potential penalties that a party might incur if it litigated with EPA and lost. Fortunately, for the regulated community, the Supreme Court permitted pre-enforcement review of an administrative order in Sackett v. EPA, 566 U.S. 120 (2012), holding that the order was a final agency action subject to review under the Administrative Procedure Act.
Any attempts to apply the 2015 definition of WOTUS would increase the uncertainties because, among other things, it would specifically authorize EPA and COE personnel to make “case specific determinations” of whether certain waters are WOTUS under 33 C.F.R. §328.3(a)(7) and (8) and similar provisions set forth at 40 C.F.R. Parts 110, 112, 116, 117, 122, 230, 232, 300, 302, and 401.
The proposal of EPA and COE to reinstate the pre-2015 definition of WOTUS is clearly preferable to the 2015 definition, but it would reinstate a knowingly flawed definition that previously led to highly disputed jurisdictional determinations over the Clean Water Act’s application to some existing land uses and new land development projects.
While this approach is preferable to the 2015 Rule, it is essential that the government establish a clear and reasonable definition of WOTUS as soon as possible. Among other things, any new definition should require prompt jurisdictional determinations, perhaps within 60 days or at least no longer than 120 days, so that the process does not unduly delay proposed new development plans. Also, aggrieved parties should be able to seek prompt and expeditious judicial review of such jurisdictional determinations.
Clearly, the controversy and uncertainty associated with the Clean Water Act’s potential application to various surface water features and wetlands will not be resolved in the near future. All developers should account for this uncertainty in their development planning until EPA and COE finally develop a clear and reasonable definition of WOTUS. Depending on the circumstances, this might be limited to seeing periodic updates on this issue, but it could also include active participation in future rulemaking activities and/or in any litigation of an issue if it might pose a material risk to their current investments or future plans.