Practitioner Insights: The Never Ending Saga of Defining Waters of the U.S.

Trying to keep up with all of the controversy swirling around the Environmental Protection Agency and Army Corps of Engineers’ 2015 Clean Water Act Waters of the U.S. rule (WOTUS) is not for the faint of heart. The WOTUS rule, which is the culmination of decades of inconsistent district and circuit court rulings, and a trilogy of seminal Supreme Court cases, has spawned not only a myriad of judicial challenges, a presidential executive order, and further rulemaking that itself is being challenged, but also generated a dispute over what court can hear a direct challenge to the rule. The dust has not quite settled, and recent maneuvers by Administrator Scott Pruitt’s EPA have thrown yet more uncertainty into this ever-shifting Greek tragedy (or should we say Greek comedy!).

The WOTUS Rule

The Clean Water Act has never been a paragon of clarity. Under the act, the “discharge” of a pollutant without a permit is unlawful. “Discharge,” in turn, is defined as an addition of a pollutant through a point source to “navigable waters.” “Navigable waters,” in turn, is defined as “waters of the United States.” However, as the statute provides no definition of “waters of the United States,” the EPA and the Corps took it upon themselves soon after the 1972 Clean Water Act legislation, through the regulatory process, to begin to define that term. It is that regulatory definition that has created the morass that has enveloped regulation of water pollution at the federal level for over a generation.

Until 2001, courts, including the U.S. Supreme Court in United States v. Riverside Bayview generally upheld the broad scope of the Clean Water Act and rendered an expansive reading of federal authority, concluding that the government’s powers, manifested through the EPA and the Corps, generally extended to the reaches of the federal government’s authority under the Constitution’s Commerce Clause. The Supreme Court took a sharp turn in 2001, however, in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers, ruling for the first time that the scope of the Clean Water Act must be narrower than the breadth of the Commerce Clause. It evinced an intent to constrain federal jurisdiction and found that there must be both a touchstone to what would commonly be understood to be navigable-in-fact waters and a recognition of traditional state control of local waters. The EPA and the Army Corps’ Clean Water Act authority was further contracted in Rapanos v. United States, in which polar opposite four-justice plurality and dissenting opinions pulled at each other across the divide. But it was Justice Anthony Kennedy’s more nuanced concurring opinion, concluding that non-navigable-in-fact waters could be regulated if there is a “significant nexus” between those waters and a traditionally navigable waterway, that has tended to be viewed by lower courts as controlling law.

The EPA and the Corps, during the Obama administration, responded to Rapanos by initiating a lengthy rulemaking process to revise and clarify the definition of “waters of the United States,” garnering more than 1 million public comments. The result of that rulemaking process was the WOTUS rule, which became effective on Aug. 28, 2015. The touchstone of the revised “waters of the United States” definition is Kennedy’s “significant nexus” test.

Unsurprisingly, reaction to WOTUS was swift and forceful, generating significant opposition from states and industry, as well as from environmental groups. Indeed, more than two dozen challenges were soon filed in federal district and circuit courts.

The U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay pending further litigation in the case, In re EPA, 803 F.3d 804 (6th Cir. 2015). In the course of the Sixth Circuit case, a question arose as to whether under the Clean Water Act, it is the courts of appeals, in this case the Sixth Circuit, or instead district courts, that may hear in the first instance challenges to WOTUS. Although the Sixth Circuit ruled that it had jurisdiction over original challenges to the WOTUS rule, In re U.S. Dep’t of Def., U.S. EPA Final Rule: Clean Water Rule: Definition of Waters of U.S., the Supreme Court, on Jan. 22 in a unanimous opinion authored by Justice Sonia Sotomayor, reversed the Sixth Circuit and held that lawsuits challenging WOTUS first must be brought in federal district courts

As a result of the Supreme Court’s recent ruling on the jurisdictional issue, one would expect that the matter is back in the hands of the district court. Of course, nothing with regard to Clean Water Act jurisprudence, and the scope of authority under the Act, could be that simple …

The Trump Administration’s Role

As the various judicial machinations were going on, and only one month into his tenure in the White House, President Donald Trump issued an executive order calling the WOTUS rule “one of the worst examples of federal regulation.” The executive order instructs the agencies to interpret the term “navigable waters” in a manner “consistent with the opinion of the late Justice Antonin Scalia in Rapanos v. United States.”

To implement that order, the EPA and Corps, in November 2017, issued a “rescind-and-replace” notice in which they stated that such action was necessary because of the need for “regulatory continuity and clarity.” In particular, the agencies noted the complications that would arise if the Sixth Circuit’s nationwide stay expired but the North Dakota district court’s stay in another of the challenges, which applied to only thirteen states, remained in place, but other lawsuits proceeded. Ultimately, the agencies determined that a “stable regulatory foundation for the status quo would facilitate the agencies’ considered re-evaluation” of the waters of the U.S. definition. According to the agencies, that re-evaluation would include “developing ‘some notion of an outer bound’ [of the scope of federal authority under the Clean Water Act] from the full range of relevant information.”

As noted above, the Supreme Court did rule that the Sixth Circuit was without jurisdiction to hear a direct challenge to WOTUS. On the heels of that decision, on Feb. 6 and notwithstanding that the rule actually became effective in 2015, the EPA and the Corps issued a final decision providing that the rule will not become effective until an “applicability date” of Feb. 6, 2020 (83 Fed. Reg. 5200).

As a shock to no one, the very same day that the EPA and the Corps finalized this “applicability date” of the rule, 10 states and the District of Columbia as well as environmental groups filed lawsuits against both the EPA and the Corps, in New York v. EPA, No. 18-cv-1030 (S.D. N.Y. Feb. 6, 2018), and NRDC v. EPA, No. 18-cv-1048 (S.D. N.Y. Feb. 6, 2018). Those actions, which are now pending in the Southern District of New York, challenge the agencies’ applicability date decision as a violation of the Administrative Procedure Act. The main arguments in challenging the EPA and the Corps’ decision are: (1) neither the Clean Water Act nor the APA authorize the agencies to summarily suspend a final rule; (2) the “short comment period for an important and complex rule is insufficient,” and the notice documents discouraged substantive comment; and (3) the agencies acted arbitrarily and capriciously and without a rational basis. The NRDC lawsuit alleges that “[i]n suspending the [WOTUS] Rule in service of an ultimate repeal, the Agencies refused to consider the substance of the Rule. They did not repudiate the findings and conclusions that underlay the Clean Water Rule. They did not express any substantive disagreement with the Rule, or address the foundation for the Rule, including the scientific evidence supporting its findings. The Agencies did not claim that the regulatory regime they intend to apply for two years is in any way preferable to the Rule—or that it is even reasonable.”

What Does the Future Hold?

Under the current state of affairs, the regulations that apply today arguably are those long-standing regulations that existed before the WOTUS rule was finalized. But if the states’ and NRDC’s lawsuits succeed, WOTUS, and all of the cases challenging the rule, are back on the table. Presumably, the rule will be stayed one way or another as part of those cases, and that would once again put the status quo back to the regulations that preceded the WOTUS rule. It can be expected that, in view of the various appeals, agency remands, and revised rulemaking that will flow as part of these challenges, it will be a long time before a “waters of the United States” definition is solidly in place and can be relied on as the foundational point of Clean Water Act jurisdiction.

Where does this leave the regulated community, and the regulators today? There are a handful of points that should be considered:

First, there is a question as to whether, and to what extent, the WOTUS rule, on a day-to-day basis, actually expands the definition of “waters of the United States” beyond the definition in the pre-WOTUS regulations. Certainly, the WOTUS rule, and Kennedy’s significant nexus test were intended to clarify that definition. Indeed, the rule has, among other things, specific geographic parameters that it incorporates to provide, to a limited extent, some bright-line thresholds in determining whether something is a water of the United States, and formalizes the significant-nexus test. Therefore, by reverting back to the more vague rule that existed prior to the WOTUS rule, the real difference between the two may for practical purposes be that the prior rule provided the regulators a greater degree of enforcement discretion and flexibility in making jurisdictional determinations, for better or worse.

Second, even with that ability to exercise a greater degree of discretion, the regulated community may continue to rely on the Supreme Court’s decision in U.S. Army Corps of Engineers v. Hawkes Co. In that case, the court ruled that the Army Corps’ jurisdictional determinations are final agency actions under the Administrative Procedure Act, and can be judicially reviewed before one is put in the untenable position of having to either spend significant amounts applying for a permit that might not be necessary, or instead going ahead without a permit and risking enforcement.

Third, it is fair to speculate, based on the past year’s experience, that enforcement will generally be less active under a Pruitt EPA than would otherwise be the case. Moreover, as agency budgets are sought to be reduced, and staffing reverts to numbers not seen in decades, it is arguable that the EPA and the Corps simply will not have the depth to vigorously enforce Clean Water Act violations or make jurisdictional determinations.

Fourth, and notwithstanding the current administration’s exercise of enforcement discretion and reduction in staffing, it can also be expected that states, particularly those with more stringent environmental regulations, will in equal measure ramp up their enforcement activities. Although the Clean Water Act has a broad savings clause that permits states to regulate waters of their respective state and apply standards that are more stringent than federal standards, one can envision circumstances where those subject to enforcement, or the EPA or the Corps, may argue for federal preemption. Of course, this would run head long into the position taken by the more conservative justices in SWANCC and Rapanos that federal jurisdiction should be limited to ensure that states are afforded their traditional oversight of local waters.

Finally, it can be expected that the Pruitt EPA will continue to seek to use the regulatory process to limit federal jurisdiction to the greatest extent that it believes it can.

To say that this is a mess is an understatement. At some point the procedural issues will be resolved, but ultimately, the substance of the WOTUS rule, whether in its 2015 form or some new iteration after a rescind-and-replace rulemaking by the EPA and the Corps, will be subject to further challenge. Above all, one thing can be fairly certain—the Supreme Court’s trilogy of cases on the scope of federal authority under the Clean Water Act is likely to have a new member, and we will at some point be speaking of the quadrant of Supreme Court rulings that define the parameters of federal authority.

Joshua Bloom is a principal at Meyers Nave in the firm’s Land Use and Environmental Law Practice Group. With more than 25 years of experience, he specializes in all areas of state and federal environmental and natural resources law, including complex environmental litigation, brownfields, environmental aspects of transactional matters, and compliance counseling, representing both public and private clients.

Adam Regele is an associate in Meyers Nave’s Land Use and Environmental Law Practice Group. He represents clients in environmental matters relating to the California Environmental Quality Act, the National Environmental Policy Act, the Global Warming Solutions Act of 2006, the Comprehensive Environmental Response, Compensation, and Liability Act, Resource Conservation and Recovery Act, and other environmental laws and regulations.

Vidya Venugopal is an associate in Meyers Nave’s Land Use and Environmental Law Practice Group. Her experience includes permitting, compliance, enforcement and litigation relating to the California Environmental Quality Act, Clean Air Act, Clean Water Act, Comprehensive Environmental Response, Compensation, and Liability Act, and Proposition 65. Vidya has assisted clients with issues relating to air quality, climate change, crisis response ,and release reporting.

The opinions expressed here do not represent those of Bloomberg Environment, which welcomes other points of view.