Supreme Court to Decide Water Rule Challenge Venue

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By Lars-Eric Hedberg

The U.S. Supreme Court agreed to decide whether challenges to the Environmental Protection Agency clean water rule, which seeks to clarify Clean Water Act jurisdiction, properly lie in federal district courts or a specific federal appeals court ( Nat’l Ass’n of Mfrs. v. DOD , U.S., No. 16-299, cert. granted 1/13/17 ).

The high court Jan. 13 granted a request filed by the National Association of Manufacturers, which asked the court to determine whether the U.S. Court of Appeals for the Sixth Circuit erred when it claimed exclusive jurisdiction to decide petitions to review the Obama administration’s waters of the U.S. rule.

Dick Stoll, a partner at Foley Lardner, called the Supreme Court’s decision to grant the petition “incredible.”

“So Obama EPA regulations foster two totally unbelievable Supreme Court actions—stay of Clean Power Plan while judicial review is proceeding in lower courts and taking up a jurisdictional issue over a federal rule in a purely interlocutory fashion,” Stoll told Bloomberg BNA in a Jan. 17 e-mail. “Both of these efforts were truly Hail Mary.”

An interlocutory appeal is an appeal made from a nonfinal judgment or order, and is rarely granted.

Several states and industry groups argue that the waters of the U.S. rule (80 Fed. Reg. 37,053), jointly released by the EPA and U.S. Army Corps of Engineers on June 29, 2015, improperly expands federal authority.

Reed Hopper, principal attorney in the Pacific Legal Foundation’s Environmental Law Practice Group, told Bloomberg BNA that the clerk of the court had informed him that oral arguments in the case will be in April. As such, a decision in the case is expected in the Supreme Court term that ends by early July.

Hopper is counsel of record for the respondents in support of the petition, including Agrowstar, LLC, the American Exploration and Mining Association and the Washington Cattlemen’s Association. Those groups, like the National Association of Manufacturers, oppose the rule and argue that their challenges should be in the form of district court complaints.

Sixth Circuit Ruling at Issue

In February 2016, the Sixth Circuit ruled in favor of the Obama administration in a 1-1-1 opinion that essentially said the appeals court, not the district courts, was the proper venue to hear challenges to the rule ( Murray Energy Corp. v. DOD, 817 F.3d 261, 81 ERC 2165, 2016 BL 49440 (6th Cir. 2016)).

Writing the lead opinion, Judge David McKeague held that the court has jurisdiction under two sections of the Clean Water Act. Section 509(b)(1)(E) provides for appeals court review of the approval or promulgation of any effluent limitation under certain sections, while Section 509(b)(1)(F) grants appeals court review for the issuing or denying of a permit under Section 402.

Judge Richard Griffin concluded that neither provision vests the court with jurisdiction but because National Cotton Council of America v. EPA, 553 F.3d 927, 68 ERC 1129, 2009 BL 1441 (6th Cir. 2009), held otherwise with respect to 509(b)(1)(F), he concurred in the judgment.

In dissent, Judge Damon Keith wrote that neither the plain language of Section 509(b)(1)(E) nor 509(b)(1)(F) confers jurisdiction despite the court’s holding in National Cotton.

It is a Sixth Circuit rule that only the court sitting en banc, rather than a panel, can overrule circuit precedent, such as National Cotton, Keith wrote. The full court denied such a petition.

States and industry groups also challenged the rule in district courts across the country, under Section 704 of the Administrative Procedure Act, to preserve review should the U.S. Supreme Court eventually conclude the Sixth Circuit is not the proper venue for the challenges.

The Sixth Circuit stayed the rule nationwide on Oct. 9, 2015, while it studied the challenges.

Extra Layer of Review Sought

“The panel’s ruling, if allowed to stand, would disserve the federal judicial process, which depends on district courts and courts of appeals independently analyzing legal issues,” the association wrote in its petition to the high court. “Under the panel’s ruling, challenges to important CWA regulations would be funneled to a single court of appeals, without the benefit of initial consideration by the district courts or the opinions of the other federal courts of appeals on the same issues.”

Hopper said that the law is “pretty clear” that the federal district court is the appropriate venue, and Congress intended Clean Water Act jurisdiction challenges to be filed in those courts.

“Right now it is unclear where plaintiffs can file challenges to rules that interpret the scope of the act because the Sixth Circuit was split on the issue, and the plain language of the Act supports the view that the district courts are the proper venue,” he said. “Only the Supreme Court can resolve the question definitively. The more courts that weigh in on the rule challenge the more help it will be for the Supreme Court to make a final decision.”

Importantly, the trial or appellate level also changes the amount of time a plaintiff has to file a complaint or petition, Hopper said.

“If the appellate court is the proper venue then a challenge to rules like the WOTUS rule must be brought within a short timeframe,” like a few months, he said. “If you miss the deadline, you are out of luck.”

By contrast, he said, “rule challenges in the district court can be brought within six years of adoption.”

Decision Likely This Summer

The Supreme Court is likely to rule during this court term, which will end by early July, said Ellen Steen, an attorney for the American Farm Bureau Federation, one of the plaintiffs and petitioners challenging the rule.

“I’m told that we can expect a decision in June,” Steen told Bloomberg BNA.

The Supreme Court justices who agree to take a case often do so because they have doubts about an appellate court’s decision. That does not mean the Supreme Court will overturn the Sixth Circuit jurisdiction ruling, but it puts the odds a little more in favor of a decision to overturn, Steen said.

Steen suggested the court agreed to hear the case because this area of the Clean Water Act is legally confusing. The court’s decision could help clarify the legal route for many future cases, she said.

Plaintiff Advantage Seen

The Supreme Court has not previously delved into a similar case, which means this case is “somewhat of a case of first impression,” said Larry Liebesman, a senior adviser to Dawson & Associates, a consulting and environmental permitting firm.

Liebesman, who worked more than 10 years at the Justice Department helping to defend the EPA and the Army Corps of Engineers against lawsuits, is not representing a party in the fight but said the plaintiffs appear to have the advantage on the jurisdiction question.

Section 509 of the Clean Water Act is very clear on the question of what legal disputes should start in an appellate court, Liebesman said. Section 509 assigns such matters as permitting rules and effluent limitations to appellate courts, leaving a “definitional rule” like the rule at issue to district courts, he said.

Starting the actions against the rule in the district courts would have the advantage, for plaintiffs, that district courts tend to be more oriented toward factual discovery and a little less inclined to show “Chevron deference” to regulatory agencies, Liebesman said.

Steen said plaintiffs like the American Farm Bureau Federation need to have the court jurisdiction issue clarified because otherwise they might spend time and money getting to the end of a legal road only to be told by the Supreme Court to start over.

Timothy S. Bishop of Mayer Brown LLP is counsel of record for the association.

Acting Solicitor General Ian Heath Gershengorn is counsel of record for the Department of Defense.

—With assistance from Alan Kovski

To contact the reporter on this story: Lars-Eric Hedberg in Washington, D.C., at lhedberg@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information

The Jan. 13 order list of the U.S. Supreme Court is available at http://src.bna.com/lqR.

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