By: Patrick F. Estill and Kevin M. McGuire
The United States Court of Appeals for the Sixth Circuit recently imposed a nationwide stay of the EPA’s controversial new “Clean Water Rule.” States and industry alike have viewed the Rule, effective on August 28, 2015, as an impermissible expansion of Clean Water Act jurisdiction. The Act governs discharges into “navigable waters,” vaguely defined by Congress to mean “waters of the United States.” The EPA and the Army Corps of Engineers issued the new Rule to clarify this definition and state the principles they will use to assert jurisdiction under the Act. 80 Fed. Reg. 37,054. The agencies have explained that the Rule uses “bright-line boundaries” to make “the process of identifying waters protected under the Clean Water Act easier to understand, more predictable,” and consistent with the law and peer reviewed science. 80 Fed. Reg. at 37,055.
But, as the Sixth Circuit observed last week, uncertainty surrounding the Rule’s requirements has instead produced a “whirlwind of confusion” for states and regulated parties. In the midst of legal challenges, the Sixth Circuit imposed a nationwide stay of the Rule in an opinion and order issued on October 9, 2015. Enforcement of the Rule will remain stayed while the court decides whether it has jurisdiction to review the challenges.
The Clean Water Rule and the Lawsuits Challenging It
The Clean Water Rule defines eight categories of waters as jurisdictional waters, i.e., “waters of the United States,” under the Act. It also clarifies the meaning of “tributary” and “adjacent water” as used in the Act. According to the Rule, a tributary is now per se jurisdictional if it shares a “significant nexus” to a water of the United States. No “hydrologic connection” is necessary to establish the significant nexus. Rather, any water with a bed and bank and an “ordinary high water mark” that contributes flow directly or indirectly to a navigable water may have the required nexus. Many fear that this will allow the EPA and the Corps to assert jurisdiction over lands that are dry for most of the year, such as transitional land between waterbodies or upland and lowland areas that are not wetlands.
Under the Rule, “adjacent” waters are those “bordering, contiguous, or neighboring a water of the United States.” This includes waters that are connected to or located at the head of traditional navigable waterways and waters separated by manmade barriers or natural berms or dunes. Some fear that the change arguably allows for jurisdiction over all waters near waters of the United States. Moreover, the change is arguably inconsistent with legal precedent treating adjacency as relevant only ifthe waterbody is a wetland. Finally, certain waters are now subject to a case by case “significant nexus” analysis if: they are located within the 100-year floodplain of a traditional navigable water; they are located within 4,000 feet of the high tide line or ordinary high water mark; or they fit into one of the five categories of waters that will likely impact downstream water.
Many see the new Rule as an impermissible expansion of Clean Water Act jurisdiction. West Virginia’s Attorney General has said that it creates “a series of absurd scenarios for which people can be fined,” and that it regulates waters that were “never previously subject to federal regulation,” causing confusion for property owners. Predictably, legal challenges have followed, with scores of suits being filed in jurisdictions all over the country. States are claiming that the Rule gives the EPA and the Corps “virtually limitless power” over non-navigable waters. See, e.g., Georgia, et al. v. McCarthy, et al., 15-cv-00079 (S.D. Ga.). Opponents of the new rule are also accusing the agencies of usurping States’ primary responsibility for management, protections, and care of intrastate waters and lands. See, e.g., id.
Suits have been filed in both the United States district courts and courts of appeals. A federal Joint Panel on Multidistrict Litigation (MDL) exists for coordinating discovery and pre-trial procedure in litigation like this filed in multiple courts across the country. On October 13, the panel denied the agencies’ request to consolidate the district court cases in the District of Columbia. The Panel found centralization in the D.C. District inappropriate, as the cases were based almost entirely on the administrative record and required little discovery. The Panel also cited the differing procedural postures of the district court cases as a reason for denying consolidation.
On the other hand, the MDL Panel has already consolidated the various courts of appeals cases, transferring them all to the Sixth Circuit. As the consolidated case stands, 18 states are challenging the expansion of the Clean Water Act’s reach under the Rule. Specifically, the states are arguing that (1) the bright-line boundaries for determining which tributaries and “adjacent” waters have a significant nexus to waters protected by the Act are inconsistent with the Act as construed by the Supreme Court, and that (2) the agencies’ rulemaking process failed to conform to the notice requirements under the Administrative Procedure Act (“APA”). In re: EPA and Department of Defense Final Rule; “Clean Water Rule: Definition of Waters of the United States,” Nos. 15-3799/3822/3853/3887 (6th Cir.).
The Sixth Circuit’s Order Staying the Rule
On October 9, the Sixth Circuit imposed a nationwide stay on the Rule, effectively halting enforcement for the time being. According to the court, the “pervasive nationwide impact of the new Rule on state and federal regulation of the nation’s waters” justified imposing the stay. Id. Courts have the power to grant such stays to preserve the status quo while litigation is ongoing. Here, the status quo was the “pre-Rule regime of federal-state collaboration that has been in place for years” following the Supreme Court’s decision in Rapanos v. United States, 547 U.S. 715 (2006). Id.
The Sixth Circuit found that a stay was appropriate because the states had a “substantial possibility of success on the merits of their claims.” The Rule’s treatment of “tributaries,” “adjacent waters,” and waters having a “significant nexus” to navigable waters is at odds with the Supreme Court’s ruling in Rapanos. Id. Significantly, however, there was no majority opinion in Rapanos (the apparent status quo). The Rapanos Court instead produced two competing tests for determining Clean Water Act jurisdiction. Justice Scalia, writing for the plurality, proposed a “continuous surface water connection” test. Non-navigable waters must exhibit a relatively permanent flow (i.e., a river, lake, or stream) to be subject to the Act; wetlands must have a continuous surface connection to jurisdictional waters. According to the plurality, the jurisdictional nexus contemplated by the Act is a physical connection to navigable waters. Rapanos, 547 U.S. at 754–55. The competing test comes from Justice Kennedy’s concurring opinion. According to Kennedy, jurisdiction exists if the waterbody in question has a “significant nexus” to, i.e., a significant effect on the chemical, physical, and biological integrity of, navigable waters under the Act’s jurisdiction. Id. at 780.
The Sixth Circuit found that the states had a substantial chance of success regardless of which test from Rapanos applies. The new Rule, which specifically defines “significant nexus” in the ecological rather than physical sense, would more closely resemble Kennedy’s concurring opinion. Some critics have pointed out that the Rule borrows buzzwords from Kennedy’s opinion without exercising any of the caution it expressed, and that the multifactor analysis for determining “significant nexus” to jurisdictional waters all but ensures inconsistent outcomes. Could the Sixth Circuit’s order signal a shift toward the more restrictive reading of the Clean Water Act by the Rapanos plurality? Scalia was adamant that the plurality’s physical connection test was truer to the language of the Act. Rapanos, 547 U.S. at 754–55. The Sixth Circuit also wrote that imposing a stay honored “the policy of cooperative federalism that informs the Clean Water Act”—another parallel to the Rapanos plurality opinion, which recognized the Act’s dual purpose of maintaining clean waters and preserving the “primary state responsibility for ordinary land-use decisions.” Id. at 755–56.
As for the procedural challenge to the Rule under the APA, the Sixth Circuit found that the EPA and the Corps had not given sufficient notice of the proposed distance limitations and new “adjacent waters” and “significant nexus” concepts in the Rule. Thus, the Final Rule was not a “logical outgrowth” of the proposed rule, which is a requirement for notice-and-comment rulemaking under the APA. The court rejected the agencies’ assertion that such bright-line rulemaking, without notice, was simply a “fact of regulatory life.”
The Sixth Circuit will now decide whether it has jurisdiction to hear the case under 33 U.S.C. § 1369(b)(1), which vests original jurisdiction in the courts of appeals for certain Clean Water Act disputes. The law provides for immediate review in the courts of appeals for agency actions “approving or promulgating any effluent limitation or other limitation” or “issuing or denying any permit.” The complaints brought in the various district courts have seen mixed results on the jurisdictional question, with the agencies favoring dismissal and immediate review in the courts of appeals. Compare State of Georgia, et al. v. EPA, et al., No. 2:15-cv-00079 (S.D. Ga.) (dismissing for lack of jurisdiction) with State of North Dakota, et al. v. EPA, et al., No. 3:15-cv-00059 (D.N.D.) (finding jurisdiction and also imposing a stay). Briefs are currently pending, and those following can expect a ruling from the Sixth Circuit on jurisdiction within a matter of weeks.
This article was authored by Kevin M. McGuire and Patrick F. Estill, Jackson Kelly PLLC.