The decision could delay the resolution of challenges to the US Environmental Protection Agency’s Clean Water Act regulations and may result in conflicting interpretations from different federal district courts.
The US Supreme Court unanimously held on January 22 in National Association of Manufacturers v. Department of Defense (NAM) that challenges to the “Waters of the United States” Rule (WOTUS Rule), which determines the reach of the Clean Water Act, must be brought in the first instance in federal district courts. The decision reversed the US Court of Appeals for the Sixth Circuit, which had concluded that such challenges could be filed directly in courts of appeal. The Supreme Court’s decision thus did not resolve the merits of the challenges to the WOTUS rule, but it established the procedure for their resolution going forward. It will also guide the procedure for future Clean Water Act suits, such as the petitions that are likely to be filed when the US Environmental Protection Agency (EPA) finalizes a revision of the WOTUS rule pursuant to a 2017 executive order issued by President Trump.
The Clean Water Act generally requires that challenges to administrative actions under the act be brought in federal district courts in the first instance. The Clean Water Act describes seven kinds of challenges, however, that must be brought in the federal courts of appeal. See 33 U.S.C. § 1369(b)(1)(A-G). And, when multiple challenges are filed in different courts of appeal relating to the same EPA action, those actions are consolidated in one circuit and heard together. 28 U.S.C. § 2112.
The reach of the Clean Water Act, which applies to all “waters of the United States,” has long been controversial. In 2015, EPA issued the WOTUS Rule, which interpreted the Clean Water Act’s scope in a manner that many stakeholders viewed as a significant expansion of the areas subject to the Clean Water Act and its accompanying regulations.
In NAM, several petitioners (including NAM itself) therefore sought review of the WOTUS Rule in district courts around the country, arguing that it represented an unlawful expansion of EPA’s authority and that the rule was inconsistent with prior Supreme Court decisions. The petitioners also filed protective petitions for review in various courts of appeals to resolve the jurisdictional questions. The various appellate cases were consolidated and assigned to the US Court of Appeals for the Sixth Circuit. The Sixth Circuit ruled that appellate courts had jurisdiction over the challenge, and the petitioners sought review in the Supreme Court.
On appeal, the petitioners argued that challenges to the WOTUS Rule should be heard, in the first instance, in federal district court, rather than in a federal appeals court. The government, on the other hand, argued that the challenges satisfied Section 1369(b)(1)(E) of the Clean Water Act, which allows appellate courts to review agency action “approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title,” or, alternatively, Section 1369(b)(1)(F), which allows appellate courts to review agency action “issuing or denying any permit under section 1342 of this title.”
Writing for a unanimous Court, Justice Sonia Sotomayor concluded that the WOTUS Rule does not qualify for direct appellate review under either Section 1369(b)(1)(E) or Section 1369(b)(1)(F).
With respect to Section 1369(b)(1)(E), it was undisputed that the WOTUS Rule does not create an “effluent limitation.” The remaining question was thus whether the rule qualifies as an “other limitation.” Because “effluent limitation” and “other limitation” appear in close proximity in Section 1369(b)(1)(E), the Court held that an “‘other limitation’ must be similar in kind to an ‘effluent limitation’,” such that it is “related to the discharge of pollutants.” Slip op. at 10. Because the purpose of WOTUS Rule was to define a statutory term, the Court held that it was not related to the discharge of pollutants and thus does not constitute an “other limitation.” Id.
Similarly, the Court held that the WOTUS Rule did not qualify for direct review in a court of appeals under Section 1369(b)(1)(F) because the rule did not involve the issuance or denial of a permit.
With respect to both provisions, the Court rejected the government’s arguments supporting a broad construction of the appellate exemptions. The Court reasoned that the government’s proposed view of the statute took the language out of context and, if adopted, would expand appellate review far beyond what Congress intended.
One impact of the NAM decision is that resolution of the substantive issues in challenges to the WOTUS Rule will likely be delayed. The decision itself does not address or resolve any disputes regarding the substance of the WOTUS Rule or of EPA’s authority to promulgate such a rule. Instead, the decision simply clarifies how challenges to the rule should proceed. Because the decision requires that cases start in district court, it means that challenges to the rule will be subject to at least two levels of review (district court and court of appeals) before potentially reaching the Supreme Court rather than a single level of review (court of appeals). The fact that the challenge must first be heard in district court thus means that it may take significantly longer to reach a final resolution of the issues.
Additionally, the NAM decision could result in conflicting interpretations of the Clean Water Act among district courts. By requiring challenges to be heard in district court, the decision allows parties challenging the rule to bring parallel petitions in district courts across the country. (Unlike appellate challenges to agency actions, challenges filed in district court are generally not required to be consolidated in a single court.) Because district courts in different jurisdictions do not bind each other, the various challenges could result in the application of different rulings across jurisdictions—where the WOTUS Rule is deemed valid in some districts and invalid in others. Disagreements among the district courts could, in turn, lead to differences among the various courts of appeals, potentially leading to another trip to the Supreme Court.
The immediate aftermath of the Supreme Court’s ruling is uncertain. As a result of the decision, the Sixth Circuit will need to lift the stay that it placed on the implementation of the WOTUS Rule, making it effective in all but 13 states (13 states are subject to a preliminary injunction issued by the US District Court for the District of North Dakota). But EPA has already proposed to delay the 2015 WOTUS Rule’s effective date and may finalize that proposal quickly when the Sixth Circuit’s stay is lifted. (Read the EPA release on the proposed delay.)
To add more uncertainty into the mix, President Trump has directed EPA to repeal the WOTUS Rule and replace it with a rule assigning a different definition to the phrase “waters of the United States.” (Read our LawFlash on that topic.) EPA’s pending replacement rule creates uncertainty on two levels. First, the pending replacement makes it unclear how EPA will defend the 2015 WOTUS Rule, if at all. Second, EPA has not provided much detail regarding the new rule; we do not know when it will be promulgated and do not know the specifics of how it will interpret “waters of the United States.”
Ultimately, it likely will be years before the challenges regarding the scope of the Clean Water Act are resolved. If EPA repeals and replaces the 2015 WOTUS Rule, it could render challenges to the existing rule moot. But a new rule promulgated by EPA would almost certainly give rise to new challenges from affected parties, environmental groups, or others. The NAM decision would guide the procedure of those challenges by requiring them to be filed in district court, but it does not dictate their substantive outcomes.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Christopher B. Amandes
Jeffrey N. Hurwitz
Ella Foley Gannon
Kenneth S. Komoroski