The Nickel Report

On January 22nd, the Supreme Court issued a unanimous (9-0) decision, authored by Justice Sotomayor, agreeing with industry groups, some eNGOs, and many states, that the district courts have jurisdiction over challenges to the 2015 Waters of the U.S. (WOTUS) Rule. Nat’l Ass’n of Manufacturers v. Dept. of Defense, et al., No. 16-299 (Jan. 22, 2018). The Court wholly rejected the government’s claim that the WOTUS Rule is subject to exclusive appellate court jurisdiction under the Clean Water Act’s (CWA) judicial review provision and confirms that current and future challenges to the WOTUS Rule must be brought in district court. By reversing the Sixth Circuit decision which found that the CWA vests the federal courts of appeals with exclusive jurisdiction over challenges to the WOTUS Rule, the Supreme Court set in motion proceedings that will likely result in the lifting of the Sixth Circuit’s nationwide stay of the 2015 WOTUS Rule.

The Agencies’ two-step process to repeal and replace the 2015 Rule is already underway. To prevent the 2015 Rule from going back into effect once the nationwide stay is lifted, the Trump administration has ramped up efforts to finalize a rule that would push back the applicability date of the 2015 Rule for two years, affording the Agencies what they say is sufficient time to complete the process to repeal and replace the 2015 Rule.

Key highlights of the Supreme Court’s decision include:

• The Court noted that the CWA contemplates two primary avenues for judicial review of EPA actions; the first is review under § 509(b)(1), which is limited to seven discrete categories of EPA actions and the second is governed by the APA. The Court rejected each argument made by the government as to the applicability of § 509, noting that “rather than confront the statutory text, the Government asks us to ignore it altogether.”
• The Court held that the government’s “litany of extratexual considerations” (e.g., policy arguments) provided “no basis” to ignore the statutory text: “Routing WOTUS Rule challenges directly to the courts of appeals may improve judicial efficiency. But efficiency was not Congress’ only consideration…. Had Congress wanted to prioritize efficiency, it could have authorized direct circuit court review of all nationally applicable regulations, as it did under the Clean Air Act.”
• The Court also recognized that defining WOTUS is a “contentious and difficult task.” This acknowledgement may help the Agencies receive deference on a new WOTUS Rule, assuming the rule is well-reasoned and grounded in the administrative record and law.
• In a footnote, the Court addressed the regulatory developments that have occurred since the Court granted review. The Court noted that the proposals do not moot the case and the WOTUS Rule “remains on the books for now.”

The Supreme Court’s decision has significant implications that are likely to unfold quickly. In a few weeks, the Supreme Court will issue a final judgment at which point the Sixth Circuit is expected to lift the nationwide stay of the 2015 WOTUS Rule and dismiss the pending challenges to the 2015 Rule. Attention will then quickly shift to the federal district courts, which the Supreme Court has recognized have jurisdiction over challenges to the 2015 WOTUS Rule.

The 2015 WOTUS Rule is likely to remain stayed in thirteen States^[1] subject to an order issued by the North Dakota District Court. North Dakota v. EPA, 127 F. Supp. 3d 1047, 1051 (D.N.D. 2015). A number of pending district court challenges across the country, and proceedings in those actions, may be renewed and other challenges may be filed. For example, on January 24th, in response to the Supreme Court’s decision, the Eleventh Circuit decided it no longer has jurisdiction and remanded a challenge initiated by eleven states^[2] to the Southern District of Georgia. There, those states will seek a preliminary injunction to halt implementation of the 2015 Rule. Other district court cases around the country—including challenges brought by states, industry groups, and eNGOs—that were dismissed or stayed pending Supreme Court’s review of the jurisdiction issue will likely be revived.

Meanwhile, in parallel with the efforts in the district courts to stay implementation of the Rule nationwide, the Trump administration is working to quickly finalize its Applicability Rule. On January 25th, EPA and the Corps sent a final version of the Applicability Rule to the Office of Management and Budget (OMB) for a final round of interagency review. In light of the Supreme Court’s decision, the Agencies anticipate an expedited OMB interagency review process.

[1] Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, and Wyoming.

[2] Georgia, West Virginia, Alabama, Florida, Kansas, Kentucky, South Carolina, Utah, Wisconsin, Indiana, and North Carolina