California Environmental Lawyers Monitor NAM’s Petition for Writ of Cert on WOTUS Jurisdictional Issue and Possible Impacts on California Ag and Property Owners

In the latest move to shut down EPA’s Clean Water Rule, the National Association of Manufacturers (NAM) petitioned the U.S. Supreme Court to decide a threshold jurisdictional question. This question has haunted the 22 court challenges to the rule from the start; namely, which court has original jurisdiction under the Clean Water Act (CWA) to hear legal challenges to EPA’s rule — the federal courts of appeal or federal trial courts? NAM would like jurisdiction to begin with the district courts.

Section 1369(b) of the Clean Water Act provides that certain specified actions of the EPA Administrator are reviewable directly in the U.S. Circuit Courts of Appeals. Because of uncertainty about whether the adoption of the Clean Water Rule is among these specified actions, parties challenging the Clean Water Rule filed petitions in both district courts and circuit courts across the country. Many of the petitions were consolidated in the U.S. Court of Appeals for the Sixth Circuit.

At issue is the interpretation of two categories of agency action specified in the Clean Water Act that trigger automatic or direct circuit court review; namely, actions approving or promulgating effluent or other limitation (Section 509(b)(1)(E)) and actions issuing or denying any permit under the act’s National Pollutant Discharge Elimination System (Section 509(b)(1)(F)). The Sixth Circuit found support for direct circuit court review under subsection E because the rule is a “basic regulation governing other individual actions issuing or denying permits,” quoting the E.I. du Pont decision by the Supreme Court. Similarly, the Sixth Circuit held that because an action of the Administrator under the WOTUS rule is “functionally similar” to the denial of a permit, it is encompassed within subsection F. Although the judges on the panel were not united in the opinion, the Sixth Circuit held the U.S. courts of appeal have original jurisdiction.

Although the lower courts (including the Sixth Circuit in the consolidated action) have not yet heard, let alone ruled, on the merits of the challenge to the WOTUS rule, NAM petitioned the Supreme Court for review of the Sixth Circuit’s jurisdictional determination. According to NAM, the rule does not “issue or deny any permit,” but instead defines the waters that fall within Clean Water Act jurisdiction. In the past, according to NAM, the key statutory term “waters of the United States,” has previously been reviewed first in district courts. NAM argues that CWA’s limited jurisdictional grant does not provide jurisdiction for the circuit courts to hear challenges to definitional clarifications promulgated by the EPA and the Corps. As a basic tenet of the APA, courts of appeal typically do not have subject matter jurisdiction to hear challenges to agency rulemaking, such as promulgation of the WOTUS or Clean Water Rule.

From a pragmatic standpoint, in support of its petition for writ of cert, NAM argues that the uncertainty over the jurisdiction has resulted in challenges being filed both in the district courts and in the courts of appeals, producing duplicative litigation and potentially conflicting decisions vulnerable to appeal.

NAM challenged the WOTUS rule in the Southern District of Texas under the Administrative Procedures Act. NAM intervened as a respondent in the Sixth Circuit consolidated action and moved to dismiss for want of jurisdiction. Once the Sixth Circuit ruled that there is direct circuit court review, NAM sought review of the jurisdictional issue before the Supreme Court.

EPA intended the Clean Water Rule, promulgated in June 2015, to clarify the scope of “the waters of the United States” (WOTUS) subject to protection under the Clean Water Act. More than 100 parties have filed 22 petitions in various federal courts for review of EPA’s new definition of WOTUS.

The Sixth Circuit has issued a nationwide stay of the WOTUS rule, leaving parties to comply with the existing Clean Water Act regulations and the Army Corps of Engineer’s case-by-case determination of jurisdictional waters — whether a party’s property contains any “waters of the U.S” – until the challenge to WOTUS is heard on the merits. No brief has yet been filed on the merits of any case challenging the rule. Briefing of the consolidated case before the Sixth Circuit is scheduled to end February 2017.

The California Ag industry, developers, and other property owners will be impacted by the outcome of this petition for writ of cert. If the Supreme Court agrees with the Sixth Circuit, then all cases in the district court may be dismissed. NAM did not file a protective petition in the Sixth Circuit because it wanted to ensure it’s standing to challenge the jurisdiction of the circuit courts in its petition for writ of cert. Therefore, NAM could either intervene in the consolidated action or file a new challenge. Although there is no statute of limitations under the APA for challenging an agency rulemaking, the courts generally look to whether a challenge is “timely.” Equitable factors are balanced to determine if the challenge may proceed. Presumably, the Sixth Circuit would allow NAM to weigh in and add its challenge to the consolidated cases.

On the other hand, if the Supreme Court overturns the Sixth Circuit’s finding of jurisdiction to hear the WOTUS challenge directly and orders that the challenge must first be heard by the district courts, then the consolidated cases in front of the Sixth Circuit may be dismissed. At that point, all of the petitioners in the circuit court cases would be faced with the decision whether or not to file a new challenge in the relevant district court. In addition, the Sixth Circuit’s stay could be vacated, resulting in inconsistent implementation of the WOTUS rule by various jurisdictions until the multiple challenges wind their way through the various district courts and then to the circuit courts for review. Again from a practical standpoint, there will likely be inconsistent rulings from the district courts, and potentially from the circuit courts, resulting in inconsistent regulation across the country. Ultimately, the Supreme Court will likely see this case again.

California Environmental Lawyers should continue to monitor the case on behalf of clients who may be property owners, developers, or farmers.