Environment & Energy Report

INSIGHT: Court Says Water Rule Unlawful; Patchwork of Rules Left

June 20, 2019, 10:16 AM

After four years of litigation in numerous courts around the country, a district court in Texas last month was the first to reach summary judgment on the Obama administration’s landmark 2015 Clean Water Rule, finding it unlawful on procedural grounds. The rule, promulgated by the Environmental Protection Agency and the U.S. Army Corp of Engineers, established a new regulatory definition for the term “waters of the United States” (WOTUS), thereby expanding the reach of permitting requirements under the Clean Water Act.

Thirty-three states and numerous industry, municipal, and environmental groups immediately challenged the rule, and it has been stayed in many states under various court orders.

In addition, the Trump administration proposed in June 2017 to repeal the 2015 rule and issue a revised WOTUS definition this year.

In Texas v. EPA, Texas, Louisiana, and Mississippi and a number of industry groups argued, among other things, that the rule asserts authority over remote waters that Congress did not intend the federal government to regulate, violates the Commerce Clause and the Tenth Amendment, and was adopted without observing Administrative Procedure Act requirements.

Rule Remanded to Agencies

In a May 28 decision, the U.S. District Court for the Southern District of Texas remanded the rule to the agencies for further consideration and ordered that a preliminary injunction issued last fall remain in place.

The court declined to address the key substantive question at stake—which waters are WOTUS that therefore require federal permits and which are not and thus subject to state law. Rather, “the substantive challenges are premature at this time,” the court said.

Regarding the plaintiffs’ APA claims, the court focused on two violations.

First, the final rule deviated too far from the agencies’ initial proposal.

Although an agency may adopt a final rule that differs from what it proposed—indeed, one of the key purposes of notice and comment in rulemaking is to allow the agency to get information about its proposal from the public and adjust it accordingly—the final rule must be a “logical outgrowth” of the proposal. That is, the proposal must give the public fair notice of what the agency is considering so the public can provide meaningful comment.

Here, the proposed rule defined jurisdictional “adjacent” waters based on ecological and hydrologic criteria (e.g., waters with a “shallow subsurface hydrologic connection” to jurisdictional waters), but the final rule abandoned those criteria and instead adopted distance-based criteria for “adjacent” waters (e.g., “waters located within the 100-year floodplain”).

The court found the change was “significant,” “alter[ed] the jurisdictional scope of the Act,” and deviated from the proposed rule in a way that interested parties could not have reasonably anticipated. Therefore, the rule was not a “logical outgrowth” of the proposal as required by the APA.

No Opportunity for Comment on Final Science Report

Second, the court noted that a report commissioned by the agencies “was the technical basis for the Final Rule and was instrumental in determining what changes were to be made to the definition of the phrase WOTUS.” Yet the agencies declined to reopen the comment period after this Final Connectivity Report was issued.

Citing to the “fairly obvious proposition that studies upon which an agency relies in promulgating a rule must be made available during the rulemaking in order to afford interested persons meaningful notice and opportunity for comment,” the court found that the agencies’ decision not to provide an opportunity for comment on the Final Connectivity Report prejudiced interested parties’ ability to provide meaningful comments, another APA violation.

Based on these procedural errors, the court sent the rule back to the agencies for reconsideration.

No Consistent WOTUS Definition

Because the issue was not presented in the Texas litigation, the court was not able to address a practical problem that is currently bedeviling the CWA regulatory programs: court orders have stayed the rule in 25 states, leaving no consistent nationwide definition of WOTUS being applied by the agencies.

Instead, geographic jurisdiction under the CWA varies from state to state, and this patchwork implementation of the 2015 rule will continue for the time being. For now, the rule is in effect in 24 states but stayed in 25 states.

Where the rule is stayed, the agencies are applying the pre-2015 WOTUS definition.

For one state, New Mexico, the WOTUS definition is particularly fraught. New Mexico was subject to a stay issued by the North Dakota district court. Following the 2018 election, the state withdrew its challenge, but a group of 10 New Mexico counties intervened in the litigation, arguing that the 2015 rule unlawfully expanded federal CWA jurisdiction.

The government has asked the North Dakota court to clarify the status of the 2015 rule in those 10 counties, while the New Mexico Environment Department has interpreted the court’s ruling to mean that the 2015 rule remains stayed for all of New Mexico.

This messy landscape is all the more reason for the agencies to expeditiously finalize their proposed repeal of the 2015 rule. Doing so, however, will bring its own legal challenges from supporters of the 2015 rule and result in an additional layer of litigation across the country over the repeal action. So too is the agencies’ revised definition of “waters of the United States” sure to face legal scrutiny and add to the web of litigation.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Virginia Albrecht, special counsel at Hunton Andrews Kurth, focuses on environmental law and administrative law—in particular, the Clean Water Act wetlands program, the Endangered Species Act, the National Environmental Policy Act, and other federal regulatory programs that affect land use.

Deidre G. Duncan, a partner at the firm and co-leader of its environmental practice, and Kerry L. McGrath, a partner, focus on environmental, energy and administrative law, and represent clients on permitting, compliance, and litigation relating to the Clean Water Act, the Endangered Species Act, the National Environmental Policy Act, and other laws.