Case Summary

One protection afforded small businesses from overly burdensome federal regulations is the requirement that agencies consider the economic impact of regulations on small businesses; however, no such analysis was done regarding the “waters of the United States” rules issued by the Obama administration.

Case History

Over the years, landowners challenging federal wetland determinations reached the Supreme Court of the United States. In 1985, deciding at which point “water ends and land begins,” the Supreme Court upheld a definition that included wetlands that “actually abut” traditional navigable waters.

In 2001, the Court held that “non-navigable, isolated, intrastate waters,” even those used by migratory birds, were not within the CWA. In 2006, ruling on whether the CWA included intrastate wetlands adjacent to non-navigable tributaries of navigable waters, the Court vacated the Corps’ rules.

On behalf of a four judge plurality, Justice Scalia required a “continuous surface connection to bodies that are ‘waters of the United States’ in their own right,” but Justice Kennedy, while concurring in striking down the rules, demanded “a ‘significant nexus’ to waters that are or were navigable in fact or that could reasonably be so made.”

In 2007, the EPA and the Corps responded to the Court’s rulings and in late 2008, after the receipt of 66,000 comments, issued new guidance on identifying “waters of the United States.”

Then, in 2011, the two agencies proposed new guidance that expanded significantly the reach of the CWA, including over vernal pools, prairie potholes, natural ponds, and playa lakes. In response to 230,000 comments, many of which demanded a formal rule-making, the agencies issued that proposal in April of 2014.

On June 23, 2016, MSLF filed a complaint on behalf of AEMA asserting that the rule published on June 29, 2015, violates both the Regulatory Flexibility Act (RFA) and the Administrative Procedure Act (APA). The rules violate the APA because they illegally: extend to all waters (not just wetlands) and all waters adjacent to non-navigable interstate waters; create a new jurisdictional concept “similarly situated waters” by misquoting the Supreme Court; and ignore the Court’s demand regarding alleged wetlands adjacent to non-navigable tributaries.

Although AEMA currently has a petition for review, consolidated with 21 other petitions for review, before the U.S. Court of Appeals for the Sixth Circuit, there is uncertainty over whether the Sixth Circuit has original and exclusive jurisdiction over challenges to the final rule. Compare In re: U.S. Dep’t of Def. & EPA Final Rule: Clean Water Rule: Definition of “Waters of the U.S.,” 817 F.3d 261 (6th Cir. 2016) (concluding jurisdiction over the petitions for review challenging the final rule is proper in the U.S. Court of Appeals) with North Dakota v. EPA, 127 F. Supp. 3d 1047 (D.N.D. 2015) (concluding that jurisdiction is proper in the U.S. District Courts). There is also a petition for certiorari before the Supreme Court.

This uncertainty coupled with the one-year statute of limitations under the Regulatory Flexibility Act (“RFA”), compelled MSLF to file this district court complaint as a protective measure to ensure that the statute of limitations would not run on AEMA’s RFA claim.

In light of the pending petitions for review before the Sixth Circuit and the pending petition for writ of certiorari before the Supreme Court of the United States, MSLF filed an unopposed motion to stay the proceedings on September 30, 2016. That same day, the federal district court entered a minute order granting the motion to stay and further ordered the parties to file a joint status report every 120 days. Additionally, the parties must notify the district court, within 14 days, of any definitive action taken by the Sixth Circuit or the Supreme Court. Meanwhile, on January 13, 2017, the Supreme Court granted the petition.

On January 26, 2017, MSLF filed the first joint status report. On March 7, 2017, the agencies notified the district court of President Trump’s Executive Order 13778 and the agencies’ notice of their “Intention to Review and Rescind or Revise the Clean Water Rule.” 82 Fed. Reg. 12,532 (Mar. 6, 2017). On May 25, 2017, MSLF filed the second joint status report. On June 30, 2017, the agencies filed another notice apprising the district court that the agencies would be publishing for comment a notice of proposed rulemaking entitled “Definition of ‘Waters of the United States Recodification of Pre-existing Rules.” On September 22, 2017, MSLF filed the third joint status report.

On January 22, 2018, the Supreme Court reversed the Sixth Circuit, which had held that federal courts of appeals alone had jurisdiction to decide the lawfulness of the rule, and remanded the case with instructions to dismiss the challenge for lack of jurisdiction. The Supreme Court held that that challenges to “wetland” determinations by federal agencies must be heard in first in federal trial courts.

Case Documents
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