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U.S. Supreme Court Holds That Challenges To The Waters Of The United States Rule Must Begin In District Court

On January 22, 2018, the United States Supreme Court decided National Association of Manufacturers v. Department of Defense, 583 U.S. ___ (2018), determining whether challenges to the Waters of the United States Rule ("WOTUS Rule" also known as the Clean Water Rule) should be heard in federal district court or in the United States courts of appeals. The U.S. Supreme Court, in a 9-0 opinion, held that challenges must be brought before the federal district court.

The Clean Water Act prohibits the "discharge of any pollutant by any person," except in express circumstances. 33 U.S.C. § 1311(a). A "discharge of a pollutant" includes "any addition of any pollutant to navigable waters," and the term "navigable waters," means "the waters of the United States." 33 U.S.C. §§ 1362(12), 1362(7). In 2015, the Environmental Protection Agency ("EPA") and the Army Corps of Engineers ("Corps") proffered a definition of the term "waters of the United States" through an agency regulation, the WOTUS Rule. The WOTUS Rule establishes the geographic reach of the federal government's regulatory authority under the Clean Water Act. When the WOTUS Rule was issued, over one hundred (100) parties across the United States sued to challenge it.

Generally, a party must file a challenge to a final EPA action in federal district court. However, a provision of the Clean Water Act enumerates seven (7) categories of EPA actions for which review lies directly in the federal courts of appeals. 33 U.S.C. § 1369(b)(1). Several parties, including Petitioner, National Association of Manufacturers ("NAM"), challenged the WOTUS Rule in federal district court. Many parties also filed petitions for review in various federal courts of appeals to preserve the challenge should the federal district court actions be dismissed for lack of jurisdiction. The circuit court actions were consolidated within the Court of Appeals for the Sixth Circuit. Several parties, including NAM, moved in the circuit court to dismiss for lack of jurisdiction. The government opposed those motions, arguing that the challenges must be brought first in the appellate courts because the WOTUS Rule fell within two (2) of the enumerated categories of the Clean Water Act requiring review by the federal courts of appeals.

The government argued that WOTUS fell within subparagraph (E) and (F) of § 1369(b)(1). Subparagraph (E) grants courts of appeals exclusive jurisdiction to review any EPA action "in approving or promulgating any effluent limitation or other limitation . . . ." 33 U.S.C. § 1369(b)(1)(E). The U.S. Supreme Court held that the WOTUS Rule does not fall within that provision because it does not establish an "effluent limitation," and imposes no such restriction on quantities, rates, or concentrations of pollutants discharged into navigable waters, instead it announces a regulatory definition for a statutory term. The U.S. Supreme Court also discounted the government's argument that the WOTUS Rule's "practical effect" is to make the Clean Water Act's limitations applicable to the waters covered by the WOTUS Rule as the "practical effects" test is not grounded in the statute. The Court held that subparagraph (F) also does not apply, as it grants courts of appeals exclusive and original jurisdiction to review any EPA action "in issuing or denying any permit under section 1342." 33 U.S.C. § 1369(b)(1)(F). The WOTUS Rule neither issues nor denies permits issued under § 1342.

The U.S. Supreme Court did acknowledge some of the government's policy arguments; however the Court found no textual support for the argument in the statute's plain language. Ultimately, the government's arguments were grounded in judicial and administrative convenience and not based on the clear and unambiguous reading of the statutory text. The Court held that the presumption favoring courts of appeals review of administrative actions does not apply, as the scope of subparagraphs (E) and (F) are clearly set forth in the statute.

In October of 2015, the Sixth Circuit had issued a nationwide stay on implementation of the WOTUS Rule. That stay must now dissolve as the Sixth Circuit no longer has jurisdiction. The WOTUS Rule will now go into effect in those areas where it is not stayed by a federal district court. This is especially of note as the Trump Administration is strongly opposed to the WOTUS Rule. In February 2017, the President issued an Executive Order directing the agencies to propose a rule rescinding or revising the WOTUS Rule. The agencies responded by issuing a proposed rule rescinding the WOTUS Rule, and issued a second proposed rule establishing a new effective date for the WOTUS Rule. Now it will be up to the district courts to decide whether to issue a stay, or to let the WOTUS Rule take effect.

It will be some time before the full effect of this decision is realized, but it certainly places additional burdens on the out-of-state insurer with insureds who may have a presence in New York.

To read the full opinion of the United States Supreme Court, please click here.

For more information about the Court's decision, please do not hesitate to call on us at info@chaloslaw.com.

Chalos & Co, P.C.
International Law Firm
www.chaloslaw.com
Email: info@chaloslaw.com

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