With due respect to Norman Maclean’s famous quote, environmental lawyers and the regulated public continue to be “haunted by waters.”

The question of “who controls the water?” is raging throughout the nation, and is playing out in a number of federal courts.  At issue is the “Waters of the United States” rule issued in late July 2015 by the United States Environmental Protection Agency and the Army Corps of Engineers.  The rule was set to go into effect on August 28, 2015 (the “Water Rule”).  At this time, the Water Rule is on hold, and most observers expect that the United State Supreme Court will ultimately be called upon to decide whether the Water Rule survives.

Background and Nature of the Water Rule.

The Clean Water Act (CWA) generally regulates discharges or pollutants to “navigable waters.”  Navigable waters are defined in the CWA to mean the “Waters of the United States,” yet Congress never defined the scope of the “Waters of the United States.”  This definition is critical, as it defines the boundaries of the federal government’s regulation and control of water bodies.  Any waters not within the bounds of federal regulation will therefore be regulated only by the states.

The most recent Supreme Court decisions addressing the extent of federal jurisdiction over water bodies under the CWA created considerable uncertainty.  Based upon the Court’s decisions, a water body could be regulated under the CWA if it had a “significant nexus” to a navigable water body.  But what’s a “significant nexus?”  The Water Rule is an attempt by the federal government (the U.S. EPA and the U.S. Army Corps of Engineers) to clarify federal jurisdiction by more clearly defining which waters are “Waters of the United States.” 

The new definition affects the permitting and compliance requirements under a number of CWA programs, including, for instance, wastewater discharge permitting, stormwater permitting and wetlands regulation.  

While most navigable waters such as large rivers have always been clearly regulated under the CWA, the Water Rule clarifies and extends federal jurisdiction to include remote tributaries, adjacent waters and wetlands, and certain kinds of region-specific features such as “prairie potholes” and “western vernal pools” that are not themselves navigable. The new definitions are  potentially far-reaching, and provide the federal agencies considerable latitude to require permitting before any discharges (including dredge or fill activities) are made into these “jurisdictional” waters. The agencies take enforcement of these permitting processes seriously, and developers or other regulated parties must remain vigilant in considering the jurisdictional status of any water or drainage features on project sites in order to avoid potential civil and criminal penalties.

While the Water Rule is designed to clarify (or, some would argue, expand) the agencies’ already broad jurisdiction, it also contains several new jurisdictional exceptions that will allow many activities and projects to move forward without obtaining federal CWA permits. The agencies have clarified that some types of ditches are non-jurisdictional, and have also made exceptions related to other man-made features associated with mining and construction activity. Of particular interest to clients in the arid west will be the exclusion for certain types of erosional features, such as gullies, and other ephemeral features. These exclusions, however, are not as clear as the agencies believe, and the challenge for the regulated community will be to navigate the complex set of inclusions and exclusions to decisively identify the features on a particular project site as jurisdictional or non-jurisdictional.

This, of course, assumes that the Water Rule survives judicial scrutiny.

Current Procedural Status of the Water Rule.

The Water Rule was set to go into effect on August 28, 2015.  However, immediately after the Water Rule was announced, a number of lawsuits were filed challenging the Water Rule.  Those lawsuits sought immediate injunctions to prevent the federal government from implementing the Water Rule until the rules validity could be assessed.  Lawsuits were filed in federal district courts as well as federal courts of appeal, as a result of uncertainty over which court would have original jurisdiction to hear a challenge to the Water Rule – most challengers filed their suits in both courts.

Three cases were decided on the eve of the effective date of the Water Rule.  On August 27, 2015, Judge Erickson of the US District Court for the District of North Dakota, in State of North Dakota v. U.S. Environmental Protection Agency, issued a preliminary injunction preventing the U.S. EPA and the Army Corps from implementing the Water Rule.  The court found (a) that jurisdiction to hear the challenge was with the district court and not the Courts of Appeal and (b) that the states had a substantial likelihood of success in challenging the Water Rule.  Eight days later, Judge Erickson issued an order clarifying that his preliminary injunction did not apply nationally, but only applied to the plaintiff-states in this specific lawsuit.  Those states are North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, New Mexico, Nevada, South Dakota, and Wyoming.

Also on August 27, 2015, the United States District Court for the Southern District of Georgia, in a case brought by eleven states challenging the Water Rule, decided that it did not have jurisdiction to hear the challenge.  Instead, the district court found that original jurisdiction to challenge the Water Rule was solely with the Courts of Appeal.  Likewise, the District Court for the Northern District of West Virginia also held that the Courts of Appeal had original jurisdiction.

In addition to those three cases, a number of other courts stayed their proceedings pending a decision by the Judicial Panel on Multi-District Litigation on whether to consolidate the many cases challenging the Water Rule.  The cases pending in the Circuit Courts were consolidated, with the challenge being heard in the Sixth Circuit.

On October 9, 2015, the Sixth Circuit issued its decision in State of Ohio v. U.S. Army Corps.  Eighteen states are plaintiffs in this case.  In a somewhat striking decision, the court issued a nation-wide stay enjoining implementation of the Water Rule, despite having not yet determined whether it even had jurisdiction to decide the case, since briefing on that issue was still pending.  The court found two potentially fatal flaws with the Water Rule.  First, the court agreed with the states that the Water Rule’s treatment of tributaries, adjacent waters and waters with a significant nexus to navigable waters may be at odds with Supreme Court precedent.  Second, the court agreed with the states that the federal agencies may have violated the Administrative Procedures Act in issuing the final Water Rule.  One judge dissented, finding it inappropriate to issue an order prior to determining the jurisdictional issue.  

So, at this time, the question of “who controls the waters” is still an open question.  Instead of operating under the Water Rule, which was the federal government’s attempt to clarify and more precisely define the scope of federal CWA jurisdiction, we are instead left with the old system of uncertainty and potentially different application based upon where a party is located.