November 01, 2016

WOTUS Wars and Endangered Species: Where Will Farmers Find Their Legal High Ground?

Thomas P. Redick and Christopher Brooks

The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) finalized their Waters of the United States (WOTUS) rule in June 2015. See EPA, The Final Clean Water Rule, 80 Fed. Reg. 37054 (2015), available at www.epa.gov/cleanwaterrule/final-clean-water-rule. This rule, if not vacated by courts or Congress, could expand federal jurisdiction of the Clean Water Act (CWA) and the reach of the Endangered Species Act (ESA). EPA says its WOTUS rule is not expanding jurisdiction, but farmer opponents believe otherwise.

The WOTUS rule embraces the “significant nexus” test proposed by Justice Kennedy in Rapanos v. United States, 547 U.S. 715 (2006) (evidenced by use of the phrase “significant nexus” over 400 times). This article discusses how this expansion of CWA jurisdiction could also establish a “nexus” triggering ESA review. See 16 U.S.C. § 1539.

Federal courts have had a decade to apply the “significant nexus” test under Rapanos and the ESA. Federal actions like issuing permits for water pollution or filling wetlands may provide the “nexus” EPA and the Corps need for ESA consultation. See 16 U.S.C. § 1536(a)(2). However, courts may apply an exemption from the ESA for CWA decisions that meet nine exclusionary criteria for authorized state programs. See 33 U.S.C. § 1342(b) (2011).

If the Rapanos “significant nexus” test expands CWA jurisdiction, it could bring the ESA § 7 nexus into the relatively high “uplands” ground that many states and landowners might not consider covered by the CWA. If this occurs, the expanded federal power over water and species could bring a major sea change impacting farming in the United States. An increase in federal jurisdiction over agricultural lands may result in some farmers finding it hard to locate the “high ground” where no federal nexus of any kind (CWA or ESA) impedes their freedom to grow crops.

Confusion over the jurisdictional reach of the CWA’s statutory phrase “navigable waters” began decades ago and persists to this day, following a series of Supreme Court decisions. See 33 U.S.C. § 1362(7). In 1985, United States v. Riverside Bayview Homes, 474 U.S. 121 (1985), established jurisdiction over intrastate wetlands directly adjacent to navigable waters. In 2001, Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001), rejected the so-called “migratory bird rule” in holding that jurisdiction did not exist over non-navigable, isolated, intrastate waters.

This test got even murkier, if narrower, as a result of the Supreme Court’s 2006 plurality decision in Rapanos. The plurality opinion in Rapanos, authored by Justice Scalia, holds that only “relatively permanent” bodies of water with a “continuous surface connection” to navigable-in-fact waters are jurisdictional. 547 U.S. 715, 716 (2006). Justice Kennedy concurred in the plurality’s judgment, but wrote a separate opinion asserting that jurisdiction exists over areas with a “significant nexus” to traditionally navigable waters. See id. at 723–25 (Kennedy, J., concurring).

Justice Kennedy’s concurrence takes the position that a wetland (not all waters) would be jurisdictional if it bears a “significant nexus” to a navigable-in-fact water. Such a nexus would exist, according to Justice Kennedy, if the wetland were to affect significantly the chemical, physical, and biological integrity of the downstream navigable-in-fact water. See id. at 779–80. Some commentators suggest that the WOTUS rule’s “continued allegiance to an ‘all tributaries are regulable’ approach is somewhat difficult to reconcile with Rapanos.” Damien M. Schiff, Defining “Water of the United States”: A Litigious Task, ABA Section of Environment, Energy, and Resources, 45th Section Spring Meeting, Austin, Tex. (Apr. 1, 2016), at 4.

The divided 4–1–4 Rapanos decision left agency officials, judges, environmentalists, and the regulated community with very little guidance for how jurisdiction would be determined in the future. Even the Supreme Court has acknowledged some jurisdictional ambiguity stating that the “precise reach of the [CWA] remains unclear.” Sackett v. EPA, 132 S. Ct. 1367, 1355 (2012).

In the years since Rapanos, federal courts have split on the proper test to apply for determining federal regulatory jurisdiction under the CWA. The Eighth Circuit holds that jurisdiction exists if a wetland either has a continuous surface connection to navigable-in-fact waters, or possesses a significant nexus to traditionally navigable waters. See United States v. Bailey, 571 F.3d 791 (8th Cir. 2009). The First Circuit and the Third Circuit also agree that either test may be used to establish jurisdiction. See United States v. Johnson, 467 F.3d 56, 64 (1st Cir. 2006); United States v. Donovan, 661 F.3d 174 (3d Cir. 2011).

The Seventh, Ninth, and Eleventh Circuits, however, hold that the Kennedy significant nexus test is the sole controlling rule of law for determining jurisdiction after Rapanos.

The jurisdictional debate in the federal circuit courts centers on whether the Scalia plurality test or the Kennedy test, or both, should control. In 2007, EPA and the Corps issued joint guidance that fell short of clarifying how to apply either test. See Thomas K. Maurer and Tanya C. O’Neill, U.S. EPA and the Army Corps of Engineers Issue Joint Guidance on Wetlands Jurisdiction, Foley & Lardner LLP, Legal News: Environmental (June 18, 2007), www.foley.com/us-epa-and-the-army-corps-of-engineers-issue-joint-guidance-on-wetlands-jurisdiction-06-18-2007/. This guidance was not adopted through rulemaking, so courts should not grant deference to it. See Precon Dev. Corp. v. U.S. Army Corps of Engineers, 633 F.3d 278 (2011); Jeff Kray, Federal Circuit Courts Split on Application of Supreme Court’s Rapanos Decision, Marten Law Newsletter (Dec. 6, 2006). Although the promulgation of the WOTUS rule remedied this lack of notice and comment, its clarification potentially extended the scope of EPA jurisdiction of both the CWA and the ESA.

This circuit split comes as no surprise, given the 4–1–4 ruling in Rapanos. However, courts interpreting Rapanos should follow the Supreme Court’s decision in Marks v. United States, which held that “[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds.’” 430 U.S. 188, 193 (1977) (citation omitted) (emphasis added).

Courts come to different conclusions deciding what the narrowest scope of federal jurisdiction should be under Rapanos and Marks. “Narrow,” as some courts see it, would mean the least restrictive of federal power (i.e., an expansion of it), while others see a narrower outcome as more restrictive of federal power. For example, the Seventh and Eleventh Circuits held that Kennedy’s view is “the least restrictive of federal jurisdiction” in light of Marks. See Gerke, 464 F.3d at 724–25; Robinson, 505 F.3d at 1221–22. The Seventh Circuit reviewed hypothetical cases and found that Kennedy’s test is “narrower . . . than the plurality’s in most cases.” 464 F.3d at 724–25. The court argued that it could suggest a case where Kennedy would not find in favor of federal authority but the other eight justices would somehow agree—an outcome so “extremely rare” that as “a practical matter the Kennedy concurrence is the least common denominator.” Id. at 725.

The First and Eighth Circuits take the opposite view under Marks in holding that either Rapanos test applies to impart jurisdiction—neither test is narrower. The First Circuit in Johnson embraces the plurality test as narrower because Marks did not equate the “narrowest grounds” of decision. Thus, “it seems just as plausible to conclude that the narrowest ground of decision in Rapanos is the ground most restrictive of government authority . . . because that ground avoids the constitutional issue of how far Congress can go in asserting jurisdiction under the Commerce Clause.” Johnson, 467 F.3d at 63 (emphasis added). This opinion admitted, however, that its reading of Marks does not readily apply to Rapanos because the Kennedy test would find federal jurisdiction in some circumstances where the plurality test would not. See id. at 63–64. For example, a small surface water connection to a stream or brook would satisfy the plurality test, but not Justice Kennedy’s balancing of interests and “significant nexus.” Similarly, a wetland that lacks this surface water connection but has underground hydrologic connections contaminating a traditionally navigable waterway would have Kennedy’s nexus, but not the plurality’s surface water connection.

As a third option, the First and Third Circuits have held that either test would impart jurisdiction in cases where a majority of the Supreme Court would agree. For example, if the Kennedy test is satisfied, the four Rapanos dissenting justices would also support jurisdiction. The First Circuit noted that in the years since Marks, some of the justices “have indicated that whenever a decision is fragmented such that no single opinion has the support of five Justices, lower courts should examine the plurality, concurring and dissenting opinions to extract the principles that a majority has embraced.” Johnson, 467 F.3d at 65.

This split would seem to warrant another review by the Supreme Court, but the justices do not seem eager to wade into this debate in the near future—for example, the Court denied certiorari in a 2008 case that directly presented the CWA jurisdiction issue. See United States v. McWane, Inc., 555 U.S. 1045 (2008). Similarly, it seems unlikely that Congress will resolve the issue any time soon. A number of proposed amendments aimed at clarifying jurisdiction have never made it to a floor vote (e.g., the moribund 2009 Clean Water Restoration Act, S. 787, available at www.congress.gov/bill/111th-congress/senate-bill/787). The current split in federal circuits reflects confusion over Rapanos—uncertainty that potentially impacts the protection of millions of acres of farmland wetlands and precipitated this WOTUS rule attempting clarification.

Farm Groups Urge EPA-Corps to “Ditch the Rule”

The long anticipated WOTUS rule appeared in the Federal Register on June 29, 2015, with an effective date of August 28, 2015. This rule generated over a million public comments—and many negative comments came from major agricultural trade groups. Farmers used the catchphrase “Ditch the Rule” to convey concern that the WOTUS rule will extend federal regulation to ditches far removed from the flowing waters of streams and rivers. See e.g., American Farm Bureau Federation Press Release, Ditch the Rule (2016), available at http://ditchtherule.fb.org (last visited Aug. 11, 2016). According to the American Farm Bureau Federation, the WOTUS rule makes it hard for farmers to change a farming operation and remain competitive and profitable.

In a ruling applicable to thirteen Midwest states, the Sixth Circuit stayed implementation of the WOTUS rule. In re U.S. Dep’t of Defense & EPA Final Rule, 803 F.3d 804 (6th Cir. 2016).

Courts Are Still Sorting Out Where to Appeal WOTUS Rule Challenges

There are many legal challenges being filed to this rule, and the threshold issue they must resolve is where to sue: district or circuit court. Lawsuits challenging the rule brought by many states (Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, South Carolina, South Dakota, Texas, Wisconsin, and West Virginia) and industry associations (American Farm Bureau Federation, National Association of Home Builders, and National Cattlemen’s Beef Association) are pending in district courts in North Dakota, Ohio, Georgia, and Texas and have resisted multidistrict consolidation. See Todd Neeley, WOTUS Lawsuits Remain Separate, DTN The Progressive Farmer (Oct. 14, 2015), www.greatamericancrop.com/news-resources/article/2015/10/14/wotus-lawsuits-remain-separate (last visited Aug. 11, 2016).

On October 9, 2015, the United States Court of Appeals for the Sixth Circuit stayed the WOTUS rule pending resolution of the multitude of suits by states and private interests. The holding was procedural, focusing on whether suits against the EPA rule have original jurisdiction in federal courts of appeals.

Challengers filed many suits in federal district courts on the assumption that CWA provisions for direct appellate court review did not apply. Specifically, petitioners view CWA § 509(b)(1) as inapplicable based on the lack of an “effluent limitation or other limitation” or “issuing or denying any permit” (subsections (E) and (F), respectively). See 16 U.S.C. § 509(b)(1).

As discussed below, two appellate courts have held that only the federal courts of appeals have jurisdiction over these regulatory challenges. A district court reached the opposite conclusion.

The first court of appeals to rule on this issue found that original jurisdiction resides in the courts of appeals. In a divided three-judge opinion (a 1–1–1 plurality decision), the concurring majority found original appellate original jurisdiction. See In re U.S. Dep’t of Defense & EPA Final Rule, 803 F.3d 804 (6th Cir. 2015). Writing the plurality decision, Judge David McKeague found that (1) direct circuit court review should apply where the rule could indirectly result in limitations on point sources (referencing § 509(b)(1)(E)) and (2) the WOTUS rule could impact the issuance or denial of permits. See 803 F.3d at 830. Concurring, Judge Richard Allen Griffin agreed on the latter point alone. The dissenting third judge, Judge Damon J. Keith, disagreed and wanted district court review. Id. at 836. Judge McKeague saw the congressional purpose in direct appellate court judicial review as promoting judicial efficiency because cases directly brought in circuit courts that do not need a fact-finding proceeding (just review of a regulatory record) are fitting for a court of appeals. Id. at 819. The two majority judges followed National Cotton Council of America v. EPA, 553 F.3d 927, 933 (6th Cir. 2009), which found the application of biological pesticides not exempt from the requirement of a National Pollution Discharge Elimination System permit.

With this split 1–1–1 panel opinion, however, the petitioners (nearly 20 trade groups and associations) jumped at the chance to request an en banc rehearing. Arguing that In re U.S. Department of Defense & EPA Final Rule was wrongly decided, they bolstered their case with a discussion of the Eleventh Circuit’s disagreement with National Cotton. The presence of a circuit split, coupled with judges questioning the validity of the Sixth Circuit’s own precedent, works in petitioners’ favor.

Moreover, while the federal agency defendants may move to dismiss the WOTUS rule challenges in district courts nationwide based on this case, such motions to dismiss may receive a cold reception in district courts given the fractured Sixth Circuit opinion and looming en banc rehearing.

The Expanding WOTUS Rule

Although EPA has reached out to farmers with reassurances that all CWA exemptions will be maintained for agriculture, some are concerned that its WOTUS rule expands the “significant nexus” test into regions where the applicable court of appeals has not adopted that test. When this “significant nexus” imparts jurisdiction for an ESA “nexus” and mandatory ESA consultation, the impact of the WOTUS rule could mean even greater restrictions on various farm operations as simple as fencing in a field or applying pesticides.

The WOTUS rule may expand the scope of federal jurisdiction in some regions (or reassert federal jurisdiction to pre-SWANCC status). See Claudia Copeland, EPA and the Army Corps’ Rule to Define “Waters of the United States,” Congressional Research Service 13 (Jan. 4, 2016).

The WOTUS rule redefines which “ditches” are jurisdictional, listing three: (1) ditches with “ephemeral flow” that are chemically, physically, and biologically connected to downstream waters, and influence the integrity of downstream waters; (2) ditches with “intermittent flow” unrelated to tributaries and which do not drain wetlands, including non-jurisdictional isolated wetlands; and (3) ditches that do not flow into jurisdictional waters, whether the flow is ephemeral, intermittent, or perennial. 80 Fed. Reg. at 37097.

While the WOTUS rule attempts to define those ditches that do not trigger jurisdiction, public comments submitted on the draft rule suggest that the ditch definition remains confusing. The WOTUS rule may also provide clarity in some issues where the plurality’s “adjacency” test does not protect water quality from industrial sites. In San Francisco Baykeeper v. Cargill Salt Division, the Ninth Circuit refused to extend federal CWA jurisdiction to an industrial waste pond next to a slough flowing into San Francisco Bay by narrowly construing the phrase “adjacent wetlands” to exclude certain ponds. 481 F.3d 700 (9th Cir. 2007). This case stirred controversy. See, e.g., Genevieve Casey, What Went Wrong in San Francisco Baykeeper v. Cargill Salt Division—The Ninth Circuit’s Weak Reading of Kennedy’s Rapanos Concurrence, and a Prescription for Litigating Clean Water Act Claims under Rapanos, 35 Ecology L.Q. 531 (2008). In another Ninth Circuit case, the court found a farmer at fault under CWA permitting requirements for allowing herbicide to leach into irrigation canals that flowed into nearby streams. See Headwaters, Inc. v. Talent Irrigation Dist., 243 F.3d 526 (9th Cir. 2001).

The WOTUS rule attempts to clarify situations where a farmer whose ditches only flow into streams intermittently could nevertheless be subject to CWA jurisdiction. The WOTUS rule lists certain ditches that would not be jurisdictional waters, and “prior converted cropland” is exempt. National Association of Counties 2015 Policy Brief, Final “Waters of the U.S.” Rule, Summary of Final Regulation Published by EPA and Corps (2015), at 7, available at www.naco.org/sites/default/files/documents/WOTUS%20Final%20FS%20%20Chart%20-%20June30.pdf.

Expanding the Definition of “Point Source” to Include Drainage Tile?

In a case pending in Des Moines, Iowa, the Des Moines Water Works (DMWW) pins a CWA violation on drainage tiles used by farmers to keep storm water from pooling on fields, ruining crops. Bd. of Water Works Trs. of City of Des Moines, Iowa v. Sac Cnty. Bd. of Supervisors, No. 5:15 Civ. 04020 (N.D. Iowa filed Mar. 16, 2015), available at www.calt.iastate.edu/sites/default/files/1513756-0--20402.pdf. DMWW argued that nitrates emitted from tiles into “groundwater” are not exempted storm water under the CWA. Id. at 31. These are therefore “point sources” and the drainage districts managing this groundwater need NPDES permits. They hope to force farmers to cut the discharge of nitrates to meet a 9.5 milligram per liter emission limit. Id. at 13. The other 77 NPDES permits in the Raccoon River watershed must meet this limit or risk noncompliance via “Daily Monitoring Reports” that activists can read to prepare lawsuits. See Daryll E. Ray & Harwood D. Schaffer, Des Moines’ water-quality suit is based on drainage-tile water not stormwater, Farm Ranch Guide (Aug. 5, 2015), available at www.farmandranchguide.com/news/opinion/des-moines-water-quality-suit-is-based-on-drainage-tile/article_7baa1126-3bb7-11e5-94e8-47cdff932813.html (includes link to the DMWW complaint).

ESA Nexus Meets the Kennedy Nexus

The Endangered Species Act (ESA) has been described as “the most far-reaching conservation statute on the books—in the U.S. or anywhere.” ESWR.com Endangered Species & Wetlands Report (2015), available at www.eswr.com/species/. The ESA requires the listing of species that are “threatened” or “endangered” and works toward their recovery. 16 U.S.C. § 1533.

The ESA has several prongs of enforcement, only one of which—section 10—does not require a jurisdictional “nexus” when a listed species is “taken” under the ESA. First, ESA section 7 provides that a federal agency must “consult” with the secretary of the interior or secretary of commerce to avoid putting any endangered or threatened species in jeopardy of extinction, or “destruction or adverse modification” of designated “critical” habitat. 16 U.S.C. § 1536(a)(2). A farmer who is under WOTUS jurisdiction would face similar obligations to require consideration of the impact to designated critical habitat with the naming of any ESA-listed species that depends on CWA-jurisdictional waters for its existence and identifying any critical habitat on the farmer’s property. A farmer who, for example, has installed drainage tiles may think he needs federal CWA approval given the expanded WOTUS rule. This CWA jurisdiction could also trigger ESA consultation requirements if such tiles jeopardize the critical habitat of a listed species of salamander. ESA consultation on the tiles may require costly biosassays for listed species, and EPA might designate critical habitat—requiring modifications to the tiled areas. A grower might decide to make a costly mitigation payment to another grower who can expand his salamander habitat.

Second, ESA section 9 makes it unlawful for anyone to “take” an endangered plant species from federal land. There are stiff penalties for “take” of a listed species prohibited by ESA section 9. The ESA authorizes the FWS to issue permits allowing incidental takes but imposes conditions on landowners, such as requiring an approved “habitat conservation plan” under section 10. See 16 U.S.C. § 1539. ESA section 9 is much more limited for plants than it is for animal species; plants are only subject to ESA “take” if they are endangered and actually located on federal public lands or protected by state law. Few states prohibit landowners from collecting or destroying endangered plants on private property, so endangered plants on private property have minimal protection. Lastly, it is important to remember that ESA sections 9 and 10 apply to private land to protect listed species without a federal nexus.

If the WOTUS rule extends EPA/Corps jurisdiction under the Kennedy “significant nexus” test to upland ditches not previously addressed, this jurisdictional expansion would lead to more cases finding a “nexus” under ESA section 7. The use of the CWA’s “significant nexus” test to establish some forms of ESA liability arose in Northern California River Watch v. City of Healdsburg, 457 F.3d 1023 (9th Cir. 2006). In Healdsburg, River Watch contended that the city violated the ESA when employees removed an endangered plant species, Sebastopol meadowfoam (Limnanthes vinculans), thereby violating the take prohibition of ESA section 9 on private land “under federal jurisdiction,” because it was found in adjacent CWA wetlands. Id. at 12781–85. The court rejected this argument and granted summary judgment for defendant.

In National Association of Home Builders v. Defenders of Wildlife, 127 S. Ct. 2518 (2007), the United States Supreme Court considered the nexus between the ESA and CWA obligations of a state with delegated authority to implement the CWA under §402(b). As noted above, CWA § 402(b) allows states to take over permitting if they meet nine listed criteria to ensure a process that meets federal standards. Defenders of Wildlife contended that under ESA section 7(a)(2), the state permitting agency must consult with federal ESA agencies to avoid decisions that “jeopardize the continued existence of any endangered species or threatened species” when the state issues NPDES permits. See 16 U.S.C § 1531 et seq.

The court ruled against Defenders of Wildlife, holding that section 7(a)(2) does not add a tenth criterion to the CWA permitting criteria. See 127 S. Ct. at 2519. In a 5–4 decision authored by Justice Alito (with Justice Kennedy providing the fifth vote), the court reversed the judgment of the United States Court of Appeals for the Ninth Circuit.

Despite this ruling, the federal government remains “fundamentally loathe to delegate any management and enforcement authority under [the ESA] to the States.” L. Michael Bogert, Like a Plastic Groom Alone There at the Top of the Cake: Cooperative Federalism and Section 6 of the Endangered Species Act, ABA Section of Environment, Energy, and Resources, 45th Section Spring Meeting, Austin, Tex. (Mar. 31, 2016).

In conclusion, the question of EPA’s jurisdiction in those circuits that have not yet adopted the “significant nexus” test remains uncertain. As a result, the extension of federal CWA authority may intrude on decisions that could be left to the states. When the parallel expansion of ESA authority is considered, the magnitude of CWA expansion may increase exponentially. Farmers may fear such expanded federal power could restrain their freedom to operate in the manner that they have been farming, many on the same property for several generations.

Thomas P. Redick and Christopher Brooks

Mr. Redick represents grower associations as a solo practitioner with Global Environmental Ethics Counsel LLC in St. Louis, Missouri. He may be reached at tpr@geeclaw.com. Mr. Brooks is an assistant professor of environmental studies and the pre-law program director at Green Mountain College in Poultney, Vermont. He may be reached at brookscc@greenmtn.edu.