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June 07, 2016 Articles

Who Can Rule on the Clean Water Rule?

A three-judge panel of the Sixth Circuit issued an opinion, a concurrence, and a dissent.

By Tavo True-Alcala and Megan Baroni – June 7, 2016

The definition of “waters of the United States” is a critical component of the Clean Water Act (CWA) and one that has a long history of litigation and interpretation. On June 29, 2015, this history gained another chapter when the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers published their latest interpretation of that definition in theFederal Register, the Clean Water Rule. The Clean Water Rule attempted to clarify what are jurisdictional “waters of the United States” under the CWA, drawing from a wealth of legal decisions, scientific studies, and public comments while trying to stay true to the legislative intentions of the act. Not surprisingly, shortly after the Clean Water Rule was published, a swell of lawsuits were filed challenging the new rule.

In response to the Clean Water Rule, numerous petitions were filed by interested parties in district and circuit courts around the country. In one of those cases, Ohio et al. v. EPA et al., No. 2:15-cv-2467 (S.D. Ohio filed June 29, 2015), Ohio and Michigan, later joined by Tennessee, alleged that, through the Clean Water Rule, the EPA and the Army Corps were attempting to expand their regulatory scope beyond what was allowed under federal law and claim authority over waters that were rightly within the jurisdiction of the states.

Shortly after Ohio v. EPA was filed, the circuit court cases challenging the Clean Water Rule were ultimately consolidated in the Sixth Circuit by the Judicial Panel for Multidistrict Litigation in Murray Energy Corp. v. U.S. Department of Defense, 2016 U.S. App. LEXIS 3031 (6th Cir. Feb. 22, 2016). The Sixth Circuit then stayed application of the Clean Water Rule, which went into effect on August 28, 2015, pending the outcome of its review.

Murray Energy began with motions to dismiss claiming that the Sixth Circuit did not have jurisdiction to hear challenges to the Clean Water Rule. The question of jurisdiction inMurray Energy ultimately hinged on the language of CWA section 509(b)(1). Specifically, section 509(b)(1)(E) and (F), respectively, provide that the appropriate circuit court has jurisdiction to review the administrator’s action in approving or promulgating any effluent limitation under CWA sections 301, 302, 306, or 405, or in issuing or denying a permit under CWA section 402.

On February 22, 2016, in a very divided opinion, the Sixth Circuit held that it had jurisdiction over the Clean Water Rule under both section 509(b)(1)(E) and section 509(b)(1)(F). The three-judge panel issued an opinion, a concurrence, and a dissent.

In the lead opinion, Judge McKeague stated that the Supreme Court and the Sixth Circuit “have favored a ‘functional’ approach over a ‘formalistic’ one in construing these provisions.” This perspective guided Judge McKeague’s interpretation of the relevant provisions of the CWA. With regard to section 509(b)(1)(E), or jurisdiction over effluent limitations, Judge McKeague distilled the essence of the agencies’ arguments into the question of whether an action—such as the Clean Water Rule—that indirectly has the effect of promulgating “other limitations” is subject to circuit court review. In answering this question in the affirmative, Judge McKeague relied on the Supreme Court’s decision in E.I. du Pont de Nemours Co. v. Train, 430 U.S. 112 (1977), which allowed for a more liberal interpretation of jurisdiction under the CWA, as well as cases from the D.C., Fourth, and Eighth Circuits, stating that these examples “demonstrate courts’ willingness to view E.I. du Pont as license to construe Congress’s purposes in [section 509(b)(1)] more generously than its language would indicate.” With this “functional” interpretation of the statute, Judge McKeague held that the judicial review provisions cover actions that indirectly result in effluent limitations under CWA section 509(b)(1)(E).

Judge McKeague engaged in a similar functionality analysis regarding section 509(b)(1)(F), which provides for jurisdiction over the issuance or denial of a permit. Judge McKeague relied significantly on National Cotton Council of America v. EPA, 553 F.3d 927 (6th Cir. 2009), which held that section 509(b)(1)(F) authorized circuit court review not only of permit decisions but also of regulations governing the issuance of permits. The moving parties criticized National Cotton, stating that the holding was merely “summary in nature” and, in essence, just plain wrong, but Judge McKeague rejected these arguments. Ultimately, given that National Cotton is direct precedent in the Sixth Circuit, Judge McKeague stated that, even if it was wrongly decided, the court would “still not be free to reject its holding.”

The concurrence and dissent disagreed with Judge McKeague’s dedication to a functional interpretation of the CWA. While the lead opinion concluded, much as it started, by stating that the judicial review provisions “have been subjected to judicial scrutiny in relation to various regulatory actions and have been consistently construed not in a strict literal sense, but in a manner designed to further Congress’s evident purposes,” Judge Griffin’s concurring opinion opposes this ideal in equally strong terms. It attacked the premise on which the lead opinion is based, stating, “[a]s with all matters of statutory construction, we should apply a textualist, not a ‘functional’ or ‘formalistic,’ approach.”

With regard to section 509(b)(1)(E), Judge Griffin argued that it creates jurisdiction to review only actions relating to limitations under the specific sections referenced, or the approval or promulgation of any effluent limitation under CWA sections 301, 302, 306, or 405. The act’s definitional section, which the Clean Water Rule modifies, is not one of these specifically mentioned in subsection (E), nor in section 509(b)(1) as a whole, and therefore is not an action under which jurisdiction is conferred by 509(b)(1).

After rejecting jurisdiction under section 509(b)(1)(E), Judge Griffin offered a thorough analysis of why the circuit courts should not have jurisdiction over the Clean Water Rule under section 509(b)(1)(F), which allows circuit court jurisdiction over the issuance or denial of a permit under section 402. Judge Griffin distinguished precedent relied on in the lead opinion; noted that the Clean Water Rule applies across the entire act, not just permitting; and pointed out that the Clean Water Rule will ultimately affect waters that do not meet the definition of “waters of the United States”—where there will never be permit decisions to be made. For these reasons, the court should not have jurisdiction over the Clean Water Rule under section 509(b)(1)(F). Nevertheless, Judge Griffin stated that he was bound by the decision in National Cotton and, despite his rationale, was forced to conclude that the circuit courts had jurisdiction. To be clear, Judge Griffin stated, “[a]bsent National Cotton I would dismiss the petitions for lack of jurisdiction.”

In the dissent, Judge Keith agreed with most of the arguments presented by Judge Griffin. However, Judge Keith offered a different interpretation on the scope of the holding inNational Cotton. In Judge Keith’s view, the holding of National Cotton could not go as far as to expand subsection (F) jurisdiction “to include anything ‘relating’ to permitting procedures,” because such an interpretation would be “all-encompassing” and “limitless.” With this interpretation, the dissent found that National Cotton did not require a finding of jurisdiction over the Clean Water Rule.

In the wake of the Sixth’s Circuit’s fractured opinion, the petitioners in Ohio. v. EPA filed a notice in the district court regarding jurisdictionIn the notice, the petitioners recognized that the holding in Murray Energy is controlling over the district court and that the district court is required to “act in accordance with its view of the law as guided by controlling Sixth Circuit precedent” and “may therefore dismiss this action (without prejudice and on jurisdictional grounds only).” Despite this recognition, petitioners argued that the district court should reject the Sixth Court’s decision. Noting that the case was decided on a 1–1–1 vote, the petitioners relied on the concurring and dissenting opinions in Murray Energy to support their case that the district court retained jurisdiction over their claim.

Shortly after the petitioners filed this notice, the defendants filed a motion to dismiss for lack of subject-matter jurisdiction. The motion began by stating that “the Sixth Circuit held that it has exclusive jurisdiction to review challenges to the Clean Water Rule” and goes on to agree with the plaintiffs’ notice that “this Court may conclude that it lacks jurisdiction here in light of the Sixth Circuit’s ruling, and may therefore dismiss this action.” According to the defendants, because the Sixth Circuit’s holding is controlling, the case should be dismissed.

On March 17, 2016, the plaintiffs filed a response to the motion to dismiss. They repeated their previous recognition that the Sixth Circuit’s decision in Murray Energy is controlling, but they continued to criticize the lead opinion. The plaintiffs pointed to an Eleventh Circuit case,Friends of the Everglades v. EPA, 699 F.3d 1280 (11th Cir. 2012), which “reject[ed] National Cotton’s broad reading as ‘contrary to the statutory text,’” as well as to Judge Griffin’s statement in the concurring opinion in Murray Energy that, “[w]ere it not for National Cotton, I would grant the motion to dismiss.” The plaintiffs make clear their position that, while their case in the Southern District of Ohio may be dismissed, this outcome should not be rolled out to districts outside the domain of the Sixth Circuit.

The Southern District of Ohio stayed its decision on the motion to dismiss on March 21, 2016, pending the Sixth Circuit’s ultimate decision, in the wake of multiple petitions for en banc review, in Murray Energy. On April 1, 2016, however, the Sixth Circuit denied the petitions for en banc review, stating that the petitions do not establish sufficient reason for the decision to be reviewed. The Sixth Circuit stated that the decision neither “directly conflicts with Supreme Court or Sixth Circuit precedent,” nor does it constitute a “precedent-setting error of exceptional public significance” and therefore should not be subject to review. The court continued by stating that allowing an en banc review would either “affirm the panel decision, in which case many more months would have passed to no purpose whatsoever,” or lead to “multiple district court proceedings and the very ‘waste of resources,’ ‘chaos,’ ‘duplicative proceedings,’ ‘nationwide confusion,’ ‘absurd’ results, ‘procedural morass,’ ‘mischief,’ and ‘delayed justice’ that the petitioners claim they are seeking to avoid.”

On April 25, 2016, the Southern District of Ohio dismissed Ohio v. EPA for lack of jurisdiction, citing the Sixth Circuit’s February 22, 2016, decision and subsequent denial of petitions seeking en banc review. While this particular court was bound by the direct Sixth Circuit precedent, other petitioners outside the Sixth Circuit can be expected to continue to challenge the Clean Water Rule, despite the holding in Murray Energy. As many of the petitioners for en banc review noted, if Murray Energy is upheld, “the fractured decision all but guarantees that duplicative proceedings will continue even with the panel’s jurisdictional finding.” In dismissing Ohio v. EPA, the Southern District of Ohio seems to acknowledge that possibility, stating that “[t]he parties may move to reopen this case if the circumstances surrounding the Court’s jurisdiction change.” For now, the Southern District of Ohio has yielded to the Sixth Circuit. It remains to be seen whether this will signal the resolution of the jurisdictional question.

Keywords: environmental litigation, Clean Water Act, Clean Water Rule, jurisdiction

Tavo True-Alcala is an environmental and energy analyst and Megan Baroni is a partner in the Stamford, Connecticut, office of Robinson + Cole LLP.

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