On February 22, 2016, in a 2-1 decision, the US Court of Appeals for the Sixth Circuit determined it has jurisdiction over the numerous legal challenges to the Clean Water Rule (the Final Rule), thus siding with the position of the agencies that promulgated the Final Rule, the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (together, the Agencies). The Final Rule was issued on May 27, 2015 and defines “waters of the United States,” a threshold term that determines the Clean Water Act’s (CWA) scope and application. Previously, on October 9, 2015, the Sixth Circuit stayed the implementation of the Final Rule nationwide, concluding that the challengers demonstrated a substantial possibility of success on the merits. In a fragmented decision, two of the panel’s judges found that under the Sixth Circuit precedent in National Cotton Council of America v. U.S. E.P.A., 553 F.3d 927, 933 (6th Cir. 2009), the Sixth Circuit had jurisdiction over review of the Final Rule.
Sixth Circuit Issues Splintered Decision
Judge David W. McKeague delivered the Sixth Circuit’s opinion and concluded that the court has jurisdiction over challenges to the Final Rule under both 33 U.S.C. § 1369(b)(1)(E) and (F). Section 1369 identifies the seven types of actions by the EPA Administrator that are reviewable directly in the federal circuit courts. Sections 1369(b)(1)(E) and (F) provide for review of actions “in approving or promulgating any effluent limitation or other limitation” under certain CWA sections and actions “in issuing or denying any permit under section 1342,” which governs the issuance of permits for the discharge of pollutants. In concluding that the Sixth Circuit had jurisdiction over review of the Final Rule under both provisions, Judge McKeague relied on a “functional” rather than “formalistic” construction of the CWA’s judicial review provision, an approach that the opinion states has been favored by courts, including the Supreme Court and the Sixth Circuit, over the past 35 years.
More specifically, Judge McKeague found that as to section 1369(b)(1)(E), while the Agencies’ argument that the Final Rule qualifies as an “other limitation” was not “compelling” “[o]n its face,” it was supported by the Supreme Court’s decision in E.I. du Pont de Nemours Co. v. Train, 430 U.S. 112, 136 (1977), as well as decisions of other circuit courts, including the DC Circuit, Fourth Circuit and Eighth Circuit. Under E.I. du Pont, Judge McKeague found that the Final Rule’s practical effect was to “indirectly produce various limitations on point-source operators and permit issuing authorities” and that was sufficient to confer jurisdiction for review in the federal appellate courts. In addition, while acknowledging that the issuance of the Final Rule was not technically an action by the Agencies to issue or deny a permit as specified in section 1369(b)(1)(F), Judge McKeague found that jurisdiction was still proper under that subsection because, as the Agencies argued, the effect of the Final Rule “is to impact permitting requirements, thereby affecting the granting and denying of permits.” Judge McKeague noted various prior circuit court decisions—including the decision of a Sixth Circuit panel in National Cotton Council—that have interpreted both Sections 1369(b)(1)(E) and (F) broadly and have demonstrated a preference for taking a “practical, functional approach rather than a technical approach,” in favor of direct circuit court review.
Judge Richard Allen Griffin concurred in the judgment of the court, stating that he did “so only because I am required to follow our precedentially-binding decision, National Cotton Council of America v. U.S. E.P.A., 553 F.3d 927 (6th Cir. 2009).” As to the proper interpretation of 33 U.S.C. § 1369(b)(1)(E) and (F), Judge Griffin’s concurrence relies on a textualist reading of the statute and finds Congress did not create jurisdiction in the appellate courts for review of the Final Rule. Nevertheless, Judge Griffin found that the Sixth Circuit’s decision in National Cotton Council extended jurisdiction under Section 1369(F) “to review any regulation ‘governing’ permits,” which category “undoubtedly” encompasses the Final Rule, given that it “defines what waters necessarily require permits.” Judge Griffin’s concurrence goes on to state that he disagrees that National Cotton Council was correctly decided, that jurisdictional reach under National Cotton Council case is essentially unbounded, and that absent that decision, Judge Griffin would have dismissed the petitions for lack of jurisdiction.
Senior Judge Damon J. Keith dissented. In his dissent, Judge Keith concludes first that neither of the relevant subsections of 33 U.S.C. § 1369(b)(1) confer original jurisdiction in these circumstances on the appellate courts. Second, Judge Keith states that Judge Griffin’s reading of the National Cotton Council is “wrong” and that “[w]hile National Cotton expanded the scope of subsection (F) to cover rules “regulating” or “governing” permitting procedures, 553 F.3d at 933, it did not expand that subsection to cover all rules “relating” to those procedures, such as the one at issue here—a rule that merely defines the scope of the term “waters of the United States.”
Implications of the Sixth Circuit’s Decision
The Sixth Circuit’s ruling represents a victory for the Agencies in a complex multipart legal battle. Going forward, however, the state and industry petitioners in the circuit court petitions consolidated before the Sixth Circuit are likely to request a review of the Sixth Circuit panel’s decision en banc, before the entire Sixth Circuit bench. Such a procedure is utilized where panel decisions could involve errors of exceptional public importance or conflict with Supreme Court or Sixth Circuit precedent; however, a rehearing en banc is not favored and is generally only granted in extraordinary circumstances. Petitioners would need to file any en banc petition by April 7, 2016. For the time being, the Sixth Circuit’s stay of the Final Rule will continue in effect.
The impact of the Sixth Circuit’s decision outside of the states within its jurisdiction is already being debated, as challenges to the Final Rule were filed by multiple states and private petitioners in myriad district courts across the country and have not been consolidated. While most of those district court challenges were dismissed for lack of jurisdiction or stayed pending the Sixth Circuit’s decision on the scope of its jurisdiction, the US District Court for the North Dakota, issued a preliminary injunction against implementation of the Final Rule in August 2015. One day after the Sixth Circuit’s decision, on February 23, 2016, the United States filed a notice in the US District Court for the District of North Dakota to advise the court of the Sixth Circuit’s decision and notify the court that the United States plans to “file a motion addressing the effect of the Sixth Circuit’s decision in this action”—presumably a motion to dismiss.[i] Similarly, the United States submitted a letter to the Eleventh Circuit on February 23, 2016, stating that in supplemental briefing that the Eleventh Circuit had previously anticipated would be necessary subsequent to the Sixth Circuit’s decision, the “Agencies will argue that the Sixth Circuit decision is controlling because, among other reasons, the Sixth Circuit is the court where all the petitions challenging the Rule have been consolidated…”[ii] The same day, the Attorney General for Georgia submitted its own letter to the Eleventh Circuit stating that the Sixth Circuit’s decision supported the states’ argument that 33 U.S.C. § 1369(b)(1) does not apply to the Final Rule, noting the split amongst the three-member panel and that the Sixth Circuit only came to its decision based on precedential authority it was bound by, but which has no control over the Eleventh Circuit.[iii] Filings by other state and private petitioners in various district and circuit courts have been made contemporaneously and point out the fractured nature of the Sixth Circuit panel’s decision as well as petitioners’ disagreement with the judgment of the panel.[iv] At least one district court, the U.S. District Court for the Northern District of Oklahoma, has already dismissed plaintiffs’ challenge to the Final Rule in light of the Sixth Circuit’s decision that it, and not the district courts, has jurisdiction.[v]
In addition to the litigation challenges to the Final Rule, the Rule has been faced with legislative challenges in both the US House of Representatives and Senate. Under the Congressional Review Act, Congress can overturn an agency’s rule if a joint resolution of disapproval is passed by both chambers and signed by the President. In November 2015, the Senate passed a resolution of disapproval (S.J. Res. 22) by a vote of 53-44, to vacate the Final Rule and prohibit the issuance of any new rule substantially similar to the Final Rule. The House then approved S.J. Res. 22 on January 13, 2016. However, the Senate ultimately failed to obtain the votes necessary to overcome the resolution’s January 19, 2016 veto by President Obama. Thus, the future of the Final Rule will likely rest with the courts.
We will continue to monitor the litigation over the Final Rule and post updates here.
Update: On February 29, 2016, Intervenors The National Association of Manufacturers and American Farm Bureau Federation, et al., filed a petition for rehearing en banc with the Sixth Circuit.
[i] Federal Defendants’ Notice of Decision of the Sixth Circuit Court of Appeals Confirming Its Jurisdiction To Review The Clean Water Rule, North Dakota v. U.S. EPA, Case No. 3:15-cv-00059-RRE-ARS (D.N.D.) (Feb. 23, 2016).
[ii] Letter from US. Department of Justice to Clerk of Court, Untied States Court of Appeals for the Eleventh Circuit, Re: State of Georgia v. McCarthy, 11th Cir. No. 15-14035-EE (Feb. 23, 2016).
[iii] See Letter from the Office of the Georgia Attorney General to Clerk of Court, Untied States Court of Appeals for the Eleventh Circuit, Re: State of Georgia v. McCarthy, 11th Cir. No. 15-14035-EE (Feb. 23, 2016).
[iv] See e.g., Plaintiff’s Notice of Sixth Circuit Ruling, State of Ohio, et al., v. EPA, et al., Case: 2:15-cv-02467-EAS-NMK (S.D. Ohio) (Feb. 23, 2016).
[v] See e.g., Opinion and Order, State of Oklahoma, et al., v. EPA, et al., Case: 4:15-cv-00381-CVE-FHM (N.D. Okla.) (Feb. 24, 2016).