Judge throws major Obama rule into doubt

By Annie Snider, Jeremy P. Jacobs | 08/28/2015 01:25 PM EDT

The legal and practical morass surrounding the Obama administration’s controversial water rule became more muddied yesterday when a federal judge blocked its implementation in 13 states just hours before it was set to go into effect.

In an 18-page ruling late yesterday, U.S. District Court Chief Judge Ralph Erickson for the District of North Dakota granted a preliminary injunction against U.S. EPA and the Army Corps of Engineers’ Waters of the U.S. rule, which redefines which streams and wetlands warrant federal protection under the Clean Water Act.

Erickson ruled that the regulation likely oversteps the Supreme Court’s standard for federal authority set in its 2006 Rapanos v. United States decision and that the agencies also appear to have violated Administrative Procedures Act requirements. Although the Department of Justice had focused its arguments opposing the injunction on questions of venue, Erickson found that challengers have a "fair chance of success" on the merits of the case.

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"The Rule," Erickson wrote, "allows EPA regulation of waters that do not bear any effect on the ‘chemical, physical, and biological integrity’ of any navigable-in-fact water."

He also particularly took issue with the breadth of EPA’s definition of a tributary in the rule.

Opponents of the water rule quickly hailed the injunction as a victory.

"Judge Erickson’s ruling is a significant and rightful win for states’ rights. I am pleased that the arbitrary and subjective guidelines imposed by the EPA’s WOTUS rule will no longer go into effect today," House Oversight and Government Reform Chairman Jason Chaffetz (R-Utah) said in a statement today. "This ruling is an important check on an Administration that continues to overreach in its authority. Such flawed policy should never see the light of day."

EPA, which said it is still weighing its next legal steps, emphasized that the injunction applies only in the 13 states that were party to the lawsuit heard by Erickson: Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming. The agency said yesterday that the 2008 guidance that has been on the books to govern Clean Water Act decisions will remain in effect in those states, while the new rule will proceed today in the 37 other states.

Legal experts and backers of the rule argue that the injunction may only be temporary.

"One way or another, they’re going to attack the injunction, you can be sure of that," said Vermont Law School professor Pat Parenteau. "It’s just a question of how they’re going to play that."

In the meantime, the agencies’ approach sets up a difficult situation for regulators on the ground, said Don Riley, a retired major general who previously served as the second in command at the Army Corps of Engineers. His former agency is responsible for the vast majority of on-the-ground calls about which bogs, marshes and creeks are subject to federal regulation.

"I think there’s going to be significant confusion among the districts and across the corps, because you could have, in the same corps division, different standards," he said. "What does that poor regulatory chief do?"

Riley, now a senior vice president at the Washington, D.C., firm Dawson & Associates, said the confusion is compounded by the fact that there is fierce disagreement between the corps leaders and their political bosses over the new rule, as was laid out in a pair of inflammatory memos while the rule was undergoing interagency review (Greenwire, July 27).

"If I was a regulator and I had [a jurisdictional determination] on my desk today in one of the other 37 states, I’d be waiting for my boss to tell me what to do, and he’ll look to his boss, and it’ll go all the way up to headquarters, and you’ve got this tension between headquarters and the secretary’s office," he said. "What was already going to be a slower permitting process is now going to be even longer, and it will frustrate many landowners."

To be sure, there is some precedent for the agencies applying different water regimes in different states.

In 1993, the 4th U.S. Circuit Court of Appeals, which covers Maryland, Virginia, North Carolina, South Carolina and West Virginia, threw out water regulations stemming from the "migratory bird rule."

Those regulations were ultimately completely invalidated by the Supreme Court in 2001. But until then, EPA and the Army Corps applied different regulations to different states.

Notably, the 13 states party to yesterday’s injunction include several that stood to be ground zero for changes made in the new rule.

Arid Arizona, New Mexico and Nevada, which were all party to the suit, are covered in dry washes and other streams that flow only after it rains, which face a new standard under the final rule. According to EPA, 94 percent of Arizona’s streams are ephemeral.

North and South Dakota, also party to the suit, are pockmarked with prairie potholes, which were often seen as too far from the tributary network to warrant federal protection under the George W. Bush administration guidance but receive special consideration under the new rule (Greenwire, June 1).

Conflicting court rulings

The ruling also further complicates an already complex litigation picture for the regulations.

Three other federal district court judges — in Oklahoma, Georgia and West Virginia — have declined efforts by challengers, including 11 states, to halt the rule.

Of those three, rulings from judges in Georgia and West Virginia, which also came yesterday, squarely conflict with Erickson on the issue of which court has jurisdiction to hear challenges to the water rule.

EPA and the Army Corps believe the Clean Water Act grants jurisdiction to federal appeals courts, which sit above district courts in judicial hierarchy.

The judges in Georgia and West Virginia agreed yesterday.

The question is whether the water rule constitutes an "effluent limitation" or "other limitation" or directly affects permitting for the challengers in the case. If it does, the Clean Water Act authorizes the cases to go straight to appeals courts, bypassing district courts.

Erickson said it does not and criticized the agencies for taking an "exceptionally expansive" view of those terms in the law.

"The rule has at best an attenuated connection to any permitting process," wrote Erickson, a George W. Bush appointee. "If the exceptionally expansive view advocated by the government is adopted, it would encompass virtually all EPA actions under the Clean Water Act."

U.S. District Court Judge Lisa Godbey Wood squarely rejected that reasoning in her ruling for the Southern District of Georgia yesterday.

"[I]ts undeniable and inescapable effect is to restrict pollutants and subject entities to the requirements of the Clean Water Act’s permit program," wrote Wood, another Bush appointee. "Indeed, that is, in part, why the Plaintiffs are suing, and it is part of the harm of which they complain."

U.S. District Court Judge Irene Keeley for the Northern District of West Virginia used similar reasoning yesterday in rejecting an injunction request by Ohio-based Murray Energy Corp. (Greenwire, Aug. 27).

In light of the conflicting rulings, environmentalists who support the rule have urged patience as the process plays out in courts.

"Consider a recent point of reference: the Affordable Care Act was found to be invalid by some different courts when it was similarly challenged in a number of places," wrote Jon Devine of the Natural Resources Defense Council in a blog post this morning. "At the end of the day, however, it was twice upheld by the Supreme Court, and is now the law of the land."

EPA could appeal Erickson’s decision to the 8th U.S. Circuit Court of Appeals, highlighting the rulings from the judges in Georgia and West Virginia.

There are also challenges to the rule filed in eight federal appeals courts. Those cases have already been consolidated to the Cincinnati-based 6th U.S. Circuit Court of Appeals.

Further complicating the picture, a judicial panel on mutidistrict litigation in New York City will consider where those cases should be heard on Oct. 1. EPA is pressing to have lawsuits moved to the U.S. District Court for the District of Columbia, a request the challengers have strongly opposed.

Jonathan Adler, a law professor at Case Western Reserve University who has opposed the Obama administration rule, said that while the conflicting decisions may seem confusing, the rule will eventually be sorted out — perhaps by the Supreme Court.

"Having a period of time in which the application of EPA’s rule is not uniform certainly seems weird," he said, "but it’s the sort of temporary situation that we’ve seen before."

Green groups sue

Meanwhile, a subset of environmental groups challenging the rule from the left yesterday filed their complaint, with their own request for an injunction.

The suit, from the Waterkeeper Alliance, Center for Biological Diversity, Center for Food Safety and a number of local environmental groups, was filed in U.S. District Court for the Northern District of California.

The groups have long seen weaknesses in the Obama administration’s rule, but their arguments received a boost from the internal Army Corps documents that laid out the concerns from the agency’s own experts, which dovetailed with greens in some key areas (Greenwire, Aug. 5).

The lawsuit filed yesterday challenges portions of the final rule, including first-ever geographical limits on jursidiction, exclusion of waters that are in agricultural use from Clean Water Act coverage, and provisions relating to ditches and waste treatment systems under the Administrative Procedures Act and the National Environmental Policy Act.

"Most environmental groups were cautiously optimistic when they saw the proposed rule come out, but there were a number of changes made very late in the process, and almost all of those last-minute changes had the result of shrinking the scope of waters protected," said Jamie Saul, staff attorney and assistant clinical professor at Lewis & Clark Law School’s Earthrise Law Center, which is involved with the suit.

Saul said the aim is to "fashion a scalpel-like approach" to cut away portions of the rule that the groups find problematic, while still leaving other portions of it intact. But many legal experts question whether this will be possible and argue the suit could cause the entire rule to be struck down.

Saul said the groups are aware of the danger.

"That’s a risk," he said. "That’s not our preferred outcome, but we can live with that outcome."

While his groups would prefer to see a more tailored remedy that leaves intact strengthened aspects of the new rule, Saul said, in total, they see more lost than won in the final rule.

"From our view, the final rule here in several important respects is a step back away from what Justice Kennedy would require under the significant nexus analyis," he said. "We certainly prefer the old rule to the new rule as currently written, with all the exclusions and limitations that have been added."

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