One highlight from the last week in regulatory practice overshadowed all else: confusion over fundamental administrative law and judicial review issues far beyond the confines of environmental law became evident in conflicting court decisions and the damming of the Environmental Protection Agency (EPA) and Army Corps of Engineers’ Clean Water Rule: Definition of Waters of the United States (WOTUS). Three different United States District Courts acted in different ways when faced with the WOTUS rule’s August 28, 2015, effective date and motions for interim relief.
Jurisdiction: First, last, and always, courts must determine their jurisdiction and three district courts differed: judges in Murray Energy Corp. v. EPA and Georgia v. McCarthy found that they lacked jurisdiction. Under the Clean Water Act (CWA), the United States Courts of Appeal review final agency actions “approving or promulgating any effluent limitation or other limitation” or “issuing or denying any permit.” Jurisdiction flows from the substance and characterization of the rule. Murray granted the agencies’ motion to dismiss for want of jurisdiction following Fourth Circuit precedent, but also confirmed the direct impact of the rule on Murray, thus confirming Murray’s standing to sue. Georgia focused on the agencies’ opposition to a motion for a preliminary injunction and, following Eleventh Circuit precedent, reached the same result:
In the present case, the WOTUS rule does define waters of the United States. However, its undeniable and inescapable effect is to restrict pollutants and subject entities to the requirements of the Clean Water Act’s permit program. Indeed, that is, in part, why the Plaintiffs are suing, and it is part of the harm of which they complain. The Rule operates as a limitation or restriction on permit issuers and people who would discharge into the bodies of water the Rule now includes as waters of the United States. The WOTUS rule accomplishes significant limiting and significant restricting even if accomplished by way of defining.
Georgia noted the decision in Murray. These district courts believe that jurisdiction would thus lie in each plaintiff’s protective petition for review in the appropriate court of appeals, but those courts must also determine their own jurisdiction – and the Judicial Panel on Multidistrict Litigation (JPMDL) consolidated those petitions for review in the United States Court of Appeals for the Sixth Circuit.
In North Dakota v. EPA, however, the judge noted that the rule itself imposes no “effluent limitation” but merely redefines what constitutes “waters of the United States,” a bow to the Department of Justice (DOJ) position on behalf of the agencies in attacking standing. The limitations jurisdiction could not be read so broadly; put another way,
If the exceptionally expansive view advocated by the government is adopted, it would encompass virtually all EPA actions under the Clean Water Act. It is difficult to imagine any action the EPA might take in the promulgation of a rule that is not either definitional or regulatory. This view of … jurisdiction would run precisely contrary to Congress’ intent in drafting the court of appeals jurisdictional provision as recognized [by the United States Supreme Court (SCOTUS)].
Moreover, North Dakota found the relationship between permitting and the definitions at bar to be “tangential.”
Presuming that all judges possess reasonable minds, reasonable minds may differ. Until vacated by the district court or higher court, the district court in North Dakota has jurisdiction.
Preliminary Injunction: The North Dakota opinion focuses on the Eighth Circuit variation of the four factors of the preliminary injunction test – (1) the threat of irreparable harm to the movant; (2) the balance of harms; (3) the movant’s likelihood of success on the merits; and (4) the public interest. Likelihood of success is critical for no other factor merits review if a plaintiff cannot establish a likelihood of success on the merits and, thus, necessarily focuses on the alleged agency errors and plaintiffs’ claims for relief.
In this instance, and in all of these cases, the court could not base its decision on the agencies’ administrative record of all material considered directly and indirectly in reaching their decision to promulgate the rule. The agencies have not lodged the administrative record 60 days after the agencies published the final rule and more than 90 days after officials signed the final rule.
The States repeatedly point the court’s attention to two clearly pre-decisional and deliberative interagency memoranda. Ordinarily the court would not rely on these documents in its [preliminary injunction] analysis, however, the footing of the case leaves no other effective way to exercise judicial review in a timely manner. At this point, the Rule’s effective date looms, the administrative record has not been produced, and the States assert irreparable harm. The court has reviewed both the memoranda at issue, the Technical Support Document, and the Economic Analysis document, and finds that the memoranda’s opinion is supported by the underlying documents at the court’s disposal.
While the court would prefer an opportunity to review the entire administrative record, rather than rely on a handful of documents and deliberative memoranda, it is impossible to obtain the record prior to the effective date of the Rule. Under these unique circumstances, including a review of the Army Corps of Engineer’s memoranda, consideration of the documents in the record is “the only way there can be effective judicial review.”
[footnotes omitted]. The ex-record documents relied upon by the court in North Dakota may be seen as adverse to the agencies’ decision. The problem here is that, without a certified administrative record, the court cannot know whether or how the agencies considered the documents or whether or to what extent the agencies assert privilege.
► The interagency memoranda may be privileged, but the agencies may waive privilege and submit the documents as part of the public administrative record. On the other hand, agency failure to include considered adverse documents is an exception to the presumption of regularity in the administrative record and, therefore, a court may supplement the record. The court had no opportunity to make such a decision. The agencies did file the certified index to the administrative record with the Sixth Circuit in the JPMDL-consolidated petitions for review on August 24, 2015.
With this handicap, the court assessed whether the agencies exceeded their authority under the CWA, as interpreted by SCOTUS, and the district court found that the WOTUS rule likely suffers the same fatal defect as the approach taken by the Engineers in a SCOTUS decision that the agencies purport to implement. The district court concluded that the definition advanced by the WOTUS rule “includes vast numbers of waters that are unlikely to have a nexus to navigable waters within any reasonable understanding of the term,” thereby exceeding the agencies’ jurisdiction.
► EPA is normally quite adept at certifying an administrative record or index if for no other reason than that EPA seeks to place all non-privileged documents on their public docket and reproduces that public docket (and they are the government-wide contracted manager of regulatory dockets). DOJ may have relied too heavily on its jurisdictional arguments that all these cases belong in the court of appeals and the lack of administrative record filing in the district court has proven costly.
Additionally, North Dakota found that plaintiffs were likely to succeed on the issue of whether the WOTUS rule was arbitrary and capricious on several different bases. First, the court found that the WOTUS rule asserts jurisdiction over waters that are remote and intermittent waters, and that “no evidence actually points to how these intermittent and remote wetlands have any nexus to a navigable-in-fact water.” Agency action is arbitrary and capricious under the Administrative Procedure Act (APA) whenever, and the court found here, the agencies “have failed to establish a ‘rational connection between the facts found’ and the Rule.”
The court further found that “The Rule also arbitrarily establishes the distances from a navigable water that are subject to regulation” and notes that an ex-record Engineers’ memorandum complained that an adopted 4000-foot boundary distance was, in some instances, under-inclusive. Here, again, the court does not have the agencies’ administrative record – so the 4000-foot boundary may also be over-inclusive in other instances. Given the lack of a record to support this bright line, the court concluded that it was likely to be arbitrary and capricious.
► The court noted that a “bright line” 4000-foot boundary is not necessarily arbitrary, but this confuses the two elements. “Numbers” are inherently arbitrary (i.e. not 4000-foot-one-inch), but whether the agency has established the requisite rational connection between the facts found in the record and its regulatory decision goes to whether the number is capricious. Arbitrary versus capricious is not an uncommon misunderstanding.
Third, the court found that:
The definition of “neighboring” under the final rule is not likely a logical outgrowth of its definition in the proposed rule. The final rule greatly expanded the definition of “neighboring” such that an interested person would not recognize the promulgated Rule as a logical outgrowth of the proposed rule.
The court then turned to the States’ plea of irreparable harm – a higher than standing injury-in-fact doctrine requirement of certain and great harm of such imminence that there is a clear and present need for equitable relief because post-judgment relief would be ineffective. Here the States represent a unique litigant because WOTUS would preempt their traditional purview over land and water use. The court found that the loss of sovereignty, even temporarily, to be sufficient harm: “Immediately upon the Rule taking effect, the Rule will irreparably diminish the States’ power over their waters.” The court found also that the States would suffer economic harm because WOTUS imposed subsidiary regulatory requirements and costs on the States’ regulation of other economic processes.
The court summarily found that the balance of harms favored the States and the public interest lay in issuing the preliminary injunction. Much more could be said on these often merged points – but in regulatory litigation, the balance of the harm is more critical because the public interest in agency compliance with the law is a given.
Compliance: EPA’s reaction to the preliminary injunction was swift, with a statement that the preliminary injunction applies only the 13 States that sought relief and the WOTUS rule will be enforceable in all other States:
Under the order issued by the District Court of North Dakota, the parties that obtained the preliminary injunction are not subject to the new rule, and instead continue to be subject to the prior regulation. In light of the order, EPA and the Army Corps of Engineers will continue to implement the prior regulation in the following States: Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, and Wyoming.
In all other respects, the rule is effective on August 28.
Plaintiffs noticed EPA’s statement to the district court with equal swiftness and the court immediately ordered briefing by the parties on the nationwide or party-centric application of the preliminary injunction by 5:00 PM on September 1st. Some non-party State Attorneys General have indicated they will seek clarification that the North Dakota preliminary injunction applies nationwide, an indication that motions to intervene or at least amicus briefs are likely.
The extent of an agency’s violation in promulgating a rule establishes the scope of injunctive relief, not the application of standing rules or other criteria. Here plaintiffs mounted a facial challenge to the rule and the court found that the agencies violated statutory CWA and APA requirements.
► EPA and the Engineers may argue that the preliminary injunction should be limited to the 13 plaintiff States, and the agencies may interpret the preliminary injunction as so limited, but the agencies may not unilaterally dictate the limits of a court order. To borrow a venerable phrase – “It is emphatically the province and duty of the judicial department to say what the law is.” DOJ should have sought clarification rather than EPA making such an unqualified assertion. The court’s briefing order is no surprise in light of the EPA’s response and the States’ notice.
Plaintiffs also bear some responsibility for this state of affairs by denominating their motion as seeking a preliminary injunction under the Federal Rules of Civil Procedure rather than a stay of the rule’s effective date under the APA. While the two interim remedies greatly overlap, a request for a stay – guiding the court toward a clearer statement of application to the rule effective date – would have avoided this confusion.
Appellate Review: DOJ certainly will appeal the decision and that appeal normally would lie in the Eighth Circuit. JPMDL’s consolidation of all other petitions for review raises the possibility of a transfer, but that path is as unclear as appeals from the dismissal in Murray (Fourth Circuit) and the denial in Georgia (Eleventh Circuit). Filings will soon give the parties’ probably conflicting views.
Stay tuned – the litigation waters continue to flow, however the WOTUS rule may be dammed.
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