Courthouse Steps Decision: National Association of Manufacturers v. DOD

Intro Speaker:                 Welcome to the Federalist Society's Practice Group podcast. The following podcast, hosted by the Federalist Society's environmental law and property rights practice group, was recorded on a Monday January 29, 2018 during a live courthouse steps teleforum conference call held exclusively for Federalist Society members.

Wesley Hodges:              Welcome to the Federalist Society teleforum conference call. This afternoon's topic is a courthouse steps discussion of the decision in National Association of Manufacturers vs. the DOD. My name is Wesley Hodges and I'm the Associate Director of Practice Groups at the Federalist Society. As always, please note that all expressions of opinion are those of the expert on today's call.

                                         Today we are fortunate to have with us Professor Johnathan Adler, who's the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at the Case Western Reserve University School of Law. After our speaker's remarks, we'll open for audience Q and A.

                                         Thanks for speaking with us today Professor Adler. The floor is now yours.

Johnathan Adler:            Great. Thank you. It is a pleasure to be here today to talk about the decision we got last week in National Association of Manufacturers vs. Department of Defense, otherwise known as the WOTUS case. Now, this case is, I'm sure, most listeners know is about the challenge to federal regulation's defining waters of the United States and WOTUS under the Clean Water Act and in particular about whether or not such challenges are to be filed in Federal District Courts or to be filed in the U.S. Circuit Courts of Appeals. This case has important implications for challenges to regulations issued under the Clean Water Act as well as to the Trump administration's efforts to rewrite or revise the controversial WOTUS rule that was issued by the Obama administration.

                                         What I want to do, relatively briefly, is provide some background on this case, then talk a little bit about the court's decision, and a little bit about what we can expect will come next. As I mentioned, this case arises out of litigation over the Federal Government's long and controversial effort to define the scope of regulatory jurisdiction under the Clean Water Act. The Clean Water Act requires permits for the discharge of pollutants into navigable waters. This is true for discharges of traditional pollutants, such as those that are regulated by the NPDES permit program as well as the deposit of dirt and other clean fill material into waters and wet lands under Section 404 of the Clean Water Act.

                                         Importantly, the Clean Water Act defines navigable waters as the waters of the United States, so how we define the waters of the United States defines the scope of federal regulatory jurisdiction under the Clean Water Act. In the Obama administration the US EPA and the Army Corps of Engineers adopted what many believe is an unduly expanse of definition of waters of the United States that could reach well beyond what most consider to be navigable waters, including intermittent streams, washes, [inaudible 00:03:12] and the like. This is not the first time the Federal Government has adopted a unduly broad notion of what constitutes water of the United States, and it's certainly not the first time this has been a subject of litigation. In fact, over the last 20 years, the Supreme Court has twice rebuked the EPA and Army Corps for adopting unnecessarily broad definitions of waters of the United States.

                                         First, in the 2001 case of Solid Waste Agency of Northern Cook County vs. U.S. Army Corps of Engineers and again in 2006 in Rapanos vs. United States. In both those cases the court concluded that the EPE and Army Corps were seeking to apply their definition of waters of the United States beyond the scope of the authority authorized under the Clean Water Act, and noted that an expansive interpretation of waters of the United States raises potential constitutional questions about the proper scope of federal regulation, given the potential for such regulation to justify federal regulation of private land.

                                         The Army Corps and EPA had dealt with the setbacks initially by issuing Guidance Documents about how they would apply waters of the United States in 2015 in effort to provide greater certainty about the scope of federal regulation. The Obama administration issued a rule formally defining waters of the United States, the so-called WOTUS Rule and this prompted substantial litigation. Indeed, by one count over 100 organizations and groups filed to challenging the WOTUS Rule, mostly arguing that it exceeded the scope of proper regulatory jurisdiction under the Clean Water Act.

                                         The problem for this litigation filed by all these different groups is that under the Clean Water Act it was not entirely clear where these challenges should be filed. The text of the Clean Water Act would seem to suggest that a challenge to a definition of waters of the United States should be filed in Federal District Courts. But, there were various lower court opinions and even some dicta and Supreme Court opinions that were interpreted by some to suggest that any such cases should be filed in the Circuit Courts of Appeal. And, certainly, there are other environmental statutes, most notably, perhaps the Clean Air Act, which do require challenges to regulations with nationwide scope to be filed in Circuit Courts as opposed to District Courts.

                                         The Clean Water Act, like the Clean Air act, and other environmental statutes does contain provisions that specify what sorts of actions should be brought in which courts. These provisions generally require challenges to EPA actions under the Clean Water Act to be filed in District Court with a set of exceptions that are listed in 33 U.S. Code § 1369 (b) and what that § 1369 (b) requires is that in seven particular types of challenges, those challenges must be filed in Circuit Court within 120 days of the challenged action. It also provides that for those seven exceptions Circuit Court jurisdiction is exclusive and that such actions cannot be challenged in the context of civil or criminal enforcement proceeding.

                                         What this means is that determining where challenges to Clean Water Act actions are to be filed is important, not simply from standpoint of efficiency of letting litigants know where to bring their case, it also matters because if this is the sort of case that should be filed in Circuit Court, that has preclusive effects on the ability of regulated entities to challenge WOTUS or other sorts of regulations in subsequent cases.

                                         Something else that's important to note, is that whereas a statute like the Clean Air Act has what appears to be a fairly logical split between what sorts of actions should be filed in District Court and what sorts of actions should be filed in Circuit Court. Localized actions generally are filed in District Court under the Clean Air Act, actions with regulations with nationwide scope and application are generally filed in the Circuit Court. The Clean Water Act language does not adopt as logical a division. And, as a consequence, some courts have interpreted these provisions to require a challenge to a waters of the United States definition to be filed in Circuit Court and in fact that is what the U.S. Court of Appeals for the Sixth Circuit had done in this case. As, I noted, cases were filed around the country, they were filed in both District Courts and Federal Circuit Courts because those challenging the WOTUS Rule wanted to be safe. They figured they needed to challenge in both places in case courts interpreted the jurisdictional provisions to preclude one or the other.

                                         The U.S. Court of Appeals for the Sixth Circuit had an issue in 2015, had issued a nationwide injunction against enforcement of the WOTUS Rule and because it concluded that petitioners had shown a substantial probability of success on the merits both on the scope of the rule as well as procedural APA claims they had raised. And, the Sixth Circuit also reaffirmed that it had jurisdiction and concluded that challenges to WOTUS should be filed in Circuit Courts. The Sixth Circuit opinion had acknowledged that the text of the statute could be read the other way, but felt that its precedent and practical concerns justified concluding a WOTUS challenge should be filed in Circuit Court.

                                         And so, this case, even though this Sixth Circuit had indicated that it was sympathetic to challenges to the WOTUS Rule, the National Association of Manufacturers and other groups sought certiorari both because they wanted to bring clarity to the jurisdictional question as well as because of the potential preclusive effects of a conclusion that WOTUS-type rules have to be challenged in Circuit Courts. And, the Supreme Court granted certiorari last January, heard argument in the case last October.

                                         One added wrinkle I should just note at this point is that while this litigation was underway, and Supreme Court consideration was pending, the Trump administration took office. And, one of its early major environmental acts was to initiate a rule making to reconsider the Obama administration WOTUS Rule. They had sought to have the Supreme Court hold the case in advance while they were reconsidering the WOTUS Rule. The Supreme Court declined. Since then, the Trump administration has both proposed a rule to redefine waters of the United States under the Clean Water Act as well as a second rule to postpone the effective date of the Obama administration rule so that the Trump administration has time to finish the substantive rule making on the scope of the WOTUS Rule.

                                         In the Supreme Court, various state trade associations and property rights organizations and a few environmental groups argue that the Sixth Circuit had gotten this wrong.That the plain text of the Clean Water Act require challenges to WOTUS to occur in District Courts of the Federal Government, as well as some other states and many environmental groups argued that, from a functional standpoint and a practical standpoint, the Clean Water Act's language should be read to allow Circuit Courts to review any challenge to something of nationwide scope and application like the WOTUS Rule.

                                         They thought it would make more sense, both because it would promote efficiency and uniformity as well as because the defining the scope of waters of the United States had an effect on the types of challenges that must be filed in Circuit Courts. From the briefing, I think it seems pretty clear that the plain text of the Clean Water Act strongly supported the petitioners in this case, those who heard my podcast, teleforum podcast about the oral argument know that this impression was largely confirmed at oral argument. The justices seemed more sympathetic at oral argument to the challengers than to the Federal Government. As a consequence, it should be unsurprising that the court sided with the National Association of Manufacturers in the opinion released last week. Indeed, the court was unanimous in holding that the plain text of the Clean Water Act requires any challenge to a definition of waters of the United States to be filed in District Court.

                                         Justice Sotomayor wrote for the court and there were no concurring opinions, which is somewhat notable because in many prior cases involving the Clean Water Act and in particular waters of the Unites States or wetlands regulation, we have often seen concurring opinions such as we did in the Sackett case for example. But, there were no concurring or dissenting opinions here. Writing for the court, Justice Sotomayor explained why a challenge to the definition of waters of the Unites States does not fall within any of the specific exceptions to Circuit Court jurisdiction that are detailed in § 1369 (b) noting for example, that definition of waters of the United States is not an action or proving or promulgating an effluent limitation or other limitation, nor is it a decision issuing or denying a permit under the Clean Water Act. But, rather it is an action defining terms that are potentially ambiguous, that are relied upon in implementing the Clean Water Act.

                                         As Justice Sotomayor noted, while the Waters of the Unites States Rule certainly has an effect on what sorts of facilities need permits, it is not itself an effluent limitation because an effluent limitation is "A restriction on quantities, rates and concentrations". This action by the EPA and Army Corps may determine when permits are necessary but is not itself an action issuing or denying a permit.

                                         Although the Federal Government had offered various practical arguments in support of allowing WOTUS challenges to proceed initially in Circuit Court, Justice Sotomayor explained that these arguments could not be squared with the relevant statutory texts. She said, "The courts are required to give effect to Congress' express inclusions and exclusions, not disregard them". She further said that, "The government's proposed functional interpretive approach is completely unmoored from the statutory texts". She noted that while the government's proposed alternative maybe more efficient, it may lead to speedier resolution of challenges to regulations of nationwide application like the definition of waters of the United States, that did not matter because the choice about how to structure litigation under the Clean Water Act is for Congress to make, not for the courts. And, that Congress is allowed to prioritize other considerations over litigation efficiency.

                                         If Congress believes that it's better to have many cases in many districts around the country, percolate up through the system, Congress is entitled to make that choice. Justice Sotomayor wrote, "The Government's policy arguments provide no basis to depart from the statute's plain language". This opinion, I think, shows that the current court cares about text quite a bit. Although, there were lots of pragmatic arguments made for adopting different views. Those arguments did not attract a single Justice. So, as a consequence of this decision, those that wish to litigate over things like the definition of waters of the United States now has certainty about where these cases need to be filed. They need to be filed in District Courts.

                                         There's no longer a need to seek litigants to file cases simultaneously in both District and Circuit Courts so as to preserve the viability of legal challenges. As a practical matter, in terms of what comes next, as I think I noted earlier, the Sixth Circuit had imposed a nationwide stay on the WOTUS Rule. Because this decision concluded that the Sixth Circuit lacked jurisdiction to hear the challenge to the WOTUS Rule, we should expect that stay to be lifted no later than mid February when the Supreme Court's mandate should issue. Usually, it takes around 25 days for the actual mandate of the court to issue. That leaves time for litigants to file a petition for re-hearing and that sort of thing.

                                         So, there's a little bit of time before this stay is likely to be vacated, but we should expect it to be vacate because if the Sixth Circuit did not have jurisdiction to hear the challenge, then the Sixth Circuit did not have jurisdiction to stay the regulation. Cases remain pending in various District Courts. At least one of those courts, District Court in North Dakota had enjoined implementation of the WOTUS definition in the 13th state that had challenged the regulation in that case. There are some other broad challenges in District Courts in Georgia and Texas that both involve multiple states. I wold expect those cases to be revived relatively soon.

                                         The Trump administration, as I noted, has proposed delaying the effectiveness of the Obama administration's WOTUS Rule. That proposal was published in the Federal Register, my understanding is that final action on that proposal is currently undergoing White House review, and so potentially could be issued in relatively short order. And, that would give the Trump administration time to proceed with its role-making to adopt a new definition of waters of the United States because the Trump administration would prefer to be able to adopt a new definition without having to go through a temporary period of enforcing the Obama administration definition.

                                         Without question, these efforts by the Trump administration will themselves provoke legal challenge, and these challenges will also need to be filed in District Court. Indeed, as I understand it, several blue states have already announced that they plan to file legal challenges against any Trump administration actions, either delaying the effective date of the Obama administration Rule or seeking to revise the definition of WOTUS. So, that's where we stand now. The Supreme Court has issued this important definition on Clean Water Act jurisdiction, it's the first time that this WOTUS Rule has gone to SCOTUS but because of the ongoing efforts to revise that rule, and the legal challenges that will provoke, I expect it will not be the last time we get to engage in alliteration about WOTUS and POTUS.

                                         I'll stop there. Happy to take questions if we have any.

Wesley Hodges:              Professor, it looks like there's one question in the queue so far, so let's go ahead and move to our first caller.

Johnathan Adler:            Okay.

Caller One:                      Hi Johnathan it's Craig Heimowitz.

Johnathan Adler:            How are ya?

Caller One:                      Good. So, question. It sounds like it's sort of a bit of a race to see whether the Trump agencies can get the new proposed rule making out and beat the stay to prevent them from doing that. Is that really the gist of it at this point?

Johnathan Adler:            Yes, I think it is. The Trump administration, my understanding, is there was a news report the Trump administration was going to ask the Sixth Circuit to delay any action dissolving the stay. My own view is that once the Supreme Court's mandate issues, I'm not really sure what justification the Sixth Circuit would have since the Supreme Court's conclusion is that the Sixth Circuit lacked any jurisdiction over this case in the first place. So, that would seem to suggest that the Trump administration has until mid-February to at least promulgate the rule that alters the effective date of the Obama administration rule.

                                         As, I think I had noted, that the strategy is, it's a lot easier to simply change the effective date on a regulation that's been promulgated than it is to completely rewrite the substance of that regulation. So, while the Trump administration is working on the latter, they're hoping they do the former. If they can get that out in time, then that would certainly smooth the transition. If they can't then we could have a short period of time where the EPA and the Army Corps are required to enforce the definition of waters of the United States that they're in the process of trying to undo, and that certainly could increase uncertainty for regulated entities. So, we'll just have to see if the Trump administration is capable of moving that quickly.

Caller One:                      Thanks. One quick followup, assuming the Trump administration can move fast enough, and the inevitable challenge comes in that they don't have the authority to change the date of the Obama rule, even though it's the exact same authority that issued the rule, do you think that has any legs in court or all just depends on the judge?

Johnathan Adler:            I mean it's hard to know. In some cases, like with the Clean Power Plan, courts have been relatively accommodating of the Trump administration. In the Clean Power Plan context, Trump administration has made very clear it's seeking to rescind that rule and that has initiated a role making to begin that process, and the D.C. Circuit has been accommodating with that. There have been some other cases in which courts have not been accommodating and have rejected Trump administration efforts to postpone regulations that they want to rescind or otherwise deal with.

                                         I think, in this particular case, I would think that assuming the Trump administration does get this rule out, amending the implementation date, I would think as an initial matter, that would be allowed to take place because it would essentially be preserving the status quo. And, there is one District Court decision out there that already had suspended the Obama administration WOTUS Rule in the 13 states that have been part of that challenge. And, I would think that if environmental groups go into courts saying the Trump administration can't change the effective date, I would think that would be a hard case to make.

                                         But, different courts may view this differently, and to be fair, we should note that we don't have a lot of case law, a lot of recent case law on administrations aggressively trying to undo the regulatory measures of their predecessors. You know, there are a handful of cases from the early Reagan administration. A handful from the Bush administration, But not a lot, and so that makes it more difficult to predict how courts are going to respond to these sorts of questions.

Caller One:                      Thanks.

Wesley Hodges:              Thank you caller. Looks as I spoke one person dialed in, so let's go ahead and move to them.

Caller  Two:                     Hello Professor this is Roger [inaudible 00:23:47]. I certainly enjoyed your presentation. I'm trying to look way down the road to the future. Let's assume that the Obama rule is canceled, withdrawn, changed. What ways can eventual rule come out that the Trump administration will push? Could it possibly be to return to actually navigable waters rather than some other extended hyperventilation?

Johnathan Adler:            Thanks for the question, and I think it's a very good question. The Trump administration has indicated that they'd like to move in the direction of Justice Scalia's plurality opinion in the Rapanos decision, which doesn't confine the Clean Water Act purely to navigable waters. But, certainly would adopt a narrower view of what constitutes waters of the Unites States generally requiring some sort of continuous surface water connection to navigable waters for a body of water, but to be understood as part of the waters of the United States.

                                         Two things, to not here, one is because the Clean Water Act defines navigable waters as waters of the United States, it's hard to argue that navigable waters simply means navigable waters. If that were so, then there would be no reason to have included that definition. So, waters of the United States subject to Clean Water Act are almost certainly broader than simply navigable waters. The question is really how much broader? My own view is that I do think there is a substantial amount of room to narrow the scope of regulatory jurisdiction under the Clean Water Act.

                                         I do think that the Trump administration could do that, and that it could hold up in court. But, they'll certainly have to be very careful about how they do it. If one reads the Rapanos decision closely, my own view is that it's a Chevron step two opinion, that is to say the court concluded that the phrase "Waters of the United States" is ambiguous, but then concluded that the interpretation that the Federal Government had given was not permissible interpretation under step two of Chevron.

                                         The reason that's important is that means that future administrations have a range of definitions within which they can operate, they can try and use that ambiguity to adopt a very broad definition, the way the Obama administration did. Or to adopt a fairly narrow definitions. And so, I think there is room to narrow the scope of Federal regulatory authority here. Not to just cover navigable waters, but certainly significantly less expansive that the rule that was issued in 2015.

Caller  Two:                     Thank you.

Wesley Hodges:              Thank you caller for your question. Professor Adler, are there any remarks you'd like to make before we end today?

Johnathan Adler:            I would say, as the last question indicated, that it will be important to pay attention to how the Trump administration goes about trying to revise the definition of waters of the United States. In Rapanos we had a 4-1-4 decision of the Supreme Court, four justices thinking that the Clean Water Act's jurisdiction should largely be confined to waters that have a continuous surface connection to navigable waters or otherwise have that sort of truly substantial connection to navigable waters.

                                         You had four justices that were willing to give the EPA and Army Corps a broad range to define what constitutes waters of the United States, and as so often is the case, we had Justice Kennedy in the middle arguing that there needed to be a significant nexus between a water and navigable waters for it to be subject to clean water regulation. But, explaining, at least as he saw it, that created quite a bit of room for the EPA and Army Corps and that they just needed to demonstrate that different types of waters that they wanted to regulate had such a nexus.

                                         A real challenge for the Trump administration in rewriting the Waters of the United States Rule will be to adopt a rule that is less expansive, but that is still something that Justice Kennedy would find to be consistent with the underlying language of the Act. I think it's doable, but I think it will be challenging and it will be certainly interesting to see what the Trump administration comes up with in that regard.

Wesley Hodges:              Thank you Professor. It looks like we did have one person calling with a question, so if it's okay with you ...

Johnathan Adler:            Sure.

Wesley Hodges:              We'll move to them.

Johnathan Adler:            Wonderful.

Caller Three:                    This is David [inaudible 00:28:42] in Atlanta. I'm a little unclear about what's wrong with just the basic navigable waters rule? Could you help me with that please?

Johnathan Adler:            Sure. So, the Clean Water Act requires a permit for deposit into navigable waters. The Act then defines navigable waters to be waters of the United States. The inclusion of that definition suggests that there are things that are not navigable, that are nonetheless waters.

                                         The real question that has always come up in the context of the Obama administration regulation as well as prior litigation over the scope of the Clean Water Act, is how much broader waters are than navigable waters. If the Clean Water Act only reached truly navigable waters, there would be no need to define navigable waters as waters of the United States. And so, that I think both creates ambiguity but I think it also indicates that the EPA and Army Corps of Engineers are obligated to apply the Clean Water Act to at least some waters that are not truly or continuously navigable.

Wesley Hodges:              Thank you caller for your question. No one has called in, so Professor, are there any remaining remarks you would like to make before end today?

Johnathan Adler:            I'll make one other comment about how this case fits into the environmental law jurisprudence of the Robert's Court and draw some conclusions I reached in a chapter in a book on Business in the Robert's Court that I published with Oxford University Press about a year or so ago. And that is, in this case like in most of the Robert's Court's environmental opinions, you don't see the court talking a lot about the environmental aspect of the case. There isn't a long discussion of why regulation of waters is important, or why it's important to control the pollution of waterways. Rather, this case focuses on the underlying textual question and the argument the government is trying to make to justify departing from or ignoring the relevant texts.

                                         That's interesting because throughout the Robert's Court the court has engaged environmental law cases not as being somehow special or distinct because they raise environmental concerns, but rather the court has approached them based on the type of questions that are being asked; Textual interpretation, regulatory process, federalism and so on. In that regard, this case is very much in line with the pattern we've seen in the Robert's Court and there's certainly no reason to think that that pattern will change when the Robert's Court deals with future environmental cases such as the significant Endangered Species Act case that the court will be hearing, I believe, at the beginning of next term.

 

Wesley Hodges:              Wonderful. Well, on behalf of the Federalist Society I'd like to thank Professor Adler for the benefit of his valuable time and expertise today. We welcome all listener feedback by email at [email protected]. Thank you all for joining us today. This call is now adjourned.