On Thursday, August 27, 2015, the U.S. District Court for the District of North Dakota enjoined the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) from implementing the recently finalized rule (Rule) that defines waters subject to jurisdiction under the Clean Water Act (CWA).  The Rule, issued on June 29, 2015, is intended to clarify which streams and wetlands constitute "waters of the United States," and are therefore subject to CWA protection.  Several states, including North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, and Wyoming (collectively, States), filed a lawsuit challenging the Rule, and sought to enjoin implementation of the Rule pending a decision on the merits.  The court granted the preliminary injunction, finding it was likely EPA and USACE exceeded the limits of their statutory authority by promulgating the Rule. 

In determining whether to grant the injunction, the court applied the traditional four-factor test, weighing:  (1) the likelihood of success on the merits, (2) the threat of irreparable harm, (3) the balance of harms, and (4) the public interest.  In finding that the States were likely to succeed on the merits, the court held that the Rule failed to satisfy the standards set forth by the U.S. Supreme Court in Rapanos v. United States, 547 U.S. 715 (2006).  The court explained that the Rule allows EPA and USACE to regulate "waters that do not bear any effect on the ‘chemical, physical, and biological integrity' of any navigable-in-fact water."  Specifically, the court found that the definition of "tributary" includes "vast numbers of waters that are unlikely to have a nexus to navigable waters within any reasonable understanding of the term."  The court also found that the agencies likely promulgated the Rule in violation of the Administrative Procedure Act.

Turning to the remaining three factors, the court found that the States had established a threat of irreparable harm because, once the Rule takes effect, the States will lose their sovereignty over intrastate waters and will be subject to "unrecoverable economic losses" as a consequence of the obligation to comply with CWA regulations.  Finally, the court concluded that the balance of the harms and the effect on the public interest weigh in favor of the States, because the injunction would "ensure that federal agencies do not extend their power beyond the express delegation from Congress." 

Notably, EPA has taken the position that the injunction only applies in the States that were parties to the litigation.  According to EPA, in all other respects, the Rule is effective today, on August 28, 2015.  Despite EPA's statements, the court's decision does not expressly limit the scope of the injunction.  Rather, it simply provides that the States' motion for a preliminary injunction, enjoining the Rule, is granted.  It is unclear whether the scope of the injunction will become an issue in controversy in the litigation.

The court also rejected the agencies' contention that the district court lacks jurisdiction to hear the case.  EPA and USACE argued that, pursuant to 33 U.S.C. § 1369(b)(1)(E), the district court lacked jurisdiction because EPA had promulgated "an effluent limitation or other limitation under [33 U.S.C. §§ 1311, 1312, 1316, or 1345]," and therefore original jurisdiction belonged in the U.S. Court of Appeals.  The court rejected this argument, finding the Rule does not impose any "effluent limitation" or "other limitation" within the statutory definition.  Rather, the Rule "merely redefines what constitutes ‘waters of the United States.'"  Alternatively, EPA and USACE argued that original jurisdiction rests in the court of appeals because issuance of the Rule involved the issuance or denial of a permit.  The court also rejected this argument, holding that the Rule had "at best, an attenuated connection to any permitting process." 

The North Dakota case is one of 28 cases challenging the Rule filed by states, and one of more than 33 cases filed jointly by states, environmental groups and industry organizations.  Given this landscape, it is noteworthy that the court decided to enjoin the Rule, denying a request by EPA and USACE to stay the case.

The court's jurisdictional ruling is contrary to a recent decision by the U.S. District Court for the Northern District of West Virginia.  On August 26, 2015, a West Virginia judge dismissed an action brought by an energy corporation challenging the Rule.  The court held that, pursuant to 33 U.S.C. § 1369(b)(1)(E) and (F), the district court lacked jurisdiction and that exclusive jurisdiction over the action belongs in the court of appeals.  In light of the West Virginia decision, among other things, it is a near certainty that the North Dakota court's decision will be appealed.