In the latest chapter of the ongoing Clean Water Rule saga, the Sixth Circuit Court of Appeals today stayed implementation of that rule.  Jointly promulgated by USEPA and the Army Corps of Engineers on June 29, 2015 (80 Fed. Reg. 37,054), the Clean Water Rule went into effect on August 25, 2015.  The rule substantially revised earlier rulemakings and guidance regarding the scope of the Clean Water Act’s jurisdiction, but triggered lawsuits and Congressional hearings in doing so.

In the judicial forum, a series of actions were filed in federal district and appeals courts.  The  Judicial Panel on Multi-District Litigation consolidated these actions before the Sixth Circuit Court of Appeals (In re Environmental Protection Agency and Department of Defense Final Rule, Nos. 15-3799/3822/3853/3887).  As consolidated, that matter includes 18 states challenging the rule, as well as numerous intervenors (seven states, the District of Columbia and environmental groups) supporting USEPA and the Army Corps.

The Sixth Circuit’s jurisdiction over the consolidated cases has been challenged, but pending resolution of that dispute, the Court granted a motion to stay implementation of the Clean Water Rule.  Unlike an earlier decision from the federal district court in North Dakota that stayed implementation of the Clean Water Rule in 13 states, this stay applies nationwide.

In addition to the practical implications of this ruling (discussed below), the grounds for the decision are important, as they provide an indication of how the merits of the pending challenges may be evaluated.  The Court concluded that these challenges had a “substantial possibility of success on the merits,” in particular  citing two claims:  (i) that the final rule varied so substantially from the draft published for public comment that it violated the Administrative Procedures Act, and (ii) that the distance-based jurisdictional limitations lacked any scientific basis.  While the Court agreed “the clarification that the new Rule strives to achieve is long overdue,” it concluded “a stay temporarily silences the whirlwind of confusion that springs from uncertainty about the requirements of the new Rule and whether they will survive legal testing.”  The Court split 2-1, with the dissent contending that the Court should not grant the stay without first determining if it had jurisdiction over the case.

As a practical matter, this ruling answers some questions and raises yet others.  While implementation of the Clean Water Rule had already been stayed in 13 states, the rule’s implementation is now halted in all states. The decision states that the stay preserves the pre-Clean Water Rule “status quo,” presumably meaning that the regulations and guidance in effect before the Clean Water Act became effective should again be consulted to determine Clean Water Act jurisdiction.

However, the Sixth Circuit still has to decide whether it is has jurisdiction over the multi-district litigation – when will that decision be made? And if the Court concludes that it does not have jurisdiction, the stay will dissolve and presumably implementation of the Clean Water Rule would proceed.  This uncertainty presents obvious risks to applicants who may file permit applications relying on the stay of the Clean Water Rule, only to find that the Sixth Circuit has dissolved its stay, thereby rendering the application obsolete (unless the applicant is in one of the 13 states subject to the stay issued by the federal district in North Dakota – assuming that stay also remains in effect!).

The obvious but unlikely solution would be for the USEPA and the Army Corps to agree voluntarily to suspend implementation of the Clean Water Rule.  In the absence of that occurence, entities needing to resolve Clean Water Act jurisdictional issues are unfortunately left to travel in uncharted waters.