The United States Court of Appeals for the Sixth Circuit today issued a nationwide stay on the so-called “Clean Water Rule,” under which the United States Environmental Protection Agency (U.S. EPA) and the United States Army Corps of Engineers (Corps) revised the federal definition of “waters of the United States.” The rule, which is often referred to as the “waters of the United States,” or “WOTUS” rule, had previously been stayed in only thirteen states, pursuant to a North Dakota federal district court’s August and September rulings (available here and here). While additional background regarding the Clean Water Rule is available here and here, in general the rule would expand the application of various regulations under multiple federal environmental laws, resulting in significant impacts to the manufacturing industry and numerous other sectors, including agriculture, development, oil and gas recovery, and utilities.

Stay in Effect While Court Decides Jurisdiction

In today’s decision, the Sixth Circuit stayed the Clean Water Rule pending a determination of whether the court actually has jurisdiction to determine the rule’s validity—a question that led one of the three judicial panel members to dissent from the decision. The question of which court has jurisdiction over this question arises due to the relatively unique judicial review provisions in the federal Clean Water Act (CWA). The CWA states that certain types of rules promulgated under the Act are subject to review in the U.S. Courts of Appeals, while others are subject to review in the U.S. District Courts. Although U.S. EPA has consistently asserted, including to the Sixth Circuit, that review of the Clean Water Rule properly lies in a U.S. Court of Appeals, there are numerous lawsuits pending in district courts across the country challenging the rule. These district court lawsuits have not yet been consolidated (as the U.S. Courts of Appeals lawsuits were consolidated in the Sixth Circuit), and it is not clear when (or even if) such a district court consolidation will occur. Regardless, under the Sixth Circuit’s decision, the Clean Water Rule will remain stayed at least until the question of its own jurisdiction to hear the case is resolved.

Also of note was that in granting the stay, the court sent a discouraging message to U.S. EPA and the Corps, finding that the petitioners (a coalition of 18 states) had demonstrated a substantial likelihood of success on the merits (i.e., proving the Clean Water Rule is invalid). This likelihood of success was based primarily on the petitioners’ contentions that (1) the rule’s definition of “waters of the United States” is at odds with the U.S. Supreme Court’s definition set forth in Rapanos v. United States, decided in 2006, and (2) the rulemaking process for the final rule was “facially suspect,” as certain elements of the final rule (i.e., distance limits used to determine whether certain waters qualify as waters of the United States) were not properly noticed in the proposed rule. This finding raises the strong possibility, if not the likelihood, that if the Sixth Circuit decides it has jurisdiction over the case, it will ultimately invalidate the Clean Water Rule.

Pre-Clean Water Rule Regime Remains in Effect

The practical effect of the Sixth Circuit’s decision is that the pre-Clean Water Rule definition of waters of the United States remains in effect. While this likely means that the definition will continue to reach a smaller number of waters compared to the stayed Clean Water Rule, it also means that the regulated community will be required to continue seeking case-by-case applicability determinations, and dealing with the associated delays. In addition, the Sixth Circuit stated in its opinion that it expects the jurisdictional question to be ripe for decision in a “matter of weeks,” at which time it is at least possible the Clean Water Rule will be put back into effect (e.g., if the court finds it has no jurisdiction, it may find it does not have jurisdiction to continue the stay). This obviously leads to significant uncertainty and potential delay regarding permitting for pending development projects, among other activities regulated under the Clean Water Act. Accordingly, affected parties should closely follow further developments regarding the Clean Water Rule and its effectiveness.