On January 22, 2018, the U.S. Supreme Court, in a unanimous ruling, held that federal district courts have jurisdiction over challenges to a rule amending the definition of "waters of the United States" (WOTUS Rule). National Association of Manufacturers v. Department of Defense, No. 16-299 (St. Ct.) (Opinion). The WOTUS Rule, which defines the scope of waters protected under the federal Clean Water Act (CWA), is a joint rulemaking by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (ACE) (see KEAG Bulletins Nos. 2014-26 and 2015-39).

Due to uncertainty about whether certain CWA judicial review provisions at 33 U.S.C. § 1369 applied to the WOTUS Rule, many parties challenged the Rule in both circuit courts and district courts. The circuit-court actions were consolidated and transferred to the Sixth Circuit in 2015, while the district-court challenges continued in parallel. State and industry petitioners in the Sixth Circuit challenge moved to dismiss for lack of jurisdiction. The government opposed the motions. In February 2016, the Sixth Circuit issued a split opinion finding that the Sixth Circuit, not the district courts, had jurisdiction to hear a case on the merits of the legality of the WOTUS Rule (see KEAG Bulletin No. 2016-05). State and industry petitioners appealed.

The Supreme Court considered the government's arguments that the WOTUS Rule falls within two of the seven categories of EPA actions for which the CWA provides judicial review directly in the circuit courts. 33 U.S.C. § 1369(b)(1)(E) and (F). Specifically, judicial review in circuit courts is available for certain actions of the EPA Administrator, including:

E. Approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title, and

F. Issuing or denying any permit under section 1342 of this title.

Id. Regarding subpart E, the government argued that the WOTUS Rule qualifies as an "other limitation under 1311" because the Rule establishes the "geographic scope of limitations promulgated under Section 1311." Opinion at 9. The Supreme Court disagreed, holding that the WOTUS Rule is not an effluent limitation because it imposes no restriction on quantities, rates, and concentrations of pollutants discharged into navigable waters. Opinion at 10. Instead, it merely defines a statutory term. Id. The Supreme Court went on to reason that the phrase "other limitation" must mean a limitation that, like an effluent limitation, restricts the discharge of pollutants. Id. at 11. Additionally, the Supreme Court held that the WOTUS Rule does not fall within subpart E because it is not a limitation promulgated or approved "under section 1311." Id. at 12. In support of this, the Supreme Court noted that CWA Section 1311 does not direct or authorize EPA to define statutory phrases, and that the rulemaking authority for the WOTUS Rule was cited in the government's own brief as CWA Section 1361(a). The Court rejected the government's argument that the WOTUS Rule's practical effect is to make effluent limitations under Section 1311 to the waters the Rule covers. Id.

Regarding subpart F, the government argued for a "functional interpretive approach" employed in Crown Simpson Pulp Co. v. Costle, 445 U.S. 193 (1980) (per curiam), which asks whether an agency action is "functionally similar" to permit issuance or denial. Id. at 15. Even though the WOTUS Rule does not itself issue or deny permits, it defines the scope of the National Pollutant Discharge Elimination System ("NPDES") program, which authorizes discharges into certain waters. The government argued that the WOTUS Rule has the effect of determining the geographic jurisdiction of EPA, and therefore determining when a permit might be issued. The Supreme Court described this argument as "completely unmoored from the statutory text," which the court held to be unambiguous. Opinion at 16, 15.

Finally, the Supreme Court addressed the government's policy arguments that support direct circuit-court review of the WOTUS Rule. For example, the government argued that circuit-court review of the WOTUS Rule would avoid the scheme under which federal courts of appeals review individual actions issuing or denying permits while district courts review broader regulations governing those actions. Id. at 17. The Court held that Congressional intent was clear "even if the Court might draft the statute differently." Id. at 18. Similarly, the Supreme Court rejected arguments that circuit-court review would allow for more efficiency and national uniformity. Id. at 18-19. Efficiency was "not Congress' only consideration," and while national uniformity may be desirable when dealing with provisions applicable nationwide, Congress chose not to funnel all challenges to CWA national rules to the courts of appeals, though it could have. Id. at 19. The Supreme Court reasoned that policy arguments "do not obscure what the statutory language makes clear: Subparagraphs (E) and (F) do not grant courts of appeals exclusive jurisdiction to review the WOTUS Rule." Id. at 19-20.

The decision settles a long-standing circuit split regarding the reach of the judicial review provisions in the CWA, but the practical effect on district court WOTUS Rule challenges may be minimal due to the Trump administration's commitment to repeal the Rule.