On January 22, 2018, the United States Supreme Court ruled unanimously in National Association of Manufacturers v. Department of Defense that legal challenges to an Obama Administration regulation defining “waters of the United States” (WOTUS) must be initially heard in federal district courts – and not federal courts of appeals. The decision resolves a long-standing ambiguity in the Clean Water Act and will have long-term consequences – e.g., relatively more resources will be necessary to litigate similar future cases and a six-year statute of limitations will apply (vs. 120 days). In the near term, a key impact of the decision could be that the Obama-era WOTUS rule goes into effect in 37 states. This could lead to uncertainty and confusion – and delays – in certain permitting regimes, including the U.S. Army Corps of Engineers’ (Corps) issuance of Clean Water Act 404 permits.

An enduring controversy in environmental law is the scope of the term “waters of the Unites States” as set forth in the Clean Water Act. The issue rests on statutory and constitutional interpretation, with a key practical impact being the scope of the federal government’s jurisdiction over waters and wetlands. The conventional wisdom is that broader federal jurisdiction results in, among other things, a more complex and expensive permitting process (and, conversely, narrower jurisdiction means fewer regulatory burdens).

In 2015, the Corps and U.S. EPA promulgated the Obama WOTUS rule, which re-defined “waters of the United States,” generally providing for broader federal jurisdiction under the Clean Water Act. Unsurprisingly, this led to a bevy of lawsuits. Due in part to the aforementioned ambiguity as to where jurisdiction lies, a range of groups and states challenged the Obama WOTUS rule in several federal district courts and courts of appeals. Two of these lawsuits resulted in key decisions. First, the District Court of North Dakota issued an injunction halting implementation of the Obama WOTUS rule in 13 states (North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, Wyoming and New Mexico). Subsequently, in a separate proceeding, the Sixth Circuit Court of Appeals issued a nationwide stay of the Obama WOTUS rule. Staying the Obama WOTUS rule resulted in the continued effectiveness of the “waters of the United States” definition “promulgated in 1986/1988, implemented consistent with subsequent Supreme Court decisions and guidance documents.” (Additional details regarding the recent history of WOTUS rulemakings and court challenges are set forth in Section II.B of the Corps’ and U.S. EPA’s recent Proposed Rule, Definition of “Waters of the United States – Addition of an Applicability Date to 2015 Clean Water Rule.)

An important consequence of National Association of Manufacturers is that the Sixth Circuit will likely conclude that its nationwide stay may not remain in effect because that court lacks jurisdiction to hear the case. The only other limit on the Obama WOTUS rule currently in effect is the injunction issued by the District Court of North Dakota – which only applies to the 13 states listed above. As to the other 37 states, the Obama WOTUS rule could go into effect in the very near future – potentially creating significant concerns for the regulated community. As noted by U.S. EPA:

The Supreme Court’s resolution of the question as to which courts have original jurisdiction over challenges to the 2015 Rule [i.e., the Obama WOTUS rule] could impact the Sixth Circuit’s exercise of jurisdiction and its stay. If, for example, the Supreme Court were to decide that the Sixth Circuit lacks original jurisdiction over challenges to the 2015 Rule, the Sixth Circuit case would be dismissed and its nationwide stay would expire, leading to possible inconsistencies, uncertainty, and confusion as to the regulatory regime that could be in effect pending substantive rulemaking under the Executive Order. (Emphasis added).

To be sure, ongoing efforts under the Trump Administration could very well result in the delay of the Obama WOTUS Rule’s implementation and, ultimately, its rescission and replacement. Furthermore, parties in the District of North Dakota litigation discussed above may seek to expand the applicability of the injunction from 13 states to nationwide. Additionally, litigation in several federal district courts challenging the Obama WOTUS rule that had previously been dismissed could proceed separately and result in additional injunctions beyond those currently in effect for the 13 states. That said, entities that have recently submitted or are contemplating submitting certain types of permit applications – including Clean Water Act 404 permit applications – should consider taking steps to ensure that the permits they seek will not be unduly delayed as a result of the uncertainties stemming from National Association of Manufacturers.