The U.S. Supreme Court on May 25, 2023, issued its opinion in Sackett v. Environmental Protection Agency, 598 U.S. ____ (2023). The opinion addresses the definition of "Waters of the United States" (WOTUS) pursuant to the Clean Water Act (CWA), 33 U.S.C. Section 1251 et seq. The definition of WOTUS defines the geographic reach of the U.S. Army Corps of Engineers' and the U.S. Environmental Protection Agency's (EPA) authority in regulating streams, wetlands and other water bodies under the CWA. (See Holland & Knight's previous alert, "Waters of the U.S. Rule Will Significantly Expand Federal Authority," Jan. 19, 2023.)

There have been multiple Supreme Court decisions and dueling regulatory definitions over the past several years concerning the proper standard for how to determine whether a wetland or stream that is not navigable in fact is properly considered a WOTUS. The Sackett decision provides a very clear standard that substantially restricts the agencies' ability to regulate certain types of wetlands and streams. Specifically, wetlands that do not have a continuous surface connection with a navigable water are not federally jurisdictional. While streams were not addressed in the opinion, ephemeral streams and other water bodies that are not relatively permanent would also not be jurisdictional. The most recent definition of WOTUS promulgated by the Biden Administration (See Holland & Knight's previous alert, "Biden Administration Begins Process of Revising Waters of the U.S. Rule," Aug. 6, 2021), is based in part on the "significant nexus" test specifically rejected by the court. Thus, the Sackett case effectively moots that effort.

Background

Idaho landowners Michael and Chantell Sackett purchased property near Priest Lake, Idaho, and began backfilling the lot with dirt to prepare for building a home. The EPA informed the Sacketts that their property contained wetlands and that their backfilling violated the CWA, which prohibits discharging pollutants into "the waters of the United States" without a permit, 33 U.S.C. Section 1362(7). The Sacketts were given the choice of risking civil penalties (more than $40,000 per day) or restoring the site. The EPA classified the wetlands on the Sacketts' lot as "waters of the United States" because they were near a ditch that fed into a creek, which fed into Priest Lake, a navigable, intrastate lake. The EPA argued that the wetlands on the Sackett property were "adjacent" to an "unnamed tributary" on the other side of a 30-foot road. To establish a significant nexus, the EPA lumped the Sacketts' lot together with the Kalispell Bay Fen, a large nearby wetland complex that the Agency regarded as "similarly situated."

The Sacketts sued, challenging the EPA's interpretation of WOTUS. The U.S. Court of Appeals for the Ninth Circuit affirmed the district court's opinion, holding that the CWA covers wetlands with an ecologically significant nexus to traditional navigable waters and that the Sacketts' wetlands satisfy that standard.

In effect, the Ninth Circuit teed up resolution of a prior Supreme Court opinion Rapanos v. United States, 547 U.S. 715 (2006). In Rapanos the court failed to reach a majority, resulting in two different standards to choose from – the "significant nexus" standard expounded on by Justice Anthony Kennedy's concurring opinion and the "relatively permanent" standard as set forth in the Rapanos plurality opinion written by Justice Antonin Scalia.¹  In terms of the most recent rulemaking on the definition of WOTUS, the Trump Administration's 2020 Navigable Waters Protection Rule (NWPR),²  adopted the Scalia "relatively permanent" test, while the 2023 Biden rule is based on both relative permanence and the "significant nexus" test.³

The Sackett Majority Opinion

All nine Supreme Court justices agreed that the EPA overstepped its authority in asserting jurisdiction over the Sacketts' property. However, the justices disagreed on the proper standard for how to determine when the agencies may assert jurisdiction over an adjacent wetland under the CWA.

The majority opinion, written by Justice Samuel Alito and joined by Justices John Roberts, Clarence Thomas, Neil Gorsuch and Amy Coney Barrett, essentially adopted the Scalia test from Rapanos to determine when wetlands are part of covered waters. The opinion works through the history of the CWA and analyzes the statutory text to conclude that the Act "reflects Congress's assumption that certain 'adjacent' wetlands are part of 'waters of the United States.'" Thus, the core question was how to determine what waters are "adjacent" to a traditionally navigable water. The court agreed with the formulation of the Scalia test, holding that to assert jurisdiction over an adjacent wetland under the CWA, a party must establish "first, that the adjacent [body of water constitutes] … 'water[s] of the United States' (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the 'water' ends and the 'wetland' begins.'" The court stated plainly that "the CWA extends to only wetlands that are as a practical matter indistinguishable from waters of the United States." (Id.). The court did, however, "acknowledge that temporary interruptions in surface connection may sometimes occur because of phenomena like low tides or dry spells." This exception appears quite limited: It is not enough that the wetland is "neighboring" to covered waters – it must be connected.

The agencies argued that the significant nexus test has been and remains sufficient to establish jurisdiction over "adjacent" wetlands. The agencies requested the court to defer to its understanding of the CWA's jurisdictional reach as set out in its 2023 WOTUS rule. The court offered multiple reasons for concluding that the agencies' interpretation is inconsistent with the text and structure of the CWA. First, the court held that the "significant nexus" test is "inconsistent with the CWA's text and structure." The court held that it requires Congress "to enact exceedingly clear language if it wishes to significantly alter the balance between federal and state power and the power of the Government over private property." Noting that the CWA has an express policy of preserving state primacy over water, the court stated that it requires "a clear statement from Congress when determining the scope of 'the waters of the United States.'" The significant nexus test failed this test when compared to the basic definition of "navigable waters."

Second, the court held that "EPA's interpretation gives rise to serious vagueness concerns in light of the CWA's criminal penalties." The court was clearly concerned by prior acknowledgement of the EPA that under the significant nexus test, "almost all wetlands and waters" are regulated. Citing due process protections, the court was concerned that ordinary people would not be able to determine what conduct is prohibited under the significant nexus test. Earlier in the opinion the court noted that the CWA can criminalize even mundane activities and, therefore, a "staggering array of landowners are at risk of criminal prosecution or onerous civil penalties." The court also expressed concern about the ability of the agencies to overstep their authority in enforcement, noting at the opening that the "CWA is a potent weapon. It imposes what have been described as 'crushing' consequences even for inadvertent violations." The court also pointed out that the costs of permitting are significant and the process is "arduous, expensive and long." (Id. at 4). "Due to the CWA's capacious definition of 'pollutant,' its low mens rea, and its severe penalties, regulated parties have focused particular attention on the Act's geographic scope." The court clearly understood the fight over WOTUS from the side of property owners.

Finally, the court rejected the agencies' argument that "waters of the United States" covers any wetlands that are "bordering, contiguous, or neighboring" to covered waters. While acknowledging that this is the interpretation favored in the concurring opinion by Justice Brett Kavanaugh, the majority opinion held that an "adjacent" wetland has to be part of the "covered" waters – mere proximity is not enough; a continuous surface connection is required.

Conclusion

The Sackett majority opinion opens by acknowledging that the "uncertain" meaning of the definition of WOTUS has been a persistent problem. This opinion may bring an end to that uncertainty. The Sackett decision sets forth a clear test for determining jurisdiction. This test is a significant setback for any future attempt to expand CWA authority to wetlands and streams that are isolated, ephemeral or not obviously connected to a navigable lake or stream. In the arid West, this will be particularly significant given that many waters are not permanently wet. Yet, the states retain authority to regulate and certain states' jurisdiction is more broad than the federal.

Typically, the Administration will issue guidance interpreting the court’s opinion, as it did with Rapanos. While the 2023 WOTUS rule was not technically before the court, the majority opinion addressed the EPA's arguments and refused to defer to the EPA's interpretation of WOTUS based on "significant nexus." The 2023 WOTUS rule is effectively struck with not a lot of options remaining. Moreover, the tenor of the court and the statutory interpretation is part of a trend of requiring a clear statement from Congress when determining the scope of agency jurisdiction, as epitomized in West Virginia v. Environmental Protection Agency, 577 U. S. 1126 (2016), in which the court held that the EPA lacked the necessary "clear congressional authorization" to devise emissions caps under the Clean Air Act. While some are waiting for the court to address the deference established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. in the upcoming Loper Bright Enterprises v. Raimondo case, arguably that ship has already sailed. Future environmental regulations will be subjected to the same level of scrutiny. It should be expected that this jurisprudence will be tested in other forums and may have consequences for recent rulemakings.

Notes

¹ Holland & Knight's previous alert, "Waters of the U.S. Rule Will Significantly Expand Federal Authority," Jan. 19, 2023, discusses the differences between the two tests.

² The Navigable Waters Protection Rule: Definition of "Waters of the United States" 85 Fed. Reg. 22250 (April 21, 2020).

³ Revised Definition of "Waters of the United States" 88 Fed. Reg. 3004 (Jan. 18, 2023).