The Sacketts made history again^[1] in their continuing saga to build a modest house on a small lot they purchased in Bonner County, Idaho where they filled in some soggy low land. For roughly 15 years, Michael and Chantell Sackett battled against a United States Environmental Protection Agency (EPA)-issued Clean Water Act (CWA or the Act) Section 1319(a)(3) Order directing them to restore their property or pay substantial daily penalties.^[2] On May 25, 2023, in an appeal from the Ninth Circuit, the Sacketts won the war as all nine Justices in the majority and concurring opinions reversed the court below, rejected the "significant nexus" test that the EPA uses to determine whether a wetland is a water of the United States (WOTUS), and concluded that the wetland on the Sacketts' property^[3] is not covered by the CWA. This decision has an immediate and significant impact on federal wetland regulation.

What You Need to Know:

• After years of disagreement between landowners and the federal government about what is and is not a water of the United States subject to the federal Clean Water Act, the United States Supreme Court has simplified its interpretation of the language in that 41-year-old law to conclude that "waters of the United States" are relatively permanent bodies of navigable water, like lakes, rivers and streams, or wetlands with a continuous surface connection to such a water body.
• The decision leaves open to the states the ability to enact and enforce their own laws to protect both interstate and intrastate waters.
• Congress is likely free to amend the law if it disagrees with the Court
• For landowners and developers this is a welcome decision, that will likely save them significant time and money, even in states with rigorous environmental protection programs.

The Clean Water Act Framework

Enacted in 1972, the CWA applies to "navigable waters" defined as "the waters of the United States, including the territorial seas."^[4] The Act prohibits the discharge of "pollutants" ‒ including dredged and fill material ‒  into such waters without a permit.^[5]  

In 1977, Congress amended the CWA to add Section 1344(g)(1), allowing States to apply to the EPA to administer permit programs for dumping dredged or fill material into navigable waters, carving out a portion of those navigable waters including "wetlands adjacent thereto."  

The EPA and the United States Army Corps of Engineers (Corps) jointly enforce the Act and initially promulgated different rules defining "waters of the United States." These definitional rules became materially identical in the early 1980s,^[6] reflecting the agencies' attempt to reach all waters that "could affect interstate or foreign commerce."^[7] This included "adjacent" wetlands, defined in the rule as "bordering, contiguous, or neighboring" covered waters, and those separated from covered waters by "manmade dikes or barriers, natural river berms, beach dunes and the like."^[8]

The Significant Nexus Test and its Application in Sackett

Back in 2007, when it issued its Section 1319(a)(3) Order, the EPA determined that the Sackett wetland qualified as a water of the United States or covered water under the CWA based on the "significant nexus test." This test was articulated by Justice Kennedy in his concurring opinion in Rapanos^[9] in 2006, when the Court last considered which wetlands qualify as waters of the United States under the Act. While the decision below was vacated in Rapanos, no opinion commanded a majority of that Court. Justice Kennedy issued a concurrence concluding that CWA jurisdiction requires a  "significant nexus" between wetlands and navigable waters. He further opined that such a nexus exists where "the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical and biological integrity" of those waters.^[10]

On its face, the significant nexus test reflects a jurisdictional determination necessarily made on a case-by-case basis, taking into consideration multiple ecological factors. Whether a given wetland is a covered water is far from predictable under this test. And, by factoring in all "similarly situated lands in the region," the impact of any given wetland on any given water is multiplied several fold.

After Rapanos was decided, the EPA and Corps issued guidance^[11] adopting Justice Kennedy's significant nexus test. Thereafter, the agencies promulgated several rules defining WOTUS, the most recent of which incorporates the significant nexus test. ^[12]

The wetland on the Sackett property is located across from a 30-foot-wide road along which an "unnamed tributary" lies that feeds into a non-navigable creek, which, in turn, feeds into Priest Lake, an intrastate lake that the EPA designated as traditionally navigable. The EPA evaluated the Sackett wetland in combination with a large nearby fen wetland complex to determine that these properties, taken together, "significantly affect" the ecology of Priest Lake, making the Sackett wetland a covered water.

The Majority Opinion

Justice Alito, writing the Sackett majority opinion,^[13] saw the Act as a potent weapon with its large penalties and criminal violations,^[14] and a burden on landowners who, in the face of uncertainty of jurisdiction, may have to hire expensive experts to present evidence on significant nexus or go through a costly, long permitting process. His opinion reviews the agencies' efforts over the years to expand the scope of jurisdiction over more lands and waters, and it discusses the Court's prior jurisprudence in reining in those efforts. Ultimately, the Court decides to follow the plurality opinion from Rapanos.

The Act Covers Relatively Permanent Open Waters. As to what waters the Act covers, the Court begins with the text of the Act and the words "navigable waters" or "waters of the United States." Focusing on "waters" being generally defined and commonly understood as actual, open and wet water, the Court decides the Rapanos plurality correctly determined that, under the Act, "waters" encompass "only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic[al] features' that are described in ordinary parlance as 'streams, oceans, rivers and lakes.'"^[15] In other words, the Act covers open water, not lands and only those waters that are relatively permanent. This, the Court determined, was in alignment with the term that "waters of the United States" was defining, namely "navigable waters."

As to the EPA's significant nexus test, the Court finds no support in the text of the Act for that "freewheeling inquiry."^[16] Indeed, despite being a philosophically divided Court, rejecting the significant nexus test is one point on which all the Justices agree.^[17]

The Water Must Connect to a Traditional Interstate Navigable Water. The Sackett Court acknowledges that CWA jurisdiction extends beyond traditional, truly navigable waters. However, to qualify as a "water of the United States" the Court decides that there must be a water body like a lake, stream, or river, and it must be a relatively permanent body of water "connected to traditional interstate navigable waters."

Only Wetlands with a Continuous Surface Connection to WOTUS are Covered Waters. Viewing wetlands as lands rather than waters, the Court must harmonize the reference to adjacent wetlands in Section 1344(g)(1) with the Act's jurisdiction over "waters" of the United States. It does so by adopting a narrow interpretation of the word adjacent, concluding that the CWA extends to "only those wetlands that are 'as a practical matter indistinguishable from waters of the United States.'"^[18] In other words, a wetland qualifies as a covered water when you can't readily tell where the water ends and the wetland begins. This is a direct result of the Court interpreting "adjacent" as used in Section 1344(g)(1) of the Act to mean "adjoining."

In summary, under Sackett a wetland will not qualify as a CWA-covered water unless the following requirements are met: 

• The body of water adjacent to the alleged jurisdictional wetland must be a water of the United States, meaning a relatively permanent water that is connected to traditional, navigable interstate waters.
• The wetland in question must have a continuous surface connection with that water of the United States, making it difficult to determine where the water ends and the wetland begins.

Opening the window just a crack, the Sackett Court acknowledges that "low tides" and "dry spells" may interrupt a continuous surface connection.^[19] It also notes that while a barrier separating a wetland from a covered water ordinarily removes that wetland from jurisdiction, an owner cannot install such a barrier to defeat jurisdiction without violating the Act.^[20]

The Repercussions of Sackett. Sackett reflects the current Supreme Court's tendency to be less deferential to administrative agencies, to rein in agency attempts to expand their authority beyond what Congress has expressly granted, and perhaps to limit agency powers even further. Justice Kavanaugh (joined by Justices Sotomayor, Kagan and Jackson) concurs in the result and rejection of the significant nexus test, but disavows the majority's narrow definition of "adjacent" as contrary to its ordinary meaning. The concurring Justices admonish the majority for ignoring the plain text of the Act by effectively deciding Section 1344(g)(1) says "adjoining" rather than the more encompassing "adjacent." Justice Kavanaugh observes that the majority's interpretation eliminates many adjacent key wetlands from jurisdiction, such as those where a man-made dike or barrier separates the wetland from the jurisdictional waters.

As a result, Sackett significantly narrows the scope of wetlands subject to the federal wetland permitting program. Its holding effectively invalidates the Biden administration's new rule defining waters of the United States, many of the jurisdictional determinations issued by the Corps, and even Corps permits. Unless Congress steps in and amends the CWA, the EPA and Corps need to retool their approach to wetland jurisdictional determinations, permitting and enforcement. Some states already have robust wetland permitting programs and will be less affected by this decision; others may step in to regulate what Sackett carves out, likely depending on the political climate in that state.

Developers with planned and active projects should re-evaluate the federal wetland issues. If the necessary continuous surface connection is not present or there is no relatively permanent water connected to the wetland, the newly minted jurisdictional prerequisites may be missing. Since the Corps performs environmental review under the National Environmental Policy Act (NEPA) for each individual permit it issues, for some projects, eliminating a federal wetland permit may also eliminate review under NEPA, which can significantly improve the development timeline and cost. This is true even in a state with an aggressive wetland permitting program and its own NEPA equivalent.

Developers and landowners subject to federal-only ongoing wetland permit mitigation requirements should seek advice on whether to challenge those obligations as ultra vires.

Any person involved in a federal wetland enforcement action should evaluate the Sackett holding and seek dismissal of the proceedings if the decision eliminates the allegedly impacted wetland from CWA jurisdiction.

Persons involved in other CWA enforcement actions (e.g., point source or stormwater programs) should also consider whether their alleged discharge is or is not to a jurisdictional water given the Court's new interpretation and seek relief accordingly.

[1] The Sacketts' first foray before the United States Supreme Court resulted in a decision in their favor allowing persons to obtain judicial review of CWA § 1319(a)(3) orders under the Administrative Procedures Act. Sackett v. EPA, 566 U.S. 120 (2012).

[2] The daily penalty amount at the time was up to $37,500 per day. The EPA claimed a separate, additional violation and penalty applied per day for not complying with the Order. This penalty is substantially higher today due to the Federal Civil Penalties Inflation Adjustment Act of 1990 that authorizes the EPA to adjust the maximum penalty for inflation.

[3] The "wetlands" on the Sackett property are located across from a 30-foot-wide road along which an "unnamed tributary" lies that feeds into a non-navigable creek, which, in turn, feeds into Priest Lake, an intrastate lake.  

[4] 33 U.S.C. § 1362(7).

[5] 33 U.S.C. §§ 1311(a), 1344(a), 1362.

[6] See 45 Fed. Reg. 33424 (1980); 47 Fed. Reg. 31810-31811 (1982).

[7] The agencies extended their jurisdiction to include "intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds." 40 C.F.R. § 122.3 (1981) (EPA); 33 C.F.R. § 323.2 (1983) (Corps).

[8] Id.

[9] Rapanos v. United States, 547 U.S. 715 (2006).

[10] Id. at 779-780 (Kennedy, J. concurring in judgment).

[11] EPA and Corps, Clean Water Act Jurisdiction Following the U.S. Supreme Court's Decision in Rapanos v. United States & Carabell v. United States 8-12 (2008).

[12] The significant nexus guidance was followed by three rules, each promulgated during a different Presidential administration and defining WOTUS differently. 80 Fed. Reg. 37056 (2015); 84 Fed. Reg. 22340 (2020); 88 Fed. Reg. 3004 (2023). Each rule was met with multiple court challenges, some successful and some not, creating a regulatory quagmire and patchwork where, on any given day, different rules defining waters of the United States applied in different states. When the Court granted certiorari on Sackett, whether a wetland is a covered water under the Act was an issue begging for clarity and consistency.

[13] Sackett v. United States, 598 U.S. ____ (2023). Justices Roberts, Thomas, Gorsuch and Barrett joined in the majority opinion. Justice Thomas also filed a concurring opinion focused on the history and limited scope of what are navigable waters, in which Justice Gorsuch joined. Justice Kagan, joined by Justices Sotomayor and Jackson filed an opinion concurring in the judgment and disagreeing with the majority's "pop-up clear statement rule" that "magically appear[s] as get-out-of-text-free cards,"— all in reference to the Court's interpretation of "adjacent." (Kagan, J. concurring at p. 5). Finally, Justice Kavanaugh joined by Justices Sotomayor, Kagan and Jackson filed an opinion concurring in the judgment but disagreeing with the majority's interpretation of the CWA and the meaning of "adjacent," based on the plain text of the Act and the longstanding and consistent agency interpretation of the term.

[14] Sackett v. United States, No. 21-454 (May 24, 2023) Slip. Op. at pp. 3, 13.

[15] Id. at 14.

[16] Id. at 25.

[17] Id., Kavanaugh, J. concurring in result at p. 1 (joined by Sotomayor, J., Kagan, J. and Jackson, J.).

[18] Id. (Alito, J. for the Court) at p. 22 (quoting Rapanos).

[19] Id. at 21.

[20] Id. at 21-22; n. 16.