Ruling upends EPA's ability to regulate under the Clean Water Act but offers clarity to landowners and developers

In Sackett v. EPA, the U.S. Supreme Court delivered a massive blow to EPA's ability to regulate wetlands under the Clean Water Act ("CWA"). Addressing the "nagging question" about the reaches of the CWA, Justice Alito, joined by four other justices, found that only wetlands with a "continuous surface connection" to traditional "waters of the United States" are jurisdictional. This decision is at odds with 45 years of jurisprudence and agency practice but consistent with the growing hostility that the Supreme Court has shown towards agencies and their ability to make rules interpreting key statutes. To be sure, the Court's decision makes a key term of the CWA a lot clearer in a way that should benefit landowners, developers, and many currently regulated entities. The downside is that EPA lost the ability to regulate millions of acres of wetlands that are critical to water quality and biodiversity in the United States.

How Did We Get Here?

We have written a lot about the infamous "waters of the United States," or WOTUS. For the past 50 years or so, environmentalists, permit applicants, legislators, agencies, and courts have tried and failed to bring consistency and clarity to the meaning of WOTUS in the absence of a clear definition in the CWA itself. The U.S. Army Corps of Engineers and EPA have embarked on multiple rulemaking efforts, only to be consistently faced with judicial challenges and reversals, leaving us with a fragmented and uncertain landscape.

Beginning in 1985 with the Riverside Bayview and SWANCC decisions, the Supreme Court several times considered the jurisdictional limits of the CWA. Its decisions have often focused on wetlands, given that approval of potential development areas has been made significantly more difficult if a CWA permit is required. Riverside Bayview established the principle that wetlands adjacent to a navigable waterway are within the definition of WOTUS. The SWANCC decision first introduced the notion that isolated ponds and waters needed a "significant nexus" to traditionally navigable waters to be subject to CWA jurisdiction. Then came the 2006 Rapanos decision, which governed much of the last 20 years of CWA jurisdictional analysis.

In Rapanos, the Court considered jurisdiction over wetlands physically separated from navigable waters and over wetlands that are hydrologically isolated from any "waters of the United States." In a famous 4-1-4 split, Justice Scalia wrote an opinion for a plurality of the Court, while Justice Kennedy authored a separate concurring opinion affirming the result butproposing a different test. Justice Scalia, concerned about the increasing reach of the CWA, found that "waters of the United States" included wetlands with a "continuous surface connection to bodies of water that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and wetlands." Justice Kennedy instead argued that the Corps should determine on a case-by-case basis whether a water at issue had a "significant nexus" to waters that are navigable in fact.

Following Rapanos, some lower courts applied Scalia's test while others followed Kennedy, and some circuits found that waters satisfying either test could be jurisdictional (the view of the United States). The Corps and EPA have since repeatedly tried and failed to enact rules that would clarify the Rapanos decision. Presidents Obama, Trump, and Biden have all taken a cut at issuing new rules, but those rules have consistently been stuck in never-ending legal battles until repealed by the following administration. Then came Sackett.

The Sackett Case

On January 24, 2022, the Supreme Court agreed once again to weigh in on the jurisdictional reach of the CWA and on whether certain wetlands are WOTUS. The Sacketts own land in Idaho near Priest Lake, across a road from wetlands draining into a tributary eventually feeding into Priest Lake. The Sacketts are no stranger to CWA jurisdictional battles and have been trying to build on the parcel for years. After the Ninth Circuit upheld EPA's determination concluding that the property was jurisdictional wetland based on Justice Kennedy's significant nexus test, the Sacketts appealed to the Supreme Court. The Supreme Court accepted the case for review to determine "whether the Ninth Circuit set forth the proper test for determining whether wetlands are 'waters of the United States' under the Clean Water Act."

While the case was pending, the Biden administration issued a new rule adopting and refining the "significant nexus" test, providing another among several options that we wrote were open to the Court in approaching the Sackett case.First, it could dismiss the appeal as made as moot because of the new rule. Second, it could issue a very narrow ruling focused on the facts of the case. Finally, the conservative supermajority could firmly adopt Justice Scalia's surface connection test and effectively send EPA back to the drawing board. It went with the latter.

In Sackett, all of the justices agreed that federal regulators had gone too far in asserting jurisdiction in the case at hand. But only five justices agreed to categorically adopt the Scalia test. Addressing the "nagging question about the outer reaches" of the CWA, Justice Alito emphasized the low mens rea required to convict a person under the CWA and the severe penalties associated with the Act for the need to provide more clarity regarding its jurisdictional reach. Justice Alito relied on the use of the term "waters" elsewhere in the CWA and other laws to argue that those only referred to "bodies of open water" and concluded that the CWA "extends to only those 'wetlands with a continuous surface connection to bodies that are 'water of the United States' in their own right,' so that they are 'indistinguishable' from those waters."

In contrast, Justice Kavanaugh, joined by Justices Kagan, Sotomayor, and Jackson, warned that Justice Alito's test "depart[ed] from the statutory text, from 45 years of consistent agency practice, and from this Court's precedents," and will have "significant repercussions for water quality and flood control throughout the United States."

What Does This Mean?

Undoubtedly, the Sackett ruling simplifies the WOTUS jurisdictional test and will at least for the time being provide landowners and developers with more certainty when trying to determine whether a permit may be needed for development. The downside, especially for environmentalists, is that it is estimated that it will prevent EPA from protecting as much as between 118 million and 188 million acres of wetlands essential for biodiversity and water quality. Unless Congress intervenes to amend the CWA and clarifies the meaning of the term WOTUS, or the composition of the Supreme Court dramatically changes, it appears that the Scalia test will remain the law of the land for years to come. We are already seeing the impacts of the Sackett ruling as the Corps of Engineers was ordered to reconsider a jurisdictional determination in Louisiana as a result of the new test. Another potential wrinkle is that states may choose to assert greater jurisdictional coverage than the Corps, especially in California, which could thus still impose some restrictions on developments on wetlands. However, relying on resource-strapped states for enforcement could be tricky for environmental groups. Finally, the ruling may result in many projects avoiding review under the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA), by removing the “federal action” trigger of a Corps of Engineer Permit.

More broadly, the Sackett ruling continues what may be seen as a worrying trend in the last few years with the Supreme Court dramatically curtailing an agency's authority to regulate in its area of expertise. For a long time, agencies enjoyed broad discretion when interpreting the statutes they are charged with implementing and enforcing, due to their expertise and knowledge in a specific area. Following what become known as Chevron deference (from Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984)), courts would defer to an agency's interpretation of a statute if the statute was silent on the issue or the language was ambiguous, the interpretation was not unreasonable, and Congress had not directly answered the question. However, in recent years, Chevron v. NRDC has come under attack from state courts and the Supreme Court, and it just so happens that SCOTUS has agreed to review a case reconsidering the Chevron doctrine on appeal from the D.C. Circuit (Loper Bright Enterprises v. Raimondo). The Sackett case (which does not even cite Chevron), along with the recent West Virginia decision, sends a strong signal that the days of Chevron deference may be over soon.

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