By: Nicholas W. Scala

The Supreme Court has paved the way for industry to argue for a district court venue in what is expected to be a long-running judicial dispute over the Environmental Protection Agency’s sweeping rule under President Obama to regulate virtually all water bodies in the country.

On Jan. 13 the high court said it would hear arguments over a petition backed by the National Sand, Stone and Gravel Association (NSSGA) regarding which court will initially field the multi-industry challenge to the “Waters of the United States” rule. One of the most contentious rules issued in the Obama administration, the far-reaching regulations would affect almost all mining permits in the United States if fully implemented.

The massive rule issued in 2015, becoming effective August that year, redefines what bodies of water fall under the Clean Water Act, now to include both navigable and various other types of water bodies, effectively expanding the reach of the EPA’s regulations to a vast degree. See our previous blog post for more details on the effects of WOTUS.

Supreme Court justices will likely hold a hearing on the petition in April and issue a decision in June, near the end of this court term. Meanwhile we can expect the Trump administration to do everything it can to rework WOTUS and at least halt the existing rule, which has already been stayed throughout the country.

Numerous industries opposing the rule would like to see the multi-party challenge heard in district courts where they may find a more favorable opportunity to present their case, as opposed to one of the appeals courts. The high court will explore whether the Sixth Circuit Court of Appeals erred in ruling that it has jurisdiction over the challenges.

Specifically, the legal question is whether the Sixth Circuit has jurisdiction under the Clean Water Act’s judicial review provision regarding permits to review the rule, even though the rule does not issue or deny any permits but instead, defines waters that fall under the Act.

How this litigation evolves will have a tremendous impact on the mining sector. As NSSGA explained in a blog recently regarding the regulations’ impact:

“The WOTUS rule would drastically increase the jurisdiction of the EPA and would cost the aggregates industry millions of dollars to comply with new requirements.”

Rule May Be Reworked

EPA wants more time to rework the rule before legal challenges ultimately lead to the courts vacating the rule entirely. However, this would be a lengthy and difficult undertaking. EPA already has said under Obama’s administrator, Gina McCarthy, that the Agency met with stakeholders more than 400 times in devising the complex rule.

If that wasn’t enough to get it right, most industry advocates cannot see a way forward that does not involve throwing out the rule entirely. In the case of the mining sector the Agency simply did not foresee the massive impact that redefining “waters” would have on permitting.

On Jan. 25 the Sixth Circuit put a “hold” on the legal challenges in acknowledgment of the Supreme Court review of which courts have jurisdiction. This will give the new administration some breathing room to revisit the rule and also possibly work out something with Congress, which will almost certainly get involved again this year.

In the last days of the Obama administration, officials were circling the wagons in anticipation of the full-on assault that the rule would face in courts, the Congress and probably by opponents in the incoming administration. As a last-ditch effort, the outgoing administration filed a lengthy brief in the Sixth Circuit to defend the rule. The Sixth Circuit previously issued a nationwide stay of the rule’s enforcement pending litigation.

Industry groups argue in the extensive legal challenge that EPA did not follow procedural rules in issuing the rule, including failing to reopen the administrative record after making major changes to the rule; that the Agency issued an arbitrary and capricious rule; and that required analyses of economic and environmental impacts had not been conducted, among other faults in the rulemaking.

Numerous district court challenges to the rule were consolidated into the challenge that is now pending before the Sixth Circuit, but we will now see, based on the Supreme Court decision, where this crucial litigation actually proceeds.

Conclusion

With the countless legal and congressional battles still ahead on the WOTUS front, it will be interesting to see how the Trump administration approaches what EPA earlier hoped would be a relatively smooth transition to wider regulatory authority under the Clean Water Act.

Congress has already shown a willingness to stay engaged in this issue, especially through the purse strings, and emboldened after the election will continue to push back against the rule. The legal questions aside, we may very well see lawmakers try to de-fund the rule and take other actions to peel back the regulations.

The mining sector, which Trump did his best to court during the election, will also be watching closely to see how this plays out not only in his administration but in the courts and on Capitol Hill.