Questions Remain After EPA and the Army Corps Update the “Waters of the United States” Definition Following Sackett v. EPA

On August 29, 2023, the Environmental Protection Agency (“EPA”) and U.S. Army Corps of Engineers (“Corps”) released the text of a rule further revising the definition of “waters of the United States” (“WOTUS”) that the agencies had finalized earlier this year (the “January 2023 Rule”). The newest rule seeks to incorporate key limitations on the jurisdictional reach of the Clean Water Act as explained in the Supreme Court’s May 2023 decision in Sackett v. EPA.¹ Key changes are highlighted in the chart below. This is the agencies’ fourth attempt in seven years to create a durable WOTUS definition, and what this rule does — and does not do — has far-reaching implications for permitting and enforcement for everything from large infrastructure and construction projects to manufacturing, industrial and natural resource extraction activities to homebuilding and the family farm. One long-standing test for determining federal jurisdiction is out, two new limitations are in, and many questions for project proponents and property owners remain.

In Sackett, the Court rejected, as inconsistent with the Clean Water Act, the “significant nexus” test that the agencies had used for more than fifteen years as grounds for establishing federal jurisdiction over waters and wetlands. In the August 2023 regulation, the agencies dutifully deleted that test from the definition of “waters of the United States.” But by bypassing the normal notice-and-comment rulemaking process, and by purporting to only mechanically (and some might say superficially) implement the Court’s opinion, the agencies missed an opportunity to clarify for the regulated community how they would interpret Sackett when determining if a waterbody or wetland might be jurisdictional. What counts as a “continuous surface connection?” How much flow is needed for a waterbody to qualify as “relatively permanent”? How can a water be only “relatively permanent,” but still have a “continuous” surface connection? What about flows that occur as a result of water management activities? Unfortunately, these and many other questions are unlikely to be resolved in the short term, even as the agencies work to prepare guidance to provide direction to their field staff and to the regulated public.

Setting the Stage

Earlier this year, we wrote about both the Biden administration’s January 2023 effort to craft a durable WOTUS definition and the Court’s subsequent Sackett decision invalidating the primary basis upon which the agencies have asserted jurisdiction since the Court’s fractured 2006 decision in Rapanos v. United States. The scope and contours of the term “waters of the United States” matter, because when a property includes jurisdictional waters, a property owner or developer may need to obtain a permit from federal agencies for projects that will affect those waters — including activities such as dredge and fill, and installing structures across or through the jurisdictional waters. Landowners and developers can face civil and criminal penalties for undertaking discharges into jurisdictional waters without a permit. The geographic reach of the Clean Water Act is among the longest-running and most contentious issues in U.S. environmental law.

As the decades since Rapanos have shown, interpreting what the Supreme Court has said, and deciding how scientific evidence should inform legal and policy decisions about the reach of federal jurisdiction, have made this a fertile ground for disagreement and litigation.

The Supreme Court attempted to resolve at least some of those issues in Sackett. Under the Court’s opinion, as implemented in the August 2023 regulation, the key jurisdictional tests center on whether a waterbody is “relatively permanent, standing or continuously flowing,” and whether a wetland has a “continuous surface connection” to a jurisdictional water. These standards replace the prior “significant nexus” test, where waterbodies or wetlands were jurisdictional if they “significantly affect” the chemical, physical, or biological integrity of waters used in interstate or foreign commerce, the territorial seas, or interstate waters (commonly known as paragraph (a)(1) waters). The August 2023 regulation did not change any of the existing exclusions from federal jurisdiction, such as those for water treatment systems, ditches excavated wholly in and only draining dry land that do not carry a relatively permanent flow of water, swales, gullies, and other erosional features characterized by low volume, infrequent, or short duration flow, and irrigated areas that would revert to dry land without irrigation.

Key Takeaways

The Rule Only Superficially Implements the “Continuous Surface Connection” Concept: In Sackett, the Supreme Court emphasized that Clean Water Act jurisdiction is limited to “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” (emphasis added and internal quotes omitted). While the revised rule adopts the “continuous surface connection” language for wetlands, it does not define the term — presumably because the agencies were relying on the “good cause” exception to notice-and-comment rulemaking, which they have interpreted as covering rulemakings that “merely” implement the Supreme Court’s decision. Nor does the August 2023 regulation clarify what kinds of “adjacent wetlands” are, to use the Court’s own language, “as a practical matter indistinguishable from waters of the United States,” such that it is “difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” Nor does the August 2023 regulation contain any express limitations to ensure jurisdiction does not extend beyond ordinary streams, oceans, rivers, and lakes. By not attempting to define those key jurisdictional terms, the agencies missed an opportunity to clarify for the regulated community how they will actually interpret Sackett when determining if a waterbody or wetland might be jurisdictional.

Ambiguity Remains for Relatively Permanent Flows, “Adjacent” Wetlands, and Ditches: Because the agencies did not provide any guidance on what qualifies as a “relatively permanent” flow or a “continuous surface connection,” disagreements and uncertainty will persist. Areas of potential disagreement include deciding what time periods and precipitation conditions are used to determine if a wetland has a “continuous” surface water connection to a downstream water, and how “relatively permanent” or “continuously flowing” a water body must be. As an example, consider a ditch a hundred miles from any traditionally navigable water that carries water only by virtue of water management practices. A determination that this ditch is jurisdictional seems at odds with the Court’s focus on the ordinary meaning of waters as features such as streams and rivers. How long a particular water feature must flow water to qualify as both “relatively permanent” and having a “continuous surface connection” will be a particularly significant question in water-scarce regions, where flow may occur seasonally or be interrupted in times of drought or extreme weather.

Timing and process: The rule will take effect as soon as it is published in the Federal Register. The agencies did not accept any public comments on the amendments to the regulation. In both instances (bypassing notice-and-comment and making the rule immediately effective), the agencies have relied on the Administrative Procedure Act’s “good cause” exception. The agencies have interpreted that exception to apply to rulemakings that (in their characterization) simply implement aspects of the Supreme Court’s direction in Sackett, over which they have no discretion. In the agencies’ view, going through the standard notice-and-comment process and allowing the standard delay between publication and effectiveness would have been “impracticable, unnecessary, or contrary to the public interest.”² Use of the “good cause” authority has historically been controversial and courts have construed the exception narrowly; opponents of the rule have indicated that they plan to bring challenges on both procedural and substantive grounds. In the meantime, the agencies say they are preparing guidance to provide direction to their field staff and to the regulated public.

Continued Patchwork of Which Rule Applies: There are multiple cases challenging the January 2023 Rule — one in Kentucky on appeal to the Sixth Circuit,³ another in Texas,⁴ and a third in North Dakota.⁵ These challenges primarily focused on the jurisdictional overreach of the significant nexus test, with the January 2023 Rule currently enjoined in 27 states and for certain parties. All three cases are currently being held in abeyance (paused), but the parties are required to file status reports or proposals for further proceedings within the next few weeks.⁶ EPA has stated that neither the January 2023 Rule nor these latest revisions will apply to states and parties where judicial stays are in force. Until the respective courts take action, those states and parties will be governed by the pre-2015 regulatory regime, which the agencies will need to administer in a manner consistent with Sackett.

We expect further litigation over the agencies’ decision to bypass the notice-and-comment rulemaking process and to make the August 2023 regulation effective immediately upon publication, as well as substantive arguments about the scope of the overall regulations, as revised. Although these revisions are a significant milestone, stakeholders should be on the lookout for further guidance from the agencies and updates on pending and new legal challenges.

Property owners and project developers and other proponents should continue to evaluate the changes and keep an eye out for further developments before taking actions that could impact areas that constitute federal jurisdictional “waters.” Given the (1) uncertainty about how the Supreme Court’s language, as implemented in the latest rulemaking, will be interpreted and applied in individual cases, and (2) the possibility of further litigation affecting the overall regulatory landscape, we recommend continuing to follow updates in this area and carefully assessing whether certain features will be considered jurisdictional waters.

¹ 598 U.S. 651 (2023).

² 5 U.S.C. 553(b)(B).

³ Kentucky et al. v. EPA et al., 3:23-cv-00007 (E.D. Ky.); 23-5345 (6th Cir.).

⁴ Texas et al. v. EPA et al., 3:23-cv-00017 (S.D. Tx.).

⁵ West Virginia et al. v. EPA, 3:23-cv-00032 (D. N.D.).

⁶ Texas et al. v. EPA et al., 3:23-cv-00017, ECF No. 81 (S.D. Tx.); West Virginia et al. v. EPA, 3:23-cv-00032, ECF No. 151 (D. N.D.); Kentucky et al. v. EPA et al., 23-5345, ECF No. 32 (6th Cir.).

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.