Court Tosses 2015 WOTUS Rule

In redefining "waters of the United States," the Obama Administration failed to follow the Administrative Procedure Act.

Last night, in Texas v. U.S. Environmental Protection Agency, a federal district court in Texas held that the Obama Administration violated the Administrative Procedure Act when it adopted a revised definition of "waters of the United States" in 2015, and remanded the so-called WOTUS rule back to the federal agencies from whence it came.

The definition of "waters of the United States" is of particular importance because it defines the scope of federal regulatory jurisdiction under the Clean Water Act (CWA). In short, the CWA prohibits the discharge of materials into "navigable waters" without a federal permit, and the Act defines "navigable waters" as "waters of the United States." A broader definition means that more activities that take place on or near such "waters" are subject to federal regulation.

The precise scope of CWA jurisdiction has been the subject of litigation and legal wrangling for decades. In 2015, the U.S. Army Corps of Engineers and Environmental Protection Agency sought to bring greater certainty to CWA regulation with a new, fairly broad definition of "waters of the United States"—the so-called WOTUS rule. Yet because this rule adopted an expansive interpretation of "waters of the United States," numerous states, industry organizations, and property rights groups sued.

Much of the debate over the 2015 WOTUS rule focuses on whether the Obama Administration asserted federal regulatory jurisdiction beyond the scope of what the CWA authorizes or the Constitution permits. Yet Judge Hanks did not need to reach such questions to throw out the rule.

In promulgating the 2015 rule, the Army Corps and EPA failed to comply with the basic requirements of notice-and-comment rulemaking under the Administrative Procedure Act (APA). Specifically, Judge Hanks noted, key aspects of the final rule were not a "logical outgrowth" of the initial regulatory proposal published in the Federal Register and the public was never given the opportunity to comment on a key study that was "instrumental" in the final regulation adopted by the EPA and Army Corps.

According to Judge Hanks:

the Final Rule violated the APA's notice-and-comment requirements by deviating from the Proposed Rule in a way that interested parties could not have reasonably anticipated. Instead of continuing to use ecologic and hydrologic criteria to define "adjacent waters" as originally proposed, the summary judgment evidence reflects that the Final Rule abandoned this approach and switched to the use of distance-based criteria. . . . This shift in terminology and approach led to the promulgation of a Final Rule that was different in kind and degree from the concept announced in the Proposed Rule.

Specifically, the Proposed Rule defined "adjacent waters" based on the presence of a "hydrologic connection" with a Categorically Covered Water or a Categorically Covered Water's "influence [on] the ecological processes and plant and animal community structure" of a potentially covered water. . . . The
summary judgment evidence reflects that commentators to the Proposed Rule spent months evaluating the merits of this definition. However, in contrast, the Final Rule defined "adjacent waters" by proximity to Categorically Covered Waters. . . .

The Final Rule also violated the APA by preventing interested parties from commenting on the studies that served as the technical basis for the rule. As the courts have held, "[a]n agency commits serious procedural error when it fails to reveal portions of the technical basis for a proposed rule in time to allow for meaningful commentary." Owner-Operator Indep. Drivers Ass'n v. Fed. Motor Carrier Safety Admin., 494 F.3d 188, 199 (D.C. Cir. 2007). Indeed, it is a "fairly obvious proposition that studies upon which an agency relies in promulgating a rule must be made available during the rulemaking in order to afford interested persons meaningful notice and an opportunity for comment." Am. Radio Relay League, Inc. v. FCC, 524 F.3d 227, 237 (D.C. Cir. 2008). "The most critical factual material that is used to support the agency's position on review must have been made public in the proceeding and exposed to refutation." Air Transp. Ass'n of Am. v. FAA, 169 F.3d 1, 7 (D.C. Cir. 1999).

Here, the Agencies failed to give commentators an opportunity to refute the most critical factual material used to support the Final Rule—the Final Connectivity Report. Indeed, the summary judgment record establishes that the Final Connectivity Report was the technical basis for the Final Rule and was instrumental in determining what changes were to be made to the definition of the phrase WOTUS. . . .

Texas v. U.S. EPA is one of three challenges to the 2015 WOTUS rule pending in federal court. As Greenwire notes, there are other suits pending in federal court in North Dakota and Ohio. In addition, the Trump Administration is at work on its own revised WOTUS definition, which aims to increase regulatory certainty without significantly expanding federal regulatory jurisdiction. No doubt this WOTUS rewrite, when final, will be a target of litigation too. In the meantime, the Obama Administration's WOTUS rule in enjoined in half of the nation, and is now in force in the rest.