Toss of Trump-era Clean Water Act rule roils Ninth Circuit panel

(CN) — A Ninth Circuit panel on Tuesday heard arguments on whether federal judges can vacate a rule by the Trump-era U.S. Environmental Protection Agency without finding the rule unlawful.

In July 2020, the Trump administration revised the “Clean Water Act 401 Certification Rule,” which narrowed what issues state and tribal governments can consider when determining whether a project, particularly one discharging pollution into a waterway, complies with state water quality standards.

The rule affected the permitting and relicensing process for thousands of industrial projects, including natural gas pipelines, hydroelectric plants, wastewater treatment facilities and construction sites near sensitive wetlands. Beginning September 2020, states could no longer consider a project’s effects on air emissions and road traffic congestion. The scope of review would be limited to water quality alone.

By July 2021, the Biden administration asked the court to remand the dispute to the EPA because it planned to revise the rule by spring 2023. A coalition of states, tribal governments and conservation groups opposed Biden’s request, arguing that waiting another 18 months would cause “extreme” harm to the environment.

In October 2021, U.S. District Judge William Alsup concluded the risk of long-term environmental harms is of greater concern than economic hardships for project developers. Alsup also surmised the Trump-era rule likely violated the law because it adopted an understanding of the Clean Water Act that contradicted decades of EPA interpretation and Supreme Court precedent established in the 1994 ruling PUD No. 1 of Jefferson County v. Washington Department of Ecology.

Intervening industry groups asked Alsup to stay his decision, arguing that vacating the regulation would scuttle important energy projects, impose burdensome costs on project developers and hurt the economy. The groups also argued voiding the rule trampled on their rights to actively participate in rulemaking before different regulations are imposed. Alsup dismissed that argument, finding the groups could still fully participate in the EPA’s rulemaking process.

While the EPA declined to appeal Alsup’s decision, intervenor industries took the case to the Ninth Circuit in November 2021. Meanwhile, eight intervening Republican states appealed to the U.S. Supreme Court, which granted a stay pending appeal in a 5-4 split in April 2022. The stay restored the 2020 rule until the EPA revises it in 2023 or until the Ninth Circuit vacates it.

In May 2022, the state of California filed a motion for an indicative ruling that would “clear the way for conclusive merits briefing on the validity of the rule in the district court,” according to Judge Alsup, who rejected the motion after finding the plaintiffs had not demonstrated extraordinary circumstances. Moreover, Alsup noted the EPA issued a notice in June that it intends to do away with the major changes of 2020.

“We must ask what is the point of proceeding to litigate the merits of the 2020 rule when the agency says it will eviscerate it anyway?” Alsup wrote.

Judges from the Ninth Circuit appeared to ask the same question several times Tuesday, yet attorney George Sibley III for intervenor industry appellants — including American Petroleum Institute and Interstate Natural Gas Association of America — argued the appeal comes down to setting a precedent.

“We have 12 cases pending in the district courts just within the Ninth Circuit that involve challenges to rulemaking as issued by the Trump administration for which the agency in question has sought remand without vacatur,” Sibley told the 3-judge panel. “And you have the district courts reaching different conclusions on this very question, whether they nonetheless have the authority to vacate.”

The intervenors had argued that while three federal judges around the country challenged the Section 401 Rule, only Alsup vacated the rule and without holding the rule unlawful or attempting mandatory severability analysis.

To this argument, Senior U.S. Circuit Judge Richard Tallman, a Bill Clinton appointee, almost seemed partial, agreeing Alsup’s vacatur acted as a final order. Sibley had a harder time convincing U.S. Circuit Judge Michelle Friedland, a Barack Obama appointee, that Alsup’s vacatur was any different than a remand, which was the basis of the EPA’s argument for why the appeal should be dismissed altogether.

“Under this court’s precedent, the appeals should be dismissed for lack of jurisdiction. The remand order — including its vacatur provision — is not a final order appealable by nonagency litigants,” the EPA argued in a brief.   

The panel also heard arguments Washington Attorney General Kelly Wood, who took time to explain how the EPA’s 2020 rule change affected state and tribal government oversight over projects.

“The scope is what causes the harm because it prevents states, and we had pointed out there, it's things like hydroelectric dams that are licensed in Washington and anadromous fish have a hard time with temperature and we are losing the temperature battle in that regard from development and climate change,” Wood told the panel.

Still, the judges continued to circle back to how either appellant get what they want ahead of the EPA’s new rule in the spring.

Intervenor industries want the 2020 rule set back in place until the new rule is promogulated, while state and conservation appellees either want to the rule vacated or to be granted summary judgment. The EPA, on the other hand, wants the appeal dismissed or Alsup's vacatur tossed. Either way, it may take the panel up to six months to decide.

After Sibley’s rebuttal, Tallman, Friedland and Senior U.S. Circuit Judge Susan Graber, also a Clinton appointee, adjourned with no indication on how they may lean.

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