U.S. EPA's Jurisdiction Over Wetlands Dries Up Under Landmark Supreme Court Ruling

In a 9-0 ruling published on May 25, 2023, the U.S. Supreme Court rejected the U.S. EPA’s and U.S. Army Corps of Engineers’ (USACE's) use of the expansive “significant nexus” test to assert authority over adjacent wetlands as “waters of the United States” (aka WOTUS) for purposes of Clean Water Act (CWA) Section 404 permitting. The nine justices could not agree on the scope of the test to be applied – splitting 5-4 – with the majority adopting a narrow reading of the CWA that limited U.S. EPA’s and USACE’s jurisdiction to only those wetlands that have a continuous surface connection to a covered water. The decision in Sackett vs. EPA [available here] will require substantial changes to how the agencies regulate wetlands and has implications for how washes and other small tributaries can be regulated as well. 

The End of the Significance Nexus Test

The CWA prohibits the discharge or any “pollutant” into “navigable waters” without a permit. The term “pollutant” is very broadly defined in the CWA to include not only chemical waste but also plain, old dirt, and “navigable waters” is defined as the “waters of the United States, including the territorial seas.” Waters of the United States (or WOTUS), however, is not defined by the CWA, and here lies the root of the problem.  

For years, the courts and private parties, including property owners, developers and farmers, have struggled with the uncertain regulation of wetlands under the CWA. Since the U.S. Supreme Court’s 2006 decision in Rapanos vs. United States, in which a majority of the Court could not agree on a test for determining whether a wetland is regulated under the CWA, U.S. EPA and the USACE used the “significant nexus” test when defining jurisdictional wetlands. Under the significant nexus test, CWA jurisdiction over a wetland was present when “the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity” of WOTUS. 

To put it mildly, the “significant nexus” test was far from a model of clarity. Its application created confusion for property owners seeking to build on their property and resulted in significant costs for property owners to retain consultants to assist in evaluating potential wetlands and obtaining jurisdictional determinations or permits. Property owners could also face enforcement and significant penalties if they unknowingly deposited fill in a wetland that U.S. EPA determined to be jurisdictional using this expansive test.

The Court accepted Sackett specifically to decide the proper test for determining whether wetlands constitute WOTUS, and with this decision, the U.S. Supreme Court has ended the significant nexus test.

Continuous Surface Connection

In this decision, the Court, unanimously agreed that use of the significant nexus test was inconsistent with the CWA and that wetlands on the Sackett’s property were not covered by the CWA, and therefore not subject to permitting. The justices, however, could not all agree on how to determine whether a wetland constituted a WOTUS. In this case, a majority of five justices did agree on a test, which will provide much clearer guidance on what constitutes a jurisdictional wetland for purposes of CWA discharge prohibitions and permitting.

In an opinion authored by Justice Alito, the Court’s majority concluded that the test for whether a wetland constitutes WOTUS depends on whether the wetland has “a continuous surface connection” to relatively permanent waters. 

Referring to its 2006 decision in Rapanos vs. United States, the Court, in its lengthy analysis, concluded that “the Rapanos plurality was correct: the CWA’s use of ‘waters’ encompasses only those relatively permanent, standing or continuously flowing bodies of water forming geographical features that are described in ordinary parlance as streams, oceans, rivers, and lakes.” As a result, the Court found that the reach of the Clean Water Act “extends to only those wetlands that are as a practical matter indistinguishable from waters of the United States.” This means that the wetland must have “a continuous surface connection” to an adjacent body of water that itself is “a relatively permanent body of water connected to traditional interstate navigable waters.” The continuous surface connection required for federal jurisdiction to exist must be such that it is “difficult to determine where the water ends and the wetland begins.” 

Rejection of Expansive Arguments

The Court’s majority rejected the policy arguments made by U.S. EPA in support of expansive federal regulatory authority over conceivable waterways. Some of the points made by the Court include:

• “Wetlands that are separate from traditional navigable waters cannot be considered part of those waters, even if they are located nearby.”
• “The area covered by wetlands alone is vast—greater than the combined surface area of California and Texas. And the scope of the EPA’s conception of ‘the waters of the United States’ is truly staggering when this vast territory is supplemented by all the additional area, some of which is generally dry, over which the Agency asserts jurisdiction.”
• “The EPA also advances various policy arguments about the ecological consequences of a narrower definition of adjacent. But the CWA does not define the EPA’s jurisdiction based on ecological importance, and we cannot redraw the Act’s allocation of authority.”

A concurring opinion by Justices Thomas and Gorsuch, who also joined the majority opinion, would have gone even farther. These justices objected to the federal government regulating such waters under the Commerce Clause of the U.S. Constitution. They observed that “wetlands are just the beginning of the problems raised by the agencies’ assertion of jurisdiction in this case… Congress chose to tether federal jurisdiction under the CWA to its traditional authority over navigable waters. The EPA and the Corps must respect that decision.”

Justice Kavanaugh’s Concurrence and the Definition of "Adjacent"

While there is finally a majority opinion setting forth a clear test for evaluating the CWA regulation of wetlands, there are four justices who, while concurring in judgment with the majority, believe that the majority’s “continuous surface connection” test departs from the statutory text of the CWA, 45 years of consistent agency practice in regulating wetlands, and the Court’s precedents. Justice Kavanaugh’s concurrence, which was joined by three justices, primarily focuses on the 1977 amendments to the CWA that expressly authorized permitting of wetlands “adjacent” to WOTUS. Justice Kavanaugh states that the definition of “adjacent” covers not only adjoining/bordering wetlands, which would have a continuous surface connection” to a WOTUS, but also wetlands that are separated from a covered water by a man-made dike or barrier, natural river berm, beach dune or the like. He notes that to find otherwise, as the majority did, may leave long accepted and long regulated wetlands beyond U.S. EPA’s and USACE’s jurisdiction, which would have a concrete impact on the ability of the federal government to protect flood prone areas and unique ecologies, like the Chesapeake Bay. 

Implications of the "Continuous Surface Connection" Test

The new WOTUS definition published in the Federal Register on January 18, 2023 (and thereafter prevented from taking effect in many states) relied heavily on the "significant nexus" test, returning to the broader interpretation of WOTUS that had prevailed before the briefly applicable, more narrow definition published during the Trump administration. Sackett significantly curtails the scope of wetlands that may be considered WOTUS and has implications for streams as well. Although streams were not directly addressed in Sackett, the jurisdictional requirement of a "continuous surface connection" with relatively permanent waters may eliminate many small washes and ephemeral streams from federal jurisdiction, especially in the arid West. 

The Court's rejection of U.S. EPA's policy arguments about the ecological consequences of a narrower definition has implications as well. To supports its new WOTUS definition published in January, U.S. EPA and the Corps relied on potential ecological consequences of failing to subject a broad expanse of streams and washes to federal regulation. This rationale for an expansive definition of WOTUS was rejected in Sackett, where the majority opinion dismissed the use of ecological importance as a basis to expand the federal government's authority beyond what is stated in the CWA

Sackett is the most impactful WOTUS ruling since Rapanos. It lends authority to the several jurisdictions that have suspended the new WOTUS definition and will require the definition to be revisited yet again through rulemaking, the result of which will likely be a clearer, more narrow definition that will benefit many in the regulated community.

Quarles continues to monitor and share updates on the energy and environmental industries as events unfold. For additional insights to this ruling or guidance relative to your specific business needs, please contact your local Quarles attorney or:

Jeremy Lite: 602-229-5739 / jeremy.lite@quarles.com

Cynthia Faur: 312-715-5228 / cynthia.faur@quarles.com

Michael Mostow: 312-715-5158 / michael.mostow@quarles.com