In re Clean Water Act Rulemaking

Background

States, tribes, and nonprofit conservation groups challenged the Environmental Protection Agency’s Clean Water Act Section 401 certification rule. Section 401 generally requires a state, authorized tribe, or the Environmental Protection Agency to certify that a federally licensed or permitted activity that may discharge into navigable waters will comply with applicable water-quality requirements. Federal permits generally cannot be issued when the required certification has been denied.

The 2020 certification rule changed the prior procedures in several ways. Among other things, it narrowed the scope of certification, allowed the Environmental Protection Agency to set the time for a certifying authority to act, and allowed the agency to review whether a certification denial followed the rule’s procedural requirements and to deem a certification waived if it did not.

After a change in federal administration, the Environmental Protection Agency announced that it intended to review the rule and issue a replacement. It then asked the court to remand the rule to the agency for further proceedings without vacating it. The plaintiffs opposed that request and sought remand with vacatur. Intervening defendants moved to strike the plaintiffs’ arguments about vacatur.

Legal standards

The court explained that an agency may voluntarily ask a court to remand a challenged action for further consideration without admitting that it made a legal error. In this circuit, remand generally should be refused only when the agency’s request is frivolous or made in bad faith. When an agency has substantial and legitimate concerns about its action, remand is usually appropriate.

The court also held that it could vacate the rule without first issuing a final decision on the merits of the underlying challenges. Vacatur means setting aside and nullifying the agency action. The court applied the two-part Allied-Signal test: first, the seriousness of the rule’s deficiencies and the extent of doubt that the agency chose correctly; and second, the disruptive consequences of changing the rule while the agency reconsiders it.

Remand

The court granted remand. The Environmental Protection Agency had identified substantial concerns about the current rule, including its certification-process requirements, enforcement provisions, treatment of modifications and reopeners, and practical effects on certification requests and decisions. The court concluded that the plaintiffs had not shown sufficient grounds to depart from the usual practice of allowing remand.

Vacatur analysis

For the first Allied-Signal factor, the court focused on the rule’s revised definition of the scope of certification. The court said that the revised rule took a position contrary to the Supreme Court’s interpretation of Section 401 in PUD No. 1 of Jefferson County v. Washington Department of Ecology, which recognized state authority to impose conditions addressing the applicant’s compliance with water-quality requirements and limitations on the activity as a whole once a discharge exists.

The court found that the Environmental Protection Agency had not reasonably explained this sharp departure from the Supreme Court’s interpretation. It also found that the rule appeared inconsistent with the Clean Water Act’s cooperative-federalism principles and that the agency’s stated intention to restore those principles further supported significant doubt about the rule’s correctness. The agency’s list of substantial concerns also covered nearly every major substantive change in the rule, suggesting that the agency would not or could not adopt the same rule on remand. The first factor therefore supported vacatur.

For the second factor, intervening defendants argued that vacatur would disrupt regulators and regulated entities by temporarily returning them to the earlier rule. The court found that the current rule had been in effect for only thirteen months and had been challenged from the beginning, so substantial reliance on it had not developed.

The court gave particular weight to potential environmental harm from leaving the rule in place. It relied on evidence concerning three hydropower dams on Washington’s Skagit River, including concerns that the rule limited restrictions on increases in water temperature that could affect threatened Chinook salmon and the endangered Southern Resident Orca population. The court concluded that these environmental consequences outweighed the economic disruptions identified by intervening defendants and supported vacatur.

Disposition

The court granted the motion for remand. Upon remand, it vacated the current certification rule, 40 C.F.R. Part 121. The court stated that this would temporarily return the earlier rule to force until the Environmental Protection Agency finalized a new certification rule, which the opinion expected in Spring 2023.

The court denied intervening defendants’ motion to strike. It denied the Environmental Protection Agency’s request for judicial notice as moot. Judge William Alsup entered the order.