In a major victory for the regulated community, the Supreme Court ruled unanimously this week that property owners facing potential enforcement actions under the Clean Water Act may seek pre-enforcement judicial review of administrative compliance orders (ACO).  The decision clarifies that landowners may challenge an ACO that claims they are in violation of the Clean Water Act because they filled wetlands without obtaining a permit.  The Environmental Protection Agency and the Army Corps of Engineers have traditionally relied on ACOs (which subject landowners to significant liability) to encourage them to come into compliance quickly (i.e., before any judicial process). 

Prior to the ruling, those receiving ACOs, but believing their property did not contain a wetland, had no way to challenge an agency determination to the contrary in court.  Rather, landowners were forced to defy the ACO and await the initiation of a federal enforcement action before challenging the jurisdiction on which the ACO was based.  The court held such landowners should be able to contest agency findings under the Administrative Procedure Act.  Writing for the Court, Justice Scalia explained that Act’s "presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all," and that there is “no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance.'"  The full Opinion is available at http://www.supremecourt.gov/opinions/11pdf/10-1062.pdf.

The Environmental Protection Agency and the Army Corps of Engineers appear to have dropped their schedule for crafting a rule to codify informal “Guidance” governing Clean Water Act jurisdiction over various wetlands and marginal “waters of the United States.” Earlier this month, EPA’s website indicated a notice of proposed rulemaking could be published in the Federal Register in March. The EPA site now simply states, notwithstanding multiple calls for a formal rulemaking process, “[t]he agencies propose to finalize the guidance and to continue work on a rulemaking.” There is now no timetable, and it is unclear whether the agency will issue a proposal before the Presidential election. The informal nature of the “Guidance” presents significant questions concerning its legal effect. These questions have led many to call for a formal rulemaking under the Administrative Procedure Act. Even if the Guidance is not ultimately promulgated as a formal administrative rule, the regulated community can expect agency employees to follow it. But, it is unclear what deference Courts might afford the policies embodied in the Guidance. In response to the agencies’ decision to transmit the Guidance to the Office of Management and Budget, on February 21, 2012, Sen. Rand Paul (R-KY) introduced legislation, S. 2122, that would provide a definition of "navigable waters" and federal authority; exclude ephemeral and intermittent streams from federal control; prevent agencies from reinterpreting the definition of "navigable waters" without congressional approval; restore control over local water and land use to the States; limit federal access to private property; and, require compensation for loss of use and value of private property.

This is a reminder that a new general permit for pesticides became effective November 1, 2011, providing coverage for specific types of applications of pesticides to, over or near waters of the state.  The new pesticide general permit provides additional protection in some specific circumstances where pesticides are applied on or near surface waters.  The goal of this permit is to protect water quality under specific conditions where surface waters could be affected.  Until recently, the Federal Insecticide, Fungicide and Rodenticide Act instructions on product labels had been the method of regulating the application of pesticides.  However, federal court rulings led EPA to establish requirements for a National Pollutant Discharge Elimination System (NPDES) permit in addition to the labeling requirements, under specific circumstances.

To comply with these new federal requirements, NDEQ developed the NPDES pesticides general permit.  The new permit rules can apply to a variety of applications by those who are responsible for the management of surface water bodies.  Entities that are potentially affected include: Nebraska’s Natural Resources Districts, weed management districts, irrigation districts and canal operators, city governments, lake associations, individuals, or any other entity responsible for managing the surface water body’s assigned beneficial uses.

In most situations, those affected by the new general permit would need only follow the rules specified in the general permit and maintain records of their applications.  However, under specific circumstances that involve application of pesticides at or near waters of the state, the applicator would need to submit a Notice of Intent to NDEQ that provides details of the proposed application.  This requirement applies to those who intend to apply pesticides to, over or near Class III waters, which include:  State resource waters as defined in Nebraska’s surface water regulations; Waters listed as impaired on the current Nebraska Clean Water Act 303(d) list for any ingredients in the pesticide, or residuals from the application; Waters where Threatened and Endangered Species or critical habitats are present; Flowing or discharging waters that are within 250 feet of a direct surface water connection to the three types of surface waters listed above; and Waters within 250 feet of a surface water intake for public drinking water.

Until the case is decided, the Cross-State Air Pollution Rule (CSAPR) is stayed. Since the initial court decision on December 30, 2011, EPA has reinstated the emission allowances under the Clean Air Interstate Rule (CAIR) effective January 10, 2012.  Affected facilities must continue compliance with the CAIR requirements while the courts decide on the Cross State rule.

The court also required preliminary arguments on the case to be submitted by January 17, 2012.  One day after the initial plaintiff submittals were received, the court denied several requests from states, utilities and other groups to split their briefings and proceeded to set a schedule for expedited briefings that is faster than requested by any of the stakeholders, including EPA.

The court action will press industry and state petitioners to consolidate arguments on the broader legal challenges of the rule’s scope with those that target specific issues within the requirements.  Initial briefs from Plaintiffs are due by February 9, 2012, while Intervenors are due February 14, 2012.  EPA’s response brief is due March 3, 2012, while Intervenors supporting EPA must submit by March 6, 2012.  

The court has scheduled to hear oral arguments in the case for April 13, 2012.  According to an order by the U.S. Court of Appeals for the District of Columbia, Circuit Judges Judith W. Rogers, Thomas B. Griffith, and Brett M. Kavanaugh will hear the case, the same three judges that issued the order to stay the rule.