In State of Louisiana et al. v. U.S. Envt’l Prot. Agency et al., 2:23-CV-01714, 2024 WL 994651 (W.D. La. Mar. 7, 2024), a federal judge rejected certain states’ and industry groups’ motion for preliminary relief to enjoin the EPA’s revised Clean Water Act (“CWA”) rule (“2023 Rule”). The 2023 Rule reinstated EPA’s long-held interpretation of Section 401 of the CWA that afforded states and tribes broad authority to veto or impose conditions on federally permitted activities due to water quality concerns. The court’s decision is a blow to efforts instituted by EPA under the Trump administration to interpret the authority of states and tribes more narrowly under Section 401.

This ongoing controversy stems from Section 401 of the CWA governing state water quality certifications, a process that was originally conceived as part of the Federal Water Pollution Control Act of 1948.  Under the 1948 Act, an early iteration of the CWA, if an applicant sought a federal license or permit for any activity that may result in a discharge into a navigable water, the applicant had to obtain a water quality certification from the state where the discharge originated certifying that the activity would not violate applicable water quality standards. Shortly after its formation in 1971, EPA promulgated regulations implementing this requirement.  In 1972, however, Congress enacted landmark amendments to the Federal Water Pollution Control Act, creating what we now know as the CWA. In doing so, the applicable statutory language for water quality certifications was revised to focus on if a discharge would violate applicable water quality standards. 33 U.S.C. § 1341(a)(1). EPA, meanwhile, did not update its previously promulgated regulations to match the change in statutory language until 2020 when EPA finally promulgated the 2020 rule (“2020 Rule”) under President Trump’s administration.

The 2020 Rule limited the ability of states and tribes to weigh in on a proposed activity’s Section 401 water quality certification process. Among other changes, the 2020 Rule specified that a state or tribe could only veto or impose conditions on the specific point source discharge at issue in order to protect water quality, as opposed to the permittee’s entire activity, an interpretation intended to reflect Congress’s 1972 amendments to the CWA. After the change in administration, however, President Biden issued an Executive Order requiring EPA to review and revise the 2020 Rule. The 2023 Rule, which is the issue in the present litigation, reverts to the previous language used for over forty years and requires a state to certify that the activity does not violate applicable water quality standards.  

Eleven historically red states, including Louisiana, and various industry groups (“Plaintiffs”) filed a lawsuit in federal court and then moved to preliminarily enjoin EPA and conservation groups (“Defendants”) from applying the 2023 Rule. In their complaint, Plaintiffs asserted that the 2023 Rule was unlawful on two grounds. First, the Plaintiffs’ main allegation was that the 2023 Rule was unlawfully applied retroactively to Section 401 certification requests submitted under the 2020 Rule but before the effective date of the 2023 Rule. Second, the Plaintiffs argued that the 2023 Rule impermissibly broadened the regulatory scope of the Section 401 certification because, as interpreted by EPA, the certifying authority could evaluate the impacts of any activity subject to a Federal license or permit rather than just the potential point source discharges that were the subject of the Federal license or permit.

The subject of the court’s decision was the Plaintiff’s motion for a preliminary injunction.  Under this familiar standard, Plaintiffs were required to demonstrate that they (1) would likely succeed on the merits; (2) suffer irreparable harm; (3) the balance of equities tips in their favor; and (4) that an injunction is in the public’s interest.

The court rejected the Plaintiffs’ arguments and denied the motion for a preliminary injunction, leaving in place at least for now the 2023 Rule.

First, the court was not persuaded that the Plaintiffs were likely to succeed on the merits of their claim that the 2023 Rule is impermissibly retroactive. The court explained that a regulation only has impermissible retroactive effect when it impairs vested rights that a party possesses when it files its claim. Here, the court held that the Plaintiffs did not have any vested rights merely because they had sought certifications from states or tribes prior to the effective date of the 2023 Rule. The court reasoned that, in general, filing an application with an agency does not confer upon the applicant an inviolable right to have the agency rule on the application pursuant to the regulations in effect at the time of filing.

As for Plaintiffs’ argument that the 2023 Rule impermissibly broadens the regulatory scope of Section 401 certification by allowing the certifying authority to evaluate water quality impacts of the entire activity in question, the court did not provide a detailed analysis of this issue in its ruling.  However, the court signaled at least some skepticism of Plaintiffs’ merits argument, as the court noted that the 2023 Rule merely reverts to an agency interpretation that had existed for 50 years before the 2020 Rule.

Second, the court rejected the Plaintiffs’ argument that they will be irreparably harmed by the effects or conditions imposed by the 2023 Rule. Specifically, the Plaintiffs asserted that they may have additional requirements and increased compliance costs given that states and tribes had the ability to consider all impacts of an activity when assessing compliance with applicable water quality requirements. The court rejected the Plaintiffs’ speculative argument noting that the Plaintiffs did not show a harm that is more concrete than an unfounded fear. With regard to the last two factors, the balance of equities and public interest, the court agreed with the Defendants that an injunction would create regulatory confusion for some certification actions to continue to operate under the 2023 Rule and others to operate under the 2020 Rule. Thus, the court held the public interest is best served by allowing the 2023 Rule to remain in effect while the court considers the full merits of the Rule.

Although the holding is a setback for the Plaintiffs, it is only an interim step in the ongoing litigation because the court must still assess the merits of the 2023 Rule. Given the court’s view that the 2023 Rule merely reinstates an interpretation that existed for decades before the 2020 Rule, however, the Plaintiffs may have an uphill battle when the court assesses the full merits of the 2023 Rule.    

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