On February 21, 2023, the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) issued its decision in American Rivers v. American Petroleum Institute, Case No. 21-16958, reversing the federal district court’s order that vacated a Clean Water Act (CWA) Section 401 Certification Rule after the district court had granted a voluntary remand of the rule requested by the U.S. Environmental Protection Agency (EPA).
The Clean Water Act’s Certification Requirements
The CWA allows states and tribes to exert significant oversight on the federal permitting process by blocking or delaying controversial energy and infrastructure projects for a multitude of reasons, including impacts on climate. States and tribes derive their authority to influence federal permitting from Section 401 of the Act.
In June of 2020, the Trump Administration changed the regulatory scheme of the CWA when it announced its CWA Section 401 Certification Rule (the “2020 Rule”). Seeking to expedite infrastructure permitting, the 2020 Rule placed limitations on states’ and tribes’ review process, and expanded agency ability to overrule their determinations.
Litigation Challenging the 2020 Rule
The 2020 Rule was challenged in three lawsuits by several states, environmental groups, and tribes, before the United States District Court for the Northern District of California, and defended by other states and energy industry groups. Yet, shortly before litigation reached the summary judgment stage, President Biden was elected. The Biden Administration EPA requested a voluntary remand of the regulation to allow for revision. Plaintiffs requested the court to either deny the remand to allow their challenge of the 2020 Rule to proceed or grant the EPA’s remand request but also vacate the 2020 Rule. The district court granted the EPA’s remand and vacated the 2020 Rule, and did so before issuing any ruling on the merits of the case.
At issue before the Ninth Circuit was (1) whether the Ninth Circuit has jurisdiction to consider the district court’s order to vacate, as the decision was not a final appealable order, and (2) whether a court granting remand may also vacate a regulation before ruling on its lawfulness, as the district court did.
The Ninth Circuit held that the district court’s decision was a final appealable order because it effectively terminated the core dispute of the action. The court noted, “the practical effect of the remand order was to end the parties’ dispute, creating the finality needed for appellate jurisdiction.” On the second issue, the Ninth Circuit held that the district court exceeded its authority by vacating the 2020 Rule without ever holding it unlawful on its merits. The Administrative Procedure Act (APA) set forth a detailed process for repealing rules, which the district court cannot circumvent. As such, the court ruled that a strict application of the APA’s judicial-review section must be used in the voluntary-remand context.
What to Expect from this Ruling
While the practical implications of this case are still to be seen, the 2020 Rule will remain in effect until the district court rules on the question of whether the 2020 Rule is lawful, or until the Biden Administration EPA promulgates its own revisions to the Rule. Furthermore, because voluntary remands conserve judicial resources by allowing agencies the chance to correct their errors before the court rules on the merits, this decision has the potential to exacerbate the expense of judicial resources. Finally, this ruling complicates the path to challenging problematic regulations in the courts. Erroneous rules enacted under prior administrations will be less easy to remove by subsequent administrations. This could inflict a greater burden on the courts to be the arbiter of voluntary remands rather than affording due deference to agencies seeking such remands.
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