News | June 12, 2023

The Supreme Court Significantly Narrows Federal Authority to Regulate Wetlands Nationwide

In its May 25, 2023, decision in Sackett v. EPA, the U.S. Supreme Court attempted to settle a question that has plagued property owners, developers, farmers, environmentalists, and many other stakeholders for decades: what is the scope of “waters of the United States” that the federal government may regulate pursuant to the Clean Water Act (“CWA”)?  The CWA forbids the unpermitted discharge of pollutants, including dredged and fill material, from point sources into “navigable waters,” which the CWA defines as “waters of the United States,” including “adjacent” wetlands.  The meaning and scope of the term “waters of the United States” has been debated and litigated in the courts for many years.  With Sackett, the Court has attempted to settle that question with respect to wetlands, holding that “waters of the United States” covers only adjacent wetlands that are “indistinguishable” from other CWA waters such as streams, rivers, and lakes because the wetlands have a “continuous surface connection.” 

This ruling significantly narrows the Army Corps of Engineers’ and the Environmental Protection Agency’s regulatory authority over wetlands and other similar water features by excluding from coverage wetlands and other features that lack a continuous surface connection to other jurisdictional waters, even if they are connected intermittently or below the surface.  While the Corps and EPA have regulated wetlands under varying jurisdictional tests over the past decades, regulation of “adjacent wetlands” has included not only wetlands with a surface connection to other CWA waters, but wetlands that are separated from covered waters by a manmade dike or barrier, natural river berm, beach dune, and “the like.”  Sackett restricts the agencies’ longstanding interpretation of “adjacent wetlands.”

Under the Sackett test, a significant portion of the nation’s wetlands that are hydrologically connected but lack a continuous surface connection to jurisdictional waters will lose federal protection.  Some estimate up to 100 million acres of wetlands would fall into this category.  That number includes a significant portion of wetlands in the arid West that are ephemeral or seasonal in nature and thus only sometimes exhibit a surface connection with other waters covered by the CWA.  

History of the Sackett Case

The Sacketts own a piece of land 300 feet from Priest Lake in Idaho, separated from the lake by a roadway and lakefront homes.  In 2007, they deposited gravel and sand into wetlands on their lot to build a home – a practice requiring a CWA Section 404 permit from the Corps if the wetlands are jurisdictional.  EPA issued a stop-work notice, asserting the Sacketts were filling jurisdictional wetlands without a permit.  

At that time, EPA interpreted “waters of the United States” to include wetlands “adjacent” to those waters and “adjacent,” under regulations dating back to the 1970s, had always been understood to include wetlands neighboring other CWA waters as well as those physically abutting other CWA waters.  Agency guidance issued in the wake of the 2006 Rapanos v. United States decision instructed regulators to assert jurisdiction over wetlands adjacent to non-navigable tributaries when those wetlands had a “significant nexus to a traditional navigable water,” with a “significant nexus” existing when “wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity” of traditionally navigable waters.  EPA determined the Sacketts’ wetlands were jurisdictional because they neighbored an unnamed tributary to Priest Lake located on the other side of the 30-foot road.  The Sacketts challenged this determination all the way to the Supreme Court, ultimately asking the Court to (1) reject as overly broad the “significant nexus” test articulated by Justice Kennedy in Rapanos and applied nationwide since, and (2) adopt the more limited “continuous surface connection” test articulated by Justice Scalia in Rapanos.

The Court unanimously rejects the long-applied “significant nexus” test.

All nine Justices agreed with the Sacketts that their wetlands are not jurisdictional and rejected Justice Kennedy’s “significant nexus” test, but the Court was divided on what standard should be applied to wetlands.  The five-justice majority opinion, authored by Justice Alito, adopted the “continuous surface connection” test to determine if a wetland is jurisdictional.  The Sacketts’ wetlands, the majority found, are distinguishable from the nearby “waters of the United States” (Priest Lake and the tributary across the road from the Sacketts) due to the barrier between them and are therefore outside of the CWA’s jurisdiction. 

The majority described several reasons for rejecting the “significant nexus” test and the agencies’ broader view of “adjacency,” finding the test overly vague for property owners to determine whether their land is covered by the CWA and an abuse of due process given the possibility of significant civil penalties and even criminal ones for violations.  The majority held that the CWA only regulates “adjacent wetlands” that are “indistinguishable from waters of the United States,” which occurs only when “wetlands have a continuous surface connection to bodies that are waters of the United States in their own right, so that there is no clear demarcation between waters and wetlands.”  According to the majority, the existing broader view of federal regulation of wetlands eviscerates the federal-state balance of the CWA, which identifies states as the “primary” regulators.  Justice Thomas, concurring in full with the majority, wrote separately to expand further on his view that the text and history of the CWA indicate it is meant to focus on navigable waters.  

The Court’s four remaining justices agreed with the majority’s ruling that the Sacketts’ wetlands are not covered by the CWA, as well as the rejection of the “significant nexus” test, but they did not agree with adopting the “continuous surface connection” test.  Justice Kagan’s concurrence emphasized that the CWA’s language is not vague, but intentionally broad, because in enacting the CWA, Congress was addressing a crisis of water pollution of epic proportions.  According to Kagan, the term “adjacent wetlands” properly includes other “neighboring” wetlands based on the plain meaning of that word and its use in the statute.  Kagan chided that the majority was again “impermissibly rewriting Congress’ plain instructions” when those directives go further than the Court prefers, as it had allegedly done recently in West Virginia v. EPA (2022), when the Court rejected a broad interpretation of the term “system of emission reduction” under the Clean Air Act to enable the agency to address climate emissions.

Justice Kavanaugh concurred only in the judgment and vigorously opposed the majority’s conflation of “adjacent” with the more restrictive term “adjoining,” which he saw as a critical mistake in conflict with longstanding agency practice.  Kavanaugh argued that the new Sackett standard would harm the country—warning that levees in the Mississippi delta will now disqualify adjacent wetlands from protection, and wetlands nearby but not abutting the Chesapeake Bay would be left unprotected.  He declared the new test “will leave long-regulated adjacent wetlands no longer covered by the [CWA], with significant repercussions for water quality and flood control throughout the United States.”

Interestingly, the Court’s test in Sackett relies on the distinction between a wetland’s hydrological connection with other CWA waters at the surface versus below the surface; however, it arrives close on the heels of another decision of the Court that explicitly acknowledged the interconnection of surface and groundwater.  In County of Maui v. Hawai’i Wildlife Fund (2021), the Court held the County of Maui was required to obtain a permit to discharge from its wastewater treatment facility into groundwater that then discharged to the ocean.  The Court reasoned that the CWA requires a permit if the addition of pollutants through groundwater is performed in a way that is the “functional equivalent” of a direct discharge from the point source into navigable waters.  That holding relied on the recognition that CWA waters and groundwater are interconnected, scientifically and ecologically, and in some cases, it is necessary to regulate one to prevent harm to the other.  Similarly, Justices Kavanaugh and Kagan both acknowledged the importance of adjacent wetlands in protecting water quality of other CWA waters such as rivers and lakes, even without a continuous surface connection.  In Sackett, the recognition of that interconnection between the nation’s waters was not addressed by the majority.

What effect will Sackett have on wetlands regulation and permitting under the Clean Water Act?

The Court in Sackett provided some clarity in defining the CWA jurisdiction, an issue that has eluded potential permit applicants for many years.  Notably, under the new standard, a wetland that has no surface connection to other CWA waters is non-jurisdictional and no Section 404 permit is required.  But the regulatory landscape remains far from certain.  In adopting the new Sackett standard, the Court recognized that “temporary interruptions in surface connection may sometimes occur because of phenomena like low tides or dry spells.”  Moreover, a “landowner cannot carve out wetlands from federal jurisdiction by illegally constructing a barrier on wetlands otherwise covered by the CWA.”  Such statements suggest the Sackett standard is hardly a bright line rule.  In acknowledging “temporary interruptions”—while not defining those terms—the Court left room for the Corps and EPA to attempt a broad approach in applying the “continuous surface connection” test.  Given the Court’s intentional restriction of the federal agencies’ regulatory authority under the CWA, the agencies will likely do everything possible to protect their jurisdictional reach over wetlands.

Precisely what happens in the near term remains to be seen.  Corps district offices have represented that they will suspend issuing approved jurisdictional determinations until the agency issues guidance on how the new Sackett standard will be implemented.  The Corps and EPA will likely issue guidance for the regulatory community until a new regulation incorporating the Sackett standards is issued; such guidance is likely to revert, for the time being, to the 1986 regulatory standard (i.e., the pre- “significant nexus” regime) as modified by the new test established in Sackett.  

While the impact of the Sackett decision will unfold over the coming months (and years with expected litigation involving the Corps and EPA’s response to the decision), the significance of the ruling—including its implications for the regulated industry and for the environment—is difficult to understate.  Here are a several critical implications and consequences of the new Sackett standard.

  • The Biden Administration’s proposed regulations must be overhauled.  In light of Sackett, the Corps and EPA will likely withdrawal the recent January 2023 rulemaking on “waters of the United States,” which the Biden Administration had hoped would be a “durable” rule, because it relied heavily on the “significant nexus” test.  In crafting a new or revised rule, the Corps and EPA will have to grapple with new complexities and questions raised by the new Sackett standard: for instance, what are the outer bounds of “continuous surface connection” and “adjacent,” and when and how will the agencies measure a surface connection, given that a wetland’s connectivity can fluctuate based on weather and seasons and, ultimately, from climate change. Further, despite the majority “acknowledg[ing] that temporary interruptions in surface connection may sometimes occur,” what determines whether an interruption is temporary and what does “sometimes” mean?  Does it vary according to the environment (arid vs. humid)?  Are changes due to climate change considered in determining what is normal and what is a “sometimes” event?  In addressing these questions, the agencies will have an opportunity to interpret the holding in the broadest way possible (for example, determining that “continuous” surface connection in the arid regions means only directly after rain events).  It is inevitable that the agencies’ interpretation and application of the Sackett standards—especially a broad one—will be subject to legal challenges.
  • Permitting under the CWA’s Section 404 will likely be less costly, less burdensome, and more certain in the long run for regulated parties facing potential impacts to wetlands.  The Sackett decision immediately carves out huge categories of waters from the CWA’s jurisdiction and, therefore, significantly reduces the burden of time and resources required by Section 404 permitting.  Before Sackett, permit applicants faced some uncertainty with respect to wetlands that may not have had a continuous surface connection to other CWA waters but were nonetheless potentially regulated under the significant nexus test.  The Sackett standard reduces that uncertainty and excludes millions of acres of wetlands from the Section 404 permit requirement, including the requirement that impacts to those once-jurisdictional wetlands are mitigated.
  • The fate of mitigation under Section 404 is uncertain.  Compensatory mitigation of wetlands impacts has been a critical component of Section 404 permitting, particularly since the 2008 Mitigation Rule issued by the Corps and EPA.  Mitigation is required to offset impacts to wetlands and, often, the mitigation required by the Corps is relied on by other federal and state agencies to address a project’s environmental impacts.  Sackett may reduce the amount of mitigation for projects with potential impacts to jurisdictional wetlands, or the Corps may attempt to maintain the current level of mitigation required by Section 404 permits by focusing on mitigating overall impacts to the aquatic ecosystem—including non-jurisdictional waters.  Further, Sackett may impact established mitigation banks, a profitable industry that has emerged over the years, as the demand for mitigation for wetlands will be reduced with the exclusion of millions of acres of wetlands no longer covered by the CWA.
  • NEPA’s reach may be reduced under Sackett.  Narrowing the scope of wetlands covered under the CWA may result in less environmental review under the National Environmental Policy Act for development and other projects that otherwise would require a Section 404 permit before Sackett.  Often a Section 404 permit for wetlands impacts is the federal action triggering environmental review under NEPA.  The exclusion of substantial wetlands from coverage under the CWA will invariably exclude some projects from NEPA review.
  • The exclusion of millions of acres of wetlands from federal protection may make it harder to properly manage water supplies and water resources, as well as conduct flood control efforts. As recognized in Justice Kagan’s and Justice Kavanaugh’s concurring opinions, wetlands play a critical role in protecting the quality of nearby waters—including filtering water and reducing the flow of surface runoff into other CWA waters, such as rivers.  They also are critical to flood control and buffering against coastal storms and sea level rise.  Under Sackett, large amounts of wetlands may now be developed without the costly permitting requirement and environmental review.  Thus, Sackett may elevate the risk and potential effects of development of wetlands as an important factor that must be considered by utilities, water suppliers, municipalities, and communities in managing watersheds, water pollution, water supplies, and flood control.
  • The burden of wetlands protection shifts to the states.  While there will be a push for Congress to revise the CWA to broaden CWA jurisdiction after Sackett, and once and for all define clearly what wetlands are federally regulated, any legislative fix is far from guaranteed.  In the meantime, the fate of wetlands protection will further shift to states that can enact their own dredge and fill permitting regimes to regulate areas no longer covered by the CWA.  When that happens, the Corps and EPA can regulate federal waters and wetlands in a state, and the state regulates additional state waters.  States can also “assume” the federal dredge and fill permitting program within their own state, so that they issue permits for both state and federal waters (with some limited exceptions).  ”Assumption” provides states with more complete control over dredge and fill permitting, though only three states have done so to date.  However, standing up new regulatory programs is not easy, politically, financially, or otherwise.  How many states may choose to act post-Sackett remains to be seen and any meaningful regulatory changes on the state level will require time.

What should regulated parties consider in navigating the regulatory uncertainty following Sackett?  

Until the Corps and EPA provide new guidance on implementation of the Sackett standard and, ultimately, a new regulation that incorporates the Court’s decision, regulated parties should consider the following:

  • Do not expect approved jurisdictional determinations issued by the Corps in the near term, which will likely delay the processing of certain Corps permits.  Direction from Corps headquarters is that all approved jurisdictional determinations are suspended indefinitely, and certain Corps District offices have issued formal public announcements that issuance of approved jurisdictional determinations is on hold until further notice.  See Chicago District, Army Corps of Engineers, https://www.lrc.usace.army.mil/Missions/Regulatory/Jurisdictional-Determinations/ (last visited June 7, 2023).
  • Anticipate potential impacts to planned or pending projects that currently rely on jurisdictional determinations issued before Sackett.  While federal agencies often grandfather pending projects from being subject to new regulations, it is uncertain how the Corps will treat existing approved jurisdictional determinations that conflict with the Sackett standard.  For the time being, permit applicants must wait and see.
  • According to the Corps, permit applicants can still rely on preliminary jurisdictional determinations, which are non-binding, advisory determinations by the Corps regarding the potential presence of CWA waters.  The value in preliminary jurisdictional determinations may be increased now because the Corps is not issuing any approved jurisdictional determinations, particularly for those projects that likely do not require a Section 404 permit and must move forward.  A preliminary jurisdictional determination can allow a party to move forward with a permit application with some added assurance of compliance with Sackett.  However, in computing impacts (and mitigation) for preliminary jurisdictional determinations, the Corps treats all aquatic resources that would be affected by a project as jurisdictional, so a permit applicant seeking a preliminary jurisdictional determination cannot rely on the Sackett standard to reduce the number of jurisdictional wetlands impacted by a project.
  • Proceed with caution.  If it is reasonable to conclude that a continuous surface connection clearly does not exist, property owners can likely proceed without any jurisdictional determination or Section 404 permit.  If there is any question as to whether a wetland is jurisdictional under a broad interpretation of the Sackett standard, a party should proceed with caution.  If an existing jurisdictional determination or permit is in place, the prudent course of action is to proceed pursuant to the jurisdictional determination until the agencies have provided guidance on the Sackett test. 
  • Monitor regulatory developments at the district level in addition to guidance and directives from Corps and EPA headquarters.  While the Corps’ district offices often provide guidance for regulatory activities within the district, that local or regional guidance may be particularly relevant in applying the Sackett test and, ultimately, determining what wetlands are covered by the CWA.  Corps guidance at the district level can account for the unique water resources and ecology within the district, which may be a critical factor in determining what wetlands have a “continuous surface connection” to CWA waters.

Kaplan Kirsch & Rockwell LLP advises public and private clients on a host of water quality, water permitting, and project development matters including Section 404 permitting and litigation.  We will continue to track and advise clients on the regulatory developments following the Sackett decision.  For more information about how the Supreme Court’s decision in Sackett v. EPA could impact you or your organization, please contact Nate Hunt, Sara Mogharabi, or Brandon Rattiner.