On May 25, 2023, the US Supreme Court issued its decision in Sackett v. EPA, 598 U.S. ____ (2023), which significantly impacts wetland permitting for development, manufacturing, farming, and other industries. Prior to the ruling, EPA’s jurisdiction over wetlands under the Clean Water Act (CWA) was determined by the “significant nexus test” created by Justice Kennedy’s concurrence in Rapanos v. United States, 574 U.S. 715 (2006). Under the “significant nexus test,” all waters with a significant nexus to a traditionally navigable water of the United States were under federal oversight. The significant nexus test granted EPA expansive authority to regulate nearly all wetlands, even those without an apparent surface connection to navigable water. In Sackett, the court rolled back that authority holding that “the CWA extends to only those ‘wetlands with a continuous surface connection to bodies that are ‘waters of the United States’ in their own right,’ so that they are ‘indistinguishable’ from those waters.” Sackett, slip op. at 27.

The plaintiffs, Michael and Chantell Sackett, purchased a small lot near Priest Lake in Idaho. They backfilled their property with dirt and rocks to build a home. EPA claimed the Sacketts backfilled a wetland in violation of the CWA and sent the Sacketts an order requiring remediation of the wetland with a $40,000 per day penalty for failure to comply. The Sacketts filed suit under the Administrative Procedure Act alleging that the EPA lacked jurisdiction because any wetlands on their property were not “waters of the United States.” After seven years of proceedings — including a prior trip to the Supreme Court — the District Court ruled for EPA and the Ninth Circuit affirmed. The Supreme Court granted certiorari to “decide the proper test for determining whether wetlands are ‘Waters of the United States.’”

All nine justices agreed that the Sacketts’ property should not be subject to the CWA and that the “significant nexus test” should be rejected. The court, however, fractured 5-4 over what test to apply.

Justice Alito authored the majority opinion creating the “continuance surface connection test,” based on three key rationales. First, the majority looked at 33 U.S.C. § 1344(g)(1), which pulls wetlands “adjacent” to “waters of the United States” into the CWA. The court concluded that “adjacent” does not mean the same thing as separate; thus, wetlands “adjacent” to “waters of the United States” must mean those that are connected to “waters of the United States.” Second, the court invoked the major questions doctrine explaining that “this Court ‘require[s] Congress to enact exceedingly clear language if it wishes to significantly alter the balance between federal and state power . . . .’” Sackett, slip op. at 23. Congressional language was not clear enough to grant EPA sweeping authority over all wetlands, which include more land “than the combined surface area of California and Texas.” Id. Lastly, the CWA’s severe criminal penalties, which EPA uses to punish unknowing polluters of wetlands not connected to noticeable water, pose significant due process concerns.

Justices Kagan, Kavanaugh, and Thomas wrote concurring opinions that disagreed with the majority’s reading of the word “adjacent” as used in the CWA. Justice Kavanaugh argues “the Court’s new test is overly narrow and inconsistent with the [CWA’s] coverage of adjacent wetlands.” Restricting jurisdictional wetlands to only those with a surface connection to traditionally navigable waters will have “significant repercussions for water quality and flood control throughout the United States.” He further explains that the CWA covers adjacent wetlands, and a wetland is “adjacent” to a covered water (i) if the wetland is contiguous to or bordering a covered water, or (ii) if the wetland is separated from a covered water only by a man-made dike or barrier, natural river berm, beach dune, or the like. The wetlands on the Sacketts’ property do not fall into either of those categories and, therefore, are not covered under the CWA as J. Kavanaugh would interpret it.

This significant decision removed thousands of acres of wetlands from CWA jurisdiction. Wetlands that were once considered waters of the United States via roadside drainage, temporary flooding, and other avenues will likely be removed from federal oversight. Developers and manufacturers who were previously required to obtain Section 404 permits under the CWA and alter their construction designs based on the presence of such wetlands will no longer face such administrative hurdles. On the other hand, environmental groups have voiced concern over the impact that Sackett will have on the long-term health of the United States wetlands that serve as critical habitats for fish, waterfowl, and other wildlife in addition to flood control.

Sackett serves as another example where the current majority has decided not to apply the doctrine of Chevron deference. Chevron deference is a judicial doctrine where courts defer to an agency’s “permissible construction” of an ambiguous federal statute that the agency is charged to administer. Next term, the Supreme Court will hear Loper Bright Enterprises Inc. v. Raimondo, where the court is poised to reconsider and could end Chevron deference. The absence of any reference to Chevron in Sackett does not bode well for Chevron deference’s future in determining the scope of the agency’s authority to interpret federal law.

Although Sackett substantially restricts federal regulation, some wetlands remain subject to state and local regulations. Moving forward, ensuring compliance with applicable state and local permitting requirements will be important for all permittees. For more information on compliance with federal and state waters permitting, please contact a member of Taft’s Environmental practice group.

Taft attorney Austin Warehime contributed to this article.