State v. U.S. Envtl. Prot. Agency, Civil Action No. 20-cv-1461-WJM-NRN

• Decision Date: 19 June 2020
• Docket Number: Civil Action No. 20-cv-1461-WJM-NRN
• Citation: 445 F.Supp.3d 1295
• Parties: The State of COLORADO, Plaintiff, v. U.S. ENVIRONMENTAL PROTECTION AGENCY; Andrew Wheeler, in his official capacity as Administrator of the U.S. Environmental Protection Agency; U.S. Army Corps of Engineers; and R.D. James, in his official capacity as Assistant Secretary of the Army for Civil Works, Defendants.
• Court: U.S. Court of Appeals — Seventh Circuit

445 F.Supp.3d 1295

The State of COLORADO, Plaintiff,

v.U.S. ENVIRONMENTAL PROTECTION AGENCY; Andrew Wheeler, in his official capacity as Administrator of the U.S. Environmental Protection Agency; U.S. Army Corps of Engineers; and R.D. James, in his official capacity as Assistant Secretary of the Army for Civil Works, Defendants.

Civil Action No. 20-cv-1461-WJM-NRN

United States District Court, D. Colorado.

Signed June 19, 2020

Annette M. Quill, Carrie Elizabeth Noteboom, Jennifer H. Hunt, Eric R. Olson, Colorado Attorney General's Office, Denver, CO, for Plaintiff.

Devon Lehman McCune, Sonya Joy Shea, U.S. Department of Justice, Denver, CO, Phillip Roark DuPre, U.S. Department of Justice-DC-# 7611, Washington, DC, for Defendants.

ORDER GRANTING AS-CONSTRUED MOTION FOR STAY OF AGENCY ACTION

William J. Martinez, United States District Judge

Plaintiff State of Colorado ("Colorado") sues the U.S. Environmental Protection Agency ("EPA") and its administrator, along with the U.S. Army Corps of Engineers ("Corps of Engineers") and its administrator, to invalidate a new regulation regarding the scope of federal jurisdiction under the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251 et seq. The Court will refer to Defendants collectively as "the Agencies."

Currently before the Court is Colorado's Amended Motion for Preliminary Injunction. (ECF No. 24.) The Court construes this as a motion seeking a stay of agency action under 5 U.S.C. § 705. For the reasons explained below, the Court finds that Colorado advances an unusual and partly self-contradictory theory of harm, but Colorado has nonetheless satisfied the elements required to obtain preliminary relief. The Court will therefore enjoin the Agencies from implementing their new regulation in Colorado.¹

I. LEGAL STANDARD

Colorado explicitly moves for a preliminary injunction under Federal Rule of Civil Procedure 65. (See ECF No. 24 at 2.)² Because this case seeks review of agency action under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 500 et seq. , the proper authority for preliminary relief is 5 U.S.C. § 705 :

When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review. On such conditions as may be required and to the extent necessary to prevent irreparable injury, the reviewing court ... may issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending conclusion of the review proceedings.

But the distinction between Rule 65 and § 705 is mostly technical because a § 705 stay is a provisional remedy in the nature of a preliminary injunction, see Winkler v. Andrus , 614 F.2d 707, 709 (10th Cir. 1980), and its availability turns on the same four factors considered under a traditional Rule 65 analysis, see, e.g. , Hill Dermaceuticals, Inc. v. U.S. Food & Drug Admin. , 524 F. Supp. 2d 5, 8 (D.D.C. 2007).³

The Supreme Court has described the four preliminary injunction factors as follows: "A plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest." Winter v. NRDC , 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008).

II. STATUTORY BACKGROUND & PROCEDURAL HISTORY

Absent a permit, the CWA prohibits "discharge of any pollutant," 33 U.S.C. § 1311, into "navigable waters," id. § 1362(12). "Navigable waters" means "the waters of the United States." Id. § 1362(7). The CWA does not further define "waters of the United States," so the Agencies have defined it by regulation. See 33 C.F.R. § 328.3. The current definition reaches more than literally "navigable" waters, but the precise details are unimportant for present purposes. What matters is that, on June 22, 2020, the Agencies will put into effect a new rule that narrows the current definition of that term. See 85 Fed. Reg. 22250 (Apr. 21, 2020). In other words, the new rule puts some waters outside the reach of the CWA that the Agencies previously considered to be within the reach of the CWA. The Court will refer to the rule in effect today as the "Current Rule," the rule to take effect this coming Monday as the "New Rule," and the waters that are encompassed by the Current Rule but not by the New Rule as "Disputed Waters."

Of particular importance in this regard is the "Section 404 permit" process, which refers to the Corps of Engineers’ authority under CWA § 404 ( 33 U.S.C. § 1344 ) to "issue permits ... for the discharge of dredged or fill material into the navigable waters." Id. § 1344(a). Thus, for instance, if a developer wants to fill in a marshy area so it may build on it, and if that marshy area is deemed "navigable waters"—i.e. , "waters of the United States" as defined in 33 C.F.R. § 328.3 —then the developer must first obtain a Section 404 permit from the Corps of Engineers. On the flipside, if the marshy area is not "waters of the United States" as defined in 33 C.F.R. § 328.3, then the developer does not need a Section 404 permit—meaning, from the perspective of federal law, the developer may fill in the marshy area with impunity. If the New Rule goes into effect, such a developer would no longer need a Section 404 permit to fill Disputed Waters.

But whether federal law requires a permit or not, a state may enforce its own standards that are stricter than Section 404. See 33 U.S.C. § 1344(t) ("Nothing in this section shall preclude or deny the right of any State ... to control the discharge of dredged or fill material in any portion of the navigable waters within the jurisdiction of such State ...."). Colorado asserts jurisdiction over "state waters," defined to mean (with exceptions not relevant here) "any and all surface and subsurface waters which are contained in or flow in or through this state." Colo. Rev. Stat. § 25-8-103(19). And "[n]o person shall discharge any pollutant into any state water from a point source without first having obtained a permit from the division [i.e. , the Water Quality Control Division of the Colorado Department of Public Health and Environment]." Colo. Rev. Stat. § 25-8-501(1).

The parties do not dispute that Colorado's definition of "state waters" embraces the Disputed Waters. Thus, anyone seeking to fill Disputed Waters will still need a permit from the state when the New Rule goes into effect. However, under Colorado law, "[n]o permit shall be issued which allows a discharge that by itself or in combination with other pollution will result in pollution of the receiving waters in excess of the pollution permitted by an applicable water quality standard unless the permit contains effluent limitations and a schedule of compliance specifying treatment requirements." Colo. Rev. Stat. § 25-8-503(4). This presents a problem for Colorado: "Because discharges of large quantities of fill, by their nature, are likely to result in exceedances of state water quality standards and compromise the classified uses of these waters, the [state] could not allow almost any of them under a state discharge permit." (ECF No. 24 at 8.) In other words, there is no state water quality standard that contemplates dumping dirt and rock into water until it becomes dry land. Thus, filling state waters is flatly prohibited under Colorado law.

Since roughly January of this year, in anticipation of the New Rule, state administrators have been working with the Colorado Legislature to amend the relevant statute to provide state authority equivalent to Section 404. (ECF No. 56 ¶ 2.) These efforts, like many other things, were disrupted by the COVID-19 pandemic. (Id. ¶ 3.) The legislature adjourned on June 15, 2020, without passing legislation that would provide Section 404-like authority to state administrators.

The Court will provide additional background as it becomes relevant to the legal issues addressed below.

III. ANALYSIS

A. Irreparable Harm

Among the preliminary injunction factors, "a showing of probable irreparable harm is the single most important prerequisite." Dominion Video Satellite, Inc. v. Echostar Satellite Corp. , 356 F.3d 1256, 1260 (10th Cir. 2004) (internal quotation marks omitted). "Without showing irreparable harm, [a party] cannot obtain a preliminary injunction." First W. Capital Mgmt. Co. v. Malamed , 874 F.3d 1136, 1143 (10th Cir. 2017). "[T]he party seeking injunctive relief must show that the injury complained of is of such imminence that there is a clear and present need for equitable relief to prevent irreparable harm." Heideman v. S. Salt Lake City , 348 F.3d 1182, 1189 (10th Cir. 2003) (emphasis in original; internal quotation marks omitted). "Irreparable harm, as the name suggests, is harm that cannot be undone, such as by an award of compensatory damages or otherwise." Salt Lake Tribune Publ'g Co. v. AT&T Corp. , 320 F.3d 1081, 1105 (10th Cir. 2003). "To constitute irreparable harm, an injury must be certain, great, actual and not theoretical." Schrier v. University of Colorado , 427 F.3d 1253, 1267 (10th Cir. 2005). Harm that is "merely serious or substantial" is not irreparable. Prairie Band of Potawatomi Indians v. Pierce , 253 F.3d 1234, 1250 (10th Cir. 2001).

In this case, the irreparable harm inquiry overlaps with whether Colorado asserts any cognizable harm flowing from the New Rule. If it does not, this Court does not have jurisdiction under Article III of the U.S. Constitution to adjudicate the dispute. In other words, every plaintiff in federal court must have " Article III standing," which entails the following:

First, the plaintiff must have suffered an "injury in fact"—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not ‘conjectural’ or ‘hypothetical.’ " Second, there must be a causal connection between the injury and the conduct

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