Case 3:15-Cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 1 of 59

Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 1 of 59 IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS GALVESTON DIVISION STATE OF TEXAS, et al., Plaintiffs, v. No. 3:15-cv-162, consolidated with Nos. 3:15-cv-165, 3:15-cv-266, and UNITED STATES ENVIRONMENTAL 3:18-cv-176 PROTECTION AGENCY, et al., Defendants. MOTION FOR SUMMARY JUDGMENT OF PLAINTIFFS IN NUMBERS 3:15-CV-165, 3:15-CV-266, AND 3:18-CV-176 Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 2 of 59 TABLE OF CONTENTS Introduction ............................................................................................................... 1 Issues and standard for decision ............................................................................... 2 Statement of the Case ................................................................................................ 3 A. Legal Background ....................................................................................... 3 B. Factual Background ..................................................................................... 6 1. The Proposed Rule ............................................................................... 6 2. The comment process and Connectivity Report .................................. 7 3. EPA’s advocacy campaign ................................................................... 7 C. The final Rule and its fallout ....................................................................... 9 1. The Rule ............................................................................................... 9 2. The GAO report ................................................................................. 12 3. The nationwide stay and preliminary injunctions of the Rule ........... 13 4. Subsequent Administrative Proceedings ............................................ 14 Summary of Argument............................................................................................ 14 Argument ................................................................................................................ 17 I. The Rule was promulgated without observance of procedure required by law ............................................................................................................... 17 A. The final Rule was promulgated in violation of basic principles of notice-and-comment rulemaking .............................................................. 18 1. The final Rule is not a logical outgrowth of the proposed Rule ........ 19 2. The agencies denied the public an opportunity to comment on the final Connectivity Report ............................................................. 20 3. The agencies failed to consider important comments ........................ 22 B. EPA’s advocacy campaigns were unlawful .............................................. 24 1. EPA’s “crowdsourcing” campaign constituted illegal “covert propaganda” ....................................................................................... 25 2. EPA lobbying efforts were unlawful.................................................. 26 C. The agencies violated the RFA ................................................................. 26 II. The Rule is contrary to law .............................................................................. 29 A. The Rule is inconsistent with statutory language, Supreme Court precedent, and the scientific evidence ....................................................... 29 1. The Rule reads the word “navigable” out of the CWA ...................... 29 2. The Rule’s definition of “tributaries” is unlawful ............................. 32 3. The Rule’s definition of “adjacent” is unlawful ................................ 35 i Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 3 of 59 4. The “significant nexus” test resurrects the invalidated Migratory Bird Rule ........................................................................... 37 5. The Rule’s hard distances and other criteria are unsupported by scientific evidence ......................................................................... 38 6. The agencies’ classification of Texas Coastal Prairie Wetlands is arbitrary and capricious .................................................. 41 7. The Rule paradoxically treats some features as both “point sources” and jurisdictional waters ...................................................... 43 III. The Rule violates the Constitution ................................................................... 44 A. The Rule is unconstitutionally vague ........................................................ 44 B. The Rule violates the Commerce Clause and federalism principles ......... 48 C. The constitutional concerns are a basis for construing the statutory text narrowly and disentitling the agencies to Chevron deference ........... 50 IV. The Rule should be vacated in its entirety ....................................................... 53 Conclusion .............................................................................................................. 54 ii Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 4 of 59 INTRODUCTION These consolidated cases challenge the Environmental Protection Agency’s and U.S. Army Corps of Engineers’ (the agencies) 2015 regulation defining “waters of the United States” (the Rule) within the meaning of the Clean Water Act (CWA). Plaintiffs in Nos. 3:15-cv-165, 3:15-cv-266, and 3:18-cv-176 (the Private Party Plaintiffs) now move for summary judgment and ask that the Court vacate the Rule in its entirety. In both the process leading to the Rule’s promulgation and in its substance, the agencies disregarded the statutory and constitutional limits on their authority. First, the Administrative Procedure Act (APA) requires an agency to give the public an opportunity to comment before making substantive changes to a proposed rule that could not be anticipated. It also requires the agency to make available the evidence on which the proposed rule is based. The agencies flouted both requirements, failing to reopen the comment period after making important changes to the proposed rule, and withholding a key scientific report until after the initial comment period closed. The agencies also refused to undertake the required economic analysis, used illegal “covert propaganda” to generate superficial support, and engaged in illegal lobbying against legislative efforts to stop the Rule—as the U.S. Government Accountability Office concluded. Second, the Rule is arbitrary and contrary to law. It reads the term navigable out of the CWA, purporting to assert jurisdiction over mostly-dry and isolated land features that bear no meaningful relationship with “navigable waters.” It warps Supreme Court precedents, which recognize clear and common-sense limits on the agencies’ authority. And it draws arbitrary lines and declares categorical exemptions that are unsupported by scientific evidence. Congress enacted the APA to prevent this kind of arbitrary decisionmaking. Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 5 of 59 Finally, the Rule violates the Constitution, in two ways. First, the Due Process Clause protects the regulated public from statutes and rules that either fail to put them on notice of what is prohibited or give government agents unchecked discretion to enforce the law in arbitrary and discriminatory ways. The Rule offends both prongs of the vagueness doctrine: It opens regulated entities to severe civil and criminal penalties that rest on nebulous and undefined standards like “more than speculative or insubstantial” and “similarly situated,” and on ambiguous definitions of terms like “ordinary high water mark” and “significant nexus.” These uncertain standards are impossible for the public to understand or the agencies to apply consistently. Second—by regulating dry, isolated land features that are not channels of interstate commerce and do not substantially affect interstate commerce—the Rule exceeds the agencies’ power under the Commerce Clause and usurps State authority under the Constitution’s federalist structure. Because the Rule violates the Constitution, the Clean Water Act, and the Supreme Court’s precedents, and is arbitrary and capricious under the APA—and in light of the devastating consequences that it would have on the economy—the Rule must be vacated. ISSUES AND STANDARD FOR DECISION The question presented is whether the Rule is unlawful and should be vacated. A regulation is unlawful under the APA if it is adopted “without observation of [the] procedure required by law” (5 U.S.C. 706(2)(D)), or is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” (5 U.S.C. 706(2)(A)). To determine the lawful reach of the agencies’ authority under the CWA, a court must “give effect to [the] unambiguously expressed intent of Congress.” Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 843 (1984). Agency interpretations of Supreme Court precedent are 2 Case 3:15-cv-00162 Document 156 Filed in TXSD on 10/18/18 Page 6 of 59 reviewed de novo, without deference. Emp’r Sols. Staffing Grp. II, L.L.C. v. Office of Chief Admin. Hearing Officer, 833 F.3d 480, 484 (5th Cir. 2016). Similarly, courts do not defer to an agency’s interpretation that presents “serious constitutional difficulties.” Nat’l Mining Ass’n v. Kempthorne, 512 F.3d 702, 711 (D.C. Cir. 2008). Vacatur is the ordinary remedy upon finding a regulation unlawful. Nat’l Venture Capital

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