The Wetlands Guidance Memo: Finality, Notice and Comment, and Life After Chevron
The federal Environmental Resources Agency (ERA) administers the Clean Waters Act, which defines 'navigable waters' as 'waters of the United States.' After a full notice-and-comment rulemaking in 2021, ERA's Office of Wetlands issued a six-page 'Compliance Guidance Memo' stating that 'ephemeral streams with a defined bed and banks are categorically jurisdictional until further notice.' The memo was posted on the agency website, was not published in the Federal Register, and took no comments. It recites that it 'does not create any rights or obligations' and that 'field staff retain case-by-case discretion.' Harrow Farms, a 1,200-acre row-crop operation, received a letter from the district office stating that its irrigation ditch is now jurisdictional under the memo and that unpermitted discharges 'may result in enforcement.' No penalty has been assessed and no permit application is pending. Harrow sues in federal court seeking review of the memo. ERA moves to dismiss for lack of final agency action and for failure to exhaust.
1. Is the memo (or the letter) 'final agency action'? Apply the two-part test and distinguish a facial from an as-applied challenge.
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Final agency action requires (1) that the action mark the consummation of the agency's decisionmaking, not be tentative or interlocutory, and (2) that it be an action by which rights or obligations have been determined or from which legal consequences flow.
The memo alone is weak on both prongs. It is labeled guidance, it disclaims creating obligations, it reserves case-by-case discretion to field staff, it was not published in the Federal Register, and its 'until further notice' framing makes it look provisional. A court would likely hold the memo is not final as a freestanding act and would dismiss a facial challenge to it, noting that the agency has not applied it and that Harrow's facial challenge may be premature.
The letter is stronger. An agency communication that determines the regulated party's legal status and threatens enforcement is often final even when framed as a warning rather than a penalty. Courts have treated compliance orders that expose a party to substantial penalties for noncompliance as final, because the practical effect is to require a change in conduct or face jeopardy. Here, however, no penalty has been assessed and no permit is pending, so Harrow must argue that the prospect of enforcement is a concrete legal consequence rather than a speculative one. The better framing is an as-applied challenge: the agency has, as to this ditch and this operator, consummated its position. Because Article III standing may also be in play, the same facts that make the letter final help establish injury in fact.
2. Was the memo a legislative rule that required notice and comment, or an interpretive rule exempt from it?
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The label means little; the substance controls. A legislative rule binds the agency and regulated public, creates or modifies legal obligations, and must go through notice and comment. An interpretive rule merely explains the agency's understanding of an existing statute or regulation and does not bind.
Two features here point to a legislative rule. First, the categorical language: 'ephemeral streams with defined bed and banks are categorically jurisdictional' changes the operative standard by replacing a case-specific judgment with a bright-line rule. If the 2021 rule used a multifactor approach, the memo has effectively amended the regulation without amending it. Second, the practical binding effect: guidance issued to field staff that directs outcomes is treated as binding even if it disclaims that effect, because staff who depart from it face internal discipline. The disclaimer 'does not create any rights or obligations' is not dispositive; courts look to whether the agency treats the document as a standard of conduct.
On the other hand, if the memo merely paraphrased the 2021 rule and echoed a definition already in the regulation, it would be interpretive and exempt. Harrow's counsel should put side by side the pre-memo treatment of ephemeral streams and the post-memo categorical rule; if anything moved, notice and comment was required.
Exhaustion is a separate obstacle: there is no permit decision to appeal, so Harrow will need to argue that exhaustion is futile or that the agency lacks authority to adjudicate the validity of its own guidance. Courts allow futility where the agency has predetermined the issue.
3. How has Loper Bright changed the analysis, and what deference, if any, should the court give?
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Begin with what did not change. Loper Bright overruled Chevron, so a court no longer asks whether an agency interpretation is permissible. Instead, the court exercises independent judgment under the APA and decides the best reading of the statute, while giving respectful consideration to the agency's reasoning in proportion to its persuasiveness and the consistency of its practice. Some deference survives as a matter of weight, not authority: the agency's technical expertise and contemporaneous construction may be persuasive, especially on contestable scientific questions such as hydrology.
Apply that here. The threshold statutory term - 'waters of the United States' - is a legal question for the court, and the agency gets no thumb on the scale. If the statute's text and structure suggest a narrower reach, the court says so. The same is true for the 2021 regulation's own terms: the memo's categorical expansion must be measured against the rule's text, and the court, not the agency, decides whether the memo is consistent with it.
Two practical points. First, Loper Bright is unhelpful to the agency on the procedural issue: whether notice and comment was required is a question of law under section 553, not a matter of deference. Second, if the agency's memo claims authority over features that reach vast portions of the economy, the major questions doctrine supplies an additional clear-statement hurdle. A court should decide the procedural defect first, since vacating the memo on notice-and-comment grounds avoids the more difficult statutory question and is the narrower disposition.