ACOEL : American College of Environmental Lawyers : ACOEL : Environmental Law, Ethics, Administration of Justice

originally posted for the Association of Corporate Counsel's Green-House Counsel ©2009

The construction and rehabilitation of our nation’s infrastructure has come to the fore with the advent of both climate change and the transformation of our energy production.  As water shortages continue to move eastward from the western states and new water quality standards are promulgated to address previously unregulated pollutants, the handling of water will ultimately require as much, if not more, attention from corporate counsel than the current focus on fossil fuel.  To anticipate this potential sea change, counsel should be aware of the evolution of governmental regulation of the use and handling of water, as well as monetary incentives to achieve compliance with the emerging laws.

To provide a brief history, in 1972, the Clean Water Act was amended to regulate direct discharges from industrial facilities and publicly owned treatment works (POTW), and later expanded to cover indirect discharges (e.g., runoff of stormwater) from agriculture and land development.  Although the 1972 laws created a discharge permit system (NPDES) and initial funding for POTW construction, it wasn’t until the enactment of the Water Quality Act of 1987 that EPA received annual funding to award to states who set up revolving grant and loan funds to address problems with wastewater, drinking water and stormwater systems within each of their states. 

Although the amounts varied with the changes in the executive office and congressional makeup, these funds were normally matched by the states through general obligation and/or revenue bonds and derived from the loan repayments and interest earnings to ensure that the funds would continue to be available to achieve their mission year after year.  One such example is the Pennsylvania Infrastructure Investment Authority (PENNVEST), which awards grants and loans for wastewater, drinking water and stormwater projects, including brownfields, acid mine drainage and nutrient trading.  Similar programs exist in each of the 50 states.

The enactment of the American Recovery and Reinvestment Act of 2009 (ARRA) provided additional stimulus funds, designed to create jobs, and required that 20 percent of the funds be disbursed for “green infrastructure” projects.  EPA received $4 billion of stimulus money, to encourage the full recycling of wastewater and stormwater to reduce energy costs, augment future water supplies and minimize adverse impacts on water quality.  Since there are financial federal incentives from both the U.S. Environmental Protection Agency (“EPA”) and the Department of Housing and Urban Development (“HUD”), you should proceed with due diligence to determine if funding opportunities are available for your organization.  If an appropriate match is identified, assist in the requisite applications for these funds.

·               Water Quality Standards;

·               Clean Water Act;

·               Publicly Owned Treatment Works;

·               POTW;

·               Wastewater;

·               Drinking water;

·               Stormwater;

·               American Recovery and Reinvestment Act of 2009;

·               ARRA;

·               “Green infrastructure”;

·               Stimulus money;

·               Financial federal incentives; and

·               Funding opportunities.

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The regulated community is experimenting with solutions to water quality regulatory problems that are market based and implemented on a watershed scale. Such efforts are being met with guarded interest by agencies, environmental organizations and the public, but offer the best hope for true ecological restoration. Oregon has recently passed legislation to foster ecosystem services markets to facilitate this approach. 

The Clean Water Act addresses water quality degradation through establishment of water quality standards and imposition of technology based effluent limitations in point source discharge permits. The receiving waters are tested periodically to see if standards are being attained, and if not, then Total Maximum Daily Loads are set and waste load allocations given to point sources so that permits can be adjusted. Non-point sources are given load allocations in the TMDL, but since there is no direct regulatory enforcement mechanism, and since funding sources are limited, compliance is not assured. 

This model has worked out pretty well for dealing with municipal and industrial waste water discharges, and toxics in receiving waters have been  much reduced. However, there has been little effect on water quality degradation related to non-point sources. In Oregon, over 1,200 streams are listed as water quality limited, and the vast majority are on the list for non-point source related problems, such as warmer ambient water temperatures and nutrient loading. What to do?

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United States v. Milner, Nos. 05-35802, -36126, 39 ELR 20232 (9th Cir. Oct. 9, 2009)

In a suit brought by the United States against homeowners for common law trespass to tidelands held in trust for a Native American tribe, the Ninth Circuit held that waterfront homeowners who built shoreline defense structures on this property are liable for common law trespass and for violating the Rivers and Harbors Appropriations Act of 1899 (RHA).  

 Between 1963 and 1988, the homeowners leased the tidelands from the tribe, giving them the right to erect shore defense structures on the tidelands. After the lease expired, the homeowners refused to remove the structures or enter into a new lease agreement. The homeowners argued that they cannot be liable for trespass, despite the movement of the tideland boundary, because their structures were lawfully built on the homeowners' property landward of the mean high water (MHW) line.  

 The court disagreed.  Under common law, however, the boundary between the tidelands and the uplands is ambulatory, changing when the water body shifts course or changes in volume. Because both the upland and tideland owners have a vested right to gains from the ambulation of the boundary, the homeowners cannot permanently fix the property boundary, thereby depriving the tribe of tidelands that they would otherwise gain. And although the structures may have been legal as they were initially erected, the court found that this is not a defense against the trespass action nor does it justify denying the tribe land that would otherwise accrue to them.  

The court also determined the homeowners are liable under the RHA because they have maintained at least part of their shore defense structures below the MHW line and because the structures alter the course, location, condition, or capacity of a navigable U.S. water. Addressing whether the homeowners had also violated the Clean Water Act (CWA), the court held that it was unclear from the evidence whether the high tide line actually reached the area where the homeowners discharged fill material during their maintenance of the structures. The court emphasized that although the jurisdictional reach of the CWA is generally broader than that of the RHA, the RHA is concerned with preventing obstructions, whereas the CWA is focused on discharges into water. Since the two laws serve different purposes, their regulatory powers will diverge in some circumstances, such as this one. 

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On March 9, 2009, we posted an article regarding issues raised in the United States District Court for the Northern District of Oklahoma, State of Oklahoma v. Tyson Foods, Inc., et al., Case No. 05-CV-329-GFK regarding the Cherokee Nation ownership interests in the Illinois River and its watershed. In this case, the Attorney General for the State of Oklahoma sued several poultry companies for polluting the Illinois River and its watershed in eastern Oklahoma as the result of the disposal of poultry litter in the watershed. The suit alleges claims under CERCLA, RCRA, trespass and nuisance, among other things. The State of Oklahoma sought money damages and injunctive relief against the poultry companies.

The Poultry Defendants filed a Motion to Dismiss for Failure to Join the Cherokee Nation as a Required Party under Rule 19, or in the Alternative, Motion for Judgment on the Pleadings alleging the State lacks standing to prosecute the case. The Poultry Defendants alleged the Cherokee Nation possessed significant, legally protected interests in the Illinois River and it’s Watershed that would be impaired or impeded by its absence from the litigation, and further that the Court should grant judgment as a matter of law to the defendants because the State did not have standing to bring the suit.

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On July 7, 2009, the United States Court of Appeals for the D.C. Circuit rendered its decisions in the PM_2.5 Designations Litigation, Catawba County, NC v. EPA, No. 05-1064 and consolidated cases (D.C. Cir. July 7, 2009). Applying the standard of review set forth in Section 307(d)(9) of the Clean Air Act, which “requires the Court to set aside EPA’s final actions when they are excess of the agency’s statutory authority or otherwise arbitrary and capricious,” the Court denied all of the petitions for review except Rockland County, New York and remanded the designation of Rockland County to EPA for a “coherent explanation of its designation”. Slip op. at 3, 9, 53-56. 

Overall, the Court complimented EPA on its handling of “the complex task of identifying those geographic areas that contribute to fine particulate matter pollution”. Id. The Court concluded “EPA both complied with the statute and, for all but one of the 225 counties or partial counties it designated as nonattainment, satisfied – indeed, quite often surpassed – its basic obligation of reasoned decisionmaking.” Id. (emphasis added).

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On June 22, 2009, the Supreme Court held 6-3 that the Corps, rather than EPA, has authority to permit the discharge of a rock and water mixture called “slurry” from a mine froth flotation process to a nearby lake, reversing the Ninth Circuit’s decision that the proposed discharge would violate the EPA’s performance standard and §306(e) of the Clean Water Act.  Coeur Alaska, Inc. v.. Southeast Alaska Conservation Council et al., __U.S.__ (No.  No. 07–984, June 22, 2009).  Section §402(a) of the Clean Water Act forbids the EPA to issue permits for fill materials falling under the Corps’ §404 authority. Because §404(a) empowers the Corps to “issue permits . . . for the discharge of . . . fill material,” and the agencies’ joint regulation defines “fill material” to include “slurry . . . or similar mining-related materials” having the “effect of . . . [c]hanging the bottom elevation” of water, 40 C.F.R. §232.2, Justice Kennedy's opinion for Court states, the slurry Coeur Alaska wishes to discharge into the lake falls within the Corps’ §404 permitting authority.  The Clean Water Act is ambiguous on the question whether §306 applies to discharges of fill material regulated under §404, however EPA’s internal “Regas Memorandum” states that the performance standard applies only to the discharge of water from the lake into the downstream creek, and not to the initial discharge of slurry into the lake.  The dissent , written by Justice Ginsburg, takes the view that a discharge covered by a performance standard must be authorized, if at all, by EPA.

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On December 5, 2008, the U.S. EPA Region 1 announced that it would use its “residual designation authority” under Clean Water Act Section 402(p)(2)(3) to regulate owners of properties that discharge storm water into a three square mile urban watershed located within a major commercial center near downtown Portland, Maine. Landowners with one acre or more of existing “impervious surface” in the Long Creek watershed, such as parking lots, roads, and rooftops, will be required to obtain storm water permits under the National Pollutant Discharge Elimination System (NPDES).  The EPA decision was prompted by a March 6, 2008 petition from Conservation Law Foundation (CLF) asserting that certain storm water dischargers be required to obtain NPDES permits.  

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Has the EPA gone far enough to overcome the successful Waterkeeper Alliance challenge to its CAFO Rule? 

In 2005, the 2^nd Circuit Court of Appeals held EPA’s 2003 CAFO Rule exceeded its authority. The challenged rule required certain concentrated animal feeding operators to apply for an NPDES water permit or prove none was needed. The court held that having only a potential to discharge was not enough to require a permit. In 2008, the EPA revised its CAFO Rule, announced on November 20, 2008 at 73 Fed. Reg. 70,418 as “Revised National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitations Guidelines for Concentrated Animal Feeding Operations in Response to the Waterkeeper Decision”-did it do enough to survive a challenge?

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Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

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Broad statement of underlying support cannot sustain EPA regulatory definition of navigable waters [1]

 EPA’s broad regulatory reach on navigable waters is rejected by the United States District Court for the District of Columbia. 

Setting aside the EPA’s regulatory definition of navigable waters, the D.C. Circuit Court  found the EPA’s definition was inadequately explained in light of recent United States Supreme Court cases. Oil producing facilities that add pollutants to navigable waters were required to develop spill prevention, control and counter measure plans under a Clean Water Act regulation that broadly defined navigable waters. Affected industry participants and associations successfully challenged the regulation.  

The question became whether in promulgating a regulation in an area where there has been recent Supreme Court activity whether the EPA considered all the relevant factors. If it did not, plaintiffs argued the EPA’s decisions were arbitrary and capricious or a clear error of judgment. The EPA argued while concise, its explanation was adequate. Its explanation came in a response to a comment and provided in part: “The case law supports a broad definition of navigable waters, such as the one published today, and that definition does not necessarily depend on navigability in fact.”[2]

The court could not reconcile, however, recent cases, that do not define navigable waters as broadly as in the EPA’s expansive rule. Noting recent courts have reined in the reach of the definition of navigable waters to not reach the fullest extent of the commerce clause, the court found inadequate EPA’s brief comment statement. Thus, the court agreed the EPA rule was not the product of reasoned decision making and struck it.

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            With some exceptions and common law developed standards, Arkansas has traditionally followed the reasonable use theory of the riparian doctrine. A riparian user must use water in a manner that is reasonable compared to others’ rights  (including as to ground water). 

            As a mid-south state, Arkansas receives a moderate amount of rain per year (approximately 49.19 inches on average since 1895 compiled from the Arkansas Natural Resource Commission’s Arkansas Ground Water Protection and Management Report for 2006). Stress on the amount, use of and quality of its underground aquifers, primarily in east and southeast Arkansas, have  resulted in increased scrutiny and planning for alternate water sources, including from conservation, recovery and surface water.        

            Arkansas has no current active system in operation for regulating water usage.  The Arkansas Natural Resources Commission, however, is directed to monitor our state’s water resources and can set minimum streamflows by rulemaking (but this step requires consultation with other state agencies). Water needs to be considered are domestic and municipal water supplies; agricultural and industrial; navigation; recreational; fish and wildlife and other ecological needs. The regulations and laws describe preferences and priorities, but are untested in practice.

            Minimum streamflows are to be set on a case by case basis, defining such stream flows as the “quantity of water required to meet the largest of the following instream flow needs as determined on a case-by-case basis:” (1) interstate compacts, (2) navigation, (3) fish and wildlife, (4) water quality, and (5) aquifer recharge. 

            After minimum flows are established, non-riparian permits may be applied for from “excess surface water.” Excess surface water means twenty-five percent (25%) of the amount of water available on an average annual basis from any watershed basin above that amount required to satisfy all of the following:

                        1.         Existing riparian rights as of June 28, 1985

                        2.         The water needs of federal water projects existing on June 28, 1985

                        3.         The firm yield of all reservoirs in existence on June 28, 1985

                        4.         Maintenance of instream flows for wish and wildlife, water quality, aquifer recharge requirements, and navigation

                        5.         Future water needs of the basis of origin as projected in the State’s Water Plan

                        6.         Additionally, in the White River Basin, permitted transfers may not exceed on a monthly basis an amount that is 50% of the monthly average.

Minimum streamflow is important because of its relevance to the Commission’s planning in the case of a possible shortage. Separate and apart from its use in this way, minimum streamflows are also used to determine when excess surface water is available for transfers to nonriparians.

            These standards may be reviewed in the near future to begin establishing minimum streamflows and potentially, associated protected levels, which the Commission may attempt to implement by rule under shortage conditions. The White River is scheduled as the first river to be reviewed in conjunction with the Memphis District Corps of Engineers’ Grand Prairie Area Demonstration Project.  While such irrigation projects were unusual in eastern states, another such project is on the horizon with the Corps’ November 2007 Record of Decision issued for the Bayou Meto Basin of Arkansas.    

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