The use of ecosystem services as a tool for compensatory mitigation is off to a slow start in Oregon.  It remains to be seen whether state agencies will effectively embrace and implement this relatively new approach to setting priorities and standards for mitigation programs. A specific question from the standpoint of water use and development is whether a wide range of ecosystem services can be used as an alternative to “bucket-for-bucket” in-stream flow replacement as mitigation to offset new water development.

The concept of ecosystem services – defined as “the benefits human communities enjoy as a result of natural processes and biodiversity” – has been recognized in Oregon law since 2009. (ORS 468.581(3)). The law establishes a general policy to support the maintenance, enhancement and restoration of ecosystem services in Oregon (ORS 468.583). Agencies are “encouraged” to use ecosystem services markets as a means to meet mitigation needs for various programs, and are directed to consider mitigation strategies that recognize the need for biological connectivity and ecological restoration efforts at a landscape scale rather than exercise an “automatic preference for on-site, in-kind mitigation” in making mitigation decisions (ORS 468.587(2)). See “Adventures in Water Quality Mitigation” for additional background.

Despite this policy and directive, the Oregon Water Resources Department (OWRD) has not yet taken any actions to modify its mitigation policies relating to issuance of new water right permits.  Under long-standing procedures, OWRD requires mitigation for new uses that are determined to have the potential to interfere with in-stream flows needed for fish that are listed as sensitive, threatened or endangered under state or federal programs.  (OAR Chapter 690, Division 33).

The need for mitigation arises most often in the context of reviewing applications for new ground water use. When the ground water source is determined to be in hydraulic connection to surface waters providing habitat for the listed fish species, mitigation may be required to offset the expected surface water depletion. Based on guidance from a biological opinion issued in a specific water right permit matter some years back, OWRD typically requires “bucket-for-bucket” mitigation in the form of in-stream flow restoration at or above the stream reach that will be affected by the ground water use. 

Applicants generally obtain mitigation water by acquiring and cancelling other existing water rights for surface water use.  In practice, the system results in a de facto cap and trade program, conditioning approval of new water rights on the cancellation of existing rights. 

In a few regions of the state – most notably the Deschutes Basin in Central Oregon – the bucket-for-bucket replacement approach works because mitigation water is generally available through voluntary markets.  This somewhat unique set of circumstances arises because of population growth and land use changes in an area of relatively marginal farming productivity.  As farm lands are converted to housing and urban uses in and near the cities Bend, Redmond and Prineville, the existing water rights become available for mitigation purposes.

In other parts of the state – most notably the highly productive and water-efficient farming region in the mid-Columbia Basin – the fact situation is quite different.  There is very little mitigation water available because existing water rights are needed to maintain existing agricultural production levels.  The frustration for economic development interests is exacerbated by the enormous volume of flow in the Columbia River and huge reservoir pools created by the federal hydropower system, both of which are untouchable because of the regulatory limitations on new withdrawals.   

The issue of ecosystem services as a potential alternative for mitigation took center stage briefly in the 2012 legislative session – but the discussion resulted in no action. HB 4126 would have spurred availability of ecosystem services markets by focusing on improved methodologies for quantifying and applying ecosystem services “credits.” Another bill that was hotly debated but eventually died in committee was focused directly on the Columbia Basin problems.  HB 4101 would have required OWRD to “consider new mitigation options for new surface water diversions” in the Columbia River Basin. The mitigation wording was specifically intended to open the door for alternatives to the “bucket-for-bucket” approach.  By putting the ecosystem services concept to work, mitigation alternatives could reasonably include investment in high value habitat restoration, including temperature reduction or other water quality improvements in priority tributaries to offset direct withdrawals from the Columbia River. 

For many of us directly involved in the Columbia River debates in Oregon, this new approach could be a key to unlocking access to the river for new economic use.  Without this policy change, Oregon water uses will continue to see little or no new irrigation development in the area because of the lack of traditional mitigation sources.  The Governor and legislative leadership are already working on a revival of the HB 4101 discussion in 2013.

On Friday, March 30, the United States Environmental Protection Agency (“EPA”) announced that the agency was withdrawing its December 7, 2010 Imminent and Substantial Endangerment Administrative Order (“AO ”) issued unilaterally to Range Resources Corporation and Range Resources Production Company (“Range”).  With much fanfare and national media attention, EPA issued the AO to address the contamination of two water wells in North Central Texas.  EPA alleged that the source of the contamination was from Range’s oil and gas activities, including hydraulic fracturing, in the Barnett Shale Formation.  Range has challenged EPA’s action with pending litigation in the Northern District of Texas and in the Fifth Circuit.  Was EPA’s decision to withdraw its AO an outgrowth of the recent unanimous Supreme Court decision in Sackett v. EPA?

In addition to ordering replacement water supplies to the recipients of water from the affected water well, the AO included the requirements that Range study a twenty-county aquifer, identify gas flow pathways anywhere within that aquifer regardless of their source, and prepare a plan to eliminate those flows and remediate any area of the aquifer that has been impacted by gas from any source.  Range was to identify and sample all private water wells within 3,000 feet of their two suspect gas wells, as well as all the water wells serving a subdivision in Parker County.  Range informed EPA that it disputed the validity of the AO and would not comply with some of its terms.

In addition to Range’s challenge to the AO, the Railroad Commission Texas, the state agency with sole jurisdiction and responsibility for the control and disposition of waste and the abatement and prevention of pollution of surface and subsurface water resulting from oil and gas activities, called a hearing to consider whether Range’s operations caused or contributed to the contamination of the water wells in question.  Based on the evidence presented at the hearing, conducted on January 19-20, 2011, the Railroad Commission found that the contamination of the water wells came from the shallower Strawn gas field, which begins about 200 to 400 feet below the surface.  Geochemical gas testing demonstrated that the natural gas seeping into the water wells did not match the gas produced by Range from the much deeper Barnett Shale field, which is more than 5.000 feet below the surface in that area of Parker County.  The evidence showed that hydraulic fracturing of gas wells in the area could not result in communication between the Barnett Shale gas field and the shallow aquifers from which water wells in the area produce.  EPA chose not to participate in the state hearing process.

EPA brought a civil enforcement action in the Northern District of Texas against Range on January 18, 2011, Case No. 3:11-cv-00116-F, seeking injunctive relief and civil penalties for Range’s failure to comply with the AO.  Range filed a petition for review on the AO with the 5th Circuit on January 20, 2011, Case No. 11-60040, challenging the AO and the constitutionality of the AO statutory scheme as interpreted and applied by EPA.

The district court in its Order Denying Without Prejudice Defendants’ Motion to Dismiss and Staying Case, 2011 WL 2469731 (N.D.Tex.), struggled with EPA’s claim that it only has to prove noncompliance with the AO and the Court has no jurisdiction to review the factual and legal basis of the AO. The Court found that the AO was a final agency action, but stayed the case pending the 5th Circuit decision.

The issues before the 5th Circuit included whether the AO was final agency action and, if so, has Range been provided due process. Oral argument was considered on October 3, 2011.

On March 21, 2012, a unanimous Supreme Court held in the Sackett case that AOs issued under the Clean Water Act constitute final agency action. Under the Administrative Procedure Act, Respondents, like Chantell and Michael Sackett, are afforded pre-enforcement review of the factual and legal basis of the AO and may bring a civil action under the APA to challenge the AO.

Given the opinion for a unanimous Supreme Court in the Sackett case, EPA must have felt less than enthusiastic about its prospects in the pending Range cases. On Friday afternoon, March 30 with no fanfare and limited media attention, EPA announced the withdrawal of the Range AO. In a letter to EPA on the same date, Range confirmed the withdrawal of the AO and a related joint stipulation to dismiss EPA’s enforcement action and committed to sample twenty private water wells located in southern Parker County on a quarterly basis for one year, a substantial reduction in the scope and magnitude of the terms in the AO.

EPA’s hasty dismissal of the Range case raises some interesting questions. Did EPA agree to withdraw the Range AO in order to minimize the litigation risk of establishing pre-enforcement review rights of respondents to unilateral AOs under the Safe Drinking Water Act?  How extensive will the Sackett case be applied to unilateral AOs authorized under other non-Clean Water Act statutes administered by EPA and other federal agencies? What are the implications to EPA’s ability to react quickly to bonified public health emergencies? Will Congress need to overhaul statutory AO provisions to avoid the problem confronted in Sackett?

On February 22, 2012, the United States Supreme Court issued a rare 9-0 opinion addressing issues of interest to environmental lawyers and historians alike.  PPL Montana, LLC v. Montana, 565 U.S., 132 S.Ct. 1215 (2012).  The Court's decision needs to be reviewed and properly understood by practitioners and parties dealing with a myriad of activities that take place along and under rivers, including environmental remediation and determination of ownership of river beds and banks within any environmental site through which a river flows.

The Court dealt with a dispute between the Petitioner (owner of hydroelectric facilities on three rivers in Montana) and the State of Montana regarding who owns the riverbeds.  Under the Constitution-based “Equal Footing Doctrine,” first adopted by the Supreme Court in 1842, the answer to that question depends upon whether the rivers were navigable at the time of statehood. 

The high court reversed the decision by the Montana Supreme Court holding that Montana owned the riverbeds in question, based upon the Montana Court’s “infirm legal understanding of [the Supreme] Court’s rules of navigability law for title under the equal footing doctrine.” 

The Court reinstated bedrock principles of title and navigability law that it last ruled on in 1931.  The Court reaffirmed that, while states do receive title at the time of statehood to the beds and banks of rivers that were "really navigable," the states may not amend the pertinent federal navigability rules in their favor, post-statehood, because "it is not for a State by courts or legislature, in dealing with the general subject of beds or streams, to adopt a retroactive rule for determining navigability which would enlarge what actually passed to the State, at the time of her admission."  The Court also confirmed that, if a river was not navigable at statehood, then title to the river's beds and banks stayed in the United States "to be transferred or licensed if and as it chooses;" for example, by land patents or grants, leaving private riparian landholders on either side of a river owning the beds "to the center of the stream."

Some other important highlights from the unanimous opinion, authored by Justice Kennedy:

           1.    The Court explained that, other than for title, the concept of “navigability” is used in different contexts, including for purposes of assessing federal regulatory authority under the Commerce Clause and to determine admiralty jurisdiction, but emphasized that “the test for navigability is not applied in the same way in these distinct types of cases." 
           2.    The Court reiterated that rivers are deemed navigable in fact when they are "used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water."  Importantly, however, in title disputes, the existence or absence of such commercial "navigation is determined at the time of statehood;" is "based on the natural and ordinary condition of the water;" and cannot be based on improvements made to that natural condition.
           3.    The Court rejected Montana's reliance on present-day recreational use of the rivers, including anglers in drift boats, as evidence that the rivers had been susceptible of commercial navigation at the time of Montana's statehood in 1889.  The Court held that an assessment for title navigability at statehood "concerns the river's usefulness for trade and travel, rather than for other purposes," and explained that while "a river need not be susceptible of navigation at every point during the year, neither can that susceptibility be so brief that it is not a commercial reality:"  “At a minimum, a party seeking to use present-day evidence for title purposes must show: (1) the watercraft are meaningfully similar to those in customary use for trade and travel at the time of statehood; and (2) the river's post-statehood condition is not materially different from its physical condition at statehood."

The Supreme Court issued its long awaited decision in Sackett v. EPA. In a unanimous decision, the Court held that the Sacketts may bring a civil action under the Administrative Procedure Act to challenge EPA’s compliance order. The court rejected the government’s argument that EPA is less likely to use orders if they are subject to judicial review, saying that “[t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.” It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters. See link to the Sackett opinion.

EPA had issued a compliance order charging the Sacketts with filling in a wetland during construction of their home, in violation of the Clean Water Act, and requiring them to restore their property. The Sacketts argued that they were entitled to prompt judicial review because they faced severe penalties for noncompliance and disputed that their property is a wetland. The United States argued that the Sacketts could comply with the EPA order and  submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order. The tenor of the oral argument did not bode well for the United States, as previously reported.  The Court’s unanimous opinion, reversing the Ninth Circuit, bears that out.

The court’s opinion, written by Justice Scalia, starts with the proposition that the APA provides for judicial review of  “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. §704. The court concludes that EPA’s compliance order has all the hallmarks of APA finality: it required the Sacketts to restore their property according to an agency-approved plan, exposed the Sacketts to double penalties in future enforcement proceedings, and severely limits their ability to obtain a Section 404 permit from the Army Corps of Engineers. See 33 U. S. C. §1344; 33 CFR§326.3(e)(1)(iv). Rejecting the government’s argument, the court held that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied does not provide an adequate remedy.

The Court also had little difficulty in disposing of the government’s argument that the Clean Water Act should be read as precluding judicial review under the APA, 5 U. S. C. §701(a)(1). The APA creates a presumption favoring judicial review of administrative action, and the Court concluded that nothing in the Clean Water Act’s statutory scheme precludes APA review.  The court was similarly not persuaded that the issuance of a compliance order is simply a step in the deliberative process, given that EPA rejected the Sackett’s attempt to obtain a hearing, and the next step will involve judicial and not administrative deliberation.  Justice Scalia’s opinion concludes that “there is no reason to think the Clean Water Act was uniquely designed to enable the strong-arming of  regulated parties into ‘voluntary compliance’ without the opportunity for judicial review -- even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.” 

Justice Alito’s concurring opinion is of interest because of its emphasis on the fact that the “reach of the Clean Water Act is notoriously unclear.” Citing an amicus brief filed by the Competitive Enterprise Institute, Justice Alito cites EPA’s guidance advising property owners that jurisdictional determinations concerning wetlands will be made on a case-by-case basis.  His opinion concludes that allowing property owners to sue under the APA is “better than nothing,” but only clarification of the reach of the Clean Water Act can rectify the underlying problem. 

It will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters.  The Sackett decision will be relied upon by parties who are subject to orders under other statutes that EPA administers.  For some of the reasons cited by Justice Alito, the Sackett decision also underscores the need for clarification of the reach of the Clean Water Act.  Stay tuned. 

Chapter 4: High Stakes Litigation

My fall 2011 blog  discussed Chickasaw Nation and Choctaw Nation of Oklahoma v. Mary Fallin, in her official capacity as Governor of the State of Oklahoma, et al., Case No. CIV-11-927-C, filed in Federal Court in Oklahoma City (“Federal Court case”) on August 18, 2011.  In the Federal Court case, the Chickasaw and Choctaw Nations seek declaratory and injunctive relief to protect their federal rights, their present and future water rights, regulatory authority over water resources and immunity from state law and jurisdiction over certain waters located in Southeastern Oklahoma.  Certain aspects of this suit were also covered in Mark Walker’s December 2011 blog  on the 1830 Treaty of Dancing Rabbit Creek.  As a result of recent developments, claims in the Federal Court case and outside that litigation have evolved and escalated, and the stakes are now much higher. 

In June, 2010, the Oklahoma Water Resources Board (“OWRB”) entered into an agreement with the Oklahoma City Water Utility Trust (“Trust”) to sell to the Trust certain of the OWRB’s rights to store waters of the Kiamichi Basin in the Sardis Reservoir and to control withdrawals of water from the reservoir.  The tribes claim that a fundamental element of that agreement is the OWRB’s issuance of a water use permit granting the Trust annual water withdrawal rights from the Sardis Reservoir and/or the Kiamichi Basin in an amount roughly equal to ninety percent (90%) of Sardis’ estimated sustainable yield.  The tribes take issue with the sale, transfer and appropriation of water which they assert was given to them under various treaties with the United States that granted them exclusive dominion and control over the water resources on their tribal lands in Oklahoma.

In a most important tactical move, the State of Oklahoma, through the OWRB, filed a Petition for a General Stream Adjudication in the Oklahoma Supreme Court on February 10, 2012, asking that court to assume original jurisdiction and determine the relative rights of all parties laying claim to waters which are the subject of the Federal Court case, pursuant to the federal McCarran Amendment, 43 U.S.C. § 666.  Under the McCarran Amendment, such proceedings may be brought in either federal or state court, with the United States waiving its sovereign immunity if all interested parties are joined so that all rights can be determined in one proceeding.  In a move surprising to many, the Oklahoma Supreme Court on February 23, 2012 unanimously agreed to accept original jurisdiction of the case and set a briefing schedule. 

Not to be outdone, the Chickasaw and Choctaw Nations filed a Motion for Partial Summary Judgment in the Federal Court case on February 14, 2012, essentially asking the federal court to enjoin the Oklahoma Supreme Court from making a determination of the relative rights of the parties to the water.  In this motion the tribes “clarified” that their case is not one that seeks adjudication of water rights, nor do they seek to determine the full extent of their regulatory authority over the water.  The Nations contend that federal law does not allow the defendants to “drain the Treaty Territory waters in whatever quantity and for whatever purposes….without regard to the Nations’ rights…”  Motion for Partial Summary Judgment Brief, p. 15.  As a result of this filing, the Nations’ position is much less clear than before when they were seeking exclusive dominion and control over the same water. 

The Defendants have filed motions to stay briefing on the Tribes’ Motion for Partial Summary Judgment.  Their arguments include assertions that the federal court lacks jurisdiction over the subject matter of the action; the case is barred because it violates the state’s Eleventh amendment immunity in the relief sought against the OWRB defendants; and there is a failure to join indispensable parties (the U.S. and the OWRB).  Interestingly, the Defendants also ask the federal court to abstain from addressing the merits of the Federal Court case in deference to the General Stream Adjudication suit where the Oklahoma Supreme Court has assumed original jurisdiction pursuant to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). 

And it gets worse.  On February 20, 2012 the Association for the Protection of Oklahoma Water (“APOW”) filed suit claiming irregularities in the OWRB’s authorization process for requesting a General Stream Adjudication.  The suit alleges that the OWRB went into executive session to discuss the Federal Court case filed by the Chickasaw and Choctaw Nations and came out of the meeting with a motion authorizing the stream adjudication, in violation of the Oklahoma Open Meeting and Open Records Acts.  If the General Stream Adjudication request was filed as the result of improper authorization, presumably that proceeding could be dismissed.  However, assuming the Oklahoma Supreme Court agreed with APOW’s contention, it might decide to stay the proceedings until the OWRB authorized another General Stream Adjudication request in accordance with state law.   The original General Stream Adjudication case could then proceed or, if necessary, a new original action could be filed. 

This is high stakes litigation between powerful sovereigns pitting the decision making role of the federal courts against that of a state supreme court.  The jurisdictional dispute involving the state’s desire to avoid piecemeal litigation and seek a comprehensive determination of the rights of all parties in one action in state court as envisioned by the McCarran Amendment, versus the Nations’ interest in having their treaty rights determined in federal court, will be fascinating to watch.  The substantive supremacy issues go to the heart of how dispute resolution occurs within a federal system, and the ultimate winner of this struggle will realize significant revenue for many years to come. 

There is always the possibility that a negotiated settlement could let the courts off the hook.  With the stakes being so high, both sides are already flinching, as evidenced by the lack of clarity in the filings made by both sides in the Federal Court case.  However, sooner or later each party will have to tell the court exactly what it is asking the court to do, unless the parties settle.  Those looking to see whether a settlement is possible may well be interested in the outcome of an upcoming hearing in the General Stream Adjudication case.  According to an Oklahoma City newspaper, such a hearing is planned in April before a Supreme Court referee. 

Again, the words “stay tuned” are particularly appropriate.  

PostScript:
After this blog was written but before posting, the U.S. Justice Department on March 12, 2012 removed the General Stream Adjudication case from the Oklahoma Supreme Court to the US District Court in Oklahoma City, but it landed in a different federal court than the one where the Chickasaw case is pending.  The Judge asked for briefs by March 27 on whether the cases should be consolidated, and the City of Oklahoma City filed a Motion to Remand the streamwide adjudication on March 19, 2012.  Hold on, these cases are moving at the speed of light.

With significant funding in 2010 under the American Reinvestment and Recovery Act (“ARRA”), a major financial stimulus was afforded the water and wastewater industry to “go green.”  Although many large urban areas decided to address their combined sewer overflow (“CSO”) problems by replacing their existing sewage systems with separate systems, many others opted to construct “green infrastructure” to detain and/or retain the surcharge from rainstorms that could overwhelm operation of wastewater treatment plants and result in the discharge of sewage and other pollutants from CSOs.  In Pennsylvania, a $30 million loan was extended to the City of Philadelphia by the Pennsylvania Infrastructure Investment Authority’s Clean Water State Revolving Fund. This loan enabled the City, which had signed a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection, to implement a green infrastructure program over a 20 year period. 

With the economic recession and major changes in the composition (and philosophies) of the members in both Houses of Congress from the 2010 elections, not only did the prospect of future similar economic stimuli programs go to the “back of the bus”, but the desire of these new members of Congress to reduce spending put increased pressure on the federal government to reduce the funding of any infrastructure improvements. 

A good example of this can be seen in the President’s proposed budget issued on February 13, calling for a proposed EPA budget of $8.3 billion. This reflects a decrease of 1.2 percent below the fiscal 2012 enacted level.  More pertinent to the water and wastewater industry, the proposed cuts included a 19.8 percent reduction (from $1.47 billion to $1.18 billion) in EPA’s budget for the Clean Water State Revolving Funds, and a 7.4% reduction (from $918 million to $850 million) in the Drinking Water State Revolving Fund.  Similar budget cuts occurred in most, if not all, of the states’ share of infrastructure funding.  With dire predictions associated with the Nation’s failure to maintain all of its infrastructure, one may recall the plot in “Atlas Shrugged” where the nation’s infrastructure failed and those who were its leaders “disappeared”.  Recall the query “Who is John Galt?”

As a result, we environmental attorneys find ourselves on the horns of a dilemma.  On the one hand, we are trying to adapt our infrastructure to climate change, foster the use of cleaner and more efficient energy in operating treatment plants, and conserve water. On the other hand, we face the reality of having to represent an industry with an infrastructure that is largely old and outdated and appears, at least in some cases, ready to fail. These failures will no doubt result in more and more violations of the Clean Water Act (and state water laws) in the future. 

Although funding cutbacks are not yet “carved in stone”, it would be wise for us to keep an eye on the budget debates. They may affect our practices in the near term and our environment as well.  

Two recent South Carolina Supreme Court decisions have addressed significant environmental regulatory issues.  In the Smith Land decision  which dealt with state regulation of discharges into isolated wetlands (“waters of the State”), the court held that there is a private cause of action to enforce the provisions of the South Carolina Pollution Control Act (“PCA”)¹.   In the Sandlands decision  which involved a certified question from the federal district court, the South Carolina Supreme Court held that the state’s Solid Waste Policy & Planning Act (“SWA”) did not preempt local government flow control².   Each of these issues has been addressed in prior blogs (1, 2), although the outcome of the certified question on the flow control matter had not yet been determined.

Several pieces of legislation pending in the South Carolina General Assembly respond to these decisions and the issues they address.

House Bill H.4654 and its companion Senate Bill S.1126 would amend the PCA to identify those activities which require, or do not require, a permit under the Smith Land decision.  The bills also preclude a private cause of action to enforce the provisions of the PCA.  The House version of the bill cleared the House Agriculture subcommittee and committee with overwhelming support and is now on the House calendar for consideration.  These bills enjoy considerable support from the regulated community.

Two other bills address the question of whether state law preempts local government flow control following the Sandlands decision.  Senate Bill S.514 and its companion House Bill H.4721 would amend the SWA to prohibit local ordinances that preclude solid waste disposal facilities, regardless of location.  The House version has also cleared the House Agriculture subcommittee and committee with nearly unanimous support and is pending on the floor of the House for consideration.

In each instance, the General Assembly clearly appears to be reacting to the Smith Land and Sandlands decisions in an effort to give meaning to its legislative intent.  Time will tell whether the proposed amendments will be enacted into law as the Legislature moves through its last year of a two-year Session.

¹ Georgetown County League of Women Voters v. Smith Land Co., 393 S.C. 350, 713 S.E. 2d 287 (2011).
² Sandlands C&D, LLC v. County of Horry, 394 S.C. 451, 716 S.E. 2d 280 (2011).

Current federal law requires states to develop and adopt a statewide antidegradation policy to protect existing in-stream uses for high quality waters.  Georgia has done so under Rule 391-3-6-.03.  Georgia’s antidegradation policy describes what requirements must be met before the State issues a permit under the National Pollutant Discharge Elimination System (“NPDES”) and allows a wastewater point source (i.e. wastewater treatment plan) to discharge pollutants into surface waters.  However, in apparent response to the U.S. Environmental Protection Agency’s (“EPA”) potential revision of its requirements for state antidegradation policies and an Administrative Law Judge’s recent ruling, the Georgia Environmental Protection Division (“EPD”) published proposed amendments to its antidegradation policy in September 2011.

In its proposed amendments, EPD attempts to set out exactly when the antidegradation review process is triggered and what an applicant requesting a new or expanded point source discharge must demonstrate to obtain the permit.  EPD’s proposed rule and related guidelines explain the three basic steps as follows: (1) applicant may demonstrate that proposed discharge will not result in “significant lowering of water quality” (if satisfied, no antidegradation analysis is required); (2) if water quality is significantly lowered, applicant must demonstrate that discharge will accommodate important social or economic development; and (3) applicant must demonstrate that no reasonable alternatives exist that would provide the needed wastewater capacity without authorizing a new or expanded wastewater discharge into surface waters.  The key to this new procedure is the definition of “does not significantly lower water quality.”   Specifically, if the proposed discharge of a pollutant is 10% or less than the remaining assimilative capacity for that pollutant in the receiving stream, then the new discharge per se “does not significantly lower water quality” and no antidegradation analysis is required.  These amendments appear to respond to EPA’s concerns over EPD’s implementation of an antidegradation policy, and clearly appear to respond to the ALJ’s decision in Upper Chattahoochee Riverkeeper, Inc. v. Forsyth County, Georgia. 

In September 2010, Upper Chattahoochee Riverkeeper, Inc. (“UCR”) filed a petition challenging the issuance by EPD of an NPDES permit (“Permit”) authorizing Forsyth County to discharge 6 million gallons per day (“MGD”) of wastewater into the Chattachoochee River from the County’s existing waste water treatment facility and the new Shakerag facility.  The Permit set limits of 200 colony-forming units per 100 milliliters (“cfu/100mL”) and 0.3 milligrams per liter (“mg/L”) for fecal coliform bacteria and phosphorous, respectively.  UCR claimed that the Permit, specifically the expanded limits, threatened the present and future health of the Chattahoochee River without EPD having undertaken a proper study, modeling or antidegradation analysis to show that the degradation of the river was necessary to accommodate Forsyth County’s economic and social development. 

In a decision found later to be overreaching, the ALJ held that any lowering of water quality in the receiving water triggers an antidegradation review and such review must analyze both the technical and economic feasibility of any alternatives, as well as a no-discharge permit alternative.  The ALJ made this conclusion in part by referencing EPD’s failure to define certain terms and therefore the ALJ adopted the EPA’s guidelines.  More surprising, the ALJ also adopted the permit discharge limits suggested by UCR which were much lower than those in the original permit or even those allowed for recreational waters by Georgia’s Department of Natural Resources.  The ALJ then remanded the permit to the Director of EPD for reissuance with revised monthly discharge limits of 23 cfu/100mL for fecal coliform bacteria and 0.08 mg/L for total phosphorous.   

Forsyth County appealed to the Superior Court of Forsyth County which reversed the ALJ’s decision finding that the ALJ had exceeded her authority.  The Court concluded the ALJ could not create an enhanced review by wholesale adoption of EPA guidelines nor set specific effluent limits.  EPD’s recent proposed amendments state clearly that effluent limits cannot be set pursuant to an antidegradation analysis, but only by EPD pursuant to Rule 391-2-6-.06.  The Court remanded the matter to the ALJ, ordering the antidegradation review standard be applied as codified in EPD’s implementing procedures without reference to EPA guidance documents. 

However, the battle is not over as UCR has appealed this decision to the Georgia Court of Appeals. As of this writing, both parties have submitted their briefs for review and oral argument is yet to be set.  In light of EPD’s recent proposed amendments, this decision is one to watch as the appellate court’s holding could have a significant impact on restrictions in future NPDES permits.

Section 316(b) of the Clean Water Act is a model of statutory simplicity:  “Any standard established pursuant to section 301 or section 306 of this Act and applicable to a point source shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.”  The effort by EPA to implement rules to interpret Section 316(b) approaches the opposite extreme.

The latest rulemaking effort began on April 20, 2011 when EPA published a proposed rule to protect fish from being killed at water intake structures that withdraw at least two million gallons of water per day from waters of the United States and use at least 25% of the water they withdraw exclusively for cooling purposes. 

Pursuant to a settlement agreement with the environmental group Riverkeeper and other organizations, EPA is required to issue the revised rule by July 27, 2012.  In the proposed rule, EPA agrees to impose flexible technology standards to deal with fish trapped against intake structures or drawn into cooling water systems.  The rule requires facilities to obtain an NPDES permit reflecting best available technology in the design, location and construction of cooling water intake structures to minimize impingement (trapping of fish against intake screens) and entrainment (drawing of fish into a cooling water system). 

The proposed rule has been attacked by the Natural Resources Defense Council and Riverkeeper, among other environmental groups.  The rule has also been criticized by industry.

On January 25, 2012, EPA submitted a draft notice of data availability that could lead to amendments of the proposed rule.  Notwithstanding the fact the rule has yet to be adopted and EPA has acknowledged the draft may be amended prior to adoption this summer, EPA staff in Region 1 have sent detailed  information requests to facilities in Maine concerning any cooling water intake structure at those facilities. 

Given the status of the 316(b) rulemaking, why EPA is requesting such information at this time is unclear.  Given the existence of the proposed rule, EPA’s acknowledgement that it may revise the proposed rule and the court-required issuance date of July 27, this rulemaking process bears close scrutiny.

A rather surprising turn of events occurred recently in North Carolina, but the underlying reasons still remain unclear.  On January 11, 2012, the North Carolina Environmental Management Commission (“EMC”), by a 4-3 vote, vacated an Administrative Law Judge’s (“ALJ”) decision on summary judgment that the Rose Acre egg farm’s airborne ammonia emissions are not subject to regulation under, and do not require, a National Pollutant Discharge Elimination System (“NPDES”) permit.  The ALJ’s Decision and the parties’ pleadings are available here.The EMC remanded the matter back to the ALJ, August B. Elkins II, for a full evidentiary hearing.  Thus, the case raises anew the question of whether a discharge to air can constitute a point source discharge to navigable waters of the United States which requires a NPDES permit under the Clean Water Act,.  The answer may depend on whether such a discharge is found to remain “in the air” and not make its way by land “into the water.” 

On October 17, 2011, ALJ Elkin found that the Rose Acre facility does not discharge or have the potential to discharge process wastewater (or manure, litter) to navigable waters of the United States.  Judge Elkin’s relied on the March 2011 decision by the Firth Circuit Court of Appeals in National Pork Producers Council v. EPA, in which it held that the U.S. Environmental Protection Agency lacked the authority to require a NPDES permit for a facility that “proposes to discharge” or any facility that has not yet discharged into a navigable water of the United States.  Judge Elkin held that the DENR has no authority to require Rose Acre to obtain an NPDES Permit. 

Rose Acre is the site of 14 high-rise hen houses with a total of four million egg laying hens, located within the Tar-Pamlico River Basin in North Carolina.  Rose Acre operates what is called a “dry-litter facility” that does not directly discharge into any waters.  In 2009, before the Fifth Circuit’s decision in National Pork Producers Council that only CAFOs that actually discharge were required to secure a NPDES permit, Rose Acre applied for a NPDES permit.  The Division of Water Quality of the North Carolina Department of Environment and Natural Resources (“DENR”) issued a NPDES permit to Rose Acre, which included conditions requiring amendment of the facility’s Best Management Plan (“BMP”).  Rose Acre appealed, contending that it no longer needed an NPDES permit as well as challenging a number of the BMP conditions on the grounds that they exceeded the DENR’s regulatory authority.  The ALJ granted Rose Acre summary judgment.

Existing precedent supports the ALJ’s decision.  Both the Second and Tenth Circuit Court of Appeals have ruled that air emissions, even where there is atmospheric deposition into navigable waters, are not regulated by the Clean Water Act.  The Second Circuit so held in its 2000 decision in No Spray Coalition, Inc. v. City of New York, dealing with insecticide spray to eradicate mosquitoes.  In No Spray Coalition, the Second Circuit found that:
       While the trucks and helicopters used to spray insecticides may be point sources…they discharge the    insecticides into the atmosphere and not into navigable waters.  It would be stretching the language of the [Clean Water Act] well beyond the intent of Congress to hold that the de minimus incidental drift over navigable waters of a pesticide is a discharge from a point source into those waters. The fact that a pollutant might ultimately end up in navigable  waters as it courses through the environment does not make its use a violation of the Clean Water Act…To so hold would bring within the purview of the Clean Water Act every emission of smoke, exhaust fumes, or pesticides in New York City.

In 1997, the Tenth Circuit, in Chemical Weapons Working Group v. U.S. Department of the Army, refused to apply the Clean Water Act § 301(f) prohibition against disposal of chemical weapons into waters to smokestack emissions from a chemical weapons incinerator.  The Tenth Circuit emphasized the potential duplication of regulation by the Clean Air Act as well as finding that under § 301(f), Congress clearly intended to authorize the incineration of chemical weapons.  The Tenth Circuit also viewed the attempt to regulate stack emission under the Clean Water Act as contrary to plain old common sense.  (“Although Plaintiffs may be correct in arguing that an object may fly through the air and still be ‘discharged…into the navigable waters’ under the Clean Water Act, common sense dictates that [the] stack emission constitute discharges into the air – not water- are therefore beyond § 301(f) reach.”). 

Similarly, in American Canoe Assn. v. D.C. Water and Sewer Authority, the U.S. District Court for the District of Columbia rejected allegations that the D.C. Sewer Authority violated its NPDES permit by failing to install odor controlling carbon filters on sewer vents.  The court found that attempts to control sewer gas or hydrogen sulfide fumes emanating from sewers in a NPDES permit are “unrelated to the general purposes of the CWA” and unenforceable obligations. 

During oral argument on its challenge to the ALJ Elkin’s Rose Acre decision before a panel of the EMC, the DENR’s counsel appears to have successfully changed the focus of the legal inquiry from what’s in the air to what’s in the water?  In its Exceptions to the ALJ’s Entry of Summary Judgment, the DENR contended that it had not attempted to regulate airborne emissions of ammonia.  Instead, it now contends that Rose Acre does discharge to navigable waters, citing the fact that “with a rain event the feathers and dust from the ventilations fans at [Rose Acre] are flushed into a stormwater pond and then into waters of the State.  The DENR further relied upon the comparative results of surface water monitoring taken before and the Rose Acre hens were stocked, which showed higher levels of ammonia nitrogen, total inorganic nitrogen, phosphorus and fecal coliform in surface water.  Thus, the DENR took the position that although pollutants may initially be discharged “into the air,” if they wind up on the ground and then make their way to a regulated surface water, there is a “point source” discharge that is subject to regulation under the Clean Water Act. 

Rose Acre contends that the DENR’s argument is a post hoc rationalization, without any supporting, credible evidence, to defend its decision to issue the NPDES permit.  In this regard, Rose Acre notes that the ventilation fans in question “are pointed at a ninety degree angle away from a storm water retention pond that is located over one-fifth of a mile away.”  Judge Elkin found that the stormwater pond point source theory was unsupported by the record.  Relying on the holding in National Pork Producers Council that a CAFO is not required to apply for a NPDES permit until there is an “actual discharge into navigable waters to trigger the CWA’s requirements”, Rose Acre contends that the DENR has failed to present any proof of such a discharge. 

If the Rose Acre case proceeds to ruling after the ordered full evidentiary hearing, it will be worth watching to see whether the ultimate decision is based on what’s in the air or what’s in the water (and how it got there). 

Section 303(d) of the Clean Water Act requires each state to identify all water body segments within the state that do not meet water quality standards.  The statute requires the states to submit a list of their impaired water body segments to EPA every two years for review and approval.  The decision to list as stream segment as impaired is important because it usually triggers a chain of regulatory consequences, beginning with the preparation of a Total Maximum Daily Load (“TMDL”) study and typically ending with significantly more stringent permit limits for point sources and more robust regulation of non-point sources.

Although the decision to add a stream segment to a state’s 303(d) list is undeniably important, there is significant uncertainty whether the decision is subject to judicial review.  An ACOEL blog entry reported in December 2011 on a Pennsylvania decision which questioned whether Pennsylvania’s issuance of its 303(d) list was an appealable agency action under state law.  Chester Babst, Beware of “Impaired” Surface Water Designations, posted December 10, 2010.

The federal courts of appeals are split on whether EPA’s decisions in reviewing a state 303(d) list are subject to judicial review.  The 8th Circuit has held that a private stakeholder challenge to EPA’s approval of a Missouri 303(d) list was premature and not justiciable because the addition of a segment to a 303(d) list, by itself, did not have any impact on the rights, duties, or property of private parties.   On the other hand, the 9th Circuit has held that a private party had alleged sufficient claims of present injury to have standing to challenge EPA’s approval of California’s 303(d) list. Even after the 9th Circuit’s decision, EPA argued on remand that the scope of judicial review should be narrow because EPA’s role in reviewing California’s 303(d) list was supposedly only one of limited oversight (“[EPA] note[s] that the 30-day limitation on [its] review process demonstrates that [its] ‘role is one of mere oversight’.”  The district court accepted this argument and rejected the challenge to EPA’s review on remand.

It must have been amusing for knowledgeable stakeholders and state water quality regulators to read EPA’s claim that its role is one of “mere oversight” that is strictly circumscribed by a 30-day time limit.   The practical experience of most states has been quite different.  In fact, EPA routinely runs months and even years past the 30-day limit on its review of state 303(d) lists, and it is not at all unusual for EPA to significantly alter the state’s submission, frequently with a supplemental factual record and the imposition of new impairment decisions generated out of whole cloth.

Normally one might think that identifying impaired stream segments would be a simple task of comparing the numbers in the monitoring results for a given stream segment to the relevant numeric water quality standards, and therefore questions of judicial review would rarely be relevant.  In practice, however, the decision to list a segment as impaired frequently can be problematic or even controversial.  To begin with, monitoring results are sometimes subject to questions regarding the adequacy and accuracy of the sampling and analysis.   In many instances the relevant water quality standard is expressed in a narrative rather than numeric form, and therefore the simple comparison of two numbers is replaced by an exercise in subjective judgment.  Even when the basic identification of an impaired segment has been made, there are still choices of priority and timing that can make a great deal of difference in how the impairment decision affects stakeholders.

Given the potential uncertainties that can attend a listing decision, and the gravity of the regulatory consequences that are set in motion by such a decision, it is unfortunate that EPA and some state agencies have displayed such resistance to any form of independent accountability for their decisions.

The Supreme Court heard oral argument this morning (January 9, 2012) in Sackett v. EPA, No. 10-1062.  EPA had issued a compliance order charging the Sacketts with filling in a wetlands, in the course of building their home, in violation of the Clean Water Act and requiring them to restore their property.  The Sacketts dispute that their property is a wetlands and seek an opportunity for judicial review of EPA’s order.  EPA argues that the Sacketts could comply with the EPA order or submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s order. 

The tenor of the oral argument did not bode well for the United States.  Some of the Court’s questions seemed to focus on how to write the opinion and the consequences of a ruling for the Sacketts.  If the Sacketts prevail, it will be important to see how EPA responds and what if any changes are made to EPA’s practice and procedure for issuing orders in wetlands and perhaps other matters.  The transcript of the Supreme Court argument is available [here].

The toughest questions and comments were aimed at counsel for the United States, Malcolm Stewart.  Justice Alito stated:  “Mr. Stewart, if you related the facts of this case as they come to us to an ordinary homeowner, don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?”  (Tr. 37)

Chief Justice Roberts asked “what would you do, Mr. Stewart, if you received this compliance order? (Tr. 35).  When Stewart responded that one could apply for an after-the-fact permit,”  Chief Justice Roberts replied “You wouldn’t do that, right? You know you will never get an after the fact permit if the EPA has sent you a compliance order saying you’ve got wetlands.”  (Tr. 36)  Earlier, Justice Kagan had asked counsel for the Sacketts rhetorically whether the critical point wasn’t that EPA would not entertain an after-the-fact permit while a compliance order is outstanding. (Tr. 12).  Justice Alito expressed the view it “seems very strange for that, for a party to apply for a permit on the ground that they don't need a permit at all.”  (Tr. 14). 

The government’s alternative solution, that one could comply with the compliance order, met with an incredulous response from Chief Justice Roberts:  ”That's what you would do? You would say, I don't think there are wetlands on my property but EPA does, so I'm going to take out all the fill, I'm going to plant herbaceous trees or whatever it is, and I will worry about whether to -- that way, I'll just do what the government tells me I should do.” (Tr. 36-37). 

Justice Breyer focused on the finality of the EPA order for purposes of judicial review, stating “for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite. And yet -- so here you are saying that this statute that says nothing about it precludes review, and then the second thing you say is that this isn't final. So I read the order. It looks like about as final a thing as I have ever seen.”  (Tr. 41)

Justice Ginsburg asked Mr. Stewart whether, once EPA made the determination that there were wetlands, that be the end of the matter as far as EPA is concerned.  Mr. Stewart got himself in difficulty when he replied “ I think they have reached that conclusion for now. I don't think it would be accurate to say that we have done all the research we would want to do if we were going to be required to prove up our case in court.” (Tr. 51)  Justice Alito was not pleased with that reply:  “Well, that makes the EPA's conduct here even more outrageous.  We think now that this is -- these are wetlands that -- that qualify, so we're going to hit you with this compliance order, but, you know, when we look into it more thoroughly in the future, we might change our mind?” (Tr. 51)

In questions to counsel for the Sacketts, Justice Breyer noted the government’s concern that “when you get judicial review of this kind of order, the Court doesn't refer on fact-finding that isn't made on a record.  * * * And so they'll have a hard time -- or a harder time -- in each of these cases subjecting it to judicial fact-finding.”  Justice Breyer suggested that EPA might change its procedure if the Sacketts prevail, and providing some type of pre-order or post-order procedure that would be open to change. (Tr. 55) 

It is of course always difficult to predict the outcome of a Supreme Court case with certainty simply based on oral argument.  That being said, it is also difficult to be optimistic about the government’s chances of prevailing based on the comments made by the court during oral argument today.  Whatever the outcome, the Court’s ruling will likely be an important environmental and administrative law precedent. 

I am generally loath to speculate about what the Supreme Court will do based on oral argument, but the overwhelming reaction to the oral argument in Sackett v. EPA was that EPA is going to lose. What would a loss mean? In simplest terms, EPA would no longer be able to issue enforcement orders under the Clean Water Act without those orders being subject to judicial review. Such a decision would undeniably be significant. Everyone practicing in this area knows how coercive EPA enforcement orders can be. A person who thinks that he is not liable or that the order is inappropriate, and faced with having to violate the order and wait for EPA to bring an enforcement action to obtain judicial review, is truly between a rock and a hard place – or perhaps Scylla and Charybdis (I’m not sure which, but it’s not good, either way). The opportunity for preenforcement review would eliminate much of EPA’s coercive power.

The big question is whether a decision against EPA would be so broad as to make it clear that EPA’s order authority under other statutes, such as CERCLA, would be similarly affected. Here, speculation really is difficult, because the Supreme Court could invalidate EPA’s CWA authority several different ways, with differing impacts on other statutes. Readers who want to explore the issue in more depth than a blog post can review an article I did in the ABA Superfund and Natural Resource Damages Litigation Committee Newsletter.

As long as I am speculating, I’m going to go out on limb and predict that the Court’s decision will not be easily limited to the CWA. I think EPA’s order authority is in trouble across the board.

The next big question is when lower courts are going to actually start paying attention to what the Supreme Court says about environmental cases. I’m tired of this pattern. A series of cases are decided by lower courts, almost universally in EPA’s favor. Indeed, one of the striking things about Sackett is that the Supreme Court took the case without a circuit court split – EPA had won before every circuit court that had reached the question. The Supreme Court applies principles that are broadly accepted outside the environmental arena, but which for reasons unknown to everyone but the lower court judges have been thought inapplicable to environmental cases, and EPA loses. The next several years are spent with EPA, DOJ, and the lower courts merrily constructing some new edifice which allows EPA to continue to win – until the Supreme Court takes another case and says “No, we really meant it.”

There is a lesson here for lower courts, if they would but listen. Environmental cases are not sui generis. EPA does not necessarily win just because it is protecting the environment. General principles of corporate, administrative, and constitutional law apply. Under this framework, EPA will still win most of the time. That’s the nature of administrative law. Expert agencies receive a lot of deference from the courts in interpreting their organic statutes and applying their expertise. But they don’t win all the time, and they don’t win just because they are EPA.

Rant over. Let’s see what the Supremes actually do.

For many years, the Great Lakes community has identified invasive species as one of the most serious threats to the largest system of surface fresh water in the world.  Well over 180 species are present already, and include such types as sea lamprey, zebra mussels, quagga mussels, round gobies, and many more causing hundreds of millions of dollars of damage each year.  Even with all the concern over the current invaders, much more anguish has developed because of the threat from Asian carp, more specifically silver and bighead carp.

The Asian carp were introduced to fish farms in the southern United States in the 1970’s to remove algae and plankton from catfish ponds.  Along the way, through flooding and other means, they escaped into the rivers, and have been eating and reproducing their way north over the years.  The U.S. Army Corps of Engineers have erected an electric barrier about 40 miles from Lake Michigan on the Chicago Sanitary and Ship Canal, linked to the Illinois River, to stop the further movement.  Although it appears the barrier is having an effect, there is evidence to suggest the carp have already gone beyond and are threatening Lake Michigan.

 When this evidence became public in late 2009, Michigan went to the U.S. Supreme Court to seek a reopening of an old multi state consent decree over water diversion from Lake Michigan to Illinois.  The Court refused to hear the matter, but Michigan and other states have gone to Federal district court in the Northern District of Illinois for injunctive relief to close the locks that separate Lake Michigan from the Chicago Area Waterway System.  The district court denied the injunction, and the Seventh Circuit upheld the denial, but appeared to leave the door open to the plaintiffs if action is not taken quickly enough.

 The U.S. Army Corps of Engineers is undertaking a large study called the Great Lakes and Mississippi River Inter-basin Study to look at all possible connections between the two watersheds, and consider all possible ways to stop the movement of the carp.  The Great Lakes and Mississippi River communities are both concerned that this will take too long.  To address this concern, the Great Lakes Commission and Great Lakes and St. Lawrence Cities Initiative have undertaken an expedited study funded by six foundations looking just at the Chicago Area Waterway System and the option of re-establishing the divide between the two basins by separating them with an earthen barrier that would prevent any flow of water or movement of aquatic species in either direction. 
 The situation presents a number of interesting public policy and legal issues.  How seriously do we need to take invasive species?  How much emphasis should be placed on the prevention of introductions of new species to new areas, and how much certainty in the risk analysis should be required to take action?  How much disruption of commerce is acceptable?  What level of legal showing should be required to get an injunction?

On August 18, 2011, the Chickasaw and Choctaw Nations filed a lawsuit, in federal court in Oklahoma City claiming that they, rather than the State of Oklahoma, have regulatory authority over the water resources within their original tribal boundaries which comprise almost one-fourth of the State.  The source of their claims is the 1830 Treaty of Dancing Rabbit Creek, in which the federal government agreed to convey the lands to the Nations, in fee simple, to entice the Nations to move west of the Mississippi from their aboriginal homelands.

In support of their position, the Nations point to the fact that the State, in its lawsuit against the poultry industry for alleged pollution to the Illinois River Watershed, recently stipulated that the Cherokee Nation (as one of the "Five Tribes") had "substantial interests" in the watershed.  The Nations also rely upon the case of Choctaw Nation v. State of Oklahoma, in which the U.S. Supreme Court held that the Tribes own the riverbed of the Arkansas River as it flows across their treaty lands.  The Nations also contend that the State previously recognized the Nations' water rights when it negotiated a compact with the Nations to apportion out-of-state water sales revenues.  Lastly, the Nations remind the State that, as a precondition to being admitted to the Union, the State of Oklahoma agreed that it would never assert jurisdiction over the Nations' lands or affairs.

One of the main issues underlying the lawsuit is, of course - money.  The Nations are upset that the State recently sold water storage rights in Lake Sardis to the Oklahoma City Water Utility Trust, thus paving the way for water to be transported from tribal lands to provide water to several municipalities in central Oklahoma, without consulting or sharing revenues with the Nations.  Moreover, the temporary moratorium on out-of-state sales while the State studied water availability is about to end, meaning the State could move forward with out-of-state sales of waters located within the tribal territories without sharing the revenues with the Nations.  A 2002 proposed compact had resolved this issue, agreeing to revenue share 50%/50% on such sales, however, the Oklahoma Legislature never approved the compact.

The Nations say they want to talk - sovereign to sovereign - to try to resolve the problem.  However, the Nations contend that the State has spurned all such efforts.  The Governor responded, claiming that the filing of the lawsuit while she was out of town promoting Oklahoma as the go to place to live and do business was a surprise and not helpful to either side's interests.

Neal McCaleb, a spokesman for the Chickasaw Nation, has said, "most people think tribal rights and tribal sovereignty in general is some kind of ancient relic from the past that really doesn't have any relevance to the issues today, like water, and that's not the case."  One hundred and eighty-one years later, the Nations' water claims under the 1830 Treaty of Dancing Rabbit Creek are finally going to court.

In recent years, the states and EPA have placed greater emphasis on regulating storm water discharges from various industrial and municipal sources under the Clean Water Act.  These discharges are typically regulated by a general NPDES Permit issued by EPA or an authorized state.  The standard approach required in these general permits is for a facility to develop a storm water pollution prevention plan (SWPPP) incorporating best management practices (BMPs) that will be followed to reduce pollutant impacts to storm water discharged from the facility.  Typically some type of periodic monitoring is required during storm events.  The monitoring can be just visual monitoring and less frequently chemical analysis of certain pollutants associated with the particular industry.  In lieu of numerical effluent limits, typically the general permit will establish “benchmark levels” for industry specific pollutants that are not to be exceeded.  If a benchmark level is exceeded, the facility is required to undertake and document corrective measures to address the problem.  Typically corrective measures involve modifications to BMPs.  Unlike a numerical effluent limit in non-storm water NPDES permits, benchmark levels are not enforceable effluent limits under the Clean Water Act.  Therefore exceeding a benchmark level by itself does not subject a facility to an enforcement action by EPA, an authorized state or a third party citizen suit.

Over the past five years there has been a significant increase in Clean Water Act storm water enforcement actions.  The emphasis has been on actions against the home construction industry as well as confined animal feeding operations (CAFOs).  The typical enforcement action has been focused on facilities that failed to obtain a required general permit or failed to comply with SWPPS and related paperwork requirements.  Also in the West we have witnessed a significant increase in third party citizen suits for violation of general storm water permits.

Over the past 15-20 years, the BMP approach in general permits has provided relative certainty of the requirements and ease of implementation for permittees.  EPA has taken the position, however, that the BMP approach to storm water permits is just a first phase in the program while the agency gathers data to support future actual numerical limits.  The future is now here.  An EPA Guidance document entitled “Guidance on Establishing TMDL Waste Load Allocations for Storm Water Discharges in NPDES Permits (EPA November 2010),” although not finalized, is already being implemented by EPA to establish numerical criteria. 

For those not familiar with “TMDLs” and “waste load allocations,” some brief background may be helpful.  The total maximum daily load (TMDL) program is dictated by Section 303(d) of the Clean Water Act.  The program requires states to identify impaired waters not meeting water quality standards and to then develop TMDLs to bring the waters back into compliance.  TMDLS are basically pollution reduction plans that identify the loading capacity (with a margin of safety) of a water body which is the level of particular pollutant causing the impaired condition that will bring the water body back into compliance with water quality standards.  The TMDL thus requires reductions of pollutant loading from both point sources (known as “waste load allocations” or “WLAs”) and nonpoint sources (known as “load allocations”).  Typical of Clean Water Act programs, the regulatory onus of complying with TMDLs falls on point sources through the NPDES permit program.  Nonpoint sources are not regulated by EPA and state nonpoint source programs are generally based on a non-regulatory approach.  Also typical of Clean Water Act programs involving water quality standards, a states’ identification of impaired waters and development of TMDLs are subject to EPA review, approval or disapproval.  In many instances EPA will actually develop a TMDL in the face of state inaction.

In the past storm water NPDES permits were often overlooked by the states and EPA in establishing TMDLs.  EPA’s recent Guidance makes clear that storm water permits will be considered when EPA reviews state TMDLs.  In fact the Guidance makes clear that it is EPA’s intent in approving TMDLS to ensure that numerical WLAs are included in general storm water NPDES Permits.  Although the Guidance suggests some flexibility in such an approach by stipulating that WLAs will only be included in storm water permits when “practical,” we all know that “practicality” is in the eye of the beholder.

Inserting WLAs into storm water permits raises a host of technical and compliance issues.  First, because of the variability of storm events it is often difficult to quantify the actual loading of pollutants from a particular facility.  Often times the data on such loading is lacking and is therefore based on modeling which may or may not predict actual conditions.  Thus if EPA implements this Guidance in storm water permits the cost and frequency of monitoring storm water discharges is likely to increase substantially.  Secondly, it is often very difficult to control the concentration or loading of a particular pollutant during storm events absent the installation of expensive wastewater treatment controls.  Thus the cost of compliance may increase substantially once this Guidance is implemented.  Finally, once WLAs or numeric effluent limits do find their way into general storm water NPDES permits, exceedence of these limits will subject facilities to EPA, state or third party citizen suits enforcement actions.

Despite these concerns, numerical limits or WLAs in storm water discharge permits appear to be the next wave of regulation.  Practitioners in this area should make sure that clients with regulated storm water discharges to impaired waters become involved in the TMDL development at the state level to ensure that they receive a reasonable WLA that can be consistently complied with and which will not be too costly to achieve.

The Supreme Court’s last determination of what wetlands are subject to the Clean Water Act and hence may not be filled without a permit left behind a matted mess. In Rapanos v. United States, the 4-1-4 opinion, articulated two tests for when a wetland constitutes a water of the United States.  In the plurality opinion, wetlands must have “a continuous surface connection to bodies that are waters of the United States.”  Justice Kennedy’s swing vote decision for the plurality’s remand, stated that, while there needed to be a connection, it would be sufficient if there was a “significant nexus” with the waters of the U.S.; that is, it would be sufficient if the wetlands, alone or in combination with other lands in the region, would significantly affect the chemical, physical and biological characteristics of the U.S. waters. So which test should be applied?

Since Rapanos, the Seventh and Eleventh Circuits have found that Justice Kennedy’s test must be met, under a weakest-link theory – it is the narrowest grounds for the Supreme Court’s decision in Rapanos. On the other hand, the First, Eighth and recently the Third Circuits have held that if the wetlands can meet either test set forth in Rapanos, then the fill would be in violation of the Clean Water Act.

In order to "clarify" things, EPA and the Corp of Engineers issued a proposed guidance document, to help identify waters subject to Clean Water Act jurisdiction   The Agencies added that the proposed guidance would result in more waters being brought within their jurisdiction - a statement that is the political equivalent of poking a bear with a stick.  Predictably, the proposed guidance quickly came under attack as being an attempt by EPA and the Corp to expand their jurisdiction and to promulgate rules without following proper procedure.

The "clarification" guidance also did not sit well with several Republican members of Congress -- John Mica, Bob Gibbs, James Inhofe and Jeff Sessions.  On November 8, 2011, these four Congressmen wrote a letter to EPA and the Army Corps of Engineers. They noted that EPA had apparently decided not to finalize the draft guidance but, rather, that the Agencies were planning to address the scope of CWA jurisdiction via rulemaking. The authors commended the agencies for deciding to follow the rulemaking procedure, but lamented that if they were simply going to incorporate the guidance documents into the rule, the Agencies had effectively (and improperly) prejudged the issue, particularly given their view that the guidance “misconstrues or manipulates the legal standards announced in the Supreme Court decisions.”
The letter goes on to “encourage” the agencies to start the rulemaking process fresh, open the matter to an advanced notice of proposed rulemaking to obtain public input, and to do a cost-benefit analysis of whatever proposed rule is developed. The authors sincerely hoped that the agencies would not make a “mockery of the rulemaking process under the Administrative Procedure Act.”

Perhaps there is more to the letter than a gentle reminder that the Agencies shouldn't consider mocking the law.  If EPA promulgates the rule rather than issues a guidance, the inevitable challenge will be much more difficult because of the deference (frequently referred to as Chevron deference) that will attach to the rule.  Deference is a powerful weapon in any agency's arsenal and anyone who seeks to diminish the power of an agency would do well to find a way to challenge that deference.   In this case, the letter is preemptively making the case that if the final rule looks like the guidance, it proves that EPA prejudged the outcome, that the rule should be thrown out and that it would be a "mockery" to allow deference to save it. Given the recent decisions regarding agency deference, it just might work.  And if it does, letter-writing will be back in vogue.

In United States v. Donovan, 2011 U.S. App. LEXIS 22026 (3rd Cir., Oct. 31, 2011), the Third Circuit became the latest Circuit Court of Appeals to weigh in on . the Army Corps of Engineers' regulatory authority over wetlands under the Clean Water Act in the wake of the Supreme Court's splintered decision in Rapanos v. United States, 547 U.S. 715 (2006).

In Donovan, the United States brought an enforcement action for filing wetlands without first obtaining a permit from the Corps of Engineers.  The district court granted summary judgment in favor of the federal government, finding that, under the "continuous surface connection test" articulated by the plurality opinion in Rapanos v. United States, 547 U.S. 715 (2006), or the "substantial nexus test" laid out by Justice Kennedy in his concurring opinion in Rapanos, the wetlands in question were subject to regulation under the CWA.  The court imposed civil penalties and granted the government's request for injunctive relief.

On appeal Donovan argued that because the multiple opinions in Rapanos did not provide any governing standard, pre-Rapanos case law should govern whether the wetlands on his property were subject to the CWA.  The Third Circuit rejected this argument and concluded that either the plurality's test or Justice Kennedy's test could be used to determine the CWA's jurisdictional reach over wetlands.  Because the wetlands met either test, the Corps' exercise of jurisdiction was proper.

The Third Circuit needed to cobble together a governing standard for jurisdiction over wetlands because in Rapanos no one standard commanded majority support.  In Rapanos, the Court considered whether wetlands, which lie near ditches or man-made drains that eventually flow into traditional navigable waters, constitute "waters of the United States" within the meaning of the CWA.  Justice Scalia, in a plurality opinion in which three other Justices joined, concluded that "the waters of the United States" as used in the CWA "includes only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams[,] . . . oceans, rivers [and] lakes.'"  547 U.S. at 739.  Importantly, the plurality opinion noted that the phrase "does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall."  Id. With regard to wetlands, the plurality opined that "only those wetlands with a continuous surface connection to bodies that are 'waters of the United States' in their own right, so that there is no clear demarcation between 'waters' and wetlands, are 'adjacent to' such waters and covered by the [Clean Water] Act."  547 U.S. at 742.

Justice Kennedy concurred in the judgment but struck out on a different path.  In his view, the Corps of Engineers' jurisdiction over wetlands "depends upon the existence of significant nexus between the wetlands in question and navigable waters in the traditional sense."  547 U.S. at 779.  "Wetlands possess the requisite nexus, and thus come within the statutory phrase 'navigable waters,' if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as 'navigable.'"  Id.

Justice Stevens, in an opinion joined by three other justices, dissented.  In the dissenters' view, the Court should have deferred to the Corps' interpretation of its jurisdiction under the CWA.  Under the Corps' interpretation, wetlands are subject to its jurisdiction if they are adjacent to tributaries of traditionally navigable waters and thus fall within the term "waters of the United States." 

The Third Circuit concluded that a majority of the Supreme Court would have supported the exercise of the Corps' jurisdiction under either the plurality’s "continuous connection test" or Justice Kennedy’s "substantial nexus test"..  The Third Circuit pointed out that the dissenting opinion said they would uphold the Corps' jurisdiction in all cases in which either the plurality's test or Justice Kennedy's test is satisfied.  The Third Circuit joined the First Circuit (United States v. Johnson, 467 F.3d 56 (1st Cir. 2006)) and the Eighth Circuit (United States v. Bailey, 571 F.3d 791 (8th Cir. 2009)) in concluding that either test is sufficient.  The Seventh Circuit (United States v. Genke Excavating, 464 F.3d 723 (7th Cir. 2006)) and the Eleventh Circuit (United States v. Robison, 505 F.3d 1208 (11th Cir. 2007)) have concluded that because he was the “swing” vote for the decision, only Justice Kennedy's substantial nexus test should be used to determine jurisdiction.  The remainder of the circuits that have considered the issue have declined to specify which Rapanos test or tests should be applied.

From what appeared to be a hopelessly fragmented Supreme Court decision, the lower courts have managed to fashion two governing tests for jurisdiction over wetlands.  These tests will continue to control for the foreseeable future until they are superseded by Congressional action or agency rulemaking.

March and September 2009 blog entries discussed issues involving Native American water rights in the Illinois River and its watershed.  The issues arose in connection with a federal district court case in Oklahoma involving poultry litter pollution.  State of Oklahoma v. Tyson Foods, Inc., et al., Case No. 05-CV-329-GFK.  In that case, the non-party Cherokee Nation signed an agreement with the State of Oklahoma wherein the State acknowledged that the Cherokees had “substantial” interests in the Illinois River and its watershed and wherein the Cherokees assigned to the State of Oklahoma any and all of their claims against the poultry defendants.  The poultry defendants challenged the agreement, and for various reasons, the Court concluded that the agreement was not valid and did not grant standing to the State to assert the claims of the Cherokee Nation.

Other tribes did not fail to notice the purported agreement between Oklahoma and the Cherokee Nation, with the State acknowledging the “substantial” interest of the Cherokee Nation in the water resources of the State of Oklahoma, the Illinois River, and its watershed. Indeed, on August 18, 2011, the Chickasaw and Choctaw Nations of Oklahoma filed a case involving Native American water rights in the United States District Court for the Western District of Oklahoma.  Chickasaw Nation and Choctaw Nation of Oklahoma v. Mary Fallin, in her official capacity as Governor of the State of Oklahoma, et al., Case No. CIV-11-927-C.  In this case, the Chickasaw and Choctaw Nations of Oklahoma seek declaratory and injunctive relief to protect their federal rights, their present and future water rights, regulatory authority over water resources, and the right to be immune from state law and jurisdiction in and to certain waters located in the State of Oklahoma.  The background facts are as follows:

In June, 2010, the Oklahoma Water Resources Board (“OWRB”) entered into an agreement with the Oklahoma City Water Utility Trust (“Trust”), agreeing to sell to the Trust certain of the OWRB’s rights to store waters of the Kiamichi Basin in the Sardis Reservoir and to control withdrawals of the water from the reservoir.   The tribes claim that a fundamental element of the agreement is that the OWRB will issue a water use permit that grants the Trust the right to annually withdraw water from the Sardis Reservoir and/or the Kiamichi Basin in an amount roughly equal to ninety percent (90%) of Sardis’ estimated sustainable yield.  The tribes take issue with the sale, transfer and appropriation of water, which they assert was given to the tribes under various treaties with the United States granting them exclusive dominion and control over the water resources on their tribal lands in Oklahoma.

The suit alleges that Oklahoma officials earlier “acknowledged” tribal water rights in the waters in question, as evidenced by State officials seeking participation in a proposed interstate transaction involving the Kiamichi Basin waters.  Paragraph 44.  Similarly, the suit alleges that the State of Oklahoma “recognized [from the earlier poultry litigation] that ‘the Cherokee Nation has substantial interests’…” in the waters and natural resources in the Illinois River watershed.  Paragraph 45.  Thus, the earlier agreement with the Cherokee Nation (in which there was an acknowledgement of some level of sovereign rights of the Cherokee Nation in the Illinois River watershed), and the State’s participation in negotiations with the tribes over an interstate transaction related to the Kiamichi Basin waters, are apparently being invoked as indications of the State’s acquiescence in tribal rights in and to certain Oklahoma waters.

Some think that the State of Oklahoma has held its breath for years over the possibility that a court of competent jurisdiction will have the issue of tribal ownership of water squarely in front of it.  Others think that the tribes don’t actually want to litigate the matter for fear of how it might turn out.  Not so any more, as the Chickasaw and the Choctaw Nations place their ownership rights of water resources of the State of Oklahoma squarely in issue in this case, suing the Governor, the OWRB, the City of Oklahoma City and the Trust for the purported granting of rights to the Trust in the Sardis Reservoir and the Kiamichi River and its tributaries.  A ruling in favor of the tribes establishing tribal sovereignty over water rights in certain Oklahoma water bodies and lakes and watersheds will stand Oklahoma on its ear, if it ever happens.  Will the case be settled or go to trial?  Do the tribes or the State really want to risk letting a court decide these questions?  Stay tuned.

In June of this year, a three judge panel of the Eleventh Circuit made an important ruling in the decades-long battle between Alabama, Florida and Georgia over rights to the water reserves of Lake Lanier in Buford, Georgia.  Reversing a United States District Court decision in 2009 by Judge Magnuson, the Eleventh Circuit held that water supply for Altanta’s more than 4 million metro population is an “authorized purpose” of the Buford Project under the Rivers and Harbor Act of 1946  (“RHA”) and that the United States Corps of Engineers (“Corps”) has one year to make a final decision as to how much water Atlanta may draw from Lake Lanier.

To better understand the magnitude of this decision, a brief journey through the history of this long battle is instructive.  In the 1950s, the Buford Dam was constructed and pursuant to the RHA, the Lake Lanier Reservoir was created in North Georgia to control flooding, float barges downstream, and generate power.  According to the Eleventh Circuit’s most recent decision, the reservoir was also created to act as a water supply for the metro Atlanta area although the breadth of the need for this resource was unknown at the time.

As many know, the metro Atlanta area has been one of outstanding growth in the last several decades as the city and its surrounding suburbs have more than tripled their population to more than 4 million in 2010.  This growth has demanded a much greater demand for water, which -- under the RHA -- the Corps had agreed to supply from Lake Lanier.  However, in 1990, the State of Alabama sued the Corps to stop the agency from providing any more water from Lake Lanier to the metro Atlanta Area.  Alabama needs water from Lake Lanier to maintain the operation of its nuclear power plant.  Florida, who later intervened, needs fresh water from Lake Lanier to sustain its multi-million dollar shellfish industry.

United States Senior District Judge Magnuson was specially appointed to hear the several related water cases consolidated in the Middle District of Florida because Georgia, Alabama and Florida judges were conflicted.  In 2009, Judge Magnuson held that it was illegal for the Corps to draw water from Lake Lanier for Atlanta’s needs and that the three states had until July 2012 to reach an agreement regarding water supply or Atlanta would thereafter be allowed to draw only the amounts allowed in 1970—more than 40 years ago.  The Eleventh Circuit’s recent decision clearly reverses the tide.  However, what does this decision really mean for the future?  Both Alabama and Florida are expected to appeal this most recent decision to a full panel of the Eleventh Circuit.  Thus, the water war is not over. 

Governor Deal of Georgia, although pleased about this latest decision, promises to continue efforts to come to an agreement with Alabama and Florida.  Hall County, located in north Georgia and currently drawing more than 18 million gallons per day from Lake Lanier, also reports that it will continue its plans to build an 856 acre reservoir to limit its dependency on Lake Lanier.  At the end of the day, Georgia will still have to work diligently to design alternative water supplies for the metro Atlanta area, but there is no doubt that this most recent decision gives the rapidly growing city more time and a little breathing room.

For questions or comments regarding this article, please email Richard Horder.

Three South Arkansas industries and the City of El Dorado, Arkansas decided to remove their discharge from small ephemeral streams and construct a joint pipeline to carry their combined, treated effluent directly to the Ouachita River, a major river that flows through Arkansas into Louisiana.  Louisiana joined with neighbors and two environmental groups to oppose the “Joint Pipeline” NPDES permit.  In a 41-page opinion, the Arkansas Supreme Court rejected the challenges, and in the process provided some important interpretations of the Clean Water Act’s protections for impaired waterbodies and downstream states.

The Louisiana Environmental Action Network (LEAN) argued that a TMDL for mercury impairment in the Ouachita River basin did not allocate a mercury load for the joint pipeline; and therefore a new discharge permit with a mercury effluent limit was prohibited.  LEAN advocated a “0 mg/l” mercury limit based on 40 C.F.R. 122.4(i) which requires a demonstration of sufficient pollutant load allocations in a TMDL before a new discharge may be allowed.  Relying on Friends of Pinto Creek v. EPA, 504 F.3d 1007 (9th Cir. 2007), LEAN argued that load allocations in a TMDL are like tickets to a sold out performance.  Because the Ouachita River Basin TMDL did not provide a “ticket” (i.e. a load allocation) for the Joint Pipeline, LEAN argued that Arkansas could not authorize entry by the Joint Pipeline (i.e. no discharge of mercury could be permitted). 

The Arkansas Supreme Court focused on the first sentence of 40 C.F.R. 122.4(i) and Arkansas v. Oklahoma, 503 U.S.91 (1991) to reject LEAN’s “sold out performance” argument. The first sentence of 40 C.F.R. 122.4(i) prohibits new discharges that “will cause or contribute to the violation of water quality standards.”  Although the NPDES permit included a mercury limit that authorized mercury to be discharged, the permit limited mercury in the effluent to less than the water quality standard.  In other words, the Joint Pipeline effluent would have to be “cleaner” than the already impaired waterbody.   The Court stated that Arkansas v. Oklahoma had rejected the notion that new discharges were categorically banned from impaired waterbodies, and authorized a more flexible approach, especially for permits that authorize “the construction of new plants that would improve existing conditions.”

When a state issues an NPDES permit that requires effluent to meet the water quality standard, the effluent will always be cleaner than the impaired waterbody receiving stream.  Does the Arkansas Supreme Court opinion authorize any new permit into an impaired waterbody, so long as the water quality standard is protected?  That would be a broad reading of this opinion—perhaps too broad. 

In this case, the mercury in the Joint Pipeline effluent is a pass-through pollutant from the Ouachita River – the industrial participants use the mercury-impaired Ouachita River water as make up water, and that same water is returned to the Ouachita River as wastewater.  None of the pipeline participants add mercury through their operations.  EPA has authorized new discharges into impaired waterbodies under these circumstances through the Multi-Sector General Permit (73 Fed. Reg. 56572 at p. 56575 (Sept. 29, 2008)).  Limiting the opinion to a “pass through” of pollutants that originated in the impaired waterbody would be a narrow reading of this opinion—perhaps too narrow. 

 
The opinion clearly stands for the proposition that the existence of a TMDL does not serve as an outright ban on new sources. New sources can get a “ticket” to discharge into an impaired waterbody if the new source does not “cause or contribute to a water quality violation”—even if the TMDL does not specifically accommodate the new source.

On July 29, 2011, EPA denied a 2008 petition by thirteen environmental organizations to develop and promulgate numeric nutrient water quality criteria for any of the 50 states where such criteria do not exist, or at least promulgate such criteria for the Mississippi-Atchafalaya River Basin (MARB) and the Northern Gulf of Mexico (31 states) as well as total maximum daily loads (TMDLs) for nitrogen and phosphorus for the Mississippi River and its tributaries. 

EPA agreed that nitrogen and phosphorus pollution “presents a significant water quality problem facing our nation” which is damaging ecosystems and public health and causing significant adverse economic consequences.  However, EPA stated that its clear preference for addressing nutrient water quality problems is by working with states, other federal agencies (including USDA and USGS), and stakeholders at the regional and community levels, as it has been doing throughout the MARB for a number of years.

 In denying the petition, EPA placed substantial reliance on its March 16, 2011 memorandum entitled Working In Partnership With States To Address Phosphorus and Nitrogen Pollution Through Use of a Framework For State Nutrient Reductions (Framework Memo).

The Framework Memo was issued by Nancy Stoner, EPA’s Acting Assistant Administrator for Water, to EPA’s Regional Administrator, the Directors of all state and tribal water programs, and others. In her transmittal Memorandum she said  “The amount of nitrogen and phosphorus pollution entering our waters has escalated dramatically” over the past fifty years, due in particular to stormwater runoff, municipal wastewater discharges, agricultural livestock activities and row crop runoff. She added, "Nitrogen and phosphorus pollution has the potential to become one of the costliest and the most challenging environmental problems we face."  Stoner urged each region to use the Framework Memo to work closely with the states and “engage all sectors and parties" in a major effort to reduce this pollution, including development of numeric nutrient criteria based on scientific information at the local and watershed levels. 

The Framework Memo calls upon states to identify and prioritize watersheds where nitrogen and phosphorus loadings are significant and to set loading reduction goals based on best available information.  These include establishment of numeric criteria, TMDLs, reasonable timetables for achieving compliance with water quality standards and collaborative efforts to identify and implement best management practices (BMPs) to reduce the loadings.  No doubt to the chagrin of those who make a living by demonizing EPA as a heavy handed bureaucracy, the Framework Memo is quite deferential to the states, recognizing their lead role under the CWA in setting water quality standards and TMDLs. The Memo emphasizes collaboration, prioritized targeting of technical and financial assistance and the setting of “reasonable” milestones based on a consultative process involving all relevant stakeholders. 

If there is a flaw with the Framework Memo it is the absence of guidance to the regions on what to do when states fail to take reasonable measures to curb nutrient pollution.  One is left to guess at this based on a single sentence in the Stoner transmittal memo which states that EPA “will retain all its authorities under the Clean Water Act.”  By that she presumably means that if states consistently fail to set nutrient criteria, develop and implement TMDLs and require reasonable measures towards compliance, EPA may step in and do it for them, but only if all else has failed.

EPA’s  denial of the MARB petition seems reasonable because substantial activities had been accomplished or were in progress at the state and local level.  For example, EPA, USDA and USGS were already leading regional initiatives with state agencies to address nutrient problems in the Mississippi River Basin and the resulting oxygen-starved “dead zone” in the Gulf of Mexico.  The 31 MARB states have listed over 10,000 nutrient-related water quality impairments and developed over 5,000 nutrient-related TMDLs designed to achieve compliance with water quality standards.  Approximately 4,400 of these were developed by the states and 682 by EPA.  EPA cited extensive efforts at the state, local and watershed levels, including CWA Section 319 watershed plans to address nutrient issues.  While EPA noted that it had set federal numerical nutrient criteria for the State of Florida, its general policy has been to encourage states to do this in the first instance.

EPA’s July 29 decision letter and the Framework Memo, taken together, provide useful guidance for practitioners on how EPA plans to approach this complicated set of legal, technical, practical, and political issues in the future.

*  Ridge Hall is Vice Chair of the Chesapeake Legal Alliance and can be reached at ridgehall@gmail.com.

While we know all too well what the U.S. Supreme Court concluded in the SWANCC and Rapanos with respect to the jurisdiction of the Army Corps of Engineers over isolated and adjacent wetlands, what was not before the Supreme Court was the status of non-jurisdictional, isolated wetlands.   By default, that issue remained within the purview of the states.  While some states already had express authority to regulated isolated, non-jurisdictional wetlands, others had not specifically addressed the matter.

Previously, South Carolina’s omnibus environmental statute, the Pollution Control Act, did not expressly address isolated wetlands, but did describe “waters of the State” rather broadly.  Nonetheless, South Carolina had not overtly attempted to exercise jurisdiction over isolated wetlands following SWANCC.  Recently, the South Carolina Supreme Court in Georgetown League of Women Voters vs. Smith Land Company, 2011 WL 268243 (S.C. July 11, 2011).  While the State environmental agency argued in its brief that it did not have the authority to require a permit for a small, isolated wetland in the center of a residential building site wetlands, the Court disagreed.  In that case, the lot owner, Smith Land, filled the lot and was sued by a number of local environmental groups arguing that the landowner failed to obtain required permits from the State for filling the isolated wetland. 

In Smith Land, the trial court granted summary judgment in favor of the property owner, and the S.C. Court of Appeals affirmed.  The S.C. Supreme Court granted certiorari, and on July 13, 2011, held that the State’s Pollution Control Act does extend regulatory authority over isolated wetlands.  The two significant holdings in the case found that the property owner was required to obtain a permit for the discharge of pollutants into the isolated wetland, which it held was within the scope of the statutory definition of “environment.”  Just as significantly, the Supreme Court held that the Pollution Control Act afforded the plaintiff a private cause of action to enforce the provisions of the Act, heretofore not previously addressed. 

This case is significant to the regulation of wetlands since, while there is a permit program in place for storm water discharges resulting from land-disturbing activities, there is no specific statutory or regulatory framework for immediately responding to requests for permits to fill isolated wetlands.  Interestingly, the majority of the Court left untouched the legitimate question of whether the plaintiffs even had standing to bring the action and whether the existing stormwater permit program that excludes land-disturbing activities below a certain threshold levels satisfied the requirement for a State permit exemption.  At this point, landowners in South Carolina have been left hanging in the balance with the implementation of a judicially-created regulatory program.

 Blog written by: William Green and Gary Perko

Florida’s Everglades is a diverse mosaic of wetland communities that once extended from the shores of Lake Okeechobee to Florida Bay almost 100 miles to the south. Over a period of 100 or more years, a series of alterations and controls changed how the historic Everglades water naturally flowed. First, drainage canals were constructed from Lake Okeechobee to the ocean and Gulf of Mexico. These were followed by development of a fertile Everglades Agricultural Area (EAA) and compartmentalization of the remaining wetland ecosystem into series of Water Conservation Areas laying north of the Everglades National Park.

The diversity of the Everglades system is now rivaled by the complexity of litigation over Everglades water quality. In 1988, the United States sued the State of Florida alleging that the state had failed to enforce state water quality standards for phosphorus released into two key undeveloped components of the remaining Everglades: the Loxahatchee National Wildlife Refuge in the northern Everglades and Everglades National Park in the south. This led to a comprehensive settlement agreement and state legislation -- the Everglades Forever Act or "EFA" -- calling for construction of the largest man-made wetland treatment system ever attempted in the world. See, United States v. South Fla. Water Management Dist., 847 F.Supp. 1567 (S.D.Fla. 1992) (order approving settlement agreement); § 373.4592, Fla. Stat. (Florida’s Everglades Forever Act). To date, Florida has invested over $1 billion to convert approximately 45,000 acres of EAA farmland into Stormwater Treatment Areas or "STAs." EAA farmers also have implemented Best Management Practices that have reduced phosphorus loads from the EAA by more than 50 percent over the past 15 years.

Despite these significant state efforts, yet another lawsuit has led the federal government to threaten to wrest total control over Everglades restoration from the State of Florida and force the state to spend billions more on STA expansion. That case started out as a modest APA review of the U.S. Environmental Protection Agency’s approval, under the federal Clean Water Act, of certain amendments to the EFA, as well as Florida’s new water quality standard for phosphorus in the Everglades. As part of that water quality standard, the state adopted an ambitious phosphorus criterion of 10 ppb, but included certain moderating provisions based on the recognition that compliance with the 10 ppb criterion is a daunting task that, if achievable at all, will take decades or more to realize. In 2008, however, a federal district court rejected EPA’s approval of the moderating provisions, remanded the matter back to EPA for further review, and closed the case. See, Miccosukee Tribe of Indians of Fla. v. United States, 2008 WL 2967654 (S.D.Fla. July 29, 2008).

When EPA issued a revised determination in 2009, those disagreeing with EPA’s action chose not to file a new lawsuit to challenge the 2009 determination. Instead, the plaintiffs asked the district court to hold EPA in contempt of the 2008 order. Then, in an unprecedented expansion of APA jurisdiction, the district court reopened the case and issued another order in 2010, requiring EPA to take several actions aimed at the State. See, Miccosukee Tribe, 706 F.Supp.2d 1296 (S.D.Fla. 2010).  These included: (1) ordering Florida to re-write portions of the Everglades phosphorus standard; (2) requiring the Florida Legislature to further amend the EFA; (3) declaring the state "out-of-compliance" with state water quality standards and instructing the "manner and method" to obtain compliance within a time certain; (4) requiring the state to conform all state-issued NPDES permits and EFA permits with the court’s order; and (5) requiring EPA to "initiate and carry out" its authority to withdraw approval of the state’s NPDES program, prohibiting the state from issuing or modifying of any permits for the STAs during the interim.

Based on the district court’s 2010 order, EPA issued yet another determination "instructing" the state that a 40,000-acre STA expansion -- estimated to cost approximately $2 billion -- is necessary to achieve compliance with state water quality standards. And, in accordance with yet another order issued by the district court in Miccosukee Tribe, 2011 WL 1624977 (Apr. 26, 2011), EPA has set in motion the process by which it can assume NPDES permitting authority over the STAs to impose a stringent water quality-based effluent limit and ultimately ensure that its proposed STA expansion is implemented. Not surprisingly, the State of Florida has appealed the district court’s 2010 and 2011 orders to the U.S. Court of Appeals for the Eleventh Circuit. Thus, it remains to be seen whether the dispute over state water quality standards will ultimately lead to federalization of Everglades restoration and beyond.

The deepening of the Savannah Harbor, now estimated to cost $588 million, was conditionally approved in part when Congress passed the Water Resources Development Act of 1999 (“WRDA99”). Those conditions included finalizing an environmental impact statement for the project as well as other supporting studies and completion of the permitting process. The act also required the selected plan for this project, which is known as SHEP, to be jointly approved by the Secretary of Interior, the Secretary of Commerce, the Administrator of the Environmental Protection Agency, and the Secretary of the Army, pursuant to § 101(b)(9)(B(ii) of WRDA99.

On April 15, 2010, I posted a blog entitled “In Search of Mitigation” on the ACOEL website (see Archives) which outlined the history and need for SHEP, as well as various proposals for mitigating the project’s adverse environmental impacts. A Draft Tier II EIS and Draft General Re-Evaluation Report for SHEP were released in November 2010. The public comment period closed in January of 2011 and the Corps of Engineers has been analyzing comments and undertaking additional studies.

Because of the unique language in WRDA99, EPA, U.S. Fish and Wildlife and NOAA individually have a “kill switch” (a term coined by Savannahians) on key issues regarding SHEP. Fish and Wildlife is concerned that the proposed five years of post-construction monitoring is not adequate, and that ten years of monitoring should be required to ensure that proposed mitigation procedures are working. As discussed in my earlier posting, SHEP incorporates an Adaptive Management Plan (“AMP”) which in itself is somewhat unique. The AMP, one of the first ever implemented for a harbor project, is designed to evaluate whether the measures undertaken to mitigate adverse impacts are performing as predicted and provide for changes to those mitigation measures if needed. And it's worth noting that those mitigation measures represent a very substantial share of the total project costs - 41.6 percent according to a March 2011 update from the Corps.

Of great concern to Fish and Wildlife is preservation of areas of tidal freshwater marsh found in the Savannah National Wildlife Refuge adjacent to the Savannah harbor. Fish and Wildlife also wants a guaranty that the money will be readily available to implement the AMP if mitigation measures need to be modified during post-construction monitoring. Mitigation efforts will include acquisition of freshwater wetlands across from and upriver of the Savannah National Wildlife Refuge (approximately 2,680 acres of wetland preservation) to replace freshwater acres which will be lost in part to increased salinity as a result of future rising tides, whether or not SHEP is implemented.

NOAA also remains concerned about SHEP’s impacts, particularly on the endangered shortnose sturgeon. Many of NOAA’s concerns could be alleviated if an out of service lock and dam system located upriver in Augusta, Georgia, were removed. However, such action would not be popular with residents in and about Augusta who use the impoundment for recreational purposes. EPA, in turn has requested a better explanation from the Corps of the impacts of harbor deepening on future harbor growth and on increases in air pollution and other collateral impacts.

Watching every move the agencies make is the Southern Environmental Law Center (“SELC”) and the Coastal Conservation League. Both have threatened to sue if their environmental concerns are not resolved. SELC advocates a systematic by the Corps that would include consideration of all ports located on the Eastern Seaboard as “alternative sites” in order to determine which port best warrants deepening after considering environmental impacts and construction costs at each location.

Another player to watch is South Carolina, which shares the Savannah River as a common boundary with Georgia. South Carolina appears to be doing everything it can to stop or slow down SHEP in an effort to protect the competitiveness of the Port of Charleston.

Given the size of SHEP and its potential impacts, we can expect that other parties may join the action, and I in turn expect to be reporting again on SHEP as the project progresses into its second decade.

The increasingly controversial issues surrounding the extraction of natural gas by “fracking” took an unusual turn on May 2, 2011 when the Attorney General for the State of Maryland notified Chesapeake Energy Corporation and its affiliates of the State’s intent to sue for violations of the Clean Water Act (“CWA”) and the Resource Conservation and Recovery Act (“RCRA”). The notice letter followed from the alleged release of “thousands of gallons” of hydraulic fracturing fluids (“frack fluids”) from the failure of a natural gas well located in Bradford County, Pennsylvania on April 19, 2011. The frack fluids reportedly entered Towanda Creek, a tributary of the Susquehanna River, which eventually flows into Maryland and empties into the Chesapeake Bay. According to the May 2, 2011 press release from the Attorney General’s office, “at the close of the required 90-day notice period, the State intends to file a citizen suit and seek injunctive relief and civil penalties under RCRA for solid or hazardous waste contamination of soils and ground waters, and the surface waters and sediments of Towanda Creek and the Susquehanna River. The State also intends to seek injunctive relief and civil penalties under the CWA for violation of the CWA's prohibition on unpermitted pollution to waters of the United States.” The press release noted that “the Susquehanna River supplies drinking water for approximately 6.2 million people and sensitive fish populations like the American shad and striped bass are moving into the Susquehanna flats at this time of year. Exposure to toxic and carcinogenic chemicals in unknown quantities creates a risk of imminent and substantial endangerment to humans using Pennsylvania and Maryland waterways for recreation and to the environment.”

The notice of intent to sue is another example of the increased scrutiny directed toward hydraulic fracturing activities associated with the Marcellus Shale, an enormous geological formation underlying much of Pennsylvania and portions of West Virginia, Ohio and New York. Hydraulic fracturing refers to the process by which water, sand and a limited amount of chemicals are injected into a rock formation to fracture it, allowing the natural gas to be released and extracted. Much attention has been directed toward the chemicals used during the fracking process. U.S. EPA recently issued its plan to study the effects of fracking, with the initial report due in 2012 and the final report due in 2014. It also issued information requests earlier this month to six large natural gas producers in Pennsylvania, asking for information regarding how wastewater will be recycled or disposed. In addition, plaintiffs’ lawyers and citizens have begun filing toxic tort claims for alleged property damages and personal injuries caused by fracking, and Marcellus Shale activities in general.

Bradford County is located in north central Pennsylvania and borders New York State. The prospect of a suit by Maryland for a release in Pennsylvania at a significant remove from Maryland raises many novel issues, not the least of which is the question of standing.

Yesterday, Ted Garrett posted a blog on the Supreme Court’s grant of certiorari in Sackett v. EPA, 2011 WL 675769 (No. 10-162, June 28, 2011) which involves appeal of an EPA enforcement order under the Clean Water Act (CWA). His blog notes that the Court declined to review a similar appeal brought by GE under CERCLA. In an earlier blog post I summarized that GE petition which posed the following questions with respect to CERCLA’s unilateral administrative order (UAO) provisions:

1. Does a UAO’s imposition of either significant response costs or significant decreases in a PRP’s stock price and credit rating constitute a deprivation of property under the Due Process Clause?
2. Does CERCLA’s UAO scheme impermissibly coerce compliance in violation of the Due Process Clause by conditioning any judicial review of a UAO upon the threat of treble damages and fines that accumulate at EPA’s sole discretion?

Given the Supreme Court’s denial of the GE petition on June 6, 2011, it is somewhat surprising that the Court granted certiorari on June 28 in the Sackett appeal where the issues to be considered are:

1. May Petitioners seek pre-enforcement judicial review of the administrative compliance order pursuant to the Administrative Procedure Act, 5 U.S.C. §704?
2. If not, does Petitioners’ inability to seek pre-enforcement judicial review of the administrative compliance order violate their rights under the due process clause?

Sackett v. EPA, S. Ct. No. 10-1062. In fact, that second question, which was drafted by the Court itself and not by the Sackett petitioners, is uncannily similar to the second issue raised in the GE petition. What’s going on here?

The facts in Sackett are these. Mr. and Mrs. Sackett bought a small parcel of property – roughly ½ acre – near Priest Lake, Idaho for the purpose of building a house. Although the lots on either side were undeveloped, the lots between the Sacketts’ property and the lake were developed with permanent structures, and the entire area was a built out area zoned for residential use, with sewer hookups and local building permits. The Sacketts began earth moving work with permits in hand, only to receive an order from EPA pursuant to the CWA telling them that they had illegally filled jurisdictional wetlands and that they were required not only to cease further filling but to remove the prior fill and replant the area with indigenous wetland plants. The effect of the order was to preclude any development of the Sacketts’ property.

Upon receiving the order, Mr. and Mrs. Sackett asked EPA to conduct an administrative hearing to contest whether their property in fact contained wetlands within EPA’s jurisdiction. When EPA ignored their request, the Sacketts sued EPA, challenging EPA’s exercise of jurisdiction. EPA moved to dismiss, arguing that pre-enforcement review of compliance orders is precluded by the CWA. In response, the Sackett’s argued that they were entitled to seek review of EPA’s exercise of jurisdiction under the Administrative Procedure Act (“APA”). The district court agreed with EPA, reasoning that pre-enforcement review of administrative compliance orders is barred by the Clean Water Act’s statutory scheme and that preclusion of pre-enforcement review did not violate the Sacketts’ due process rights.

On appeal, the Ninth Circuit affirmed. It held, first, that review under the APA is not available where the relevant statute precludes judicial review, and – though the CWA does not expressly preclude review of administrative compliance orders – it found a clear intent to preclude such review in the statutory scheme. In so holding, the Ninth Circuit joined the ranks of the four other circuit courts that have considered the question, as well as the majority of district courts that have ruled on the issue.

The court then considered and rejected the Sacketts’ due process argument. The Sacketts had argued that, absent pre-enforcement judicial review, their only avenue to judicial review was to defy the order and await an EPA enforcement action. That course of action, however, carries with it the risk of large daily civil penalties (up to $37,500 per day) and potential criminal sanctions as well – in short, penalties so onerous as to foreclose access to the courts as a practical matter in violation of Ex Parte Young, 209 U.S. 123 (1908), and its progeny. The Ninth Circuit nonetheless found the consequences of noncompliance with a CWA order were not so onerous as to create a constitutionally intolerable choice for two reasons:

• First, the court concluded that the Sacketts could avoid potential penalties by applying for a permit to fill their property and then immediately appeal the agency’s permit denial to district court. Setting aside the oddity of a proceeding to contest a permit denial where the primary argument is that the agency lacked jurisdiction to issue the permit in the first place, the Court’s conclusion ignores two important practical realities – (1) EPA and the Corps of Engineers typically will not act on a permit application while a compliance order is outstanding, and (2) as the Supreme Court observed in Rapanos v. U.S., 547 U.S. 715,721 (2006), the permit application process typically takes years to conclude and costs the applicant hundreds of thousands of dollars, none of which is likely to be reimbursable even if the applicant later prevails on its jurisdictional challenge.
• Second, the court noted that the award of civil penalties is ultimately committed to judicial, not agency, discretion and that a court must take into account a wide range of equitable factors in determining the amount of the penalty. Thus, the Ninth Circuit reasoned, the Sacketts can refuse to comply and have their day in court before any penalties are assessed. However, absent some guarantee that no penalty will be assessed where an order recipient has presented a substantial, good faith, albeit unsuccessful, challenge to the order, the fact that it will be a court, rather than EPA, that considers whether to assess potentially ruinous civil penalties offers scant comfort to folks in the Sacketts’ position.

Against this backdrop, the Supreme Court granted certiorari. There had been some indication in recent decisions that the Court was interested in revisiting Ex Parte Young, which has received scant attention in many decades. See, e.g., Free Enterprise Fund v. Public Accounting Oversight Board, 130 S. Ct. 3138, 3151 (2010) (“[w]e normally do not require plaintiffs to ‘bet the farm by taking the violative action’ before ‘testing the validity of the law,’” citing Ex Parte Young). But why this case and not GE’s challenge to CERCLA’s UAO provisions? Two differences between the CWA and CERCLA may provide an explanation. First, section 106(b)(1) of CERCLA permits imposition of penalties for violations of a UAO only where the violation (or failure to comply) is willful and “without sufficient cause.” The CWA contains no similar “defense”, which the government argued in the GE case was a constitutionally significant escape clause under Ex Parte Young. Second, Section 106(b)(2) of CERCLA gives a UAO recipient who chooses to comply with an unlawful order the opportunity to seek reimbursement of its costs of compliance, at least in certain circumstances. Again, the CWA contains no such provision, and again the government argued in the GE case that the reimbursement provision had constitutional significance. Whether or not those differences do, indeed, rise to constitutional significance, it is true that they would have made the constitutional analysis in the GE case more complicated than in Sackett.

Of course, the Court may well avoid the due process issue in Sackett by ruling that the CWA does not preclude pre-enforcement review. Should it reach the due process issue and decide in favor of petitioners, however, its opinion will bear close examination, as it may have significant implications for recipients of administrative compliance orders under CERCLA, the Clean Air Act, and many other statutes.

Watch this space.
 

The U.S. Supreme Court will hear a lawsuit challenging the constitutionality of EPA compliance orders under the Clean Water Act. Sackett v. EPA, 2011 WL 675769 (No. 10-162, June 28, 2011). The petition for a writ of certiorari was granted to consider: “(1) whether petitioners may seek pre-enforcement judicial review of the order pursuant and (2) if not, does the unavailability of such review violate petitioners’ rights under the Due Process Clause?” Because of EPA’s broad authority to issue orders under the Clean Water Act and other statutes, the Sackett case will be of broad interest to environmental lawyers.

The facts are as follows. The Sacketts graded a lot in a residential subdivision in order to build a home. Thereafter, EPA issued an order to the Sacketts claiming that they violated the Clean Water Act by filling a wetland without a permit. The order directed the Sacketts to remove the fill, replace lost vegetation, and monitor the site for three years. The Sacketts did not agree that their property was a wetland and asked EPA for a hearing, which EPA allegedly ignored. The Sacketts then filed suit demanding an opportunity to contest the basis for the compliance order, which was dismissed by the district court. The Ninth Circuit affirmed the dismissal on appeal, holding that the Clean Water Act precludes review of pre-enforcement actions, such as compliance orders. The Ninth Circuit rejected the Sackett’s due process argument, noting that the Sacketts can raise their defenses if and when EPA seeks to enforce the compliance order in federal court.

The Sackett’s petition for certiorari argues that the Ninth Circuit’s decision leaves property owners like the Sacketts in an impossible situation: “either go through with the permit process that you believe is completely unnecessary and spend more money than your property is worth to "purchase" your chance at your day in court; or invite an enforcement action by EPA that may give you your day in court but only at the price of ruinous civil penalties and, depending on EPA's ire, criminal sanctions for underlying violations of the CWA.”

The Sackett case raises significant issues applicable to the Clean Water Act that may have implications for other environmental statutes such as the Clean Air Act under which EPA may issue enforcement orders and that do not expressly bar pre-enforcement review.

General Electric unsuccessfully challenged EPA’s use of enforcement orders issued under CERCLA. Although the Supreme Court declined to review the GE case, CERCLA practitioners will be interested to see if the Court’s opinion has implications for EPA Superfund orders. Stay tuned.

In the 1980s a group of Vermont landowners challenged the legality of a New York paper mill’s wastewater discharges into Lake Champlain. The Vermonters argued that the paper mill’s discharges in New York constituted a nuisance because of the injuries they caused in Vermont. They sought monetary damages and injunctive relief under Vermont tort law. The paper company argued that the discharges from its mill were authorized by its NPDES permit, and the company contended that the Clean Water Act preempted state tort claims of this sort – at least when the tort claims challenged conduct authorized by a permit issued pursuant to the Act. The U.S. Supreme Court sided with the Vermont landowners, but with a twist. The Court held that the Clean Water Act preempted tort claims based on Vermont law against a source permitted in New York, but it did not preempt tort claims based on New York law, the law of the state where the source was permitted. The Court rejected the notion that the paper mill’s permit was a complete shield against all state law tort claims. The Court reasoned that the savings provision of the Clean Water Act left New York free to impose legal restrictions under state law –including state tort law— that were more stringent than the requirements of the Clean Water Act. International Paper Co. v. Ouellette, 479 U.S. 481 (1987).

For more than twenty years following the Supreme Court’s decision in Ouellette, the law on this question seemed well-settled: federal environmental statutes do not preempt the state tort law of the “source” state; and permits issued under federal environmental programs do not provide a shield against tort claims based on the law of the source state. The recent decisions in the Second Circuit and the Supreme Court in American Electric Power v. Connecticut did not disturb this view of the law because the tort claims in AEP were based on federal common law, not state law of the source state.

A recent decision in the Fourth Circuit has turned the seemingly well-settled view of the law on its head. The Fourth Circuit’s decision arose out of a suit by the State of North Carolina against TVA. North Carolina claimed that NOx and SOx emissions from TVA coal-fired electric generating stations located in Tennessee and Alabama were causing health problems and other environmental damage in North Carolina. The state alleged that TVA’s emissions constituted a public nuisance under the tort law of the states where the facilities were located; and North Carolina sought injunctive relief requiring the prompt installation of more advanced emissions controls than required by the facilities’ air permits. The district court ultimately found TVA liable and ordered injunctive relief with respect to the four TVA facilities closest to North Carolina. In a remarkably strident decision, the Fourth Circuit reversed the district court and remanded with instructions to dismiss the case. North Carolina v. TVA, 615 F.3d 291 (4th Cir. 2010).

The Fourth Circuit’s opinion examined at length the regulatory structure created by the Clean Air Act and concluded that Congress intended to preempt state tort law claims of the sort asserted by North Carolina, even when those claims were based on tort law of the source state. In so holding, the Fourth Circuit made no attempt to distinguish Ouellette. Nor did it suggest that the Clean Air Act differed in any material respect on this point from the statute involved in Ouellette, the Clean Water Act. Indeed, the Fourth Circuit repeatedly cited those portions of the majority opinion in Ouellette which found that Vermont law was preempted, but the Fourth Circuit largely ignored the portion of Ouellette which held New York tort law to be intact and available.

The Fourth Circuit also concluded, ostensibly as an independent ground for its decision, that the district court erroneously applied North Carolina law rather than the law of the source states. One cannot help but question the strength of the court’s conviction in this conclusion, however, because the proper remedy for application of the wrong state’s law would be to remand the matter for further consideration based on the correct state law, not to direct dismissal of the action as ordered by the Fourth Circuit.

The Fourth Circuit also found that even if the district court did apply the correct state law, it reached the wrong conclusion. According to the Fourth Circuit, it was inconceivable that the source states would have concluded that the TVA facilities in question constituted a nuisance since those states had issued permits allowing TVA to operate in the manner challenged by North Carolina. The Fourth Circuit’s opinion on this point relied on Alabama and Tennessee cases which held that conduct expressly authorized by law would not constitute a nuisance; but the Fourth Circuit did not address the savings clauses in the Alabama and Tennessee environmental statutes, nor did it discuss decisions in those states which held that environmental permits did not block nuisance claims under their respective state’s laws.

North Carolina filed a petition for certiorari. Amici briefs in support of the petition were filed by the American Lung Association, the American Thoracic Society, Defenders of Wildlife, National Parks Association, Parks Conservation Association, Natural Resources Defense Council, Sierra Club, a group of environmental and administrative law professors, and the states of Maryland, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, and Vermont. Among other things, the petition argued that the Fourth Circuit’s decision was contrary to Ouellette and conflicted with decisions in the Second and Sixth Circuits. Not surprisingly, North Carolina’s cert. petition attracted significant attention from those who follow the Supreme Court docket. In the end, however, the Supreme Court will never have a chance to act on North Carolina’s petition for certiorari. After repeated extensions of the time for it to respond to the cert petition, TVA entered into a settlement with North Carolina and other parties that resolved the merits of North Carolina’s claims. As part of the settlement, North Carolina agreed to withdraw its petition for certiorari.

The net result for Ouellette is that the Fourth Circuit’s opinion North Carolina v. TVA is left standing as a significant obstacle to any environmental tort claim that challenges activities authorized by an environmental permit, even if the tort claim is based on the law of the source state. Stated differently, environmental permits may now serve as shields against all tort claims, including claims based on the law of the source state, despite the presence of any savings provisions in the state and federal environmental statutes in question.

As a minor footnote, the Fourth Circuit’s revisionist treatment of Ouellette is particularly ironic because the author of the Fourth Circuit opinion, Judge J. Harvie Wilkinson, once served as a law clerk to Justice Lewis Powell, the author of the majority opinion in Ouellette, and even wrote a flattering memoir of his clerkship entitled Serving Justice.

The United States District Court for the Northern District of New York recently took at least a small bite out of the legacy established by the 2007 U. S. Supreme Court decision in United Haulers Association v. United Herkimer Solid Waste Management Authority which first allowed flow control by a county under the unique circumstances set forth in that case.

Emboldened by the 2007 decision, several counties in various states have enacted flow control ordinances that require solid waste to be disposed only at county owned facilities. Not surprisingly, private waste management companies have systematically challenged those laws. In JWJ Industries, Inc. and Jeffrey Holbrook v. Oswego County, 5:09-CV-0740 (NPM/DEP) (N.D.N.Y. June 13, 2011), the district court addressed the narrow question of whether the flow control ordinance adoped by Oswego County was unconstitutionally vague and overbroad, both on its face and as applied. As an initial matter, the court, citing to United Haulers, noted that "the County was unquestionably within its right to implement a flow control ordinance directly affecting the operation of [Plaintiffs' facility]." However, after subjecting the ordinance to the two-pronged analysis set forth in Thibodeau v. Portuondo, 486 F. 3rd 61 (2d Cir. 2007), the court determined that the ordinance was unconstitutionally vague.

The Second Circuit in Thibodeau set forth two independent grounds recognized by the U.S. Supreme Court to determine whether a law is so vague as to deny due process of law:

1. Fails to provide people of ordinary intelligence a reasonable opportunity to understand what conduct the law prohibits.
2. Authorizes or even encourages arbitrary and discriminatory enforcement.

Applying this two-pronged analysis, the court in JWJ Industries determined that the ordinance at issue failed both prongs. As to the first prong, the court found specifically that portions of the ordinance were contradictory and could be read to both require and prohibit the same exact actions, while also prohibiting inaction. As to the second prong, the court determined that the ordinance failed to take JWJ’s status or prior existence into account, providing no explicit standards on how it would treat existing private transfer facilities or processing facilities within the county; that scrutiny of letters and directives from the County and its director of solid wastes revealed that the flow control ordinance in question authorized and encouraged arbitrary and discriminatory enforcement; and that such arbitrary enforcement was manifest. Accordingly, the Court granted Plaintiffs' motion for judgment on the pleadings, set aside the ordinance as unconstitutionally vague and otherwise dismissed the case.

Of note, the court also admonished the county, stating that, if the county government was basing its ordinance on a template obtained from elsewhere or was adopting an ordinance from another municipality (which often is done), it needed to at least try to conform the law to the conditions in that specific county.

By: Rick Glick and Michael Gelardi

On June 14, the Oregon Environmental Quality Commission is likely to adopt stringent new water quality standards for toxics. After years of planning and debate, the Oregon Environmental Quality Commission (EQC) next week will likely adopt a proposal by the Department of Environmental Quality (DEQ) to tighten human health-based water quality criteria for a broad range of toxic pollutants. The proposed rules are driven by a fish consumption rate that is ten times higher than assumed in previous rules.

Once adopted by the EQC and approved by the EPA, the new rules will result in stricter limits on water discharge permits and new programs to control agricultural and forestry runoff. The proposed rules are controversial and set Oregon apart as having the strictest water quality standards in the country. For more information, please click here.

Observance of International Migratory Bird Day on May 14 marks a good time to examine the latest efforts to define the limits of Clean Water Act jurisdiction over wetlands and other waters. Recall that in the SWANCC case in 2001, the Supreme Court held that the presence of migratory birds did not serve as a sufficient basis for applying Clean Water Act protections to isolated, intrastate wetlands. Since SWANCC, courts and agencies have struggled to define the limits of federal jurisdiction.

On May 2, 2011, EPA and the Army Corps published draft guidance (“Guidance”) in the Federal Register. This Guidance may be a trial balloon that will inform a final guidance document and ultimately duly adopted regulations. Whether there will be challenges to the substantive provisions of the Guidance or the procedure of issuing guidance in advance of formal rulemaking remains to be seen.

Initially, the Guidance is solidly grounded in the language of the Act and the Supreme Court’s 1985 ruling in Riverside Bayview Homes. The Act, the Guidance notes, is applicable to navigable waters which are defined as waters of the United States and the territorial seas. Traditional navigable waters are susceptible to use in commerce and form the core of jurisdictional waters. Navigable waters are not, however, limited to waters that are navigable in fact. The Guidance reflects Riverside Bayview Homes’ holding that wetlands abutting traditional waters are also subject to regulation under the Act.

How far the Act’s jurisdiction extends beyond abutting wetlands remains highly controversial. The Guidance eschews any attempt to define jurisdictional boundaries through a single science-based theory. Instead, the Guidance looks to the Supreme Court’s 2006 splintered decision in Rapanos and adopts alternative standards based on the plurality opinion’s “continuous surface connection” test and Justice Kennedy’s concurring opinion’s “significant nexus” test. If either test is satisfied, jurisdiction attaches.

In keeping with the Rapanos plurality, the Guidance includes as “waters of the United States” those wetlands, non-navigable tributaries and other waters which have a continuous surface connection to jurisdictional waters at least on a seasonal basis. In this respect, the Guidance requires an evaluation of the length and timing of seasonable flow in the watershed or other “eco-region” in question. The Guidance appears to justify use of this test on the ground that its results would be upheld by a majority of the Justices on the Court, albeit for varying reasons.

The Guidance also asserts jurisdiction based on Justice Kennedy’s concurring opinion in Rapanos. Justice Kennedy concluded that the Act regulates waters with a significant nexus to traditional navigable waters. A nexus exists if the waters either alone or in combination with similarly situated waters in the region significantly affect the chemical, physical or biological integrity of traditional navigable waters.

There is much to be said in favor of the significant nexus test. It focuses on the goals of the Act to restore and maintain water quality and allows scientific judgments to inform the Act’s reach. Wetlands and other waters that themselves are not navigable may provide ecological services that benefit navigable or interstate waters. For example, ponds or other features may retain stormwater and thereby protect traditional navigable waters from flooding or pollution. Viewing all such wetlands or other features within a watershed in a comprehensive manner is consistent with modern water management and protective of water resources.

Nevertheless, applying the test leaves much room to debate the significance of the connection between the wetlands, non-navigable tributaries or other waters to be evaluated and the nearest navigable water in specific instances. Despite the Guidance’s goal of clarity, distinguishing a significant reduction of stormwater runoff or pollutant discharge from an insignificant reduction is necessarily subject to considerable uncertainty.

Perhaps the most controversial aspect of the Guidance is its suggestion that where a significant nexus with a wetland exists, all other wetlands within the same watershed may be deemed similarly situated and thereby covered by the Act. Likewise jurisdiction over a single non-navigable tributary may lead to jurisdiction over all non-navigable tributaries in the watershed. This potential blanket classification if applied to waters that do not provide a meaningful contribution to water quality goals is expansive and may leave very few waters unregulated. The implementing agencies are likely to be judicially challenged if they rely on jurisdiction over one wetland or tributary as the basis for asserting jurisdiction over a different wetland or tributary in the same watershed. Given the past willingness of courts to enter the fray even where the Corps has gone through a full rulemaking process, the agencies are not likely to have the final word.

Yet another state is embarking on the long and arduous road towards assuming regulatory control of the Clean Water Act § 404 wetlands protection program from the US Army Corps of Engineers. As part of newly-elected Republican Governor Paul Page’s overall regulatory reform initiative, the Maine Department of Environmental Protection is planning to seek authority (pursuant to 33 U.S.C. §§ 1344(g) and (h)) to implement the dredge and fill program in lieu of the Army Corps. In the 34 years since the mechanism for states to assume the so-called “404 program” of federal wetlands permitting was created in 1977, many other states have considered it, but only two, Michigan and New Jersey, have completed the process.

State assumption allows a state to regulate wetlands and waterbodies and to issue, condition or deny permits for work in those natural resources. At first blush, state takeover would seem like low-hanging fruit in states’ efforts to eliminate multiple regulatory review layers. However, a 2008 EPA study found that although numerous states have evaluated assumption -- and several have moved significantly down the path -- most abandoned the effort for a number of reasons:

• Resources: Lack of state funding to implement the program and unavailability of Federal implementation grants (unlike the 402 program);
• Statutory Changes: State laws had to be enacted or amended, and the political will necessary to make such changes often fades in light of environmental NGO opposition;
• Corps Involvement: Rivers & Harbors Act §10 permitting authority remains with the Corps, thus not eliminating redundancy in ecosystems involving both wetlands and navigable/tidal waterways;
• EPA Involvement: EPA regulations still require EPA review of permits issued by a state even under an assumed program when those permits involve, among other things, potential impacts to ESA threatened or endangered species, NHPA protected properties, waters of another state, and discharges to “critical areas” (e.g., state/federal parks, wilderness areas, refuges, etc.).
• Federal Agency Authorization Disputes: At least until recently, there was uncertainty as to whether an ESA §7 consultation requirement (with USFWS and NMFS) had to be met before EPA could grant approval of a state’s application to assume the 404 program. A December 27, 2010 letter from EPA’s Assistant Administrator for Water indicates that EPA has won that tug of war -- no ESA §7 consultation is required.

Also impacting states’ decisions regarding assumption of the 404 program is the continuing uncertainty surrounding the scope of the Corps’ jurisdiction following the Supreme Court’s decisions in SWANCC and Rapanos. EPA and the Corps have attempted to address this issue in various guidance documents. See e.g., “Joint Memorandum” (January 15, 2003)(68 Fed. Reg. 1991) and “Clean Water Act Jurisdiction Following the U.S. Supreme Court’s Decision in Rapanos v. United States & Carabell v. United States” (12/2/08).

An April 2011 joint Corps/EPA proposed superseding guidance, notes that “Corps Districts will utilize this guidance to implement Clean Water Act section 404, 33 U.S.C. 1344.” While there is no mention in the guidance of its applicability to state-assumed programs, it is likely that EPA (and the Corps) will require that such guidance, once finalized, be adhered to in any EPA-approved state assumption of the CWA 404 program. Given recent reports  that the April 2011 proposed guidance will dramatically expand the scope of federal jurisdiction over wetlands and waterbodies, states will undoubtedly continue to struggle to identify the benefits in assuming the CWA 404 program.

David B. Van Slyke
Preti Flaherty
One City Center
Portland, Maine 04112-9546

I previously posted that EPA and the Army Corps of Engineers’ December 2010 draft guidance document describing how EPA and the Army Corps of Engineers intend to identify jurisdictional waters under the Clean Water Act (CWA) and implement the U.S. Supreme Court’s decisions in Rapanos and SWANCC had been leaked to the public. EPA's Draft CWA Jurisdiction Guidance Is Leaked At Last.Today, at last, EPA and the Corps have published in the Federal Register their proposed “EPA and Army Corps of Engineers Guidance Regarding Identification of Waters Protected by the Clean Water Act” (the “Proposed Guidance”). EPA and the Corps will accept public comment on the Proposed Guidance until July 1, 2011. The Agencies state that rulemaking will follow issuance of the final Guidance. 

Once finalized, the Proposed Guidance will supersede EPA’s and the Corps’ “Joint Memorandum,” providing clarifying guidance on SWANCC, dated January 15, 2003 (68 Fed. Reg. 1991, 1995), and “Clean Water Act Jurisdiction Following the U.S. Supreme Court’s Decision in Rapanos v. United States & Carabell v. United States,” dated December 2, 2008 (the “Rapanos Guidance”).  Until the Proposed Guidance is final, both the 2003 Joint Memorandum and the Rapanos Guidance remain in effect.

The Proposed Guidance is more measured in tone than the December 2010 leaked Draft. For example, the Proposed Guidance eliminates the dig at the Bush administration’s earlier Rapanos Guidance as reflecting “a policy choice to interpret Justice Kennedy’s opinion narrowly, resulting in fewer waterbodies found to be jurisdictional under the CWA than under a more faithful interpretation.” And the Proposed Guidance no longer acknowledges that it will “increase significantly” the number of waters which are subject to Clean Water Act jurisdiction. (Instead, the Proposed Guidance carefully explains that, “The agencies expect, based on relevant science and recent field experience, that under the understandings stated in this draft guidance, the extent of waters over which the agencies assert jurisdiction under the CWA will increase compared to the extent of waters over which jurisdiction has been asserted under existing guidance, though certainly not to the full extent that it was typically asserted prior to the Supreme Court decisions in SWANCC and Rapanos.”) Despite this revised language, the fact remains that the Proposed Guidance will significantly expand the scope of waters subject to Clean Water Act jurisdiction for all waters subject to any of the programs authorized under the CWA.

In an April 14, 2011 letter to EPA Administrator Lisa Jackson and the Assistant Secretary for the Army, Jo‑Ellen Darcy, a bipartisan group of 170 members of Congress urged EPA and the Corps to scrap the Draft Guidance and to proceed with formal rulemaking:

The Agencies cannot, through guidance, change the scope and meaning of the Clean Water Act or the statute’s implementing regulations. If the Administration seeks statutory changes to the Clean Water Act, a proposal must be submitted to Congress for legislative action. If the Administration seeks to make regulatory changes, a notice and comment rulemaking is required.

EPA and the Corps appear to have responded to this Congressional pressure and the input of stakeholders by taking a mixed guidance/rulemaking approach. The Proposed Guidance states:

After receiving and taking account of public comments on this document, EPA and the Corps expect to finalize it and to undertake rulemaking consistent with the Administrative Procedure Act.  This process is expected to start with a proposed rule, to clarify further via regulation the extent of Clean Water Act jurisdiction, consistent with the Court’s decisions.  EPA and the Corps decided to begin this process with draft, nonbinding guidance in order to clarify their existing understandings while also considering and receiving the benefit of public comments.

It remains unclear whether all or portions of the Proposed Guidance actually will be subject to rulemaking under the APA. For example, one of the more controversial aspects of the Proposed Guidance deals with the extent to which “other waters” [or “(a)(3) waters”] are subject to Clean Water Act jurisdiction. “Other waters” are “waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation or destruction of which could affect interstate or foreign commerce.” 33 C.F.R. § 328.3(a)(3). Under the Proposed Guidance, these other waters are subject to Clean Water Act jurisdiction if a fact specific analysis determines they have a significant nexus to a traditional navigable water or interstate water. The Guidance divides these other waters into two categories – those that are physically proximate to other jurisdictional waters and those that are not – and discusses how each category should be evaluated.The Proposed Guidance states expressly that these other waters will be subject to rulemaking:

The agencies expect to further clarify the scope of waters subject to CWA jurisdiction, including jurisdiction over (a)(3) waters after SWANCC and Rapanos, as part of a notice and comment rulemaking.

As part of this rulemaking process, the Agencies will consider how a significant nexus analysis should be conducted for non-physically proximate other waters. The only other issue that the Guidance specifically says will be addressed in the upcoming rulemaking is whether the existence of an ordinary high-water mark alone is sufficient to establish a significant nexus to downstream traditional navigable or interstate waters, without requiring a site-specific analysis.

Given the substantial increase in waters that will become subject to Clean Water Act jurisdiction under the Proposed Guidance, and the resultant impact upon numerous stakeholders, it seems that substantive parts of the Proposed Guidance that will dictate whether or not a water is jurisdictional under the CWA should be subject to APA notice and comment rulemaking. While this appears to be EPA’s and the Corps’ intent, the specific highlighting of certain issues in the Proposed Guidance that will be subject to rulemaking, with silence on other equally controversial issues, leaves open the question of how much of the Proposed Guidance ultimately will be covered by a proposed rule. In any event, interested persons can take advantage of the sixty-day public comment period to help clarify EPA’s and the Corps’ understanding.

The Connecticut Department of Environmental Protection (“DEP”) has significantly changed the way storm water discharges from industrial facilities are regulated with the adoption of a new General Permit for Storm Water Discharges Associated with Industrial Activities (“GP”). The new GP becomes effective on October 1, 2011, but the deadline for facilities to submit renewal registrations is June 1, 2011. Approximately 1,500 facilities in the state are subject to the GP.

For the first time, the GP includes a public participation process to allow the public to comment on Storm Water Pollution Prevention Plans (“SWPPs”) before they are approved by DEP. The SWPPs contain the best management practices proposed by the registrant to minimize pollution from storm water run-off.

The public participation provision was added at the urging of environmental groups. They cited the Ninth Circuit’s decision in Environmental Defense Center, Inc. et al. v. EPA, 344 F. 3d 832, (2003), which addressed EPA’s general permit for Small Municipal Separate Storm Sewers (“MS4s”). It held that public participation was an essential part of the federal Clean Water Act permitting scheme, and that EPA’s failure to provide for public review of applications for coverage (Notices of Intent) under the MS4 general permit violated the intent of Congress. Id. at 856.

The new GP also expands monitoring requirements and sets enforceable "benchmark" concentrations, replacing the previous aspirational "target values".

Thirteen months. Seems like a long time, right? In many cases, thirteen months is enough time to buy or sell a major business unit, or perhaps even litigate a minor dispute to trial. In this light, it’s easy to think at first glance that thirteen months should be plenty of time to implement the Bureau of Ocean Energy Management, Regulation and Enforcement’s (“BOEMRE”) six-page regulation requiring offshore operators to adopt a Safety and Environmental Management System (“SEMS”) by November 15, 2011. 75 Fed. Reg 63619 (Oct. 15, 2010). Unfortunately, companies who delay preparations to implement 30 C.F.R. Part 250 Subpart S are in for an ugly surprise particularly given that there are now just eight months remaining in the race to compliance. The challenge is amplified because the new regulation adopts the American Petroleum Institute’s Recommended Practice 75 (“RP 75”) in its entirety, converting the formerly voluntary practices into required elements of the regulation. 30 C.F.R. § 250.1902(c).

In my experience, companies tackling the job of creating a SEMS program that is compliant with the new federal regulations have encountered a number of challenges. Although at least sixty percent of operators already have a SEMS program that incorporates many of the elements of RP 75, converting a voluntary program intended to assist companies with internally identifying and resolving weaknesses in environmental, health and safety performance into a full-scale regulatory program complete with public disclosure is a daunting prospect. As an initial matter, the sheer number of potentially-applicable elements is astounding—by my count the regulation imposes well over 150 separate requirements. In order to thoroughly address all applicable requirements, it is likely that many business units or departments will be involved in creating the SEMS plan. While the Health, Safety and Environmental divisions will be inexorably intertwined in the effort, departments that manage contractor relationships and training should also be involved. As with all endeavors that involve multiple personalities and levels of management, coordinating such a large group of people is bound to be taxing. In addition, creating or modifying training programs and rolling those out to employees will be time-consuming. When viewed as a whole, the thirteen-month period to achieve compliance is no walk in the park—for many companies it will be a sprint to the finish.

Although complying with the now-required API practices is a daunting task in and of itself, the regulations, though short, contain significant requirements in addition to RP 75. Most notably, the new regulations require companies to audit themselves and disclose the results of the audit to BOEMRE. The purpose of the audit is to identify areas in which safety and environmental performance need improvement. Under Subpart S, an audit must be conducted by an independent third-party or “designated and qualified” internal personnel. Id. § 250.1920. Before the audit is even conducted, the operator must submit an audit plan to BOEMRE thirty days prior to the audit. The audit plan will identify the facilities to be audited (the audit must cover at least 15% of the operator’s facilities), and the persons conducting the audit. BOEMRE reserves the right to strike a selected independent third party or designated and qualified personnel if they do not meet BOEMRE’s criteria; specifically, the auditor must have an appropriate background, education, technical capabilities, previous experience with BOEMRE requirements, and no conflicts of interest. BOEMRE may also modify the list of facilities selected for auditing. The first audit must be conducted within the first two years of adopting the operator’s SEMS plan; after that, the company may space its audits out by up to three years. The resulting audit report must disclose any deficiencies in the SEMS uncovered by the audit, and must be submitted to BOEMRE within thirty days of the audit’s completion. Along with the audit report, the operator must submit a plan that addresses any deficiencies identified by the audit report, and identifies the individual employee responsible for correcting each deficiency. Given the tough requirements imposed by BOEMRE’s auditing requirements, operators that are already comfortable with their SEMS plan should consider conducting a trial audit prior to the regulation’s effective date, as all audits conducted after November 15, 2011 must follow BOEMRE’s pre-approval and disclosure requirements. The audit should identify any gaps in compliance and provide a roadmap for areas needing corrective action before the November 15th deadline.
 

Despite a House Republican agenda to eviscerate EPA’s GHG authority, EPA is pushing forward with workable greenhouse gas reduction solutions.  EPA’s gradual phasing in of GHG permitting requirements for new facilities has provoked a vicious response from both heavy industry and political partisans, despite the requirements’ limited scope on only the largest pollution sources in the country – those that emit the equivalent of a burning railroad car of coal a day – and the common-sense requirements that these new facilities install the most efficient cost-effective technology available.

EPA has moved cautiously in deployingpotentially more important regulatory tool: New Source Performance Standards (NSPS).  Starting with the two largest sectors of emitters in the U.S., electricity generators and refineries, NSPS can create a “floor” of minimum standards for new and modified facilities, as well as create a flexible, state-based system to drive steady reductions from existing sources.  Importantly, reinvented NSPSstandards can capture the benefits of and build upon existing state GHG reduction programs, encourage other states to pursue or join in broader clean energy solutions, and produce greater environmental benefits (GHG reductions) than traditional NSPS.

In part to exploreand flesh out its new approach to NSPS, EPA held several “listening sessions” to hear from industry, air pollution control agencies, NGOs, and others in February and March of this year.  A recurring theme throughout these sessions was flexibility.  The most common stakeholder response has been thatEPA should set reasonably stringent 111(b) standards for new and modified sources.  At the same time, EPA should build upon its experience in allowing state emissions averaging and trading to propose guidelines for states to regulate existing sources.  These guidelines should include astraightforward method for states to show that alternative existing or proposed programs – whether or not they include individual numeric standards for individual NSPS sources– would achieve equivalent or greater emission reductions to traditional NSPS, individually applied.

Several states, including California, were quite vocal in these listening sessions, and for good reason.  As Seth Jaffe pointed out in his blog, emissions trading programs such as California’s cap-and-trade program under Assembly Bill 32 clearly provide the most cost-effective emission reductions.  Other states could propose clean energy programs, that achieve local economic development and energy security objectives, as well as emissions reductions, or they could be attracted to join existing regional initiatives.  Rather than adopt a one-size fits all NSPS, EPA can establish a stringent NSPS that allows states, their industries, and other stakeholders to work together to innovate and create unique solutions that serve multiple goals.

I am picking up the discussion on EPA’s proposed willingness to pay survey addressed to the fish mortality at once-through cooling water systems at electric power plants. Bill Green laid out the background of this issue in his February 17th post. The willingness to pay survey is designed to help EPA in writing its rule which will regulate cooling water intake structures at existing power plants. The Information Collection Request for the survey appeared in the Federal Register on January 21, 2011. EPA recently agreed to propose that rule by March 14, 2011, and it is understood that the proposed rule has been sent by EPA to OMB for review. The content of the proposed rule is not public, but the likelihood that it relies on a survey done after January 21 and before the end of February is very close to nil. So is it EPA’s plan to do the survey after the proposed rule is public and then use the results in writing the final rule? That’s hard to believe, since relying on significant new data generated by the Agency but not available at the time the rule was proposed is highly unlikely to pass muster under administrative law principles. Whatever EPA’s plan is here, it doesn’t follow the normal pattern of collecting the data, proposing the regulation, and then adjusting the final rule in light of comment from the public. I seem to remember something in Alice in Wonderland about proceeding in the reverse order.

Then one needs to look hard at the survey itself. It never makes clear to the public the basic biology that is at stake in fish mortality at power plant cooling water structures. Fish typically produce thousands of eggs over their lifetime. A single winter flounder can spawn 500,000 eggs each year and a single Atlantic cod can spawn 4-8 million eggs each year. Only two need to survive to maturity to maintain the population at its present size. Thousands of the early life forms will die – from starvation or being consumed by other fish or from being sucked into cooling water systems or from other causes. The number of cases where the mortality from cooling water systems has resulted in a demonstrable decline in mature fish populations is no more than a handful. Any cost-effective policy on cooling water intake structures at existing power plants would focus on those plants and not on power plants generally. Moreover, the policy would also take into consideration the remaining useful life of the plants in question. EPA’s survey does nothing to address these issues. Experts on willingness to pay surveys will undoubtedly have other and more telling criticisms of the survey, suffice it say that one may have serious doubts that it will produce information of real value.

It is now 39 years since the Clean Water Act was passed. Section 316 is one of the few sections in which EPA is directed to consider on an individual basis what the effect of particular industrial operations are on the aquatic biology. That is a serious and important issue. Assuming that EPA seriously intends to rewrite its Section 316 regulations on the basis of willingness to pay surveys, it may be 50 years after the passage of the Act before the Agency is able to get it all right.

The year 2011 has begun much in the way 2010 ended. There is activity across the northeast and nationally about whether hydraulic fracturing, a technique used for decades in the petroleum industry, posses a risk to the environment and to drinking waters, in particular, when it is used as a technique for developing natural gas. So, what is happening, and what is at issue?

There are more regulatory proceedings and investigations underway than we will mention here. This representative sampling is just the tip of the iceberg. In Washington, the Environmental Protection Agency is in the process of beginning a study regarding the potential influences of hydraulic fracturing on drinking water. That study is in response to a request from Congress, and several members have been active on fracturing issues. In addition to the EPA investigation prompted by letters from representatives Waxman and Markey, representative Hinchey has reintroduced legislation that would authorize EPA to regulate hydraulic fracturing under the Safe Drinking Water Act. EPA also has sought information from fracturing companies pursuant to its TSCA authority, and more recently, by way of a subpoena.

Regionally, the Delaware River Basin Commission, an interstate compact established by Congress to address conditions within the Delaware River Basin, has proposed rules which would apply to natural gas development within the four member states. Among those states, New York is in the process of revisiting the question of whether and to what degree hydraulic fracturing merits further environmental analysis in the context of natural gas development, and Pennsylvania, a state with experience in developing energy resources, has put in place a fairly detailed set of rules and regulations governing various aspects of the activities associated with hydraulic fracturing. At DRBC public hearings so far in New York and Pennsylvania, the number of speakers has been balanced, if not slightly in favor of those who favor developing the energy resource.
 

But the action isn’t limited to politicians. Self promoters and celebrities also have entered the mix at the DRBC hearings. And, there is even a film nominated for an academy award (as a documentary) making the rounds. The film reportedly is based principally on anecdotes and aspects of it fall into that well known genre of fear mongering and half truths.

The action surrounding fracturing is likely to continue through the year. Natural gas is an energy source widely viewed as serving as a bridge fuel to a low carbon or no carbon future. The resources available by exploiting shale gas reportedly are adequate to address domestic energy needs for the foreseeable future. The question is, will science or emotion prevail in determining what diligence must be done by those seeking to develop this resource.

So, what does one draw from all this?
 

1. Hydraulic fracturing has been used successfully by the energy industry for several decades. While there are anecdotal reports of environmental influences resulting from hydraulic fracturing practices, they reflect a minute portion of the tens of thousands if not hundreds of thousands of wells where the technique has been employed. When properly performed, the process is safe and environmentally sound.
2. Much of the press for federal legislation seems to have originated from those offended at the exemption granted to industry by the Bush administration. In fact, the states where hydraulic fracturing has been in use for decades all have extensive regulatory programs. There may be little need for federal legislation.
3. Interest by the Congress has been focused in the House. Most arose before the shift in power that occurred in November. It is not clear that the new Republican majority will have much appetite to fix what is not broken.
4. The prospect of plentiful, domestic natural gas along with the economic benefits that will accompany development of those resources, is a powerful incentive for the state and local governments as well as for industry and labor organizations. Do not expect interest in hydraulic fracturing to diminish; but, do not expect the volume of complaints from opponents to diminish either.

On December 29, 2010, EPA published the largest total maximum daily load (“TMDL”) ever issued under the Clean Water Act. It imposes maximum loadings for nitrogen, phosphorus and sediment for the Bay and its 92 tidal segments, including loading allocations for major river systems in six states and the District of Columbia which drain into the Chesapeake. This TMDL was required because of widespread non-attainment of water quality standards for dissolved oxygen, clarity/underwater grasses and chlorophyll-a (a measure of algae levels). This non-attainment is caused by excess discharges of nitrogen, phosphorus and sediment, largely from human activities.

For decades, water quality in the Chesapeake Bay and its tributaries has been poor, resulting in fish kills, large “dead zones” in the summer time where no oxygen exists (and no fish can survive) and significant decreases in the annual harvests of fish, crabs, oysters and other shellfish from historic levels. There has also been a serious decline in wildlife habitat, including wetlands.

On May 12, 2009, President Obama issued Executive Order 13508 entitled “Chesapeake Bay Protection and Restoration”. The Order recognized the Chesapeake Bay as a “national treasure” and directed federal and state agencies to work together to develop strategies and programs “to protect and restore the health, heritage, natural resources and social and economic value of the nation’s largest estuary and ecosystem.” Led by EPA, the agencies issued a Strategy For Protecting and Restoring the Chesapeake Bay Watershed, which I described in an ACOEL blog article entitled “EPA Announces Strategy for Chesapeake Bay Restoration” posted May 27, 2010.
 

The TMDL is the centerpiece of the water quality restoration strategy. The Chesapeake Bay watershed covers 64,000 square miles in Maryland, Virginia, Pennsylvania, Delaware, West Virginia, New York, and the District of Columbia. The population is 27 million and growing. Rising human demands on the Bay and its watershed have outstripped the modest gains of past efforts.
Because the water quality problems involve multiple states and are technically complex, the states and the District of Columbia in 2007 asked EPA to take the lead in developing a multi-state TMDL. EPA did so, in close consultation with the states as well as local government officials and members of the public and interested stakeholder groups. The resulting TMDL calls for reductions in 25% of the nitrogen, 24% of the phosphorus, and 20% in sediment loadings below current levels. The goal is to have all necessary programs in place to achieve these reductions by 2025, and 60% in place by 2017.

Because the TMDL will require reductions from substantial numbers of non-point sources (such as agriculture and stormwater runoff), which EPA has no direct authority to regulate under the Clean Water Act, states have developed “Watershed Implementation Plans”, or “WIPs”, which embody the measures which each state will employ to achieve the required pollutant reductions. The effect of the WIPs is to give the states the first cut in selecting the mix of controls on various point and non-point sources to achieve a cost-effective solution. If a state’s WIP does not provide reasonable assurance of achieving the desired goals, EPA is prepared to use “backstop” allocations, emphasizing increased point-source regulation over which EPA has clear regulatory authority.

The WIP is a brand new tool in the TMDL toolbox, and its use by the Chesapeake watershed states should prove instructive for other impaired water bodies. Work is in progress at the state, county and local levels to carry out the plans. Principles of adaptive management are built into the system with annual reviews and two-year milestones to ensure progress towards meeting water quality standards. Both the TMDL and the WIPs were subject to extensive public comment, public hearings and meetings with affected sectors.

The cost of the necessary reductions will not be cheap. Wastewater treatment plants and storm sewer systems will need to be upgraded. Buildings and shopping centers will need to be designed and managed to sharply reduce stormwater runoff. Non-point source runoff from farming operations will require nutrient management plans and other best management practices. Federal and state funding and technical assistance are available to help.

Most importantly, the TMDL challenges everyone in the Chesapeake Bay watershed to put aside past differences and indifferences, and put in place the necessary programs and practices. Extensive information is available on EPA’s Chesapeake Bay TMDL web site . This includes the state WIPs and links to each state program.
 

Ridge Hall serves on the Board of the Chesapeake Legal Alliance. He can be reached at ridgehall@gmail.com.

The suspense is over. Inside EPA just released EPA’s December 2010 Draft Guidance describing how EPA and the Army Corps of Engineers intend to identify jurisdictional waters under the Clean Water Act (CWA) and implement the U.S. Supreme Court’s decisions in Rapanos and SWANCC.  The Agency has yet to formally release the 2010 Draft Guidance. 

As anticipated, the 2010 Draft Guidance significantly expands the scope of waters over which EPA and the Corps assert jurisdiction. Indeed, the Draft Guidance unabashedly exclaims that, “the Agencies expect that the numbers of waters found to be subject to CWA jurisdiction will increase significantly compared to practices under the 2003 SWANCC guidance and the 2008 Rapanos guidance.” The Draft Guidance takes a dig at the 2008 Rapanos guidance stating that the older guidance “reflected a policy choice to interpret Justice Kennedy’s opinion narrowly, resulting in fewer waterbodies found to be jurisdictional under the CWA than under a more faithful interpretation.” 

The 2010 Draft Guidance, still marked as “Deliberative Process; Confidential”, would supersede EPA’s and the Corp’s December 2008 Revised Guidance on Clean Water Act Jurisdiction Following the Supreme Court Decision in Rapanos v. U.S. and Carabell v. U.S., and their 2003 “Joint Memorandum” which provides clarifying guidance on the Supreme Court’s SWANCC decision.   

The Draft Guidance rarely misses an opportunity to expand the scope of CWA jurisdiction as interpreted by the 2008 Rapanos guidance. For example, while the 2008 Rapanos guidance focused only on the CWA 404 regulations at issue in the Rapanos case, the 2010 Draft Guidance applies to decisions concerning “whether a waterbody is subject to any of the programs authorized under the CWA”, and expressly includes CWA sections 402 (NPDES), 311 (oil spill), 303 (water quality standards and TMDLs) and 401 (state water quality certification) programs.

The 2010 Draft Guidance begins with a broad interpretation of the meaning of “traditional navigable waters” and “interstate waters” for purposes of CWA jurisdiction. It says that waters will be considered “traditional navigable waters” if “they are susceptible for being used in the future for commercial navigation, including waterborne recreation . . . . A determination that a water is susceptible to future commercial navigation, including commercial waterborne recreation, should be supported by evidence.”   Of course it should! In contrast, the 2008 Raponos guidance mandated that a likelihood of future commercial navigation, including waterborne commercial recreation, “must be clearly documented” and “will not be supported when evidence is insubstantial or speculative.”  

The 2008 Rapanos guidance provided useful guidelines for the regulated community to determine what features would not be subject to CWA jurisdiction.   For example, the “Summary of Key Points” in the 2008 Rapanos guidance provided that the agencies generally would not assert CWA jurisdiction over “swales or erosional features (e .g., gullies, small washes characterized by low volume, infrequent, or short duration flow)”, or over “ditches (including roadside ditches) excavated wholly in and draining only uplands and that do not carry a relatively permanent flow of water.” 

This reasonable interpretation of features that are outside the scope of CWA jurisdiction under Rapanos is eliminated from the “Summary of Key Points” in the 2010 Draft Guidance. Later text in the 2010 Draft Guidance does retain the concept that such features generally are not subject to CWA jurisdiction: “Swales or erosional features (e.g., gullies, small washes characterized by low volume, infrequent, or short duration flow) are generally not waters of the United States because they are not tributaries or they do not have a significant nexus to downstream traditional navigable waters or interstate waters.” The Guidance emphasizes that “[e]rosional features such as gullies and rills are not part of the tributary system, are not jurisdictional waters, and shall not be assessed as part of the significant nexus determination.  Natural and man-made swales are also not tributaries for purposes of this guidance.”

However, the 2010 Draft Guidance “clarifies” that under certain circumstances ditches may be jurisdictional. If a ditch has a bed and bank and an ordinary high water mark, and connects directly or indirectly to a traditional navigable water, it is considered a “tributary” potentially subject to CWA jurisdiction like any other tributary, if: a) it is a natural stream that has been altered (e.g., channelized, straightened or relocated); b) it is excavated in waters of the U.S., including wetlands; c)  it has relatively permanent flowing or standing water; or d) the ditch connects two or more jurisdictional waters of the U.S. If a ditch or swale includes areas that meet the regulatory definition of “wetlands”, the ditch or swale must be evaluated to see if it qualifies as wetlands for purposes of CWA coverage.

The 2008 Rapanos guidance stated that the agencies will assert jurisdiction over non-navigable tributaries of traditional navigable waters that are relatively permanent where the tributaries “typically flow year round or have continuous flow at least seasonally (e.g., typically three months).”  The 2010 Draft Guidance deletes the “continuous flow” and “three month” clarifications, and instead asserts that non-navigable tributaries are subject to CWA jurisdiction if “they are relatively permanent, meaning at least seasonal.”  The 2010 Draft Guidance explains these changes were made because the “time period constituting ‘seasonal’ will vary across the country.  Rather than having distinct, rigid boundaries, stream reaches classified as perennial, intermittent, and ephemeral may more accurately be described as dynamic zones within stream networks.”

Under the 2010 Draft Guidance, more tributaries would be jurisdictional. The Draft Guidance takes the position that “a tributary continues as far as a channel (i.e., bed and bank) is present. A natural or man-made break (e.g., outcrop, underground flow, dam, weir, diversion or similar break) in the presence of a bed and bank or ordinary high water mark [OHWM] does not establish the limit of a tributary in cases where a bed and bank and an OHWM can be identified upstream and downstream of the break.”  This position is likely to substantially increase the number of jurisdictional tributaries, especially in the desert southwest, where many washes have miles upon miles where no beds and banks with identifiable OHWMs exist as a result of underground flows, outcrops, and man-made breaks.

The 2010 Draft Guidance indicates that tributaries with an OHWM and identifiable beds and banks will generally be considered jurisdictional if they are “part of a tributary system to a traditional navigable water or interstate water, and therefore can transport pollutants, sediments, flood waters and other materials to a traditional navigable water.” In contrast, the 2008 guidance provided that these were simply factors to evaluate in determining whether a significant nexus exists.

The 2010 Draft Guidance interprets the word “significant” in “significant nexus” to mean “more than speculative or insubstantial.”  The Guidance suggests that Justice Kennedy likely meant that “‘significant’ includes having a predictable or observable chemical, physical or biological functional relationship.”  It is debatable whether Justice Kennedy intended the word ‘significant’ to have this more expansive meaning.     

At this time, the fate of the 2010 Draft Guidance remains uncertain. The Guidance faces strong opposition from various industry groups and Congressional efforts to block its issuance. And it remains to be seen whether and the extent to which the Draft Guidance, if and when formally issued by EPA, will differ from the controversial December 2010 Draft.

Previously, I discussed EPA’s efforts to “muddle through” on climate change in the absence of comprehensive legislation. This week, I think it’s the Clean Water Act’s turn. If there were any regulatory situation which required some serious muddling through at the moment, interpretation of the Supreme Court’s Rapanos decision almost is a match for the current climate mess. As most of my readers know, Rapanos was a 4-1-4 decision which left EPA, the Corps, developers and environmentalists fairly equally perplexed

Most stakeholders have assumed that Kennedy’s concurring opinion, requiring a “significant nexus” between wetlands and traditional navigable waters before those wetlands are subject to jurisdiction under the CWA, is the law of the land at this point. That is the approach adopted in the Rapanos Guidance issued by EPA and the Corps in 2007. 

A recent decision by the 4^th Circuit Court of Appeals, in Precon Development Corporation v. Army Corps of Engineers, illustrates just how muddled post-Rapanos interpretation has become. The decision in Precon – reversing the District Court – found that the Corps had not built a record sufficient to establish that the wetlands which Precon sought to develop were jurisdictional under the CWA. 

There were two technical issues in Precon. Precon lost what one might have thought would be the more significant issue – the Corps’ finding that, although only 4.8 acres were really at issue in this case, and Precon’s entire development includes 166 acres of wetlands, 448 acres of “similarly situated” wetlands would be examined for a substantial nexus to navigable waters. Precon ultimately won, however, because the Court concluded that the Corps’ record did not contain enough physical evidence to support its determination that a significant nexus exists between the 448 wetland acres and the downstream navigable water. 

The Court’s conclusion raised two issues of broad concern to stakeholders. First, the Court granted little deference to EPA’s conclusion on the significant nexus issue. The Corps argued that its conclusion that there was a significant nexus between the site wetlands and the downstream navigable waters was a factual conclusion. However, the Court concluded that the significant nexus determination was not factual. The Court stated that:

The question is instead whether the Corps’ findings were adequate to support the ultimate conclusion that a significant nexus exists. This legal determination is essentially now a matter of statutory construction, as Justice Kennedy established that a “significant nexus” is a statutory requirement for bringing wetlands adjacent to non-navigable tributaries within the CWA’s definition of “navigable waters.”

Well, this is certainly a nice question of administrative law. The significant nexus issue may now be the ultimate legal question. Nonetheless, I would guess that most wetlands scientists and hydrologists would say that this is largely a factual question. Even if the agency is applying its judgment to answer that question, it’s the type of judgment that requires technical expertise – expertise to which courts have traditionally deferred.

The second of the Court’s important pronouncements was that it would not give the EPA/Corps Rapanos Guidance deference under Chevron. Why not?

Because – although it could – the Corps has not adopted an interpretation of “navigable waters” that incorporates this concept through notice-and-comment rulemaking, but instead has interpreted the term only in a non-binding guidance document.”

Isn’t it timely, then, that EPA and the Corps sent a draft new Rapanos guidance to OMB in December, and GOP leadership in the House is proposing language in a continuing resolution that would preclude EPA from using any funds “to implement, administer, or enforce a change to a rule or guidance document pertaining to the definition of waters under the jurisdiction of the Federal Water Pollution Control Act (33 U.S.C. 1251).” Perhaps EPA and the Corps should take half a loaf. Why not agree to shelve the guidance and instead proceed with notice-and-comment rulemaking to clarify Rapanos? At least then the Courts might grant EPA and the Corps more deference in implementation.  It’s already been almost five years since Rapanos was issued. EPA and the Corps can hardly argue that it’s necessary to go the guidance route because they don’t have the time to proceed through the full regulatory process.

Enough muddling through. Take the time to do it right and issue regulations. Then, maybe the muddle will abate. (Can one abate a muddle?)

Today, a drive through Georgia will present dozens of half-developed abandoned residential subdivisions, many having been graded and with various degrees of erosion control in place. However, the erosion control devices have not been maintained and are in disrepair. Such protection measures, if they even exist, fail to prevent Georgia red clay and other soils from rushing down the streets, causing damage to the proposed development as well as to neighboring down-gradient properties, and running off into nearby streams causing elevated turbidity and other problems.

Both federal and state environmental agencies are struggling to address this problem and have begun to develop regulations and guidelines to assign responsibility for reconstruction and continued maintenance of the soil and erosion control devices. Under a standard stormwater regime such as Georgia’s, prior to land disturbance activities, a developer must submit a Notice of Intent (NOI) to discharge stormwater under the state’s General Permit. Such permit is required for land disturbance of greater than one acre due to construction activities. Failure to obtain coverage under the General Permit or violation of the requirements of the Permit may result in daily fines. Typically, the developer is responsible for any violations or resulting fines. However, due to current economic conditions, many developers have abandoned their projects and are nowhere to be found, or have filed bankruptcy.

Thus, lenders are finding themselves left with loans secured by these properties and if they hope to recover on the collateral, they will have to confront the problems associated with them. The standard Phase I assessment does not consider stormwater compliance. Yet, many lenders foreclose on such properties without considering the consequences. The Clean Water Act under which the General Permit is issued does not have a secured creditor exemption and therefore, after foreclosure, lenders may be responsible as either an owner or operator. Lenders can then be liable for any permit violations and fines, which can range from hundreds to thousands of dollars. In addition, lenders may face the cost of maintaining continued compliance with soil and erosion control requirements and claims from down-stream property owners. Perhaps most importantly, savvy buyers will not relieve lenders of these problems, resulting in steep discounts at sale that may over-penalize relative to the real risk.
 

Georgia is in the lead among states in taking specific steps to impose stormwater liability upon lenders. In 2008, Georgia EPD issued new General Permits for Storm Water Discharges Associated with Construction Activity for Stand Alone Projects, Infrastructure Projects, and Common Developments. Under these new General Permits, a lender who acquires title to the construction site is directed to file a new NOI either seven days before beginning work at the construction site or thirty days from acquiring legal title to the property, whether the lender intends to carry out any land disturbance construction activities at the property or not. Under the permit and related regulations, EPD’s position is that a foreclosing lender essentially steps into the shoes of the former Permitee, assumes that Permitee’s obligations and must continue to comply with the General Permit. Obviously, this has serious implications for lenders, which are all too often discovered after it is too late.

However, it can be argued that these provisions of the new Permits stretch the boundaries of EPD’s authority. A defense to this broad assertion of liability for lenders lie in the fact that the lender (which may have to hold the property for years) does not intend to conduct any “land disturbance of one acre or more” on the property. It is that activity which would make the provisions of the General Permit applicable. Further, the General Permit does not specifically impose such obligation on a successor purchaser of the property who does not intend to carry out land disturbance activity. Why, then, should a foreclosing lender be treated differently than any other entity in Georgia solely because it has foreclosed on a property to protect its financial investment. The validity of this new provision has not been tested in court, but arguably would be subject to legal challenge.

Obviously, a lender who finds itself in this position would ideally undertake appropriate due diligence before foreclosing. The lender should determine what the actual status of the property is and whether foreclosing, and stepping into the shoes of the Permitee as EPD asserts, is worth the risk. For low value properties it may be better for the lender not to foreclose but instead to implement other strategies to realize on the collateral like note sales. On the other hand, if the lender does foreclose it certainly should take appropriate steps to protect itself from a number of risks, particularly claims from downstream property owners. Regardless of whether taking title makes sense, it may also be appropriate to take certain actions to stabilize the property, which could have the twin benefits of defusing regulatory scrutiny and removing a topic for negotiation with potential purchaser. In any event, following the General Permit provisions by filing an NOI and voluntarily stepping into the shoes of the previous Permitee may not be the wisest decision. A lender who does not take steps to preserve the ability to assert its defenses may be left holding a property for many years before it can be sold, and having to maintain soil and erosion control installations and continually monitor such devices for a significant period of time at a substantial cost. At a minimum, appropriate analysis needs to take place prior to foreclosure regarding which approach to use for recovery against the collateral in order for a lender to assess its risk and determine the best course of action.

Last month, the Alabama Department of Environmental Management (“ADEM”) gained the Environmental Protection Agency’s (“EPA”) long-awaited approval of its proposed stormwater pollution regulations. EPA’s approval ends the looming threat it would take over Alabama’s stormwater permitting in the event ADEM did not cure certain deficiencies contained in previous draft regulations. EPA’s primary concern with ADEM’s previous draft regulations was that the regulations did not make clear exactly what obligations a local government had with respect to stormwater management. This issue has sparked intense debate from various groups over the last several months. One constituency, primarily builders and developers, argued that increasing local governments’ role in stormwater pollution prevention is unnecessary and wholly duplicative in light of ADEM’s existing regulations. On the other hand, various environmental groups contended that ADEM is simply ill-equipped to handle monitoring and enforcement responsibilities at the local level. Under the proposed regulations recently accepted by EPA, local governments must adopt local regulations to control runoff, conduct site inspections, and must have enforcement authority. EPA’s recent approval settles this dispute for the time being, but just as importantly, ends the threat that it would take over stormwater permitting in Alabama. It should be noted that the proposed regulations will not become final until ADEM has completed its review of and responded to the comments received during the rule making process.

 

Although EPA’s threat to take over Alabama’s permitting could be viewed as a strategic maneuver designed to hasten ADEM’s action, such a threat should not be taken lightly given EPA’s recent actions in Texas. EPA issued a series of rules and regulations that would bring greenhouse gases under the permitting programs of the Clean Air Act beginning January 2, 2011. To bring about these changes, EPA asked each state to revise and submit new state implementation plans to account for greenhouse gases. Several states publicly voiced their concern and disagreement with the rulemakings, but only Texas persisted in completely refusing to cooperate with EPA. After Texas failed to meet EPA’s deadline for submitting a revised plan, EPA sent Texas a letter stating that it would proceed with taking over Texas’s air permitting program. In response, Texas filed two petitions asking the Fifth Circuit Court of Appeals and the U.S. Circuit Court of Appeals for the District of Columbia to stay the EPA takeover. On December, 25, 2010, the Fifth Circuit denied Texas’s request for an immediate stay. While the D.C. Circuit issued a short-lived administrative stay, the court lifted the stay on January 12, 2011, determining that Texas had failed to meet “the stringent standards required for a stay pending court review.” While these rulings represent just one battle in the war between EPA and Texas, it remains to be seen how they will shape Texas’s strategy moving forward. Regardless of the ultimate outcome in this litigation, one thing is clear – the current EPA has demonstrated that it is not adverse to stepping in to take over state environmental regulatory programs in circumstances where EPA determines that the state agency is either unwilling or unable to implement federal law.

EPA MAY SOON BE ASKING YOU!

On January 21, 2011, EPA published a final information collection request (ICR) as the first step in assessing the benefits of imposing what industry fears to be severe and costly measures to control fish being crushed against cooling water intake screens (impingement) or trapped in the cooling water as it flows through an electrical facility’s cooling water system (entrainment). 76 Fed. Reg. 3883. In early life stages, many fish that support commercial and sport fisheries are small enough to pass through screens installed to prevent the entrainment of larger individuals. The ultimate impact upon fish stocks, caused by the loss of juvenile and larval forms of many fish species, may be incalculable.

BACKGROUND
 

Long prior to the Clean Water Act and the existence of EPA, much of the nation’s energy needs was met through waterfront electrical facilities with large pipes and pumping systems referred to as cooling water intake structures (CWIS). The 1972 amendments to the Federal Water Pollution Control Act addressed the issues of impingement and entrainment with a single sentence requiring that “the location, design, construction and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impacts.” 33 U.S.C. § 1326(b); CWA § 316§(b). When EPA or an approved state issued a point source discharge permit under the National Pollutant Discharge Elimination System (NPDES), the permit writer would apply best professional judgment (BPJ) to assure that the CWIS of an electrical facility met that narrative standard in § 316(b) of the Clean Water Act. Some facilities were allowed to offset the presumed impacts upon fish populations with programs designed to restore fisheries such as constructing hatcheries and stocking juvenile sport fish species into nearby waters. Always at issue was the fundamental tension between growing energy needs and the potential impact the CWIS would have upon fish populations.
 

In 1993, environmental interests filed a citizen suit alleging that EPA had violated the Clean Water Act by failing issue regulations implementing § 316(b). Cronin, et. al. v. Reilly, 93 Civ. 0314 (S.D.N.Y 1993). EPA resolved that case by consent decree (and amendments) which ultimately allowed EPA to perform three phases of rulemaking: Phase I addressing new facilities, Phase II addressing existing facilities, and Phase III which applied to existing facilities not captured within the scope of Phase II. EPA’s Phase I and Phase II rules were challenged by Riverkeeper, Inc., and others, resulting in the Riverkeeper I decision of February 2004 and Riverkeeper II decided in January of 2007. Riverkeeper, Inc. v. EPA, 358 F.3d 174 (2d Cir. 2004); Riverkeeper, Inc. v. EPA, 475 F.3d 83 (2d Cir. 2007).

EPA’s Phase I rule, for the most part, survived judicial challenge. A provision that would continue to allow restoration measures to offset potential losses was struck down as inconsistent with the Clean Water Act. Very little of the Phase II rule survived the Riverkeeper II litigation, with the court remanding the rule back to EPA for another try. A key issue in that case, whether EPA was precluded from weighing environmental benefit against costs in implementing § 316(b), was taken to the United States Supreme Court. On April 1, 2009, a majority of the Court ruled that § 316(b) of the Clean Water Act does not preclude EPA from comparing costs to environmental benefit in determining the best technology available for minimizing adverse environmental impact from cooling water intake structures. Entergy, Inc. v. Riverkeeper, Inc., 129 S.Ct. 1498 (2009).

To date, EPA has not issued its new Phase II rule. In November of 2010, EPA executed a settlement agreement with parties to the original 1993 matter (“Cronin Plaintiffs”) and the Riverkeeper II parties dismissing the cases so long as EPA proposes new Phase II regulations by March 14, 2011, and then issues its final rule by July 27, 2012.

QUESTIONNAIRES

The ICR published January 21, 2011 will ask individuals from U. S. households whether or not they would support policies that would increase their cost of living “in exchange for specified multi-attribute changes” in (a) impingement and entrainment losses, (b) commercial fish populations, (c) long-term populations of all fish, and (d) condition of aquatic ecosystems. EPA estimates that is will poll 9,533 respondents by telephone while another 2,288 will be mailed questionnaires. EPA asserts that statistical analysis will result an estimate of Willingness-To-Pay (WTP) “for the quantified environmental benefits of the 316(b) rulemaking.” In a nation of approximately 312 million individuals, EPA intends to poll less than 12,000 respondents. There is no guarantee that all of those who are asked will participate in EPA’s survey. How this information will translate as support for EPA’s Phase II rule remains to be seen. Another round of litigation come July 2012, when EPA issues its final rule, may be on the horizon. 
 

Written by: William Green and Winston Borkowski.

There is nothing new about transboundary water quality disputes under the Clean Water Act. Introductory classes on environmental law commonly trace the history of Supreme Court decisions arising from Milwaukee’s battles with Illinois over sewer discharges into Lake Michigan, the challenge Vermonters’ raised against New York paper mill discharges into Lake Champlain, and Oklahoma’s objections to a permit EPA issued to a sewage treatment plant in Arkansas. Given the length of time that the Clean Water Act program has been in place and the large number of instances in which upstream discharges drain into and therefore arguably affect water quality in downstream states, one would expect that most of the relevant legal questions would be well-settled. Recently, however, transboundary water quality disputes have arisen with increasing frequency.

Coal bed methane development in Wyoming has given rise to disputes with Montana over salinity impacts in the Powder and Tongue Rivers. Efforts by the state of Washington to protect dissolved oxygen levels in Spokane Lake have prompted a dispute over Washington’s attempt to impose wasteload allocations that would limit nutrient discharges by upstream sources in Idaho. Oklahoma’s efforts to restore the Illinois River to pristine scenic river conditions have resulted in recurrent and steadily intensifying disputes with agricultural interests on both sides of the border and point sources located predominantly in the headwaters on the Arkansas side. EPA’s imposition of nutrient water quality standards in Florida could have direct effects on discharges originating in Georgia; and the agency’s showcase multi-state TMDL for the Chesapeake Bay has recently precipitated challenges by state and national agricultural interests. In what undoubtedly is the most dramatic transboundary claim under the Clean Water Act, environmental groups have filed a petition with EPA asking the Agency to impose nutrient water quality standards and adopt TMDLs for the main stem of the Mississippi River, all of its tributaries, and certain related coastal waters in the Gulf of Mexico.
 

These recent disputes have recurring themes that arise out of weaknesses or unresolved questions regarding the Clean Water Act program. The statute empowers each state to exercise sovereign independence in adopting water quality standards that apply within the state’s own borders (so long as minimum federal standards are met), but the statute does little to address or even give consideration to the interests of other states that may be directly affected by those standards. Transboundary disputes frequently involve situations in which the regulatory burdens fall disproportionately on interests in one state while the resulting environmental benefits are realized largely or entirely in another state, but the Clean Water Act does nothing to address questions of transboundary fairness. Transboundary disputes frequently involve regulatory decisions that have enormous financial and long term planning consequences, but the decisions are often based upon limited factual data, imperfect scientific analysis, and less than comprehensive computer modeling. The Clean Water Act offers no process for seeking to assure that the quality of the decision making will be commensurate with the gravity of the consequences at stake. Indeed, the program largely makes the magnitude of financial consequences simply irrelevant. Disparities between the magnitude of the consequences and the limited quality of analysis and data supporting the regulatory decision are particularly problematic when the regulatory decision is being made by one jurisdiction that has no political accountability to the other.

It is perhaps no surprise that most of the recent transboundary water quality disputes are arising out of efforts to regulate the discharge of nutrients. Nutrient pollution is the largest unresolved water quality issue nationally; and the adverse effects of excess nutrients frequently occur at locations far downstream from the original source. The fact that most of the current transboundary water quality disputes involve nutrient pollution probably makes the disputes even more difficult than normal to resolve. Nutrient pollution has no simple, universally accepted means of measurement. It is costly and time consuming to establish a clear causal link between a given discharge of nutrients and an observed adverse effect; and many of the most important sources of nutrient pollution are non-point sources which are beyond direct control under the Clean Water Act. Unfortunately, this appears to be a recipe for increased frustration and controversy.
Transboundary water quality disputes may not be a new phenomenon, but it does not appear that we are any closer to finding a good way to resolve them.
 

On December 20, the Environmental Protection Agency and the U. S. Army Corps of Engineers submitted draft guidance to the Office of Management and Budget to determine when wetlands are subject to regulation under the Clean Water Act. This will be the third attempt to provide guidance on implementing the conflicting standards announced by a fractured Supreme Court in Rapanos v. United States.

In an opinion written by Justice Scalia, a plurality of the Court declared that Clean Water Act jurisdiction extended only to wetlands of a semi-permanent nature that abut open water. This is a test that many wetlands, previously thought to be jurisdictional, would fail to meet. A concurring opinion offered by Justice Kennedy announced a wholly different standard: A water or wetland is jurisdictional if there is a “significant nexus” between the wetlands and navigable waters, focusing on whether there is “a reasonable inference of ecological connection” between the two. The dissent written by Justice Stevens and joined by three others, finds both tests wanting and suggests that jurisdiction is present when either is met.
 

Agencies and courts have since strained to reconcile these opposing views. EPA and the Corps have attempted to provide guidance on when and how to apply each test, the first in June 2007 and the second in December 2008. Courts have dutifully tried to discern clarity in the Court’s opinions and have given the joint agency guidance Skidmore deference, meaning they use the guidance to the extent it is persuasive. Considerable uncertainty remains in determining when permits are needed in many cases, causing obvious problems for the development community.
 

The Obama Administration favors a legislative fix, but Clean Water Act reform seems unlikely just now . . . or during my lifetime. There have been a lot of cases decided since the 2008 guidance was released, so the new guidance perhaps will distill that experience and give us something useful to work with. OMB review can take up to 90 days, so look for the guidance no later than the end of March.

On January 10, 2011, the US district court in DC ruled that the mining industry is likely to succeed in challenging EPA's interim April 1, 2010, guidance on Clean Water Act (CWA) §404 permitting for surface mining projects in Appalachia, but denied industry's motion for a preliminary injunction. The decision, in a lawsuit brought by the National Mining Association, illustrates the pitfalls of agency regulation by guidance. The court’s opinion accepts the industry's arguments that EPA likely violated the notice-and-comment requirements of the Administrative Procedure Act and that EPA’s June 11, 2009 Enhanced Coordination Process memorandum, which subjects coal mining related §404 permits to enhanced scrutiny, “encroached upon the role carved out for the states under the Clean Water Act” However, the court held that the industry has not demonstrated the certainness of imminence of industry losses and, further, why any economic losses resulting from permitting delays “cannot ultimately be recovered if and when the mining projects in question are permitted to proceed.” The court denied the government’s motion to dismiss and held that the case is ripe for a determination on the merits, because no factual developments would clarify the issues.

On November 15, 2010, EPA announced that it had issued final numeric nutrient water quality criteria (NNC) for lakes, rivers, streams and springs in Florida, marking the first time that EPA has set numerical nutrient standards for a state. EPA’s rationale for these standards is that excess loads of nitrogen and phosphorus, the most common nutrients found in water bodies, are one of the most prevalent causes of water quality impairment in the United States and that it is a “widespread, persistent, and growing problem.” The nutrient standards establish nutrient criteria for lakes and streams by requiring that total nitrogen (TN) and total phosphorus (TP) be no higher than set levels for five different watershed regions and three different classes of lakes. For lakes, EPA also set criteria for chlorophyll a.

EPA identified 193 point municipal and industrial dischargers that are potentially affected by the rule. For municipal entities, current annual average permit limits are 3.0 mg/l for TN and .1 mg/l for TP. EPA expects that municipalities will need to employ advanced biological nutrient removal (BNR) to meet the lower levels in the rule. EPA’s annual cost estimates to implement the rule are between $135 and 206 million. EPA states that the average homeowner will pay an estimated $40 to 71 annually in increased utility bills.
 

Two main concerns emerged in the commentary on the proposal. First, critics asserted that the science behind the proposal is not sound. For example, The Florida Department of Environmental Protection (FDEP), in its comments on EPA’s proposal, noted that “EPA stream criteria for protection of downstream estuaries were not scientifically valid, that EPA’s approach to the stream criteria is not appropriate, that some aspects of what EPA has done are not adequately protective of the environment, are not linked to biological response, and, (in particular for lakes) the EPA’s approach was too simplistic.”

Second, they assert that the costs are both too high and not proportionate to the environmental benefits that EPA is hoping to achieve. The Florida Water Environment Association Utility Counsel (FWEA) released a report which said that treatment costs to meet the new standards are estimated to be “between $4.2 and $6.7 billion, and the annual debt service, including incremental operating and maintenance costs, is expected to range from $430 million to $620 million per year. Typical increases in customer charges are expected to range from $570 to $990 per year.” Similarly, the Florida Water Quality Coalition stated that the “costs of the proposed federal NNC regulations far exceed the EPA estimates. If EPA enforces ‘end-of-pipe’ criteria (requiring all discharger effluent levels to be at or below the NNC), the total annual costs could range from $3.1 to $8.4 billion.”

This is, no doubt, one of the most significant acts that EPA has taken in the water quality standards field for quite some time, and even though the standards are being set for just one state, EPA has taken a giant step down the path to imposing numeric criteria in nationwide. There will be a lot of litigation (six law suits have already been filed challenging the regulations), political push-back and a lot of discussion about how these standards are going to be implemented, delaying the actual implementation for a period of time. While EPA has pushed the effective date of the rule to 15 months following promulgation in order to allow time to comply, even this delay will likely prove to be insufficient to resolve the many contested issues.

For those readers seeking more detail on these EPA’s regulations and their consequences, please see the Alston & Bird Environmental and Land Development Advisory titled "EPA Issues First Ever Numeric Nutrient Water Quality Criteria and Standards for Florida Lakes and Rivers" here.