Legal Updates

The National Association of Clean Water Agencies (NACWA) is pleased to present the Summer 2018 Legal Update, which summarizes current legal initiatives and developments.

More detailed information on the Association’s active cases is available on the Litigation Tracking web page and the Litigation Tracking Spreadsheet.

Any questions regarding this Update or the Association’s legal advocacy efforts can be directed to Amanda Waters, NACWA’s General Counsel (202/530-2758), or Erica Spitzig, Deputy General Counsel (202/533-1813).

Legal Advocacy Insights from the General Counsel

I just googled “future of the US Supreme Court 2018 Kennedy retirement.” I got over 8 million hits. It may not rise to Hollywood blockbuster status (Avengers: Infinity War gets 259 million results), but I think it’s safe to say this is one of the hottest issues of the year.

NACWA is keenly interested in how Anthony Kennedy’s retirement and the potential confirmation of DC Circuit Judge Brett Kavanaugh will impact clean water law and administrative law. Of particular importance is whether the new court will maintain a preference for deference; Chevron deference that is.  The doctrine deals with judicial deference to agency interpretations of statutes.

What the Supreme Court does on Chevron deference will have an impact on NACWA members. And with a case involving a NACWA member potentially heading to the US Supreme Court for review, our interest is not abstract (see Ninth Circuit County of Maui case below).

Since not everyone who reads this – and I hope there are many of you– is an administrative law expert, let’s begin with a quick Chevron refresh.  Choose your own adventure: watch the NYU Chevron Two-Step rap video, or for a less entertaining overview, read on.

A 1984 landmark Supreme Court decision established the Chevron doctrine, which has two steps:

Step One. Is the statute ambiguous?

• If yes, proceed to Step Two.
• If no, STOP - Court decides the interpretation of the statute by itself.

Step Two. Is the agency's interpretation reasonable?

• If yes, defer to that reasoning.
• If no, the court decides reasonable interpretation or remands to agency.

For step two, even if the court favors a different interpretation, the doctrine holds that the judicial branch should give agencies the power to interpret ambiguous statutes passed by Congress and that courts should accept reasonable interpretations of a statute by an administrative agency. Why?  The Supreme Court has named two reasons: (1) agencies are more democratically accountable than courts, and (2) Congress has given the agencies the main responsibility for implementing statutes.

Chevron was later limited by the 2001 Supreme Court decision in United States v. Mead Corp, which held that Chevron deference should apply only where "Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority."

After Mead, the Chevron test had a new first step.  Since step one and step two had already gained such fame, the new step was dubbed zero:

Step Zero. Does the agency have authority to issue binding legal rules?

• If no, Chevron does not apply, but the agency may still receive some lesser degree of deference because of its expertise.
• If yes, the analysis moves to Step One.  

Recently, several Supreme Court Justices - Chief Justice John Roberts, Justice Clarence Thomas and Justice Neil Gorsuch - have expressed skepticism about Chevron deference. This skepticism is born out of concern that deference may endanger Constitutional separation of powers by consolidating lawmaking and law execution powers in federal agencies. 

Prior to announcing his retirement, Justice Anthony Kennedy wrote the following in a concurring opinion issued in Pereira v. Sessions:

The type of reflexive deference exhibited in some of these cases is troubling. And when deference is applied to other questions of statutory interpretation, such as an agency's interpretation of the statutory provisions that concern the scope of its own authority, it is more troubling still. Given the con­cerns raised by some Members of this Court, it seems necessary and appropriate to reconsider, in an appropriate case, the premises that underlie Chevron and how courts have implemented that decision. The proper rules for interpreting statutes and determining agency jurisdiction and substantive agency powers should accord with constitutional separation-of-powers principles and the function and province of the Judiciary.

Justice Kennedy has left the Court, but his statements capture the sentiments of the anti-Chevron Justices who remain on the Court.

To the contrary, Justice Alito is firmly in the pro-Chevron camp. In his dissenting opinion in Pereira he wrote: "Here, a straightforward application of Chevron requires us to accept the Government's construction of the provision at issue. But the Court rejects the Government's interpretation in favor of one that it regards as the best reading of the statute. I can only conclude that the Court, for whatever reason, is simply ignoring Chevron."

Justice Alito noted that the majority had to conduct an extensive analysis of the statute to uphold its meaning and ended up with a “common-sense” interpretation:

[T]he most that remains of the Court’s argument is a textually permissible interpretation consistent with the Court’s view of “common sense.”  That is not enough to show that the Government’s contrary interpretation is unreasonable. Choosing between these competing interpretations might have been difficult in the first instance.  But under Chevron, that choice was not ours to make.  Under Chevron, this Court was obliged to defer to the Government’s interpretation…. In recent years, several Members of this Court have questioned Chevron’s foundations…. But unless the Court has overruled Chevron in a secret decision that has somehow escaped my attention, it remains good law.

Why do we care? How often does deference come up in NACWA’s work? Of NACWA’s seven active cases, four involve deference:

• MA/NH MS4 General Stormwater Permit Litigation: Is the Clean Water Act (CWA) clear and unambiguous on the appropriate compliance standard for MS4 permits?
• Maui Groundwater Litigation: The County of Maui case tees up the question of whether the CWA is unambiguous regarding the addition of pollutants to navigable water from a point source. If deemed ambiguous, the court must decide whether to afford deference to EPA’s shifting interpretations on the issue.
• Montana General Variance Litigation:The Court must determine whether EPA’s approval of the variance was reasonable, supported by the administrative record and is entitled to deference.
• Water Quality Trading:While the current challenge is a state administrative appeal of a permit, Food & Water Watch’s goal is to have courts afford no deference to EPA’s interpretation of the CWA to allow water quality trading (they will want a Chevron Step One resolution).

NACWA does not have an official position on Chevron deference.  Informally, the reality is that we like judicial deference when we agree with EPA’s interpretation. When we do not agree, we argue that deference should be denied or limited. Of course, our arguments are always based in terms of reasonableness and comport with Step Two. But since reasonable minds may differ on what is reasonable and NACWA isn’t the one to decide what is or isn’t, the benefit of deference is case specific.

Tune in to NACWA’s next Hot Topics webinar to hear analysis from real experts on the potential impacts of the changing Supreme Court.  In addition, the National Clean Water Law & Enforcement Seminar will feature a session on this topic.  More details to come soon.

UPCOMING EVENTS

National Clean Water Law & Enforcement Seminar

Join us in sunny San Diego, CA for the National Clean Water Law & Enforcement Seminar, November 14-16 at the US Grant Hotel. This year, we are combining two essential events, the ever-popular Law Seminar and the Enforcement Workshop, into a single event for clean water legal professionals. The complexity and range of legal and enforcement issues that utilities face can be daunting, but the invaluable analyses and insights shared at the Seminar will help utilities develop the best solutions for today’s legal challenges.   

Registration, more details, and an agenda will be available soon.  Save the dates today and plan to join us in November!

Next Hot Topics in Clean Water Law Webinar

NACWA will host the next installment of its Hot Topics in Clean Water Law webinars on September 12, from 2:00-3:30 PM ET.  The webinar will focus on the recent retirement of Justice Anthony Kennedy from the US Supreme Court, the nomination of DC Circuit Judge Brett Kavanaugh to take his place, and the likely impact on the future of clean water law. Discussion will focus on the makeup of the court, how Justice Kennedy shaped clean water law as a swing vote, and the likely impact Judge Kavanaugh would have on cases scheduled to be heard during the October 2018 term.

Further details and registration will be available soon on NACWA’s website.  Please contact Erica Spitzig with suggestions for topics or speakers for future Hot Topics in Clean Water Law webinars.

NPDES Permit Issues

Clean Water Act Point Source Liability for Discharges via Groundwater

Does the release of a pollutant that reaches groundwater and thereafter enters a CWA jurisdictional surface water constitute a “point source” discharge triggering the requirement for a CWA National Pollutant Discharge Elimination System (NPDES) permit? With petitions expected to be filed with the US Supreme Court late summer for review of Ninth and Fourth Circuit decisions, decisions pending in two circuits, and the potential for further EPA action, this promises to continue to be a significant, controversial, and rapidly evolving legal issue.

Judicial

Ninth Circuit

On March 30, the US Court of Appeals for the Ninth Circuit denied a Petition for Rehearing en banc that was filed by NACWA Member Agency the Maui County Department of Environmental Management in the Hawaii Wildlife Fund v. County of Maui litigation. (See also February 1 decision).

The Ninth Circuit adopted a new indirect discharge theory to hold Maui County liable under the CWA because (1) the County discharged pollutants from a point source (i.e., its underground injection wells); (2) the pollutants are fairly traceable from the point source to a navigable water, such that the discharge is the functional equivalent of a discharge into the navigable water; and (3) the pollutant levels reaching navigable water are more than de minimis.

In late September, NACWA will file an amicus brief in support of Maui’s request for Supreme Court review. 

Fourth Circuit

A divided panel of the U.S. Court of Appeals for the Fourth Circuit reversed a district court’s dismissal of the CWA citizen suit in Upstate Forever v. Kinder Morgan.

Deferring to EPA statements from 1991 and 2001, the majority found that CWA liability may be triggered based upon release of pollutants to groundwater that has a “direct hydrologic connection” (DHC) to surface water.  Although the majority did not define the term “direct,” it found that the allegations in the complaint were sufficient to state a claim under the CWA: “an alleged discharge of pollutants … reaching navigable waters located 1000 feet or less from the point source by means of ground water … falls within the scope of the CWA.”

In so holding, the majority found that a point source need not convey the pollutants to navigable waters to trigger NPDES permitting requirements: “to qualify as a discharge of a pollutant under the CWA, that discharge need not be channeled by a point source until it reaches navigable waters.”  Rather, a discharge to groundwater may trigger liability so long as the groundwater is “sufficiently connected” to navigable waters.

Kinder Morgan will be filing a petition for Supreme Court review in August. 

Second Circuit

A decision is pending in the Second Circuit case 26 Crown Associates, LLC v. Greater New Haven Water Pollution Control Authority.

The appeal involves a claim against NACWA Member Agency, the Greater New Haven Regional Water Pollution Control Authority, alleging that the city’s sewer system resulted in continuing and chronic backflows of sewage into the basement of a local property, which in turn resulted in releases of untreated sewage directly into the Long Island Sound. The plaintiff argues that wastewater seeps from basements into groundwater that then migrates into hydrologically connected navigable waters resulting in a violation of the CWA.

At oral argument on April 18, the Second Circuit seemed disinclined to reach the merits of the conduit theory, focusing instead on the plaintiff’s lack of standing to bring the claims at all.  See the April 24 Clean Water Current.

Sixth Circuit

A three-judge panel of the Sixth Circuit heard oral arguments on August 2 in two cases involving the DHC theory under the CWA: Kentucky Waterways Alliance v. Kentucky Utilities Co (KWA) and Tennessee Clean Water Network v. Tennessee Valley Authority (TVA).

The two cases both involve allegations by environmental groups that the seepage of pollutants from coal ash ponds through groundwater into hydrologically connected surface water, prompting the Sixth Circuit to conduct a joint oral argument before the same panel. However, the cases have significant factual differences that may result in differing resolutions.

The TVA case involves a suit brought in April 2015 by two environmental entities, alleging liability for contamination of groundwater with coal ash from the TVA’s operation of its Gallatin Plant that eventually reaches the Cumberland River via groundwater. The lower court held that discharges to state-regulated groundwater require NPDES permits if the constituents end up in jurisdictional surface waters under the CWA, and following a trial, the court required the elimination of the source of pollutants by requiring that TVA fully excavate the site rather than complete a closure in place as permitted under the Resource Conservation and Recovery Act (RCRA).  TVA appealed the decision to the Sixth Circuit.

The KWA case involved a decision by the lower court dismissing the environmentalists’ claims arguing that discharges from a coal ash pond that eventually migrated to a nearby lake violated the CWA.  The district court rejected the DHC theory, finding that adopting this theory would subject a variety of non-point source pollution to CWA regulation simply by going up the causal chain to find some initial point of discharge, and would effectively read the point source requirement out of the CWA.  The environmental plaintiffs, KWA, appealed the decision to the Sixth Circuit.

Read more about the oral argument in the August 7 Clean Water Current.

EPA

On May 21, NACWA, along with a coalition of water organizations including the WateReuse Association, the National League of Cities, the National Association of Counties, the California Association of Sanitation Agencies, and the Central Valley Clean Water Association, submitted comments to EPA’s Office of Water regarding how discharges of pollutants to groundwater should be regulated under federal and state environmental laws. 

The comments were submitted in response to a February 20, 2018 Federal Register notice requesting comments on EPA’s previous statements regarding whether point source discharges through groundwater that has a direct hydrologic connection to jurisdictional surface water may be subject to regulation under the CWA. The Agency requested comments on whether it should clarify previous statements on the issue, and if so, how this clarification should be accomplished (e.g., rulemaking or through other means).

While EPA has not taken a consistent position on the issue, the Agency has made statements in recent years that point source discharges that travel to surface water via groundwater with a DHC are subject to the CWA under the NPDES regulations.

NACWA’s comments focus on not whether, but how these discharges should be regulated, arguing that the DHC theory is not supported by the text or history of the CWA, and that discharges to groundwater are regulated under other federal and state environmental statutes better suited to address the issue.  The comments point out the impracticability of applying the end-of-pipe NPDES program to the diffuse and innumerable sources that would fall within the DHC theory.  The comments also provide a critical perspective on the potential implications for NACWA members, including citizen suit liability for discharges and infrastructure that has never previously required an NPDES permit.

Stormwater

Maximum Extent Practicable Standard Litigation

Mediation is still ongoing in the challenge to the NPDES permits for small municipal separate storm sewer systems (MS4s) in New Hampshire and Massachusetts. The permits require MS4s to comply with water quality standards, in addition to the requirement to reduce the discharge of pollutants to the maximum extent practicable (MEP). 

The effective date of the permits was July 1, 2018.  NACWA is working closely with the Massachusetts Coalition for Water Resources Stewardship to ensure that the legal rights of regulated MS4s are preserved as they prepare to file notices of intent for coverage.

More information about the permits and the litigation can be found on NACWA’s litigation tracking page.

Residual Designation Authority

On August 9, a federal district court gave environmental advocacy groups their first victory in their push for EPA to broaden the universe of facilities subject to CWA NPDES permits using the residual designation authority (RDA) in section 402(p)(2)(e) of the CWA.

Pursuant to CWA 402(p), EPA and authorized states regulate stormwater discharges from regulated MS4s, industrial activities, and construction sites via NPDES permits. In addition, EPA can use its RDA to require NPDES permits for other stormwater discharges or categories of discharges on a case-by-case basis when it determines that: 

• the discharges contribute to a violation of water quality standards;
• are a significant contributor of pollutants to federally protected surface waters; or
• controls are needed for the discharge based on wasteload allocations that are part of "total maximum daily loads" (TMDLs) that address the pollutant(s) of concern.

On September 17, 2015, EPA Region 9 received an RDA petition seeking designation of unregulated stormwater discharges from privately-owned commercial, industrial and institutional sites (CII sources) in specific watersheds in Los Angeles County.

In October 2016, EPA Region 9 denied the environmental groups’ RDA petition based on the following factors:

• The likelihood that the pollutants would be exposed to precipitation at sites in the source categories specified in the petition
• Whether sufficient data were available to evaluate the contribution of stormwater discharges to water quality impairment from the specified sources
• Whether the specified sources already were adequately addressed by other environmental programs

EPA concluded that the first two factors were satisfied: “the pollutants of concern are exposed to stormwater at CII sources and that there are sufficient data available to demonstrate that stormwater discharges are contributing to water quality impairments.” For the third factor, EPA concluded that “existing programs are underway to adequately address the impairments” - primarily by individual and general MS4 permits, a statewide NPDES permit for the California Department of Transportation, and a statewide general permit for industrial facilities. However, these permits do not directly regulate discharges from the CII sources.

The environmental groups then brought litigation - Los Angeles Waterkeeper et al. v. Pruitt et al. – in the U.S. District Court for the Central District of California alleging (1) a failure to perform a nondiscretionary duty under the CWA pursuant to the citizen-suit provision; and (2) in the alternative, arbitrary and capricious agency action in violation of the Administrative Procedure Act (APA).

On November 2, 2017, the court concluded that EPA had discretion to decide whether to require NPDES permits for stormwater and, therefore, dismissed Plaintiffs’ claim under the CWA citizen suit provision, which only provides for such suits where a plaintiff seeks to enforce a nondiscretionary duty. The Court allowed the APA claim to proceed.

Despite EPA’s argument that whether to invoke RDA is entirely discretionary, the court held that once EPA determines that a stormwater discharge contributes to a violation of water quality standards, EPA’s discretion is limited to (1) requiring NPDES permits for the discharges or (2) enforcing CWA Section 301(a)’s total prohibition of the discharge of pollutants.

In other words, when EPA determined there was sufficient data available to demonstrate that stormwater discharges are contributing to water quality impairments in the watersheds, EPA did not have the discretion to leave the discharges unregulated; such action was arbitrary and capricious.

The court also found that EPA had considered an improper factor in rejecting the RDA petition. Relying on Massachusetts v. EPA, the court reasoned that because the Clean Air Act’s and CWA’s regulatory triggers are similar, whenever EPA declines to regulate a pollutant, its decision must be grounded in statute. Here, the court concluded that “EPA does not point the Court to a provision of the [CWA] that indicates that EPA may consider whether other federal, state, or local programs adequately address the known stormwater discharge contribution to a violation of water quality standards,” and “EPA acted arbitrary and capricious in denying Plaintiffs’ petition by considering a factor ‘divorced from the statutory text’ in its denial.”

The case is likely to be appealed and NACWA will continue to monitor and report developments. There is also a similar case pending in Maryland related to stormwater permitting and RDA.

TMDLs

Fourth Circuit Upholds State Authority Over TMDLs

The US Court of Appeals for the Fourth Circuit issued a unanimous decision in Ohio Valley Environmental Coalition (OVEC) v. Pruitt on June 20, reversing the trial court’s application of the constructive submission doctrine to West Virginia Department of Environmental Protection’s (WVDEP) development of total maximum daily loads (TMDLs).  The court’s reasoning embraces NACWA’s position in the case that application of the constructive submission theory to the TMDLs in question was not appropriate.

The appeal arose from a district court decision finding that WVDEP’s delay in submitting TMDLs for ionic toxicity – which is measured in terms of conductivity – amounted to constructive submission of no TMDLs.  The district court held that this constructive submittal required EPA to either approve the submission of “no TMDLs,” or reject the submittal and create the TMDLs itself. 

In its opinion, the Fourth Circuit explicitly withheld judgment on the validity of the constructive submission doctrine — a judicial doctrine that has no basis in the text of the CWA— but instead focused on decisions by other courts and found that WVDEP’s delay in submitting the TMDLs did not meet the strict standards of the constructive submission doctrine.  WVDEP had developed thousands of TMDLs for other pollutants and had a plan in place to develop those for conductivity. As the court noted, courts have found that constructive submission occurs only where the state has “clearly and unambiguously” refused to develop any TMDLs and has no credible plan to do so. 

The decision represents an important victory in maintaining the balance of cooperative federalism and allowing states the necessary time to develop TMDLs to address complex issues.  A decision upholding the district court would have broadly expanded the constructive submission doctrine and threatened to rush states to TMDL development on a variety of complex issues impacting NACWA members. 

In July 2017, NACWA filed an amicus curiae brief in the case in cooperationwith the National Mining Association and the National Cattlemen’s Beef Association, providing a national perspective on the broader implications of the district court’s holding.

OVEC filed a petition for rehearing, which the Fourth Circuit denied on August 17.

More information about the litigation can be found on NACWA’s litigation tracking page.

Trading

NACWA to Participate in Nutrient Trading Permit Challenge

On July 25, the NACWA Board of Directors approved the Association’s participation as an amicus curiae in Food & Water Watch v. Commonwealth of Pennsylvania, Department of Environmental Protection, an appeal of the NPDES permit for a poultry processing facility pending before the Pennsylvania Environmental Hearing Board.  The permit allows for the purchase of credits to allow the facility to meet a zero-discharge limit for nutrients.  The credits are part of a program developed by Pennsylvania’s Department of Environmental Protection in 2010, to provide a more cost-efficient way for NPDES permittees in the Chesapeake Bay Watershed to meet their effluent cap load limits for nutrients.  Credits purchased through the program must be certified, verified, and then registered by the program before they can be applied to NPDES permit effluent limits. 

Food & Water Watch’s (FWW) challenge attacks the lawfulness of trading under the CWA generally, the use of trading to implement the Chesapeake Bay TMDL in particular, and is part of an ongoing effort by FWW to challenge the validity of trading under the CWA.  This challenge, if successful, could have negative impacts on current and future water quality trading programs for nutrients and other pollutants, not only within the Chesapeake Bay, but also nationwide. This would present challenges to the current and future efforts of many NACWA members to achieve water quality improvements through innovative trading efforts and would also significantly limit the ability to engage nonpoint source dischargers in meaningful nutrient reduction efforts.

NACWA’s participation will add a valuable national perspective on this important federal CWA issue, will help defend EPA’s use of trading programs as an effective way to address water quality concerns, and will ensure the perspective of the municipal clean water community is represented. The litigation is stayed until November 1.

WOTUS

Court Strikes Down EPA’s Clean Water Rule Delay; 2015 Rule Effective in Most States

On August 16, a federal district court struck down EPA's two-year delay on implementing the 2015 Obama-era Clean Water Rule.

The court held that the Trump administration’s extension of the effective date violated the APA notice-and-comment requirements because the Agency limited the opportunity for comment to only the effective date issue, and did not allow comment on the merits of the 2015 rule or the previous rule, which the extension effectively reinstated. The court held: "The agencies refused to engage in a substantive reevaluation of the definition of the ‘waters of the United States’ [WOTUS] even though the legal effect of the Suspension Rule is that the definition of ‘waters of the United States’ ceases to be the definition under the WOTUS rule."

The judge ruled that while “different administrations may implement different regulatory priorities,” the APA “requires that the pivot from one administration's priorities to those of the next be accomplished with at least some fidelity to law and legal process.”

This along with recent Clean Air Act rulings have raised questions about whether courts are willing to give the agency deference on delay rulemakings.

The decision reinstates the 2015 rule in 26 states. However, it will have no effect in the 24 other states, which are subject to prior court orders blocking implementation of the 2015 rule.

2015 rule on hold in these 24 states:

EPA Region 3: West Virginia

EPA Region 4: Georgia, Alabama, Florida, North Carolina, South Carolina, Kentucky

EPA Region 5: Indiana, Wisconsin

EPA Region 6: Arkansas, New Mexico

EPA Region 7: Kansas, Missouri, Nebraska

EPA Region 8: All states - Utah, North Dakota, South Dakota, Colorado, Wyoming, Montana

EPA Region 9: Nevada, Arizona

EPA Region 10: Alaska, Idaho

 

2015 rule in effect in these 26 states:

EPA Region 1: All states - Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut

EPA Region 2: Both states - New York, New Jersey

EPA Region 3: Pennsylvania, Virginia, Maryland, Delaware

EPA Region 4: Mississippi, Tennessee

EPA Region 5: Minnesota, Michigan, Illinois, Ohio

EPA Region 6: Texas, Oklahoma, Louisiana

EPA Region 7: Iowa

EPA Region 8: Not effective in any states

EPA Region 9: California, Hawaii

EPA Region 10: Oregon, Washington

NACWA will continue monitoring developments in terms of how EPA plans to react to the court’s decision and what additional steps the Agency may take to provide further short-term clarity around WOTUS regulation, and will keep the membership updated.