dcsimg Environment 2013: Water Issues

Legal Alert

Environment 2013: Water Issues

January 22, 2013

Courts, EPA, state agencies, environmental groups and individual citizens will face new and difficult questions in 2013 involving stormwater, nutrients, wetlands and water rights.

In the first of its series addressing this year’s major environmental issues, the McGuireWoods environmental team identifies the following water issues to follow in 2013.

Nutrients and Total Maximum Daily Loads (TMDL)

  • Florida’s Numeric Limits Go to Court. For years, the U.S. Environmental Protection Agency (EPA) sought to force Florida to promulgate numeric instead of narrative water quality standards for nutrients, specifically phosphorous and nitrogen, a battle that ended late last year with the final passage of new state regulations. Now, both environmental and industry groups have filed court challenges to the new rules. Environmentalists claim that the standards are too lax, especially when determining whether upstream limits adequately protect downstream waters. Industry groups contend that EPA lacked authority to develop water criteria for the state when Florida had already established criteria that met the requirements of the Clean Water Act. Absent a settlement, this litigation is expected to last throughout 2013. EPA had hoped that the adoption of the Florida numeric standards would give it a precedent to require other states to take a similar approach. While EPA work toward this end is expected to continue (such as EPA’s push to have Iowa address nutrient discharges from agricultural operations and for North Carolina to develop a nutrient management plan), a concentrated effort by EPA to force Florida-type changes in a number of states may well wait until the court challenge is resolved.
  • Use of Surrogate Parameters to Establish TMDLs. It is not uncommon for EPA to use substitute or “surrogate” parameters for pollutants that it seeks to control — a practice that the courts have generally upheld as within the agency’s authority under the Clean Water Act. However, a Jan. 3, 2013, decision by the U.S. District Court for the Eastern District of Virginia in Virginia Department of Transportation v. United States Environmental Protection Agency calls into question the extent of EPA’s authority to use surrogate parameters to establish TMDLs even if the record shows that a surrogate parameter would be more effective at achieving compliance with water quality standards. The case involves impairment to Accotink Creek in Fairfax County, VA, due to sediment. EPA determined that since sediment suspended in stormwater was the source of the impairment, a maximum daily load for stormwater flow would be more effective at remedying the impairment than a maximum daily load for sediment. In their challenge to the Accotink TMDL, Virginia Department of Transportation (VDOT) and Fairfax County argued that EPA can establish TMDLs only for “pollutants,” and that since stormwater is not a pollutant, EPA exceeded its authority under the Clean Water Act in using stormwater flow as a surrogate for sediment. The court agreed, finding that the Clean Water Act is clear in requiring that TMDLs be established only for “pollutants” and that "flow" is not a pollutant. It remains to be seen whether the VDOT decision will stand. The same issue is pending in other courts and EPA is expected to appeal the Jan. 3 decision.
  • Nutrient Trading. Just as trading is gaining ever-increasing support from both point and nonpoint sources as a cost-effective tool for achieving compliance with the nutrient and sediment allocations in the Chesapeake Bay TMDL, environmental groups have filed a lawsuit seeking to have the practice declared unlawful. An Oct. 3, 2012, complaint filed against EPA by Food and Water Watch and Friends of the Earth in the U.S. District Court for the District of Columbia claims that EPA acted arbitrarily and capriciously and exceeded its authority under the Clean Water Act when it authorized trading in the Bay TMDL. The principal legal theory behind the groups’ claims is that the water quality-based requirements of the Clean Water Act (including the waste load allocations in the Bay TMDL) apply to individual sources and that trading will impede achieving compliance with water quality standards in the Chesapeake Bay by unlawfully allowing individual sources to discharge pollutant loads greater than the allocations assigned to them in the TMDL. Although it is the Bay states, and not EPA, that are responsible for implementing trading through their respective National Pollutant Discharge Elimination System (NPDES) permit programs, this case has potentially far-reaching implications for the states because a ruling adverse to EPA would force it to veto any state-issued NPDES permit that authorized trading. The consequences would be particularly serious for Virginia, which is in the process of aggressively expanding its highly successful point-to-point trading program to include trading among all source sectors covered by the Bay TMDL.
  • Secondary Treatment Standards for Nutrients. On Dec. 14, 2012, EPA denied a 2007 petition for rulemaking filed by a coalition of environmental groups seeking to modify the secondary treatment standards for sewage treatment plants to establish standards for nutrient removal. If granted, the petition would have a rulemaking to require sewage treatment plants nationwide to achieve technology-based treatment standards for nitrogen and phosphorus regardless of water quality impact. In denying the petition, EPA reaffirmed its preference for controlling the discharge of nutrients through water quality-based limits reflecting local conditions rather than through uniform standards. EPA’s denial also cited the resource constraints under which both the municipal wastewater industry and EPA were operating. In March of last year, the coalition filed suit against EPA in the U.S. District Court for the Southern District of New York to compel the agency to respond to the petition. Although EPA responded to the petition before the court ruled on the coalition’s complaint, the case remains pending and could provide a forum to challenge EPA’s decision to deny the petition.

Wetlands

  • Jurisdiction by Guidance or By Rule? EPA and the Army Corps of Engineers (Corps) are considering whether to finalize draft guidance describing wetland jurisdiction (which was published in April 2011) or begin rulemaking on the issue. This guidance was developed in response to the U.S. Supreme Court’s decisions in Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers and Rapanos v. United States, decisions that created legal uncertainties in the world of wetland delineation. The draft guidance was highly criticized by industry, states and lawmakers, who argued that the guidance sought to expand the government’s jurisdiction beyond that contemplated by the Clean Water Act. EPA and the Corps submitted final guidance to the Office of Management and Budget (OMB) for federal interagency review, but that review halted in advance of the November presidential election. It is not clear when OMB expects to complete its review of the guidance. It is also not clear whether, if the guidance is approved, the agencies will finalize the guidance or turn to rulemaking. If the guidance is approved and finalized, then litigation to overturn it for not following the rulemaking process is likely. If the guidance is turned into a rule and goes through the regulatory process, that will likely be at least a two-year process. Congressional action on this issue is also unlikely given other more pressing economic and budget considerations in 2013.
  • Challenging Jurisdictional Determinations. In its 2012 decision in Sackett v. EPA, the Supreme Court ruled that compliance orders issued under Section 309 of the Clean Water Act are final agency actions that can be challenged under the Administrative Procedure Act prior to enforcement of the orders or imposition of penalties. It is important to note that this case has a broad reach: EPA issues similar orders under the Clean Air Act, the Resource Conservation and Recovery Act and the Toxic Substances Control Act. Since Sackett, a variety of complaints have been filed on this issue, including one recent suit by the Pacific Legal Foundation (PLF) that attempts to apply the Sackett holding to jurisdictional determinations. In Smith v. Army Corps of Engineers, the PLF argues that the Corps has tried to expand its jurisdiction into nonnavigable areas (in this case, a dry arroyo that the Corps classified as nonrelatively permanent) and PLF has asked the court to determine three things: (i) whether Sackett applies to jurisdictional determinations; (ii) which Rapanos test must be used to conduct delineations (PLF favors the Scalia-only test); and (iii) how the Corps should demonstrate significant nexus as the basis for a jurisdictional determination. While the circuits are split on the test that regulators should use in jurisdictional determinations, this case adds an additional wrinkle, focusing on a Scalia-only test. It will be interesting to see how the court decides this case — a decision that is almost certainly to be appealed.

Stormwater

  • Post-Construction Stormwater Rule. As part of a 2010 settlement in a case brought by the Chesapeake Bay Foundation, EPA agreed to adopt a post-construction stormwater rule. EPA is continuing its efforts to develop such a rule and although the deadline for the rule has been extended multiple times, EPA now expects to publish a draft rule by June 10, 2013, and to finalize that rule by Dec. 10, 2014. Through this rule EPA expects to develop performance standards to (i) better address stormwater discharges from newly developed and redeveloped sites; (ii) evaluate options for expanding the MS4 program and establishing local government programs to address existing development; (iii) explore requirements for transportation facilities; (iv) establish a set of minimum measures requirements for MS4s; and (v) evaluate additional provisions specific to the Chesapeake Bay.
  • Transfer Rule Lives … For Now. The Supreme Court recently held in Los Angeles Flood Control District v. Natural Resources Defense Council that polluted water flowing from an improved portion of a river (in this case, improved with a concrete channel for flood control purposes) into an unimproved and unlined section of the same river was not a discharge of pollutants requiring a permit under the Clean Water Act. The Court reversed a decision of the Court of Appeals for the Ninth Circuit in which local agencies were found to be liable for contaminated water passing through their stormwater management systems. The court of appeals had held that the flood control improved sections of the water body were no longer navigable, and therefore, each time stormwater flowed from an improved section to an unimproved section, that was another discharge that could require a permit. The Supreme Court nixed this idea and upheld its prior decision in South Florida Water Management District v. Miccosukee Tribe in which transfers of water between two sections of the same water body did not require a permit under the Clean Water Act.

The holding in Los Angeles was very narrow and the Court did not address (i) EPA’s transfer rule under which transfers of water between water bodies do not require permits as long as there is no intervening use (commercial, industrial, etc.) of the water or (ii) as requested by NRDC, the determination of liability under vaguely written permits or permits with contradictory conditions. Had the Court decided otherwise in this case, localities could be threatened with obtaining hundreds of discharge permits. Instead, the Court has provided a measure of comfort and cover for MS4 permittees in the operation of their stormwater management systems, limiting the number of required permits.

  • Federal Agencies and Stormwater Fees. Although the federal government continues to fight to avoid paying local stormwater utility fees, this battle may soon be over because the most recent case on the issue was decided squarely against the federal government. In United States v. City of Renton, the Bonneville Power Administration (a federal entity) challenged the applicability of local stormwater utility fees to its property. Under the doctrine of sovereign immunity, the federal government is usually exempt from local fees and taxes, but not in this case. The fees were assessed according to Section 313 of the Clean Water Act that requires federal agencies to be subject to local requirements for the control and abatement of water pollution “in the same manner, and to the same extent as any nongovernmental entity including the payment of reasonable service charges.” In 2011, Congress amended the statute to clarify that these fees were to be paid regardless of whether they were called fees, charges or taxes.

In a clear and well-reasoned opinion, the court held that Congress had waived sovereign immunity with respect to the fees and that the fees would be valid (and BPA would be required to pay the fees) if the city could show that the fees did not discriminate, were based on a fair approximation of use and were not excessive in relation to the benefit that they conferred.

While the Department of Justice has since decided to forego an appeal in Renton (which was decided by a federal district court), DOJ is now focusing on a case in which DeKalb County, GA, has sued to collect stormwater fees from the U.S. Post Office and other federal agencies. This case is being heard in the U.S. Court of Federal Claims, a venue more to the DOJ’s liking. Both DeKalb County and the National Association of Clean Water Agencies have asked the claims court to consider the Renton decision. If DeKalb County can show that its fees are reasonable and that it meets the requirements of the statute, it is likely that the claims court will follow the Renton decision, sending a signal that federal agencies must pay appropriately designed and reasonable fees established under Section 313 of the Clean Water Act.

Other Issues of Note

  • 303(d) Impaired Water Designations. As states work on the methodology for and identification of impaired waters for submission to EPA in 2014, three ongoing lawsuits could affect those efforts. Lawsuits in New Hampshire and Pennsylvania argue that EPA cannot use numeric measurements of water body health to make impairment designations when the states use narrative water quality criteria. In those cases, New Hampshire and Pennsylvania contend that the use of numeric criteria violates the Clean Water Act because those criteria do not bear any connection to the state’s narrative water quality criteria. For example, in the Pennsylvania case, EPA declared a creek to be impaired by high phosphorous levels due to its population of insects and small animal life, even though Pennsylvania’s regulations say that a water body can only be declared impaired by nutrients based on excess plant growth or dissolved oxygen. In Barnum Timber v. EPA, a company is seeking to have EPA take responsibility for reviewing state water impairment designations for water bodies that have been declared impaired but where a TMDL has already been established. EPA contends its only responsibility is to review impaired waters lists for waters without cleanup plans (such as TMDLs), a position that the company in question contends would leave the property owners with no legal recourse if they believe an impaired water subject to a TMDL is not actually impaired at all. These cases and others set a busy and perhaps confusing scene for the development of impaired water lists during the coming year.
  • Utilities and Cooling Water Intakes. EPA continues to face pressure from environmental groups to finalize regulations governing cooling water intake structures at existing power plants. Last year, EPA agreed to an 11-month delay of a July 2012 deadline to issue a final rule. Environmentalists are adamant that no further extensions of time be granted. In terms of technical requirements, industry is arguing for the flexibility to use a variety of approaches, especially site-specific approaches. Environmental groups want to require all plants to use closed-loop cooling systems. If no further time extensions are granted, EPA would be expected to finalize the rule in June of this year.
  • NPDES Permit Rule Revisions. EPA is working to update existing NPDES regulations so as to have better permit documentation and transparency. Specifically, the EPA effort will focus on requirements that are either outdated or have become obsolete over the last 20 years, whether due to changes within the regulatory program itself or due to technology. It is anticipated that the updates will be proposed in September, with the rule finalized sometime in mid-2014.
  • Fracking Study. Included in the fiscal year 2009 appropriations bill funding EPA was a requirement that EPA study the potential impacts on drinking water of fracking operations. The study commenced last year and will be completed in 2014, and EPA released a progress report outlining the research process at the end of 2012. EPA is studying five water quality issue areas: Water Acquisition; Hydraulic Frac[t]uring Fluid Spills; Well Injection; Flowback/Produced Water; and Wastewater Treatment and Disposal. This report is expected to confirm the need to promulgate new regulations under the Clean Water Act on water quality associated with fracking.