The following student post is by Collin Gannon (B.A., University of Pittsburgh; J.D., University of Michigan Law School, expected 2015). While in law school, Collin has worked at the Utton Transboundary Resources Center and the New Mexico Supreme Court.
A federal district court in New York has vacated and remanded EPA’s controversial “Water Transfers Rule.” In Catskill Mountains Chapter of Trout Unlimited v. EPA (“Catskills II”) (S.D.N.Y., Mar. 28, 2014), Judge Kenneth Karas rejected the agency’s attempt to narrowly interpret the scope of its regulatory obligations under the Clean Water Act by exempting from its NPDES program the discharges into navigable water resulting from the transfers of water between and amongst other navigable waters.
The CWA prohibits the discharge of pollutants from a point source without a permit, and defines the discharge of a pollutant as being “any addition of any pollutant to navigable waters from a point source.” See 33 U.S.C § 1311(a).Over time, the EPA’s interpretation of this provision crystallized into an argument that an addition of a pollutant from a point source into navigable water which gives rise to a nondiscretionary duty to regulate (under CWA §402) must introduce a pollutant from the outside world. Reflecting the determination that the statutory language is ambiguous, early courts considering this EPA interpretation were for the most part diligently deferential, yet those decisions were factually confined in scope to the recirculation of water through dams. See Natl. Wildlife Fed. v. Gorsuch, 693 F.2d 156 (D.C. Cir. 1982). As the issue of water transfers became more prevalent with the onset of artificial diversions of water and transfers between unrelated waters miles apart, a common law limit on the EPA’s former narrow interpretation of its authority evolved: the transfer of water between “distinct” navigable bodies of water through a point source was an addition that required a permit.
Without the procedural benefit of notice and comment rulemaking, the EPA’s interpretation repeatedly failed to garner Chevron deference. See Catskill Mountains Chapter of Trout Unlimited, Inc. v. City of New York (“Catskills I”), 273 F.3d 481 (2nd Cir. 2001). The EPA persisted with the narrow interpretation, though, until finally advancing a “unitary waters theory” in the Supreme Court that considered all bodies of navigable water unitarily for purposes of NPDES permitting requirements. See S. Fla. Water Management Dist. v. Miccosukee, 124 S. Ct. 1537 (2004). As this theory was only advanced by the EPA in its briefs, with no administrative documents explicitly espousing that position prior to argument, the Supreme Court in South Florida disagreed. It is likely the Supreme Court will thus support a future analysis in the water transfer context of whether two bodies of navigable water are meaningfully distinct.
Dropping the extreme unitary waters theory, the EPA soon after issued an internal memorandum defining water transfers as “any activity that conveys or connects navigable waters . . . without subjecting the water to intervening industrial, municipal or commercial use.” In light of the new Supreme Court precedent and EPA interpretation, the Second Circuit reconsidered its earlier case, Catskills I, but still disapproved of the EPA’s Chevron ineligibleexemption of water transfers.
In June 2008 the EPA finalized and promulgated a Notice and Comment rule creating a formal exclusion to the NPDES program for discharges from a water transfer, predictably defining a water transfer as “an activity that conveys or connects waters of the United States without subjecting the transferred water to intervening industrial, municipal, or commercial use.” 40 C.F.R §112.3(i). The exclusion would not apply to pollutants introduced to the navigable water by the transfer activity itself. This was this rule as it sat before Judge Karas in Catskills II, setting the stage for a long-awaited analysis of the water transfers issue under the highly deferential Chevron framework.
Judge Karas found the relevant provisions of the statute ambiguous both because of the complex saga of litigation inspired by it and the two reasonable interpretations of the term “any addition,” one applying the term to a discharge “to [any] navigable waters” and the other cabining its application to “navigable waters [as a whole].” Thus reaching Chevron Step 2, Judge Karas admonished the EPA for neglecting reasoned decision-making in the context of balancing the statute’s competing goals and interpreting the CWA far beyond the scope of what its ambiguity fairly allows. Essentially, the EPA based its decision to exclude water transfers on what the agency called a “holistic approach,” and that was arbitrary and capricious primarily because the agency ultimately failed to holistically employ its chosen methodology. The Court rejected the EPA’s interpretation in light of the agency’s failure to reasonably explain its reliance on state’s rights administrative burden to the frustration of the CWA’s overarching policy goals and its duty to enforce water pollution standards. The water transfers rule was thus vacated, but the court’s order gives the EPA a chance on remand to supply the missing reasoned explanation.
Since it wouldn’t be a case concerning the CWA without a discussion of jurisdiction and navigable waters, the issue Judge Karas blames for causing most CWA ambiguity, the Court scolds the EPA for its impermissible extension of CWA jurisdiction inherent in the now-vacated water transfers rule. The EPA interpreted the scope of “navigable waters” in an impermissibly broad manner by promulgating the water transfers rule for multiple reasons. See Rapanos v. United States, 547 U.S. 715 (2006). Under the water transfers rule, the scope of CWA jurisdiction turned on that water’s retention of its “status” as “navigable water.” Thus, under such a status-based interpretation, waters that have been withdrawn from navigable bodies of water but are not subjected to an intervening use somehow remain “navigable waters” despite their diversion from the original water body. Unfortunately for the EPA, Judge Karas considered Rapanos as the outer boundary circumscribing any permissible exercise of CWA jurisdiction. Reminiscent of Justice Scalia’s textual contention in Rapanos that “navigable waters” and “waters of the United States” plainly relate to “water bodies,” the status-based standard strains textual and practical realities inherent in the CWA’s intended regulation.
The EPA further offends the Rapanos plurality when it contemplates applying “navigable water” status to readily discernible man-made point sources of pollution not ordinarily treated by the CWA as “bodies of water.” The Rapanos plurality would not be alone in raising its brow at this expansive take on CWA jurisdiction, as it also seems to offend Justice Kennedy’s fact-specific significant nexus standard. Justice Kennedy would have the EPA make fact-specific jurisdictional analyses of a water body and its affects on the physical, chemical, or biological integrity of a traditionally navigable water – much different from the EPA’s status-based standard rooted in permanence. Even Justice Stevens, who’s dissent argues for expansive CWA jurisdiction, would likely agree with Justice Kennedy and the plurality as he implicitly agrees that there must be some semblance of a fact-specific jurisdictional analysis regardless of the ultimate standard.
The water transfers rule, now vacated to the extent that it frustrates the holding in Rapanos, sits in limbo awaiting the EPA’s reasoned explanation as is consistent with the court’s order. Yet, it does seem unlikely that the EPA can ultimately square its underlying goal for promulgating the rule with Rapanos’s limit on a “status-based” navigable waters jurisdictional standard.