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The National Association of Clean Water Agencies (NACWA) is pleased to provide the membership with the Fall 2013 Legal Update.  This Update provides summaries of current legal initiatives and discusses developments in NACWA’s litigation matters.  Additional information on cases involving NACWA and discussed in this Update, including copies of relevant court filings and documents, can be found on the Association’s Litigation Tracking web page.  Any questions regarding this Update or NACWA’s legal advocacy efforts can be directed to Nathan Gardner Andrews at  202/833-3692 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or to Amanda Waters at 202/530-2758 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .   

NACWA’s 2013 National Clean Water Law Seminar to be Held November 20 – 22, 2013 in San Antonio, Texas

Registration is well underway for NACWA’s 2013 National Clean Water Law Seminar, with an agenda that promises to deliver a timely and informative analysis of the hottest current topics in clean water law. This year’s program will feature some of the top clean water attorneys from around the nation speaking on a variety of critical utility topics, including integrated planning, consent decrees, stormwater, effective negotiation and advocacy strategies, and wet weather developments. As always, Continuing Legal Education (CLE) credits, including ethics credit, will be available. NACWA’s Law Seminar is the only conference of its kind to focus exclusively on legal and regulatory issues impacting municipal clean water attorneys and managers, so don’t miss it! Additional details on the Seminar, including registration and hotel information, conference agenda, and CLE information are available on NACWA’s website.

Legal Affairs Committee Meets at Summer Conference

The Legal Affairs Committee met on July 15 as part of NACWA’s 2013 Summer Conference and discussed a number of legal issues currently impacting clean water utilities.  Among the topics addressed was a recent Federal Court decision in Center for Biological Diversity, et al. v EPA, which vacated EPA’s three-year deferral of carbon dioxide (CO2) emissions from biogenic sources, including publicly owned treatment works (POTWs), from federal greenhouse gas regulations (more information on this case below).  The Committee also received updates on litigation related to nutrients, water quality trading, blending and water transfers.  The meeting concluded with a brief update on the work of NACWA’s Wet Weather Enforcement Workgroup, an announcement about plans to update the Association’s Wet Weather Consent Decree Handbook, and a reminder about NACWA’s availability to provide public comments on proposed consent decrees involving individual utility members.   Handouts from the meeting are available here.  The Committee will next meet in February as part of NACWA’s 2014 Winter Conference.  

CURRENT CASES

NACWA Helps Secure Legal Victory in Chesapeake Bay TMDL Litigation

On September 13, a federal district court issued a resounding legal victory in litigation over EPA’s final total maximum daily load (TMDL) for the Chesapeake Bay, embracing arguments made by NACWA and others to affirm the TMDL and its holistic watershed approach requiring pollution reduction from all sources of impairment, including nonpoint sources. American Farm Bureau, et al. v. EPA was a challenge by agricultural interests to EPA’s inclusion of nonpoint sources as part of the final Bay TMDL.  NACWA, the Maryland Association of Municipal Wastewater Agencies (MAMWA), and the Virginia Association of Municipal Wastewater Agencies (VAMWA) jointly intervened in the litigation last year to represent the municipal clean water community and were active participants during briefing and oral arguments to support inclusion of all sources of water quality impairment in the final TMDL allocations.  The court’s ruling rejects all challenges to the TMDL made by the agricultural plaintiffs in the case, and grants requests by EPA and the municipal intervenors, to uphold the final TMDL and its watershed approach for achieving nutrient and sediment reductions. In making its decision, the court noted that it “endorses the holistic, watershed approach used” in the TMDL, finding the approach to be “consistent with the Clean Water Act (CWA), and practical in terms of attaining a full and fair contribution by all major source sectors.”

This decision marks a significant win for NACWA, its members, and its municipal partners in the litigation by affirming EPA’s ability to pursue a watershed approach – including a meaningful contribution from nonpoint agricultural sources – in crafting TMDLs to achieve improved water quality. The ruling also contains some very positive language on water quality trading that can support the legal basis for trading programs under the CWA both within the Chesapeake Bay and nationwide.   NACWA is very pleased with the court’s ruling, and appreciates the opportunity to have worked with MAMWA and VAMWA in achieving this outcome. Additional information on the decision is available in Advocacy Alert 13-14.

Court Rules EPA Must Make Determination on Federal Nutrient Criteria in Mississippi River Nutrients Case

On September 20, the U.S. District Court for the Eastern District of Louisiana ruled that EPA is required under the CWA to make a determination within 180 days on whether federal numeric nutrient criteria (NNC) are necessary for the Mississippi River Basin (MRB) and Gulf of Mexico, but the court also affirmed EPA’s discretion to consider a wide variety of factors in making such determination.  The Gulf Restoration Network, et al. v. EPA case arose from a challenge by environmental activist organizations to EPA’s 2011 denial of their 2008 petition requesting federal NNC and nutrient TMDLs for all waters nationwide where such criteria have not been developed or in the alternative, at a minimum, to establish such criteria and TMDLs for all waters in the MRB and Gulf of Mexico.  NACWA requested and was granted intervention in the case in late May 2012 and filed briefs in 2013.  

The court found that “EPA could not simply decline to make a necessity determination in response to Plaintiffs’ petition for rulemaking” but was required to make a clear “yes” or “no” decision.   However, in an important positive development for NACWA and its utility members, the court expressly rejected arguments that EPA cannot rely on non-scientific factors when making a necessity determination.  This provides an opportunity for EPA to make a “no” decision on the need for federal NNC – thus meeting the court’s directive to make a formal necessity determination – using many of the same factors from its 2011 petition denial. NACWA will continue advocating strongly with EPA in support of this outcome. Another aspect of the ruling that is helpful for NACWA members is the court’s clear affirmation that states have primary responsibility under the CWA for developing water quality standards, which echoes NACWA’s longstanding position that was expressed in this case through briefing. NACWA will monitor further developments in the litigation, including any potential appeal by EPA.  Additional details on the decision can be found in Advocacy Alert 13-14.

NACWA Secures Sewage Sludge Incinerator Rule Remand in Court Ruling

NACWA secured a partial legal victory August 20 when a federal appeals court issued a decision  in the Association’s challenge to EPA’s Sewage Sludge Incinerator (SSI) rule, agreeing with NACWA that EPA’s technical basis for the rule was flawed and remanding the regulation back to the Agency for changes. The ruling from the U.S. Court of Appeals for the District of Columbia Circuit in the case NACWA v. EPA, et al. caps a two-and-a-half year legal effort led by NACWA to push back on the SSI rule and secure more environmentally and economically appropriate emission limits for SSI units.

The court’s ruling affirms NACWA’s position that EPA must gather and analyze the appropriate data to reassess, justify or potentially revise the SSI rule. NACWA set forth two main challenges to the rule in the lawsuit: a challenge to EPA’s statutory authority for promulgating the rule, and a challenge to EPA’s technical basis for the emission standards in the final rule. In the decision, the court sided with EPA on the statutory argument, but sided with NACWA on the majority of our technical arguments. The court further remanded a number of technical issues back to EPA for additional consideration, noting that EPA’s technical justifications in the rule are not legally adequate and that the Agency must provide additional explanations for the emission limits in the SSI Rule or develop new emission limits entirely.

The remand of the rule is important for two main reasons: first, it means the court agreed with NACWA that EPA’s technical explanations for how it set the emission limits were not sufficient, suggesting that the current limits may be fundamentally flawed if EPA cannot come up with better justifications; and second, EPA must now make changes to the rule on remand consistent with the court’s direction, providing NACWA with an additional opportunity to advocate for a change to the rule’s emission limits.

While NACWA is disappointed the court did not agree with its statutory arguments in the case or agree to vacate the rule, the Association is pleased with the remand on the technical issues. NACWA is currently gathering information and feedback from its SSI utility members to determine an appropriate advocacy path forward in light of the decision.  NACWA will work with its member utilities and EPA to advance the remand process in an appropriate manner and to achieve a rule that is scientifically based, technically sound, and will not impose unnecessary costs on utilities and their local ratepayers at a time when they are already struggling to meet existing regulatory and financial obligations.

The court’s decision also has broader implications for EPA’s general rulemaking process.  EPA is required to go through a thorough, deliberative and transparent process for any rulemaking, including in this instance for SSIs. NACWA’s primary advocacy mission is to ensure that EPA’s rulemaking process is based upon sound science and data and viable economic principles.  This ruling sends a clear message to EPA that the process cannot be circumvented or short-circuited and that NACWA will be constantly diligent in protecting the interests of public clean water agencies across the country.

Court Vacates EPA’s Biogenic GHG Deferral

A Federal Court ruled on July 12 in the Center for Biological Diversity, et al. v EPA case that EPA failed to provide legal justification to support its deferral of greenhouse gas (GHG) permitting requirements for biogenic emissions. The U.S. Court of Appeals for the District of Columbia (DC Circuit) vacated EPA’s three-year Deferral Rule  thereby causing uncertainty about the permitting requirements for biogenic sources, which include emissions from wastewater treatment processes and the combustion of biogas and biosolids – as well as the combustion of other biomass, such as agricultural and forest products. The court did not close the door on EPA’s authority to finalize its rulemaking; however, it emphasized the need and urgency for the Agency to expedite that process in order to provide clarity and consistency.

In late August, the DC Circuit agreed to delay issuing the mandate in the case until November, meaning that the actual vacature of the deferral rule for biogenic sources will not occur until that time.  In the interim, the current deferral will stay in place.  This was done in part to allow for negotiations between various parties and EPA to explore the option of keeping the temporary deferral in place while EPA works on a permanent deferral via rulemaking.  NACWA, as a member of the Biogenic CO2 Coalition, is involved in these discussions.  The Coalition is also drafting a technical report and petition for rulemaking to exclude short cycle CO2 emissions from Clean Air Act (CAA) permitting programs and make permanent a deferral for biogenic sources. Because the July 12 ruling does not foreclose a statutory exclusion of biogenic emissions, the work of the Coalition is now even more critical. The Association will continue to work with the Coalition to accelerate the advocacy strategy in light of this ruling.

The need for a biogenic exemption from GHG permitting requirements first arose in June 2010 when EPA released its GHG Tailoring Rule applying permitting regulations to large stationary sources of CO2. The Agency did not exclude biogenic emissions, which occur as a result of combustion or decomposition of biological materials and are considered part of the natural carbon cycle. Without an exclusion, the CO2 emissions from the wastewater treatment process, as well as combustion of biosolids and biogas, would be subject to CAA Prevention of Significant Deterioration (PSD) and Title V permitting programs. NACWA, and other industries impacted by the rule, objected – emphasizing the carbon neutrality of these emissions. This led EPA, in January 2011, to institute the three-year deferral while it conducts scientific analysis and develops rulemaking to specifically address these emissions. In early 2012, environmental groups filed a legal challenge to the deferral. NACWA filed an amicus brief  in the case explaining why biogenic emissions from clean water agencies are different in nature, noting the short carbon cycle associated with human waste and the unavoidable nature of the emissions. The brief also emphasized the hardship that would occur if clean water agencies were forced to comply with the permitting requirements.

Feds Agree to Pay in Settlement of Stormwater Fee Dispute

A settlement agreement  requiring payment of a majority of outstanding stormwater fees was reached in July to resolve a legal battle between the federal government and NACWA member DeKalb County, Georgia.  The settlement is an important victory for the municipality and NACWA and will help weaken the impact of the underlying federal claims court decision which found that the federal government was not responsible for the fees.

The settlement document memorializes the agreement between the parties in the case, including the payment of $150,000 by the U.S. Department of Justice (DOJ) to DeKalb County to settle the claim. The agreement also acknowledges DeKalb’s objection to the January 2013 U.S. Court of Federal Claims decision in the case, specifically the court’s finding that 1) the stormwater charges in question were taxes and not utility fees, and 2) that a 2011 CWA Amendment clarifying federal responsibility for stormwater fees does not apply to pre-2011 charges. DOJ ultimately did not appear confident defending these two issues on appeal, and accordingly offered to settle the case instead.

NACWA filed a brief  in support of the county before the claims court and was disappointed with the January ruling. The Association is, however, pleased with the settlement agreement and believes it represents a clear acknowledgment by the federal government of the necessity to pay the fees in question. NACWA also believes the settlement agreement can be used by other utilities to help minimize the impact of the claims court decision in the future.

No Ruling Yet In Water Quality Trading Case

NACWA continues to await a ruling in federal litigation challenging water quality trading programs in the Chesapeake Bay.  NACWA filed an Answer in Food and Water Watch, et al. v. EPA in April, the same day EPA filed a Motion to Dismiss.  EPA requested dismissal on procedural grounds, arguing the plaintiffs have failed to identify a sufficient legal injury or specific EPA action that warrants legal review.   The plaintiffs filed an opposition brief to the dismissal request in May.

While NACWA is supportive of EPA efforts to defend the case, the Association also believes a substantive ruling from the court affirming the legal validity of trading programs under the CWA is important to limit any future legal challenges – and provide legal certainty going forward for trading programs across the country.  Accordingly, NACWA has not joined in EPA’s procedurally-based dismissal request but has met with senior Agency officials and lawyers to discuss a coordinated response to the substantive issues raised by lawsuit that provides the greatest level of protection for trading approaches.  NACWA is confident that if the litigation is not dismissed on procedural grounds and ultimately reaches the merits, the Association and EPA will be able to work in a collaborative fashion to defend the legality of water quality trading programs under the CWA.  The recent decision to uphold the overall Chesapeake Bay TMDL (see related case update above) has some very positive language in support of water quality trading that could be helpful in this case if the litigation proceeds to the merits.    

Ninth Circuit Rules that LA County Flood Control District is Liable for Permit Violations

In January 2013, the U.S. Supreme Court released a ruling in Los Angeles County Flood Control District v. Natural Resources Defense Council, confirming that water flowing from one portion of a waterway through an artificial channel into another portion of the same waterway does not qualify as a “discharge” under the CWA.  The Supreme Court also remanded the case to the Ninth Circuit for consideration of the remaining issue of whether the Flood Control District's monitoring data can be used to establish liability for violations of the municipal separate storm sewer system (MS4) permit for its drainage system.

On August 8, 2013, the Ninth Circuit issued a unanimous ruling  that as a matter of law, the Los Angeles County Flood Control District is liable for violating its MS4 discharge permit when the monitoring data it collects shows permit violations. The ruling was based on the specific language in Defendants’ MS4 permit relating to discharge prohibitions and monitoring and reporting programs that required the Permittees to monitor their LA MS4 discharges, including via mass-emission monitoring stations.  The court held that “because the results of County Defendants’ pollution monitoring conclusively demonstrates that pollutant levels in the Los Angeles and San Gabriel Rivers are in excess of those allowed under the Permit, the County Defendants are liable for permit violations as a matter of law."  Given that the Ninth Circuit’s decision was based on the fact-specific provisions of the District’s MS4 permit, it is likely the ruling will have limited precedential value elsewhere.

ISSUES OF INTEREST

Federal Court Denies EPA’s Petition for Rehearing of Blending Decision

On July 10, the U.S. Court of Appeals for the Eighth Circuit denied  EPA’s May 9 request for rehearing of a significant decision on the use of peak wet weather flow blending, preserving an important legal victory for the clean water community. EPA sought rehearing  of a previous March 25 decision  invalidating key elements of the Agency’s improper efforts to regulate blending and raising significant concerns about the their ongoing attempts to limit wet weather treatment options.

EPA sought to have the decision reviewed by the full Eighth Circuit, arguing the original ruling was legally flawed and conflicted with decisions from other federal courts. As part of its rehearing request, EPA argued in unambiguous language that it may regulate internal waste streams within the treatment plant: “EPA may, consistent with the CWA, regulate bypass and prohibit the diversion of waste streams from secondary and other treatment units even if a POTW is discharging in compliance with end-of-pipe effluent limitations.”

Although the Eight Circuit provided no explanation in its order for its rehearing denial, it clearly rejected EPA’s position on efforts to regulate wet weather treatment options at the plant. There are no further options for appeal at the appellate level. EPA may file a petition for appeal with the US Supreme Court within 90 days of the Eighth Circuit’s denial of rehearing; however, given the small percentage of cases the Supreme Court accepts for review, it is unlikely the High Court would grant the petition. NACWA will closely monitor developments before the Supreme Court involving this case and is prepared to take legal action to help defend the ruling if appropriate.

NACWA Applauds Miami-Dade County Proposed Consent Decree

NACWA submitted a comment letter  on August 9 in support of a proposed municipal wet weather consent decree negotiated with federal and state officials by Association member Miami-Dade County. In the letter, NACWA encouraged approval of the proposal, as written, and opposed unwarranted changes suggested by environmental activist groups. The Association’s comments highlighted the complexity involved in negotiating wet weather decrees and reinforced the importance of federal courts deferring to the expertise of the parties that negotiate these agreements when reviewing proposed decrees.

The proposed Miami-Dade decree establishes a framework to maximize public health and environmental benefits, and achieve compliance with the CWA, without requiring unnecessary expenditures of limited local ratepayer dollars. A number of local environmental stakeholder groups have, however, intervened in the related judicial proceedings and argued that the proposed decree should be revised to deal more directly with climate change factors. NACWA’s comments acknowledge that potential climate change impacts can be important considerations for utilities in long-range planning, but also fully support the decision of EPA, DOJ, Florida state officials, and Miami-Dade County that such considerations are not required to ensure CWA compliance – and that the proposed decree is not the appropriate tool to address climate change.

NACWA is always willing to provide comments on proposed decrees or other enforcement orders for Association members when such action would be helpful and appropriate.

NACWA Releases New Financial Capability Paper

NACWA met with EPA water and enforcement office staff on July 30 to discuss the Association’s most recent financial capability paper, The Evolving Landscape for Financial Capability Assessment – Clean Water Act Negotiations and the Opportunities of Integrated Planning, and an upcoming EPA policy statement on financial capability. While EPA stood firm that it will not revise its 1997 financial capability guidance – or move away from its matrix calculations as a baseline for negotiations – the Agency acknowledged that there is a need for clearer direction on the extent to which utilities can supplement, or potentially deviate from, the guidance. The Agency is working on a Financial Capability Framework to further outline the flexibility it believes is available to utilities. The Framework is anticipated to provide additional information on, and justification for, what is affordable. It will also serve as a complement to the Agency’s Integrated Planning Framework. EPA expects to have a draft of the Financial Capability Framework in October and plans to share it with NACWA at that time. EPA will also be discussing the draft Financial Capability Framework with the U.S. Conference of Mayors at an October meeting and hopes to issue it in final form by the end of the year.

During the meeting, EPA indicated that the cash flow forecasting approach laid out in NACWA’s most recent paper will be included in the new Framework as one of the options available to utilities. The Framework is anticipated to rely on the 1997 guidance as the foundation for federal government negotiations; however, EPA acknowledged that many existing consent decrees are based on assessments like cash-flow forecasting, not the 1997 matrix. Examples of where this has been done successfully may be included in the Framework to highlight the flexibility EPA intends to provide. It is hoped that this new Framework will demonstrate that when communities have the knowledge and willingness to offer an alternative approach, they have been, and can continue to be, successful.

NACWA made the point that the flexibility EPA believes is already in its guidance is not really acknowledged ‘out in the trenches’ during real negotiations. The Agency is optimistic that this new Framework, which will be sent to Regional Administrators as a memo from the Office of Water and Office of Enforcement & Compliance Assurance, will help to improve negotiations. NACWA will alert the membership when it receives a copy of the new Financial Capability Framework.