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» Update Archive
| To: |
Members & Affiliates, Legal Affairs Committee |
| From: |
National Office |
| Date: |
June 29, 2016 |
The National Association of Clean Water Agencies (NACWA) is pleased to present the Spring/Summer 2016 Legal Update, which summarizes current legal initiatives and developments since February 2016.
Additional information on cases can be found on the Association’s Litigation Tracking web page. The Litigation Tracking Spreadsheet  provides a condensed overview of all active NACWA litigation.
Any questions regarding this Update or the Association’s legal advocacy efforts can be directed to
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, NACWA’s General Counsel & Director of Public Affairs (202/530-2758), or
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, Deputy General Counsel (202/533-1813).
Legal Advocacy Insights from the General Counsel
NACWA has been tracking two recent citizen enforcement lawsuits that potentially reflect an emerging litigation strategy being advanced by environmental activist groups to threaten our members’ ability to rely on National Pollutant Discharge Elimination System (NPDES) permit compliance as a shield against citizen suit enforcement. NACWA joined a coalition to file a recent amicus brief in Ohio Valley Environmental Coalition v. Fola Coal Company before a federal appeals court (see article below), and we are closely monitoring the other case, NRDC v. Metropolitan Water Reclamation District of Greater Chicago (MWRD), pending in federal district court in Illinois (see article below).
At issue is the protection afforded by CWA Section 402(k), which establishes that compliance with a NPDES permit is compliance with the CWA and provides a shield from citizen suits (the permit shield). The citizen suits are based on language in NPDES permits that incorporate state code provisions reiterating the requirement that permits include limits to comply with water quality standards. Essentially, the environmental groups and the courts are using these boilerplates permit conditions on water quality standards to impose new limits that permittees had no notice of until they are alleged to be in violation of them.
Unless overturned on appeal, the federal court decisions in these cases could be used by environmental groups to upend the NPDES permitting process, obtain civil penalties, and impose surprise, new effluent limits on unsuspecting permittees.
Clean water agencies must be able to rely on compliance with their permits in order to effectively and sustainably operate now and in the future. Due to the importance of the permit shield to NACWA’s members, the Association has developed a strategy to combat this trend.
First, NACWA is raising awareness with members about what to look for in draft permits and offer suggestions on how to work with their permitting authority to strike the problematic language. On June 15, NACWA hosted nearly 140 participants for a Hot Topics in Clean Water Law webinar with Richard S. Davis, Beveridge & Diamond, and Karen C. Bennett, Hunton & Williams, leading the discussion on the permit shield litigation and efforts to overturn the negative lower court precedent. At the conclusion of the webinar, numerous topics and questions had yet to be addressed. Accordingly, we will continue the conversation at the next Legal Affairs Committee meeting on July 11 from 3:00-4:00 pm during NACWA’s Utility Leadership Conference & 46th Annual Meeting.
NACWA is also working with the Association of Clean Water Administrators to determine which states are incorporating such provisions into permits, why they are doing so, and if they are willing to change this practice to something that preserves regulators’ enforcement discretion but limits the risk of collateral attack.
In order to assess risk, we need to determine how pervasive this practice is. Please respond to the Engage Open Forum message posted by our Legal Affairs Committee Chair, Hilary Meltzer, or reach out to me directly -
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(202/530-2758) – to share information.
UPCOMING EVENTS
Legal Affairs Committee Meeting
The NACWA Legal Affairs Committee will meet on July 11 from 3:00-4:00 pm during NACWA’s Utility Leadership Conference & 46th Annual Meeting, Leadership Strategies for the Smart Utility, which will be held July 10-13, 2016, at the Grand Hyatt Denver Hotel in Denver, Colorado.
NACWA has changed the format of committee meetings to more effectively facilitate dialogue among committee members on legal issues of significance to the clean water sector. The committee will focus discussion on the permit shield litigation described above. More details on the committee meeting will be available soon including discussion questions that attendees should consider in advance of the meeting.
National Clean Water Law Seminar & Consent Decree Workshop Dates
The 2016 National Clean Water Law Seminar & Consent Decree Workshop will take place November 1 – November 4 in Kansas City, Missouri. Mark your calendars now! NACWA welcomes
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on topics and speakers.
CURRENT CASES
Blending
Briefs Filed in Blending Litigation
On March 21, 2016, the petitioner in Center for Regulatory Reasonableness v. EPA submitted a brief  responding to EPA’s February 3, 2016 filing . The case, pending in the D.C. Circuit Court of Appeals, challenges EPA’s decision not to apply the Eighth Circuit’s 2013 ruling in Iowa League of Cities v. EPA dealing with blending nationwide. The reply brief focuses on the regulatory uncertainty and potentially high cost of compliance created by the Agency’s statements that it would apply the Iowa League decision within the Eighth Circuit but consider it on a “case by case basis” elsewhere, arguing that the CWA requires permitting regulations to apply uniformly nationwide.
NACWA filed an amicus brief in this case, providing a critical national utility perspective on the important issue of blending and why the Iowa League decision should be applied nationally. All required briefs have now been submitted to the court, but the case has yet to be scheduled for oral argument.
NPDES Permit Issues
Association Participates in Key CWA Liability Litigation
On March 28, NACWA joined a coalition amicus brief before the U.S. Court of Appeals for the Ninth Circuit in a legal case that could have a substantial impact on clean water utility liability under the CWA. The appeal in Hawaii Wildlife Fund v. County of Maui involves a federal district court decision holding that a release of pollutants into groundwater, which is neither a Water of the United States nor a point source itself, that migrates to hydrologically-connected navigable waters violates the CWA.
If upheld by the Ninth Circuit, the district court’s decision and its novel “conduit” theory will effectively rewrite the CWA by eliminating the distinction between point source discharges that require an NPDES permit and nonpoint source discharges that do not require a permit. The decision could subject clean water utilities to nebulous regulatory requirements and a new universe of citizen suits, which will likely have a negligible effect on water quality. For further details on potential impacts, see NACWA’s Litigation Tracking.
On May 31, the Department of Justice (DOJ) filed an amicus brief in support of the plaintiffs’ answering brief in the litigation. In its brief, DOJ argues that the district court’s decision is consistent both with the “text and purpose” of the CWA and with “EPA’s long-held position governing when the CWA requires permits for discharges of pollutants that move to jurisdictional surface waters through groundwater with a direct hydrological connection.” For more details on DOJ’s position, see the June 6 Edition of the Clean Water Current.
A decision in the case is not expected until late 2016 at the earliest, and NACWA will report on any developments.
NACWA Seeks to Defend Permit Shield
NACWA filed an amicus curiae brief April 20 with the U.S. Court of Appeals for the Fourth Circuit in an appeal of a federal district court ruling that, if upheld, could create significant legal vulnerabilities for Member Agencies and other holders of NPDES permits. Among other things, NACWA’s brief argues that the lower court decision significantly damages the CWA permit shield defense, upends the NPDES permitting process in a way that creates a backdoor to collaterally attack final permit decisions, and deprives NPDES permittees of fair notice and raises serious Due Process concerns.
The litigation, Ohio Valley Environmental Coalition v. Fola Coal Company, involves a ruling from the U.S. District Court for the Southern District of West Virginia that a provision prohibiting discharges from causing or materially contributing to violations of water quality standards, incorporated into an NPDES permit by reference, created an independently enforceable effluent limitation. The court then created its own numeric effluent limitation for the permit from narrative criteria, and further found that compliance with this effluent limitation is a prerequisite for protection under the CWA §402(k) permit shield.
NACWA members count on NPDES permits to provide clear and certain notice of their compliance obligations and a shield against liability so long as they remain in compliance. Accordingly, the Association is participating in this case to help preserve the permit shield as a strong defense for NPDES permit holders to enforcement actions. NACWA’s participation is part of a broad coalition of diverse groups, including industrial and agricultural point source dischargers, who share a common interest in defending the permit shield defense.
A similar case, NRDC v. Metropolitan Water Reclamation District of Greater Chicago (MWRD), is pending in federal district court in Illinois. There, environmental activist groups are alleging permit violations based on a narrative WQS that is incorporated by reference into MWRD’s NPDES permit and prohibits discharges from causing excessive algal growth and/or nonattainment of water quality standards. In March, the judge denied cross motions for summary judgment, holding that the provision in the permit incorporates the WQS as substantive terms of the permit and that compliance with the WQS is required in order for the permit shield to apply.
NACWA is closely monitoring this litigation and will report any developments.
TMDLs
DC Water Litigation Challenges TMDL Issues
In November 2015, DC Water filed a challenge in federal district court to a 2014 revised Total Maximum Daily Load (TMDL) for the Potomac River.
This litigation addresses a critical TMDL/permitting issue of significance to NACWA members; specifically, whether strict, daily limits expressed in a TMDL must be included in all subsequently issued and renewed permits. The case also addresses the issue of when a challenge to a TMDL is ripe for judicial review.
DC Water’s challenge focuses on daily loading for E. coli in the wasteload allocation (WLA) assigned to its Blue Plains treatment plant under the new TMDL and seeks to ensure that the limit will not be expressed as a daily maximum effluent limit in its upcoming permit renewal.
A decision upholding the States’ and EPA’s flexibility not to include daily TMDL-based load limits in NPDES permits, in favor of limits expressed with longer durations (weekly, monthly, seasonal, annual), is of immense importance to NACWA’s members. NACWA has participated in similar cases before to ensure that permitting authorities retain discretion in how daily TMDL limits are expressed in NPDES permits. Imposition of more stringent NPDES limits based on daily TMDL WLAs has the potential to impact compliance, capital projects, operations and costs.
Given the importance of this case, NACWA will join the Wet Weather Partnership in filing an amicus curiae brief in the case in July supporting DC Water’s position.
US Supreme Court Rejects Petition for Review in Chesapeake Bay TMDL Case
On February 29, the U.S. Supreme Court announced that it would not review the lower court’s decision in American Farm Bureau v. EPA. The Court’s rejection of the appeal essentially affirms the unanimous 2015 ruling by the U.S. Court of Appeals for the Third Circuit, upholding EPA’s final TMDL for the Chesapeake Bay and its holistic watershed approach requiring pollution reduction from all sources of impairment, including nonpoint sources. This decision marks a significant win for NACWA, its members, and its municipal partners by supporting EPA’s ability to pursue a watershed approach under the CWA – including a meaningful allocation assigned to nonpoint agricultural sources – in crafting TMDLs to achieve improved water quality.
The case was initiated by a group of agricultural and development interests, seeking to limit EPA’s ability to include nonpoint sources under the CWA TMDL program. NACWA intervened and filed a brief in the Third Circuit appeal in April 2014, arguing that the watershed approach embodied in the Bay TMDL is both lawful and necessary to restore water quality, and explaining that despite the significant efforts of NACWA’s utility members to advance the goals of the TMDL, true success cannot be achieved without the meaningful participation of nonpoint sources.
Water Quality Criteria/Standards
Brief Filed in Mississippi River Nutrients Litigation
On April 15, NACWA filed a reply brief in the remanded Gulf Restoration Network, et al. v. EPA litigation. The brief included NACWA and a larger coalition of industrial and agricultural organizations opposed to federally-mandated numeric nutrient criteria (NNC) for the Mississippi River Basin. It supports EPA’s position that the Agency provided a reasonable explanation, grounded in the CWA, for declining a request to make a necessity determination for federal NNC. NACWA and its partners previously filed a more substantive brief in the remand proceedings in January 2016.
The case involves EPA’s response to a petition from activist organizations requesting that the Agency develop federal NNC for the Mississippi River Basin and northern Gulf of Mexico. In 2012, after EPA declined to make a necessity determination on the need for NNC, the activist groups sued EPA. NACWA successfully intervened in the case in 2012 to protect the interests of its Member Agencies and argued against the development of numeric nutrient criteria. Briefing in the case is now complete and a decision from the court could come at any time. We will keep members updated on developments. Visit the Association’s Litigation Tracking page and the January 22 Clean Water Current, Advocacy Alert 15-05, and Advocacy Alert 13-15 for additional information.
OTHER KEY CASES
Sixth Circuit Denies Rehearing on Venue in Clean Water Rule Litigation
The U.S. Court of Appeals for the Sixth Circuit denied petitions seeking an en banc rehearing on the appropriate venue for challenges to EPA’s final Clean Water Rule. The court, in its brief April 21 order , denied the request for rehearing before the full court because “the issues raised in the petitions were fully considered upon the original submission” and after the petitions were circulated to the full court, no judge requested a vote for rehearing en banc. In February, in a 2 to 1 decision , the Sixth Circuit accepted jurisdiction over several consolidated challenges of the Clean Water Rule. See the February 29 Clean Water Current for more details.
ISSUES OF INTEREST
NACWA Comments on Proposed Changes to Tax Exempt Bonds
On May 23, NACWA submitted comments along with a coalition representing the municipal water and wastewater sector on a proposed rule that would change the way the Internal Revenue Service (IRS) defines “political subdivision” for purposes of tax-exempt bond issuance. The rule, which could have troubling implications for NACWA member utilities, imposes two new requirements: first, that political subdivisions operate in a way that provides “no more than incidental benefit to private persons,” and, second, that a single entity of state or local government must have control over the political subdivision.
NACWA’s comments focused on the impact the proposed regulations could have on utilities’ access to tax-exempt bonds and urged Treasury and the IRS to revise the proposed language. NACWA also plans to appear at the public hearing at the IRS offices on June 6, and to meet with Treasury and the IRS to discuss the need to revise the proposed regulations to avoid unintended restrictions on the public water sector’s use of tax-exempt bonds.
Any NACWA members with questions or comments on the proposed regulation should contact
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New Report Released on California Citizen Suit Enforcement
The Wheeler Institute for Water Law & Policy at the UC Berkeley School of Law recently released a report titled Citizen Enforcement and Sanitary Sewer Overflows in California. NACWA and several wastewater agencies and associations provided funding for this report but – to ensure an independent drafting process – did not have editorial control over the questions asked, Wheeler’s analysis or conclusions, or the writing of the report.
The report highlights that three organizations were the primary or sole plaintiff in 77 out of 90 (86%) of actions in California. It also notes that public clean water agencies have paid nearly $12 million in opponents’ attorneys’ fees over the last decade or so, plus their own legal defense fees which can be comparable amounts or considerably higher.
The report includes the acknowledgement that in many cases citizen suits may not be an efficient or productive method of improving water quality; for example, where an agency is already doing everything feasible to address the problem, citizen enforcement would be unlikely to provide significant net water quality benefit. There is also an acknowledgment that there was no way to directly quantify either the water quality impacts of citizen enforcement or the full costs of carrying out and responding to citizen enforcement efforts.
While the report contains an interesting and unique look at the problem of CWA citizen suits, it represents a quantitative approach to what remains a complex and qualitative problem. Nonetheless, it could provide a basis for future discussion and dialogue on the issue.
NACWA Meets with EPA Staff to Discuss Stormwater Phase II Rule
NACWA met with EPA staff on May 3 to discuss comments the Agency received on proposed changes to the municipal separate storm sewer system (MS4) Phase II rule. NACWA reinforced the Association’s comments on the proposal and the importance of maintaining flexibility for municipal permittees under the Phase II program.
EPA officials reiterated that the proposal is only intended to make procedural changes to the Phase II program, and they indicated that the Agency would make changes in the final rule to address issues raised by NACWA’s comments and clarify that there is no intent to mandate numeric limits. EPA also noted that the majority of the 74 public comments on the rule were supportive of the flexibility afforded by the Option 3 approach, which NACWA also endorsed in its comments.
A final rule is due to be issued by November 2016. Please contact
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with any questions or comments on the Phase II rule and how it may impact NACWA members.
Minnesota Court of Appeals Upholds WQBEL Based on Voluntary Reductions
In a June 13 opinion , the Minnesota Court of Appeals in Minnesota Center for Environmental Advocacy v. Minnesota Pollution Control Agency upheld an NPDES permit in which the state regulatory agency had considered future, voluntary pollution reductions from nonpoint sources in establishing water quality based effluent limits (WQBELs) in permits for municipal dischargers. The challenge arose out of five permits, issued to NACWA member utility Metropolitan Council Environmental Services, that included phosphorous limits calculated based on assumed voluntary control of phosphorous discharges from nonpoint sources.
The court reasoned that while regulators must consider existing controls on point and nonpoint sources in deciding whether a WQBEL is necessary, it is not limited to considering only those existing controls in setting the WQBEL. The court went on to hold that the use of the future, voluntary nonpoint source controls in establishing the phosphorous limit was reasonable given the evidence suggesting that the controls would provide significant cost savings to nonpoint sources and would therefore likely be implemented.
NACWA Comments Highlight Concerns with Draft EPA/USGS Report on Flow Alteration
NACWA filed comments June 17 on a draft document developed by EPA and the U.S. Geological Survey, Technical Report: Protecting Aquatic Life from Effect of Hydrologic Alteration, raising concerns over the extensive policy and legal discussions throughout the draft.
NACWA’s comments underscored the important role that flow-related impacts can have on aquatic life – the focus of the draft report – but also noted that the CWA is geared toward protecting all designated uses and does not prioritize aquatic life uses above all else. NACWA noted that the draft “does not strike an adequate balance among the various uses of the nation’s waters – beyond the protection of aquatic life – and fails to recognize that returning waters to their natural flow regimes in many places will not be possible given the extent of development and existing alteration.”
However, it was the inclusion of extensive policy/legal discussions in what is described as a “technical document” that raised the most concern. NACWA’s comments stressed that EPA and USGS must either “work to separate and remove the policy discussions from the document before it is finalized, or initiate a more substantive review process on a revised version of the report acknowledging that it contains both extensive policy and technical information.”
NACWA to Comment on EPA Environmental Justice Plan
EPA released a final draft of its Environmental Justice (EJ) 2020 Action Agenda on May 23, laying out the Agency’s plans over the next five years to incorporate EJ concerns into its actions and rulemakings. The Agenda is intended to integrate environmental justice into EPA’s initiatives and cultivate partnerships at the state and local levels to ensure better environmental outcomes and reduce disparities in overburdened communities. EPA is accepting comment on the document until July 7.
NACWA submitted comments on a prior version of the Agenda last year, encouraging the Agency to include affordability as part of its EJ program. NACWA has since formed an EJ Workgroup and engaged with EPA on areas for collaboration and dialogue around EJ and clean water issues. NACWA will be working through the Association’s EJ Workgroup to develop comments on the 2020 Action Agenda and will be spearheading a project to develop a compendium of EJ and community service practices at municipal clean water agencies. This document will both provide a resource for utilities looking to develop EJ initiatives and highlight the good work that NACWA members are already doing to address EJ concerns in their communities.
Any NACWA members with thoughts or comments on the Action Agenda for inclusion in NACWA’s comment letter should contact
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.
NACWA LEGAL TOOLS
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