Environmental Defense Center, Inc. v. United States Environmental Protection Agency
344 F.3d 832 (2003)
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Rule of Law:
The Clean Water Act requires that permits for stormwater discharges ensure pollutants are reduced to the "maximum extent practicable" and that permit applications are subject to public availability and public hearings. An agency’s regulatory scheme that delegates substantive pollution control determinations to regulated parties without meaningful review, and that withholds public participation rights for functionally equivalent permit applications, violates these express statutory mandates.
Facts:
- Stormwater runoff is a significant source of water pollution, carrying various contaminants like metals, sediments, and toxic materials into U.S. waters.
- The Clean Water Act prohibits the discharge of pollutants from a "point source" into U.S. waters without a permit under the National Pollutant Discharge Elimination System (NPDES).
- Storm sewers are classified as point sources and are subject to NPDES permitting requirements.
- In 1987, Congress enacted Clean Water Act § 402(p) to better regulate pollution from stormwater runoff, establishing a two-phase program.
- Section 402(p)(6) directed the EPA to establish a comprehensive program to regulate stormwater discharges not covered by the Phase I Rule "to protect water quality."
- In October 1999, the EPA promulgated the Phase II Rule, requiring NPDES permits for discharges from small municipal separate storm sewer systems (small MS4s) and stormwater discharges from construction activity disturbing between one and five acres (small construction sites).
Procedural Posture:
- In October 1999, the Environmental Protection Agency (EPA) promulgated a final administrative rule, known as the Phase II Rule, under Section 402(p) of the Clean Water Act, to control stormwater pollutants.
- The Phase II Rule was challenged in three separate actions filed by various petitioners and intervenors (including the Texas Cities Coalition on Stormwater, Environmental Defense Center, and American Forest & Paper Association) in the Fifth, Ninth, and D.C. Circuits.
- These three cases were ultimately consolidated before the United States Court of Appeals for the Ninth Circuit for review.
- An earlier opinion and dissent filed in this consolidated case on January 14, 2003, and published at 319 F.3d 398, were vacated by the panel, to be replaced by the current opinion and dissent.
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Issue:
Does the EPA's Clean Water Act Phase II Rule, which regulates stormwater discharges, violate statutory requirements by failing to ensure meaningful review of Notices of Intent (NOIs) for compliance with the "maximum extent practicable" standard and by denying public participation rights for NOIs, or does it exceed constitutional or statutory authority in other areas such as compelling municipal action or designating regulated sources?
Opinions:
Majority - James R. Browning
Yes, the EPA's Phase II Rule violates statutory requirements by failing to ensure meaningful review of Notices of Intent (NOIs) for compliance with the “maximum extent practicable” standard and by denying public participation rights for NOIs; and the EPA must reconsider the regulation of forest roads. However, the Rule does not exceed constitutional or statutory authority in other challenged areas. The Clean Water Act unambiguously requires permits to "require controls to reduce the discharge of pollutants to the maximum extent practicable." Under the Phase II Rule, a Notice of Intent (NOI) submitted by a small MS4 operator establishes an individualized pollution control program to meet this standard, making it a substantive component functionally equivalent to a permit application. However, the Rule does not require NPDES permitting authorities to review these NOIs to ensure they actually achieve the "maximum extent practicable" standard, effectively allowing impermissible self-regulation without oversight, contrary to Congress's clear intent. Furthermore, the Clean Water Act mandates that permit applications and issued permits be publicly available and subject to public hearings. As NOIs are functional equivalents of permit applications, they must be subject to these public participation requirements, which the current Rule's reliance on general public involvement, federal and state freedom of information acts does not adequately provide for. The court also found that the EPA arbitrarily failed to regulate stormwater runoff from forest roads under § 402(p)(6), remanding this issue for a merits-based consideration. Conversely, the court affirmed several other aspects of the Phase II Rule: (1) The EPA acted within its statutory authority under § 402(p)(6) to establish a permitting program, supported by the implication of the prior permitting moratorium in § 402(p)(1). (2) The Rule does not violate the Tenth Amendment by compelling states to regulate third parties because it provides an "Alternative Permit" option (§ 122.26(d)) that avoids the Minimum Measures and their associated requirements, ensuring that compliance is voluntary rather than coercive, consistent with New York v. United States and City of Abilene v. EPA. (3) The public education and illicit discharge Minimum Measures do not unconstitutionally compel speech under the First Amendment, as they are broad, non-ideological requirements for public safety information, distinguished from compelled ideological speech by Wooley v. Maynard and consistent with a broader regulatory program as in Glickman v. Wileman Bros. & Elliott. (4) The Alternative Permit option was a "logical outgrowth" of the proposed rule and public comments, thus meeting APA notice and comment procedures. (5) The EPA's decision not to designate "Group A" industrial facilities nationwide was not arbitrary or capricious, given the articulated rational connection between insufficient nationwide data and its decision to allow for local designation. (6) The EPA satisfied its statutory duty of consultation with state and local officials through extensive engagement. (7) The EPA appropriately based the Phase II Rule on all available information, not just the § 402(p)(5) studies, using public comments and additional research. (8) The designation of small MS4s based on Census Bureau "urbanized areas" was a reasoned decision supported by evidence of correlation between urbanization and water quality impacts. (9) The regulation of small construction sites (1-5 acres) was not arbitrary, supported by evidence and justified extrapolation from larger sites. (10) The EPA lawfully retained "residual" designation authority under § 402(p)(6) and the ongoing nature of § 402(p)(2)(E), which also does not violate the nondelegation doctrine as "to protect water quality" provides an intelligible principle (Whitman v. Am. Trucking Ass’ns). (11) The EPA's certification under the Regulatory Flexibility Act was reasonable, and any procedural noncompliance was harmless error.
Concurring-in-part-and-dissenting-in-part - Tallman
No, the EPA's general permit system supported by Notices of Intent (NOIs) is a permissible and reasonable exercise of EPA's administrative discretion, and the majority errs in remanding these aspects of the Phase II Rule. Judge Tallman agrees with most of the majority opinion but dissents from the remand of Section II.B concerning the general permit system. The Clean Water Act is silent or ambiguous regarding the use of a general permit system and whether NOIs should be considered "permits." Under Chevron deference, the EPA's interpretation should be upheld if it is a permissible construction of the statute. The use of general permits is a recognized means for agencies to manage large numbers of similar dischargers efficiently, as noted in NRDC v. Costle. The general permit itself sets the pollution limitations and controls, including the "maximum extent practicable" standard, and a discharger filing an NOI agrees to comply with these terms. Therefore, the EPA's decision not to individually review every NOI does not constitute a failure to ensure compliance with the Clean Water Act. The Act also does not provide a specific definition of "permit" or what triggers public hearing requirements for all stages of permitting, allowing EPA flexibility in designing the NOI process. The majority, by requiring individual review and public hearings for NOIs, imposes its own policy preferences rather than deferring to the agency's reasonable administrative design.
Analysis:
This case significantly refines the scope of EPA's regulatory authority and obligations under the Clean Water Act, particularly for large-scale, diffuse pollution sources like stormwater runoff. It reinforces that even when adopting streamlined permitting mechanisms like general permits, the EPA cannot delegate substantive pollution control determinations to regulated entities without ensuring meaningful agency review. The ruling emphasizes that core statutory goals, such as achieving the "maximum extent practicable" pollution reduction and ensuring robust public participation, are paramount and cannot be circumvented through procedural shortcuts. The decision serves as a critical precedent for future environmental regulations, requiring agencies to carefully balance administrative efficiency with the fundamental requirements of substantive oversight and public transparency, especially for mechanisms that function as permit applications.
