Costly Consequences: The Implications of the Ninth Circuit’s Interpretation of the Clean Water Act

By: Elizabeth Platt

Congress enacted the Clean Water Act (CWA) to restore and maintain the nation’s waters.[1] The National Pollutant Discharge Elimination System (NPDES) is the primary system for issuing permits and controlling point sources.[2] NPDES permits are issued one of two ways. Either, the EPA administrator may issue permits,[3] or EPA may authorize a state to issue its own permits.[4] Under the state program, EPA retains oversight and must approve of all permit applications, but the state assumes the responsibility for issuing the permit.[5] As of July 2015, forty-six states have been authorized to issue permits under a state program.[6] To efficiently resolve disputes under the CWA, Congress provided federal appellate courts with subject matter jurisdiction to review specific federal agency actions.[7] In 2014, EPA formally objected to two NPDES permits proposed by the state of California by issuing both a required changes and recommended changes list.[8] The objection letter included an ultimatum to the state that if the required changes were not met, EPA would take back permitting authority.[9] To avoid losing permitting authority, the state acquiesced.[10] The Southern California Alliance of Publicly Owned Treatment Works (SCAP) petitioned for review under the CWA in federal appellate court of EPA’s formal objections.[11] The Ninth Circuit Court held that it lacked subject matter jurisdiction and dismissed the petition.[12] The court reasoned that because EPA objected to two permits, the requirements were not equivalent to promulgating effluent limits for the industry,[13] nor were the objections a denial because the state ultimately revised and issued the permit.[14] Because the possibility of modification remained, the court held that it lacked jurisdiction under 33 U.S.C. § 1369(b)(1).[15] This analysis addresses the circuit split in approaches to reading 33 U.S.C. § 1369(b)(1) and the presumption of judicial review over agency action. By finding a lack of jurisdiction, the court created an inequality between permittees in states with primary permitting authority and those in states without. The decision not only denied meaningful review of agency action, but also established a redressability problem forcing the permittee into additional litigation. The impact of the decision caused uncertainty and increased costs for the entire industry passed onto ratepayers across the nation.

The majority of circuits restrict 33 U.S.C. § 1369(b)(1) to only grant subject matter jurisdiction when EPA has made the final decision to issue or deny a permit, not to formally object,[16] but the Third Circuit took a different approach.[17] In Crown Simpson Pulp Co. v. Costle,[18] the Supreme Court addressed the issue and held that EPA objections were the equivalent to a permit denial.[19] The Court reasoned that without a clear directive from Congress that a bifurcated review system was intended, the decision must avoid a duplicative review process.[20] However, since this decision, Congress amended the CWA with amendments in 1977 to allow for other administrative options after formal objections.[21]

The Eighth and Ninth Circuit agreed that the possibility of other administrative opportunities implied the objections were merely interim steps. The Eighth Circuit held in City of Ames, Iowa v. Reilly[22] that appealing EPA objections to a proposed permit was premature.[23] Although the action indicated disapproval, various administrative options remained.[24] Thus, the action was merely preliminary, not final.[25] Similarly, the Ninth Circuit in American Paper Institute, Inc. v. EPA[26] held that Congress did not intend for objections to proposed permits to be reviewable in federal appellate court.[27] While the Second Circuit has not reached the issue of jurisdiction over permit objections, it has otherwise embraced a strict interpretation of limiting jurisdiction arguing that the complexity and specificity of the section illustrates Congress’s intent to allow jurisdiction over only those actions listed.[28]

The Third Circuit, on the other hand, evaluated appellate jurisdiction over federal agency action with a presumption in favor of judicial review, specifically in Modine Manufacturing Corp. v. EPA.[29] The court explained that when a statute provides for “some appellate review of agency action, jurisdiction provisions should be construed generously unless there is clear and convincing evidence of contrary congressional intent.”[30] Other circuits have attempted to limit Modine to its facts,[31] but the Third Circuit has continued to embrace subject matter jurisdiction generously.[32]

In reaching a decision in SCAP, the court assumed a strict interpretation of jurisdiction and ignored the contents of EPA’s objection letter.[33] SCAP’s holding solidified an extended appeal process in primary authority states compared to states without permitting authority. Permittees in states with primary authority must appeal the state’s decision first even though EPA set the required provisions. However, where EPA retains permitting authority, the actions would be appealable.[34] Permittees should not be punished depending on their state’s decision to request primary authority in issuing permits.

Review of EPA objections must include a limit, though, because there are other options to modify or amend objections.[35] However, given the facts of SCAP, federal appellate review was necessary when EPA issued a required changes list threatening to take back permitting authority.[36] EPA’s decision was final and effectively denied the permit. Without such judicial examination, the permittee is denied a meaningful opportunity for review. Redressability becomes an issue because the court cannot properly address the situation if the decision-making party is not present. If the state court requires the board to alter the permit, EPA will then take back permitting authority and the review process will begin again at the federal appellate court level. Ratepayers are left bearing the burden of the increased litigation.[37] In the interim, the entire industry is left in a period of uncertainty, wondering if EPA will impose the same requirements on their permit renewal. Expensive adjustments to comply with permits require financial planning. Stalling until the new permits were denied and the new process went into effect would force permittees to “play Russian roulette with taxpayers’ money.”[38] By formally adopting a restrictive reading, the Ninth Circuit sustained the unequal application of the statute between states with primary authority and those without. Permittees and ratepayers are left to bear the burden of increased litigation and the uncertainty EPA promulgated through strong-armed objections.

 

 

[1] 33 U.S.C. § 1251(a) (1987).

[2] 33 U.S.C. § 1342(a) (2014).

[3] Id.

[4] 33 U.S.C. § 1342(b) (2014).

[5] Id.

[6] NPDES State Program Information, Envtl. Prot. Agency, https://www.epa.gov/npdes/npdes-state-program-information. (last visited July 16, 2017).

[7] 33 U.S.C. § 1369(b)(1)

[8] S. Cal All. Of Publicly Owned Treatment Works v. Envtl. Prot. Agency, 853 F.3d 1076, 1080 (9th Cir. 2017) (hereinafter SCAP).

[9] Id.

[10] Id.

[11] Id.

[12] Id. at 1087.

[13] Id. at 1083.

[14] Id. at 1085.

[15] Id.

[16] See City of Ames, Iowa v. Reilly, 986 F.2d 253, 256 (8th Cir. 1993) (deciding that appealing EPA’s objections was premature); Am. Paper Inst., 890 F.2d at 879 (inferring that Congress did not intend for EPA objections for be reviewable in federal appellate court); Bethlehem Steel Corp. v. EPA, 538 F.2d 513, 517 (2d Cir. 1976) (viewing the specificity and complexity of the statute to imply Congress only intended review of the specific actions listed).

[17] See Modine Mfg. Corp. v. EPA, 791 F.2d 267, 270 (3d Cir. 1986) (finding subject matter jurisdiction under 33 U.S.C. § 1369(b)(1) by following the Supreme Court’s presumption of judicial review over agency action.

[18] Crown Simpson Pulp Co. v. Costle, 445 U.S. 193 (1980) (hereinafter Crown Simpson II)

[19] Id. at 196.

[20] Id. (arguing that by not finding federal appellate jurisdiction, the parties would be forced into a bifurcated review process between the district and appellate court even though an adequate record of the objections and EPA’s reasoning already existed).

[21] S. Cal All. Of Publicly Owned Treatment Works v. Envtl. Prot. Agency, 853 F.3d 1076, 1085 (9th Cir. 2017).

[22] City of Ames, Iowa v. Reilly, 986 F.2d 253 (8th Cir. 1993).

[23] Id. at 256.

[24] Id.

[25] Id.

[26] Am. Paper Inst., Inc. v. Envtl. Prot. Agency, 890 F.2d 869 (7th Cir. 1989).

[27] Id. at 879.

[28] See Bethlehem Steel Corp. v. Envtl. Prot. Agency, 538 F.2d 513, 517 (2d Cir. 1976); see also Central Hudson Gas & Elec. Corp. v. Envtl.. Prot. Agency, 587 F.2d 549, 556 (2d Cir. 1987) (holding that because only six actions were listed, Congress did not intend for all EPA actions to be covered); Mianus River Preservation Committee v. EPA, 541 F.2d 899, 902 (2d Cir. 1976) (finding lack of jurisdiction unless there was action by the administrator, not when the state adopted modifications).

[29] Modine Mfg. Corp. v. Envtl. Prot. Agency, 791 F.2d 267, 270 (3d Cir. 1986).

[30] Id. at 270 (relying on Abbott Labs. v. Gardener, 387 U.S. 136, 140 (1967) in which the Supreme Court preferred a presumption of judicial review).

[31] See Narragansett Elec. Co. v. Envtl. Prot. Agency, 407 F.3d 1 (1st Cir. 2005) (distinguishing EPA action of pollutant listing from an effluent limit); South Holland Metal Finishing Co. v. Browner, 97 F.3d 932 (7th Cir. 1996) (holding that an interpretive ruling by EPA was not sufficiently similar to the facts of Modine Manufacturing Corp).

[32] See Vineland Chem. Co. v. Envtl. Prot. Agency, 810 F.2d 402, 405 (3d Cir. 1987) (relying on Modine Manufacturing Corp. and Crown Simpson II and refusing to limit jurisdiction with a literal reading a statute).

[33] See S. Cal All. Of Publicly Owned Treatment Works v. Envtl. Prot. Agency, 853 F.3d 1076, 1087 (9th Cir. 2017).

[34] Id. at 905.

[35] See City of Ames, 986 F.2d at 256 (discussing EPA’s option to modify, affirm, or withdraw objections).

[36] See 853 F.3d at 1080.

[37] See Rapanos v. United States, 547 U.S. 715, 721 (2006) (estimating a Dredge and Fill permittee spends 788 days and $271,596 on the permitting process, not including the cost of mitigation and design changes).

[38] Iowa League of Cities v. Envtl. Prot. Agency, 711 F.3d 844, 865 (8th Cir. 2013).