EPA’s water transfer exemption remains in force

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Issue at stake: How will the U.S. Supreme Court’s decision affect the contested question of whether a Clean Water Act permit is needed to transfer polluted water from one water body to another?

On Nov. 29, 2010, the Supreme Court declined to review Friends of the Everglades v. South Florida Water Management District. The U.S. Court of Appeals for the 11th Circuit had decided in June 2009 that the Water District’s transfer of polluted water to Lake Okeechobee did not require a Clean Water Act permit. In its decision, the Circuit Court deferred to a recent Environmental Protection Agency regulation exempting “water transfers” from permitting requirements. We believe the 11th Circuit got it wrong and that the Supreme Court’s decision not to intervene preserves opportunities for others to get it right—most importantly, for the EPA to repeal this rule that seriously undermines the Clean Water Act.

In 2002, several conservation groups filed suit against the South Florida Water Management District. The groups claimed the Water District needed a Clean Water Act permit to pump polluted water into Lake Okeechobee from contaminated runoff collection canals. The trial court agreed. Then, the Bush EPA issued a rule declaring that no Clean Water Act permit is required for discharges caused by transferring water from one water body to another as long as there aren’t certain intervening uses and the transfer itself doesn’t add pollutants.

On appeal, the Circuit Court looked favorably at the EPA’s new rule and reversed the trial court. The Clean Water Act generally requires permits for adding pollutants to navigable waters (or “waters of the United States”) from things like pipes, tunnels, and piles. Applying a deferential legal standard from the 1984 Supreme Court case Chevron v. NRDC, the Court decided the Clean Water Act was ambiguous and that the EPA’s rule was an acceptable interpretation. “To navigable waters” could reasonably mean “to all navigable waters as a singular whole” (the oft-rejected unitary waters theory) or to “each individual water body.” The Court opined that the nation’s waters were like two buckets, and that if you dropped marbles from one bucket into the other, you had not added any marbles to buckets. Thus, it made sense for the EPA to say that if you transfer pollutants from one water body to another, you have not added any pollutants to waters, and you don’t need a Clean Water Act permit.

The Circuit Court’s decision was strained and it reached to find ambiguity where there was none. Under Chevron, the Court’s first task was to try to determine Congressional intent. (This is typically done by using traditional tools of statutory interpretation. What is the plain or ordinary meaning of the text? The purpose and broader context of the statute? A reading that avoids absurdity?) If the intent is unambiguous, that is the end of the matter. The Court should have followed prior decisions and other authorities pointing toward Congressional intent and away from ambiguity.

For example, the Supreme Court had already remanded another Everglades case (Miccosukee) to determine whether two water bodies were “meaningfully distinct” – or “two pots of soup, not one.” The logical inference being: If two pots of soup, permit needed; if one pot of soup, permit not needed. (The Court did not reject the unitary waters theory, but it did identify several problems with it.)

The Second Circuit Court of Appeals had already twice decided (in the 2001 and 2006 Catskill cases) that the plain and ordinary meaning of the Clean Water Act’s text was clear and that it would indeed be an “absurd result” if the transfer of heavily polluted water from one water body to another, pristine one would not be subject to a Clean Water Act permit. Using the soup analogy, these cases held that New York City must get a permit to transfer sediment-laden water from one pot of soup (a turbid reservoir) to another (a clear trout stream).

The 11th Circuit should have considered the EPA’s own regulations defining “waters of the United States,” which fully contemplate water bodies as separate. The Court should have looked more closely at the Clean Water Act permitting scheme, which often requires water-body specific limits based on water-body specific standards. The Court should have given more weight to the importance of the statute’s purpose—“to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.”

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If, after all that, the 11th Circuit still found ambiguity and was inclined to uphold the EPA’s interpretation as reasonable, it should have sufficiently discussed the interpretation. Unlike the Court, the EPA in its final rule did not rely heavily on the unitary waters theory or a discussion of what “to navigable waters” means. Instead, it focused on policy concerns that states not be unnecessarily burdened in water management activities. Those concerns find only limited support in the Clean Water Act, and the Supreme Court has already identified their weaknesses (Miccosukee, PUD No. 1). In any case, the water transfers rule is “manifestly contrary” to the Clean Water Act and therefore should never have been considered reasonable under Chevron.

Significance: The Supreme Court’s decision not to review Friends of the Everglades v. South Florida Water Management District puts the ball in someone else’s court to resolve the “water transfers” problem. The EPA now has space to repeal the rule. The actual lawsuit challenging the rule—currently pending in both the 11th Circuit and a federal district court in the Second Circuit—can go forward. In the meantime, the federal appeals courts are basically split on the issue.

If the rule stands, the estimated thousands of water transfers occurring in the United States can continue without protective Clean Water Act permit limits. The Sierra Club, which supported the conservation groups before the Supreme Court, provided several on-the-ground examples of consequences. And in Colorado, the town of Grand Lake and others reported that the lake is being polluted by nutrient-laden water pumped from a nearby reservoir as part of the largest trans-basin water diversion in the country. An important tourism source, the lake is now polluted to the point where its clarity is one third of what it once was, and a health advisory was issued in 2007 because levels of microcyst toxin exceeded safe guidelines.

If the rule dies, what won’t happen is a breakdown of states’ water management systems—contrary to the doomsday ills predicted by several parties who supported the Water Management District before the Supreme Court, including several western states. Despite vehement protests, New York City continues to transfer water under a Clean Water Act permit and New Yorkers still have water to drink. Pennsylvania has required permits for water transfers since 1986. And, at some point, we need to accept the wisdom of the policy choices that Congress made when it wrote the Clean Water Act.

Next steps: Cross our fingers that the EPA repeals the rule as it should have done at the beginning of the Obama administration. We should also keep an eye on the rule challenge and hope that the Second Circuit—not the 11th—hears the case, sticks to its prior reasoning and strikes down the rule. Unfortunately, we won’t be able to depend on this Congress to amend the Clean Water Act to resolve any alleged ambiguity about what “addition . . . to navigable waters” means.