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Water Blog

  • 25
  • January
  • 2017

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Second Circuit Defers to EPA on Water Transfers Rule

On January 18, 2017, the U.S. Court of Appeals for the 2nd Circuit applied the Chevron doctrine of judicial deference to agency interpretations to find that EPA’s Water Transfers Rule exempting the transfer of water from one basin to another from discharge permits is a reasonable interpretation of the law and should be upheld. This decision reversed a March 2014 district court decision which would have required thousands of water transfer projects to obtain NPDES permits—a result that was particularly unpopular with many western states who believed the delays associated with the permitting process would hinder efforts to meet their water needs during droughts.

The case centers on EPA’s promulgation of the Water Transfers Rule in 2008, which formalized the Agency’s longstanding position that water transfers are not subject to regulation under the National Pollutant Discharge Elimination System (“NPDES”) permitting program. EPA defines a “water transfer” as “an activity that conveys or connects waters of the United States without subjecting transferred water to intervening industrial, municipal, or commercial use.” 40 C.F.R. § 122.3(i). The Agency has relied on a “unitary-waters” reading of the Clean Water Act to find that the transfer of water from one navigable waterbody to another does not constitute an “addition” of pollutants that would require an NPDES permit. On appeal, EPA argued that this interpretation of the rule deserves deference under the Chevron doctrine, and the 2nd Circuit ultimately agreed, finding that the rule “is precisely the kind of policymaking decision that Chevron is designed to protect from overly-intrusive judicial review.”

The 2nd Circuit concluded, as did the district court, that the Clean Water Act does not clearly address whether NPDES permits are required for water transfers. Unlike the district court, the 2nd Circuit went on to find that EPA’s Water Transfers Rule “satisfies Chevronʹs deferential standard of review because it is supported by a reasoned explanation that sets forth a reasonable interpretation of the Act.” The majority recognized that while the Rule may or may not be the best or most faithful interpretation of the Act, it is supported by valid arguments and is entitled to judicial deference. 

The court additionally found that the permissibility of the Rule was “reinforced by longstanding practice and acquiescence by Congress, recent case law, practical concerns regarding compliance costs, and the existence of alternative means for regulating pollution resulting from water transfers.” The majority considered the fact that “compliance with an NPDES permitting scheme for water transfers is likely to be burdensome and costly for permittees, and may disrupt existing water transfer systems,” and outlined other regulatory alternatives available to the states to address any potentially negative water quality impacts of water transfers. The majority concluded by stating that “in light of the potentially serious and disruptive practical consequences of requiring NPDES permits for water transfers, the EPAʹs interpretation” involves the kind of difficult policy choices that the Agency is better equipped to make than the court.

The case was decided on a 2-1 vote, with Judge Chin dissenting based on his view that the Act is “unambiguous and clearly expresses Congressʹs intent to prohibit the transfer of polluted water from one water body to another distinct water body without a permit.” Judge Chin also found that prior decisions of the 2nd Circuit and the Supreme Court make clear that the unitary waters theory is “inconsistent with the plain and ordinary meaning of the text of the Act and its purpose.” Finally, Judge Chin found that EPA’s Water Transfers Rule was not entitled to judicial deference because it was “manifestly at odds with Congress’s intent” in passing the Clean Water Act and because reliance on the “unitary waters” theory would lead to absurd results.

Government agencies and private water management entities are most likely breathing a sigh of relief at the outcome of this case. Environmental groups opposing the rule, however, may file a petition for certiorari to the Supreme Court. It is unclear whether the Court would agree to take on that appeal, but for the time being, the Water Transfers Rule will remain in effect.

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Author

Rachel D. Comeskey

Rachel D. Comeskey Associate