AMSA Legal Alert (Leg 03-7)

On August 29, the U.S. District Court for the Southern District of West Virginia issued its decision in the case in which AMSA, the West Virginia Municipal Water Quality Association, and the West Virginia Municipal League fought to defend West Virginia’s implementation of the federal antidegradation regulation under the Clean Water Act (CWA), as well as specific antidegradation exemptions for POTWs. Ohio Valley Environmental Coalition v. Horinko, Civ. No. 3:02-0059 (S.D. WV) (Ohio Valley). This Legal Alert provides details on the court’s opinion, which is posted on AMSA's Litigation Tracker at http://www.amsa-cleanwater.org/private/littrack/.

In Ohio Valley, citizen groups challenged the U.S. Environmental Protection Agency's (EPA’s) approval of West Virginia’s antidegradation procedures. Ohio Valley is a test case for antidegradation procedures nationwide, as West Virginia developed its regulations by extensively studying other states’ approaches and structuring its provisions in similar ways. The court’s ruling directly impacts West Virginia’s antidegradation program by vacating EPA’s approval of the state’s procedures. The decision also has significant implications for other EPA Region 3 states, and for states outside Region 3 but within the Fourth Judicial Circuit, such as South Carolina. This case of first impression also is likely to be cited by federal courts in any future antidegradation suits.

The most significant issue for POTWs nationwide is the Ohio Valley court’s upholding of EPA’s authority to establish de minimis exemptions from Tier 2 antidegradation (socio-economic) review for new and expanding sources. The court also upheld antidegradation exemptions where adverse water quality impacts are minimized via water quality trading. AMSA has been a vocal supporter of trading approaches. Most of the provisions rejected by the court can be corrected relatively easily on remand by expanding the administrative record to clearly support West Virginia’s policy decisions.

AMSA, our municipal coalition partners, and other parties to the case are evaluating a variety of next steps to respond to the decision. We will keep the membership apprised of further developments. As always, please contact AMSA General Counsel Alexandra Dunn at 202/533-1803 or adunn@amsa-cleanwater.org with any questions on this case or AMSA’s other legal activities.

I. Background
Under the CWA and EPA’s implementing regulations, state water quality standards (WQS) must include an antidegradation policy to assure that the WQS maintain existing beneficial uses of navigable waters and to prevent further degradation (CWA § 303(d)(4)(B); 40 C.F.R. § 131.6(d)). EPA requires each state to “develop and adopt a statewide antidegradation policy and identify methods for implementing such policy” (40 C.F.R. § 131.12(a)). State antidegradation procedures must ensure that:

1. Water quality is maintained in all waters to support existing uses (Tier 1). “Existing uses” are those actually attained in the waterbody on or after November 28, 1975, whether or not they are included in the state WQS (40 C.F.R. § 131.3(e));
    
2. Water quality is maintained in high quality waters (Tier 2). High quality waters are those where the water quality is better than the minimum necessary to support the CWA’s fishable/swimmable goals. Water quality downgrades in Tier 2 waters are allowed only when necessary to accommodate important economic or social development in the areas where the waters are located, and after public comment. Even with a reduction in water quality, such waters can not fall below the fishable/swimmable baseline; and that
    
3. Water quality is maintained in outstanding natural resource waters (ONRWs) (Tier 3). Essentially, any permanent downgrade in water quality in ONRWs is prohibited.

See 40 C.F.R. § 131.12(a)(1)-(3); see also EPA Water Quality Standards Handbook: Second Edition, Chapter 4, Antidegradation, EPA 823-B-94-005 (Aug. 1994) (Handbook). States submit their antidegradation policy and implementation procedures to EPA; EPA approves them if they are consistent with federal requirements.

Antidegradation review in Tier 2 waters, often called socio-economic review, can be controversial because the review “is often interpreted incorrectly as an absolute prohibition on lowering of water quality.” Water Quality Guidance for the Great Lakes System: Supplementary Information Document, EPA 820-B-95-001, Section VII, A, 1. EPA clarifies, however, that “such a prohibition would amount to a ‘no growth’ policy which is not consistent with EPA’s position as expressed in the regulations.” Id.

Ohio Valley stems from EPA’s November 2001 approval of West Virginia’s antidegradation procedures. In early 2002, various citizen and recreational organizations challenged EPA’s approval as arbitrary and capricious, and sought remand of the procedures to EPA for modification. The plaintiffs’ alleged that 13 specific elements of West Virginia’s implementation procedures violated the federal antidegradation rule.

II. Decision Highlights
As an initial matter, AMSA challenged the plaintiffs’ standing to sue by arguing that they were not directly harmed by the implementation procedures, that their expectation of future degraded water quality was too speculative, and that the State’s procedures would not prevent their use and enjoyment of State waters. Rejecting these arguments, the court cited the CWA’s overall purpose of protecting water quality and held that any reduction in water quality (even “a trifle”) supported the citizens’ standing. The court then upheld several of the State’s procedures and rejected others, as follows.

A. Provisions Upheld
1. Exemption from Tier 2 Review for Existing Permitted Uses
The plaintiffs argued that West Virginia’s procedures inappropriately exempt existing permitted uses from Tier 2 antidegradation review, as these continued uses would further degrade water quality. Rejecting this challenge, the court found reasonable EPA’s endorsement of the State’s presumption that existing uses generally will not further degrade water quality. The court noted that West Virginia’s procedures allow socio-economic review of existing uses if needed. Helpfully, the court concluded that Tier 2 protection applies to current ambient water quality, rather than to better water quality attained in the past. This practical ruling recognizes that in many cases, accurate historic water quality data for a waterbody will not exist.

2. Nonpoint Source Presumption
The plaintiffs challenged West Virginia’s presumption that nonpoint sources are in compliance with antidegradation requirements if they install and maintain best management practices (BMPs), arguing that federal regulations require BMPs to be achieved. The court upheld the presumption, finding EPA reasonably can assume that BMPs will be achieved where they are installed and maintained.

3. De Minimis Exemptions from Tier 2 and 2.5 Review
The plaintiffs argued that West Virginia’s regulations contained improper de minimis exemptions from Tier 2 review for new or expanding discharges where no more than 10 percent of a water’s remaining assimilative capacity is used. The plaintiffs asserted that water quality can not be lowered even a de minimis amount under EPA’s antidegradation rule without a public hearing and socio-economic analysis. The court upheld the de minimis level, and cited many federal cases establishing EPA’s inherent authority to create de minimis exceptions to statutory requirements for small risks. The court’s reaffirmation of EPA’s de minimis authority is important not only in the antidegradation context, but also for future rulemakings affecting POTWs in which de minimis exemptions may be appropriate.

EPA allows states to classify some waters as Tier 2.5, providing greater protection than high-quality Tier 2 waters to those waters that do not qualify as Tier 3 ONRWs (Handbook at 4-2)^[1]. The plaintiffs challenged West Virginia’s 10 percent de minimis antidegradation exemption for individual discharges, and its 10 percent cumulative antidegradation trigger, for Tier 2.5 waters. The court upheld the exemptions, noting that because Tier 2.5 is not mandated by federal requirements the state has greater freedom to set Tier 2.5 requirements, so long as they do not fall below minimum standards for Tier 2.

4. Trading Provisions
The plaintiffs also challenged West Virginia’s provisions allowing new or expanding dischargers to bypass antidegradation review where degradation is minimized via point or nonpoint source trading. The court upheld EPA’s approval of the trading provisions, noting that the plaintiffs’ concerns largely were with how the trading provisions might be implemented. This is an important victory, as AMSA has vocally supported water quality trading at the state level.

B. Provisions Rejected
1. Tier 1 Designation of Specific Rivers
The plaintiffs argued that EPA improperly classified West Virginia’s Kanawha and Monongahela Rivers as Tier 1. The court rejected the designations due to inadequate record support, despite the fact that both rivers are on West Virginia’s § 303(d) impaired waters list and are subject to fish advisories. On remand, EPA and the State should be able to support Tier 1 designations for these rivers with additional water quality data.

Notably, the court endorses either a pollutant-by-pollutant or a waterbody approach to tier designations. Under a pollutant-by-pollutant approach, a state can classify a waterbody as Tier 1 for some pollutants and as Tier 2 for others, using ambient water quality data.^[2] The waterbody approach is more generalized, and the court recommends that where it is used, information and factors beyond ambient water quality data (e.g., scenic attributes, ecological considerations) be included to support the designation. AMSA members may wish to review the tier approach their state uses, and the classification factors considered.

2. Tier 2 Exemption for POTWs
AMSA and the municipal parties sought to protect a specific exemption from Tier 2 antidegradation review for POTWs “where there will be a net decrease in the overall pollutant loading discharged to the combined receiving waters.” The plaintiffs asserted that this exemption would allow increases in certain harmful pollutants so long as overall pollutant loadings were reduced. EPA explained that the exemption would apply only where there is a net decrease of each individual pollutant of concern from the new or expanded POTW. Rejecting the exemption, the court suggested it could be restored if the word “overall” were removed. Importantly, the court did not express concern with the POTW exemption generally. On remand, the exemption likely can be reinstated with clarification of its text and scope.

3. Tier 2 Exemption for Activities Covered by General Permits
The plaintiffs argued that West Virginia’s procedures inappropriately exempt from Tier 2 antidegradation review activities covered by general CWA § 402 National Pollutant Discharge Elimination System or general CWA § 404 wetlands permits. The citizens alleged that general permits circumvent antidegradation review of the individual activities covered by the general permit. The court did not explicitly agree with the plaintiffs, but rejected the exemption because EPA inadequately documented how site-specific Tier 2 review and public participation would be done on a statewide basis.

The court’s concern can be addressed in several ways on remand. For example, West Virginia could clarify in general permit applications which projects are exempt from antidegradation review as de minimis. The State also could add a general permit condition requiring in-stream water quality impact from general permit activities to be de minimis (e.g., not exceed 10 percent of the water’s remaining assimilative capacity).

4. Creation of New De Minimis Categories
The court rejected West Virginia’s provision allowing the establishment of future de minimis antidegradation categories because the provision did not explicitly reference EPA approval. This provision can be corrected easily on remand.

5. 20 Percent Cumulative Degradation Trigger for Tier 2 Review
The court did not embrace the plaintiffs’ objection to West Virginia’s 20 percent cumulative degradation trigger for Tier 2 review. However, the court found the threshold inadequately supported in the administrative record. On remand, West Virginia will need to provide additional support for its 20 percent threshold.

6. De Minimis Exemption for Four Pollutants in Tier 2.5 Waters
The plaintiffs challenged specific de minimis exemptions from antidegradation review for new or expanded discharges of dissolved oxygen, pH, bacteria, and temperature in Tier 2.5 waters. The citizens argued the chosen de minimis levels were unsupported in the record. Again, without questioning EPA’s authority to endorse de minimis exemptions, the court rejected the exemptions for inadequate record support. On remand, West Virginia should be able to restore the exemptions with additional data.

C. Next Steps
The court vacated EPA’s approval of West Virginia’s procedures and remanded them to EPA without directing that specific changes be made. This is a generally favorable outcome, as EPA and the State now will have broad latitude to refine the regulations to be consistent with the court’s opinion. Various parties to the case are likely to appeal aspects of the decision to the U.S. Court of Appeals for the Fourth Circuit by the October 28 deadline. The outcome of any appeal will impact antidegradation programs within EPA Region 3 states and the Fourth Circuit, and will set important precedent as the first federal Appeals Court ruling on antidegradation implementation. West Virginia should be able to issue permits for new or expanded sources during remand and any appeal, so long as the permits are consistent with the court’s decision and do not rely on any rejected provisions.

[1] EPA notes that Tier 2.5 “allows States to provide a very high level of water quality protection without precluding unforeseen future economic and social development considerations.”  Id.

[2] The court’s opinion contains a potentially significant contradiction regarding tier classifications.  The court holds that waters must be Tier 2 where they have remaining assimilative capacity for “some” pollutants.  Decision at 51-52.  The court later holds that West Virginia may use the waterbody approach to classify as Tier 1 waters with assimilative capacity for “some parameters.”  Id. at 53-54.  This inconsistency may attract motions for clarification by various parties.