AMSA Legal Alert (Leg 03-8)

In a direct response to AMSA’s amicus brief, filed in support of the U.S. Environmental Protection Agency’s (EPA or Agency) petition for rehearing, on September 15 the U.S. Court of Appeals for the Ninth Circuit handed AMSA member agencies a true victory when it withdrew and issued a substitute opinion for its controversial January decision in the legal challenge to EPA’s Clean Water Act (CWA) Phase II municipal separate storm sewer (MS4) regulation (Phase II rule). Environmental Defense Center Inc. v. EPA, No. 00-70014 (EDC). The court’s corrected opinion makes absolutely clear that the maximum extent practicable (MEP) standard for MS4s in CWA § 402(p)(3)(B)(iii) is the only standard with which MS4 National Pollutant Discharge Elimination System (NPDES) permits must comply – not numeric effluent limitations to meet water quality standards (WQS). The court’s revisions to its original MEP discussion – which seriously misstated the standard for MS4s and directly contradicted the court’s previous holding in the 1999 Defenders of Wildlife v. Browner (Defenders) case in which AMSA participated – reveal that our amicus brief on this matter was not only received and considered, but was instrumental in persuading the court to reverse its position and conform its decision to the earlier precedent.

This Legal Alert provides details on the Ninth Circuit’s new opinion, which can be accessed on AMSA’s Litigation Tracker at http://www.amsa-cleanwater.org/private/littrack/. Although the court has revised its earlier decision in several important respects, as discussed below, EPA still will have to conduct rulemaking to correct certain provisions of the Phase II rule. AMSA will notify our members when EPA proposes any changes in the future.

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
In response to numerous legal challenges to the Phase II final rule, on January 14 the EDC court remanded the rule to EPA for corrections. The court’s fundamental concern was with EPA’s use of a Notice of Intent (NOI) and general permit for Phase II MS4s, which the court found did not meet the CWA’s requirements for public notice of, and hearings on, NPDES permits. The court also held that the Phase II rule must require review of a city’s NOI to assure that the selected MS4 controls will, in fact, reduce the discharge of pollutants to the MEP. The court’s nearly 100-page opinion triggered petitions for rehearing from nearly every party to the case, including EPA. A detailed analysis of the court’s original opinion is available in Legal Alert 03-2.

AMSA filed an amicus brief supporting rehearing because, in its original opinion, the court misstated the MEP standard for MS4 permits by stating that Phase II MS4 operators must not only reduce the discharge of pollutants to the MEP, but also must comply with the CWA’s “general effluent limitations” (which include state and federal WQS). AMSA’s brief highlighted the court’s failure to follow its own analysis set out in 1999 in Defenders – the seminal case holding that MS4 discharges do not have to comply with WQS. AMSA’s amicus demonstrated how the EDC court’s misreading of the MEP standard could lead to increased pressure by citizen groups to include numeric effluent limitations to meet WQS in MS4 permits, by throwing into question the key precedent relied upon to defeat activist group challenges to MS4 permits in Oregon, Minnesota, Alaska, and elsewhere. AMSA also questioned the opinion’s statement that cities could avoid the rule’s impacts by simply not discharging stormwater. AMSA was joined on the amicus brief by the National League of Cities, the American Public Works Association, and the National Association of Flood and Stormwater Management Agencies.

II. Highlights of the Revised Decision
Of key importance to AMSA member agencies, the court’s revised opinion no longer states that a Phase II NOI “conveys assent to the broad effluent limitations” of the CWA. EDC at 13,797. Notably absent from the new opinion are prior statements that MS4s must comply with effluent limitations – which the court had called the “core” of the NPDES permit program. The court’s new opinion also does not assert that cities can simply opt to not discharge stormwater. The court’s almost surgical correction of its original discussion clearly is in direct response to AMSA’s succinct and on-point amicus brief.

In the end, the court still remands the Phase II general permit program to EPA for modification. The court finds the rule inadequate because it does not require permitting authorities to evaluate and ensure that the MS4 measures selected by a city actually will reduce discharges to the MEP. Id. at 13,800. The court expresses concern that the Phase II rule could lead to MS4 permits that do not reduce the discharge of pollutants to the MEP because it does not provide for review of a city’s MS4 control program “to make sure that it was reasonable, or even good faith.” Id. at 13,801. In remanding this part of the Phase II rule to EPA, the court states that stormwater programs “designed by regulated parties must, in every instance, be subject to meaningful review by an appropriate regulating entity to ensure that each such program reduces” the discharge of pollutants to the MEP. Id. at 13,802. On remand, EPA also will have to make Phase II NOIs subject to public availability and public hearings because, as the court states, they are the “functional equivalent of permits.” Id. at 13,805.

III. Next Steps
The Phase II rule remains in effect during the remand period. Accordingly, any city currently covered by a Phase II permit is likely to be treated as meeting existing requirements while EPA undertakes rulemaking to amend the rule to address the court’s concerns. Changes also are likely to occur in NPDES delegated states that developed their own NOI and general permits for Phase II cities based on EPA’s template. While a third-party citizen suit could be filed against a city for having an inadequate Phase II MS4 permit, a city likely could defend the suit by referencing the forthcoming corrective rulemaking at EPA or any changes at the state regulatory level.

We have heard that some parties may seek U.S. Supreme Court review of the revised decision. Given the pains the court took to correct its opinion, and the lack of controversial issues remaining, the High Court is unlikely to be interested in the case. We will keep the membership informed, however, of any future developments.