NACWA Legal Alert (Leg 07-02)

NACWA is pleased to provide the membership with the latest Litigation Report. This Report contains summaries of the Association’s legal initiatives and discusses developments in NACWA’s litigation matters.

Late Breaking Legal Issues Calls
NACWA has completed two successful Late Breaking Legal Issues calls thus far in 2007. The first call, held January 17, featured guest speakers from NACWA Legal Affiliate Bingham McCutchen discussing City of Los Angeles v County of Kern, a key case in California involving the land application of biosolids. The featured speakers described the issues in the case, and also outlined why the case has the potential to set important precedent for the land application of biosolids elsewhere around the nation. Additionally, participants on the call discussed changes to the federal rules of civil procedure regarding electronic discovery.

The second call was held March 14 and provided a roundtable discussion entitled That Was Then, This Is Now, focused on the lack of clear state or federal approaches for permitting peak excess flow treatment facilities (PEFTFs), stormwater clarifiers, and constructed sanitary sewer overflow (SSO) points. The roundtable highlighted the recent experiences of a number of NACWA members, and roundtable participants discussed how their peak flow structures, many of which were built with state or federal approval and funds, have become the targets of increased EPA and state enforcement actions.

The dates for future 2007 calls are June 13, September 12, and December 12. All calls are held from 2:00 – 3:00 pm eastern. Dial-in information for all 2007 calls can be found on the legal section of NACWA’s Member Pipeline.

2007 Law Seminar Headed for Palm Desert, CA
Mark your calendars now for the 2007 Developments in Clean Water Law: A Seminar for Public Agency Attorneys & Managers (Seminar), which will be held November 7-9, 2007 at the Westin Mission Hills Palm Desert, CA. A planning committee for the Seminar will be formed in May and will meet during the Summer Conference in July to begin developing the agenda. Any ideas for the Seminar can be forwarded to Alexandra Dunn at adunn@nacwa.org.

Litigation Tracking Webpage Reorganized
NACWA continued an update of the Legal section of the Association’s website by reorganizing the Litigation Tracking webpage. The new design organizes cases by subject matter rather than chronologically, and includes a brief outline of key issues next to the case name. Additionally, descriptions of both active and completed cases are being revised to ensure they provide an accurate summary of the case. These changes are intended to make the page more user-friendly and assist users in finding cases by either case name or subject matter.

For More Information
New documents are posted regularly in NACWA’s active cases in the Litigation Tracking section of the Member Pipeline. As always, please feel free to contact NACWA’s General Counsel Alexandra Dunn at 202/533-1803 or adunn@nacwa.org with any questions or comments on NACWA’s legal activities.

CASE BRIEFS

Supreme Court Hears Arguments in Clean Water Act/Endangered Species Act Case
The U.S. Supreme Court heard oral arguments April 17 in U.S. EPA v. Defenders of Wildlife, a case involving the Clean Water Act (CWA) and how it may be affected by the Endangered Species Act (ESA). The Court accepted the case in early January 2007 after EPA appealed a decision by the U.S. Court of Appeals for the Ninth Circuit, which held that the Agency improperly delegated National Pollutant Discharge Elimination System (NPDES) permitting authority to the state of Arizona because ESA requirements were not sufficiently considered. NACWA’s Board of Directors approved at its January meeting the Association’s recommendation to file a brief in the case because of the implications that improper extension of the ESA to CWA activities could have on NACWA member agencies. NACWA filed an amicus curiae brief with the Court on February 20 and argued that the CWA lays out several factors EPA must consider when delegating NPDES authority, and ESA considerations are not among the permitted statutory considerations. The brief indicated that Congress has amended the CWA multiple times since the ESA was enacted but has never incorporated ESA requirements into the CWA. Furthermore, EPA’s own regulations do not require an ESA analysis as part of an NPDES delegation decision. The brief took no position on any other aspect of EPA’s approval of Arizona’s NPDES program.

During oral argument, the Court appeared to be exploring whether it needed to rule that the ESA’s requirements overlay those in the CWA regarding delegation of permitting programs. Several questions seemed to support arguments contained in NACWA’s Feb. 20 amicus curiae brief – namely, 1) that the CWA clearly states the nine factors that EPA must consider when delegating NPDES authority to a state; 2) that ESA considerations are not among the permitted statutory considerations; and 3) that EPA followed the nine factors; and 4) that many other authorities exist to protect species. A decision in the case — which could be one of the high court’s more important environmental decisions this year — is expected sometime before the end of the Court’s current term in June.

NACWA Enters BEACH Act Case as Court Rules Against EPA
NACWA won a legal victory March 19 when the U.S. District Court for the Central District of California ruled the Association may intervene as a plaintiff in Natural Resourced Defense Council (NRDC) v. EPA, over the objections of NRDC. The case involves a legal challenge regarding EPA’s failure to establish new recreational water quality criteria as required by the Beaches Environmental Assessment and Costal Health Act (BEACH Act). The BEACH Act calls for EPA to assess potential human health risks from exposure to bacteria and other pathogens found in costal recreational waters, and to then publish resulting bacteria and pathogen indicators by October 2005. However, EPA missed this deadline and NRDC filed suit last summer against the Agency. The NACWA Board approved participation in the case in September 2006, and NACWA filed a Motion to Intervene in the case in December 2006 so that the Association could bring the clean water community’s voice to anticipated settlement discussions.

On March 23 the court granted NRDC’s Motion for Summary Judgment on the Pleadings and ruled that EPA violated the BEACH Act by failing to publish the new criteria by October 2005. The ruling was expected, as EPA admitted in its pleadings that it failed to meet the deadlines in the BEACH Act. The focus of the case now shifts to determining how much time EPA will be given by the court to meet its BEACH Act obligations. NACWA and the other plaintiff-intervenor in the case, the County of Los Angeles, have both requested to participate in on-going settlement discussions between EPA and NRDC. Additionally, EPA is scheduled to produce a number of documents in discovery over the next few months which NACWA will review in preparation for proposing an appropriate EPA compliance schedule. A scheduling conference held on April 2 set a case management calendar for the litigation, and the discovery process is anticipated to stretch into October 2007. NACWA will keep the membership updated of any developments in this case.

Court Issues Favorable Ruling in Stormwater Fee Case
A federal court in Ohio ruled March 27 that a U.S. government facility in Cincinnati is not exempt from paying stormwater fees, endorsing the position advocated by NACWA. The case of City of Cincinnati (City) v. U.S. involves a Department of Health and Human Services (HHS) facility within the City’s service area that has refused to pay over $100,000 in past-due invoices for stormwater services. The case arose when the federal HHS facility alleged that the stormwater service charges are an impermissible “tax” on the federal government and thus refused payment. NACWA, along with the National League of Cities (NLC), the National Association of Flood and Stormwater Management Agencies (NAFSMA), and the American Public Works Association (APWA) filed an amicus curiae brief in the Fall of 2004 arguing that Clean Water Act (CWA) Section 313 gives local governments the authority to collect fees from the federal government to cover the cost of stormwater services at its facilities.

The court agreed with this position in its March ruling, and noted that “the City’s stormwater system charge falls squarely within the waiver of sovereign immunity,” and thus the HHS facility is not exempt from paying the charges. Additionally, the court granted permission to the City to amend its complaint and aggregate its claims in order to achieve the full recovery of past-due bills. A scheduling conference was held April 12, at which time the parties agreed to investigate the possibility of a settlement before the City files an amended complaint. If no progress is made within 30 days the parties will submit a proposed case management schedule to the court by May 24. NACWA will continue to provide updates as the litigation moves forward.

Ninth Circuit Holds Arguments in Effluent Limitation Guideline Case
The U.S. Court of Appeals for the Ninth Circuit heard oral arguments February 13 in Our Children’s Earth Foundation (OCEF) v. Environmental Protection Agency. The case involves a challenge by OCEF to EPA’s Effluent Limitation Guidelines (ELG) program. NACWA entered the case as an intervenor and urged the appeals court in November 2005 to affirm the finding of the trial court that EPA is implementing the ELG program properly and consistent with Congress’ intent. At oral arguments, the Association reiterated this position and emphasized to the court the 30 years of case law and CWA legislative history which support EPA’s recent ELG program actions. The three judge panel examined the language of the CWA and whether EPA's duty to "review" ELGs every year includes a non-discretionary duty to evaluate the details of each ELG. One judge seemed convinced that nothing in the CWA mandates this type of review; and two judges seemed to believe EPA has significant discretion in how it chooses to carry out its mandatory “review.” The panel focused on the CWA’s language that EPA shall "review, and revise [ELGs] if necessary". A decision from the Ninth Circuit is expected in the coming months.

EPA Finalizes Modification to Blue Plains NPDES Permit
EPA Region III announced on April 5 that it had released the Final Modified NPDES Permit to member agency the District of Columbia Water and Sewer Authority (DCWASA) for the Blue Plains Wastewater Treatment Plant. The final modification will reduce the nitrogen allocation for the plant from 8.5 million pounds per year to 4.7 million pounds per year. This change follows a series of comments received by EPA after a draft revised permit was first released for comment on August 18, 2006. Region III released another draft of the revised permit on December 14, 2006 and provided a 30-day comment period. The finalized version released April 5 includes comments received on the most recent draft version, but does not alter the reduction in nitrogen allocation proposed in the December 2006 draft.

The final revised permit marks a key moment in the battle over the original NPDES permit, issued in 2003. Both DCWASA and Friends of the Earth, an environmental group, appealed the original permit; the majority of the appeal was dismissed on August 23, 2006 by EPA's Environmental Appeals Board (EAB) after Region III issued the modified permit on August 18, rendering most of the appeal moot. However, the EAB did agree to hear one issues raised by DCWASA regarding Region III's decision not to include in the permit a compliance schedule for implementation of DCWASA's long-term control plan (LTCP). NACWA motioned to participate in the case in mid-2005 due to the importance of compliance schedules to combined sewer communities. Region III and DCWASA are currently in negations on this issue, and the EAB has stayed any action until April 30.

New Permit Challenge Anticipated in Clean Water/Drinking Water Case
The litigation between the Greater Cincinnati Water Works (GCWW) and NACWA member agency Sanitation District No. 1, KY (SD No. 1) is expected to intensify in the coming weeks when a revised permit is issued for SD No.1’s new wastewater plant. The case, which is one of the nation’s first truly cross-cutting clean water/drinking water disputes, began in 2004 with an appeal by GCWW of a permit issued to SD No. 1 for a new regional wastewater treatment facility. GCWW expressed concern that the facility’s outfall would be a source of problematic pollutants such as endocrine disrupters, cryptosporidium, giardia, and viruses at GCWW’s downstream drinking water plant. As a result of subsequent negotiations, SD No. 1 agreed to move the discharge location further away from GCWW’s drinking water intake, thus making the original discharge permit issued to SD No. 1 moot. However, GCWW has indicated that even with the change in the outfall location it will still appeal any revised permit for SD No. 1’s discharge site, and more litigation is expected when the permit is issued. NACWA supported SD No. 1 during the appeal of its first permit, and plans to continue its support during the expected litigation involving the forthcoming permit.

Supreme Court Declines to Review TMDL Case
NACWA learned January 16 that the U.S. Supreme Court declined review of Friends of the Earth v. EPA, an April 2006 decision by the U.S. Court of Appeals for the District of Columbia that all total maximum daily loads (TMDLs) for the Anacostia River must be expressed in daily terms, not in monthly or seasonal averages. As a result of the Supreme Court’s action, the D.C. Circuit ruling will stand, and EPA is directed to develop new TMDLs for the Anacostia River in accordance with the appeals court decision by June 2008. A draft TMDL for total suspended solids (TSS) was released on April 6, and NACWA is working with DCWASA to provide comments.

NACWA filed a joint brief with the Wet Weather Partnership (WWP) in August 2006 supporting the request by member agency DCWASA for high court review of the D.C. Circuit ruling. NACWA is disappointed with the Court’s decision not to review the case; however, the Association is actively engaged with EPA in developing technical guidance to help implement the TMDL change on a pollutant-specific basis. EPA released a final memorandum in November 2006 providing guidance on how to deal with the court’s ruling, which NACWA reviewed. NACWA also provided substantive comments on a July 2006 draft of that guidance indicating it was inadequate. Additionally, EPA is developing a “fact sheet” and other technical guidance to help convert non-daily load limits to daily limits, and NACWA has been reviewing these documents as well.

Furthermore, NACWA will be working on a technical study to determine the appropriateness of creating true “daily” TMDLs for certain pollutants, including nutrients, mercury, and bacteria. A draft outline of this study will be shared with the Water Quality Committee and the Legal Affairs Committee at the May meetings. NACWA plans to use this technical study to further inform its discussion with EPA over the development of future TMDLs.

Interbasin Water Transfer Case Denied Certiorari
The U.S. Supreme Court announced February 26 that it would not grant certiorari to review an appeals court decision, City of New York v. Catskill Mountains Chapter of Trout Unlimited, dealing with interbasin water transfers. NACWA filed a brief with the Court January 26, supporting a request by member agency the New York City Department of Environmental Protection (NYCDEP) for review of the decision from the U.S. Court of Appeals for the Second Circuit. The Second Circuit held that NYCDEP must obtain a NPDES permit for transfers of natural, untreated water between two of its reservoirs. The Supreme Court’s refusal to hear the case puts an even greater onus on EPA to clarify the appropriateness of NPDES permits for water transfers in its forthcoming water transfer rule. The rule is expected to clarify that transfers of untreated water like those carried out by NYCDEP are not subject to the NPDES permitting program. NACWA will continue to work with NYCDEP and other members on this issue and will circulate EPA’s transfer rule for review and comment when it is released.

Court Still Deliberating on Clean Water Act Attorneys Fee Award Case
No decision has been released yet by the U.S. Court of Appeals for the Sixth Circuit in the case of U.S. v. Board of County Commissioners of Hamilton County, Ohio. The litigation involves NACWA member agency the Metropolitan Sewer District of Greater Cincinnati’s (MSDGC’s) appeal of a decision by the U.S. District Court for the Southern District of Ohio that the Sierra Club was a “catalyst” to MSDGC entering a consent decree, and the award to Sierra Club of $1 million in attorneys’ fees under the CWA’s citizen suit provision (§ 505(d)). NACWA filed an amicus curiae brief in support of MSDGC before the Sixth Circuit on February 15, 2006, arguing that the catalyst theory has been soundly rejected by the U.S. Supreme Court and that the Sierra Club could not be found as a “prevailing or substantially prevailing party” under the CWA because Sierra Club not only opposed entry of the decrees but also was not a party to the decrees. Oral arguments in the case were held before the Sixth Circuit on September 15, 2006; the parties to the case speculate that the delay in releasing an opinion may be due to a split decision and a dissent. We will inform the membership as soon as a decision is announced.

Parties Continue Negotiating in Appeal of District of Columbia MS4 Permit
Settlement negotiations are ongoing between the Friends of the Earth (FOE), Defenders of Wildlife (Defenders), EPA, and the District of Columbia (District) involving the March 2006 Final Modification to the District’s municipal separate storm sewer system (MS4) permit. FOE and Defenders lodged an appeal with EPA’s Environmental Appeals Board (EAB) over the permit, but all parties agreed to extend EPA’s time to respond until June 14 to allow for additional settlement discussions.

In the appeal, FOE and Defenders cite the permit’s failure to “contain effluent limits adequate to assure compliance with water quality standards.” They allege that “pollutant specific, numeric limits” are “presumptively required” by the CWA. Contrary to the CWA’s legislative history, NACWA’s long-standing positions, and prior court decisions, the activists assert that CWA § 402(p)’s specific standard for MS4s – that cities remove stormwater pollutants to the maximum extent practicable (MEP) using best management practices – allows BMPs only where numeric limits are infeasible and where it is shown that other limitations will assure compliance with water quality standards. NACWA, the National League of Cities (NLC), the National Association of Flood and Stormwater Management Agencies (NAFSMA), the CSO Partnership (CSOP), the West Virginia Municipal League (WVML), and the Virginia Municipal League (VML) have all been involved in this case to protect the MEP standard for MS4 discharges.

Court Considering Request for Rehearing of CWA Groundwater Case
A panel of the U.S. Court of Appeals for the Ninth Circuit is still considering whether to grant a rehearing in City of Healdsburg (Healdsburg) v. Northern California River Watch, a case involving CWA jurisdiction over a wastewater treatment percolation pond. NACWA, together with the California Association of Sanitation Agencies (CASA) and the Association of California Water Agencies (ACWA), filed a letter on September 8, 2006 with the appeals court requesting a rehearing; the letter was filed as a result of the Ninth Circuit’s decision on August 10, 2006 that Basalt Pond (NACWA member agency the City of Healdsburg’s manmade wastewater percolation pond that is also involved in gravel mining operations) is a "waters of the United States" for purposes of CWA regulation because Basalt Pond contains adjacent wetlands with a "significant nexus" to the Russian River, a navigable "waters of the United States." 457 F.3d 1023 (2006). Based on this jurisdictional finding, the court held that the City must obtain an NPDES permit to discharge to the percolation pond. The letter filed by NACWA, CASA, and ACWA follows a request for rehearing filed on August 23, 2006 by the City of Healdsburg, as well as a Motion for Clarification filed by the federal government on August 31, 2006. The Healdsburg decision is critically important because it is one of the first appellate court opinions to interpret the U.S. Supreme Court’s June 19, 2006 decision in Rapanos et ux., et al. v. United States and Carabell et al. v. U.S. Army Corps of Engineers et al. (Rapanos).

The NACWA letter filed with the court argues that the Ninth Circuit incorrectly applied Justice Kennedy’s “significant nexus” test from Rapanos and reached a conclusion that “would not be endorsed by either the four plurality or the four dissenting judges.” Accordingly, NACWA and its partners argue that the Ninth Circuit must rehear the case and re-examine the appropriate test to be used to determine CWA jurisdiction under recent Supreme Court case law. The Ninth Circuit has referred the petitions for rehearing to the panel of judges that rendered the original decision; the panel has not yet indicated whether it will rehear the case and is currently accepting briefs on what the scope of the rehearing should be. If the panel denies a rehearing, NACWA may consider asking the entire Ninth Circuit to rehear the case en banc. We will alert the membership as soon as a decision on rehearing is made.

No Decision Yet in Minnesota Pre-TMDL Permitting Case
NACWA continues to await a decision from the Minnesota Supreme Court in the case of Cities of Annandale and Maple Lake (Cities) NPDES Permit Issuance, which was argued before the court in May 2006. The case concerns the Minnesota Court of Appeals’ 2005 holding that the Minnesota Pollution Control Agency (MPCA) improperly determined that an NPDES permit for the Cities would not cause or contribute to a violation of water quality standards in a CWA § 303(d) listed water. MPCA specifically found that the new discharge would be effectively “offset” by decreased discharges of the pollutant of concern by other entities in the water body. NACWA filed an amicus curiae brief in December 2005 and supported the ability of permitting authorities like MPCA to undertake such analyses. Recent indications suggest the court may be deadlocked at 3-3 over the case (one justice recused himself from the matter) and is looking for a way to break the tie. We will update the membership as soon a decision is released.

NACWA, Ohio Agencies Await Action in Phosphorus TMDL Case
NACWA and its partners in the Association of Ohio Municipal Wastewater Agencies (AOMWA) are still waiting for the City of Salem, OH (City) to initiate a challenge to EPA’s September 2005 approval of phosphorus TMDLs for several Ohio rivers. The City alleges that approval was inappropriate because the Ohio Environmental Protection Agency (Ohio EPA), using an internal technical guidance document, developed the TMDLs based on “target values” rather than real world conditions. These TMDLs, in turn, are the source of new, more stringent phosphorus effluent limitations in wastewater NPDES permits. NACWA’s Board in July 2006 approved the Association working with AOMWA on an amicus curiae brief supporting the City, and NACWA looks forward to filing the brief at an appropriate time once the City has initiated the litigation.