WESTCAS Western Coalition of Arid States

On January 18, 2017, the United States Court of Appeals for the 2nd Circuit issued its decision in Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA, No. 14-1823, (2nd Cir. Jan. 18, 2017). In its decision, the court of appeals ruled 2-1 in favor of the Environmental Protection Agency (“EPA”) on the Water Transfers Rule. This decision reversed a previous decision from the Southern District of New York and reinstates EPA’s 2008 rule.

On June 13, 2008, EPA adopted the final Water Transfers Rule which excluded water transfers from the National Pollutant Discharge Elimination System (NPEDS) program of the Clean Water Act. The complaint which resulted in the underlying case was filed 7 days later. The Water Transfers Rule, and its continued applicability, is highly important to western water providers who often rely on interbasin water transfers for irrigation, industrial and municipal uses.

In its January 18 decision, the majority, like the district court below, applied the United States Supreme Court’s holding in Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 US 837 (1984). The Chevron case established a two-step framework for judicial review of agency actions. Step one of this analysis directs the court to ask whether Congress has directly spoke to the question at issue, if Congress has the agency is authorized in its action and the analysis is over. If, however, the statutory language is silent or ambiguous the court then proceeds to step two which asks whether the agency’s action is based on a permissible construction of the statute at issue. In analyzing the Water Transfers Rule under this test, the 2nd circuit found, “[a]t step one of the Chevron analysis, we conclude—as did the district court—that the Clean Water Act does not speak directly to the precise question of whether NPDES permits are required for water transfers, and that it is therefore necessary to proceed to Chevronʹs second step.” Under the second step, the court concluded—contrary to the district court—that the “Water Transfers Ruleʹs interpretation of the Clean Water Act is reasonable.” The 2nd Circuit viewed the Environmental Protection Agency’s Water Transfers Rule “as precisely the sort of policymaking decision that the Supreme Court designed the Chevron framework to insulate from judicial second‐ (or third‐) guessing.” The 2nd Circuit reasoned that “[the Clean Water Act] does not require that water quality be improved by whatever the costs or means and the Rule preserves state authority over many aspects of water regulation, gives regulators flexibility to balance the need to improve water quality with the potentially high costs of compliance with an NPDES permitting program, and allows for several alternative means for regulating water transfers.” In the end, the ultimately concluded that because the Water Transfers Rule was a reasonable construction of the Clean Water Act, was supported by a reasoned explanation, and it therefore survived review under Chevron. As such, the district court decision was reversed and the Rule was reinstated.

It is unclear at this time, if an appeal is impending, but this decision may come before the United States Supreme Court in the future.

If you have any questions regarding this case, please contact WESTCAS members Scott Miller miller@waterlaw.com or Christopher R. Stork stork@waterlaw.com