EPA’s Necessity Determination Discretion for Water Quality Standards Before Fifth Circuit

By Lars-Eric Hedberg – Bloomberg BNA
December 3, 2014

Water Quality

Gulf Restoration Network v. McCarthy, 5th Cir.,No. 13-31214, argued 12/4/14

Key Development: Fifth Circuit to hears argument on whether the EPA has discretion not to make a necessity determination in response to a petition asking the agency to prepare water quality standards for states.

Impact:If the Fifth Circuit affirms the district court decision, EPA must devise water quality standards for nutrients such as nitrogen and phosphorus for states without standards.

Dec. 3 — The U.S. Court of Appeals for the Fifth Circuit hears oral arguments Dec. 4 on whether the Environmental Protection Agency has the discretion not to decide whether new or revised water quality standards for nutrients are necessary (Gulf Restoration Network v. McCarthy, 5th Cir., No. 13-31214, argued 12/4/14).

Gulf Restoration Network and other citizen groups asked the agency in a 2008 rulemaking petition to determine that water quality standards for nutrient pollution are needed for every state that lacks these standards, with particular emphasis on Mississippi River Basin states. They also asked the agency to thereafter devise federal standards and establish total maximum daily loads for nitrogen and phosphorus in the Mississippi River, its tributaries and the Gulf of Mexico, if any of those waters failed to meet the new standards.

The agency denied the Gulf Restoration Network group’s petition without determining whether a rulemaking for water quality standards—also called a necessity determination—was required under the Clean Water Act.

It noted in the denial that it was not concluding that nutrient numeric criteria were not necessary to meet the act’s requirements, but rather that it was exercising its discretion to allow states to develop standards and was working closely with the states.

Had the agency issued a positive necessity determination, Section 303 would require it to issue a finding within six months on whether states need to adopt numeric nutrient criteria.

The agency has argued that because the decision to issue a necessity determination is committed to agency discretion, the district court did not have jurisdiction over the groups’ action.

Three-Year Reviews

Generally, states and tribes establish surface water quality standards by creating water quality goals and defining acceptable uses for waterways within their borders. They must review these standards every three years.

Section 303(c)(4)(B) of the Clean Water Act directs the agency to prepare and publish proposed regulations for water quality standards in any case where it determines that a revised or new standard is necessary to comply with the act.

Gulf Restoration Network, Missouri Coalition for the Environment, Iowa Environmental Council, Tennessee Clean Water Network, Minnesota Center for Environmental Advocacy, Sierra Club, Prairie Rivers Network, Kentucky Waterways Alliance, Environmental Law & Policy Center, Natural Resources Defense Council Inc. and Waterkeeper Alliance Inc. have contended that the agency’s denial of their rulemaking petition, without a response in the form of necessity determination, is reviewable final agency action under the Administrative Procedure Act.

Judicial Review Presumed

Section 704 of the APA sets forth a presumption in favor of, and a general entitlement to, judicial review of a final agency action, absent congressional intent to preclude it (Abbott Labs. v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967)).

However, the statute contains two important exceptions to this presumption.

According to Section 701(a)(1), a statute can explicitly or implicitly preclude judicial review. Alternatively, as the agency argues, Section 701(a)(2) precludes judicial review where there is “no law to apply” or the agency is exercising its prosecutorial discretion.

The principal issues in the EPA’s appeal to the Fifth Circuit are whether the district court has jurisdiction to review the case and whether the agency has the requisite discretion under the Clean Water Act to refuse to make a necessity determination.

Nutrient Pollution Causes Algal Blooms

Fertilizer applications, fertilizer manufacturing plants, power plants and wastewater treatment plants discharge nutrients.

“Too much nitrogen and phosphorus in the water causes algae to grow faster than ecosystems can handle,” according to the EPA. “Significant increases in algae harm water quality, food resources and habitats, and decrease the oxygen that fish and other aquatic life need to survive.”

The discharge of nutrients and resulting decrease in oxygen has created “dead zones” in both Long Island Sound and the Gulf of Mexico, into which the Mississippi River empties.

In August, Toledo, Ohio, shut down its drinking water system after harmful algal blooms were found in Lake Erie (2014 WLPM, 8/7/14).

The groups alleged in their 2012 amended complaint that such a denial, without a positive or negative necessity determination, violates the Administrative Procedure Act. They claimed that the agency’s decision to deny the petition was arbitrary and capricious under the APA, because it was contrary to undisputed evidence and not based upon relevant statutory factors.

September 2013 Order

Judge Jay C. Zainey of the U.S. District Court for the Eastern District of Louisiana concluded in a September 2013 order that the court “is persuaded that Massachusetts v. EPA requires EPA to conduct a necessity determination in response to Plaintiffs’ rulemaking petition” (Gulf Restoration Network v. Jackson, 77 ERC 1999, 2013 BL 253612, (E.D. La. 2013); 2013 WLPM, 9/25/13).

In Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 1438, 167 L. Ed. 2d 248, 63 ERC 2057 (2007), Justice John Paul Stevens, writing for the U.S. Supreme Court majority, held that EPA acted arbitrarily and capriciously when it failed to offer a reasoned explanation for its refusal to decide whether greenhouse gases contribute to climate change under Section 202 of the Clean Air Act.

Based on the Supreme Court’s ruling, Zainey found that under Section 303(c)(4)(B) of the Clean Water Act “EPA lacks the discretion to simply decline to make a threshold determination in response to a rulemaking petition even when the statutory text does not explicitly require it to do so.”

Zainey directed the EPA to provide a necessity determination under Section 303(c)(4)(B) within 180 days.

EPA: Agency Discretion Means No Jurisdiction

The EPA contended in its Feb. 27 opening brief that the district court did not have jurisdiction to review its decision not to make a necessity determination, because, like an enforcement action, this action is committed to agency discretion by law (2014 WLPM, 3/5/14).

It argued that this case is comparable to Public Citizen, Inc. v. EPA, 343 F.3d 449, 56 ERC 2057 (5th Cir. 2003), where a citizen group petitioned the EPA to issue notices of deficiency to Texas regarding the state’s Clean Air Act Title V permitting program. The EPA declined to issue notices on the ground that it was working with the state. The Fifth Circuit held that Section 502 of the Clean Air Act grants investigative discretion to the agency and does not require it to issue notices of deficiency for the claimed shortcomings.

Because the language in Section 502a(i)(1) of the Clean Air Act is similar to that of Section 303(c)(4)(B) of the Clean Water Act, according to the EPA, the court should rule that the necessity determination is committed to agency discretion.

The EPA also contended that Section 303 imposes no continuing obligation on the agency to police state water quality standards without a state’s submission of a new or modified standard. Additionally, “the absence of any statutory standard for assessing the EPA’s decision whether to make a necessity determination,” coupled with the language of Section 303(c)(4)(B), “means that the EPA’s choice not to make such a determination is committed to agency discretion by law,” according to the brief.

It argued in the brief that Massachusetts v. EPA recognized that an agency may decline to make a threshold statutory determination, such as a necessity determination, in response to a petition.

Lastly, the EPA claimed that practical considerations, such as limited agency resources and the burden of promulgating water quality standards for states, cut against reviewability and would harm EPA if the Fifth Circuit affirmed the district court.

Groups: Rulemaking Petition Is Reviewable

The groups claimed in their April 8 brief that the district court properly exercised jurisdiction over this action based on the APA and the Supreme Court’s decision in Massachusetts v. EPA (2014 WLPM, 4/16/14).

Whereas the EPA casts the case as an enforcement action against the states, the groups principally contend that this is a rulemaking case, for which judicial review is available under Sections 704 of the APA.

They argued that the agency has not met its burden of proving that its decision to not make a necessity determination is not reviewable under Section 701(a)(2) of the APA. As to agency discretion, they claimed that the Clean Water Act provides sufficient “law to apply” in the form of a statutory standard for a reviewing court to apply in assessing the agency’s decision.

Although they acknowledged that Section 303(c)(4)(B) “is broadly drawn,” the groups contended that Section 303 identifies the requirements of the statute and its goals, as well as various regulations to use sound scientific methods.

The groups argued in their brief that this case is “closely-analogous” to Massachusetts v. EPA. They contended that both cases stand for “the principle that the federal agencies cannot dodge a rulemaking petition by refusing to answer a threshold statutory question based on extra-statutory reasons.”

Section 555(e) of the APA directs agencies to give “prompt notice” of the agency’s denial of a rulemaking petition to the parties filing the petition, along with “a brief statement of the grounds for denial.”

According to the groups, the agency failed to base its response to the petition “on reasoning consistent with the statutory text” of the Clean Water Act in violation of the APA and Massachusetts v. EPA. Specifically, they claimed that the agency expressed that it would rather work with states than follow Congress’s command to prepare and publish regulations.

Lastly, the groups countered the EPA’s practical considerations argument, noting that the agency has been tracking and overseeing states’ water quality standard-setting process for decades. The agency has made numerous pronouncements that the lack of a single set of standards for numeric nutrient criteria is an obstacle to obtaining the “fishable and swimmable” standard of Section 101(a)(2) of the Clean Water Act.

Practical Effects Called ‘Distraction.’

Machelle Lee Hall, an attorney from the Tulane Envrionmental Law Clinic, which, along with the Natural Resources Defense Council, represents the groups, told Bloomberg BNA that Massachusetts v. EPA, the Clean Water Act or APA on its own or in combination with another could become the primary issue for argument depending on the court’s line of questioning.

She also said that the EPA’s practical considerations and enforcement discretion arguments are a distraction from the law, which supports the groups’ position.

“The question for the court is whether or not the EPA has to answer the petition for a rulemaking based on statutory factors in the Clean Water Act, and the practical considerations argument seems to be an effort by the agency to distract the court from this question,” she said. “This is a discrete question for which there is statutory guidance in the Clean Water and Administrative Procedure Acts, as well as in Supreme Court precedent.”

She also added that the agency’s decision was not left to its discretion.

“From Section 303(c)(3)(B) of the Clean Water Act, there is ample law for a reviewing court to apply, such as the ‘fishable and swimmable’ standard and designated uses for these bodies of water,” she said.

Ann Alexander of the Natural Resources Defense Council will argue on behalf of the groups.

Peter Z. Ford of the EPA and Aaron P. Avila, John E. Arbab, Angeline Pudy and Matthew Littleton of the Department of Justice represent the EPA.

To contact the reporter on this story: Lars-Eric Hedberg in Washington at lhedberg@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com