Court to Vacate Federal Regulation Excluding Ballast Water Discharges from Clean Water Act Permit Requirements

In a case with potentially dramatic impacts on the shipping industry, the U.S. District Court for the Northern District of California last month ruled that it will vacate a long-standing federal regulation that exempts ballast water discharges from vessels from Clean Water Act (“CWA”) permit requirements on September 30, 2008. The Court’s ruling follows its 2005 decision that found that ballast water discharges are not exempt from CWA permit requirements. An appeal to the Ninth Circuit is likely.[1]

Ballast water is water[2] that is taken on or released by cargo vessels to compensate for changes in a ship’s weight “as cargo is loaded or unloaded, and as fuel and supplies are consumed.”[3] When a vessel takes in ballast water, it also takes in aquatic organisms that may then be carried from one port to another along the vessel’s route. The concern over ballast water discharges is that, when the water is released, non-native or invasive species may be introduced into new environments and cause environmental harm. Environmental groups and regulators have long been concerned with the introduction of new invasive species to the coastal environment.

Under the CWA, a National Pollutant Discharge Elimination System (“NPDES”) permit is required for discharges of any “pollutant” from a “point source” into navigable waters of the United States.[4] The term “point source” includes a “vessel or floating craft.”[5] The term “pollutant” includes “biological materials,” but specifically excludes “any sewage from vessels.” [6] EPA has relied on the regulation at issue, 40 C.F.R. § 122.3(a), to exclude: “effluent from properly functioning marine engines, laundry, shower, and galley sink wastes, or any other discharge incidental to the normal operation of a vessel,” from NPDES permitting program requirements. [7]

In September of 1999, Plaintiff environmental groups, among others, filed a petition asking EPA to repeal 40 C.F.R. § 122.3(a), arguing that the regulation was inconsistent with the CWA. After EPA denied plaintiffs’ petition, plaintiffs filed suit contending that EPA’s exclusion of vessel discharges—and specifically ballast water discharges—from the CWA’s NPDES permit requirements conflicted with the plain language of the CWA,[8] and that EPA’s denial of plaintiffs’ petition was arbitrary and capricious.[9] Although EPA acknowledged the tension between the plain language of the CWA and its regulation, EPA argued that “its denial of plaintiffs petition in 2003 was reasonable because Congress had assented to the EPA’s interpretation of the CWA in 40 C.F.R. § 122.3(a), in the thirty years since its promulgation.”[10]

Agreeing with plaintiffs that Congress had “directly spoken” to this issue, the Court held, in 2005, that EPA had exceeded its statutory authority in exempting ballast water discharges from the NPDES program, and denying plaintiffs’ petition to rescind 40 C.F.R. § 122.3(a). The court also found that Congress had not “acquiesced” to the EPA regulation, as the EPA claimed.[11] Accordingly, the court granted plaintiffs motion for summary judgment, and ordered EPA to repeal the regulation.[12]

After EPA made no “signs of moving to repeal the challenged regulation,” plaintiffs filed a motion for permanent injunction to force EPA to act on the court’s prior ruling.[13] The states of New York, Illinois, Michigan, Minnesota, Wisconsin, and Pennsylvania intervened in support of the environmental groups. The Shipping Industry Ballast Water Coalition (“Shipping Coalition”) intervened in support of defendant.

On September 18, 2006, the district court issued its second key ruling addressing the ballast water issue, granting plaintiffs’ motion for a permanent injunction. The Court’s ruling effectively gives EPA two years—or until September 30, 2008—to implement new regulations for vessel ballast water discharges.[14] In explaining its decision to wait two years before vacating the regulation, the Court noted the “national significance of the issues” and the “dramatic effect this Court’s ruling may have on the shipping industry and the agencies that issue NPDES permits.”[15] Nevertheless, the court determined that two years was a reasonable amount of time for EPA to correct the challenged regulation:

While the practical implications of the Court’s order make the Court wary of imposing a deadline on EPA that is too ambitious, the potential harm that ballast waters represent to our nation’s ecosystems leads the Court to conclude that there is an urgency to promulgating new regulations that EPA has not, to this point in the litigation, acknowledged.[16]

While the Court set a specific date on which it would vacate the regulation, it gave EPA “freedom to work around that date to find an appropriate solution.”[17] Additionally, despite the emphasis on ballast water in this article, and by the parties in the case, the court’s remedy applies to all vessel discharged that had been exempted in 40 C.F.R. § 122.3(a), rather than just ballast water. [18] Consequently, EPA must also address other types of vessel discharges, including the discharge of gray water (i.e. slightly used water, such as laundry or bathwater), bilge water, deck run-off, and blackwater (sewage), as a result of this decision.

Although vessel discharges historically have been excluded from CWA regulation, these discharges are addressed by Coast Guard regulations promulgated under the Non-Indigenous Aquatic Nuisance Prevention and Control Act of 1990 (“NANPCA”), 16 U.S.C. 4701 et seq.,[19] and the National Invasive Species Act of 1996 (“NISA”), Pub. L. No. 104-332, 110 Stat. 4073 (1996).[20] Coast Guard regulations impose ballast water monitoring requirements on all vessels equipped with ballast water tanks that operate in U.S. waters.[21] Other Coast Guard regulations impose mandatory ballast water management practices, and record-keeping requirements, for all vessels entering U.S. waters from beyond the U.S. exclusive economic zone (200 nautical miles offshore).[22] The regulations do not impose performance standards for the discharge of ballast water, or require management (or treatment) practices for all vessels engaged in coast-wide travel. While an International Maritime Organization (“IMO”) convention,[23] does require the phased implementation of performance standards for ballast water, that convention has not yet been ratified.

In the wake of the court’s ruling, “[t]he shipping industry is considering a range of options” including appeal, cooperative regulation, congressional action, or applying now for NPDES permits.[24] A shipping industry spokesman added that “the shipping industry is continuing to urge Congress to pass legislation codifying an international treaty’s framework [i.e. the IMO convention] for addressing ballast water, and clarifying the relationship between EPA and the U.S. Coast Guard in developing a national ballast water regulation program.”[25]

Environmentalists hailed the court’s ruling “for the taxpayers, American businesses, and environment.” Nina Bell, executive director of Northwest Environmental Advocates said “[n]ow we have a fighting chance to prevent further invasions of species that are clogging the intake pipes of drinking water facilities and power plants, harming the commercial fishing industry, and destroying habitat.”[26] Nevertheless, “[e]nvironmentalists say they fully expect EPA to appeal the case to the Ninth Circuit.”[27]

In addition to the federal court’s action, several states are taking action to address the ballast water issue. For example, on the same day that the district court issued its order, California Governor Schwarzanegger signed a California bill (S.B. 497) that will regulate the ballast water discharges of invasive species in state waters.[28] S.B. 497 requires ships to treat ballast water onboard to kill invasive species before discharging at California ports or coastal waters. California will adopt treatment standards for ballast water by January 1, 2008, and the standards will be phased in beginning in 2009. The discharge of invasive species will be prohibited from all ships by 2020.

Michigan has also passed legislation, and is developing a general permit for ballast water, which will regulate the discharges of ballast water at Michigan ports.[29] Other states including Minnesota, Wisconsin and Indiana are considering similar ballast water legislation and permitting programs. Neither Washington nor Oregon currently require a state clean water permit for ballast water discharges in state waters, or impose the types of ballast water management practices for ships, contemplated by the Great Lakes states, or California.