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Private Landowners Granted Right to Challenge EPA’s Clean Water Act “Impaired Waters” Listing Decisions

March 3, 2011

In a case of first impression, the Ninth Circuit recently held that a “perceived” decrease in value of private property following EPA’s approval of a state’s “impaired waters” listing under Section 303 of the Clean Water Act (CWA) is sufficient to establish the standing of a private plaintiff to challenge the agency’s decision. The case, Barnum Timber Co. v. EPA,[1] gives private property owners adjacent to creeks, rivers and other waterbodies in the West a seat at the table in CWA listing decisions, a step that often occurs long before affirmative obligations are imposed on uses of the private properties through the total maximum daily load (TMDL) program.

Statutory Background to the CWA TMDL Program

CWA § 303(d) requires states to identify so-called “impaired waters,” where technology-based effluent limits and other pollution control requirements “are not stringent enough to implement any water quality standard.”[2] For these waters on the § 303(d) “list,” states must prepare TMDLs, which are calculations of the maximum “load” of a pollutant that a waterbody can receive from all sources, including point, nonpoint, and background sources, without exceeding the water quality standards for the pollutant. A “wasteload allocation” is the share of the loading capacity for a particular pollutant that comes from existing and future “point” sources that are subject to a National Pollutant Discharge Elimination System (NPDES) permit under CWA § 402.[3] A “load allocation” is the share of the loading capacity attributable to nonpoint sources, such as runoff. Generally, the load and wasteload allocations comprise the TMDL.[4]

States must submit impaired waters listings and draft TMDLs to EPA for approval, and then incorporate the TMDLs into their continuing planning processes and water quality management plans.[5] If EPA approves the listing and the TMDLs, the state must incorporate the TMDLs into the current plan for the state’s waters under § 303(e). If EPA disapproves the listing and the TMDL, EPA must, within 30 days of disapproval, identify impaired waters and establish loads for those waters as necessary to implement the applicable water quality standards, which the state must incorporate into the § 303(e) plans. Neither the CWA nor EPA’s implementing regulations prescribe the method whereby a state must allocate an impaired water body’s loading capacity between existing or future sources. EPA regulations allow tradeoffs between point and nonpoint sources, where implementation of best management practices or nonpoint source controls can reduce the load allocation and allow for a larger wasteload allocation for point sources.[6]

Factual and Procedural Background to Barnum v. EPA

The plaintiff in Barnum v. EPA, Barnum Timber Company (Barnum), owns and operates nonindustrial timberlands and rangelands in the Redwood Creek watershed near Eureka, California. In 1992, California listed Redwood Creek as impaired by sediment on California’s list of CWA § 303(d) impaired waters. When California reevaluated its impaired waters list in 2002, as required under CWA § 303(d)(2), California retained Redwood Creek as an impaired water due to sediment, but also due to temperature impairments. California later retained Redwood Creek as impaired by both sediment and temperature in 2006. EPA approved California’s updated § 303(d) list in 2006.

Barnum thereafter sued EPA, alleging that EPA’s decision to retain Redwood Creek on the § 303(d) list of impaired water bodies was arbitrary and capricious under the federal Administrative Procedure Act, because the decision was not supported by substantial evidence of the impairment. Barnum alleged that it suffered an “injury” because (1) it had “suffered extra costs to satisfy land use restrictions” triggered by the listing and (2) its “property values decrease[d].”[7] Barnum sought a declaration of the erroneous listing and injunctive relief.

EPA moved to dismiss the complaint for lack of standing under Article III of the U.S. Constitution. The district court evaluated Barnum’s alleged standing under the Supreme Court’s well-established three-step test:

(1) the plaintiff must have suffered an “injury in fact” – an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of; and (3) it must be “likely,” as opposed to merely “speculative,” that the injury will be redressed by a favorable decision.[8]

In September 2008, the district court granted EPA’s motion to dismiss without prejudice, finding that complaint “offered only conclusory and non-specific claims of injury” regarding the allegedly decreased property values and failed to establish that the alleged injuries were “caused by or are in any way connected to the EPA’s 2006 approval of California’s listing of Redwood Creek.”[9] According to the district court, the alleged injury was caused by the restrictions California placed on the use of the property. These restrictions were not directly traceable to EPA’s approval of the § 303(d) listing, according to the district court, because a TMDL had yet to be developed for Redwood Creek and the regulations bore no discernible relationship to EPA’s challenged action. The district court also found that Barnum failed to support its argument that the reduction of property values stemmed from the listing itself.

Barnum thereafter moved to amend its complaint by including declarations of California forestry experts explaining that the property value of Barnum’s land had decreased because of the Redwood Creek listing. These experts opined that the financial impact of the listing could not be quantified, but that “the Section 303(d) listing of a water body reduces the value of nearby properties because the public perceives that onerous regulations will be forthcoming.”[10] The district court denied Barnum’s motion to amend, holding that “the proposed amendment would not cure the standing problem,” and dismissed Barnum’s complaint.[11]

The Ninth Circuit’s Majority Decision

In a 2-1 decision, the Ninth Circuit reversed the district court’s dismissal of Barnum’s complaint finding that the amended complaint adequately alleged all three elements of standing. Although EPA did not dispute Barnum’s allegation that it suffered an injury in fact, the court determined that Barnum satisfied this element at the pleading stage by presenting the declarations of forestry experts testifying to the property value reductions.

Under the second “causal connection” prong, the court held that Barnum’s reduced property values were causally connected to EPA’s retention of Redwood Creek as an impaired water body, because the listing “fe[d] the public’s and the market’s perception that Barnum’s timber operations are restricted by the listing.”[12] The expert declarations supported this finding, according to the court, because the public has access to impaired waters lists and perceives that a listed water will be subject to additional and onerous regulation, even where such regulation has not actually occurred. These allegations of “specific facts plausibly explaining causality and supported by competent declarations,” in the court’s view, were more than sufficient to meet Barnum’s “burden to demonstrate the causal connection element of Article III standing at the pleading stage.”[13] The court declined to evaluate Barnum’s argument that its alleged injury was causally connected to the application of state forestry practice rules that were themselves triggered by EPA’s approval of the listing.

The court also held that the alleged injury could be redressed by the current action, because, if Barnum succeeds on the merits of showing that EPA’s listing of Redwood Creek was arbitrary and capricious, the district court could grant relief by removing the waterbody from the § 303(d) list. This removal, according to the court, would directly remedy the alleged diminution in Barnum’s property values. The court distinguished a 1996 Ninth Circuit standing decision that the district court relied on in rejecting Barnum’s claim, San Diego County Gun Rights Committee v. Reno,[14] which held that the plaintiffs lacked standing to challenge a federal gun control law based on the assertion that the law caused the price of certain guns to increase. In that case, the plaintiffs’ alleged injury – higher gun prices – related to an allegedly increased price across the entire market and was not directly connected to federal – as opposed to state – gun control laws. Here, according to the court, Barnum properly pled a specific injury to its property – as opposed to a market as a whole – that was sufficiently explicit to ensure that relief would not be merely speculative. Moreover, the court rejected the argument that Barnum’s alleged injury was caused solely by a third party – California – because EPA’s action will lead to regulatory restrictions on Redwood Creek, Barnum’s property values will allegedly decrease based on these restrictions, and a successful challenge to EPA’s action could reduce or eliminate those restrictions. The court vacated the district court’s judgment and remanded.

Dissent

In a lengthy dissent, Judge Gwin opined that Barnum’s claimed injuries were conjectural and hypothetical, with no causal connection between EPA’s acts and the speculative injuries claimed, and that even a successful action against EPA would not necessarily redress this speculative injury. The dissenting opinion focused on the dual role of EPA and the states in the TMDL program specifically, but also with respect to point and nonpoint source control generally under the CWA. According to Judge Gwin, the states – and not EPA – are charged with carrying out nonpoint source controls, and are under no compulsion to develop or enforce such controls through the TMDL program or otherwise. As a result, in Judge Gwin’s view, “nonpoint loading limitations are only enforced under state law,” and the “majority opinion incorrectly suggests that the EPA, and not California, controls nonpoint water standards.”[15]

With this perception of the CWA’s structure as a backdrop, the dissent rejected all three elements of the standing analysis in this case. Barnum’s alleged injury is “highly speculative,” according to the dissent, “and would depend upon the occurrence of a long chain of future events,” such as Redwood Creek remaining on the impaired waters listing, California developing a temperature and sediment TMDL that affects timber, and California adopting and enforcing a plan for Redwood Creek in a way that actually impacts Barnum.[16] Because Barnum’s alleged injury is predicated on all of these contingent events occurring, the dissent continued, general assertions of public perception are too speculative and uncertain to satisfy an injury in fact. For many of the same reasons, the dissent disputed that Barnum’s alleged property value reduction was necessarily caused by EPA: EPA’s approval of the listing did not coerce California to design and enforce a TMDL or other methods to control sediment and temperature loadings to the creek that would impact Barnum’s property. Although California elected to tie its forestry practice regulations to § 303(d) listings, Judge Gwin opined, California’s decision regarding how best to regulate nonpoint source discharges to the waterbody are California’s alone – and any alleged injury to Barnum’s property values are caused not by EPA’s past actions, but by California’s potential future actions. Finally, according to the dissent, removal of Redwood Creek from the § 303(d) list would not redress Barnum’s claimed injury, because it would not dictate how or whether California would require Barnum to implement measures to improve water quality in the watershed.

For more information on this case or Marten Law’s Water Quality practice, please contact Meline MacCurdy.

[1] 2011 WL 383012 (9th Cir. Feb. 3, 2009).

[2] 33 U.S.C. § 1313(d)(1).

[3] Id. § 1342.

[4] See 40 C.F.R. Part 130.

[5] 33 U.S.C. §§ 1313(d)(2), (e); 40 C.F.R. § 130.6.

[6] See 40 C.F.R. § 130.2(i) (stating, in definition of TMDL, that, if BMPs “or other nonpoint source pollution controls make more stringent load allocations practicable, then wasteload allocations can be made less stringent,” such that “the TMDL process provides for nonpoint source control tradeoffs”). However, under EPA guidance, the states must provide assurances that these reductions will in fact occur. See EPA, Guidance for Water Quality Based Decisions: The TMDL Process (Apr. 1991).

[7] Barnum v. EPA, 2011 WL 383012, *2 (9th Cir. Feb. 3, 2009).

[8] Barnum Timber Co. v. EPA, 2008 WL 4447690, * 4 (N.D. Cal. Sept. 29, 2008) (citations omitted).

[9] Id. at *4-5.

[10] Barnum Timber Co. v. EPA, 2008 WL 5115088, *3 (N.D.Cal. Dec. 4, 2008).

[11] Id.

[12] Barnum, 2011 WL 383012 at *3.

[13] Id. at *4.

[14] 98 F.3d 1121 (9th Cir. 1996).

[15] Barnum, 2011 WL 383012 at *7.

[16] Id. at * 9.

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