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No Permit Required for Stormwater Discharges from Logging Roads, Supreme Court Rules; Attention Shifts to EPA Rulemaking

March 25, 2013

The Supreme Court continued its recent trend of reversing Ninth Circuit environmental decisions,[1] holding last week in Decker v. Northwest Environmental Defense Center (NEDC) that stormwater discharges from logging roads are not “associated with industrial activity” and do not require permits under the Clean Water Act’s (CWA) National Pollutant Discharge Elimination System (NPDES) program.[2] The decision comes despite an eleventh-hour attempt by EPA to moot the issue by promulgating a rule clarifying that the types of discharges do not require permits under the CWA’s “Phase I” stormwater program.

The decision is welcome news to landowners, logging companies, and state and federal agencies in the west. But the decision does not completely put the issue to rest—NEDC has already filed a petition to review EPA’s new rule and litigation could continue. Although the Supreme Court’s decision certainly undermines the likelihood of that petition prevailing, the Supreme Court did not address a dominant issue before the lower courts—whether discharges from logging roads constitute “point sources” notwithstanding the Silvicultural Rule—nor did it address EPA’s new rule. Moreover EPA could move forward with additional rulemaking covering stormwater discharges from logging roads under the CWA’s “Phase II” stormwater program.

Background

The CWA prohibits the discharge of a “pollutant” into waters of the United States from a “point source” without a permit, such as an NPDES permit.[3] Section 402(p) of the CWA includes a phased approach for addressing stormwater discharges. Phase I covers enumerated sources of stormwater pollution, including stormwater “associated with industrial activity”[4]—a term that the CWA does not define. Under EPA’s historic regulations, that term includes discharges from “immediate access roads … used or traveled by carriers of raw materials, manufactured products, waste material, or by-products used or created by the facility.”[5] The Phase II stormwater regulations apply to any additional stormwater discharges that EPA designates to protect water quality. For such designated discharges, EPA need not require NPDES permits, but must “establish a comprehensive program” that “may include performance standards, guidelines, guidance, and management practices and treatment requirements, as appropriate.”[6]

EPA has excluded forest road runoff from the NPDES program almost ever since Congress passed the CWA. After refining the Silvicultural Rule in response to court action, the Silvicultural Rule changed little for approximately thirty-five years before the Ninth Circuit’s decision. The current language of the Silvicultural Rule limits “silvicultural point sources” to “rock crushing, gravel washing, log sorting, or log storage facilities which are operated in connection with silvicultural activities and from which pollutants are discharged into waters of the United States.”[7] Falling outside the definition are “non-point source silvicultural activities such as nursery operations, site preparation, reforestation and subsequent cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, surface drainage, or road construction and maintenance from which there is natural runoff.”[8]

The Ninth Circuit’s NEDC Decision

As discussed in previous editions of this newsletter, see Ninth Circuit Reissues Opinion Requiring NPDES Permits for Stormwater Discharges from Logging Roads, NEDC involved two state-owned logging roads that timber companies use and maintain for logging activities. NEDC brought a CWA citizen suit alleging that sediment discharges in stormwater from these roads require NPDES permits. The Ninth Circuit reversed the district court’s dismissal of that lawsuit and issued three key holdings.

First, it held that the Silvicultural Rule does not and cannot, consistent with the CWA, exempt runoff that is collected from logging roads and discharged from ditches or culverts to jurisdictional waters. Without expressly invalidating the Silvicultural Rule, the Ninth Circuit interpreted the Rule in a manner that effectively negated its utility as a safe harbor for parties like the defendants. Second, the Ninth Circuit held that discharges from logging roads fall within the scope of the Phase I regulations as stormwater discharges that are “associated with industrial activity” under CWA § 402(p) and EPA’s regulations, such that an NPDES permit is necessary. Finally, the Ninth Circuit held that it properly exercised jurisdiction over the case, determining that the plaintiff did not run afoul of the time limitations for challenging EPA regulations since the court merely addressed EPA’s interpretation of its rule that was first raised in an amicus brief before the court.

Lead-up to Supreme Court Review

In the wake of the Ninth Circuit decision, stakeholders moved in parallel, somewhat conflicting tracks to unwind—or at least blunt the impact of—the decision in NEDC. Congress initially developed momentum toward an amendment to the CWA, implementing a temporary moratorium on implementation of NEDC. See Opposition Mounts To Ninth Circuit Ruling Requiring NPDES Permit For Stormwater Runoff From Forest Roads. But by the time that moratorium expired on September 30, 2012, the bills moving through Congress had stalled.

In May 2012, while briefing for petitions for certiorari was ongoing, the White House endeavored to effectively overrule the Ninth Circuit’s decision through the regulatory process. EPA released a notice of intent to promulgate rulemaking to revise the Phase I stormwater regulations by specifying that stormwater discharges from logging roads are not stormwater discharges “associated with industrial activity.”[9] EPA made clear in its amicus brief at the certiorari petition stage that it intended this rulemaking to obviate the need for Supreme Court review.[10]

Notwithstanding EPA’s efforts, the Supreme Court granted certiorari in June 2012. Undeterred, EPA moved forward with a rapid rulemaking process during the Supreme Court briefing stage. EPA released a proposed rule in September 2012[11] and, not even three months later, a final rule—only days before oral argument.[12] EPA’s final rule revises its Phase I stormwater regulations consistent with the initial notice of intent. According to EPA, while the Ninth Circuit determined that stormwater discharges from logging roads are “associated with industrial activity” under these regulations, the rule specifies that the only facilities under the SIC “logging” category (SIC 2411) that are “industrial” are “rock crushing, gravel washing, log sorting, and log storage.”[13] EPA asserts that the “immediate access roads” definition that the Ninth Circuit focused on does “not include public access roads that are state, county, or federal roads such as highways or Bureau of Land Management roads which happen to be used by the facility.”[14] Logging roads differ from “immediate access roads,” according to EPA, because logging roads have “multiple uses, including recreation and general transportation, and commonly extend over long distances.”[15] EPA’s intent is to implement “the NPDES program requirements … with regard to ‘immediate access roads’ in the same way they were implemented prior to the decision by the Ninth Circuit.”[16]

Under the rule, EPA clarifies, “contrary to the Ninth Circuit’s decision in NEDC,” that discharges of stormwater from silvicultural facilities other than rock crushing, gravel washing, log sorting, and log storage facilities “do not require an NPDES permit,”[17] regardless of whether “they are point source discharges.”[18] EPA also states that, because stormwater discharges from logging roads fall within the Phase II stormwater regulations, EPA will use its authority to consider appropriate regulatory approaches to these discharges as it “continues to review available information on the water-quality impacts of stormwater discharges from forest roads [including logging roads], as well as existing practices to control those discharges and is considering a range of options to address such discharges, which could include designating a subset of stormwater discharges from forest roads for regulation under the Agency’s section 402(p) rulemaking authority.”[19]

Briefing Before the Supreme Court

By the time the Court heard oral argument, 22 amici had submitted briefs, the vast majority of which supported the petitioners. A summary of the briefing from the petitioners, respondents, and many of the amici is available in a previous edition of this newsletter. Supreme Court Preview: The 2012/2013 Docket: Georgia-Pacific West v. Northwest Environmental Defense Center.

Generally, the majority of the briefs underscored the petitioners’ arguments that: (1) the Ninth Circuit failed to defer properly to EPA’s determination that NPDES permits were not required, both because logging roads are not “point sources” and because logging roads are not “associated with industrial activity”; and (2) the lower courts did not have jurisdiction over the lawsuit, because the suit should have been viewed as a direct challenge to the Silvicultural Rule and the Phase I stormwater rule in an enforcement proceeding, the time for which is long passed under the CWA’s 120 day statute of limitations. Several amici also pointed out the importance and efficacy of local best management practices to address the environmental impacts of runoff from logging roads and the financial and practical burden that imposing NPDES requirements could have on those that own, use, and regulate logging roads.

The United States’ amicus brief, filed on the same day that its proposed rule was published in the Federal Register, largely argued that the Ninth Circuit failed to defer to EPA’s reasonable interpretation of the CWA in the Silvicultural Rule and EPA’s interpretation of the scope of its Phase I regulations. Importantly, the United States attempted to provide the Court with a short cut by assuring the Court that it could dispense with the case merely by affording EPA deference to its reasonable interpretation of its own regulations. According to the United States, “the case will be at an end” if the Court rejects the Ninth Circuit’s holding that the pertinent discharges are “associated with industrial activity,” and doing so “would be the soundest and most straightforward way of deciding th[e] case.”[20]

Oral Argument and Supplemental Briefing

The late arrival of EPA’s final rule perplexed and clearly frustrated the Supreme Court during oral argument. Chief Justice Roberts chided the Deputy Solicitor General for blindsiding the Court with the final rule instead of letting the Court know in early November that the rule had been submitted to the Office of Management and Budget for final approval.[21] The Justices focused the majority of their questions on what the Court’s proper role should be in the wake of the EPA rule, particularly given that the petitioners could still face penalties, attorney’s fees, and potential injunctive relief for past activities that are now consistent with CWA regulations.

To assist the Court’s determination of whether and to what degree the Court should address the merits of the cert petitions, the parties submitted supplemental briefing in January 2013 that was limited to the impact of EPA’s rule on the case. The respondent argued that the Court should either dismiss the case as improvidently granted, thereby allowing the lower courts to grapple with the impact of the EPA rule, or, in the alternative, affirm the Ninth Circuit.[22] The respondent argued that it retained prospective relief, because the new rule did not categorically exempt all logging roads from the NPDES program, and retroactive relief, because a valid claim existed for past violations notwithstanding the new rule. Decker and EPA urged the Court to determine that the issue of whether the Ninth Circuit failed to defer to EPA’s interpretation of its prior rule was moot in light of the new Industrial Stormwater Rule, but disagreed regarding whether the Court should nonetheless address the Ninth Circuit’s statutory interpretation of “point source” in this context. While Decker believed that the Court could yet resolve that issue, EPA urged the Court to allow lower courts to address it during review of EPA’s new rule. Georgia-Pacific West, Inc. and other members of the timber industry argued that the new EPA rule did not moot the case and that, even if the Court declined to address the merits, it should nevertheless vacate and remand the Ninth Circuit’s decision.

The Supreme Court’s Opinion

In an opinion written by Justice Kennedy, the Supreme Court reversed the Ninth Circuit’s decision, largely following the short cut that the United States set out in its amicus brief. The Court did not address whether the discharges at issue were from “point sources” under the CWA and the Silvicultural Rule, instead holding that the stormwater discharges were not “associated with industrial activity,” and therefore did not fall within the Phase I stormwater regulations. In doing so, the Court did not reach the scope or validity of the new EPA rule, instead extending deference to EPA’s interpretation that its prior Industrial Stormwater Rule did not cover the discharges at issue.

The Court began its opinion by dispensing with two procedural issues: (1) whether the new EPA rule mooted the cert petitions; and (2) whether the lower courts properly exercised jurisdiction over the case. On the first point, the Court concluded that the petitions were not moot, because the Court retained the ability to grant effectual relief over a live controversy “regarding whether petitioners may be held liable for unlawful discharges under the earlier version of the Industrial Stormwater Rule.”[23] The Court also acknowledged that NEDC purported to have potential claims under the new rule, but that, nonetheless, even the past rule might afford NEDC with the opportunity to pursue penalties, attorney fees, and injunctive relief for past discharges.

On the second issue, the Court sided with the respondents, concluding that the Ninth Circuit “was correct to rule that the exclusive jurisdiction mandate” in CWA section 1369(b) did not apply, because it “does not bar a district court from entertaining a citizen suit under § 1365 when the suit is against an alleged violator and seeks to enforce an obligation imposed by the Act or its regulations.”[24] According to the Court, NEDC’s claim did not challenge an existing rule; it sought enforcement under a permissible reading of a rule.

The merits portion of the opinion, in which all but Justice Scalia joined,[25] is a technical analysis of whether to defer to EPA’s interpretation that the prior Phase I regulations did not reach the respondents’ stormwater discharges. The Court summarily rejected NEDC’s argument that the statutory phrase—”associated with industrial activity”—unambiguously covered discharges of channeled stormwater runoff from logging roads. The Court opined that the terms “industrial” and “industry” can have multiple meanings, covering either “business activity in general,” or a more limited meaning of “economic activity concerned with the processing of raw materials and manufacture of goods in factories”—the latter of which does not “necessarily encompass outdoor timber harvesting.”[26]

The Court viewed NEDC’s second argument as “more plausible”—that EPA’s prior Industrial Stormwater Rule unambiguously required permits for the discharges at issue by requiring permits for stormwater discharges from “immediate access roads … used or traveled by carriers of raw materials” for particular categories of industries.[27] The Court evaluated each party’s interpretation of whether “logging” qualifies as a “category of industry” subject to the provision.

Ultimately, the Court sided with EPA’s assertion that the relevant SIC code was meant to refer to “traditional industrial sources such as sawmills.”[28] The Court found traction in the definition of discharges “associated with industrial activity” as discharges “‘from any conveyance that is used for collecting and conveying storm water and that is directly related to manufacturing, processing or raw materials storage areas at an industrial plant.’”[29] According to the Court, EPA reasonably concluded that “the conveyances at issue are ‘directly related’ only to the harvesting of raw materials, rather than to ‘manufacturing,’ ‘processing,’ or ‘raw materials storage areas,’” and that, “even if logging as a general matter is a type of economic activity within the regulation’s scope,” it is reasonable to interpret the regulation as limited to discharges “related in a direct way to operations ‘at an industrial plant’ in order to be subject to NPDES permitting.”[30] The Court rejected NEDC’s assertion that the rule elsewhere required NPDES permits for stormwater associated with other outdoor activity, such as mining, landfills, and large construction sites, because EPA could reasonably conclude that those types of activities “tend to be more fixed and permanent than timber-harvesting operations are and have a closer connection to traditional industrial sites.”[31] Moreover, the Court surmised that stormwater associated with these types of economic activities could nonetheless only trigger the need for a permit if “the discharges [are] directly related to manufacturing, processing or raw materials storage areas at an industrial plant.”[32]

Having concluded that the Phase I regulations are subject to multiple interpretations, the Court cited the “well established” rule that “an agency’s interpretation need not be the only possible reading of a regulation—or even the best one—to prevail. When an agency interprets its own regulation, the Court, as a general rule, defers to it unless that interpretation is plainly erroneous or inconsistent with the regulation.”[33] In no doubt aided by information in multiple amicus briefs, the Court observed that EPA’s interpretation of its rule—and its treatment of logging road runoff—”exists against a background of state regulation with respect to stormwater runoff from logging roads,” such as Oregon’s “extensive effort to develop a comprehensive set of best practices to manage stormwater runoff from logging roads.”[34] As a result, EPA could have determined, based on its “broad discretion” that the CWA affords to EPA “in the realm of stormwater runoff,” that “further federal regulation in this area would be duplicative or counterproductive.”[35] The Court concluded that the prior version of EPA’s Industrial Stormwater Rule, “as permissibly construed by the agency, exempts discharges of channeled stormwater runoff from logging roads from the NPDES permitting scheme,” and declined to address whether the conveyances at issue constitute point sources.[36]

Concurring and Dissenting Opinions

Chief Justice Roberts (joined by Justice Alito) and Justice Scalia issued separate opinions focused entirely on whether to up-end the Auer/Seminole Rock doctrine underlying the majority’s decision, a principle “going to the heart of administrative law” that arises “as a matter of course on a regular basis.”[37] In a concurring opinion, Chief Justice Roberts concluded that the doctrine could be reconsidered “in an appropriate case,” but that, having not been raised by either of the parties, “this is not that case.”[38] Justice Scalia disagreed, authoring a lengthy dissenting opinion that, according to Chief Justice Roberts, informed the bar “that there is some interest in reconsidering” the Auer/Seminole Rock cases, and provided the bar with “a concise statement of the arguments on one side of the issue.”[39] Justice Scalia opined that the Court should no longer give “effect to a reading of EPA’s regulations that is not the most natural one, simply because EPA says that it believes that unnatural reading is right. It does this, moreover, even though the agency has vividly illustrated that it can write a rule saying precisely what it means—by doing just that while these cases were being briefed. Enough is enough.”[40] In Justice Scalia’s view, the exclusion of “natural runoff” in the Silvicultural Rule does not reach channeled runoff from logging roads, and discharges of such runoff falls within the ambit of discharges “associated with industrial activity.”

For more information regarding this article, please contact any member of Marten Law’s Water Quality practice group.

[1] See Supreme Court Clarifies Definition of “Discharge” under CWA.

[2] No. 11-338, 2013 WL 1131708 (U.S. Mar. 20, 2013). A separate petition, Georgia-Pacific West v. NEDC, 11-347, was consolidated with Decker, both of which sought review of the Ninth Circuit’s decision in NEDC v. Brown, 640 F.3d 1063 (9th Cir. 2011).

[3] 33 U.S.C. §§ 1311(a), 1342.

[4] Id. § 1342(p)(2)(B).

[5] 40 C.F.R. § 122.26(b)(14).

[6] 33 U.S.C. § 1342(p)(6).

[7] 40 C.F.R. § 122.27(b)(1).

[8] Id. (emphasis added).

[9] 77 Fed. Reg. 30473 (May 23, 2012).

[10] See Supreme Court to Review Ninth Circuit Decision Requiring Stormwater Permits for Runoff from Logging Roads.

[11] 77 Fed. Reg. 53834 (Sept. 4, 2012).

[12] 77 Fed. Reg. 72970 (Dec. 7, 2012).

[13] Id. at 72970

[14] Id. at 72971.

[15] Id. at 72972.

[16] Id.

[17] Id. at 72970.

[18] Id. at 72970-71 n.1.

[19] Id. at 72972.

[20] Brief for the United States as Amicus Curiae Supporting Petitioners, 14 (Sept. 4, 2012).

[21] Transcript at 19.

[22] Supplemental Brief for Respondent (Jan. 22, 2013), available here.

[23] Decker, 2013 WL 1131708 at 8.

[24] Id. at *7.

[25] Justice Breyer took no part in the case.

[26] Decker, 2013 WL 1131708 at *9 (citation omitted).

[27] Id. (citing 40 C.F.R. § 122.26(b)(14).

[28] Id. at *10 (citation omitted).

[29] Id. (quoting 40 C.F.R. § 122.26(b)(14)).

[30] Id. (citations omitted).

[31] Id.

[32] Id. (internal quotations and citation omitted).

[33] Id. at *11 (internal quotations and citation omitted).

[34] Id. at *11.

[35] Id.

[36] Id. at *12.

[37] Id. (Roberts, C.J., concurring).

[38] Id. (Roberts, C.J., concurring).

[39] Id. (Roberts, C.J., concurring).

[40] Id. (Scalia, J., concurring in part and dissenting in part).

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