Stephen Humes is a Partner for Holland &
New York office.
In a major water rights case that pits the practical needs of
drinking water system operators against environmentalists,
conservationists, and some state and tribal governments, the Court
of Appeals for the Second Circuit decided recently that water
transfers for drinking water systems are exempt from the Clean
Water Act pollution permitting program.
In upholding the 2008 Water Transfers Rule, the Second Circuit
Court of Appeals held that the U.S. Environmental Protection Agency
was entitled to exclude water system transfers from the National
Pollutant Discharge Elimination System (NPDES) permitting
requirements. The plaintiffs argued that such water transfers could
move harmful pollutants from one body of water to another.
Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA
(Catskill III), 14-1823, (2d Cir., 2017).
The dispute bears the hallmark of a case bound for the U.S.
Supreme Court, as national environmental organizations, led by
Trout Unlimited, Inc., fishermen, sportsmen, Riverkeeper, Inc. and
northeastern states, including New York, Connecticut, Delaware,
Illinois and Maine, line up against the EPA, western states, and
water districts and utilities from San Francisco to New York City
and South Florida.
"Because New York City cannot tap the rivers, bays, and
ocean that inhabit, surround, or, on occasion, inundate it to slake
the thirst of its millions of residents, it must instead draw water
primarily from remote areas north of the City, mainly the Catskill
Mountain/Delaware River watershed west of the Hudson River, and the
Croton Watershed east of the Hudson River and closer to New York
City," Judge Sack waxed poetically in a lengthy opinion that
even starts out quoting poetry.1
Water transfers, which drinking water systems have been
conducting for decades, connect and convey water supplies between
two water bodies before any end user, such as an industrial,
commercial or municipal consumer, uses the water. While EPA had
never required such water transfers to become subject to the NPDES
permitting requirements of the Clean Water Act, it ultimately
enacted the Water Transfer Rule to respond to a growing chorus from
environmental and conservation groups that claimed water transfers
can move harmful pollutants from one water body to another.
The court analyzed the case using the classic two-step analysis
set forth by the U.S. Supreme Court in Chevron v. Natural
Resources Defense Council (referred to as
"Chevron deference"), pursuant to which the
Court first determines if the language of the statute at issue
clearly proscribes the matter and, if not, whether the agency's
interpretation of the statute is reasonable. After concluding
that the Clean Water Act does not expressly address water transfers
and, therefore, inferring that Congress must have decided to defer
to the EPA the interpretation of the statute to water transfers,
the Court examined the reasonableness of EPA's judgment.
"The agency provided a sufficiently reasoned explanation for
its interpretation of the Clean Water Act in the Water Transfers
Rule," the Court explained.
Among the justifications for EPA's reasoning, the Court
relied on the longstanding practice of and Congress's
acquiescence to water transfers, practical concerns regarding
compliance costs (the defendants' arguments in the case
indicated compliance costs could exceed $4.2 billion), and the
existence of alternative means for regulating pollution resulting
from water transfers. New York City argued that it would be
required to construct an expensive water treatment plant if an
NPDES permit were required for its transfers. Other federal
statutes, including the Safe Drinking Water Act, provided an
acceptable alternative to regulation, the Court concluded.
1. "Water, water, everywhere/Nor any drop to
drink," by Samuel Taylor Coleridge's The Rime of the
Ancient Mariner (1798).
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