In a split 2-1 decision, the 2d Circuit Court of Appeals affirmed EPA's 2008 "Water Transfer Rule" which exempted water management facilities from obtaining Clean Water Act National Pollutant Discharge Elimination System permits. The Water Transfer Rule was an outgrowth of the 2004 Supreme Court decision in South Florida Water Management District v. Miccosukee Tribe, and is important for flood control projects, water supply particularly in arid areas, dams and hydropower generation, and related activities involving the necessary movement of water. Several environmental organizations and governments challenged the rule in the District Court for the Southern District of New York which invalidated the rule, holding that the exemption was contrary to reasonable interpretation of the Clean Water Act. Catskill Mountains v. EPA, 8 F. Supp. 3d 500 (S.D.N.Y. 2014).
The Second Circuit reversed, finding that EPA was entitled to deference, and that its decision to exempt transfers of water from the NPDES permitting requirements was not unreasonable, or arbitrary and capricious. The Court noted that the rule cited sound policy reasons, allowing states to allocate water quantity. A copy of the decision may be found here.
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