Eleventh Circuit Upholds EPA'S Rule Excluding Water Transfers from Clean Water Act Permit Requirements

On June 4, 2009, the United States Court of Appeals for the Eleventh Circuit reversed the Southern District of Florida's ruling that discharge permits were required for the transfer of water from canals collecting industrial and residential runoff into Lake Okeechobee in the Everglades. The Eleventh Circuit relied on the Environmental Protection Agency's (“EPA”) Water Transfers Rule, which exempts water transfers from National Pollutant Discharge Elimination System (“NPDES”) permits under the Clean Water Act.

EPA's Water Transfers Rule

The Clean Water Act requires NPDES permits in order to discharge pollutants into navigable waters. “Discharge of a pollutant” is defined as “any addition of any pollutant to navigable waters from any point source.” The Act does not define “addition.” The question of whether water transfers could result in the “addition” of pollutants to navigable waters has been in litigation since 2004.

In the midst of the litigation, EPA issued the Water Transfers Rule (“Rule”). The rule excludes water transfers from NPDES permits because transfers do not result in the “addition” of pollutants to navigable waters. Usually, water transfers route water through tunnels, channels, or natural streams and either pump or passively direct it for uses such as public water supply, irrigation, power generation, flood control, and environmental restoration. The routing of water in this manner typically moves pollutants from the donor water body to the receiving water body, but EPA reasoned that the statutory language and structure of the Clean Water Act indicate that Congress did not intend to subject water transfers to NPDES permits. EPA assistant administrator of water Ben Grumbles stated: “Clean water permits should focus on water pollution, not water movement.”

EPA based its reasoning, in part, on the fact that state programs regulating transfers existed when the Act was enacted and Congress clearly expressed that the Act should not unnecessarily interfere with existing programs that regulate the allocation of water. (Clean Water Act § 101(g).) EPA also stated that “addition” is a general term that is undefined by statute. Accordingly, it is reasonable to interpret “addition” as not including the mere transfer of water.

Eleventh Circuit Decision

The Eleventh Circuit is the first court to address the “addition . . . to navigable waters” issue in light of EPA's Water Transfers Rule. The Court's decision focused on whether the Rule is a reasonable construction of an ambiguous statute. First, the Court found that the “addition . . . to navigable waters” language can be used to support an interpretation that “waters” refers to waters in the individual sense or as one unitary whole. The immediate statutory context of the language does not clarify its meaning, nor does the broader context of the Clean Water Act as a whole. Accordingly, the Court concluded that two reasonable interpretations of “addition . . . to navigable waters” exist. One is that it means “any addition . . . to [any] navigable water,” the other is that it means “any addition . . . to navigable waters [as a whole].” The Court further concluded that the existence of two reasonable, competing interpretations is the very definition of ambiguity.

Because the language “addition . . . to navigable waters” is ambiguous, the Court next looked to determine whether EPA's rule, which accepts the unitary water theory that transferring pollutants between navigable waters is not an “addition . . . to navigable waters,” is a permissible construction of the ambiguous language. The Court concluded that the Rule is a reasonable, and therefore permissible, construction. Accordingly, unless EPA rescinds or Congress overrides the Rule, the Court is bound to give effect to it.

Conclusion and Implications

This decision is welcome news in light of Governor Schwarzenneger's executive order on June 4, 2008 – exactly one year prior to the Eleventh Circuit's decision – declaring a statewide drought. Executive Order S-06-08 directs the Department of Water Resources (“DWR”) to facilitate water transfers in order to address shortages across the state. DWR responded by establishing the 2009 Drought Water Bank, a state-run water bank that will purchase water for transfer to buyers at risk of experiencing water shortages due to the drought. The burden of the NPDES permit process would have added considerable delay and expense to water transfers and to the operation of the federal Central Valley Project and the State Water Project. While an appeal of the decision to the Supreme Court is expected, the Eleventh Circuit's decision sets an important precedent and – at least for the present -- insulates the two water projects and the 2009 Drought Water Bank from the burden of NPDES permits.

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