In a pivotal opinion, the 8th Circuit vacated EPA’s across-the-board prohibitions on the use of mixing zones for primary contact recreation waters and “blending” for peak wet weather flows. Iowa League of Cities v. EPA, Case No. 11-3412 (March 25, 2013). In this case, the Iowa League of Cities challenged two letters penned by EPA stating that mixing zones and blending were not permissible. EPA argued that these letters were not “promulgations” that could be challenged, but were merely interpreting existing regulations. Reviewing the regulatory history, however, the 8th Circuit disagreed concluding that the existing regulations left states discretion to permit the use of such mixing zones and blending of primary treatment waters so long as water quality standards are met. The letters, on the other hand, expressed clear and mandatory prohibitions, which had a “binding” effect on regulated entities.
After concluding that the letters were promulgations, the 8th Circuit turned to the merits of whether the “letters” were validly enacted by EPA. In its analysis, the Court was particularly concerned with the change that these “new” mandatory prohibition would have on regulated entities:
League members must either immediately alter their behavior or play an expensive game of Russian roulette with taxpayer money, investing significant resources in designing and utilizing processes that—if these letters are in effect new legislative rules—were viable before the publication but will be rejected when the letters are applied as written.
Indeed, with respect to the blending issue, the Court noted that up until 2003 that there was “widespread” use and acceptance of blending in the industry and that it was only in 2005 that EPA circulated a draft policy that proposed to eliminate blending (and use of a non-biological technology for treatment of primary treatment waters) without a demonstration by a regulated entity that there were no feasible alternatives for such a process. See 70 Fed. Reg. 76,013 (12/22/2005). 2005 Blending Policy. The policy was never finalized and permits were previously issued that allowed blending with no objection from EPA. However, EPA’s position in the subsequent letter was that blending was mandatorily prohibited.
The challenged letter, thus, expressly changed the existing landscape. Since entities have relied upon the agency’s prior position in expending resources to comply with Clean Water Act requirements, EPA’s failure to abide by the notice-and-comment procedures of the Administrative Procedures Act (APA) was fatal with respect to both its mixing zone and blending prohibitions. See 5 U.S.C. §706(2)(D).
Further, even if properly enacted, the Court determined that EPA lacked statutory authority to prohibit blending. Under the Clean Water Act, 33 U.S.C. §1311 (b)(1)(B), EPA has authority to establish effluent limitations based upon secondary treatment. However, these limitations are restricted to regulations governing “discharges from point sources into navigable waters.” 33 U.S.C. §1362(11). Indeed, there is no question that where blending has been utilized in the industry, the regulated entity is still subject to water quality standards for its effluent that apply at the end-of-pipe discharge that enters the navigable waterway. However, the blending prohibition in essence applies an effluent limitation to the discharge of flows from one internal treatment unit to another, and not at the end-of-pipe. It thus requires the regulated entity to meet an effluent limitation at point prior to discharge to a waterway. Per the 8th Circuit:
We cannot reasonably conclude that [EPA] has the statutory authority to do so. … Therefore, insofar as the blending rule imposes secondary treatment regulations on flows within facilities, we vacate it as exceeding the EPA’s statutory authority.
The 8th Circuit’s decision is important for three primary reasons:
- The first and foremost being the merits issue. Entities that have relied upon blending technology in their facilities or mixing zones in primary contact waters to meet water quality standards cannot be prohibited from their use without notice and comment.
- Secondly, application of effluent limitations to internal treatment points is beyond the statutory authority of EPA which is limited to promulgation of limitations for “discharges of pollutants from a point source.” See also Am. Iron & Steel Inst. v. EPA, 115 F.3d 979, 996 (D.C. Cir. 1997). This determination will have broader implications that just this decision.
- Finally, this case is certainly instructive for regulated entities in contexts outside of the Clean Water Act (or this particular issue) on what constitutes a challengeable agency action. The decision opens the door for review of other agency policy statements that articulate a change in policy that is considered binding on the regulated community. Indeed, the implications of this decision may be far-reaching.