USEPA filed on May 9 a Petition for Rehearing En Banc of the 8th Circuit’s decision in Iowa League of Cities v. USEPA , which held that USEPA failed to abide by proper notice and comment procedures and further lacked authority under the Clean Water Act to prohibit the use of blending by wastewater utilities. (See our prior blog post for analysis of decision). The Petition for Rehearing focuses on two main issues from the opinion: 1) whether USEPA’s letters, which were considered a binding policy determination by the 8th Circuit, constituted a “promulgation” or “ final agency action” subject to the Court’s review and 2) whether the 8th Circuit’s determination that USEPA lacked authority to prohibit blending conflicts with prior Clean Water Act precedent which authorizes USEPA to regulate internal waste streams.
USEPA first argues that the policy letters were not published agency rules that had “legal effect” and thus were not reviewable. Instead, the articulated “policies” would not be reviewable unless they resulted in a denial or modification of a Clean Water Act permit. “[T]elegraphing your punches is not the same thing as delivering them” USEPA reasoned. See Petition for Rehearing, p. 9. Because the policy letters did not “adjudicate” any right, there has been no actual application of the policies. In other words, utilities cannot be prosecuted for failing to abide by the correspondence in the absence of a permit that prohibits blending or the use of mixing zones. However, 8th Circuit addressed this point in great length in its opinion where it focused on the mandatory language of the letters, and not their form, to determine that they constitute binding actions by USEPA which should have been promulgated through proper notice and comment.
With regard to its second argument, USEPA contends in its brief that the 8th Circuit’s determination that USEPA lacks authority to regulate blending because it is regulation of an internal waste stream not an end-of-pipe discharge is in direct conflict with existing precedent from other Circuits, including the D.C. Circuit’s opinion in NRDC v. USEPA, 882 F.2d 104 (D.C. Cir. 1987) and the 5th Circuit’s opinion in Tex. Mun. Power Agency v. USEPA, 836 F.2d 1482 (5th Cir. 1988), which purportedly rejected challenges to the agency’s authority to regulate an “internal waste stream”. This is the real crux of USEPA’s brief and the alleged intercircuit conflict is really its hook for potentially gaining a rehearing.
In addition to the USEPA’s petition, the Iowa League of Cities have also filed a Petition for Partial Rehearing in the case, which requests the Court reconsider its decision on denying fees to the League.
It is yet to be seen how USEPA’s Petition for Rehearing will impact the underlying merits of the matter. The 8th Circuit does not have to act on USEPA’s Petition which would leave the underlying decision as final precedent. Alternatively, it could choose to rehearing the matter on the grounds raised by USEPA that the underlying decision results in a intercircuit conflict. We will continue to follow this matter and provide updates on this blog.