Water treatment plantControl of nutrient loadings to US surface waters has widely proven to be a difficult task, and nutrient levels in many of our waterways continue to fail in satisfying the stated goals of the Clean Water Act.  In 2015, the State of Montana established stringent water quality standards for nutrients.  Recognizing the economic and social costs associated with attainment of these strict standards, the State also provided municipal dischargers with a generally-applicable, twenty-year variance from meeting such requirements.  Montana’s regime of stringent standards accompanied by a general variance has provided a test of both: (1) the legal avenues under the Clean Water Act to address nutrient loadings; and (2) the strength and viability of the variance provisions set forth in the Act.  The US Court of Appeals for the Ninth Circuit is primed to weigh in on Montana’s novel nutrient approach, which if upheld could serve as a useful template for other states facing similar nutrient issues.

Water Quality Standards and Variances Under the Clean Water Act

The Clean Water Act, enacted as the Federal Water Pollution Control Act Amendments of 1972 and including subsequent amendments, requires that water discharges be subject to effluent limitations based on both: (1) available treatment technologies, under § 301(b)(1)(A)–(B) of the Act; and (2) water quality, under § 301(b)(1)(C) of the Act.  Section 303 of the Clean Water Act requires the development of water quality standards to address water-quality-based effluent limitations. Under § 303(c)(2), these water quality standards are subject to approval by US EPA when a state has adopted, reviewed, or revised such a standard.  Since 1983, US EPA has had regulations in place to guide the development, review, revision, and approval of water quality standards (set forth in Part 131 of Title 40 of the Code of Federal Regulations).

Additionally, in §§ 301(c) and 301(n), Congress envisioned that “alternative requirements” (variances from certain effluent limitation guidelines) could be justified for some facilities.  Through a 2015 rulemaking, US EPA explicitly authorized variances to water quality standards, which were defined as “a time-limited designated use and criterion for a specific pollutant(s) or water quality parameter(s) that reflect the highest attainable condition during the term of the WQS variance.”  40 C.F.R. § 131.3(o).  As part of the 2015 rulemaking, US EPA provided that a state granting a variance must retain the underlying water quality standard requirements and any granted variance from those requirements “must only be as long as necessary to achieve the highest attainable condition.”  40 C.F.R. § 131.14.

The Development of Water Quality Standards for Nutrients

The availability of nutrients, including nitrogen and phosphorus, in surface waters have a significant effect on water quality.  From the very beginning, US EPA recognized that nutrients in water discharges were a parameter that was to be controlled as Clean Water Act effluent limitations (for example, the 1973 Proposed Effluent Limitations for the Meat Products Industry included requirements for limiting nutrients).  By the early 2000s, US EPA had further defined nutrient control strategies under the Clean Water Act, issuing guidance on the Development and Adoption of Nutrient Criteria into Water Quality Standards and then rulemaking on Eco-Regional Nutrient Criteria.  Recent algal blooms have further highlighted the need to address nutrient pollution, both with the continued development of water quality standards and with other approaches (for example, the current Administration has continued to solicit research on approaches to reduce nutrient loadings).

While the development of water quality standards for nutrients is not new, significant difficulties have arisen regarding how to effectively implement nutrient criteria in accordance with existing legal requirements. This blog has covered a number of developments that touch on the very issue, including  the US EPA’s reversal of position on Missouri’s Water Quality Standards, Ohio’s Regulation of point and nonpoint sources of nutrients, and the development of a federal TMDL for the Chesapeake Bay region.

Montana’s Nutrient Variance Approach

Against this backdrop, the State of Montana, through its Department of Environmental Quality (DEQ), promulgated stringent water-quality-based effluent nutrient standards in its Circular DEQ-12A, including for total nitrogen and total phosphorus.  In establishing these stringent numeric nutrient standards, the State of Montana was seen as a national leader in addressing nutrient pollution to surface waters.

However, at that same time, DEQ recognized that the numeric standards it was setting would not be immediately attainable by many of the significant dischargers in the State.  To minimize the financial hardship that the standards would otherwise create for its municipal dischargers, DEQ established a variance from the nutrient water quality standards, which were reviewed and restated in an amended Circular DEQ-12B in 2017.  This seventeen-year variance is premised on the assumption that this additional time may allow for the developments that sufficiently address nonpoint nutrient sources (i.e., diffuse runoff not subject the regulation) such that the compliance requirements for municipal dischargers are lessened and/or that less costly nutrient removal technologies will become available for these dischargers.

During the period of the variance, the dischargers having the benefit of the variance would still be expected to take steps to meet interim effluent limits, but these levels would still result in nutrient loadings significantly above the levels necessary to meet the underlying standards.  By the end of the variance term, these dischargers would be required to meet the “highest attainable condition” but not necessarily the limitation required to meet the base water quality standards that the State had set in Circular DEQ-12A.  Ultimately, US EPA approved Montana’s nutrient variance approach.

Litigation Challenge

Following US EPA’s final approval, a non-profit environmental group challenged DEQ’s decision in the United States District Court for the District of Montana, arguing that the variances amounted to an impermissible replacement standard and that the Clean Water Act prohibited such variances that fail to sufficiently protect the State’s surface waters.  The District Court issued an order ruling that: (1) variances from water quality standards appeared to be contemplated by Congress and therefore were generally permissible under the Clean Water Act; but (2) the particular variances from Montana’s nutrient water quality standards provided for by DEQ were impermissible because they effectively replaced water quality standards established by the State without requiring compliance by the end of the variance term.  After considering remedies, the District Court ultimately issued a second order that partially vacated DEQ’s proposed variance and remanded the matter to DEQ and US EPA with instructions on how to implement a new variance scheme.

Both sides have appealed the District Court’s rulings.  The parties are likely to ask the appellate court to weigh in on the extent to which the Clean Water Act supports variances from water quality standards for nutrient loadings and whether a permissible variance must include a timeline for when full compliance with numeric nutrient criteria must be achieved.  While the Ninth Circuit had initially postponed the hearing of any appeals, the Court is now poised to hear the appeals and weigh in on the legality of Montana’s variance system under the Clean Water Act.

As other states continue to struggle with approaches to effectively reduce nutrient loading under the structure of the Clean Water Act, this case has the potential to provide a roadmap for such states to create water quality standards that establish nutrient reduction efforts without causing substantial hardships to municipalities, and entities discharging to surface waters should remain cognizant of how the case might affect their obligations under the Clean Water Act.  Squire Patton Boggs will continue to monitor this issue and provide updates as it proceeds.