Key Takeaways:
- SCOTUS has directed EPA (and state counterparts) to more clearly “spell out what a permittee must do or refrain from doing” in NPDES permits. Broadly worded, non-specific, “end-result” narrative limits are not longer enforceable.
- Additional legal challenges over permissible vs. impermissible “narrative” limitations in NPDES permits now seems likely.
- Facilities should evaluate their NPDES permits to flag limitations that may no longer be enforceable.
On March 4, the U.S. Supreme Court (“SCOTUS” or the “Court”) issued a decision in San Francisco v. EPA that invalidated certain “end-result” water quality limitations in NPDES permits — specifically, those that “do not spell out what a permittee must do or refrain from doing” and instead generally “make a permittee responsible for the quality of water” in its receiving waterbodies. For example, limitations that prohibit a facility from “contributing to a violation of any applicable water quality standards” or “creating pollution, contamination, or a nuisance” under state law.
This decision comes on the heels of mounting challenges from public and private dischargers alike unsatisfied with EPA’s (and state regulators’) use of vague “narrative” permit limitations — i.e., limitations that are not objective, numeric effluent limits (typically expressed as daily maximums or monthly averages) but rather are broadly worded nonspecific requirements that dischargers must comply with to promote good water quality. Going forward, the Court’s decision in San Francisco v. EPA raises serious doubts on the enforceability of such permit conditions that “simply tell[] a permittee that a particular end result must be achieved” while forcing the permit holder to “figure out what it should do” to comply. Instead, the burden is now on EPA (and arguably its state counterparts) to issue NPDES permits that contain specific “do this” or “don’t do this” requirements that tell the permittee how to implement desired water-quality standards.
Central to the Court’s decision was its focus on the statutory text, 33 U.S.C. § 1311(b)(1)(C), that requires EPA to set permit limits that will “meet” and “implement” applicable water quality standards of receiving waterbodies. SCOTUS interpreted this to mean it’s on EPA to tell a permittee — via express NPDES permit limitations — how water quality standards should be met, not require the permittee to figure it out themselves. As the Court wrote: “[T]elling a permittee to ensure [an] end result is reached … simply states the desired result; it does not implement that result,” as the law requires EPA to do. This cannot be what the Clean Water Act (CWA) intended, because, if it were, it would be like “teachers simply [telling] their students that a state math proficiency test would be administered and [the students] should make sure they passed.” That would be illogical.
The Supreme Court also highlighted how NPDES “permit shield” protections would be undermined if “end-result” limitations were allowed to continue. Recall that a discharger is deemed presumptively in compliance with the CWA, and protected from enforcement actions and the plaintiff’s bar, if it follows the terms of its NPDES permit. (This is why it’s so important to negotiate and obtain a robust discharge permit in the first place.) But the benefits of the permit shield, as SCOTUS put it, “would be eviscerated” if the permit itself makes “the permittee responsible for any drop in water quality,” regardless of their compliance with all other terms. Penalties for violating the CWA can compound daily and reach staggering sums. Closing this “permit shield” loophole suggests a majority of the Court understands its importance and is committed to protecting it.
The Court also criticized scenarios where “more than one permittee discharges into a body of water with substandard water quality.” If “end result” limitations were enforceable, only one unlucky discharger might get stuck holding the bag and be financially liable for pollution it didn’t cause. This is particularly relevant for facilities along major U.S. waterways and bodies of water (e.g., Mississippi River, Great Lakes, ports, coastal cities) with lots of adjacent industry. SCOTUS striking down these provisions was designed, at least in part, to prevent such unfairness.
Of course, the Supreme Court’s opinion raises some questions. It invalidated narrative limits in San Francisco’s permit that prohibited “contributing to a violation of any applicable water quality standards” or “creating pollution, contamination, or a nuisance” because it said these were unlawful “end-result” limits (defined above). But the decision “does not rule out ‘narrative limitations’” altogether, and suggested permit conditions mandating “best-management practices” and “operational requirements and prohibitions” are still okay. The line between these is not entirely clear and will likely lead to additional legal challenges to further define “permissible” vs. “impermissible” narrative limits. For example, many NPDES permits include restrictions such as “no toxics in toxic amounts” and no discharges that result in “objectionable” color, odor, taste, etc. The enforceability of these provisions will now probably be litigated.
The Court also rejected EPA’s argument that it needed “results-based” limitations because sometimes it doesn’t have enough data to issue specific permit requirements. The Court said that in such scenarios, EPA can “set a schedule for the provision of [needed] information and can refuse to issue a permit until the permittee complies.” Accordingly, many observers warn that EPA and the states might now require more data and robust analysis up front in the permit application and renewal process. Regulators might also now withhold issuance of permits until they are satisfied the applicant has provided “sufficient” data, which will probably be different from facility to facility. This could slow down, and complicate, permit issuance, especially in areas where water quality standards are not in attainment.
However, we at BakerHostetler don’t think this decision needs to overly complicate or delay permit issuance going forward. Unlike emission limits established in preconstruction Clean Air Act permits, NPDES permits are renewed on a 5-year cycle and EPA and state agencies already frequently require data gathering from facilities under their existing permits to justify technology-based and water quality-based effluent limitations to be included in the renewed permit. And for existing facilities with NPDES permits, renewal application shields exist that allow for continued operation if the regulators require additional data collection prior to permit renewal. Moreover, the EPA NPDES permit manual itself already authorizes permit writers to issue permits with monitoring and reporting requirements for certain pollutants, with reopeners to modify the permit if monitoring data proves it necessary.
If certain EPA regions or states start requiring extensive and time-consuming data gathering before issuing NPDES permits, our sense is that new economic development and investment will gravitate to those jurisdictions that adopt a more realistic and practical approach. Ultimately, the CWA must be implemented in accordance with supportable science. EPA and the states should see SCOTUS’ decision as an opportunity to reevaluate their technical basis for water-quality standards (particularly with respect to emerging contaminants like PFAS and 1,4-dioxane) and how those standards impact industrial and municipal dischargers. Using NPDES permits as a surrogate for technically sound water quality standards was not the intent of the CWA as it exists today.
At bottom, NPDES permits must now implement specific, actionable conditions aimed at protecting water quality, instead of leaving open-ended liability for poor water quality conditions regardless of whether a facility otherwise fully complied with its permit. This should provide more protection and certainty for permit holders moving forward, provided they are mindful of these new protections and use them to their advantage while negating and obtaining NPDES permits.
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