October Term, 2012
March 20, 2013
Today the Supreme Court issued one decision, described below, of interest to the business community.
Clean Water Act—Forest Road Runoff
Decker v. Northwest Environmental Defense Center, No. 11-338 and Georgia Pacific West, Inc. v. Northwest Environmental Defense Center, No. 11-347 (previously discussed in the June 26, 2012, Docket Report)
The Environmental Protection Agency, pursuant to the Clean Water Act (“CWA”), regulates “point source” discharges of pollutants through a system of permitting requirements under the National Pollutant Discharge Elimination System (“NPDES”). After initial uncertainty about the regulation of stormwater under this regime, Congress in 1987 amended the CWA to provide that only certain types of stormwater discharges are subject to permitting, including discharges “associated with industrial activity.” In implementing that provision, EPA indicated its intent that precipitation runoff from forest roads that collects in ditches or culverts before reaching navigable waters is not an industrial discharge and should continue to be regulated by the States using best management practices. An environmental group, Northwest Environmental Defense Center, filed suit against the State of Oregon and a number of forest-products companies that use forest roads in Oregon, claiming that they had violated the CWA by discharging runoff from forest roads without a federal permit. In today’s 7-1 decision in Decker, the Supreme Court reversed a ruling of the Ninth Circuit that forest-road discharges require an NPDES permit because they are “associated with industrial activity” under the statute and EPA’s implementing rules.
The Court addressed two procedural barriers to a ruling on the merits. First, it held that plaintiff Northwest had properly brought its suit in district court as an enforcement action under 33 U.S.C. § 1365(a), rejecting an argument that the suit was in the nature of a rule challenge governed by § 1369 (which would have had to be brought in a court of appeals within 120 days following promulgation of a new rule). When a rule is ambiguous, the Court held, an action “to enforce it under a proper interpretation” falls under Section 1365. Slip op. 9.
Second, EPA had promulgated a rule amendment on the business day before oral argument in Decker, reiterating its long-held position that forest-road runoff does not require NPDES permitting as an industrial discharge. The United States urged the Court to hold the case moot as a result of this development. Agreeing with petitioners, the Court held that there remained a live and justiciable controversy because, if the Ninth Circuit were right about petitioners’ obligations under the prior regulation, that “might be the basis for the imposition of penalties” or injunctive relief such as remediation, “even if, in the future, those types of discharges will not require a permit.” Slip op. 10-11.
Turning to the merits, the Court held that the statutory term “associated with industrial activity” does not unambiguously “encompass outdoor timber harvesting” and road use in connection with it. Slip op. 12. And EPA’s references in its industrial-stormwater regulation “to ‘facilities,’ ‘establishments,’ ‘manufacturing,’ ‘processing,’ and an ‘industrial plant’ leave open the rational interpretation that the regulation extends only to traditional industrial buildings such as factories and associated sites, as well as other relatively fixed facilities,” not to outdoor timber-harvesting operations. Id. at 12-14. Because EPA’s interpretation of its own regulation was permissible, and because that interpretation was not a “change from prior practice or a post hoc justification adopted in response to litigation,” the Court owed it deference under Auer v. Robbins, 519 U.S. 452 (1997).
The Court also observed that Oregon, like other States (21 of which filed an amicus brief in support of petitioners), had developed “a comprehensive set of best management practices to manage stormwater runoff from logging roads,” using their “considerable expertise.” Slip op. 15. Congress in the CWA gave EPA “express instructions” to work with State and local officials “to alleviate stormwater pollution by developing the precise kind of best management practices Oregon has established here,” and EPA was entitled to conclude “that further federal regulation in this area would be duplicative and counterproductive.” Ibid.
Chief Justice Roberts, joined by Justice Alito, concurred in the Court’s opinion, but wrote separately to note that the practice of deferring to an agency’s reasonable interpretation of its own regulations under Auer, while not argued by respondent in this case, may be ripe for future review. Justice Scalia concurred in part and dissented in part, expressing the view that deference to an agency’s reasonable interpretation of its own regulations is inappropriate. Justice Scalia also concluded that the text of the regulation did not support the agency’s interpretation.
The Court’s decision is of importance to forested states and to the forest-products industry. The Court’s decision is more generally of interest to all federally regulated industries, because it addresses when deference to agency action is appropriate, and in particular the contested principle that an agency’s reasonable interpretations of its own regulations are entitled to deference.
Mayer Brown LLP acted as lead counsel for the petitioners in No. 11-347 and argued the case for petitioners. Any questions about this case should be directed to Tim Bishop (+1 312 701 7829) or Richard Bulger (+1 312 701 7318) in our Chicago office.
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