Title: In re Stormwater NPDES Petition

State: vermont

Issuer: Vermont Supreme Court

Document:

In re Stormwater NPDES Petition (2004-515); 180 Vt. 261; 910 A.2d 824

2006 VT 91

[Filed 25-Aug-2006]

  NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
  40 as well as formal revision before publication in the Vermont Reports. 
  Readers are requested to notify the Reporter of Decisions, Vermont Supreme
  Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
  order that corrections may be made before this opinion goes to press.


                                 2006 VT 91

                                No. 2004-515


  In re Stormwater NPDES Petition             Supreme Court

                                              On Appeal from
                                              Water Resources Board

                                              November Term, 2005


  John F. Nicholls, Chair

  William H. Sorrell, Attorney General, and S. Mark Sciarrotta and Kevin O.
  Leske, Assistant Attorneys General, Montpelier, for Appellant.

  R. Bradford Fawley, William J. Dodge, and Daniel P. Smith of Downs Rachlin
  Martin PLLC,  Burlington, for Appellants/Intervenors.

  Christopher M. Kilian, Conservation Law Foundation, and Mark E. Naud and
  Jamey Fidel, Vermont Natural Resources Council, Montpelier, for Appellees.

  James W. Barlow, Montpelier, for Amicus Curiae Vermont League of Cities and
  Towns.

  Bernard D. Lambek of Zalinger Cameron & Lambek, P.C., Montpelier, Richard
  S. Davis and Karen M. Hansen of Beveridge & Diamond, P.C. and Thomas Ward,
  National Association of Home Builders, Washington, D.C., for Amici Curiae
  National Association of Home Builders  and Home Builders and Remodelers
  Association of Vermont.  

  Thomas F. Heilmann of Heilmann, Ekman & Associates, Burlington, for Amicus
  Curiae Vermont Association of Realtors.

  James Murphy, Montpelier, and Patrick A. Parenteau and Julia LeMense Huff,
  Environmental and Natural Resources Law Clinic, South Royalton, for Amici
  Curiae Honorable Philip Henderson Hoff, Honorable George E. Little, Jr. and
  National Wildlife Federation. 


  PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.

        
       ¶ 1.   REIBER, C.J.    This appeal arises from a determination by the
  Vermont Water Resources Board that existing stormwater discharges into five
  brooks located within Chittenden County contribute to violations of Vermont
  Water Quality Standards, and therefore require federal discharge permits
  under the Clean Water Act, 33 U.S.C. §§ 1251-1387 (2000).  Two separate
  appeals, one by a group of business organizations and the other by the
  Agency of Natural Resources, raise a variety of procedural issues relating
  to the Board's decision, as well as a direct challenge to its substantive
  ruling requiring the federal permits.  We reject the procedural claims, but
  conclude that the Board erroneously encroached on the Agency's authority in
  assuming that the discharges contribute to violations of water quality
  standards, and therefore reverse the judgment and remand for additional
  proceedings before the Agency of Natural Resources. 

       ¶ 2.       To understand the facts and issues raised by this appeal, a
  summary of the regulatory backdrop is useful.  Congress enacted the Clean
  Water Act (CWA or Act), to "restore and maintain the chemical, physical,
  and biological integrity of the Nation's waters."  33 U.S.C. § 1251(a).  
  In furtherance of this goal, the CWA prohibits the discharge of any
  pollutants into navigable waters unless the discharge complies with other
  provisions of the Act, including § 402.  Id. § 1342.  Section 402
  authorizes the issuance of National Pollutant Discharge Elimination System
  (NPDES) permits for the discharge of pollutants notwithstanding the general
  prohibition.  Congress empowered the Environmental Protection Agency (EPA),
  or a state agency duly certified by EPA, to enforce the NPDES permit
  system.   Id. § 1342(a), (b).  In Vermont, that agency is the Agency of
  Natural Resources (Agency or ANR).  
   
       ¶ 3.      In 1987, Congress amended the CWA by enacting the Water
  Quality Act.  That law added § 402(p), which codified a two-phase
  regulatory approach to the discharge of pollutants specifically contained
  in stormwater runoff.  Under this section, in Phase I, Congress prohibited
  EPA or state agencies from requiring NPDES permits for "discharges composed
  entirely of stormwater" until October 1994, with four exceptions: (1)
  discharges subject to an existing permit; (2) discharges associated with
  industrial activity; (3) discharges from an MS4-a "municipal storm sewer
  system"-serving a population of 250,000 or more; and (4) discharges from an
  MS4 for a municipality with a population greater than 100,000 but less than
  250,000.  33 U.S.C. § 1342(p)(2)(A)-(D).  Section 402(p)(2) also vested EPA
  or the duly authorized state agency with "residual authority" to designate
  any other discharge as requiring a NDPES permit if it "contributes to a
  violation of a water quality standard or is a significant contributor of
  pollutants to waters of the United States."  Id. § 1342(p)(2)(E).    

       ¶ 4.   Under the Water Quality Act, Congress required discharge
  permits for all so-called Phase I discharges, established a timetable for
  EPA to promulgate implementing regulations, and required EPA to study those
  discharges not identified as requiring a permit in Phase I and to issue new
  regulations based on the results of that study.   Id. § 1342(p)(3)-(6).  
  In 1990, EPA promulgated the so-called Phase I Rules.  National Pollutant
  Discharge Elimination System Permit Application Regulation for Storm Water
  Discharges, 55 Fed. Reg. 47, 990 (Nov. 16, 1999) (codified at 40 C.F.R.
  pts. 122-24).   In December 1999, after completing the required study, EPA
  issued the so-called Phase II Rules.  National Pollutant Discharge
  Elimination System: Regulations for Revision of  the Water Pollution
  Control Program Addressing Storm Water Discharges, 64 Fed. Reg. 68,722
  (Dec. 8, 1999) (codified at 40 C.F.R. pts. 9, 122, 123, & 124).   In
  addition to those discharges previously identified in Phase I, the Phase II
  Rules required NPDES permits for stormwater discharges from small municipal
  sewer systems and from construction activity disturbing between one and
  five acres.  40 C.F.R. § 122.26(a)(9)(i)(A)-(B) (2005).  
   
       ¶ 5.   Notably, the Phase II Rules also retained the residual
  designation authority of EPA and certified state agencies to require NDPES
  permits for any additional sources of stormwater pollution if they
  contribute to a violation of a water quality standard.   Id. §
  122.26(a)(9)(i)(D); see also 33 U.S.C. § 1342(p)(2)(E) (authorizing a NDPES
  permitting authority to designate for regulation "[a] discharge for which
  the Administrator or the State, as the case may be, determines that the
  stormwater discharge contributes to a violation of a water quality standard
  or is a significant contributor of pollutants to waters of the United
  States.").  Indeed, the Phase II Rules not only preserved, but expanded the
  scope of the residual designation authority to include a "category of
  discharges within a geographic area" that contributes to the violation of a
  water quality standard or is a significant contributor of pollutants.  40
  C.F.R. § 122.26(a)(9)(i)(D).

       ¶ 6.      This case arose in June 2003, when the Conservation Law
  Foundation, later joined by the Vermont Natural Resources Council
  (hereafter jointly CLF), filed a petition with ANR seeking a determination
  that existing stormwater discharges into Potash, Englesby, Morehouse,
  Centennial, and Bartlett Brooks contribute to violations of the Vermont
  Water Quality Standards and therefore require NDPES permits under the CWA. 
  The petition was filed pursuant to a provision of the federal stormwater
  regulations authorizing "[a]ny person [to] petition the Director to require
  a NPDES permit for a discharge which is composed entirely of storm water
  which contributes to a violation of a water quality standard or is a
  significant contributor of pollutants to waters of the United States."  40
  C.F.R. § 122.26(f)(2).   The petition was premised on findings by the Board
  in two earlier decisions involving State discharge permits that the five
  brooks in question did not meet Vermont Water Quality Standards; that the
  brooks were therefore listed on the federally mandated schedule of
  "impaired waters," known as the 303(d) list, 33 U.S.C. § 1313(d); and that
  existing discharges within the five watersheds contribute to the
  impairments.     
   
       ¶ 7.   In response to the petition, ANR sought guidance from EPA on
  the nature and scope of its residual designation authority.  EPA, in
  response, advised that stormwater discharges, categorical or otherwise,
  must be evaluated on a "case-by-case basis" and that a permit "must be
  denied if the discharge would cause or contribute to a violation of water
  quality standards," but that otherwise  "an agency should act reasonably in
  its exercise of discretion to designate (or not) sources based on available
  information and relevant considerations."  EPA noted further that it had
  "not defined a threshold level of pollutant contribution" that would
  require a NPDES permit,  but observed that discharges which contribute more
  than "de minimis" levels of pollutants would be a "reasonable" standard.   

       ¶ 8.   In September 2003, the Agency sent a letter to CLF-together
  with a copy of EPA's responsive memorandum-categorically denying the
  petition.  The Agency indicated that it rejected CLF's claim that all
  existing stormwater discharges to impaired waters "irrespective of their
  size or character, or existing stormwater management practices require an
  NDPES permit solely because they contribute a measurable or detect[a]ble
  quantity of the pollutant causing the impairment."  CLF appealed the
  Agency's denial to the Board under 10 V.S.A. § 1269 ("Any person or party .
  . .  aggrieved by an act or decision of [ANR] . . . may appeal to the board
  within thirty days.").  Pomerleau Properties, Inc., Martin's Foods of South
  Burlington, Inc., and Greater Burlington Industrial Corp. (herafter
  "appellants"), together with ANR, were granted party status in the
  proceeding.(FN1)
   
       ¶ 9.      In April 2004, the Board issued an initial memorandum of
  decision resolving a variety of preliminary issues, including appellants'
  claim that the petition constituted a request for rulemaking over which the
  Board lacked jurisdiction.  The Board rejected this and other procedural
  objections to its authority, and outlined the remaining issues to be
  resolved on appeal. These included the core issue of "whether all
  stormwater discharges into stormwater-impaired waters require NPDES
  permits, ipso facto, as [CLF] contend[s]" or whether,  as ANR claimed, the
  decision "may involve other factors, such as the authority of Vermont to
  issue and enforce state stormwater permits."  Following additional
  briefing, the Board issued a second memorandum of decision in October 2004,
  rejecting appellants' additional procedural claim that the appeal had been
  rendered moot by intervening amendments to the State's separate stormwater
  management program, known as Act 140, 10 V.S.A. §§ 1264, 1264a-1264c, and
  further concluding that its decisions in two earlier cases  had
  conclusively established that every discharge of stormwater pollutants into
  the five brooks in question contributes to violations of the Vermont Water
  Quality Standards.   Accordingly, the Board reversed the Agency's decision
  denying the petition, but remanded to the Agency for a determination
  whether any "de minimis exemption" to the requirement for discharge permits
  would be appropriate.  These separate appeals by appellants and ANR
  followed.   

                                     I.

       ¶ 10.      Appellants and ANR raise a number of threshold issues
  relating to the Board's authority to address the petition in the first
  instance.  The Agency claims that CLF's petition was not authorized under
  the pertinent federal regulations.  It relies on the citizen-petition
  provision of the federal rules, which provides: "Any person may petition
  the Director [ANR] to require a NPDES permit for a discharge which is
  composed entirely of storm water which contributes to a violation of a
  water quality standard or is a significant contributor of pollutants to
  waters of the United States." 40 C.F.R. § 122.26(f)(2) (emphasis added). 
  ANR claims that the emphasized language limits citizen petitions to single
  discharges.  Therefore, it asserts that CLF's request to determine that
  permits were required for an entire class of existing discharges within the
  enumerated watersheds was overbroad and outside the permissible scope of
  the regulations.
   
       ¶ 11.     The Board was not persuaded by the argument; nor are we.  As
  the Board noted, the initial Phase I stormwater regulations clothed the
  Agency with residual designation authority to require a permit when it
  determined that "[a] discharge" contributes to a violation of a water
  quality standard.  Id. § 122.26(a)(v).  As part of its Phase II Rules,
  however, the EPA augmented the permitting agency's authority to require a
  permit when it "determines that the discharge, or category of discharges
  within a geographic area," contributes to a violation.  Id. §
  122.26(a)(9)(i)(D).  The Board reasoned that it would not be logical to
  authorize permits for "categories" of storm water discharges within a
  general geographic area, yet limit the petition process to single
  discharges.
   
       ¶ 12.       We agree.  Whatever the limits of Phase I's regulatory
  reach, the Phase II Rules plainly expanded ANR's authority to issue permits
  on a significantly broader basis, for wholesale categories of discharges in
  a geographic area.   EPA's explanatory note to the proposed Phase II
  changes stated that the new regulations would allow the permitting
  authority to determine the necessity of a discharge permit "on a watershed
  or class basis where the permitting authority determines there is a
  significant impact or contribution."  Amendment to Requirements for
  National Pollutant Discharge Elimination System (NPDES) Permits for Storm
  Water Discharges Under Section 402(p)(6) of the Clean Water Act, 60 Fed.
  Reg. 17,950, 17,953 (April 7, 1995) (codified at 40 C.F.R. pts. 122, 124
  (2005)).  EPA's explanatory notes to the Phase II Final Rules were the
  same, observing that the new regulations would allow discharge-permit
  determinations "on a case-by-case basis (or on a categorical basis within
  identified geographic areas such as a State or watershed) that regulatory
  controls are needed to protect water quality."  National Pollutant
  Discharge Elimination System: Regulations for Revision of the Water
  Pollution Control Program Addressing Storm Water Discharges: Final Rule, 64
  Fed. Reg.  68,721, 68,736 (Dec. 8, 1999) (codified at 40 C.F.R. pts. 9,
  122, 123, 124).   EPA explained that the broader permitting authority would
  "facilitate and promote" the overarching goal of coordinated "watershed
  planning: "  "In promoting the watershed approach to program
  administration, EPA believes NPDES general permits can cover a category of
  dischargers within a defined geographic area.  Areas can be defined very
  broadly to include political boundaries (e.g., county), watershed
  boundaries, or State or Tribal land."  Id. at 68,739. 

       ¶ 13.      Thus, while ANR may believe that the "multi-prong" analysis
  necessary to determine the propriety of NPDES stormwater permits lends
  itself to a single, case-by-case approach, the federal regulations
  nevertheless plainly authorize a more categorical approach within a broad
  geographic setting.  See Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832, 869
  (9th Cir. 2003) ("We treat EPA's judgments with great deference" because of
  its expertise in the area).(FN2)   Nothing in the regulations, moreover,
  would appear to bar a "category" consisting of existing discharges within a
  watershed not covered by the more specific provisions of the Phase I and II
  Rules relating to industrial activity, construction sites, and municipal 
  sewer systems.  See Christman v. Davis, 2005 VT 119, ¶ 10, 16 Vt. L. Wk.
  335,