Volume 1 of 2

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ENVIRONMENTAL DEFENSE CENTER, 

INC.,

Petitioner,

NATURAL RESOURCES DEFENSE No. 00-70014

COUNCIL, INC., EPA No.

Petitioner-Intervenor, 

Clean Water 40

v. CFR

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY,

Respondent. 

AMERICAN FOREST & PAPER 

ASSOCIATION; NATIONAL

ASSOCIATION OF HOME BUILDERS,

Petitioners,

No. 00-70734

v.

EPA No. UNITED STATES ENVIRONMENTAL 

Clean Water 40 PROTECTION AGENCY,

CFR Respondent,

NATURAL RESOURCES DEFENSE

COUNCIL, INC.,

Applicant-Intervenor. 

571
TEXAS CITIES COALITION ON 

STORMWATER; TEXAS COUNTIES

STORM WATER COALITION,

Petitioners,

AMERICAN FOREST & PAPER No. 00-70822 ASSOCIATION,

Intervenor, EPA No.  Clean Water 40

v. CFR

UNITED STATES ENVIRONMENTAL OPINION PROTECTION AGENCY,

Respondent,

NATURAL RESOURCES DEFENSE

COUNCIL, INC.,

Respondent-Intervenor. 

On Petition for Review of an Order of the

Environmental Protection Agency

Argued and Submitted

December 3, 2001—Pasadena, California

Filed January 14, 2003

Before: James R. Browning, Stephen Reinhardt, and

Richard C. Tallman, Circuit Judges.

Opinion by Judge Browning;

Partial Concurrence and Partial Dissent by Judge Tallman

572 ENVIRONMENTAL DEFENSE CENTER v. EPA
COUNSEL

Victoria Clark, Environmental Defense Center, Santa Barbara, California, for petitioner Environmental Defense Center,

Inc. 

Andrew G. Frank and Arlene Yang, Paul, Weiss, Rifkind,

Wharton & Garrison, New York, New York, and Nancy K.

Stoner, Natural Resources Defense Council, Washington,

D.C., for intervenor National Resources Defense Council, Inc.

R. Timothy McCrum, Ellen B. Steen, and Donald J. Kochan,

Crowell & Moring, Washington, D.C., for petitioners American Forest & Paper Association and National Association of

Home Builders. 

576 ENVIRONMENTAL DEFENSE CENTER v. EPA
Steven P. Quarles and J. Michael Klise, Crowell & Moring,

Washington, D.C., and William R. Murray, American Forest

& Paper Association, Washington, D.C., for petitioner American Forest & Paper Association. 

Jim Mathews and Clarence Joe Freeland, Mathews & Freeland, Austin, Texas, for petitioner Texas Cities Coalition on

Stormwater. 

Sydney W. Falk, Jr. and William D. Dugat III, Bickerstaff,

Heath, Smiley, Pollan, Kever & McDaniel, Austin, Texas, for

petitioner Texas Counties Storm Water Coalition. 

John C. Cruden, Daniel M. Flores and Kent E. Hanson,

United States Department of Justice, Washington, D.C., and

Stephen J. Sweeny, United States Environmental Protection

Agency, Washington, D.C., for respondent United States

Environmental Protection Agency. 

OPINION

BROWNING, Circuit Judge: 

Petitioners challenge a rule issued by the United States

Environmental Protection Agency pursuant to the Clean

Water Act, 33 U.S.C. §§ 1251-1387, to control pollutants

introduced into the nation’s waters by storm sewers. 

Storm sewers drain rainwater and melted snow from developed areas into water bodies that can handle the excess flow.

Draining stormwater picks up a variety of contaminants as it

filters through soil and over pavement on its way to sewers.

Sewers are also used on occasion as an easy (if illicit) means

for the direct discharge of unwanted contaminants. Since

storm sewer systems generally channel collected runoff into

federally protected water bodies, they are subject to the controls of the Clean Water Act. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 577
In October of 1999, after thirteen years in process, the

Environmental Protection Agency (“EPA”) promulgated a

final administrative rule (the “Phase II Rule”

1

 or “the Rule”)

under § 402(p) of the Clean Water Act, 33 U.S.C. § 1342(p),

mandating that discharges from small municipal separate

storm sewer systems and from construction sites between one

and five acres in size be subject to the permitting requirements of the National Pollutant Discharge Elimination System

(“NPDES”), 33 U.S.C. §§ 1311(a), 1342. EPA preserved

authority to regulate other harmful stormwater discharges in

the future. 

In the three cases consolidated here, petitioners and intervenors challenge the Phase II Rule on twenty-two constitutional,

statutory, and procedural grounds. We remand three aspects

of the Rule concerning the issuance of notices of intent under

the Rule’s general permitting scheme. We affirm the Rule

against all other challenges.

I.

BACKGROUND

A. The Problem of Stormwater Runoff

Stormwater runoff is one of the most significant sources of

water pollution in the nation, at times “comparable to, if not

greater than, contamination from industrial and sewage

sources.”2 Storm sewer waters carry suspended metals, sedi1The “Phase II Rule” reviewed here is the product of the second stage

of EPA’s two-phase stormwater rulemaking effort. The “Phase I Rule,”

governing larger-scale stormwater discharges, was issued in 1990 and

reviewed by this court in Natural Res. Def. Council v. EPA, 966 F.2d 1292

(9th Cir. 1992). 

2Richard G. Cohn-Lee and Diane M. Cameron, Urban Stormwater Runoff Contamination of the Chesapeake Bay: Sources and Mitigation, THE

ENVIRONMENTAL PROFESSIONAL, Vol. 14, p. 10, at 10 (1992); see also Natural Res. Def. Council, 966 F.2d at 1295 (citing a study by the Nationwide

Urban Runoff Program). 

578 ENVIRONMENTAL DEFENSE CENTER v. EPA
ments, algae-promoting nutrients (nitrogen and phosphorus),

floatable trash, used motor oil, raw sewage, pesticides, and

other toxic contaminants into streams, rivers, lakes, and estuaries across the United States.3

 In 1985, three-quarters of the

states cited urban stormwater runoff as a major cause of

waterbody impairment, and forty percent reported construction site runoff as a major cause of impairment.4

 Urban runoff

has been named as the foremost cause of impairment of surveyed ocean waters.5

 Among the sources of stormwater contamination are urban development, industrial facilities,

construction sites, and illicit discharges and connections to

storm sewer systems.6

B. Stormwater and the Clean Water Act

Congress enacted the Clean Water Act in 1948 to “restore

and maintain the chemical, physical, and biological integrity

of the Nation’s waters.” 33 U.S.C. § 1251(a) (originally codified as the Federal Water Pollution Control Act, 62 Stat.

1155). The Clean Water Act prohibits the discharge of pollutants from a “point source”

7

 into the waters of the United

States without a permit issued under the terms of the National

Pollutant Discharge Elimination System, 33 U.S.C.

§§ 1311(a), 1342, which requires dischargers to comply with

technology-based pollution limitations (generally according to

the “best available technology economically achievable,” or

3Regulation for Revision of the Water Pollution Control Program

Addressing Storm Water, 64 Fed. Reg. 68,722, 68,724, 68,727 (Dec. 8,

1999) (codified at 40 C.F.R. pts. 9, 122, 123, and 124). 

4

Id. at 68,726. 

5

Id.

6

Id. at 68,725-31. 

7A point source is “any discernible, confined and discrete conveyance,

including but not limited to any pipe, ditch, channel, tunnel, conduit, well,

discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may

be discharged.” 33 U.S.C. § 1362 (14). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 579
“BAT” standard). 33 U.S.C. § 1311(b)(2)(A). NPDES permits

are issued by EPA or by states that have been authorized by

EPA to act as NPDES permitting authorities. 33 U.S.C.

§ 1342(a)-(b). The permitting authority must make copies of

all NPDES permits and permit applications available to the

public, 33 U.S.C. §§ 1342(j), 1342(b)(3); state permitting

authorities must provide EPA notice of each permit application, 33 U.S.C. § 1342(b)(4); and a permitting authority must

provide an opportunity for a public hearing before issuing any

permit, 33 U.S.C. §§ 1342(a)(1), 1342(b)(3); cf. 33 U.S.C.

§ 1251(e) (requiring public participation). 

Storm sewers are established point sources subject to

NPDES permitting requirements. Natural Res. Def. Council v.

Costle, 568 F.2d 1369, 1379 (D.C. Cir. 1977) (holding unlawful EPA’s exemption of stormwater discharges from NPDES

permitting requirements); Natural Res. Def. Council, 966 F.2d

at 1295.8 In 1987, to better regulate pollution conveyed by

stormwater runoff, Congress enacted Clean Water Act

§ 402(p), 33 U.S.C. § 1342(p), “Municipal and Industrial

Stormwater Discharges.” Sections 402(p)(2) and 402(p)(3)

mandate NPDES permits for stormwater discharges “associated with industrial activity,” discharges from large and

medium-sized municipal storm sewer systems, and certain

other discharges. Section 402(p)(4) sets out a timetable for

promulgation of the first of a two-phase overall program of

stormwater regulation. Id. at § 1342(p)(2)-(4); Natural Res.

Def. Council, 966 F.2d at 1296. In 1990, pursuant to

§ 402(p)(4), EPA issued the Phase I Rule regulating large discharge sources.9

8Diffuse runoff, such as rainwater that is not channeled through a point

source, is considered nonpoint source pollution and is not subject to federal regulation. Oregon Natural Desert Ass’n v. Dombek, 172 F.3d 1092,

1095 (9th Cir. 1998). 

9National Pollutant Discharge Elimination System Permit Application

Regulations for Stormwater Discharges, 55 Fed. Reg. 47,990 (Nov. 16,

1990) (codified at 40 C.F.R. pt. 122-124). The Phase I rule was challenged

580 ENVIRONMENTAL DEFENSE CENTER v. EPA
C. The Phase II Stormwater Rule 

In Clean Water Act § 402(p), Congress also directed a second stage of stormwater regulation by ordering EPA to identify and address sources of pollution not covered by the Phase

I Rule. Section 402(p)(1) placed a temporary moratorium

(expiring in 1994) on the permitting of other stormwater discharges pending the results of studies mandated in § 402(p)(5)

to identify the sources and pollutant content of such discharges and to establish procedures and methods to control

them as “necessary to mitigate impacts on water quality.” 33

U.S.C. § 1342(p)(5). Section 402(p)(6) required that EPA

establish “a comprehensive program to regulate” these stormwater discharges “to protect water quality,” following the

studies mandated in § 402(p)(5) and consultation with State

and local officials. Id. at § 1342(p)(6). 

EPA proposed the Phase II Rule in January of 1998.10 In

October, 1999, Congress passed legislation precluding EPA

from promulgating the new Rule until EPA submitted an

additional report to Congress supporting certain anticipated

aspects of the Rule.11 EPA was also required to publish its

report in the Federal Register for public comment. Pub. L. No.

106-74, § 431(c), 113 Stat. at 1097. Later that month, EPA

in this court in Natural Res. Def. Council, 966 F.2d at 1292. We held, inter

alia, that EPA must impose deadlines for permit approvals, id. at 1300,

that EPA’s decision to regulate construction sites only over five acres in

size was arbitrary and capricious, id. at 1306, and that EPA did not act

capriciously in defining “municipal,” id. at 1304, or in placing differentlysized municipalities on different permitting schedules, id. at 1301. 

10Proposed Regulations for Revision of the Water Pollution Control

Program Addressing Storm Water Discharges, 63 Fed. Reg. 1536 (proposed Jan. 9, 1998). 

11Pub. L. No. 106-74, § 431(a), 113 Stat. 1047, 1096 (1999)

(“Appropriations, 2000 — Department of Veterans Affairs and Housing

and Urban Development, and Independent Agencies”). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 581
submitted the required (“Appropriations Act”) study and promulgated the Rule.12

Under the Phase II Rule, NPDES permits are required for

discharges from small municipal separate storm sewer systems (“small MS4s”) and stormwater discharges from construction activity disturbing between one and five acres

(“small construction sites”). 40 C.F.R. §§ 122.26(a)(9)(i)(A)-

(B). Small MS4s may seek permission to discharge by submitting an individualized set of best-management plans in six

specified categories, id. at § 122.34, either in the form of an

individual permit application, or in the form of a notice of

intent to comply with a general permit. Id. at § 122.33(b).

Small MS4s may also seek permission to discharge through

an alternative process, under which a permit may be sought

without requiring the operator to regulate third parties, id. at

§§ 122.33(b)(2)(ii), 122.26(d).13 Small construction sites may

apply for individual NPDES permits or seek coverage under

a promulgated general permit. Id. at § 122.26(c). EPA also

preserved authority to regulate other categories of harmful

stormwater discharges on a regional, as-needed basis. Id. at

§ 122.26(a)(9)(i)(C)-(D). 

D. Facial Challenges to the Phase II Rule 

The Rule was challenged in the Fifth, Ninth, and D.C. Circuits in three separate actions ultimately consolidated before

the Ninth Circuit. 

The Texas Cities Coalition on Stormwater and the Texas

Counties Stormwater Coalition (collectively, “the Municipal

12Regulations 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, and 124). 

13The Rule also allows a small MS4 to be regulated under an individual

NPDES permit covering a nearby large or medium MS4, with provisions

adapted to address the small MS4. 40 C.F.R. § 122.33(b)(3). 

582 ENVIRONMENTAL DEFENSE CENTER v. EPA
Petitioners”) assert that EPA lacked authority to require permitting, that its promulgation of the Rule was procedurally

defective, that the Rule establishes categories that are arbitrary and capricious, and that the Rule impermissibly requires

municipalities to regulate their own citizens in contravention

of the Tenth Amendment and to communicate a federally

mandated message in contravention of the First Amendment.

The Natural Resources Defense Council (“NRDC”) intervened on behalf of EPA. 

Environmental Defense Center, joined by petitionerintervenor NRDC, (“the Environmental Petitioners”) assert

that the regulations fail to meet minimum Clean Water Act

statutory requirements because they constitute a program of

impermissible self-regulation, fail to provide required avenues

of public participation, and neglect to address stormwater runoff associated with forest roads and other significant sources

of runoff pollution. 

The American Forest & Paper Association (“AF&PA”) and

the National Association of Home Builders (“the Industrial

Petitioners”) assert that promulgation of the Rule was procedurally defective and violated the Regulatory Flexibility Act,

that EPA’s retention of authority to regulate future sources of

runoff pollution is ultra vires, and that the decision to regulate

discharge from construction sites one to five acres in size is

arbitrary and capricious. NRDC again intervened on behalf of

EPA. 

We have jurisdiction pursuant to section 509(b)(1) of the

Clean Water Act, 33 U.S.C. § 1369(b)(1) (assigning review of

EPA effluent and permitting regulations to the Federal Courts

of Appeals). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 583
II.

DISCUSSION

A. The Permit Requirements 

The Municipal Petitioners’ primary contention is that the

Phase II Rule compels small MS4s to regulate citizens as a

condition of receiving a permit to operate, and that EPA lacks

both statutory and constitutional authority to impose such a

requirement. Because we avoid considering constitutionality

if an issue may be resolved on narrower grounds, Greater

New Orleans Broadcasting Ass’n v. United States, 527 U.S.

173, 184 (1999), we first ask whether the Phase II Rule is supported by statutory authority. 

1. Statutory Authority

The Municipal Petitioners assert that the statutory command in Clean Water Act § 402(p)(6) that EPA develop a

“comprehensive program to regulate” small MS4s did not

authorize a program based on NPDES permits. Petitioners

argue that because § 402(p)(6) explicitly indicates elements

that the program may contain (performance standards, guidelines, etc.) without mentioning “permits,” Congress must have

intended that the program exclude permitting.14

14The text of that section reads: “Not later than October 1, 1993, [EPA],

in consultation with State and local officials, shall issue regulations (based

on the results of the studies conducted under paragraph (5)) which designate stormwater discharges, other than those discharges described in paragraph (2), to be regulated to protect water quality and shall establish a

comprehensive program to regulate such designated sources. The program

shall, at a minimum, (A) establish priorities, (B) establish requirements for

State stormwater management programs, and (C) establish expeditious

deadlines. The program may include performance standards, guidelines,

guidance, and management practices and treatment requirements, as

appropriate.” 33 U.S.C. § 1342(p)(6). 

584 ENVIRONMENTAL DEFENSE CENTER v. EPA
The fact that “permitting” is not included on a statutory list

of elements that the program “may” include is not determinative, because the list is manifestly nonexclusive. The only

constraints are that the § 402(p)(6) regulations be based on the

§ 402(p)(5) studies, that they be issued in consultation with

State and local officials, and that—“at minimum”—they

establish priorities, requirements for State stormwater management programs, and expeditious deadlines, and constitute

a comprehensive program “to protect water quality.” 33

U.S.C. § 1342(p)(6). EPA was free to adopt any regulatory

program, including a permitting program, that included these

elements. See Chevron, U.S.A. v. Natural Res. Def. Council,

467 U.S. 837, 842-43 (1984) (deference to an agency’s reasonable interpretation is required unless Congress expressed

its intent unambiguously). It is more reasonable to interpret

congressional silence about permits as an indication of EPA’s

flexibility not to use them than as an outright prohibition.15

The Municipal Petitioners further contend that their interpretation is supported by the structure of § 402(p), which

expressly requires permits for large and medium sized MS4s

in a separate section, § 402(p)(3)(B).16 However, as EPA

counters, the language in § 402(p)(3) requiring permits for

municipal storm sewers may be interpreted to apply both to

Phase I and Phase II MS4s. Moreover, as respondentintervenor NRDC notes, the mere existence of the § 402(p)(1)

permitting moratorium, designed to apply only to Phase II dischargers, necessarily implies that EPA has the authority to

require permits from these sources after the 1994 expiration

of the moratorium. 

15The lesser category of “permits” may also be implied by the inclusion

of “performance standards” in the list of possible program features. 

16“Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate

inclusion or exclusion.” Bates v. United States, 522 U.S. 23, 29-30 (1997).

ENVIRONMENTAL DEFENSE CENTER v. EPA 585
Since there would have been no need to establish a permitting moratorium for these sources if the sources could never

be subject to permitting requirements, petitioners’ interpretation violates the bedrock principle that statutes not be interpreted to render any provision superfluous. See Burrey v.

Pacific Gas & Elec. Co., 159 F.3d 388, 394 (9th Cir. 1998).

EPA’s interpretation of its mandate under § 402(p)(6) was

reasonable and EPA acted within its statutory authority in formulating the Phase II Rule as a permitting program. 

2. The Tenth Amendment

The Municipal Petitioners contend that the Phase II Rule on

its face compels operators of small MS4s to regulate third parties in contravention of the Tenth Amendment. We note that

a facial challenge must show that there are no circumstances

under which the challenged provisions would be constitutional. Legal Aid Soc’y v. Legal Servs. Corp., 145 F.3d 1017,

1023-24 (9th Cir. 1998).17 We conclude that the Rule does not

violate the Tenth Amendment, because it directs no unconstitutional coercion. 

a. The Individual and General Permit Options. The

Phase II Rule requires any operator of a small MS4 applying

for an individual permit or submitting a notice of intent for

coverage under a general permit to specify plans for compliance with a series of six minimum control measures designed

to protect water quality. 40 C.F.R. § 122.34. These “Minimum Measures” require an applicant to propose programs for:

(1) conducting public education and outreach on stormwater

impacts, id. at § 122.34(b)(1); (2) engaging public participa17A court may refuse to defer to an agency’s interpretation of a statute

that raises serious constitutional questions. Ma v. Reno, 208 F.3d 815, 821

n.13 (9th Cir. 2000), vacated on other grounds by Zadvydas v. Davis, 533

U.S. 678 (2001). The court continues to apply the Chevron standard so

long as the agency’s interpretation does not raise “grave and doubtful”

constitutional issues. Williams v. Babbitt, 115 F.3d 657, 661-62 (9th Cir.

1997). 

586 ENVIRONMENTAL DEFENSE CENTER v. EPA
tion in the development of stormwater management programs,

id. at § 122.34(b)(2); (3) detecting and eliminating illicit discharges to the MS4, id. at § 122.34(b)(3); (4) reducing pollution to the MS4 from construction activities disturbing one

acre or more, id. at § 122.34(b)(4); (5) minimizing water quality impacts from development and redevelopment activities

that disturb one acre or more, id. at § 122.34(b)(5); and (6)

preventing or reducing pollutant runoff from municipal activities, id. at § 122.34(b)(6). 

The Municipal Petitioners contend that the measures regulating illicit discharges, small construction sites, and development activities interfere excessively with local government

functions and unconstitutionally compel small MS4 operators

to regulate third parties, i.e. upstream dischargers. The Illicit

Discharge Detection and Elimination measure requires that a

permit seeker prohibit non-stormwater discharges to the MS4

and implement appropriate enforcement procedures. 40

C.F.R. § 122.34(b)(3)(ii)(B).18 The Construction Site Stormwater Runoff Control measure requires a permit seeker to

implement and enforce a program to reduce stormwater pollutants from small construction sites. Id. at §§ 122.34(b)(4)(i)-

(ii).19 It mandates erosion and sedimentation controls, site plan

18This subsection provides that permit seekers must, “[t]o the extent

allowable under State, Tribal, or local law, effectively prohibit, through

ordinance or other regulatory mechanism, non-stormwater discharges into

your storm sewer systems and implement appropriate enforcement procedures and actions. . . .” 40 C.F.R. § 122.34(b)(3)(ii)(B). 

19This subsection provides that permit seekers “must develop, implement, and enforce a program to reduce pollutants in any storm water runoff to your small MS4 from construction activities that result in a land

disturbance of greater than or equal to one acre . . . . [The proposed] program must include the development and implementation of, at a minimum:

(A) An ordinance or other regulatory mechanism to require erosion and

sediment controls, as well as sanctions to ensure compliance, to the extent

allowable under State, Tribal, or local law; (B) Requirements for construction site operators to implement appropriate erosion and sediment control

best management practices; (C) Requirements for construction site operaENVIRONMENTAL DEFENSE CENTER v. EPA 587
reviews that take account of water quality impacts, site

inspections, and the consideration of public comment, and

requires that construction site operators implement erosion,

sedimentation, and waste management best management practices. Id. The Post-Construction/New Development measure

requires permit seekers to address post-construction runoff

from new development and redevelopment projects disturbing

one acre or more. Id. at § 122.34(b)(5)(ii)(B).20 Noting that

most MS4s are operated by municipal governments,21 and that

“[t]he drainage of a city in the interest of the public health and

welfare is one of the most important purposes for which the

police power can be exercised,” New Orleans Gaslight Co. v.

Drainage Comm’n, 197 U.S. 453, 460 (1905), the Municipal

Petitioners argue that requiring Phase II permit applicants to

enact “ordinances or other regulatory measures” amounts to

federal commandeering in contravention of the Tenth Amendment.22 See New York v. United States, 505 U.S. 144, 188

(1992). 

tors to control waste such as discarded building materials, concrete truck

washout, chemicals, litter, and sanitary waste at the construction site that

may cause adverse impacts to water quality; (D) Procedures for site plan

review which incorporate consideration of potential water quality impacts;

(E) Procedures for receipt and consideration of information submitted by

the public, and (F) Procedures for site inspection and enforcement control

measures.” 40 C.F.R. §§ 122.34(b)(4)(i)-(ii). 

20This subsection provides that permit seekers must “[u]se an ordinance

or other regulatory mechanism to address post-construction runoff from

new development and redevelopment projects [disturbing one acre or

more] to the extent allowable under State, Tribal or local law.” 40 C.F.R.

§§ 122.34(b)(5)(ii)(B). 

21Petitioners actually contend that all MS4s are operated by municipal

governments, but this is untrue. The Phase II Rule regulates all authorities

who operate small storm sewer systems, “including but not limited to”

federal, State, Tribal, and local authorities. 40 C.F.R. § 122.32(a). 

22Support for this claim is also found in ACORN v. Edwards, 81 F.3d

1387, 1394 (5th Cir. 1996), in which the Fifth Circuit held in violation of

the Tenth Amendment a provision of the Safe Drinking Water Act requiring that “each state shall establish a program . . . to assist local educational

588 ENVIRONMENTAL DEFENSE CENTER v. EPA
EPA counters that nothing in the Phase II Rule violates the

Tenth Amendment, because it extends to small MS4s a generally applicable regulatory scheme23 that does not excessively

interfere with municipal functions.24 It argues that the Phase

II Rule no more trespasses on state sovereignty than did the

Driver’s Privacy Protection Act (“DPPA”) unanimously

upheld in Reno v. Condon, 528 U.S. 141, 151 (2000), as a rule

of general applicability that “incidentally” applied to states—

even though the universe of entities to which the DPPA could

in fact apply included only states. 528 U.S. at 151 (declining

to address whether general applicability is a constitutional

requirement “because the DPPA is generally applicable”).

EPA contends that the federal government need not avoid all

requirements that cause States and localities to engage their

legislative or executive processes, but only those that would

“excessively interfere” with the functioning of those governments. Printz v. United States, 521 U.S. 898, 932 (1997). EPA

argues that the federal government’s great interest in preventing water pollution justifies the “minimal interference” with

municipal functions that the Minimum Measures might occasion, and asserts that the Measures by definition could not

interfere “excessively” with state or local governments, since

MS4s are only required to reduce pollutants to the “maximum

extent practicable.” 40 C.F.R. § 122.34(a). 

agencies in testing for, and remedying, lead contamination in drinking

water from coolers. . . .” 42 U.S.C. § 300j-24(d)(1). EPA distinguishes the

invalidated provision of the Safe Drinking Water Act from the Phase II

Rule, arguing that the former directly targeted state police power and commanded the terms of its performance as its sole object, whereas the Phase

II Rule is a neutral rule of general applicability. 

23See 40 C.F.R. § 122.32(a) (applying the Rule to federal, state, local,

and tribal MS4 operators). Petitioners do not contest EPA’s assertion that

Clean Water Act and NPDES regulations are generally applicable, prohibiting unpermitted discharges from point sources without regard to the government status of the discharger. 

24EPA further argues that the alternative option, discussed in detail

below, provides a lawful failsafe mechanism against any future “as

applied” defects in the Minimum Measures. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 589
[1] b. Tenth Amendment Standards. The Tenth

Amendment provides that “all is retained [by the states]

which has not been surrendered [to the federal government].”

New York, 505 U.S. at 156 (internal quotations omitted). If a

power is delegated to Congress by the Constitution, the Tenth

Amendment expressly disclaims any reservation of that power

to the States, and Congress’s exercise of that power does not

intrude impermissibly on state sovereignty. Id.; Garcia v. San

Antonio Metro. Transit Auth., 469 U.S. 528, 549 (1985). But

the Tenth Amendment also signals constitutional protection

for our system of dual sovereignty, confirming “that the

power of the Federal Government is subject to limits that

may, in a given instance, reserve power to the States.” New

York, 505 U.S. at 157. Among the most important limits

implied by the Tenth Amendment are the circumstances under

which the federal government may not conscript state and

local governments to regulate on its behalf—as petitioners

contend EPA has inappropriately done in the Phase II Rule.

[2] The Supreme Court has made clear that while Congress

has substantial power under the Constitution to encourage the

States to regulate according to federal preferences, “the Constitution does not confer upon Congress the ability simply to

compel the States to do so.” New York, 505 U.S. at 149. Congress must not “commandeer[ ] the legislative processes of

the States by directly compelling them to enact and enforce a

federal regulatory program.” Hodel v. Virginia Surface Mining & Reclamation Ass’n, 452 U.S. 264, 288 (1981). See also

Printz, 521 U.S. at 935 (“The Federal Government may neither issue directives requiring the States to address particular

problems, nor command the States’ officers . . . to administer

or enforce a federal regulatory program.”). 

[3] The key proscribed element is coercion. In New York,

where the Court invalidated a federal law requiring states

either to regulate radioactive waste according to a Congressional mandate or to take title to the waste, the Court held that

“[t]he Federal Government may not compel the States to enact

590 ENVIRONMENTAL DEFENSE CENTER v. EPA
or administer a federal regulatory program.” 505 U.S. at 188

(invalidating part of the Low-Level Radioactive Waste Policy

Amendment Act of 1985) (emphasis added). In contrast,

Hodel sustained a federal law requiring states to choose

between administering a federally-directed regulatory program or allowing federal authorities to regulate the mining

activities of third parties within each state, because “there can

be no suggestion that the Act commandeers the legislative

processes of the States by directly compelling them to enact

and enforce a federal regulatory program.” 452 U.S. at 288

(upholding the Surface Mining Control and Reclamation Act

of 1977). Similarly, in Federal Energy Regulatory Comm’n v.

Mississippi, 456 U.S. 742 (1982) (“FERC”), the Supreme

Court sustained the Public Utility Regulatory Policies Act

(PURPA), requiring States to follow certain procedures and

consider adopting federally specified standards, because

“there is nothing in PURPA directly compelling the States to

enact a legislative program.” Id. at 765 (internal quotation

omitted). 

While Congress may not coerce a State to regulate according to its terms, Congress may encourage a State to regulate

in a manner consistent with federal interests. New York, 505

U.S. at 166-67. Under the spending power, Congress may

seek to influence a State’s policy choices by attaching conditions on the receipt of federal funds, as long as the conditions

bear some relationship to the purpose of the federal spending.

South Dakota v. Dole, 483 U.S. 203, 206-08 (1987) (upholding federal statute conditioning State receipt of certain federal

highway funds on adoption of minimum drinking age of

twenty-one). And where Congress is authorized to regulate

private activity under the Commerce Clause, it may offer

States the choice of regulating that activity according to federal standards or having state law preempted by federal regulation. Hodel, 452 U.S. at 288; FERC, 456 U.S. at 759, 764-

67 (Congress may require States that choose to regulate in a

preemptible field to follow federally mandated procedures).

As the Court has recognized, “to hold that motive or temptaENVIRONMENTAL DEFENSE CENTER v. EPA 591
tion is equivalent to coercion is to plunge the law in endless

difficulties.” Charles C. Steward Mach. Co. v. Davis, 301

U.S. 548, 589-90 (1937). 

Moreover, the Court has distinguished between federal

laws that unconstitutionally compel state regulation of third

parties and generally applicable federal laws that permissibly

regulate the activities of States that choose to act in the regulated field. South Carolina v. Baker, 485 U.S. 505, 514

(1988); Condon, 528 U.S. at 151. In South Carolina v. Baker,

upholding an Internal Revenue Code provision that effectively forced States to issue bonds in registered form, the

Supreme Court explained that the provision was permissible

because it merely “regulates state activities; it does not

. . . seek to control or influence the manner in which States

regulate private parties.” 485 U.S. at 514. Responding to the

claim that the provision commandeered state legislative and

administrative process because many states had to enact legislation authorizing and administering the new bond registration

program, the Court observed:

Such “commandeering” is, however, an inevitable

consequence of regulating a state activity. Any federal regulation demands compliance. That a State

wishing to engage in certain activity must take

administrative and sometimes legislative action to

comply with federal standards regulating that activity is a commonplace that presents no constitutional

defect. 

Id. at 514-15. Even where state compliance with a generally

applicable federal law “thrusts upon the States all of the dayto-day responsibility for administering its complex provisions,” no violation of the Tenth Amendment occurs when the

federal law “does not require the States in their sovereign

capacity to regulate their own citizens.” Condon, 528 U.S. at

149-50, 151 (upholding the DPPA because, though it clearly

592 ENVIRONMENTAL DEFENSE CENTER v. EPA
regulates state activity, it does not require the States to regulate their own citizens). 

Where state action is incidentally burdened by a federal law

of general applicability, the Court has indicated that the Tenth

Amendment may still be implicated if the law “excessively

interfere[s] with the functioning of state governments.”

Printz, 521 U.S. at 932 (“[W]here, as here, it is the whole

object of the law to direct the functioning of the state executive, and hence to compromise the structural framework of

dual sovereignty . . . a ‘balancing’ analysis is inappropriate.

. . .”). 

The Tenth Amendment thus requires that we evaluate

whether the Phase II Rule coerces state action (leaving a State

no choice but to comply with a federal mandate), whether the

mandated action forces the state to regulate third parties (as

opposed to regulating state activities legitimately subject to

generally applicable federal law), and, if the federal law is

generally applicable, whether it nevertheless excessively

interferes with the functioning of state government. 

In conducting this inquiry, however, we are sensitive to the

fact that solving pressing environmental problems may

require the formation of partnerships between federal and

state authorities that the Supreme Court has referred to as

“program[s] of cooperative federalism.” Hodel, 452 U.S. at

289 (“[T]he Surface Mining Act establishes a program of

cooperative federalism that allows the States, within limits

established by federal minimum standards, to enact and

administer their own regulatory programs, structured to meet

their own particular needs. . . .”). Although local governments

have traditionally enjoyed broad authority over drainage

activities, New Orleans Gaslight Co., 197 U.S. at 460, they do

not enjoy exclusive sovereign authority over actions that contribute pollutants to the nation’s waters. 

We conclude that even if the Individual and General Permit

options of the Phase II Rule require operators of small MS4s

ENVIRONMENTAL DEFENSE CENTER v. EPA 593
to regulate third parties, the Phase II Rule entrails no unconstitutional coercion because operators of small MS4s have

two alternatives to the Individual and General Permit options:

the option of not discharging and the Alternative Permit

option. 

c. The Option of Not Discharging. The boundary

between federal and local water resources is uniquely permeable; state water generally becomes federal along its journey

to the sea,25 while federal waters from sources other than rainfall always begin as local water somewhere. “The Clean

Water Act anticipates a partnership between the States and the

Federal Government, animated by a shared objective: ‘to

restore and maintain the chemical, physical, and biological

integrity of the Nation’s waters.’ ” Arkansas v. Oklahoma,

503 U.S. 91, 101 (1992) (quoting 33 U.S.C. § 1251(a)). For

this reason, Congress required EPA to consult with state and

local officials in mandating best management practices, 33

U.S.C. § 1342(p)(6) (in the context of the Phase II Rule); 33

U.S.C. § 1251(b) (highlighting the general Clean Water Act

policy “to recognize, preserve, and protect the primary

responsibilities and rights of States to prevent, reduce, and

eliminate pollution”). 

[4] If the Phase II Rule compelled state authorities to regulate third parties or involved excessive interference with local

governance, it would transgress constitutional bounds regardless of the need for cooperative approaches to meet the important objectives of the Clean Water Act. But the Rule allows

regulated MS4s flexibility within which to meet their obligations under federal law without unduly compromising local

authority. The Rule does not coerce local governments to reg25We note that this is often, but not always, the case. Contrary to Petitioners’ assertion, state water does not inexorably become federal water by

running downhill through a point source. For example, it may be channeled to a naturally or artificially created terminal basin, as with other

forms of sewage, and there treated at the state’s discretion. 

594 ENVIRONMENTAL DEFENSE CENTER v. EPA
ulate third parties and does not excessively interfere with the

state activities it regulates under legitimate commerce clause

authority, but establishes a constitutional program of cooperative federalism like that upheld in Hodel. 

Compliance with the Minimum Measures should not “excessively interfere” with the functioning of municipalities.

The public education requirement may be satisfied by distributing leaflets or making public service announcements; the

public participation measure requires only that small MS4s

comply with State, Tribal and local public notice requirements when implementing a public involvement/participation

program; and the pollution prevention measure requires only

that a permit-seeker train its staff to reduce runoff pollution

from municipal operations. The illicit discharge, construction,

and post-development measures may impose greater burdens,

but each requires only that a small MS4 take reasonable steps

to regulate the pollutant intake of their systems to minimize

the introduction of pollutants to waters of the United States.

The Minimum Measures addressing illicit discharges,

construction-related pollution, and post-development pollution each explicitly require compliance “through ordinance, or

other regulatory mechanism.” 40 C.F.R. § 122.34(b)(3)-

(b)(5). Compliance with the first and last of these Minimum

Measures is possible by taking action entirely on the MS4

side of the interface. For example, an MS4 could manage the

problem of illicit discharges by sealing off illicit connections

at the point of entry to the MS4, rather than regulating the

content of third party discharges. Similarly, nothing in the

language of the post-development measure requires that the

proposed best management plan addressing post-construction

runoff regulate a third party. By contrast, the construction

measure explicitly requires the permit-seeker to require construction site operators to implement appropriate erosion and

sedimentation controls, and to control specified forms of

waste products. 40 C.F.R. § 122.34(b)(4)(B)-(C). This lanENVIRONMENTAL DEFENSE CENTER v. EPA 595
guage26 appears to require what the federal government may

not force a local government to do: enact and enforce a federal regulatory program.27

Nevertheless, we cannot say that this Measure compels

state authorities to regulate third parties, because local governments are not compelled to discharge collected stormwater

to federal waters. Local governments make choices about how

they wish to manage stormwater runoff, and in some cases

take advantage of the presence of federal waters as a means

of disposing of their own stormwater. While the Municipal

Petitioners contend that municipalities cannot avoid discharging to federal waters, (because MS4s, broadly defined to

include even roads with drainage systems, necessarily channel

stormwater into downhill water bodies that ultimately enter

the waters of the United States), alternative means for disposing of collected stormwater remain open to local governments

that provide storm sewer services. Such alternatives include

recycling programs and wetland construction. That these

alternatives may prove more expensive does not alter the legal

framework under which municipalities choose to discharge

pollutants into the waters of the United States.28

26A proposed management program must include “[r]equirements for

construction site operators to implement appropriate erosion and sediment

control best management practices [and] for construction site operators to

control waste such as discarded building materials, concrete truck washout, chemicals, litter, and sanitary waste at the construction site that may

cause adverse impacts to water quality.” 40 C.F.R. § 122.34(b)(4)(B)-(C).

27EPA argues that, even if one of the Minimum Measures is constitutionally questionable, there is no compulsion cognizable under the Tenth

Amendment because a municipality that lacks the authority to adopt regulations, pass ordinances, or otherwise exercise power to implement a Minimum Measure will be exempted from that measure. 64 Fed. Reg. at

68,766. However, the exemption applies only to permit-seekers who genuinely lack the authority to pass ordinances or regulate the targeted activity,

not to permit-seekers who simply resist. Id.

28The dissent argues that the choice between abiding by Phase II and not

discharging into federal waters at all is a Hobson’s choice analogous to the

596 ENVIRONMENTAL DEFENSE CENTER v. EPA
Because small MS4 operators discharge collected stormwater to federal waters voluntarily, they also accede to the

requirements of Phase II permits voluntarily—if they wished

to avoid those requirements, they could elect to stop discharging into federal waters. Thus small MS4 operators are not

compelled by the terms of Phase II permits. 

Just as the Tenth Amendment does not prevent the federal

government from persuading state action by conditioning the

receipt of federal funds it is not required to bestow, the Tenth

Amendment does not prevent the federal government from

conditioning permission to discharge into federal waters on

municipal adoption of a storm water management program. In

both cases, federal authorities persuade state authorities to

take action that might otherwise encroach upon state sovereignty because the action is exchanged, not compelled, for a

good the federal government was not required to provide in

the first place. 

In this sense, the Phase II requirements are comparable in

spirit to the mandate issued to the States under the DPPA and

upheld in Condon.

29 The Clean Water Act has long been recchoice facing Washington State in Board of Natural Res. v. Brown, 992

F.2d 937 (9th Cir. 1993). In Brown, we held that Congress did not have

the power to command Washington State to choose between either regulating timber sales according to Congress’s instructions, or halting timber

sales altogether. Brown is inapposite, however, because while Brown

assumed that Congress did not have the authority to command Washington

to halt timber sales outright, Congress does have the authority to refuse

outright to accept discharges from operators of small MS4s into federal

waters. 

29EPA correctly argues: “[a]s in Condon, where the federal government

permissibly regulated States as database owners selling data, even though

the federal requirements applied to States exclusively, the Phase II regulations do not ‘require’ local governments ‘in their sovereign capacity to

regulate their own citizens.’ 528 U.S. at 151. They require separate storm

sewer system operators, in their capacity as dischargers of other entities’

ENVIRONMENTAL DEFENSE CENTER v. EPA 597
ognized as a valid exercise of Congressional power to regulate interstate commerce, see U.S. Const. art. I, § 8, cl. 3;

Natural Res. Def. Council v. EPA, 863 F.2d 1420, 1436 (9th

Cir. 1988), and a requirement that a state or municipality follow a generally applicable regulatory standard if it decides to

engage in an activity legitimately regulated by the federal

government does not usually violate the Tenth Amendment.

See Condon, 528 U.S. at 151. As in Condon, where the federal government regulated states only to the extent that those

states acted as database owners selling data, under Phase II,

the operator of an MS4 need only comply with Phase II regulations to the extent that the MS4 receives pollutants from a

third party and discharges them into the waters of the United

States. 64 Fed. Reg. 68,765-66 (Dec. 8, 1999). 

[5] But even if we were to assume that states and localities

have no choice but to discharge, and therefore no choice but

to secure Phase II permits, a plain reading of the Phase II Rule

demonstrates that they still would not face unconstitutional

compulsion. A directive to enact a regulatory program is

unconstitutionally coercive only if no constitutional alternative is provided. And the Phase II Rule offers an alternative

means for obtaining permission to discharge. 

d. The Alternative Permit Option. Operators of small

MS4s may opt to avoid the requirements of Phase II individual and general permits under an “Alternative Permit” option.

40 C.F.R. §§ 122.33(b)(2)(ii), 122.26(d). This Alternative

Permit allows operators of small MS4 to seek individualized

pollutants, to take steps to control the intake of pollutants into their systems. Requiring a small MS4 to take action to control additions of pollutants into its system, to reduce the pollutants in its ultimate stormwater

discharge, no more makes the small MS4 a sovereign ‘regulator’ or ‘law

enforcer’ than similar requirements would render a privately owned wastewater treatment works, private bulk trucking terminal, or other discharger

such a ‘regulator’ or ‘law enforcer.’ Any discharger is responsible for the

quality of its discharge.” 

598 ENVIRONMENTAL DEFENSE CENTER v. EPA
permission to discharge based on the permitting program

established by the Phase I Rule for large and medium-sized

MS4s. This option requires the permit seeker to propose management programs that address substantive concerns similar

to those raised in the Minimum Measures, but does not

require the permit seeker to regulate the actions of third parties upstream from the point of discharge to federal waters.30

EPA urges that the Minimum Measures are facially constitutional but that even if they were not, the Alternative Permit

option relieves permit seekers of the obligation to take action

that may approach the regulation of third parties. Because

municipalities may choose an alternative that does not require

regulation of third parties, EPA argues, the Phase II Rule does

not run afoul of the Tenth Amendment.31

The Municipal Petitioners maintain that the alternative program suffers from the same constitutional flaws as the general

permit program, because the provisions addressing pollution

from construction, development, illicit discharges, and munic30Small MS4s seeking an individualized permit under the Phase I model

are relieved of the requirements of § 122.26(d)(1)(ii) and § 122.26(d)(2)

mandating that larger operators demonstrate their legal authority to control

discharges to the MS4 through ordinance or other binding measures. 40

C.F.R. § 122.33(b)(2)(ii). 

31EPA further argues that a facial constitutional challenge to the Alternative Permit option cannot lie, since the rules list application requirements, not permit requirements. EPA contends that any challenge would

have to be made “as applied,” and that such a challenge would be unripe

at this point, as the pertinent facts have not yet materialized. Abbot Laboratories v. Gardner, 387 U.S. 136, 148-49 (1967) (the ripeness doctrine

protects “agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties”), overruled on other grounds by Califano v. Sanders, 430

U.S. 99, 105 (1977). The Municipal Petitioners dispute this contention on

the basis of the EPA Environmental Appeals Board’s decision in In Re:

City of Irving, Texas MS4, NPDES Appeal No. 00-18, but fail to demonstrate how the facts of that case apply here. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 599
ipal activities still functionally compel municipal authorities

to administer a federal regulatory program.32

However, the requirements of the Alternative Permit option

repeat generally applicable rules to which local governments

are legitimately subject when they engage in the maintenance

of storm sewers that discharge to federally protected waters,

32Specifically, petitioners object to the requirements that a permit seeker

must submit, with its application: 

(A)(2) A description of planning procedures including a comprehensive master plan to develop, implement and enforce controls to reduce the discharge of pollutants from municipal

separate storm sewers which receive discharges from areas of

new development and significant redevelopment. Such plan shall

address controls to reduce pollutants in discharges from municipal separate storm sewers after construction is completed; . . . 

(B) A description of a program, including a schedule, to detect

and remove (or require the discharger to the municipal separate

storm sewer to obtain a separate NPDES permit for) illicit discharges and improper disposal into the storm sewer. The proposed program shall include: (1) A description of a program,

including inspections, to implement and enforce an ordinance,

orders or similar means to prevent illicit discharges to the municipal separate storm sewer system; . . . 

(C) A description of a program to monitor and control pollutants in storm water discharges to municipal systems from municipal landfills, hazardous waste treatment, disposal and recovery

facilities, industrial facilities that are subject to section 313 of

title III of the Superfund Amendments and Reauthorization Act

of 1986 (SARA), and industrial facilities that the municipal permit applicant determines are contributing a substantial pollutant

loading to the municipal storm sewer system [including control

measures for such discharges]; . . . 

(D) A description of a program to implement and maintain

structural and non-structural best management practices to reduce

pollutants in storm water runoff from construction sites to the

municipal storm sewer system [including a description of requirements for such controls]. 

40 C.F.R. § 122.26(d)(2)(iv)(A)-(D). 

600 ENVIRONMENTAL DEFENSE CENTER v. EPA
and for the reasons cited in discussing the Minimum Measures, they do not threaten excessive interference with local

governance. “[R]ather than seeking to control or influence the

manner in which States regulate private parties,” Condon, 528

U.S. at 150 (internal quotations omitted), the Alternative Permit requirements can be satisfied without obligating the operator of a small MS4 to regulate anyone. 

Reducing “the discharge of pollutants from an MS4 which

receives discharges from areas of new development” according to § 122.26(d)(2)(iv)(A) may be accomplished without

any regulation of developers; an MS4 operator could reduce

pollutant discharges by constructing artificial wetlands or

implementing other structural treatment controls. An MS4

could prevent illicit discharges as required by § 122.26(d)(2)

(iv)(B) simply by sealing off points of entry where illicit discharges are detected. Moreover, this option allows an MS4

simply to request a discharger to seek its own NPDES permitting arrangement, relieving the MS4 of any direct regulation

of problem dischargers.33 An MS4 may similarly monitor and

control pollutants from landfills and hazardous waste facilities

in satisfaction of § 122.26(d)(2)(iv)(C) without directly regulating third parties. Finally, an MS4 may maintain structural

and non-structural best management practices34 regarding con33An MS4 that requests a discharger to seek its own NPDES permit may

reasonably decline service to that discharger if it refuses to secure such

permit, without implicating the Tenth Amendment. The decision not to

provide storm sewer service is of the sort that the federal government may

compel when a municipality elects to partake in an activity regulated by

the federal government. 

34According to § 122.34(b)(5)(iii), structural best management practices

(“BMPs”) include storage practices (such as wet ponds and extendeddetention outlet structures), filtration practices (such as grass swales and

sand filters), and infiltration practices (such as infiltration basins and

trenches). Non-structural BMPs are preventative actions, including smart

growth policies, wetland preservation, and riparian buffering. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 601
struction sites in satisfaction of § 122.26(d)(2)(iv)(D) without

regulating third parties.35

[6] Because the Alternative option provides applicants an

avenue of securing a permit consistent with the Tenth Amendment, no permit seeker is compelled to negotiate the one

questionable provision under the General Permit option (the

Measure facially requiring municipal regulation of construction professionals). The Municipal Petitioners’ claim that the

Phase II Rule violates the Tenth Amendment therefore fails.

3. Statutory Authority for the Minimum Measures

The Municipal Petitioners contend that, even if constitutional, the Minimum Measures of the General Permit option

exceed EPA’s statutory authority under § 402(p). Petitioners

argue that nothing in the statute confers authority on EPA to

require small MS4 operators to regulate third parties as a condition of receiving a permit, and that EPA’s contrary interpretation is so constitutionally questionable that it is not entitled

to Chevron deference. See Solid Waste Agency v. Army Corps

35The nearest the Alternative Permit option comes to presenting a Tenth

Amendment violation is the provision in § 122.26(d)(2)(iv)(D)(1) that best

management practices include a “description of procedures for site planning which incorporate consideration of potential water quality impacts[.]”

However, “[w]hen the constitutional validity of a statute or regulation is

called into question, it is a cardinal rule that courts must first determine

whether a construction is possible by which the constitutional problem

may be avoided.” Meinhold v. U.S. Dep’t of Defense, 34 F.3d 1469, 1476

(9th Cir. 1994); see also Williams v. Babbitt, 115 F.3d 657, 662 (9th Cir.

1997) (“[J]ust as we will not infer from an ambiguous statute that Congress meant to encroach on constitutional boundaries, we will not presume

from ambiguous language that Congress intended an agency to do so.

. . .”). And while it is possible to read the provision in § 122.26(d)(2)(iv)

(D)(1) as requiring the regulation of site planning activities by third party

construction professionals, a better reading of the provision is that it

requires the MS4 operator to consider water quality impacts in planning

MS4 connections at construction sites. Therefore, the provision poses no

Tenth Amendment problem. 

602 ENVIRONMENTAL DEFENSE CENTER v. EPA
of Engineers, 531 U.S. 159, 172-73 (2001). EPA argues that

the nonexclusive list of statutory elements in § 402(p)(6) cannot be said to exclude a non-listed element, and that EPA’s

interpretation that the statute allows the Minimum Measures

is thus reasonable and entitled to deference. 

We agree that EPA’s adoption of the Minimum Measures

represents a permissible interpretation of its authority under

§ 402(p)(6). See Chevron, 467 U.S. at 843-44. The Rule does

not violate the Tenth Amendment and the Measures are not

inconsistent with the language or structure of § 402(p) or any

other part of the Clean Water Act. 

4. The First Amendment and the Minimum Measures

The Municipal Petitioners contend that the Public Education and Illicit Discharge Minimum Measures compel municipalities to deliver EPA’s political message in violation of the

First Amendment. The Phase II Rule’s “Public Education and

Outreach” Minimum Measure directs regulated small MS4s to

“distribute educational materials to the community . . . about

the impacts of stormwater discharges on water bodies and the

steps the public can take to reduce pollutants in stormwater

runoff.” 40 C.F.R. § 122.34(b)(1)(i). The “Illicit Discharge

Detection and Elimination” measure requires regulated small

MS4s to “[i]nform public employees, businesses, and the general public of hazards associated with illegal discharges and

improper disposal of waste.” 40 C.F.R. § 122.34(b)(3)(ii)(D).

The Municipal Petitioners argue that the First Amendment

prohibits EPA from compelling small MS4s to communicate

messages that they might not otherwise wish to deliver. They

further contend that EPA’s interpretation of § 402(p) as

authorizing these Measures does not warrant Chevron deference because it raises serious constitutional issues, but that

even if deference were given, the resulting rule is unconstitutional because neither Congress nor EPA may dictate the

speech of MS4s. They contend that municipalities are proENVIRONMENTAL DEFENSE CENTER v. EPA 603
tected by the First Amendment, Pacific Gas & Elec. v. Public

Utilities Comm’n, 475 U.S. 1, 8 (1986) (“Corporations and

other associations, like individuals, contribute to the [discourse] that the First Amendment seeks to foster . . . .”),

which applies as much to compelled statements of “fact” as

to those of “opinion.” Riley v. Nat’l Fed. of the Blind, 487

U.S. 781, 797-98 (1988). 

We conclude that the purpose of the challenged provisions

is legitimate and consistent with the regulatory goals of the

overall scheme of the Clean Water Act, cf. Glickman v. Wileman Bros. & Elliott, Inc., 521 U.S. 457, 476 (1997), and does

not offend the First Amendment.36 The state may not constitutionally require an individual to disseminate an ideological

message, Wooley v. Maynard, 430 U.S. 705, 713 (1976), but

requiring a provider of storm sewers that discharge into

national waters to educate the public about the impacts of

storm water discharge on water bodies and to inform affected

parties, including the public, about the hazards of improper

waste disposal falls short of compelling such speech.37 These

broad requirements do not dictate a specific message. They

require appropriate educational and public information activi36We decline to address two further arguments raised by EPA: first, that

municipalities do not receive full First Amendment protections, under

Muir v. Ala. Educ. Television Comm’n, 688 F.2d 1033, 1038 n.12 (5th Cir.

1982) (en banc) (“Government expression, being unprotected by the First

Amendment, may be subject to legislative limitation which would be

impermissible if sought to be applied to private expression . . . .”), and

Aldrich v. Knab, 858 F. Supp. 1480, 1491 (W.D. Wash. 1994) (holding

that “unlike private broadcasters, the state itself does not enjoy First

Amendment rights”), and second, that even if the First Amendment were

fully applicable, the Phase II regulations would satisfy them because

MS4s may avoid the compulsion to speak by seeking a permit under the

Alternative option, 40 C.F.R. § 122.26(d)(2)(iv), rather than under the

Minimum Measures. 

37As a subsidiary matter, we note that it also falls short of compelling

the MS4 to “regulate” third parties in contravention of the Tenth Amendment. Dispensing information to facilitate public awareness about safe disposal of toxic materials constitutes “encouragement,” not regulation. 

604 ENVIRONMENTAL DEFENSE CENTER v. EPA
ties that need not include any specific speech at all. A regulation is facially unconstitutional only when every possible

reading compels it, Meinhold v. U.S. Dep’t of Def., 34 F.3d

1469, 1476 (1994),38 but this is clearly not the case here. 

As in Zauderer v. Office of Disciplinary Counsel of the

Sup. Ct. of Ohio, 471 U.S. 626 (1985), where the Supreme

Court upheld certain disclosure requirements in attorney

advertising, “[t]he interests at stake in this case are not of the

same order as those discussed in Wooley [invalidating a law

requiring that drivers display the motto “Live Free or Die” on

New Hampshire license plates] . . . and Barnette [forbidding

the requirement that public school students salute the flag

because the state may not impose on the individual “a ceremony so touching matters of opinion and political attitude”].”

Id. at 651. EPA has not attempted to “prescribe what shall be

orthodox in politics, nationalism, religion, or other matters of

opinion or force citizens to confess by word or act their faith

therein.” West Virginia State Bd. of Ed. v. Barnette, 319 U.S.

624, 642 (1943). 

Informing the public about safe toxin disposal is nonideological; it involves no “compelled recitation of a message” and no “affirmation of belief.” Pruneyard Shopping

Ctr. v. Robins, 447 U.S. 74, 88 (1980) (upholding state law

protecting petitioning in malls and noting that “Barnette is

inapposite because it involved the compelled recitation of a

message containing an affirmation of belief”). It does not prohibit the MS4 from stating its own views about the proper

means of managing toxic materials, or even about the Phase

II Rule itself. Nor is the MS4 prevented from identifying its

dissemination of public information as required by federal

law, or from making available federally produced informational materials on the subject and identifying them as such.

38“When the constitutional validity of a statute or regulation is called

into question, it is a cardinal rule that courts must first determine whether

a construction is possible by which the constitutional problem may be

avoided.” Meinhold, 34 F.3d at 1476. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 605
Even if such a loosely defined public information requirement could be read as compelling speech, the regulation

resembles another regulation that the Supreme Court has held

permissible. In Glickman, 521 U.S. 457, the Court upheld a

generic advertising assessment promulgated by the Department of Agriculture on behalf of California tree fruit growers

because the order was consistent with an overall regulatory

program that did not abridge protected speech: 

Three characteristics of the regulatory scheme at

issue distinguish it from laws that we have found to

abridge the freedom of speech protected by the First

Amendment. First, the marketing orders impose no

restraint on the freedom of any producer to communicate any message to any audience. Second, they do

not compel any person to engage in any actual or

symbolic speech. Third, they do not compel the producers to endorse or to finance any political or ideological views. Indeed, since all of the respondents

are engaged in the business of marketing California

nectarines, plums, and peaches, it is fair to presume

that they agree with the central message of the

speech that is generated by the generic program. 

Id. at 469-70 (footnotes omitted). Here, as in Glickman, the

Phase II regulations impose no restraint on the freedom of any

MS4 to communicate any message to any audience. They do

not compel any specific speech, nor do they compel endorsement of political or ideological views. And since all permittees are engaged in the handling of stormwater runoff that

must be conveyed in reasonably unpolluted form to national

waters, it is similarly fair to presume that they will agree with

the central message of a public safety alert encouraging

proper disposal of toxic materials.39 The Phase II regulation

39In its most recent treatment of compelled speech, the Supreme Court

held that a generic advertising campaign violated free speech where the

message was specific and antagonistic to the preferred advertising mes606 ENVIRONMENTAL DEFENSE CENTER v. EPA
departs only from the second element in the Glickman analysis, because the public information requirement may compel

a regulated party to engage in some speech at some time; but

unlike the offensive messages in Maynard and Barnette (and

even the inoffensive advertising messages at issue in Glickman) that speech is not specified by the regulation.40

The public information requirement does not impermissibly

compel speech, and nothing else in the Phase II Rule offends

the First Amendment.41 The Rule does not compel a recitation

sage of the plaintiff, and the regulation compelling participation was not

part of a broader regulatory apparatus already constraining the plaintiff’s

autonomy in the relevant arena. United States Dep’t. of Agriculture v.

United Foods, 533 U.S. 405, 410-17 (2001). The court distinguished this

advertising program from the one in Glickman on the latter point: “[t]he

program sustained in Glickman differs from the one under review in a

most fundamental respect. In Glickman the mandated assessments for

speech were ancillary to a more comprehensive program restricting market

autonomy.” Id. at 411. Although the Phase II Rule is not an advertising

or marketing regulation, it constitutes a “comprehensive program” restricting the autonomy of MS4s in the relevant arena of controlling toxic discharges to storm sewers that drain to U.S. waters. 

40In deciding the similar question of whether a regulation impermissibly

compelled speech by requiring manufacturers of mercury-containing products to inform consumers how to dispose safely of the toxic material, the

Second Circuit held that “mandated disclosure of accurate, factual, commercial information does not offend the core First Amendment values of

promoting efficient exchange of information or protecting individual liberty interests.” Nat’l Elec. Mfrs. Ass’n v. Sorrell, 272 F.3d 104, 114 (2d

Cir. 2001). What speech may follow from the Phase II directive will not

be “commercial” in the same sense that manufacturer labeling is, but it

will be similar in substance to Sorrell to the extent that it informs the public how to dispose safely of toxins. We think the policy considerations

underlying the commercial speech treatment of labeling requirements, see,

e.g., the Federal Cigarette Labeling and Advertising Act, 15 U.S.C.

§§ 1333-39, apply similarly in the context of the market-participant

municipal storm sewer provider. 

41The Alternative option contains a public education requirement that is

similar but even less specific, and therefore even less burdensome, than

ENVIRONMENTAL DEFENSE CENTER v. EPA 607
of a specific message, let alone an affirmation of belief. To

the extent MS4s are regulated by the public information

requirement, the regulation is consistent with the overall regulatory program of the Clean Water Act and the responsibilities

of point source dischargers. 

5. Notice and Comment on the Alternative Permit

Option

The Municipal Petitioners contend that, in adopting the

Alternative Permit option, EPA did not comply with the minimum notice and comment procedures required in informal

rulemaking by the Administrative Procedures Act (“APA”), 5

U.S.C. § 553. The APA requires an agency to publish notice

of a proposed rulemaking that includes “either the terms or

substance of the proposed rule or a description of the subjects

and issues involved.” Id. at § 553(b)(3). 

We have held that a “final regulation that varies from the

proposal, even substantially, will be valid as long as it is ‘in

character with the original proposal and a logical outgrowth

of the notice and comments.’ ” Hodge v. Dawson, 107 F.3d

705, 712 (9th Cir. 1997). In determining whether notice was

adequate, we consider whether the complaining party should

have anticipated that a particular requirement might be

imposed. The test is whether a new round of notice and comment would provide the first opportunity for interested parties

to offer comments that could persuade the agency to modify

its rule. Am. Water Works Ass’n v. EPA, 40 F.3d 1266, 1274

(D.C. Cir. 1994). 

the requirements in the Minimum Measures. See § 122.26(d)(2)(iv)(B)(6)

(requiring permit seekers to propose programs to counter illicit discharges,

including a “description of educational activities, public information activities, and other appropriate activities to facilitate the proper management

and disposal of used oil and toxic materials”). 

608 ENVIRONMENTAL DEFENSE CENTER v. EPA
The Municipal Petitioners argue that the Alternative Permit

option is not a logical outgrowth of EPA’s proposed rule

because, although numerous alternatives were discussed in the

Preamble to the proposed rule, 63 Fed. Reg. at 1554-1557, the

Alternative Permit option eventually adopted was not. EPA

counters that the proposed rule included a supplementary

alternative permitting system based on concepts similar to

those in the Minimum Measures, including “simplified individual permit application requirements.”

42 EPA contends that

the Alternative Permit option was a logical outgrowth of the

comments it received on the proposal expressing concern that

the Minimum Measures might violate the Tenth Amendment.

64 Fed. Reg. at 68,765. 

The Alternative Permit option passes the Hodge test. The

proposed rule suggested an individualized permitting option

to be developed in response to comments during the notice

and comment period. The Alternative option contains no elements that were not part of the original rule, even if they are

configured differently in the final rule. Petitioners had, and

took, their opportunity to object to the aspects of the Rule that

they did not support in their comments on the Minimum Measures. 

B. The General Permit Option and Notices of Intent

The Environmental Petitioners contend that the general permitting scheme of the Phase II Rule allows regulated small

MS4s to design stormwater pollution control programs without adequate regulatory and public oversight, and that it contravenes the Clean Water Act because it does not require EPA

to review the content of dischargers’ notices of intent and

does not contain express requirements for public participation

in the NPDES permitting process. 

42Municipal Petitioners concede that “simplified individual permit

application requirements” were discussed, but they contend that the permit

requirements discussed are not sufficiently similar to those promulgated to

establish a logical outgrowth. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 609
[7] In reviewing a federal administrative agency’s interpretation of a statute it administers, we first determine whether

Congress has expressed its intent unambiguously on the question before the court. See Chevron, 467 U.S. 837, 842-44 (“If

the intent of Congress is clear, that is the end of the matter;

for the court, as well as the agency, must give effect to the

unambiguously expressed intent of Congress.”). “If, instead,

Congress has left a gap for the administrative agency to fill,

we proceed to step two. At step two, we must uphold the

administrative regulation unless it is arbitrary, capricious, or

manifestly contrary to the statute.” Defenders of Wildlife v.

Browner, 191 F.3d 1159, 1162, amended by 197 F.3d 1035

(9th Cir. 1999) (citations and internal quotations omitted). 

We conclude that the Phase II General Permit option violates the Clean Water Act’s requirement that permits for discharges “require controls to reduce the discharge of pollutants

to the maximum extent practicable,” 33 U.S.C.

§ 1342(p)(3)(B)(iii), because the Phase II rule does not provide for review of notices of intent. We also conclude that the

Phase II General Permit option violates the Clean Water Act

because it does not contain express requirements for public

participation in the NPDES permitting process. We remand

these aspects of the Phase II Rule. 

1. Phase II General Permits and Notices of Intent

[8] Primary responsibility for enforcement of the requirements of the Clean Water Act is vested in the Administrator

of the EPA. 33 U.S.C. § 1251(d); see also 33 U.S.C.

§ 1361(a) (“The Administrator [of EPA] is authorized to prescribe such regulations as are necessary to carry out his functions under this chapter.”). The Clean Water Act renders

illegal any discharge of pollutants not specifically authorized

by a permit. 33 U.S.C. § 1311(a) (“Except in compliance with

this section and [other sections detailing permitting requirements] of this title, the discharge of any pollutant by any person shall be unlawful.”). Under the Phase II Rule, dischargers

610 ENVIRONMENTAL DEFENSE CENTER v. EPA
may apply for an individualized permit with the relevant permitting authority, or may file a “Notice of Intent” (“NOI”) to

seek coverage under a “general permit.” 40 C.F.R.

§ 122.33(b). 

[9] A general permit is a tool by which EPA regulates a

large number of similar dischargers. Under the traditional

general permitting model, each general permit identifies the

output limitations and technology-based requirements necessary to adequately protect water quality from a class of dischargers. Those dischargers may then acquire permission to

discharge under the Clean Water Act by filing NOIs, which

embody each discharger’s agreement to abide by the terms of

the general permit. Because the NOI represents no more than

a formal acceptance of terms elaborated elsewhere, EPA’s

approach does not require that permitting authorities review

an NOI before the party who submitted the NOI is allowed to

discharge. General permitting has long been recognized as a

lawful means of authorizing discharges. Natural Res. Def.

Council v. Costle, 568 F.2d 1369 (D.C. Cir. 1977). 

[10] The Phase II general permitting scheme differs from

the traditional general permitting model. The Clean Water Act

requires EPA not only to ensure that operators of small MS4s

comply with the general effluent limitations of the Clean

Water Act, but also that operators of small MS4s “reduce the

discharge of pollutants to the maximum extent practicable.”

40 U.S.C. § 1342(p)(3)(B). To ensure that operators of small

MS4s achieve this “maximum extent practicable” standard,

the Phase II Rule requires that each NOI contain information

on an individualized pollution control program that addresses

each of the six general criteria specified in the Minimum

Measures; thus, according to the Phase II Rule, submitting an

NOI and implementing the Minimum Measures it contains

“constitutes compliance with the standard of reducing pollutants to the ‘maximum extent practicable.’ ” 40 C.F.R.

§ 122.34(a). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 611
[11] Because a Phase II NOI not only conveys assent to the

broad effluent limitations of the Clean Water Act, but also

establishes what the discharger will do to reduce discharges

to the “maximum extent practicable,” the Phase II NOI

crosses the threshold from being an item of procedural correspondence to being a substantive component of a regulatory

regime. The text of the Rule itself acknowledges that a Phase

II NOI is a permit application that is, at least in some regards,

functionally equivalent to a detailed application for an individualized permit. See, e.g., 40 C.F.R. § 122.34(d)(1) (“In

your permit application (either a notice of intent for coverage

under a general permit or an individual permit application),

you must identify and submit to your NPDES permitting

authority the following information . . . .”). For this reason,

EPA rejected the possibility of providing a “form NOI” to

Phase II permittees, explaining that “[w]hat will be required

on an MS4’s NOI . . . is more extensive than what is usually

required on an NOI, so a ‘form’ NOI for MS4s may be

impractical.” 64 Fed. Reg. at 68,764. 

2. Failure to Regulate

The Environmental Petitioners argue that, by allowing

NPDES authorities to grant dischargers permits based on

unreviewed NOIs, the Rule creates an impermissible selfregulatory system.43 Petitioners contend the Rule impermissibly fails to require that the permitting authority review an

43Petitioners suggest that EPA should be held to the standard it

espoused to procure judicial approval for the Phase I program. In 1991,

responding to NRDC’s assertion that the Phase I Rule failed to set “hard

criteria” for review of MS4 stormwater programs, EPA responded that

“inadequate proposals will result in the denial of permit applications.”

Respondent’s Brief at 67, Natural Res. Def. Council v. EPA, 966 F.2d

1292 (9th Cir. 1992) (Nos. 91-70200, 91-70176, & 90-70671). Petitioners

contend that this court relied on that representation in ruling for EPA on

that issue. Natural Res. Def. Council v. EPA, 966 F.2d at 1308 n.17

(“Individual NPDES permit writers . . . will decide whether application

proposals are adequate . . . .”). 

612 ENVIRONMENTAL DEFENSE CENTER v. EPA
NOI to assure compliance with Clean Water Act standards,

including the standard that municipal stormwater pollution be

reduced to “the maximum extent practicable.” 33 U.S.C.

§ 1342(p)(3)(B)(iii). See 40 C.F.R. § 123.35 (setting out

requirements for permitting authorities, but not requiring

review of NOI); 64 Fed. Reg. at 68,764 (“EPA disagrees that

formal approval or disapproval by the permitting authority is

needed”). 

EPA maintains that the Phase II permit system is fully consistent with the authorizing statute. It contends that

§ 402(p)(6) granted EPA flexibility in designing the Phase II

“comprehensive program,” and notes that while the statute

does not require general permits, neither does it preclude

them. EPA contends that Congress delegated the task of

designing the program to EPA, and that EPA reasonably

adopted a “flexible version” of the NPDES permit program to

suit the unique needs of the Phase II program. It disputes that

the general permit program creates “paper tigers,” especially

since EPA, states, and citizens may initiate enforcement

actions. Finally, EPA argues that the Rule does not create a

self-regulatory program, but that even if it did, nothing in

§ 402(p)(6) precludes such a program. 

Reviewing the Phase II Rule under the first step of Chevron, we note that the plain language of § 402(p) of the Clean

Water Act, 33 U.S.C. § 1342(p), expresses unambiguously

Congress’s intent that EPA issue no permits to discharge from

municipal storm sewers unless those permits “require controls

to reduce the discharge of pollutants to the maximum extent

practicable.” 

Phase II general permits do impose requirements that

ensure that operators of small MS4s comply with many of the

effluent standards of the Clean Water Act. Thus, general permits issued under Phase II will contain numerous substantive

requirements, just as did the permits issued under Phase I. See

40 C.F.R. §§ 123.35 & 123.35(a) (“§ 123.35 As the NPDES

ENVIRONMENTAL DEFENSE CENTER v. EPA 613
Permitting Authority for regulated small MS4s, what is my

role? (a) You must comply with the requirements for all

NPDES permitting authorities under Parts 122, 123, 124 and

125 of this chapter.”); see also 40 C.F.R. § 122.28 (outlining

requirements for NPDES authorities issuing general permits).

In particular, each general permit must contain provisions to

require compliance with § 307(a) of the Clean Water Act, 33

U.S.C. § 1317(a), which sets the effluent limitations that are

the core of the NPDES program. See 40 C.F.R. § 122.44(b)(1)

(“If any applicable toxic effluent standard or prohibition . . .

is promulgated under section 307(a) of [the Clean Water Act]

for a toxic pollutant and that standard or prohibition is more

stringent than any limitation on the pollutant in the permit, the

Director shall institute proceedings under these regulations to

modify or revoke and reissue the permit. . . .”). 

Every operator of a small MS4 who files an NOI under

Phase II “must comply with other applicable NPDES permit

requirements, standards, and conditions established in the . . .

general permit.” See 40 C.F.R. §§ 122.34 & 122.34(f). Specifically, every operator of a small MS4 who files a Notice of

Intent under Phase II must comply with the effluent standards

and limitations promulgated under the Clean Water Act. See

40 C.F.R. § 122.34(f) (mandating compliance with the

requirements, standards and conditions “developed consistent

with the provisions of §§ 122.41 through 122.49”); see also

40 C.F.R. § 122.44 (mandating compliance with the effluent

standards and limitations promulgated under the Clean Water

Act). 

However, while each Phase II general permit will ensure

that operators of small MS4s comply with the effluent standards of the Clean Water Act, they will not “require controls

to reduce the discharge of pollutants to the maximum extent

practicable.” According to the Phase II Rule, the operator of

a small MS4 has complied with the requirement of reducing

discharges to the “maximum extent practicable” when it

implements its storm water management program, i.e. when

614 ENVIRONMENTAL DEFENSE CENTER v. EPA
it implements its Minimum Measures. 40 C.F.R. § 122.34(a).

Nothing in the Phase II regulations requires that NPDES permitting authorities review these Minimum Measures to ensure

that the measures that any given operator of a small MS4 has

decided to undertake will in fact reduce discharges to the

maximum extent practicable.44 See 40 C.F.R. § 123.35 (“As

the NPDES Permitting Authority for regulated small MS4s,

what is my role?”). Therefore, under the Phase II Rule, nothing prevents the operator of a small MS4 from misunderstanding or misrepresenting its own stormwater situation and

proposing a set of minimum measures for itself that would

reduce discharges by far less than the maximum extent practicable. 

[12] In fact, under the Phase II Rule, in order to receive the

protection of a general permit, the operator of a small MS4

needs do nothing more than decide for itself what reduction

in discharges would be the maximum practical reduction. No

one will review that operator’s decision to make sure that it

was reasonable, or even good faith.45 Therefore, as the Phase

44That the Rule allows a permitting authority to review an NOI is not

enough; every permit must comply with the standards articulated by the

Clean Water Act, and unless every NOI issued under a general permit is

reviewed, there is no way to ensure that such compliance has been

achieved. 

The regulations do require NPDES permitting authorities to provide

operators of small MS4s with “menus” of management practices to assist

in implementing their Minimum Measures, see 40 C.F.R. § 123.35(g), but

again, nothing requires that the combination of items that the operator of

a small MS4 selects from this “menu” will have the combined effect of

reducing discharges to the maximum extent practicable. 

Nor is the availability of citizen enforcement actions a substitute for

EPA’s enforcement responsibility, especially because, as discussed below,

the Rule does not require that NOIs be publically available. Absent review

on the front end of permitting, the general permitting regulatory program

loses meaning even as a procedural exercise. 

45EPA identifies no other general permitting program that leaves the

choice of substantive pollution control requirements to the regulated

entity, and we are not persuaded by the analogy it urges to the traditional

model of general permitting (where NOIs routinely are not reviewed),

because, as we have noted, the Phase II general permit model is substantially dissimilar. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 615
II Rule stands, EPA would allow permits to issue that would

do less than require controls to reduce the discharge of pollutants to the maximum extent practicable. We therefore must

reject this aspect of the Phase II Rule as contrary to the clear

intent of Congress. Cf. Natural Res. Def. Council, 966 F.2d

at 1305 (rejecting as arbitrary and capricious a permitting system that allowed regulated industrial stormwater dischargers

to “self-report” whether they needed permit coverage). 

[13] Involving regulated parties in the development of individualized stormwater pollution control programs is a laudable step consistent with the directive to consult with state and

local authorities in the development of the § 402(p)(6) comprehensive program. But EPA is still required to ensure that

the individual programs adopted are consistent with the law.

Our holding should not prevent the Phase II general permitting program from proceeding mostly as planned. Our holding

does not preclude regulated parties from designing aspects of

their own storm water management programs, as contemplated under the Phase II Rule. However, storm water management programs that are designed by regulated parties

must, in every instance, be subject to meaningful review by

an appropriate regulating entity to ensure that each such program reduces the discharge of pollutants to the maximum

extent practicable. We therefore remand this aspect of the

Rule. 

3. Public Participation

The Environmental Petitioners contend that the Phase II

Rule fails to provide public participation as required by the

Clean Water Act, because the public receives neither notice

nor opportunity for hearing regarding an NOI. The EPA

replies on the one hand by arguing that NOIs are not “permits” and therefore are not subject to the public availability

and public hearing requirements of the Clean Water Act, and

on the other hand by arguing that the combination of the public involvement minimum measure, 40 C.F.R. § 122.34(b)(2),

616 ENVIRONMENTAL DEFENSE CENTER v. EPA
the Federal Freedom of Information Act, 5 U.S.C. § 552, and

state freedom of information acts would fulfill any such

requirements if NOIs were permits. 

[14] Reviewing the Phase II Rule under Chevron step one,

we conclude that clear Congressional intent requires that

NOIs be subject to the Clean Water Act’s public availability

and public hearings requirements. The Clean Water Act

requires that “[a] copy of each permit application and each

permit issued under [the NPDES permitting program] shall be

available to the public,” 33 U.S.C. § 1342(j), and that the public shall have an opportunity for a hearing before a permit

application is approved, 33 U.S.C. § 1342(a)(1). Congress

identified public participation rights as a critical means of

advancing the goals of the Clean Water Act in its primary

statement of the Act’s approach and philosophy. See 33

U.S.C. § 1251(e); see also Costle v. Pacific Legal Found., 445

U.S. 198, 216 (1980) (noting the “general policy of encouraging public participation is applicable to the administration of

the NPDES permit program”). EPA has acknowledged that

technical issues relating to the issuance of NPDES permits

should be decided in “the most open, accessible forum possible, and at a stage where the [permitting authority] has the

greatest flexibility to make appropriate modifications to the

permit.” 44 Fed. Reg. 32,854, 32,885 (Jun. 7, 1979). 

[15] As we noted above, under the Phase II Rule it is the

NOIs, and not the general permits, that contain the substantive

information about how the operator of a small MS4 will

reduce discharges to the maximum extent practicable. Under

the Phase II Rule, NOIs are functionally equivalent to the permit applications Congress envisioned when it created the

Clean Water Act’s public availability and public hearing

requirements. Thus, if the Phase II Rule does not make NOIs

“available to the public,” and does not provide for public

hearings on NOIs, the Phase II Rule violates the clear intent

of Congress. EPA’s first argument—that NOIs are not subject

ENVIRONMENTAL DEFENSE CENTER v. EPA 617
to the public availability and public hearings requirements of

the Clean Water Act—therefore fails. 

[16] We therefore reject the Phase II Rule as contrary to the

clear intent of Congress insofar as it does not provide for public hearings on NOIs as required by 33 U.S.C. § 1342(a)(1).

However, Congress has not directly addressed the question of

what would constitute an NOI being “available to the public”

as required by 33 U.S.C. § 1342(j). Under Chevron step two,

we must defer to EPA’s interpretation of “available to the

public” unless it is arbitrary, capricious, or manifestly contrary to the statute. 

EPA argues that the NOIs are “available to the public” as

a result of the combined effects of the public participation

minimum measures, and of federal and state freedom of information acts. This argument is unconvincing. First, the public

participation Minimum Measure only requires dischargers to

design a program minimally consistent with State, Tribal and

local requirements. 40 C.F.R. § 122.34(b)(2). Second, the federal Freedom of Information Act only applies to documents

that are actually in EPA’s possession, not to documents that

are in the possession of state or tribal NPDES authorities, see

40 C.F.R. § 2 (providing EPA’s policy for releasing documents under the federal Freedom of Information Act), and

nothing in the Phase II Rule provides that EPA obtain possession of every NOI that is submitted to a NPDES permitting

authority. See 40 C.F.R. §123.41(a) (making information provided to state NPDES authorities available to EPA only upon

request). Thus, under the Phase II Rule, NOIs will only “be

available to the public” subject to the vagaries of state and

local freedom of information acts. We conclude that EPA’s

interpretation of 33 U.S.C. § 1342(j), as embodied in the provisions of the Phase II Rule providing for the public availability of NOIs, is manifestly contrary to the Clean Water Act,

which contemplates greater scope, greater certainty, and

greater uniformity of public availability than the Phase II Rule

provides. We therefore reject this aspect of the Phase II Rule.

618 ENVIRONMENTAL DEFENSE CENTER v. EPA
[17] In sum, we remand the Phase II Rule to EPA on the

grounds that the Phase II Rule must provide for the review of

NOIs to ensure that those NOIs “require controls” upon operators of small MS4s “that reduce the discharge of pollutants

to the maximum extent practicable,” 33 U.S.C.

§ 1342(p)(3)(B)(iii), must provide for public hearings on

NOIs before any discharge is authorized as required by 33

U.S.C. § 1342(a)(1), and must provide for the public availability of NOIs as required by 33 U.S.C. § 1342(j).

C. Failure to Designate 

We reject the Environmental Petitioners’ contention that

EPA’s failure to designate for Phase II regulation serious

sources of stormwater pollution, including certain industrial

(“Group A”) sources and forest roads, was arbitrary and capricious. See Marsh v. Oregon Natural Res. Council, 490 U.S.

360, 378 (1989).46

46Agency determinations based on the record are reviewed under the

“arbitrary and capricious” standard. 5 U.S.C. § 706(2)(A). The standard is

narrow and the reviewing court may not substitute its judgment for that of

the agency. Marsh, 490 U.S. at 378. However, the agency must articulate

a rational connection between the facts found and the conclusions made.

Washington v. Daley, 173 F.3d 1158, 1169 (9th Cir. 1999). The reviewing

court must determine whether the decision was based on a consideration

of the relevant factors and whether there has been a clear error of judgment. Marsh, 490 U.S. at 378. The court may reverse under the “arbitrary

and capricious” standard only if the agency: 

has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to

the evidence before the agency, or is so implausible that it could

not be ascribed to a difference in view or the product of agency

expertise. 

Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 619
Volume 2 of 2

ENVIRONMENTAL DEFENSE CENTER v. EPA 621
1. “Group A” Facilities

In addition to the small MS4s and construction sites ultimately designated for regulation under the Phase II Rule, EPA

evaluated a variety of other point-source discharge categories

for potential Phase II regulation. One group of dischargers

(referred to as the “Group A” facilities) included sources that

“are very similar, or identical” to regulated stormwater discharges associated with industrial activity that were not designated for Phase I regulation for administrative reasons

unrelated to their environmental impacts.47 64 Fed. Reg. at

68,779. EPA estimates that Group A includes approximately

100,000 facilities, including auxiliary facilities and secondary

activities (“e.g., maintenance of construction equipment and

vehicles, local trucking for an unregulated facility such as a

grocery store,” id.) and facilities intentionally omitted from

Phase I designation (“e.g., publicly owned treatment works

with a design flow of less than 1 million gallons per day,

landfills that have not received industrial waste,” id.). 

The Environmental Petitioners contend that EPA should

have designated the Group A facilities for categorical Phase

II regulation after finding (1) that stormwater discharges from

these facilities are the same as those from the industrial

sources regulated under Phase I, and (2) that such discharges

may cause “adverse water quality impacts.” Id. Petitioners

argue that these findings, and EPA’s failure to provide individualized analysis regarding whether any specific source category within Group A requires regulation, render EPA’s

decision not to regulate any of these sources under the Rule

47EPA explains that the Group A facilities were not regulated with the

other Phase I sources because EPA used Standard Industrial Classification

Index (SIC) codes in defining the universe of regulated industrial activities: “By relying on SIC codes, a classification system created to identify

industries rather than environmental impacts from these industries [sic]

discharges, some types of storm water discharges that might otherwise be

considered ‘industrial’ were not included in the existing NPDES storm

water program.” 64 Fed. Reg. at 68,779. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 623
arbitrary and capricious. They maintain that EPA’s “linedrawing,” which regulates some pollution sources but leaves

nearly identical sources unregulated without any persuasive

rationale, is necessarily arbitrary and capricious. See Natural

Res. Def. Council, 966 F.2d at 1306 (EPA’s decision not to

regulate construction sites smaller than five acres was arbitrary when EPA provided no data to justify the five-acre

threshold and admitted that unregulated sites could have significant water quality impacts). 

Petitioners argue that § 402(p)(6) at least required EPA to

make findings with respect to individual Group A categories,

and that data collected from Phase I permit applications could

be used to evaluate the pollutant potential of the identical

Group A sources. They contend that these findings should

have sufficed as a basis for designating at least some Group

A sources, and that EPA’s conclusion that it lacked adequate

nationwide data upon which to designate any of these sources

is not supported by the record evidence. Comparing EPA’s

identification of the serious polluting potential of some of

these sources with its statutory mandate under § 402(p)(6) “to

protect water quality,” they argue that EPA fails even the forgiving standard of arbitrary and capricious review in that it

has “offered an explanation for its decision that runs counter

to the evidence before [it]”, and “is so implausible that it

could not be ascribed to a difference in view or the product

of agency expertise.” See Motor Vehicle Mfrs., 463 U.S. at 43.

EPA maintains that it considered Group A facilities’ similarity to already regulated sources as only one of several

criteria that it used in designating sources for regulation under

Phase II, 64 Fed. Reg. at 68,780, and that sources that appear

“similarly situated” under one criterion are not necessarily

similarly situated under all. EPA asserts that nothing in

§ 402(p)(6) implied a responsibility to make individualized

findings regarding each Group A subcategory, and it maintains that it simply lacked sufficient data to support nationwide designation of the Group A facilities. EPA notes that,

624 ENVIRONMENTAL DEFENSE CENTER v. EPA
after failing to receive requested comment providing such

data, it proposed instead “to protect water quality” by allowing regional regulation of problem Group A facilities under

the residual designation authority. EPA contends that agencies

must be afforded deference in determining the data necessary

to support regulatory decision making and that it reasonably

determined the quantum of data it would need to support the

designation of additional sources on a nationwide basis. See

Sierra Club v. EPA, 167 F.3d 658, 662 (D.C. Cir. 1999). 

We conclude that sufficient evidence supports EPA’s decision not to designate Group A sources on a nationwide basis,

and instead to establish local and regional designation authority to account for these sources and protect water quality.

Although we are troubled by the purely administrative basis

for the distinction between facilities regulated under the Phase

I Rule and the Group A facilities that remain unregulated

under Phase II,48 EPA’s choice of the Phase I standard for designation is not the issue before us. Before us is whether EPA

acted arbitrarily in declining to designate the Group A sources

on a nationwide basis under the Phase II Rule, and we cannot

say that it did. 

EPA has articulated a rational connection between record

facts indicating insufficient data to categorically regulate

Group A facilities and its corresponding conclusion not to do

so, and we defer to that decision. See Washington v. Daley,

173 F.3d 1158, 1169 (9th Cir. 1999). In the text of the Rule,

EPA explains that the process behind its decision not to

nationally designate Group A sources for Phase II regulation

focused not only on the likelihood of contamination from a

source category but also on the sufficiency of national data

about each category and whether pollution concerns were ade48As discussed in footnote 47, Group A facilities were not regulated

with other Phase I industrial sources based on a government coding system used to distinguish different types of industry (without reference to

their similar environmental impacts). See 64 Fed. Reg. at 68,779. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 625
quately addressed by existing environmental regulations.49 We

cannot say that EPA relied on factors Congress had not

intended it to consider, that it failed to consider an important

aspect of the problem, or that its rationale is implausible. See

Motor Vehicle Mfrs., 463 U.S. at 43. Nor did EPA’s decision

run counter to the evidence before it. Id. The Environmental

Petitioners allege that its decision not to regulate Group A

facilities runs counter to evidence that similar sources are

highly polluting, but as EPA considered evidence beyond

those similarities that persuaded it not to regulate, we cannot

say that EPA’s decision is unsupported by the record. Nothing

in § 402(p)(6) unambiguously requires EPA to evaluate the

Group A source categories individually, and we defer to

EPA’s interpretation of the statute it is charged with administering. See Royal Foods Co. v. RJR Holdings, 252 F.3d 1102,

1106 (9th Cir. 2001). 

49“In identifying potential categories of sources for designation in

today’s notice, EPA considered designation of discharges from Group A

and Group B facilities. EPA applied three criteria to each potential category in both groups to determine the need for designation: (1) The likelihood for exposure of pollutant sources included in that category, (2)

whether such sources were adequately addressed by other environmental

programs, and (3) whether sufficient data were available at this time on

which to make a determination of potential adverse water quality impacts

for the category of sources. As discussed previously, EPA searched for

applicable nationwide data on the water quality impacts of such categories

of facilities. . . . 

“EPA’s application of the first criterion showed that a number of Group

A and B sources have a high likelihood of exposure of pollutants. . . .

Application of the second criterion showed that some categories were

likely to be adequately addressed by other programs. 

“After application of the third criterion, availability of nationwide data

on the various storm water discharge categories, EPA concluded that

available data would not support any such nationwide designations. While

such data could exist on a regional or local basis, EPA believes that permitting authorities should have flexibility to regulate only those categories

of sources contributing to localized water quality impairments. . . . If sufficient regional or nationwide data become [sic] available in the future, the

permitting authority could at that time designate a category of sources or

individual sources on a case-by-case basis.” 64 Fed. Reg. at 68,780. 

626 ENVIRONMENTAL DEFENSE CENTER v. EPA
2. Forest Roads

The Environmental Petitioners also contend that EPA arbitrarily failed to regulate forest roads under the Rule despite

clear evidence in the record documenting the need for stormwater pollution control from these roads. Petitioners again

contend that this agency action is arbitrary, because EPA has

offered an explanation for its decision that runs counter to the

evidence before it. 

Petitioners point to EPA’s own conclusion that forest roads

“are considered to be the major source of erosion from forested lands, contributing up to 90 percent of the total sediment

production from forestry operations.”

50 They note that both

unimproved forest roads and construction sites create large

expanses of non-vegetated soil subject to stormwater erosion,

and argue that construction site data thus also supports regulation of forest roads. Petitioners observe that EPA has cited no

contrary evidence indicating that forest roads are not sources

of stormwater pollutant discharges to U.S. waters, and they

argue that Phase II regulation is necessary “to protect water

quality,” because proper planning and road design can minimize erosion and prevent stream sedimentation. Petitioners

note that this court has previously held that, in the absence of

such “supportable facts,” EPA is not entitled to the usual

assumption that it has “rationally exercised the duties delegated to it by Congress.” Natural Res. Def. Council, 966 F.2d

at 1305. 

EPA maintains that this argument is time-barred by Clean

Water Act § 509(b)(1), 33 U.S.C. § 1369(b)(1) (providing that

“application for review shall be made within 120 days from

the date of [agency action]”). EPA promulgated silviculture

50Guidance Specifying Management Measures For Sources of Nonpoint

Pollution in Coastal Waters, EPA guidance paper 840-B-93-001c (Jan.

1993), available at http://www.epa.gov/owow/nps/mmgi/index.html (last

visited Sept. 18, 2002) (“Coastal Waters”). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 627
regulations in 1976 that exclude from NPDES permit requirements silvicultural activities that EPA has determined constitute non-point source activities, including “surface drainage,

or road construction and maintenance from which there is natural runoff.” 40 C.F.R. § 122.27(b)(1). EPA notes that Petitioners missed yet another opportunity to seek review of

EPA’s regulation of silvicultural activities when EPA recently

considered51 but ultimately declined52 to change the classification of forest roads to point sources subject to NPDES regulation.53

EPA’s line of argument might be more persuasive if the

Environmental Petitioners’ contention could only be understood as a direct challenge to its 1976 silviculture (forestry)

regulations, but this is not the case. The Petitioners assert that

EPA’s decision not to regulate forest roads under the Phase II

rule is arbitrary, because EPA made the decision while aware

that forest roads pose a recognized threat to water quality. 

The fact that EPA exempted forest roads from NPDES permit requirements in 1976, 40 C.F.R. § 122.27(b), does not

resolve the question whether EPA should have addressed forest roads in its “comprehensive program . . . to protect water

quality” under § 402(p)(6), because § 402(p)(6) does not

require that the “comprehensive program” be limited to the

use of NPDES permits. Indeed, as EPA argued in response to

the Municipal Petitioners’ claim that it lacked statutory

authority to regulate Phase II dischargers through the NPDES

51Revisions to the NPDES Program and Federal Antidegradation Policy

in Support of Revisions to the Water Quality Planning and Management

Regulation, 64 Fed. Reg. 46,058, 46,088 (Aug. 23, 1999) (proposed rule).

52Revisions to the Water Quality Planning and Management Regulation,

65 Fed. Reg. 43,586, 43,652 (July 13, 2000) (to be codified at 40 C.F.R.

§§ 9, 122, 123, and 124). 

53Petitions for judicial review of that decision are currently pending in

the D.C. Circuit. Am. Farm Bureau Fed’n. v. Whitman, Docket No. 00-

1320 and consolidated cases. 

628 ENVIRONMENTAL DEFENSE CENTER v. EPA
permitting program, EPA was “free to adopt any regulatory

program that was ‘comprehensive’ ” and included the other

requisite elements (that the program be based on the

§ 402(p)(5) studies, etc.). EPA was not precluded from

addressing forest roads in the Phase II program simply

because forest roads are currently exempt from NPDES permitting requirements. 

However, we cannot say that EPA’s decision not to designate forest roads for Phase II regulation was arbitrary, because

EPA was asked by Congress to promulgate the Phase II Rule

under the section of the Clean Water Act demarcated for regulating “Municipal and Industrial Stormwater Discharges.” 33

U.S.C. § 1342(p). The Phase II “comprehensive program”

was thus specifically intended to address stormwater pollution

from industrial and municipal sources, not agriculture. That

EPA did not regulate forest roads under this program is consistent with its policy practice of treating silviculture as an

agricultural, rather than an industrial, activity. This categorical distinction is supported in the text of the Clean Water Act,

see, e.g., id. § 1314(e)-(f) (treating separately best management practices for industry, § 1314(e), and pollution control

for “agricultural and silvicultural activities,” § 1314(f)(A)).54

EPA’s interpretation of the statutory provision it is charged

with administering is entitled to deference.55 See Royal Foods

Co., 252 F.3d at 1106. 

54EPA has singled out several silvicultural activities for regulation as

point sources, but forest roads are expressly excluded from the short list.

40 C.F.R. § 122.27 (requiring NPDES permits where pollutants are discharged in association with silvicultural rock crushing, gravel washing,

log sorting, and log storage). Several agricultural activities have also been

singled out for NPDES permitting, including concentrated animal feeding

operations (but not forest roads). Id. at § 122.23. 

55The legality of EPA’s recent decision not to separate its general treatment of forest roads from its treatment of agricultural activities under the

Clean Water Act is currently under review in the D.C. Circuit, Am. Farm

Bureau Fed’n., Docket No. 00-1320, and must be resolved in that forum.

ENVIRONMENTAL DEFENSE CENTER v. EPA 629
The Environmental Petitioners argue that this aspect of the

Rule is arbitrary because EPA “offered an explanation for its

decision that runs counter to the evidence before [it],” Motor

Vehicles Mfrs. Ass’n, 463 U.S. at 43, since EPA knew at the

time of the rulemaking that forest roads threaten water quality.56

We agree that EPA was probably aware of the forest road sedimentation problem at the time of the rulemaking, just as it

was aware of many other sources of water pollution that it

also declined to regulate under the Phase II Rule, including

agricultural activities responsible for even more serious water

quality impairments of rivers and lakes.57 But EPA’s awareness of the forest road sedimentation problem does not lead

to the conclusion that the Phase II rulemaking runs counter to

record evidence, when the evidence in question is only tangentially relevant to the Phase II regulatory agenda. 

In accordance with its instructions from Congress, EPA

based its decision about which sources to designate on the

available evidence related to municipal and industrial sources

of stormwater discharges. The Petitioners have offered no evidence, either in this appeal or during the long Phase II rulemaking process, that forest roads should be considered

municipal or industrial enterprises.58 Thus, available evidence

about forest roads was irrelevant to this rulemaking, and can56See, e.g., Coastal Waters, supra note 50, (describing how forestry

operations, including road construction and use, degrade water quality in

water-bodies receiving drainage from forest lands). 

57Nonpoint Source Pollution: The Nation’s Largest Water Quality Problem, EPA841-F-96-004A (“Pointer #1”) (“The latest National Water

Quality Inventory indicates that agriculture is the leading contributor to

water quality impairments, degrading 60 percent of the impaired river

miles and half of the impaired lake acreage surveyed by states, territories,

and tribes.”). 

58Petitioners can barely be regarded as having raised the issue of regulating forest roads at all during the Phase II notice and comment process.

Their only comment on the matter was contained in a single sentence in

a single footnote amidst forty-five single-spaced pages of general comments about the proposed Rule. 

630 ENVIRONMENTAL DEFENSE CENTER v. EPA
not serve as a basis for asserting that EPA acted capriciously

or arbitrarily. 

D. AF&PA’s Standing 

The American Forestry & Paper Association (AF&PA), a

national trade association representing the forest, pulp, paperboard, and wood products industry, is one of the two Industry

Petitioners asserting the remaining claims.59 Before considering these challenges, however, we consider whether AF&PA

has standing to raise them. 

EPA argues that AF&PA lacks standing because it cannot

show that it represents entities that suffer a cognizable injury

under the Phase II Rule as promulgated. EPA argues that the

interests of AF&PA entities might have supported standing

had EPA decided to regulate forest roads as Phase II stormwater dischargers, but since EPA declined to do so, none of

AF&PA’s members are currently subject to the Rule. AF&PA

contends that its members have a cognizable legal interest in

the Rule because they risk becoming subject to regulation at

any future time under the continuing designation authority. 

We agree that AF&PA lacks standing. A claimant meeting

Article III standing requirements must show that “(1) it has

suffered an ‘injury in fact’. . .; (2) the injury is fairly traceable

to the challenged action of the defendant; and (3) it is likely,

as opposed to merely speculative, that the injury will be

redressed by a favorable decision.” Friends of the Earth v.

Laidlaw Envtl. Servs. (TOC), 528 U.S. 167, 180-81 (2000).

Standing requires an injury that is “actual or imminent, not

‘conjectural or hypothetical.’ ” Lujan v. Defenders of Wildlife,

504 U.S. 555, 560 (1992). AF&PA’s interest in avoiding

future regulation of forest roads is not actually or imminently

threatened by any potential result in this case. No ripe claim

59The Municipal Petitioners join in asserting the “regulatory basis”

claim at Part II(F)(1). 

ENVIRONMENTAL DEFENSE CENTER v. EPA 631
about misuse of the residual authority to regulate forest road

discharge, or any other kind of discharge, is before the court.

Should members of AF&PA become subject to Phase II regulation through subsequent administrative action, it will have

standing to challenge those actions at that time. In the meanwhile, we proceed to the merits of the remaining claims on

behalf of AF&PA’s co-petitioner, the National Association of

Home Builders, which has established its standing to raise

them. 

E. Consultation with State and Local Officials 

The Industry Petitioners contend that EPA failed to consult

with the states on the Phase II Rule as required by

§ 402(p)(5), which instructs EPA to conduct studies “in consultation with the States,” and § 402(p)(6), which instructs the

Administrator to issue regulations based on these studies “in

consultation with State and local officials.” 33 U.S.C.

§§ 1342(p)(5)-(6). We conclude that EPA satisfied its statutory duty of consultation. See Marsh, 490 U.S. at 378. 

Petitioners concede several instances in which EPA circulated drafts of the Phase II Rule to state and local authorities,

but argue that these consultations were meaningless because

(1) the reports were circulated too far in advance of the actual

rulemaking, (2) the rulemaking wrongfully proceeded based

on other sources of input, (3) standard APA notice and comment procedures could not suffice because Congress must

have intended something more when it added the consultation

requirements to the language of § 402, and (4) consultation at

the final stage of rulemaking was inadequate because comment was sought on the final report only after it had been submitted to Congress and the Phase II Rule had been

promulgated. Petitioners provide examples of state feedback

that allegedly went unheeded by EPA in its promulgation of

the final Rule. 

EPA maintains that it consulted extensively with states and

localities in developing the Phase II Rule, discharging its obli632 ENVIRONMENTAL DEFENSE CENTER v. EPA
gations under §§ 402(p)(5) & (6). EPA contends that the comments Petitioners cite as unheeded by EPA demonstrate that

EPA did consult with states concerning the Rule, even if some

states did not concur in EPA’s ultimate conclusion, and that

the final rule adopted a good measure of the flexibility sought

by state representatives. EPA argues that Industry Petitioners

cannot complain that consultation was inadequate simply

because it did not result in the adoption of Petitioners’ preferred views. 

EPA also disputes Petitioners’ allegation that while EPA

did comply with the terms of the 1999 Appropriations Act

(requiring EPA to defend the proposed Phase II Rule before

Congress and then publish the final report for public comment), it demonstrated its failure to adequately consult by

publishing the report for public comment after the Phase II

Rule had been formally promulgated, rendering any subsequent public comment meaningless. EPA counters that these

actions do not indicate that it failed to satisfy Congress’s

directive that it consult with state and local officials, because

EPA had engaged in extensive consultation before Congress

requested the Appropriations Act report, and Congress did not

require further consultation when it conditioned promulgation

of the Rule only on the submission of this final report. EPA

claims that while Congress required it to publish the report

after its submission, public comment on the report was not

required before promulgation, and that the statutory deadline

structure rendered any other interpretation impossible. 

We conclude that the overall record indicates EPA met its

statutory duty of consultation. A draft of the first report was

circulated to states, EPA regional offices, the Association of

State and Interstate Water Pollution Control Administrators

(“ASIWPCA”), and other stakeholders in November of 1993,

and was revised based on comments received. EPA established the Urban Wet Weather Flows Federal Advisory Committee (“FACA Committee”), balancing membership between

EPA’s various outside stakeholder interests, including repreENVIRONMENTAL DEFENSE CENTER v. EPA 633
sentatives from states, municipalities, Tribes, commercial and

industrial sectors, agriculture, and environmental and public

interest groups. 64 Fed. Reg. 68,724. The 32 members of the

Phase II FACA Subcommittee, reflecting the same balance of

interests, met fourteen times over three years and state and

municipal representatives provided substantial input regarding

the draft reports, the ultimate Phase II Rule, and the supporting data.60 Id. EPA instituted the Phase II Subcommittee meetings in addition to the standard APA notice and comment

procedures, which EPA also followed. 

The fact that the Rule did not conform to Petitioners’ hopes

and expectations does not bear on whether EPA adequately

consulted state and local officials. Although required to consult with states and localities, EPA was free to chart the substantive course it saw fit. EPA was not required to consult

with states on the Appropriations Act report. Even if EPA

should have sought further comment at that late stage, failure

to do so does not outweigh the evidence demonstrating extensive consultation and cooperation with local authorities on

development of the Rule. 

F. Designation of Certain Small MS4s and Construction

Sites 

The Industry Petitioners contend that, in designating certain

small MS4s and construction sites for regulation under the

Phase II Rule, EPA failed to adhere to the statutorily required

regulatory basis and misinterpreted record evidence. We disagree. 

60NRDC argues that this claim is not only meritless for the reasons

stated by EPA, but also frivolous, since industry petitioner National Association of Home Builders, as a member of the FACA Phase II Subcommittee, participated in and affirmed that such consultation took place. 

634 ENVIRONMENTAL DEFENSE CENTER v. EPA
1. Regulatory Basis

The Industry Petitioners and the Municipal Petitioners contend that EPA violated the statutory command to base the

Phase II regulations on § 402(p)(5) studies. We review EPA’s

interpretation of its statutory authority under the Chevron

standard, 467 U.S. at 842-44, and affirm. 

Petitioners argue that the studies mandated by § 402(p)(5)

were intended to provide the sole substantive basis for the

“comprehensive program” envisioned in § 402(p)(6), but that

EPA also (and thus improperly) based its designation of small

MS4s and construction sites on (1) public comment received

in the aftermath of judicial invalidation of the scope of construction sites regulated by the Phase I Rule,61 and (2) additional research discussed in the Preamble to the Phase II Rule.62

EPA contends that the statute did not require it to base its

designations exclusively on the § 402(p)(5) studies, and that

it was in fact required to take account of information from

other sources in promulgating the regulations. It argues that

it based the Phase II Rule on conclusions reported in the

§ 402(p)(5) studies, but then appropriately supported these

results with data described in the additional study requested

by Congress in the Appropriations Act, comments submitted

during the statutorily required notice-and-comment process,

and other available information. To read the authorizing stat61See Natural Res. Def. Council, 966 F.2d at 1306 (remanding EPA’s

decision to regulate only construction sites disturbing more than five

acres, after EPA had initially proposed to regulate all sites disturbing more

than one acre). 

62The Industry Petitioners contend that EPA lacked authority to issue

the Phase II regulation of construction sites based on a process EPA itself

characterized as “separate and distinct” from the development of the

Report to Congress. 64 Fed. Reg. at 68,732. They add that the Phase II

Rule was not “based on” the 1999 Report ultimately requested by Congress in the Appropriations Act, since EPA’s report in response was

released on the very day that the final Phase II Rule was published. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 635
ute as limiting reliance to the § 402(p)(5) studies, EPA claims,

would preclude it from relying on recommendations received

through the separate, post-study requirement to “consult with

State and local officials” under § 402(p)(6), and through the

notice and comment process mandated by the APA, 5 U.S.C.

§ 553(b). 

Respondent-intervenor NRDC adds that the Phase II Rule

is consistent with the § 402(p)(5) studies reported in 1995,

and moreover, that the Industry Petitioners lack standing to

raise the “regulatory basis” claim because they cannot show

the requisite injury. See Friends of the Earth, 528 U.S. at 180-

81. 

a. Standing. Industry Petitioners63 contend that they have

suffered injury in fact, because their members are now either

automatically regulated by the permitting requirements or

subject to future regulation (under the residual authority, discussed below) that otherwise would not have been authorized,

and that this is a direct result of EPA’s failure to adhere to the

framework of the 1995 Report, which allegedly would have

precluded these aspects of the Rule. NRDC contends that the

Industry Petitioners lack standing because they cannot show

that being subject to NPDES permitting is the causal result of

the procedural injury they urge, and because they cannot base

standing on hypothetical injury that may arise in the future. 

NRDC argues that the injuries Petitioners allege are not

consistent with the guidelines laid out in Friends of the Earth.

528 U.S. at 180-81. It insists that Petitioners’ only possible

claims of injury from the alleged “regulatory basis” violation

are purported harm to members caused by the final Phase II

Rule itself or harm to members caused by EPA’s alleged failure to provide adequate notice of future regulatory require63Since we have already determined that AF&PA lacks standing to raise

any of its claims, see Section D above, this discussion pertains to the

remaining Industry Petitioner, National Association of Home Builders. 

636 ENVIRONMENTAL DEFENSE CENTER v. EPA
ments in the 1995 Report. However, NRDC contends that

Petitioners have not suffered the requisite injury, because they

had actual notice that EPA might regulate small construction

sites, 63 Fed. Reg. at 1583, and they can show no chain of

causation linking their alleged injury from the Rule itself to

the actions challenged here. 

NRDC’s causation argument is complex. Although the

Petitioners purport to challenge EPA’s failure to follow all of

the 1995 Report’s recommendations in the final Phase II Rule,

NRDC contends, they are really challenging the subsequent

proceedings through which EPA developed the final Rule.

Even if there were some unlawful variance between the 1995

report and final rule, NRDC continues, the cause of that variance would have been some failure to abide by rulemaking

standards during administrative proceedings that produced the

text of the final Rule—not EPA’s attention to sources of input

other than the 1995 Report. NRDC maintains that these intervening acts of rulemaking (e.g., Phase II Subcommittee activities and the notice-and-comment process) break the requisite

chain of causation between EPA’s alleged failure to adhere to

recommendations in the 1995 report and the flaws Petitioners

allege in the Phase II Rule, which NRDC claims would have

been due to “purportedly unlawful EPA decisions on the merits during the subsequent administrative proceedings.” See

Northside Sanitary Landfill v. Thomas, 804 F.2d 371, 381-84

(7th Cir. 1986) (finding no standing to challenge EPA statements concerning the fate of a hazardous waste facility when

subsequent state administrative acts, not EPA comments,

would determine the facility’s actual fate.) 

We note that NRDC’s standing arguments apply equally to

the Municipal Petitioners, who can also assert only the harms

resulting to members from the Rule itself or from a lack of

notice, and that we are thus not only considering the standing

of the Industry Petitioners but also that of the Municipal Petitioners to raise the “regulatory basis” claim.64 That established, we find standing for both. 

64Although the issue of Municipal Petitioners’ standing has not been

raised by the parties, we are obliged to consider it to determine whether

ENVIRONMENTAL DEFENSE CENTER v. EPA 637
NRDC essentially argues that petitioners lack standing

because (1) they cannot show that being subject to NPDES

permitting is the causal result of the procedural injury they

urge, (2) they cannot claim any actual notice injury from the

alleged procedural wrong because notice was actually given,

and (3) they cannot claim standing based on hypothetical

injury that may (or may not) arise from future regulation

under the residual authority. We can readily agree with the

latter two contentions. As discussed above, the “actual injury”

requirement of Article III standing precludes judicial consideration of exactly the kind of hypothetical harm the Industry

Petitioners allege may follow from use of Phase II authority

for future designations of regional sources. Friends of the

Earth, 528 U.S. at 180-81. If future Phase II designations

cause identifiable injury to Petitioners, they will then be free

to pursue that ripe claim. And because EPA clearly issued

notice to all regulated parties that they may be subject to regulation under the proposed rule, 63 Fed. Reg. at 1568 (MS4s)

and 1582 (construction), petitioners cannot show injury from

lack of actual notice. 

However, NRDC’s causation argument is less persuasive.

NRDC correctly argues that the petitioners cannot establish a

definite chain of causation between the EPA’s alleged failure

to limit their regulatory basis to the § 402(p)(5) studies and

the fact that they now must obtain permits. But this will

almost always be true of petitions challenging an agency’s

failure to abide by statutory procedural requirements. Because

all administrative decision making following an alleged procedural irregularity could always be considered an intervening

factor breaking the chain of causation, NRDC’s interpretation

of the requisite chain of causation would dubiously shield

administrative decisions from procedural review. 

the case-or-controversy requirement of Article III is satisfied. See, e.g.,

Boeing Co. v. Van Gemert, 444 U.S. 472, 488 n.4 (1980); Juidice v. Vail,

430 U.S. 327, 331 (1977). 

638 ENVIRONMENTAL DEFENSE CENTER v. EPA
For this reason, we have held that the failure of an administrative agency to comply with procedural requirements in

itself establishes sufficient injury to confer standing, even

though the administrative result might have been the same

had proper procedure been followed. City of Davis v. Coleman, 521 F.2d 661, 671 (9th Cir. 1975) (agency’s failure to

comply with National Environmental Policy Act’s procedural

requirements constituted injury sufficient to support standing

of a geographically related plaintiff regardless of potentially

similar regulatory outcome). In City of Davis, we noted that

the standing inquiry represents “a broad test, but because the

nature and scope of environmental consequences are often

highly uncertain before study we think it an appropriate test.”

Id. A plaintiff who shows that a causal relation is “probable”

has standing, even if the chain cannot be definitively established. Johnson v. Stuart, 702 F.2d 193, 195-96 (9th Cir.

1983) (school students and their parents had standing to challenge a statute that limited the texts that might be selected for

teaching, even though it could not be shown whether any specific book had been rejected under this statute or for other reasons). 

The Supreme Court has also acknowledged that standing

may be established by harm resulting indirectly from the challenged acts, Warth v. Seldin, 422 U.S. 490, 504-05 (1975),

and that causation may be established if the plaintiff shows a

good probability that, absent the challenged action, the

alleged harm would not have occurred, Arlington Heights v.

Metro. Hous. Dev. Corp., 429 U.S. 252, 262-64 (1977). 

Thus, although the petitioners cannot show with certainty

that the alleged “regulatory basis” violation caused them to be

wrongfully subjected to Phase II permitting requirements, we

hold that they have alleged a procedural injury sufficient to

support their standing to bring the claim. 

b. Merits. Although we resolve the standing issue in

favor of the petitioners, we nevertheless affirm the Rule

ENVIRONMENTAL DEFENSE CENTER v. EPA 639
against their claim that EPA violated procedural constraints

implied by the authorizing statute, § 402(p)(6). 

Congress intended EPA to use all sources of information in

developing a comprehensive program to protect water quality

to the maximum extent practicable. The statute unambiguously required EPA to base its regulations both on the

§ 402(p)(5) studies and on consultation with State and local

officials. Congress enacted § 402 with full knowledge that

EPA would also be required to take account of public comments during the notice and comment phase of administrative

rulemaking prescribed by the APA.65

2. MS4s in Urbanized Areas

The Municipal Petitioners contend that the designation of

small MS4s for Phase II regulation according to CensusBureau defined areas of population density (“urbanized

areas”) is arbitrary and capricious. They argue that EPA has

not established that the Census Bureau’s designation of urbanized areas is correlated with actual levels of pollution runoff

in stormwater, and that EPA adopted the designations simply

for administrative convenience. We affirm, because the record

reflects a reasoned basis for EPA’s decision. See Marsh, 490

U.S. at 378. 

Conceding that the Preamble cites studies purporting to

establish “a high correlation between the degree of

development/urbanization and adverse impacts on receiving

waters due to stormwater,” 64 Fed. Reg. at 68,751, the

Municipal Petitioners nevertheless contend that the record

contains no “demonstrably correlated, quantified basis on

which EPA may reasonably have concluded that any particular population, or any population density, per se establishes

that all urban areas having that same characteristic in gross

65Even if the statute were ambiguous, we would defer to EPA’s reasonable interpretation. Chevron, 467 U.S. 843-44. 

640 ENVIRONMENTAL DEFENSE CENTER v. EPA
are necessarily appropriate for inclusion as Phase II sources.”

Pointing to Leather Indus. of Am. v. EPA, 40 F.3d 392, 401

(D.C. Cir. 1994) (rejecting as arbitrary EPA’s regulation of

pollutant levels in the absence of data supporting a relationship between the caps and level of risk), Petitioners argue that

EPA simply assumed the relationship Congress contemplated

it would establish by the § 402(p)(5) studies. 

EPA responds that it extensively documented the relationship between urbanization and harmful water quality impacts

from stormwater runoff, pointing to its findings that the

degree of surface imperviousness in an area directly corresponds to the degree of harmful downstream pollution from

stormwater runoff, 64 Fed. Reg. at 68,724-27, and that it

articulated a rational connection between these record facts

and its decision to designate small MS4s serving areas of high

population density (“urbanized areas”) to protect water quality. 

We treat EPA’s decision with great deference because we

are reviewing the agency’s technical analysis and judgments,

based on an evaluation of complex scientific data within the

agency’s technical expertise. See Baltimore Gas & Elec. Co.

v. NRDC, 462 U.S. 87, 103 (1983); see also Chem. Mfrs.

Ass’n v. EPA, 919 F.2d 158, 167 (D.C. Cir. 1990) (“It is not

the role of courts to ‘second-guess the scientific judgments of

the EPA’ ”). We conclude that the record supports EPA’s

choice. 

The statute simply called upon EPA to “designate stormwater discharges,” other than those designated in Phase I, “to

be regulated to protect water quality.” 33 U.S.C. § 1342(p)(6).

EPA did so, based on record evidence showing a compelling

and widespread correlation between urban stormwater runoff

and deleterious impacts on water quality. Petitioners’ assertion that EPA failed to establish a “quantified” basis for its

designation is inapposite. The statute did not require EPA to

establish with pinpoint precision a numeric population threshENVIRONMENTAL DEFENSE CENTER v. EPA 641
old within urbanized areas that would justify regulation under

Phase II. In areas implicating technical expertise and judgment, courts do not require “perfect stud[ies]” or data. Sierra

Club, 167 F.3d at 662. EPA satisfied the Leather Industries

standard by adopting a threshold consistent with the criteria

of “protecting water quality,” and did not assume, but instead

sufficiently documented, the relationship between urbanization and harmful stormwater discharge. 

3. Small Construction Sites

Industry and Municipal Petitioners also argue that EPA’s

decision to regulate under Phase II all construction sites disturbing between one and five acres of land (“small construction sites”) is arbitrary and unsupported by the record. We do

not agree. See Marsh, 490 U.S. at 378. 

a. Record Evidence. Municipal Petitioners claim that

EPA arrived at the one-acre standard based not on factual

findings in the record but instead as a reaction to the earlier

Ninth Circuit remand of the Phase I five-acre designation.

They allege that the one-acre standard is no more based on

supporting data than the rejected five-acre standard, and is

thus quantitatively arbitrary. 

Industry Petitioners argue that EPA’s findings do not support regulation of all small construction sites, but indicate

only that small construction sites, taken cumulatively, may

cause effects similar to large sites in a given area. They contend that EPA’s conclusion that adverse effects are possible

under certain circumstances cannot support categorical designation of all small construction sites nationwide, and that the

Rule is arbitrary because (1) it is based on an analysis that

fails to take account of the frequency of negative impacts, (2)

it fails to take account of acknowledged factors that determine

whether small construction activities cumulatively cause harm

(such as the degree of development in a watershed at any

given time), and (3) EPA has acknowledged that the actual

642 ENVIRONMENTAL DEFENSE CENTER v. EPA
water quality impact of construction sites of all sizes varies

widely from area to area depending on climatological, geological, geographical, and hydrological influences.66

Industry Petitioners further contend that the record does not

support the designation of small sites, because almost all of

the technical papers EPA relied on focused on larger sites or

failed to take account of size,67 and because the lack of an

adequate factual basis for nationwide regulation of small sites

makes the Phase II Rule arbitrary and capricious. Am. Petroleum Inst. v. EPA, 216 F.3d 50, 58 (D.C. Cir. 2000) (invalidating a solid waste rule because EPA “failed to provide a

rational explanation for its decision” declining to exclude oilbearing waste waters from the statutory definition of solid

waste). 

EPA maintains that construction sites regulated under the

Phase II Rule degrade water quality across the United States

and that the administrative record unambiguously documents

that harm. EPA disputes Petitioners’ assertion that it failed to

establish the need to regulate small sites nationwide, but also

66The Industrial Petitioners argue that although the Phase I authorizing

statute required EPA to regulate all sources associated with “industrial

activity,” Congress expressly directed that the Phase II regulatory program

be focused on sources that require regulation “to protect water quality.”

They assert that because EPA’s rule ignores the variability of water quality impacts nationwide, the Rule is not appropriately targeted on the protection of water quality. 

67Petitioners heavily critique two studies relied on by EPA that dealt

specifically with the water quality impacts of small construction sites, noting that one concludes it is impossible to generalize about the impacts of

small sites, Lee H. MacDonald, Technical Justification for Regulating

Construction Sites 1-5 Acres in Size, July 22, 1997, and that the other

merely concludes that small sites “can have” significant effects if erosion

controls are not implemented, David W. Owens, et al., Soil Erosion from

Small Construction Sites. Petitioners contend that the latter study was

managed with no erosion controls, intentionally producing worst-case sediment runoff and unreasonable estimates of actual sediment yields for

small sites nationwide. EPA vigorously defends the studies. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 643
contends that it is not required to base every administrative

decision on a precise quantitative analysis. See Sierra Club,

167 F.3d at 662 (“EPA typically has wide latitude in determining the extent of data-gathering necessary to solve a problem”). 

EPA also disputes petitioners’ assertions that data from

studies involving larger construction sites are irrelevant to the

Phase II Rule. EPA explains that discharges of sediment due

to erosion are the result of the interaction of several factors

including soils, slope, precipitation, and vegetation: 

For construction sites that are one acre or more, none

of the environmental factors contributing to sediment

discharges is dependent on the size of the site disturbed. A one-acre site can have the same combination of soils, slope, degree of disturbance and

precipitation as a 100-acre site, and consequently can

lose soil at the same rate . . . and discharge sediments

in the same concentrations . . . as a 100-acre site. 

EPA contends that it is thus reasonable to extrapolate data

about small sites from studies of larger ones—and that such

an extrapolation may even be forgiving, since small sites are

currently less likely to have effective erosion and sedimentation control plans.68

68NRDC adds that notwithstanding the clear interest of the National

Association of Home Builders (“NAHB,” one of the Industry Petitioners),

NAHB’s multi-year participation in the FACA Phase II Subcommittee

Small Construction and No-Exposure Sites Work Group, and NAHB’s

own submission of detailed comments on the proposed Rule, NAHB failed

to enter into the administrative record any study contradicting the proposition that small construction sites cause water quality problems. NRDC

points to the record’s showing that NAHB had itself proposed that regulation of construction sites of two acres or greater was appropriate, and contends that this is thus not a dispute over whether small construction sites

should be regulated on a nationwide basis, but instead a technical disagreement over whether EPA should establish a one-acre threshold or a

different threshold on a similar small scale. 

644 ENVIRONMENTAL DEFENSE CENTER v. EPA
Indeed, EPA argues that although adverse water quality

impacts of small construction sites have been widely recognized, effective local erosion and sedimentation control programs have not been adopted in many areas.69 Though not all

watersheds are currently adversely affected by small construction sites,70 EPA notes that the Phase II Rule acts “to protect

water quality” both remedially and preventively, and argues

that it need not quantify the cumulative effects of discharges

from these sites or identify all watersheds that are currently

harmed before acting to limit pollution from small sites.71

We reverse under the arbitrary and capricious standard only

if the agency has relied on factors Congress did not intend it

to consider, entirely failed to consider an important aspect of

the problem, offered an explanation for its decision contrary

to the evidence before the agency, or is so implausible that it

could not be ascribed to a difference in view or the product

of agency expertise. Motor Vehicle Mfrs. Ass’n, 463 U.S. at

43. Petitioners’ contention that EPA relied on factors Congress did not intend it to consider was rejected in our earlier

discussion of the regulatory basis challenge. They submit no

evidence that EPA failed to consider an important aspect of

69Whitney Brown and Deborah Caraco, Controlling Stormwater Runoff

Discharges from Small Construction Sites: A National Review, Task 5

Final Report submitted by the Center for Watershed Protection to the EPA

Office of Wastewater Management, March 1997, IP E.R. 633, 643. 

70EPA adds that operators of small sites in areas unlikely to suffer

adverse impacts may apply for a permit waiver if little or no rainfall is

expected during the period of construction (the “rainfall erosivity waiver”)

or if regulation is unnecessary based on a location-specific evaluation of

water quality (the “water quality waiver”). 64 Fed. Reg. at 68,776. 

71EPA also implies permission to regulate for potential cumulative

impacts of small sites from the past directive of this court. When the Phase

I industrial discharge regulations were challenged, we found no record

data to support that rule’s exemption of construction activities on less than

five acres and held that small sites did not categorically qualify for a de

minimis exemption because “even small construction sites can have a significant impact on local water quality.” Natural Res. Def. Council, 966

F.2d at 1306. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 645
the problem. We cannot say that EPA’s designation of small

construction sites is implausible (especially given the support

of twenty-some-odd studies of sedimentation from construction sites that EPA reviewed in promulgating the challenged

regulations, 64 Fed. Reg. 68,728-31). We could remand this

aspect of the Rule only if, as the petitioners urge, EPA’s

explanation for its decision to regulate small construction sites

were contrary to the record evidence, and it is not. 

Petitioners’ primary contention is that evidence in the

record suggests it is not possible to provide an explicit, quantitative link between small construction sites and an adverse

effect on water quality. But even if this were so, EPA’s decision to regulate preventively small construction sites “to protect water quality” is not inconsistent with the record.

Petitioners contend that EPA’s reliance on data from studies

of large construction sites is insufficient to support EPA’s

designation of small sites, but EPA has adequately supported

its contention that experts can reasonably extrapolate projected water quality impacts from large to small sites. We

apply the substantial evidence standard when reviewing the

factual findings of an agency, Dickinson v. Zurko, 527 U.S.

150, 156-58 (1999),72 and find it satisfied here. 

Moreover, EPA is not required to conduct the “perfect

study.” Sierra Club, 167 F.3d at 662. We defer to an agency

decision not to invest the resources necessary to conduct the

perfect study, and we defer to a decision to use available data

unless there is no rational relationship between the means

EPA uses to account for any imperfections in its data and the

situation to which those means are applied. Id.; Am. Iron &

Steel Inst. v. EPA, 115 F.3d 979, 1004 (D.C. Cir. 1997). The

record indicates a reasoned basis for EPA’s decision that reg72The “substantial evidence” standard requires a showing of such relevant evidence as a reasonable mind might accept as adequate to support

a conclusion. Edlund v. Massanari, 253 F.3d 1152, 1156 (9th Cir. 2001).

646 ENVIRONMENTAL DEFENSE CENTER v. EPA
ulating small construction sites was necessary “to protect

water quality” as required by § 402(p)(6). 

b. Waivers. Industry Petitioners further contend that

EPA’s allowance of regulatory waivers for small construction

sites not likely to cause adverse water quality impacts inappropriately supplements the permitting regulations. 

Petitioners argue that EPA has the burden of establishing a

comprehensive program to control sources as necessary to

protect water quality, and that shifting the burden to individual contractors, businesses, and homeowners to prove they do

not harm water quality falls short of meeting this statutory

obligation. Citing National Mining Ass’n v. Babbitt, 172 F.3d

906, 910 (D.C. Cir. 1999), they argue that EPA’s rebuttable

regulatory presumption of water quality impact from small

construction activity is unreasonable because the agency has

established no scientific likelihood that any given small site

will affect water quality. EPA defends the waiver approach as

fair and efficient, and argues that the Industrial Petitioners are

confusing arguments about the limits of presumptions in evidentiary hearings conducted under the APA.73

EPA is correct; the Phase II Rule creates no presumption

applicable to an evidentiary hearing, and a regulation creating

exemptions by waiver is reviewed under the familiar arbitrary

and capricious standard. The use of waivers to allow permit

exemptions for small sites unlikely to cause adverse impacts

is reasonable under that standard. 

c. Consistency. Industry Petitioners also argue that

EPA’s decision to regulate all small construction sites under

the Phase II Rule is arbitrary and capricious because EPA

73EPA further argues that even if the waiver provision were properly

characterized as an evidentiary presumption, it should be sustained

because the record demonstrates that the presumed fact of the water quality impact of small sites is more likely true than not. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 647
applied a different standard in regulating small construction

projects than it applied to other potential sources of stormwater runoff subject to Phase II regulation. 

Petitioners contend that EPA decided not to designate other

potential sources identified in the § 402(p)(5) studies because

it determined that there are not “sufficient data . . . available

at this time on which to make a determination of potential

adverse water quality impacts for the category of sources.” 64

Fed. Reg. at 68,780. Petitioners contend this standard should

have been applied to small construction sites as well, but EPA

opted to regulate these sources despite an alleged lack of

coherent data on small site impacts as a general category. 

EPA counters, once again, that it did have adequate data to

regulate small construction sites. It contends that construction

sites of all sizes have greater erosion rates than almost any

other land use, and thus are not similarly situated to the potential polluters that EPA chose not to regulate at this time.74

These sources include secondary industrial activities (for

example, maintenance of construction equipment or local

trucking for an unregulated facility such as a grocery store)

and other unregulated commercial activities (for example, car

and truck rental facilities). 64 Fed. Reg. at 68,779. EPA

reports that it decided not to categorically regulate these

potential sources based both on available data about water

quality impacts and on the extent to which potentially adverse

water quality impacts are mitigated by existing regulations to

which these sources are already subject. Id. at 68,780. 

We find no error. See Marsh, 490 U.S. at 378. EPA acted

reasonably in designating all small construction sites for

Phase II regulation, and Industry Petitioners point to no record

74EPA notes that the Phase II Rule empowers regional permitting

authorities to regulate local sources of these types known to be responsible

for harmful water quality impacts via the continuing “residual designation” authority (an aspect of the Rule that Petitioners also challenge). 

648 ENVIRONMENTAL DEFENSE CENTER v. EPA
evidence that the nature of pollutant contributions from small

construction site discharge is sufficiently similar to pollutants

from the non-regulated sources to support the analogy they

seek to draw. New Orleans Channel 20 v. FCC, 830 F.2d 361,

366 (D.C. Cir. 1987) (an agency does not act irrationally

when it treats parties differently, unless the parties are similarly situated). Sufficient evidence supports EPA’s conclusion

that small construction sites are not similar enough to these

“other sources” to support petitioner’s challenge. 

G. Continuing (“Residual”) Designation Authority

The Industry Petitioners argue that EPA acted improperly

in retaining authority to designate future sources of stormwater pollution for Phase II regulation as needed to protect

federal waters. We disagree. 

The Phase II Rule preserves authority for EPA and authorized states to designate currently unregulated stormwater dischargers as requiring permits under the Rule if future

circumstances indicate that they warrant regulation “to protect

water quality” under the terms of § 402(p)(6). 40 C.F.R.

§ 122.26(a)(9). In the Phase II Preamble, EPA explains this

aspect of the Rule:

Under today’s rule, EPA and authorized States continue to exercise the authority to designate remaining

unregulated discharges composed entirely of stormwater for regulation on a case-by-case basis . . . .

Individual sources are subject to regulation if EPA or

the State, as the case may be, determines that the

stormwater discharge from the source contributes to

a violation of a water quality standard or is a significant contributor of pollutants to waters of the United

States. This standard is based on the text of section

CWA 402(p). In today’s rule, EPA believes, as Congress did in drafting section CWA 402(p)(2)(E), that

individual instances of stormwater discharge might

ENVIRONMENTAL DEFENSE CENTER v. EPA 649
warrant special regulatory attention, but do not fall

neatly into a discrete, predetermined category.

Today’s rule preserves the regulatory authority to

subsequently address a source (or category of

sources) of stormwater discharges of concern on a

localized or regional basis. 

64 Fed. Reg. 68,781. The text of the Rule requires a discharger to obtain a permit if the NPDES permit authority

determines that “stormwater controls are needed for the discharge based on wasteload allocations that are part of ‘total

maximum daily loads’ (TMDLs75) that address the pollutant(s) of concern” or that “the discharge, or category of discharges within a geographic area, 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(a)(9)(i)(C)-(D). 

1. Statutory Authority 

The Industry Petitioners contend that this “residual” designation authority, which would allow a NPDES permitting

authority to require at any future time a permit from any

stormwater discharge not already regulated, is ultra vires.

Although they concede that Congress authorized case-by-case

designation in § 402(p)(2)(E),76 they argue that this authority

attached only during the permitting moratorium that ended in

1994, prior to the Phase II rulemaking. They object that EPA

has impermissibly designated a category of “not yet identi75TMDLs are pollutant loading limits established by NPDES permitting

authorities under the Clean Water Act for waters that do not meet a water

quality standard due to the presence of a pollutant. See 33 U.S.C.

§ 1313(d). 

76This section enables a NPDES 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.” 33 U.S.C. § 1342(p)(2)(E). 

650 ENVIRONMENTAL DEFENSE CENTER v. EPA
fied” sources and preserved authority to regulate them on a

case-by-case basis indefinitely into the future.77

Petitioners contend that § 402(p)(6)78 cannot rescue the

residual authority because it does not authorize case-by-case

identification of discharges to be regulated, and that Congress,

had it intended otherwise, would have included language in

§ 402(p)(6) similar to the case-by-case authority explicitly

granted in § 402(p)(2)(E).79 They also contend that continuing

77Notably, Industry Petitioner NAHB itself took the position during

Phase II Subcommittee proceedings that the power to designate additional

sources survived the promulgation of the Phase II Rule. In a 1996 comment letter to EPA, NAHB asserted its understanding that “[t]he permitting authority still reserves the right to designate additional sources if they

are shown to be a contributor of water quality impairment.” NRDC Supplemental Excerpts of Record at 58. 

78The full text of § 402(p)(6), which specifically authorizes the Phase II

program, reads: “Not later than October 1, 1993, the Administrator, in

consultation with State and local officials, shall issue regulations (based

on the results of the studies conducted under paragraph (5)) which designate stormwater discharges, other than those discharges described in paragraph (2), to be regulated to protect water quality and shall establish a

comprehensive program to regulate such designated sources. The program

shall, at a minimum, (A) establish priorities, (B) establish requirements for

State stormwater management programs, and (C) establish expeditious

deadlines. The program may include performance standards, guidelines,

guidance, and management practices and treatment requirements, as

appropriate.” 33 U.S.C. § 1342(p)(6). 

79Petitioners further argue that even if EPA could preserve the case-bycase authority conferred in § 402(p)(2)(E), that section confers authority

only to regulate “a discharge” determined to threaten water quality, not a

category of discharges. However, we agree with respondent-intervenor

NRDC’s argument that § 402(p)(2)(E) does not preclude EPA from designating entire categories of sources. Petitioners’ argument follows from its

reliance on the fact that § 402(p)(2)(E) refers to “discharge” in the singular

rather than the plural to conclude that EPA may only designate sources

meeting the § 402(p)(2)(E) description on a case-by-case basis. But all

five of the § 402(p)(2)(5) categories refer to “discharge” in the singular,

even in reference to discharges clearly intended for categorical regulation,

like “a discharge from a municipal separate storm sewer system serving

ENVIRONMENTAL DEFENSE CENTER v. EPA 651
authority to designate sources based on waste load allocations

that are part of TMDLs exceeds the scope of authority in

§ 402(p)(2), which nowhere mentions TMDLs. Finally, they

argue that the categorical designation authorized by

§ 402(p)(6) is only permissible when based on the § 402(p)(5)

studies and carried out in consultation with state and local

authorities, but that the Rule allows future designations based

on agency discretion unaccompanied by adequate demonstration that the source itself is a significant threat to water quality. 

EPA counters that § 402(p)(6) authorized the designation,

made on the basis of statutorily required sources of input and

in consultation with the states, of a third class of discharges

to be identified on location-specific bases by the NPDES permitting authority. EPA contends that Petitioners mistake the

source of its authority for continuing designations as arising

only from § 402(p)(2), discounting the full scope of its

authority under § 402(p)(6). EPA argues that it permissibly

interpreted § 402(p)(6) as allowing the residual designation

authority because its language does not expressly preclude it,

and because such authority is consistent with (and arguably

required by) that section’s mandate to establish a “comprehensive program” to protect water quality from adverse

stormwater discharges. EPA maintains that the structure of

§ 402(p) reflects “Congress’ intent to assure regulation of all

problematic stormwater discharges as expeditiously as reasonably possible—not to limit EPA to a one-time-only opportunity to designate discharges for regulation.” 

We review EPA’s interpretation of the statute it administers

with deference, Royal Foods Co., 252 F.3d at 1106, and

a population of 250,000 or more.” 33 U.S.C. § 1342(p)(2)(C). The error

in petitioners’ interpretation is exposed by 1 U.S.C. § 1, which provides

that “[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise—words importing the singular include and apply

to several persons, parties, or things.” 

652 ENVIRONMENTAL DEFENSE CENTER v. EPA
affirm this aspect of the Phase II Rule as a legitimate exercise

of regulatory authority conferred by § 402(p). The residual

designation authority is grounded both on § 402(p)(6), which

broadly authorizes a comprehensive program to protect water

quality, and on § 402(p)(2)(5), which authorizes case-by-case

designation of certain polluters and categories of polluters. 

While not a blank check, § 402(p)(6) authorizes a comprehensive program that allows regional designation of polluting

discharges that compromise water quality locally, even if they

have not been established as compromising water quality

nationally at the time Phase II was promulgated. In allowing

continuing designation authority, EPA permissibly designated

a third category of dischargers subject to Phase II regulation

—those established locally as polluting U.S. waters—

following all required studies and consultation with state and

local officials. EPA reasonably determined that discharges

other than those from small MS4s and construction sites were

likely to require regulation “to protect water quality” in satisfaction of the § 402(p)(6) mandate. EPA reasonably determined that, although it lacked sufficient data to support

nationwide, categorical designation of these sources, particularized data might support their designations on a more localized basis. EPA reasonably interpreted § 402(p)(6) as

authorizing regional designation of sources and regional

source categories, based on water quality standards including

TMDLs. 

Petitioners’ § 402(p)(2)(5) argument (that EPA could not

draw support for the residual designation authority from

§ 402(p)(2)(5) because such authority expired in 1994) is contradicted by the plain language of the statute. Respondentintervenor NRDC correctly notes that § 402(p)(1) sets forth a

permitting moratorium for stormwater discharges prior to

1994, and that § 402(p)(2) exempts certain categories of

sources from that permitting moratorium, including those to

be regulated on a case-by-case basis under § 402(p)(2)(5).

Specifically, the statute provides that the 1994 date “shall not

ENVIRONMENTAL DEFENSE CENTER v. EPA 653
apply” to the five categories of discharges listed in

§ 402(p)(2). The termination of a moratorium that “shall not

apply” to the continuing designation authority under

§ 402(p)(2)(5) cannot rescind EPA’s authority to regulate

sources in that category. Nothing in § 402(p) suggests that

authority to designate these sources ends at any time, and

EPA remains free to designate § 402(p)(2)(E) dischargers. 

Finally, although Petitioners may be legitimately concerned

that a permitting authority may designate a source without

adequately establishing its eligibility, this issue must be

addressed in the context of an actual case or controversy.

Whether a NPDES authority may impose permitting requirements on a discharger without an adequate finding of polluting activity is not yet ripe for judicial review. Thomas v.

Anchorage Equal Rights Comm’n, 220 F.3d 1134, 1141 (9th

Cir. 2000) (“A concrete factual situation is necessary to delineate the boundaries of what conduct the government may or

may not regulate.”). 

2. Nondelegation Doctrine

Industry Petitioners contend that EPA’s interpretation of

§ 402(p) to allow the residual designation authority must be

rejected because it would render the statute unconstitutional

under the nondelegation doctrine. We deny petitioners’ claim,

both because it is not properly raised and because it rests on

an interpretation explicitly overturned by the United States

Supreme Court. 

Petitioners base their contention on American Trucking

Ass’ns v. EPA, 175 F.3d 1027, 1034 (D.C. Cir. 1999),80 in

which the D.C. Circuit remanded a regulation under the nondelegation doctrine because, although EPA had applied reasonable factors in establishing the air quality standards in

80This case was reversed in relevant part by the Supreme Court in Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 476 (2000). 

654 ENVIRONMENTAL DEFENSE CENTER v. EPA
question, the agency had articulated no “intelligible principle”

to channel its application of these factors. Id. Petitioners argue

that if § 402(p) authorizes a NPDES permitting authority to

require Phase II permitting of any stormwater source deemed

to be a “significant contributor” of pollutants to U.S. waters,

then that grant of authority likewise constitutes an unconstitutional delegation of legislative authority because—as did the

American Trucking delegation—it “leaves [EPA] free to pick

any point” at which a regulatory burden will attach. Id. at

1037. 

However, in reversing American Trucking, the Supreme

Court rejected the notion that an agency has the power to

interpret a statute so as to either save it from being, or transform it into, an unconstitutional delegation. Whitman v. Am.

Trucking Ass’ns, 531 U.S. 457, 473 (2000). Whether a statute

delegates legislative power “is a question for the courts, and

an agency’s [interpretation] has no bearing upon the answer.”

Id. Petitioner’s argument to the contrary rests on the very reasoning in American Trucking that was overturned in Whitman.

The relevant question is not whether EPA’s interpretation is

unconstitutional, but whether the statute itself is

unconstitutional—a challenge Industry Petitioners do not

raise. 

But even if the challenge were properly raised, § 402(p)

would, like the Clean Air Act standard-setting provision at

issue in Whitman, survive constitutional review. The Supreme

Court has upheld against nondelegation attacks many similar

statutes establishing nonquantitative standards. Am. Power &

Light Co. v. SEC, 329 U.S. 90, 104 (1946) (upholding statute

giving SEC authority to modify corporate structures so that

they are not “unduly or unnecessarily complicate[d]” and do

not “unfairly or inequitably distribute voting power among

security holders”); Yakus v. United States, 321 U.S. 414, 419-

420, 423-27 (1944) (upholding statute giving agency power to

set prices that “will be generally fair and equitable”). In

Yakus, the Court held that a statutory command to “effectuate

ENVIRONMENTAL DEFENSE CENTER v. EPA 655
the purposes” of the overall statutory scheme withstood scrutiny. Id. Section 402(p)(6)’s directive “to protect water quality” summarizes the central purpose of the Clean Water Act

“to restore and maintain the chemical, physical, and biological

integrity of the Nation’s waters,” 33 U.S.C. § 1251(a). It

establishes a determinate criterion of the kind the Supreme

Court upheld in Yakus and American Power & Light. 

3. Notice and Comment

Industry Petitioners also contend that, to the extent it allows

the designation of entire categories of sources, rather than

individual sources, the residual designation authority violates

the APA, 5 U.S.C. § 553(b)(3), because EPA did not provide

public notice that it was considering such a rule. Ober v. EPA,

84 F.3d 304, 315 (9th Cir. 1996) (invalidating EPA rule

where it deviated from proposal); Shell Oil Co. v. EPA, 950

F.2d 741, 746-47 (D.C. Cir. 1991). Petitioners contend that

while the proposed rule would have allowed case-by-case designation where an authority “determines that the discharge

contributes to a violation,” 63 Fed. Reg. at 1635 (proposing

40 C.F.R. § 122.26(a)(9)(i)(D)), the final rule authorizes caseby-case designation where “the discharge, or category of discharges within a geographic area, contributes to a violation,”

40 C.F.R. § 122.26(a)(9)(i)(D).

EPA notes that it had proposed to promulgate continuing

designation authority in some form, and points to elements in

the proposed rule that explicitly envision the categorical designation of sources at the local/watershed level.81

81“[T]oday’s proposal would encourage [voluntary] control of stormwater discharges . . . unless the discharge (or category of discharges) is

individually or locally designated as described in the following section.

The necessary data to support designation could be available on a local,

regional, or watershed basis and would allow the NPDES permitting

authority to designate a category of sources or individual sources on a

case-by-case basis. If sufficient nationwide data [becomes] available in the

656 ENVIRONMENTAL DEFENSE CENTER v. EPA
According to the “logical outgrowth” standard, a final regulation must be “in character with the original proposal and a

logical outgrowth of the notice and comments.” Hodge, 107

F.3d at 712. EPA emphasized that it was considering continuing designations based on watershed data rather than designating these sources on a national basis, and invited comment

regarding this proposal. 63 Fed. Reg. at 1536. This supports

the necessary relationship between the proposed and final

rule. 

H. Regulatory Flexibility Act 

The Industry Petitioners contend that the Phase II Rule will

impose substantial compliance costs on their members and

other small entities, but that EPA failed to conduct the analysis required by the Regulatory Flexibility Act (“RFA”), 5

U.S.C. §§ 601-11. They argue that EPA seeks to excuse its

noncompliance by falsely certifying that the Rule does not

have a significant impact on a substantial number of small

entities. 64 Fed. Reg. at 68,800. We are not persuaded. 

The RFA requires a federal agency to prepare a regulatory

flexibility analysis and an assessment of the economic impact

of a proposed rule on small business entities, 5 U.S.C. § 604,

unless the agency certifies that the proposed rule will not have

a “significant economic impact on a substantial number of

small entities” and provides a factual basis for that certification, id. at § 605; N.W. Mining Ass’n v. Babbitt, 5 F. Supp. 2d.

9, 15-16 (D.D.C. 1998). 

EPA did certify that the Phase II Rule would not yield “significant impacts,” 64 Fed. Reg. at 68,800, but Petitioners confuture, EPA could at that time designate additional categories of industrial

or commercial sources on a national basis. EPA requests comment on the

three-pronged analysis used to assess the need to designate additional

industrial or commercial sources and invites suggestions regarding

watershed-based designation.” 63 Fed. Reg. at 1588. 

ENVIRONMENTAL DEFENSE CENTER v. EPA 657
tend this certification is erroneous because (1) EPA treats as

“not significant” costs that are in fact significant, and (2) EPA

failed to account for the entire universe of small entities

affected (including small home construction contractors) and

all significant costs to those entities. They urge that the failure

to consider a significant segment of the affected small entity

community requires invalidation of the Rule, citing North

Carolina Fisheries Ass’n v. Daley, 27 F. Supp. 2d 650, 659

(E.D. Va. 1998) (certification failed to comply with RFA

where agency ignored several categories of affected small

entities), and Northwest Mining, 5 F. Supp. 2d at 15 (RFA

was violated where improper definition of small entity

excluded analysis of affected entities). 

EPA maintains that its certification was appropriate, and,

moreover, that it has already voluntarily followed the additional RFA procedures that the Industry Petitioners now

request. EPA argues that Petitioners have incorrectly specified

the costs that the small entities they represent will bear, referring erroneously to EPA’s total annual compliance costs estimates for all entities, rather than to costs estimated for small

entities as defined under the RFA. EPA maintains that it did

consider economic impacts on small home construction contractors who might be denied discharge permits, and that it

evaluated the annual costs of Phase II compliance associated

with any land disturbance between one and five acres. 64 Fed.

Reg. at 68,800-01. 

Respondent-intervenor NRDC contends that Petitioners’

reliance on measures of the aggregate impact of the Rule on

small entities to determine compliance with the threshold test

under the RFA fails as a matter of law because aggregate

measures are not consistent with the statutory language setting

out that test. NRDC notes that the plain language of § 605(b)

sets out a three-component test indicating that EPA need not

perform a regulatory flexibility analysis if it finds that the proposed rule will not have: (1) “a significant economic impact”

on (2) “a substantial number” of (3) “small entities.” 5 U.S.C.

658 ENVIRONMENTAL DEFENSE CENTER v. EPA
§ 605(b). NRDC contends that EPA satisfied the statutory

test, and that Petitioners’ interpretation, which rewrites the

test to omit the “substantial number” component, is erroneous.

We believe NRDC correctly interprets the statute, Marsh,

490 U.S. at 378, and that EPA reasonably certified that the

Phase II Rule would not have a significant economic impact

in compliance with the Regulatory Flexibility Act. We also

conclude that, even if EPA had failed to properly comply with

the procedural requirements of the RFA, its actual assessment

of the Rule’s economic impacts renders any defective compliance harmless error. In granting relief under RFA § 611, a

court may order an agency “to take corrective action consistent with” the RFA and APA, including remand to the agency,

5 U.S.C. § 611(a)(4)(A), but EPA has already conducted the

economic analyses Petitioners seek when it convened the

“Small Business Advocacy Review Panel” before publishing

notice of the proposed rule. 64 Fed. Reg. at 68,801. That

Panel evaluated the Rule and considered the comments of

small entities on a number of issues, consistent with the procedures described in RFA § 603. Id. Appendix 5 of EPA’s

preamble to the proposed rule explained provisions that had

been designed to minimize impacts on small entities, based on

advice and recommendations from the Panel. 63 Fed. Reg.

1615, 64 Fed. Reg. 68,811. Modifications for small entities

included alternative compliance and reporting mechanisms

responsive to the resources of small entities, simplified procedures, performance rather than design standards, and waivers.

Any hypothetical noncompliance would thus have been

harmless, since the available remedy would simply require

performance of the economic assessments that EPA actually

made. Like the Notice and Comment process required in

administrative rulemaking by the APA, the analyses required

by RFA are essentially procedural hurdles; after considering

the relevant impacts and alternatives, an administrative

ENVIRONMENTAL DEFENSE CENTER v. EPA 659
agency remains free to regulate as it sees fit. We affirm the

Rule against this challenge.82

III.

CONCLUSION

We conclude that the EPA’s failure to require review of

NOIs, which are the functional equivalents of permits under

the Phase II General Permit option, and its failure to make

NOIs available to the public or subject to public hearings contravene the express requirements of the Clean Water Act. We

therefore remand these aspects of the Small MS4 General Permit option so that EPA may take appropriate action to comply

with the Clean Water Act. We affirm all other aspects of the

Phase II Rule against the statutory, administrative, and constitutional challenges raised in this action. 

Petitions for Review GRANTED IN PART and DENIED

IN PART. 

TALLMAN, Circuit Judge, concurring in part and dissenting

in part: 

I concur in some of the Court’s conclusions, but I respectfully disagree with two significant sections of the majority’s

opinion. I cannot agree with Section II.A.2, which upholds the

constitutionality of the Environmental Protection Agency’s

(“EPA”) final administrative rule (the “Phase II Rule”),

82Our consideration of the issue at all may be gratuitous, since petitioners failed to submit timely comment disputing the adequacy of EPA’s consideration of economic impacts on small businesses proposed at 63 Fed.

Reg. at 1605-07. United States v. L.A. Tucker Truck Lines, 344 U.S. 33,

37 (1952) (“[C]ourts should not topple over administrative decisions

unless the administrative body not only has erred but has erred against

objection made at the time appropriate under its practice.”). 

660 ENVIRONMENTAL DEFENSE CENTER v. EPA
§ 402(p) of the Clean Water Act, 33 U.S.C. § 1342(p), against

the Municipal Petitioner’s Tenth Amendment challenge.

Because I believe that the Phase II Rule infringes upon state

sovereignty by compelling the states to enact and administer

a federal regulatory program that includes regulation of third

parties, and that the Alternative Permit Option suffers from

the same constitutional flaw, I respectfully dissent. 

I also dissent from Section II.B of the majority’s opinion,

which remands the Phase II Rule because its system of general permits is “arbitrary and capricious.” I believe EPA’s

design of a system of general permits supported by notices of

intent was a reasonable exercise of EPA’s administrative discretion.

I

No party disputes that the Phase II Rule is a federal regulatory scheme to be carried out by the states. At issue, however,

is whether the states are being compelled to enact that

scheme, whether the scheme requires the states to regulate

third parties, and whether the Alternative Permit Option saves

such regulation by creating a constitutionally sound alternative. The Court holds that the states are not compelled to regulate here because they have two choices: to stop municipal

stormwater from discharging into federal waters, or to stop

third parties from discharging into municipal stormwater systems. Majority Op. at 597-598, 602. 

The states cannot choose to stop stormwater from entering

federal waters, nor can they stop third parties or Mother

Nature from discharging into municipal stormwater systems.

To implement the scheme under the Phase II Rule, municipalities must regulate their citizens and businesses to ensure that

the stormwater they discharge meets the pollutant standards of

the Clean Water Act. The states are therefore being compelled

to regulate third parties in furtherance of a federal regulatory

ENVIRONMENTAL DEFENSE CENTER v. EPA 661
scheme. The Alternative Permit Option is qualitatively indistinguishable. 

A

Congress has the power to regulate pollutants in navigable

waters under Article I of the Constitution, and may lawfully

delegate that regulatory function to EPA. The regulatory

power of EPA, however, is limited by the Residual Powers

Clause of the Tenth Amendment, which states that “[t]he

powers not delegated to the United States by the Constitution,

nor prohibited by it to the States, are reserved to the States

respectively, or to the people.” U.S. CONST. amend. X. See

United States v. Darby, 312 U.S. 100, 124 (1941) (acknowledging the extant truism “that all is retained [by the states]

which has not been surrendered”). Thus, while the states

retain a significant amount of power under the Tenth Amendment, where the constitutional line is drawn is unclear. We are

therefore left with the arduous task of discerning the degree

of sovereign authority reserved to the states. 

We must examine United States Supreme Court case law to

decide upon the appropriate division between state and federal

spheres of power. The Supreme Court has made it clear that

“Congress has substantial powers to govern the Nation

directly, including in areas of intimate concern to the States.”

New York v. United States, 505 U.S. 144, 162 (1992). Congress may not, however, require the states to enact or administer federal regulatory programs. See Printz v. United States,

521 U.S. 898, 925 (1997); FERC v. Mississippi, 456 U.S. 742,

762-65 (1982); Hodel v. Virginia Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264, 288 (1981). While EPA may

directly regulate issues surrounding stormwater discharge, it

may not compel the states to enact and enforce such regulation. 

The federal government may persuade the states to adopt a

regulatory scheme in a preempted field, but such persuasion

662 ENVIRONMENTAL DEFENSE CENTER v. EPA
must stop short of coercion. See South Dakota v. Dole, 483

U.S. 203, 211 (1987); New York, 505 U.S. at 176-77; Hodel,

452 U.S. at 288; Board of Natural Resources v. Brown, 992

F.2d 937, 947 (9th Cir. 1993). The fundamental distinction

between persuasion and compulsion is whether the states have

a choice to either participate and accept a federal regulatory

scheme, or to not participate at all and allow the federal government itself to regulate. See Hodel, 452 U.S. at 288. The

majority holds that the states have the choice of either adopting and enforcing the Phase II Rule or stopping municipal

stormwater from discharging to federal waters by, for example, building wetlands or recycling stormwater. Majority Op.

at 597-598. The majority asserts that because of this “choice”

the Phase II Rule is not coercive, and is akin to the provision

upheld by the Supreme Court in Hodel. Majority Op. at

594-595. 

Contrary to the majority’s conclusion, the “choice” not to

discharge differs substantially from the choice the states faced

in Hodel. In Hodel, the Supreme Court held that the states

were not compelled “in any manner whatsoever” because if

the states chose not to regulate, “the full regulatory burden

will be borne by the Federal Government.” 452 U.S. at 288.

EPA has included no such provision here, presumably

because EPA does not have the resources to do the job alone.

The states have been given only one option: regulating citizens in furtherance of a federal program. Thus, Hodel does

not support the reasoning that the Phase II Rule is not coercive. To survive constitutional scrutiny under Hodel, EPA

would need to offer the states the choice to adopt the Phase

II Rule or to decline and allow EPA to regulate for itself. 

While the case at hand is clearly distinguishable from

Hodel, it is strikingly analogous to our decision in Brown. The

Phase II Rule bears a strong resemblance to the Forest

Resources Conservation and Shortage Relief Act that we

found to be coercive in Brown. The challenged legislation in

Brown contained a provision that called for the states to issue

ENVIRONMENTAL DEFENSE CENTER v. EPA 663
regulations in accordance with an export ban on timber from

federal lands. In Brown, we considered an argument much

like that presented here: that Washington State was making a

“choice” because it had the option to halt all sales of timber.

Following the Supreme Court’s decision in New York, we

held that this was a Hobson’s choice and that Congress did

not have the authority to command such an option. Brown,

992 F.2d at 947. The “choice” being offered by EPA in this

case is even more of a Hobson’s choice than that in Brown or

New York. Here, it is not that Congress lacks the power to

command the alternative, but that the alternative cannot realistically be accomplished. As the states have no real choice

but to adopt EPA’s scheme, the Phase II Rule is unconstitutional.

B

The Phase II Rule also violates the Tenth Amendment by

requiring the states to regulate third parties. As stated above,

the federal government may not force the states to use their

sovereign power to address federal issues. See Printz, 521

U.S. at 925, 935. Similarly, the federal government may not

force the states to regulate third parties in furtherance of a

federal program. See Reno v. Condon, 528 U.S. 141, 151

(2000) (upholding federal statutory scheme because it “does

not require the States in their sovereign capacity to regulate

their own citizens”). 

The majority concedes that the Construction Measure, 40

C.F.R. § 122.34(b)(4)(i)-(ii), requires an MS4 to “enact and

enforce a federal regulatory program,” but contends that the

other two contested Measures do not because the municipalities can block off the entry points to their stormwater system

and avoid regulating the dischargers. Majority Op. at 595-

596. I agree that the Construction Measure forces municipalities to regulate third parties, but I believe that the other two

contested Measures require the same unconstitutional regulation. 

664 ENVIRONMENTAL DEFENSE CENTER v. EPA
The Illicit Discharge Measure does so by requiring the

states to prohibit illicit discharge “through ordinance, or other

regulatory mechanism . . . .” 40 C.F.R. § 122.34(b)(3)(ii)(B).

The Post-Construction Measure does so by requiring that permit seekers “[u]se an ordinance or other regulatory mechanism to address post-construction runoff from new

development . . . .” Id. at § 122.34(b)(5)(ii)(B). Again, the

majority contends that these mandates are not forced on the

states because municipalities can choose not to accept discharge from illicit dischargers and runoff from construction

sites. Majority Op. at 595. This is no more of a choice than

whether or not the municipalities will discharge directly into

federal waters. The law of gravity is inflexible; the stormwater will run downhill through the municipalities into federal

waters whether the sewer system is open or blocked. No matter how much we may want to uphold EPA’s regulatory

scheme, we cannot change the law of gravity. 

We need not consider such options, however, in determining if the Construction Site Measure requires municipalities to

regulate third parties. The majority concedes that the language

of the Construction Site Measure requires such regulation outright. It does so by mandating MS4s to develop and promulgate “requirements for construction site operators to

implement appropriate erosion and sediment control [and] to

control waste . . . .” 40 C.F.R. § 122.33(b)(4)(ii)(B)-(C).

Whereas the other two contested Measures require the regulation of third parties by default, this Measure does so explicitly. The majority holds that the choice not to discharge

removes this Measure from Tenth Amendment scrutiny.

Majority Op. at 596-597. I cannot agree. The Phase II Rule

violates the Tenth Amendment by compelling the states to

enact and enforce a federal regulatory program that requires

the states to regulate third parties.1

1The majority also contends that EPA’s interference with state sovereignty is permissible because the Phase II Rule is a rule of general applicaENVIRONMENTAL DEFENSE CENTER v. EPA 665
C

Finally, the Court holds that the states are not compelled

under the Phase II Rule because the Alternative Permit Option

provides a constitutional choice for the states. Majority Op. at

598-599. I disagree. The Alternative Permit Option is not

qualitatively different from the Phase II General Permit

Option described above. 

Under the Alternative Permit Option of the Phase II Rule,

a permit applicant may also seek a permit under the previous

Phase I Rule. 40 C.F.R. § 122.33(b)(2)(ii). Under the Phase I

Rule, a petitioner must submit descriptions of programs that

accomplish essentially the same regulation of third parties as

do the three Minimum Measures of the Phase II Rule. See 40

C.F.R. § 122.26(d)(2)(iv)(B), (D). Under subsection (B) a

petitioner must submit a program that will implement by ordinance or other regulatory device the detection and removal of

“illicit discharges and improper disposal into the storm

sewer.” Id. at § 122.26(d)(2)(iv)(B). This is essentially the

same as the Illicit Discharge Minimum Measure and similarly

compels the states to regulate third parties. 

Subsection (D) calls for municipalities to submit a program

to “implement and maintain structural and non-structural best

management practices to reduce pollutants in storm water runoff from construction sites.” Id. at § 122.26(d)(2)(iv)(D). This

bility. While I agree with this classification of the Phase II Rule, I disagree

that it has any bearing on the outcome here because the question of coercion is a threshold determination. Both of the Supreme Court cases cited

by the majority as examples of the rule of general applicability exception

specifically mention the voluntary participation of the states in a field of

federal preemption. See Condon, 528 U.S. at 150; South Carolina v.

Baker, 485 U.S. 505, 514-515 (1988) (“That a State wishing to engage in

certain activity must take administrative and sometimes legislative action

. . . .”) (emphasis added);. Thus, while the Phase II Rule is a rule of general applicability, it is still unconstitutional because it is coercive. 

666 ENVIRONMENTAL DEFENSE CENTER v. EPA
section is nearly identical to the Construction and PostConstruction Minimum Measures and runs afoul of the same

constitutional restriction. In short, the Phase II Rule cannot

defeat a facial challenge by pointing to an Alternative Permit

Option that requires the same regulation of third parties as the

General Permit Option. 

D

While I concede that one of our most difficult judicial

undertakings may be to determine the appropriate exercise of

state and federal power, I would hold in this case that the

three contested Minimum Measures unconstitutionally compel the states to adopt a federal program that requires the

states to regulate third parties, and that the Alternative Permit

Option is similarly flawed. Because the Phase II Rule violates

the principles of federalism embodied in the Tenth Amendment, I respectfully dissent.

II

I also cannot agree with Section II.B of the Court’s opinion,

which remands the Phase II Rule because EPA acted arbitrarily and capriciously in creating a general permitting system

supported by notices of intent (“NOIs”). Majority Op. at 611.

This Court must give deference to EPA’s interpretation of the

laws it is charged with enforcing, so long as EPA’s reading

of those laws is permissible. Because EPA acted reasonably

in designing a National Pollutant Discharge Elimination System (“NPDES”) based on general permits and supported by

NOIs, I respectfully dissent from the Court’s decision to

remand this portion of the Phase II Rule.

A

As the majority concedes, we evaluate EPA’s interpretation

of the Clean Water Act with deference. Majority Op. at 618.

If Congress’s intent is unclear as to whether a system of genENVIRONMENTAL DEFENSE CENTER v. EPA 667
eral permits supplemented by NOIs is allowed, we simply ask

“whether EPA’s interpretation is permissible.” Ober v. Whitman, 243 F.3d 1190, 1193 (9th Cir. 2001).

B

As an initial matter, then, we must ask if Congress was

clear in its intent concerning the propriety of a system of general permits augmented by NOIs. 

Five legislative commands guide this inquiry. First, 33

U.S.C. § 1342(p)(6) charges EPA with creating a system to

regulate stormwater discharges. Plainly, nothing in this section speaks to whether EPA may utilize a general permit

approach in regulating stormwater discharge. 

Second, 33 U.S.C. § 1311(a) makes it illegal to discharge

pollutants “except as in compliance” with several sections of

the Clean Water Act. Again, nothing in this section addresses

whether EPA may make use of general permits reinforced by

NOIs. 

Third, 33 U.S.C. § 1342 in general (as opposed to the limited charge in section 1342(p)(6) discussed above) authorizes

EPA to issue NPDES permits, provided that the permits satisfy several conditions. But nothing in section 1342 prohibits

the use of a system of general permits. 

Fourth, the Clean Water Act mandates that “a copy of each

permit application and each permit issued under” the NPDES

permitting program be made available to the public for

inspection and photocopying. 33 U.S.C. § 1342(j). The Act

does not elaborate on this naked requirement. There is no

explanation of the manner in which NPDES permits and

applications are to be made publically available. Nor does the

Act define what constitutes a “permit” that would trigger

these requirements. 

668 ENVIRONMENTAL DEFENSE CENTER v. EPA
And fifth, the Clean Water Act authorizes the issuance of

an NPDES “permit” “after opportunity for public hearing.” 33

U.S.C. § 1342(a)(1). The Act does not provide a definition of

“permit,” nor does it further detail what triggers the requirement of a public hearing. 

In short, the Clean Water Act fails to address the propriety

of a general permit system, or whether NOIs ought to be considered “permits.” Therefore, EPA’s creation of a system of

general permits buttressed by NOIs should be upheld by this

Court so long as it is “permissible.” See Chevron, U.S.A., Inc.

v. Natural Resources Defense Council, 467 U.S. 837, 843-44

(1984). Our duty to defer to EPA in such a situation is based

on sound policy. Given the overwhelming challenge and complexity of the programs administered by federal agencies

today, it is sensible to trust agencies with the design of those

programs so long as the programs are reasonable interpretations of congressional mandates. 

The central issues regarding EPA’s general permit system

are whether the Clean Water Act allows such a system and

whether NOIs should be considered “permits.” The resolution

of these issues requires a complicated weighing of policies

(e.g., administrative streamlining vs. robust inquiry) that is

precisely what agencies are designed to do and courts are

without the resources or expertise to do. “[I]f the statute is

silent or ambiguous with respect to the specific issue, the

question for the court is whether the agency’s answer is based

on a permissible construction.” Chevron, 467 U.S. at 843. 

C

The Phase II Rule promulgates a system of general permits.

EPA contemplated that these general permits will be issued

on a watershed basis, with individual stormwater dischargers

then filing NOIs to operate under general permits. The federal

regulations implementing this system repeatedly emphasize

that “[t]he use of general permits, instead of individual perENVIRONMENTAL DEFENSE CENTER v. EPA 669
mits, reduces the administrative burden of permitting authorities, while also limiting the paperwork burden on regulated

parties.” 64 Fed. Reg. 68,722, 68,737, 68,762 (Dec. 8, 1999).

The use of a general permit system for the administration

of the NPDES system has been considered and approved

before. In NRDC v. Costle, 568 F.2d 1369 (D.C. Cir. 1977),

the District of Columbia Circuit considered a challenge to

EPA’s regulations under the Federal Water Pollution Control

Act, which was the precursor to the Clean Water Act. In

Costle, EPA sought approval of its design for the NPDES system. EPA had issued regulations exempting broad categories

of point sources from the requirement that an NPDES permit

be obtained before discharging into federal waters. Part of

EPA’s rationale in creating the exempted categories was that

otherwise EPA would be overwhelmed by the administrative

burden of issuing NPDES permits. Id. at 1377-79. The Costle

court affirmed the lower court’s rejection of these exemptions

because the legislation in question plainly required that all

point sources obtain some kind of NPDES permit. Id. But in

rejecting EPA’s regulations, the Costle court discussed the

options available to EPA in promulgating an NPDES system

that was considerate of the enormous burden such a system

could impose on EPA. Id. at 1380-81. In particular, the court

recommended “the use of area or general permits. The Act

allows such techniques. Area-wide regulation is one wellestablished means of coping with administrative exigency.”

Id. at 1381 (emphasis added). 

Against this backdrop, EPA’s creation of a general permit

system was entirely permissible. And if the creation of a general permit system is permissible, then it does not matter

whether NOIs are given a public airing. 

The majority contends that the general permit system prevents EPA from fulfilling its duty to make sure that municipalities do not discharge pollutants in violation of the Clean

Water Act. The majority reasons that by failing to require

670 ENVIRONMENTAL DEFENSE CENTER v. EPA
EPA review of NOIs, the Rule fails to ensure that a regulated

MS4’s stormwater pollution control program will satisfy the

Clean Water Act requirement that the MS4 “reduce the discharge to the maximum extent practicable.” Majority Op. at

616. But the majority’s analysis ignores the effects of the general permit. By filing an NOI, a discharger obligates itself to

comply with the limitations and controls imposed by the general permit under which it intends to operate. EPA mandates

that all permits (including general permits) condition their

issuance on satisfaction of pollution limitations imposed by

the Clean Water Act. 40 C.F.R. § 122.44. In particular, EPA

requires permits to satisfy the restrictions imposed by Clean

Water Act section 307(a). Id. at § 122.44(b)(1). Therefore, the

general permit imposes the obligations with which the discharger must comply (including applicable Clean Water Act

standards), and EPA’s decision not to review every NOI is not

a failure to insure compliance with the Clean Water Act. 

The Court also objects to EPA’s general permit system

because it fails to allow for sufficient public participation in

the NOIs. Majority Op. at 617-619. The majority’s position

fails to give deference to EPA and imposes the majority’s

own wishes instead. EPA would have been justified in creating a system entirely reliant on general or area permits. Its

imposition of NOIs is an indulgence to certain policy prerogatives, namely public involvement and the collection of additional information. But the power to create a general permit

system necessarily implies the power to require subordinate

steps for NOIs that do not quite reach the level of inquiry

associated with actual permits. 

D

We function as an adjudicator of disputes, not as a policymaking body. Where an agency promulgates rules after a

deliberative process, it is incumbent upon us to respect the

agency’s decisions or else risk trivializing the function of that

agency. In this case, EPA made a permissible decision to

ENVIRONMENTAL DEFENSE CENTER v. EPA 671
create a general permit program supported by NOIs. Therefore, I also respectfully dissent from Section II.B of the

Court’s opinion.

672 ENVIRONMENTAL DEFENSE CENTER v. EPA