ENVIRONMENTAL DEFENSE CENTER, INC., Petitioner, NATURAL

RESOURCES DEFENSE COUNCIL, INC., Petitioner-Intervenor, v. UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

AMERICAN FOREST & PAPER ASSOCIATION; NATIONAL ASSOCIATION

OF HOME BUILDERS, Petitioners, v. UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, Respondent, NATURAL RESOURCES DEFENSE

COUNCIL, INC., Applicant-Intervenor. TEXAS CITIES COALITION ON

STORMWATER; TEXAS COUNTIES STORM WATER COALITION, Petitioners,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent,

NATURAL RESOURCES DEFENSE COUNCIL, INC., Respondent-Intervenor.

No. 00-70014, No. 00-70734, No. 00-70822

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

344 F.3d 832; 2003 U.S. App. LEXIS 19073; 57 ERC (BNA) 1039; 33 ELR 20269

December 3, 2001, Argued and Submitted, Pasadena, California

September 15, 2003, Filed

SUBSEQUENT HISTORY: US Supreme Court

certiorari denied by Tx Coalition on Stormwater v. Epa,

2004 U.S. LEXIS 4044 (U.S., June 7, 2004)

PRIOR HISTORY: [**1] Petition for Review of an

Order of the Environmental Protection Agency. EPA No.

Clean Water 40 CFR, EPA No. Clean Water 40 CFR,

EPA No. Clean Water 40 CFR.

Envtl. Def. Ctr., Inc. v. EPA, 319 F.3d 398, 2003 U.S.

App. LEXIS 497 (9th Cir., 2003)

DISPOSITION: Affirmed in part, denied in part and

remanded.

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.

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 &

Free-land, 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 [**2] Storm

Water Coalition.

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

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

Page 1
and Stephen J. Sweeny, United States Environmental

Protection Agency, Washington, D.C., for respondent

United States Environmental Protection Agency.

JUDGES: Before: James R. Browning, Stephen

Reinhardt, and Richard C. Tallman, Circuit Judges.

Opinion by Judge Browning; Partial Concurrence and

Partial Dissent by Judge Tallman.

OPINION BY: James R. Browning

OPINION

[*840] 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 [**3] water bodies, they are subject to the

controls of the Clean Water Act.

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.

1 The "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

NRDC v. EPA, 966 F.2d 1292 (9th Cir. 1992).

[**4] 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, and a fourth aspect concerning the

regulation of forest roads. 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, sediments, algae-promoting

nutrients (nitrogen and phosphorus), floatable trash, used

motor oil, raw sewage, pesticides, and other toxic

contaminants into streams, rivers, lakes, [*841] 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 [**5]

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

2 Richard G. Cohn-Lee and Diane M. Cameron,

Urban Stormwater Run-off Contamination of the

Chesapeake Bay: Sources and Mitigation, THE

ENVIRONMENTAL PROFESSIONAL, Vol. 14,

p. 10, at 10 (1992); see also NRDC, 966 F.2d at

1295 (citing a study by the Nationwide Urban

Runoff Program).

3 Regulation 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.

B. Stormwater and the Clean Water Act

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57 ERC (BNA) 1039; 33 ELR 20269
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) [**6] (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 "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), [**7] 1342(b)(3); cf. 33 U.S.C. § 1251(e)

(requiring public participation).

7 A 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).

Storm sewers are established point sources subject to

NPDES permitting requirements. NRDC v. Costle, 186

U.S. App. D.C. 147, 568 F.2d 1369, 1379 (D.C. Cir.

1977) (holding unlawful EPA's exemption of stormwater

discharges from NPDES permitting requirements);

NRDC v. EPA, 966 F.2d 1292, 1295 (9th Cir. 1992). 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 [**8] Industrial

Stormwater Discharges." Sections 402(p)(2) and

402(p)(3) mandate NPDES permits for storm-water

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 [*842] two-phase overall program of

stormwater regulation. Id. at § 1342(p)(2)-(4); NRDC,

966 F.2d at 1296. In 1990, pursuant to § 402(p)(4), EPA

issued the Phase I Rule regulating large discharge

sources. 9

8 Diffuse runoff, such as rainwater that is not

channeled through a point source, is considered

nonpoint source pollution and is not subject to

federal regulation. Or. Nat'l Desert Ass'n v.

Dombeck, 172 F.3d 1092, 1095 (9th Cir. 1998).

9 National 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 in this

court in NRDC, 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

differently-sized municipalities on different

permitting schedules, id. at 1301.

[**9] 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

storm-water 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

[**10] Register for public comment. Pub. L. No. 106-74,

Page 3

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57 ERC (BNA) 1039; 33 ELR 20269
§ 431(c), 113 Stat. at 1097. Later that month, EPA

submitted the required ("Appropriations Act") study and

promulgated the Rule. 12

10 Proposed Regulations for Revision of the

Water Pollution Control Program Addressing

Storm Water Discharges, 63 Fed. Reg. 1536

(proposed Jan. 9, 1998).

11 Pub. 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").

12 Regulations for Revision of the Water

Pollution Control Program Addressing Storm

Water Discharges, 64 Fed. Reg. 68,722 (Dec. 8,

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

124).

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). [**11] 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 [*843] 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).

13 The 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).

[**12] 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 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

petitioner-intervenor NRDC ("the Environmental

Petitioners"), asserts 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 run-off

associated with forest roads and other [**13] 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).

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

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57 ERC (BNA) 1039; 33 ELR 20269
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,

144 L. Ed. 2d 161, 119 S. Ct. 1923 (1999), [**14] 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

[*844] contain (performance standards, guidelines, etc.)

without mentioning "permits," Congress must have

intended that the program exclude permitting. 14

14 The 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).

[**15] 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 a 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. NRDC,

467 U.S. 837, 842-43, 81 L. Ed. 2d 694, 104 S. Ct. 2778

(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

15 The lesser category of "permits" may also be

implied by the inclusion of "performance

standards" in the list of possible program features.

[**16] 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 respondent-intervenor 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.

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, 139 L.

Ed. 2d 215, 118 S. Ct. 285 (1997).

Since [**17] 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. PG&E, 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 [*845] operators of small

MS4s to regulate third parties in contravention of the

Tenth Amendment. We conclude that the Rule does not

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57 ERC (BNA) 1039; 33 ELR 20269
violate the Tenth Amendment, because it directs no

unconstitutional coercion.

The Phase II Rule contemplates several avenues

through which a small MS4 may obtain permission to

discharge. First, if the NPDES Permitting Authority

overseeing the small MS4 has issued an applicable

general permit, the small MS4 may submit a notice of

intent wherein the small MS4 agrees to comply with the

terms of the general permit [**18] and specifies plans for

implementing six "Minimum Measures" designed to

protect water quality. 40 C.F.R. §§ 122.33(b)(1),

122.34(d)(1)(i), 122.34(b). Second, the small MS4 may

apply for an individual permit under 40 C.F.R. § 122.34,

which would again require compliance with the six

Minimum Measures. Id. at §§ 122.33(b)(2)(i), 122.34(a),

122.34(b). Third, under an "Alternative Permit" option,

the small MS4 may apply for an individualized permit

under 40 C.F.R. § 122.26(d), the permitting program

established by the Phase I Rule for large and

medium-sized MS4s. Id. at §§ 122.33(b)(2)(ii),

122.26(d). 17

17 The Phase II Rule also allows a small MS4 to

be regulated under an NPDES permit covering a

nearby large or medium-sized MS4, with

provisions adapted to address the small MS4. 40

C.F.R. § 122.33(b)(3).

The Minimum Measures mentioned above require

small MS4s to implement programs for: (1) conducting

[**19] public education and outreach on stormwater

impacts, id. at § 122.34(b)(1); (2) engaging public

participation 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). 18

18 The Municipal Petitioners argue that the

Minimum Measures exceed EPA's statutory

authority under § 402(p) of the Clean Water Act.

We disagree. The list of elements for a regulatory

program that appears in § 402(p)(6) is

nonexclusive, and 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 Municipal Petitioners argue that EPA is

not entitled to Chevron deference, and that the

Minimum Measures must be rejected absent a

clear statement of congressional intent that EPA

enact the Minimum Measures. The Municipal

Petitioners argue that this clear statement

requirement arises because there are "significant

constitutional questions" about the permissibility

of the Minimum Measures under the Tenth

Amendment, and because the Minimum Measures

alter "the federal-state framework by permitting

federal encroachment upon a traditional state

power." Solid Waste Agency of N. Cook County v.

Army Corps of Eng'rs, 531 U.S. 159, 173, 148 L.

Ed. 2d 576, 121 S. Ct. 675 (2001).

As we explain, because the Phase II Rule

includes at least one alternative to the Minimum

Measures, i.e. the option of seeking a permit

under 40 C.F.R. § 122.26(d), the Minimum

Measures do not present significant Tenth

Amendment problems demanding a clear

statement of congressional intent. Nor does the

Phase II Rule alter the federal-state balance. To

the contrary, the option of seeking a permit under

40 C.F.R. § 122.26(d) maintains precisely the

same federal-state balance as existed prior to the

Phase II Rule. See, e.g., NRDC v. EPA, 966 F.2d

1292 (9th Cir. 1992) (reviewing Phase I Rule);

NRDC v. Costle, 186 U.S. App. D.C. 147, 568

F.2d 1369, 1379 (D.C. Cir. 1977) (denying EPA

authority to exempt MS4s from regulation under

the Clean Water Act). Furthermore, even if a clear

statement of congressional intent were necessary,

§ 402(p) of the Clean Water Act is replete with

clear statements that Congress intended EPA to

require MS4s either to obtain NPDES permits or

to stop discharging stormwater.

[**20] [*846] The Municipal Petitioners contend

that the measures regulating illicit discharges, small

construction sites, and development activities

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

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57 ERC (BNA) 1039; 33 ELR 20269
enforcement procedures. 40 C.F.R. § 122.34(b)(3)(ii)(B).

19 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). 20 It

mandates erosion and sedimentation controls, site plan

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.

[**21] at § 122.34(b)(5)(ii)(B). 21

19 This subsection provides that permit seekers

must, "to 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).

20 This subsection provides that permit seekers

"must develop, implement, and enforce a program

to reduce pollutants in any storm water run-off to

your small MS4 from construction activities that

result in a land disturbance of greater than or

equal to one acre. . . . [The] 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 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; (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).

[**22]

21 This subsection provides that permit seekers

must "use 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).

Noting that most MS4s are operated by municipal

governments, and that "the 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, 49 L. Ed. 831, 25 S. Ct. 471

(1905), the Municipal Petitioners argue that requiring

operators of small MS4s to implement "through

ordinance or other regulatory mechanism" the regulations

required by the Minimum Measures contravenes the

Tenth Amendment. See, e.g., New York v. United States,

505 U.S. 144, 188, 120 L. Ed. 2d 120, 112 S. Ct. 2408

(1992).

EPA counters that the Phase II Rule does not violate

the Tenth Amendment because operators [**23] of small

MS4s may opt to avoid the Minimum Measures by

seeking a permit under the Alternative Permit [*847]

option, 40 C.F.R. § 122.33(b)(2)(ii). 22

22 EPA and NRDC also argue that the Minimum

Measures are facially constitutional, and that the

Phase II Rule presents no Tenth Amendment

difficulties because operators of small MS4s may

avoid stormwater regulation entirely by electing

not to discharge stormwater into federal waters in

the first place. In light of our holding with regard

to the Alternative Permit option, we do not

consider these arguments.

Under the Tenth Amendment, "the Federal

Government may not compel States to implement, by

legislation or executive action, federal regulatory

programs." Printz v. United States, 521 U.S. 898, 925,

138 L. Ed. 2d 914, 117 S. Ct. 2365 (1997); see also New

York, 505 U.S. at 188. 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, 145 L. Ed. 2d 587, 120 S. Ct. 666

(2000) [**24] (upholding a federal statutory scheme

because it "does not require the States in their sovereign

capacity to regulate their own citizens"). These

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57 ERC (BNA) 1039; 33 ELR 20269
protections extend to municipalities. See, e.g., Printz at

931 n.15.

However, while the federal government may not

compel them to do so, it may encourage States and

municipalities to implement federal regulatory programs.

See New York, 505 U.S. at 166-68. For example, the

federal government may make certain federal funds

available only to those States or municipalities that enact

a given regulatory regime. See, e.g., South Dakota v.

Dole, 483 U.S. 203, 205-08, 97 L. Ed. 2d 171, 107 S. Ct.

2793 (1987) (upholding federal statute conditioning state

receipt of federal high-way funds on state adoption of

minimum drinking age of twenty-one). The crucial

proscribed element is coercion; the residents of the State

or municipality must retain "the ultimate decision" as to

whether or not the State or municipality will comply with

the federal regulatory program. New York, 505 U.S. at

168. However, as long as "the alternative to

implementing a federal regulatory program does not

offend [**25] the Constitution's guarantees of

federalism, the fact that the alternative is difficult,

expensive or otherwise unappealing is insufficient to

establish a Tenth Amendment violation." City of Abilene

v. EPA, 325 F.3d 657, 662 (5th Cir. 2003).

With the Phase II Rule, EPA gave the operators of

small MS4s a choice: either implement the regulatory

program spelled out by the Minimum Measures described

at 40 C.F.R. § 122.34(b), or pursue the Alternative Permit

option and seek a permit under the Phase I Rule as

described at 40 C.F.R. § 122.26(d). Thus, unless §

122.26(d) itself offends the Constitution's guarantees of

federalism, the Phase II Rule does not violate the Tenth

Amendment.

Pursuing a permit under the Alternative Permit

option does require permit seekers, in their application

for a permit to discharge, to propose management

programs that address substantive concerns similar to

those addressed by the Minimum Measures. See 40

C.F.R. § 122.26(d). However, § 122.26(d) lists the

requirements for an application for a permit to discharge,

not the requirements of the permit itself. [**26]

Therefore, nothing in § 122.26(d) requires the operator of

an MS4 to implement a federal regulatory program in

order to receive a permit to discharge, because nothing in

§ 122.26(d) specifies the contents of the permit that will

result from the application process.

City of Abilene, 325 F.3d 657, provides a helpful

illustration. The cities of Abilene and Irving, Texas, have

populations between 100,000 and 250,000, and so were

[*848] required to apply for permits under the Phase I

Rule, 40 C.F.R. § 122.26(d). City of Abilene, 325 F.3d at

659-60. Under § 122.26(d) the cities were required to

submit proposed stormwater management programs. Id.

at 660. They negotiated the terms of those programs with

EPA, and EPA eventually presented the cities with

proposed management permits that contained conditions

requiring the implementation of stormwater regulatory

programs, and potentially requiring the regulation of third

parties. Id. But, as the Fifth Circuit noted, this did not

mean that the cities had no choice but to implement a

federal regulatory program. Instead:

The Cities filed comments objecting to

those [**27] conditions, and negotiations

continued until the EPA offered the Cities

the option of pursuing numeric

end-of-pipe permits, which would have

required the Cities to satisfy specific

effluent limitations rather than implement

management programs. The Cities

declined this offer, electing to continue

negotiations on the management permits.

Id. The Fifth Circuit rejected the cities' contention that

the resulting permits violated the Tenth Amendment by

requiring the cities to regulate third parties according to

federal standards. Id. at 661-63. Because the cities chose

to pursue the management permits despite the fact that

EPA provided them with an option for obtaining permits

that would not have involved implementing a

management program or regulating third parties, no

unconstitutional coercion occurred. Id. at 663. The

ultimate decision to implement the federal program

remained with the cities.

Any operator of a small MS4 that wishes to avoid the

Minimum Measures may seek a permit under §

122.26(d), and, as City of Abilene demonstrates, nothing

in § 122.26(d) will compel the operator of a small MS4 to

implement a federal regulatory program [**28] or

regulate third parties, because § 122.26(d) specifies

application requirements, not permit requirements.

Therefore, by presenting the option of seeking a permit

under § 122.26(d), the Phase II Rule avoids any

unconstitutional coercion. The Municipal Petitioners'

claim that the Phase II Rule violates the Tenth

Amendment therefore fails.

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3. 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 "inform 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) [**29] .

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 protected by

the First Amendment, [*849] PG&E v. PUC, 475 U.S.

1, 8, 89 L. Ed. 2d 1, 106 S. Ct. 903 (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, 101 L. Ed. 2d 669, 108 S.

Ct. 2667 (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, 138 L. Ed. 2d 585, 117 S. Ct. 2130 (1997), [**30]

and does not offend the First Amendment. 23 The State

may not constitutionally require an individual to

disseminate an ideological message, Wooley v. Maynard,

430 U.S. 705, 713, 51 L. Ed. 2d 752, 97 S. Ct. 1428

(1976), but requiring a provider of storm sewers that

discharge into national waters to educate the public about

the impacts of stormwater 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. 24 These broad requirements do

not dictate a specific message. They require appropriate

educational and public information activities 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. DOD, 34 F.3d 1469,

1476 (9th Cir. 1994), 25 but this is clearly not the case

here.

23 We decline to address two further arguments

raised by EPA: first, that municipalities do not

receive full First Amendment protections, under

Muir v. Ala. Educ. TV 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.

[**31]

24 As 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.

25 "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.

As in Zauderer v. Office of Disciplinary Counsel of

the Sup. Ct. of Ohio, 471 U.S. 626, 85 L. Ed. 2d 652, 105

S. Ct. 2265, 17 Ohio B. 315 (1985), where the Supreme

Court upheld certain disclosure requirements in attorney

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advertising, "the 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 [**32] flag because the State may not

impose on the individual "a ceremony so touching

matters of opinion and political attitude"]." 471 U.S. 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." W. Va. State Bd. of Ed. v.

Barnette, 319 U.S. 624, 642, 87 L. Ed. 1628, 63 S. Ct.

1178 (1943).

[*850] Informing the public about safe toxin

disposal is non-ideological; it involves no "compelled

recitation of a message" and no "affirmation of belief."

Pruneyard Shopping Ctr. v. Robins, 447 U.S. 74, 88, 64

L. Ed. 2d 741, 100 S. Ct. 2035 (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 [**33] federally produced

informational materials on the subject and identifying

them as such.

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,

138 L. Ed. 2d 585, 117 S. Ct. 2130, 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,

[**34] 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. 26 The Phase II

regulation departs only from the second element in the

Glickman analysis, because the public information

requirement may compel a [*851] 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.

27

26 In 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 message 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 Agric. v.

United Foods, 533 U.S. 405, 410-17, 150 L. Ed.

2d 438, 121 S. Ct. 2334 (2001). The court

distinguished this advertising program from the

one in Glickman on the latter point: "the 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." 533 U.S. at 411.

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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.

[**35]

27 In 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.

The public information [**36] requirement does not

impermissibly compel speech, and nothing else in the

Phase II Rule offends the First Amendment. 28 The Rule

does not compel a recitation 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.

28 The Alternative option contains a public

education requirement that is similar but even less

specific, and therefore even less burdensome, than

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").

4. Notice and Comment on the Alternative Permit

Option

The Municipal Petitioners [**37] 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.

Dalton, 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, 309 U.S. App. D.C.

235, 40 F.3d 1266, 1274 (D.C. Cir. 1994).

The Municipal [**38] 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 [*852] Measures, including

"simplified individual permit application requirements."

29 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.

29 Municipal 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

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establish a logical outgrowth.

The Alternative Permit [**39] 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.

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, 81 L. Ed. 2d 694, 104 S.

Ct. 2778 [**40] ("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). 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. 30

30 EPA argues that the Environmental

Petitioner's challenge is not ripe for review

because "the question of whether some general

permit somewhere might fail to assure that

pollutants are reduced to the maximum extent

practicable is not ripe for review." But we are not

addressing the merits of any specific permit.

Rather, the question before us "is purely one of

statutory interpretation that would not benefit

from further factual development of the issues

presented." Whitman v. Am. Trucking, 531 U.S.

457, 479, 149 L. Ed. 2d 1, 121 S. Ct. 903 (2001).

Specifically, we are addressing whether EPA, in

promulgating the Phase II Rule, has accomplished

the substantive controls for municipal stormwater

that Congress mandated in § 402(p) of the Clean

Water Act. As we held in NRDC v. EPA, 966 F.2d

at 1296-97, 1308, this question is ripe for review.

[**41] [*853] 1. Phase II General Permits and

Notices of Intent

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 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).

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 [**42] 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

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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.

NRDC v. Costle, 186 U.S. App. D.C. 147, 568 F.2d 1369

(D.C. Cir. 1977).

The Phase II general permitting scheme differs from

the traditional general permitting model. The Clean

Water Act requires EPA to ensure that operators of small

MS4s "reduce the discharge of pollutants to the

maximum extent practicable." 33 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 [**43] 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).

Because a Phase II NOI 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, [**44] explaining that

"what will be required on an MS4's NOI . . . is more

extensive than what is usually required on [*854] 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 self-regulatory system. 31 Petitioners

contend the Rule impermissibly fails to require that the

permitting authority review an 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").

31 Petitioners 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,

NRDC 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.

NRDC v. EPA, 966 F.2d at 1308 n.17 ("Individual

NPDES permit writers . . . will decide whether

application proposals are adequate . . . .").

[**45] 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. [**46] "

Phase II general permits will likely impose

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requirements that ensure that operators of small MS4s

comply with many of the standards of the Clean Water

Act. Thus, general permits issued under Phase II will

ordinarily 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

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). And 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 [*855] the . . . general

permit." See 40 C.F.R. §§ 122.34 & 122.34(f).

However, while each Phase II general permit will

likely ensure that operators of small MS4s comply with

certain standards of the Clean Water Act, they will not

"require controls to reduce the discharge of pollutants

[**47] 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

stormwater management program, i.e., when it

implements its Minimum Measures. 40 C.F.R. §

122.34(a); see also 64 Fed. Reg. at 68753 (stating EPA's

anticipation that limitations more stringent that the

minimum control measures "will be unnecessary").

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. 32 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.

32 That 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

publicly available. Absent review on the front end

of permitting, the general permitting regulatory

program loses meaning even as a procedural

exercise.

[**48] In fact, under the Phase II Rule, in order to

receive the protection of a general permit, the operator of

a small MS4 needs to 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. 33 Therefore, as the Phase 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. 34 See [*856] 64 Fed.

Reg. at 68753 (explaining that the minimum control

measures will protect water quality if they are "properly

implemented"). We therefore must reject this aspect of

the Phase II Rule as contrary to the clear intent of

Congress. Cf. NRDC, 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).

33 EPA 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.

[**49]

34 In its petition for rehearing, EPA argues for

the first time that because the regulations require

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NPDES Permitting Authorities to include in

general permits "any additional measures

necessary" to ensure that the maximum extent

practicable standard is met, 40 C.F.R. §§

123.35(h)(1), 123.35(f) (incorporating by

reference the "maximum extent practicable"

requirement of 40 C.F.R. §§ 122.34(a)), 122.34(f)

(requiring small MS4s to comply with additional

measures), the Phase II Rule ensures that

discharges will be reduced to the maximum extent

practicable.

The trouble with EPA's reasoning is that the

Phase II Rule defines the "maximum extent

practicable" standard in such a way that no

"additional measures" will ever be necessary

under § 123.35(h)(1). While a Permitting

Authority may impose additional measures,

nothing compels it to do so because, merely by

implementing the best management practices that

the operator of a small MS4 has chosen for itself,

that small MS4 will already have met the

"maximum extent practicable" standard. See 40

C.F.R. § 122.34(a).

[**50] 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 stormwater management

programs, as contemplated under the Phase II Rule.

However, stormwater 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 for public participation as

required by the Clean Water Act, because the public

receives neither notice nor opportunity for hearing

regarding [**51] 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), 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.

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 an 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 [**52] Act in its

primary statement of the Act's approach and philosophy.

See 33 U.S.C. § 1251(e); see also Costle v. Pac. Legal

Found., 445 U.S. 198, 216, 63 L. Ed. 2d 329, 100 S. Ct.

1095 (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, [*857] 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 (June 7, 1979).

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 [**53] 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 to the public availability and public hearings

requirements of the Clean Water Act -- therefore fails.

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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) [**54] . 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. 35

35 EPA argues for the first time in its petition

for rehearing that NOIs will be publicly available

under 40 C.F.R. § 122.34(g)(2). Addressing

operators of regulated small MS4s, this section

provides: "You must make your records,

including a description of your storm water

management program, available to the public at

reasonable times during regular business hours."

While this section does seem to provide for the

public availability of a small MS4's records, we

are troubled that nothing in EPA's initial briefs

indicated that EPA considered NOIs to be subject

to this section. We normally defer to an agency's

interpretations of its own regulations, but we may

decline to defer to the post hoc rationalizations of

appellate counsel. See, e.g., Martin v. OSHRC,

499 U.S. 144 at 150, 156, 113 L. Ed. 2d 117, 111

S. Ct. 1171 (1991). If EPA intends this section to

provide for the public availability of NOIs -- for

example because it intends NOIs to be among the

records subject to this section -- it may clarify on

remand.

[**55] [*858] In sum, we conclude that EPA's

failure to require review of NOIs, which are the

functional equivalents of permits under the Phase II

General Permit option, and EPA's failure to make NOIs

available to the public or subject to public hearings

contravene the express requirements of the Clean Water

Act. We therefore vacate those portions of the Phase II

Rule that address these procedural issues relating to the

issuance of NOIs under the Small MS4 General Permit

option, and remand so that EPA may take appropriate

action to comply with the Clean Water Act.

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. Or. Nat'l Res.

Council, 490 U.S. 360, 378, 104 L. Ed. 2d 377, 109 S. Ct.

1851 (1989). 36

36 Agency 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

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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 v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43, 77 L. Ed. 2d 443,

103 S. Ct. 2856

[**56] 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. 37 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.).

37 EPA 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.

[**57] [*859] 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 arbitrary and capricious. They maintain

that EPA's "line-drawing," which regulates some

pollution sources but leaves nearly identical sources

unregulated without any persuasive rationale, is

necessarily arbitrary and capricious. See NRDC, 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 [**58] 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, [**59]

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 nation-wide designation

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of the Group A facilities. EPA notes that, 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 decisionmaking 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,

334 U.S. App. D.C. 421, 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. [**60] 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 [*860] that remain

unregulated under Phase II, 38 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.

38 As discussed in footnote 37, 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.

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). [**61] 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

adequately addressed by existing environmental

regulations. 39 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. [**62] See Royal Foods

Co. v. RJR Holdings, 252 F.3d 1102, 1106 (9th Cir.

2001).

39 "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 available in the future,

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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.

[**63] 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 [*861] of drainage

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." 40

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 support 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. [**64] 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." NRDC, 966 F.2d at 1305.

40 Guidance 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.h tml

(last visited Sept. 18, 2002) ("Coastal Waters").

EPA's response is that we have no jurisdiction to

hear this challenge, chiefly because, it believes, the

challenge 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

regulations in 1976 that exclude from NPDES permit

requirements certain silvicultural activities that EPA

determined constitute non-point [**65] source activities,

including "surface drainage, or road construction and

maintenance from which there is natural run-off." 40

C.F.R. § 122.27(b)(1). 41 EPA asserts that the exclusion

applies to forest roads in general, not only to

"construction" and "maintenance" -- an assertion disputed

by Petitioners -- and that any challenge to the decision

not to regulate forest roads should have been brought

within 120 days of the promulgation of that rule. See 33

U.S.C. § 1369(b)(1).

41 The provision provides in full as follows:

Silvicultural point source means

any discernible, confined and

discrete conveyance related to rock

crushing, gravel washing, log

sorting, or log storage facilities

which are operated in connection

with silvicultural activities and

from which pollutants are

discharged into waters of the

United States. The term does not

include non-point source

silvicultural activities such as

nursery operations, site

preparation, reforestation and

subsequent cultural treatment,

thinning, prescribed burning, pest

and fire control, harvesting

operations, surface drainage, or

road construction and maintenance

from which there is natural runoff.

However, some of these activities

(such as stream crossing for roads)

may involve point source

discharges of dredged or fill

material which may require a

CWA section 404 permit (See 33

CFR 209.120 and part 233).

40 C.F.R. § 122.27(b)(1).

[**66] EPA's argument might be more persuasive if

Petitioners' contention could be understood essentially as

a direct challenge to the 1976 silviculture regulations, but

this is not the case. Even were we to assume that EPA

exempted forest roads from NPDES permit requirements

in 1976 under 40 C.F.R. § 122.27(b)(1), that would not

resolve the question whether EPA should have addressed

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forest roads in its "comprehensive program . . . to protect

[*862] water quality" under § 402(p)(6), because §

402(p)(6) was not enacted until 1987. Petitioners

challenge EPA's decision not to regulate under the new

portion of the statute, not the decision not to regulate

under other provisions that were in effect earlier.

EPA argues in the alternative that Petitioners should

have sought judicial review when EPA considered

amending § 122.27(b)(1) -- to delete the language that it

asserts renders forest roads non-point sources -- but then

determined not to make the amendment. However, we are

aware of no statute or legal doctrine providing that a

party's failure to challenge an agency's decision not to

amend its rules in one proceeding deprives the party of

the right to challenge, in [**67] a contemporaneous

proceeding, the promulgation of an entire new rule which

could have, but did not, provide the full relief the party

seeks. Assuming that EPA is correct that § 122.27(b)(1)

defines forest roads as non-point sources, both the Phase

II Rule proceedings and the proceedings in which the

proposed amendment to § 122.27(b)(1) was considered

and rejected were proper proceedings in which to raise

the issue whether discharges from forest roads should be

regulated. Petitioners chose to raise the issue in their

comments to the proposed Phase II Rule, because they

believed that Clean Water Act § 402(p)(6) mandates the

regulation of forest roads. They did not lose their right to

challenge the final Phase II Rule's failure to regulate

forest roads simply because they did not also raise a

challenge to EPA's failure to adopt an amendment to §

122.27(b)(1) that the agency initially proposed. (We note,

incidentally, that it appears that even a successful

challenge to § 122.27(b)(1) would likely not have

achieved the objective the Environmental Petitioners

sought: it would only have allowed case-by-case

coverage for forest roads, and not for overall coverage.)

Finally, EPA suggests [**68] that Petitioners'

comments during the Phase II rulemaking process were

too short to create jurisdiction in this court to hear this

challenge. However, EPA exaggerates the slightness of

those comments, which comprised two paragraphs, with

footnotes, stating objections and providing support. We

also agree with Petitioners that EPA was aware of the

forest road sedimentation problem at the time of the

rulemaking. 42 Indeed, EPA responded to the comments

without disputing that the problem is serious. 3 EPA,

Response to Public Comments 8 (Oct. 29, 1999). Rather,

the agency relied on 40 C.F.R. § 122.27(b)(1), indicating

that it was barred from acting under the Phase II Rule by

§ 122.27(b)(1).

42 Nonpoint 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.").

[**69] EPA does not seriously address the merits of

Petitioners' objections to the Rule in its brief to this court.

Instead, EPA relies almost entirely on its assertion that

we lack jurisdiction to decide this question. It does,

however, strongly imply that its failure to adopt its own

proposed amendment in the proceeding pertaining to §

122.27(b)(1) relieves it of its obligation to consider

including forest roads in the Phase II Rule proceedings.

We reject any such contention. Petitioners' assertion that

§ 402(p)(6) requires that the Phase II Rule contain

provisions regulating forest roads necessitates a response

from EPA on the merits.

[*863] Having concluded that the objections of the

Environmental Petitioners are not time-barred, and that

we have jurisdiction to hear them, but that EPA failed to

consider those objections on the merits, we remand this

issue to the EPA, so that it may consider in an appropriate

proceeding Petitioners' contention that § 402(p)(6)

requires EPA to regulate forest roads. EPA may then

either accept Petitioners' arguments in whole or in part, or

reject them on the basis of valid reasons that are

adequately set forth to permit judicial review.

D. AF&PA's [**70] 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. 43 Before considering these challenges,

however, we consider whether AF&PA has standing to

raise them.

43 The Municipal Petitioners join in asserting

the "regulatory basis" claim at Part II(F)(1).

EPA argues that AF&PA lacks standing because it

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57 ERC (BNA) 1039; 33 ELR 20269
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.

[**71] 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, 145 L. Ed. 2d

610, 120 S. Ct. 693 (2000). Standing requires an injury

that is "actual or imminent, not 'conjectural or

hypothetical.' " Lujan v. Defenders of Wildlife, 504 U.S.

555, 560, 119 L. Ed. 2d 351, 112 S. Ct. 2130 (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 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 [**72] 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.

[*864] 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 [**73] 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 obligations 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), [**74] 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.

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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, 1993, and was revised based

on comments received. EPA established the [**75]

Urban Wet Weather Flows Federal Advisory Committee

("FACA Committee"), balancing membership between

EPA's various outside stakeholder interests, including

representatives 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. 44 Id. EPA [*865] instituted the

Phase II Subcommittee meetings in addition to the

standard APA notice and comment procedures, which

EPA also followed.

44 NRDC 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.

[**76] 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.

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, [**77] 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, 45 and (2) additional research

discussed in the Preamble to the Phase II Rule. 46

45 See NRDC, 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).

46 The 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.

[**78] 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

statute 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

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officials" under § [*866] 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 [**79] injury. See Friends

of the Earth, 528 U.S. at 180-81.

a. Standing. Industry Petitioners 47 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.

47 Since 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.

[**80] 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 requirements 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 [**81]

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 [*867] 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 [**82] the Industry

Petitioners but also that of the Municipal Petitioners to

raise the "regulatory basis" claim. 48 That established, we

find standing for both.

48 Although the issue of Municipal Petitioners'

standing has not been raised by the parties, we are

obliged to consider it to determine whether 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, 62 L. Ed. 2d 676, 100 S. Ct.

745 (1980); Juidice v. Vail, 430 U.S. 327, 331, 51

L. Ed. 2d 376, 97 S. Ct. 1211 (1977).

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. [**83] We can readily agree with the latter

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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

[**84] decisionmaking 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.

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 Nat'l

Envtl. 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 [**85] 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 [*868] 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, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (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, 50 L.

Ed. 2d 450, 97 S. Ct. 555 (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 [**86] of the petitioners, we nevertheless affirm

the Rule 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. 49

49 Even if the statute were ambiguous, we

would defer to EPA's reasonable interpretation.

Chevron, 467 U.S. 843-44, 81 L. Ed. 2d 694, 104

S. Ct. 2778.

2. MS4s in Urbanized Areas

The Municipal Petitioners contend that the

designation of small MS4s for Phase II regulation

according to Census-Bureau defined areas of population

[**87] 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

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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 are necessarily

appropriate for inclusion as Phase II sources." Pointing to

Leather Indus. of Am. v. EPA, 309 U.S. App. D.C. 136,

40 F.3d 392, 401 (D.C. Cir. 1994) (rejecting as arbitrary

EPA's regulation of pollutant [**88] 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 [*869] 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

Balt. Gas & Elec. Co. v. NRDC, 462 U.S. 87, 103, 76 L.

Ed. 2d 437, 103 S. Ct. 2246 (1983); see also Chem. Mfrs.

Ass'n v. EPA, 287 U.S. App. D.C. 49, 919 F.2d 158, 167

(D.C. Cir. 1990) [**89] ("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 threshold within urbanized areas that

would justify regulation under Phase II. In areas

implicating technical expertise and judgment, courts do

not require "perfect studies" or data. Sierra Club, 167

F.3d at 662. EPA satisfied the Leather Industries

standard by adopting a threshold consistent with the

criterion of "protecting water quality," and did not

assume, but instead sufficiently documented, the

relationship between urbanization and harmful

stormwater discharge. [**90]

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 [**91] 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 water quality

impact of construction sites of all sizes varies widely

from area to area depending on climatological,

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geological, geographical, [*870] and hydrological

influences. 50

50 The 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.

Industry Petitioners further contend that the [**92]

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, 51

and because the lack of an adequate factual basis for

nationwide regulation of small sites makes the Phase II

Rule arbitrary and capricious. API v. EPA, 342 U.S. App.

D.C. 159, 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

oil-bearing waste waters from the statutory definition of

solid waste).

51 Petitioners 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.

[**93] 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 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 [**94] 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. 52

52 NRDC 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

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threshold on a similar small scale.

[**95] [*871] 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. 53 Though not all watersheds are currently

adversely effected by small construction sites, 54 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.

55

53 Whitney 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.

54 EPA 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.

[**96]

55 EPA 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." NRDC,

966 F.2d at 1306.

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 [**97] in our earlier

discussion of the regulatory basis challenge. They submit

no evidence that EPA failed to consider an important

aspect of 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 [**98] reasonably [*872] 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, 144 L. Ed. 2d 143, 119 S.

Ct. 1816 (1999), 56 and find it satisfied here.

56 The "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).

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, 325

U.S. App. D.C. 76, 115 F.3d 979, 1004 (D.C. Cir. 1997).

[**99] The record indicates a reasoned basis for EPA's

decision that regulating small construction sites was

necessary "to protect water quality" as required by §

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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 Nat'l

Mining Ass'n v. Babbitt, 335 U.S. App. D.C. 305, 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 [**100] about the limits of presumptions in

evidentiary hearings conducted under the APA. 57

57 EPA 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.

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 applied a different standard in regulating

small construction projects than it applied to other

potential sources of stormwater runoff subject to [**101]

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 [*873] 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. 58 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. [**102]

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.

58 EPA 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).

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 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, 265 U.S. App. D.C. 213,

830 F.2d 361, 366 (D.C. Cir. 1987) [**103] (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

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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 [**104] 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 warrant

special regulatory attention, but do not fall

neatly into a discrete, predetermined

category. Today's rule preserves the

regulatory authority [*874] 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' (TMDLs 59) 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 [**105] of pollutants to

waters of the United States." 40 C.F.R. §§

122.26(a)(9)(i)(C)-(D).

59 TMDLs 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).

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), 60

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

identified" sources and preserved authority to regulate

them on a case-by-case basis indefinitely [**106] into

the future. 61

60 This 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).

61 Notably, 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 "the 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.

Petitioners contend that § 402(p)(6) 62 cannot rescue

the residual authority because it does not authorize

case-by-case identification of discharges [**107] 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). 63 They also contend that [*875]

continuing 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

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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.

62 The 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).

[**108]

63 Petitioners further argue that even if EPA

could preserve the case-by-case 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 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 "in 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."

[**109] 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, [**110] and 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

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quality" in satisfaction of the § 402(p)(6) mandate. EPA

reasonably determined that, although it lacked sufficient

[**111] data to support nationwide, categorical [*876]

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. Respondent-intervenor 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 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

[**112] 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 [**113] on Am.

Trucking Ass'ns v. EPA, 336 U.S. App. D.C. 16, 175 F.3d

1027, 1034 (D.C. Cir. 1999), 64 in which the D.C. Circuit

remanded a regulation under the non-delegation doctrine

because, although EPA had applied reasonable factors in

establishing the air quality standards in 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.

64 This case was reversed in relevant part by the

Supreme Court in Whitman v. Am. Trucking

Ass'ns, 531 U.S. 457, 476, 149 L. Ed. 2d 1, 121 S.

Ct. 903 (2000).

[**114] 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 [*877] Ass'ns, 531 U.S. 457,

473, 149 L. Ed. 2d 1, 121 S. Ct. 903 (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, 91 L. Ed. 103, 67 S. Ct. 133

(1946) (upholding [**115] statute giving SEC authority

to modify corporate structures so that they are not

"unduly or unnecessarily complicated" and do not

"unfairly or inequitably distribute voting power among

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security holders"); Yakus v. United States, 321 U.S. 414,

419-20, 423-27, 88 L. Ed. 834, 64 S. Ct. 660 (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 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), [**116]

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, 292 U.S. App. D.C.

332, 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 1536 (proposing 40 C.F.R. § 122.26(a)(9)(i)(D)),

the final rule authorizes case-by-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. 65

65 "Today'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 future, 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.

[**117] [*878] 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 [**118] 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; Northwest 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 contend 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

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community requires invalidation of the Rule, citing N.C.

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 [**119] 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 [**120] 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 [*879] rule will not have: (1) "a significant

economic impact" on (2) "a substantial number" of (3)

"small entities." 5 U.S.C. § 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 [**121] 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 agency remains free to

regulate as it sees [**122] fit. We affirm the Rule against

this challenge. 66

66 Our 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, 97 L. Ed. 54, 73 S. Ct. 67 (1952)

("Courts 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.").

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

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take appropriate [**123] action to comply with the Clean

Water Act. We also remand so that EPA may consider in

an appropriate proceeding the Environmental Petitioners'

contention that § 402(p)(6) requires EPA to regulate

forest roads. We affirm all other aspects of the Phase II

Rule against the statutory, administrative, and

constitutional challenges raised in this action.

[*880] Petitions for Review GRANTED IN PART

and DENIED IN PART.

CONCUR BY: Richard C. Tallman (In Part)

DISSENT BY: Richard C. Tallman (In Part)

DISSENT

TALLMAN, Circuit Judge, concurring in part and

dissenting in part:

I concur in most of the majority's opinion, but I

dissent from Section II.B, 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.

We 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 [**124]

from the court's decision to remand this portion of the

Phase II Rule.

I

As the majority concedes, we evaluate EPA's

interpretation of the Clean Water Act with deference.

Majority Op. 13796. If Congress's intent is unclear as to

whether a system of general 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).

II

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 [**125] 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

publicly available. Nor does the Act define what

constitutes a "permit" that would trigger these

requirements.

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, [**126] we

should uphold EPA's creation of a system of general

permits buttressed by NOIs so long as it is "permissible."

See Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837,

843-44, 81 [*881] L. Ed. 2d 694, 104 S. Ct. 2778

(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.

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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. "If 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.

[**127]

III

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 "the use of general

permits, instead of individual permits, 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, 186 U.S. App.

D.C. 147, 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 [**128] categories was that otherwise EPA

would be overwhelmed by the administrative burden of

issuing NPDES permits. 568 F.2d 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

well-established 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 [**129] majority reasons that

by failing to require 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 [*882] discharges to

the maximum extent practicable." Majority Op. 13800.

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 majority also objects to EPA's general permit

system because it fails to allow for sufficient public

[**130] participation in the NOIs. Majority Op.

13802-05. 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.

IV

We function as an adjudicator of disputes, not as a

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policy-making 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 create a general permit program

supported by NOIs. Therefore, I respectfully dissent from

Section II.B of the majority's opinion.

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