Opinion ID: 1269179
Heading Depth: 3
Heading Rank: 2

Heading: EPA's Approval of Kentucky's Multiple Exceptions to Tier II Review[9]

Text: Plaintiffs' second challenge concerns the EPA's approval of specific exemptions to the Tier II review procedure which applies to new discharges into Tier II waters. While Kentucky's antidegradation implementation regulation generally affords Tier II protection to exceptional water and high quality water, the regulation exempts pollution discharges resulting from specific categories of activity from Tier II review and allows dischargers in other categories of activity to avoid Tier II review by accepting specified permit effluent limitations. In particular, the regulation provides categorical exemptions from the Tier II review process specified in 401 Ky. Admin. Regs. 5:029 for: (1) discharges issued pursuant to storm water general permits; [10] (2) coal mining discharges; (3) domestic sewage discharges from single-family residences; (4) concentrated animal feeding operation (CAFO) discharges; [11] and (5) discharges pursuant to KPDES permit renewals and modifications that result in less than a twenty percent increase in pollutant loading. See 401 Ky. Admin. Regs. 5:030 §§ 1(2)(b)(1)(a)-(e), (3)(b)(1)(a)-(e). The regulation also allows non-domestic dischargers ( e.g., factories) to opt out of Tier II review for new KPDES permits if they accept permit limits that are restricted to no more than one-half (1/2) of the water quality based limitations that would have been permitted at standard design conditions. 401 Ky. Admin. Regs. 5:030 §§ 1(2)(b)(5), (3)(b)(5). The EPA approved most of these exemptions from Tier II review because it found them to be de minimus. Plaintiffs argue that the EPA's approval of Kentucky's categorical exemption of these six types of pollution discharges from the Tier II review procedure was arbitrary, capricious and contrary to law. In particular, Plaintiffs contend that the EPA acted contrary to law by: (1) failing to ensure that each exemption only allowed individual pollution discharges that would not reduce more than ten percent of a Tier II water body's assimilative capacity; (2) failing to provide for a cumulative cap on the loss of assimilative capacity caused by the combined effect of discharges allowed under these exemptions; and (3) basing its determination of the effect of these exemptions on non-binding assurances made by the Cabinet, rather than on the text of the Kentucky regulation itself. Unlike the majority, I find each of these arguments persuasive.
The text of 40 C.F.R. § 131.12(a)(2) does not provide for any exceptions to Tier II review based on the type or quantity of new sources of pollution, but rather requires that, for waters whose quality is better than necessary to support the propagation of fish and wildlife as well as recreation, i.e., Tier II waters, that quality shall be maintained and protected unless the State finds, after full satisfaction of the intergovernmental coordination and public participation provisions of the State's continuing planning process, that allowing lower water quality is necessary to accommodate important economic or social development in the area in which the waters are located. (emphasis added). Likewise, the CWA does not provide for any exceptions to Tier II antidegradation review but instead demands that any revision to effluent limitation standards for Tier II waters be consistent with the antidegradation policy established under this section. 33 U.S.C. § 1313(d)(4)(B). Despite this lack of text-based exceptions to Tier II antidegradation review, the EPA approved most of Kentucky's categorical exemptions to Tier II review for certain types of discharges under the administrative law principle which allows an agency to create unwritten exceptions to a statute or rule for insignificant or de minimus matters. Under this well-established principle, it is permissible as an exercise of agency power, inherent in most statutory schemes, to create categorical exemptions to overlook circumstances that in context may fairly be considered de minimus. Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C.Cir.1979). This authority to create exemptions is not an ability to depart from the statute, but rather a tool to be used in implementing the legislative design. Id. In other words, this exemption authority is narrow in reach and tightly bounded by the need to show that the situation is genuinely de minimus or one of administrative necessity. Id. at 361. Accordingly, an agency only has implied authority to create an exemption when the burdens of regulation yield a gain of trivial or no value. Greenbaum v. EPA, 370 F.3d 527, 534 (6th Cir. 2004) (quoting Alabama Power, 636 F.2d at 360-61). This implied authority is not available for a situation where the regulatory function does provide benefits, in the sense of furthering the regulatory objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs. Alabama Power, 636 F.2d at 361. Determination of when matters are truly de minimus naturally will turn on the assessment of particular circumstances, and the agency will bear the burden of making the required showing. Greenbaum, 370 F.3d at 534 (quoting Alabama Power, 636 F.2d at 360). Plaintiffs contend that, in the context of Tier II review, a narrow reading of the de minimus doctrine is appropriate given the clear intent of the federal antidegradation requirements to allow for the lowering of water quality only when necessary to accommodate important economic or social development in the area. Pl. Br. at 31 (citing 40 C.F.R. § 131.12(a)(2)). I agree with this suggestion and would hold that the EPA's approval of any exemptions from the Tier II review process must be based upon a well-founded determination that the pollution discharges permitted under such exemptions will have a truly de minimus impact upon the water quality of Tier II waters. [12] In their primary challenge to the EPA's approval of Kentucky's categorical Tier II exemptions, Plaintiffs contend that the EPA should have ensured that individual discharges allowed under these exemptions would not cause more than a specified decrease in water quality. In particular, Plaintiffs argue that an exemption for an individual pollution discharge that would use up more than ten percent of a water's remaining assimilative capacity cannot be de minimus. [13] By approving Kentucky's categorical exemptions without ensuring that they would only exempt new discharges that would have an insignificant effect on water quality, Plaintiffs argue, the EPA exceeded its legal authority under the CWA and 40 C.F.R. § 131.12(a) to allow de minimus exceptions. I agree. The EPA has previously indicated that the central purpose of the federal Tier II antidegradation regulations is to protect a water body's assimilative capacity, which is the difference between the applicable water quality criterion for a pollutant parameter and the ambient water quality for that parameter when it is better that the criterion. J.A. at 922 (Memorandum from Ephraim S. King, Director of EPA Office of Science and Technology, to Water Management Division Directors, Regions 1-10 (Aug. 10, 2005) (hereinafter King Memorandum)); accord J.A. at 208 (EPA Approval Document). In short, a water body's assimilative capacity is a measurement of the amount by which its quality exceeds levels necessary to support fish, wildlife, and recreation. The Tier II review process ensures that this assimilative capacity is maintained so as to avoid further degradation of the high quality of Tier II waters. Thus, any exceptions to Tier II review cannot be deemed de minimus if they permit new discharges which significantly decrease a Tier II water body's assimilative capacity. Indeed, the EPA has cautioned States against using a high threshold of significance for creating categorical exemptions, because such an approach could unduly restrict[] the number of proposed activities that are subject to a full antidegradation review and may not adequately prevent cumulative water quality degradation on a watershed scale. Water Quality Standards Regulation, 63 Fed.Reg. at 36,783. The EPA has likewise indicated that, while the current regulation does not specify a significance threshold below which antidegradation review would not be required[, the] EPA's current thinking is that a clear national norm regarding this `significance test' is necessary and should be developed and established in either the regulation or national guidance. Id. Neither the EPA nor any federal court has previously determined the precise threshold between significant and insignificant decreases in assimilative capacity. Nevertheless, the EPA's prior guidance statements indicate that more than a ten percent reduction in assimilative capacity would be significant, and thus not de minimus. In its Water Quality Guidance for the Great Lakes System Supplementary Information Document (Great Lakes SID), issued in 1995, the EPA addressed de minimus water degradation in the Great Lakes ecosystem. In particular, the EPA allowed States to categorize as de minimus any discharge of non-bioaccumulative chemicals (non-BCCs) that caused a loss of less than ten percent of the available assimilative capacity. The EPA stated: Although de minimus provisions do involve non-conservative assumptions, the de minimus provisions included in the proposed Guidance are not likely to seriously undermine the protection afforded a high quality water body through antidegradation. De minimus provisions provide a means for States and Tribes to differentiate between actions that will result in an increased loading of a pollutant to a receiving water that is likely to have a significant impact on water quality and those that are unlikely to do so and focus review efforts on actions that will degrade water quality. It is reasonable to assume that loading increases of non-BCCs that will use less than ten percent of the remaining assimilative capacity in a water body will have a negligent effect on ambient water quality. J.A. at 698 (Great Lakes SID) (emphasis added). More recently, the EPA embraced this ten percent threshold in the context of Tier II review generally. In a memorandum to the EPA's Water Management Division Directors, the Director of the EPA's Office of Science and Technology stated: EPA has afforded the states and tribes some discretion in determining what constitutes a significant lowering of water quality. EPA has accepted a range of approaches to defining a significance threshold over which a full antidegradation review is required. This issue was considered at length in the process of developing the Water Quality Guidance for the Great Lakes. Relying on input offered during a four-year open public process involving environmental groups, industry representatives, and other experts, with numerous opportunities for public input, the directors of the eight Great Lakes states and EPA technical experts reached a consensus on a significance threshold value of ten percent (10%) of the available assimilative capacity, coupled with a cumulative cap.... A ten percent (10%) value is within the range of values for significance thresholds that EPA has approved in other states as well. EPA considers this approach to be workable and protective in identifying those significant lowerings of water quality that should receive a full tier 2 antidegradation review, including public participation. J.A. at 923 (King Memorandum) (emphasis added). The only court to have considered this issue has likewise suggested that a ten percent reduction in assimilative capacity is the outer limit for any de minimus exception. See Ohio Valley, 279 F.Supp.2d at 770 (finding that the EPA's approval of West Virginia's exception from Tier II review for individual discharges causing up to a ten percent loss of available assimilative capacity was reasonable, but failing to indorse the EPA's approval of West Virginia's twenty percent de minimus provision for cumulative discharges). Based on these authorities' interpretations of the amount of loss of assimilative capacity that would be considered significant, I would find that, in order to be considered de minimus (and thus permissible as an exception to 40 C.F.R. § 131.12(a)(2)'s requirement that all Tier II waters be afforded Tier II review), a categorical exemption from Tier II review must not permit any individual discharge that would destroy more than ten percent of a Tier II water's available assimilative capacity. While discharges causing less than a ten percent loss of assimilative capacity might also be too significant to be considered de minimus, I find this the ten percent outer limit to be clearly supported by the EPA's own practice. As the EPA in this case did not even consider whether Kentucky's categorical exemptions could allow individual discharges that would cause a significant, i.e., more than ten percent, loss of assimilative capacity in Tier II waters, I would hold that the EPA acted contrary to law in approving these exemptions as de minimus. For this reason alone, I find reversal required and would remand the matter to the EPA, so that it could consider whether Kentucky's categorical exemptions would permit individual discharges that would cause more than a ten percent loss of a Tier II water's assimilative capacity.
Plaintiffs next argue that [a] second requirement for any de minimus exemption from Tier II antidegradation requirements is that such exemption be subject to a cumulative cap, so that individual discharges allowed to pass as trivial do not end up having a significant combined impact. Pl. Br. at 34. Again, I agree that such a cumulative cap is required in order for a discharge exemption to be permitted as de minimus. As already noted, in order to qualify as de minimus, any exemption to the strict requirements of Tier II review must only exempt pollution discharges whose combined effect does not lead to a significant degradation of a Tier II water body's quality. While the limit of ten percent destruction of assimilative capacity for individual exempted discharges helps to ensure that the exemptions have only a trivial impact on water quality, a cumulative cap is necessary to ensure that the combined effect of the many discharges allowed under the exemption is truly de minimus. See Shays v. FEC, 414 F.3d 76, 115 (D.C.Cir.2005) (rejecting the Federal Election Commission's approval of a de minimus exemption of $5000 from a campaign finance reform regulation because it was not an obviously trivial amount, considering that donors could give that amount to each and every state, district, and local party organization); Alabama Power, 636 F.2d at 360 (indicating that an agency's power to find categorical exemptions to statutory schemes is designed to overlook circumstances that in context may fairly be considered de minimus). Indeed, if a significant degradation of Tier II water quality were allowed to occur because of numerous individually exempted de minimus discharges, then the non-textual de minimus exception would be allowed to swallow the rule set forth in 40 C.F.R. § 131.12(a)'s plain language that a Tier II water's quality  shall be maintained and protected unless the State determines, after engaging in the Tier II review process, that allowing lower water quality is necessary to accommodate important economic or social development in the area in which the waters are located. (emphasis added). Accordingly, the only court to have considered this issue has found that a cumulative cap is necessary in order for an exemption to be permitted as de minimus. Ohio Valley, 279 F.Supp.2d at 770. The Ohio Valley court persuasively articulated the rationale for such a cap: From the perspective of maintaining the water quality of a Tier 2 water body (which is the focus of § 131.12(a)(2)), the de minimus standard for cumulative discharges is more important than the de minimus standard for individual discharges; it is the former that will dictate the total reduction in available assimilative capacity that a water body may undergo without any Tier 2 review. Without a cumulative cap on de minimus discharges, individual de minimus discharges could easily consume all of the available assimilative capacity for a given pollutant parameter, reducing water quality to the minimum level necessary to support existing uses without ever having undergone Tier 2 review. Id. at 770-771. Likewise, the EPA has indicated that in order to qualify as de minimus an exemption must have a cumulative cap on the reduction of assimilative capacity that may be caused by exempted discharges. See J.A. at 923 (King Memorandum) (noting that in defining a sufficiency threshold for discharges into the Great Lakes the EPA technical experts reached a consensus on a significance threshold value of ten percent (10%) of the available assimilative capacity, coupled with a cumulative cap  (emphasis added)). In light of the foregoing concerns, I would hold that a cumulative cap on the allowable reduction of assimilative capacity is required in order for a categorical exemption to Tier II review to be approved as de minimus. Neither party has suggested an appropriate limit for this cumulative cap. However, given the previous discussion regarding the significant negative impact on water quality caused by the loss of more than ten percent of a water body's assimilative capacity, I am convinced that an exemption that would allow for combined discharges to cause more than a ten percent loss of assimilative capacity, i.e., a significant loss of Tier II water quality, cannot, under the EPA's own scientific standards, be considered de minimus. As the EPA never even considered whether a cumulative cap is necessary when approving Kentucky's categorical exemptions, let alone whether the combined effect of the individual discharges allowed under such exemptions would fall below the requirements of such a cap, I would find that the EPA acted contrary to law in approving these exemptions as de minimus. Accordingly, I would reverse the district court's grant of summary judgment to Defendants on Plaintiffs' challenge to Kentucky's Tier II review exemptions and remand the matter to the EPA. On remand, in addition to considering whether Kentucky's categorical exemptions would permit individual discharges that would cause more than a ten percent loss of a Tier II water's assimilative capacity, I would also require the EPA to evaluate the potential cumulative effect of these individual discharges so as to ensure that they do not cause a combined loss of more than ten percent of the assimilative capacity of Kentucky's Tier II waters.