Court Opinion

ID: 7016870
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:23:49.39347+00
Date Added: 2024-06-11T16:10:25.500546
License: Public Domain

TALLMAN, Circuit Judge,
concurring in part and dissenting in part:
I concur in some of the Court’s conclusions, but I respectfully disagree with two significant sections of the majority’s opinion. I cannot agree with Section II.A.2, which upholds the constitutionality of the Environmental Protection Agency’s (“EPA”) final administrative rule (the “Phase II Rule”), § 402(p) of the Clean Water Act, 33 U.S.C. § 1342(p), against the Municipal Petitioner’s Tenth Amendment challenge. Because I believe that the Phase II Rule infringes upon state sovereignty by compelling the states to enact and administer a federal regulatory program that includes regulation of third parties, and that the Alternative Permit Option suffers from the same constitutional flaw, I respectfully dissent.
I also dissent from Section II.B of the majority’s opinion, which remands the Phase II Rule because its system of general permits is “arbitrary and capricious.” I believe EPA’s design of a system of general permits supported by notices of intent was a reasonable exercise of EPA’s administrative discretion.
I
No party disputes that the Phase II Rule is a federal regulatory scheme to be carried out by the states. At issue, however, is whether the states are being compelled to enact that scheme, whether the scheme requires the states to regulate third parties, and whether the Alternative Permit Option saves such regulation by creating a constitutionally sound alternative. The Court holds that the states are not compelled to regulate here because they have two choices: to stop municipal stormwater from discharging into federal waters, or to stop third parties from dis*451charging into municipal stormwater systems. Majority Op. at 416-417, 418.
The states cannot choose to stop storm-water from entering federal waters, nor can they stop third parties or Mother Nature from discharging into municipal stormwater systems. To implement the scheme under the Phase II Rule, municipalities must regulate their citizens and businesses to ensure that the stormwater they discharge meets the pollutant standards of the Clean Water Act. The states are therefore being compelled to regulate third parties in furtherance of a federal regulatory scheme. The Alternative Permit Option is qualitatively indistinguishable.
A
Congress has the power to regulate pollutants in navigable waters under Article I of the Constitution, and may lawfully delegate that regulatory function to EPA. The regulatory power of EPA, however, is limited by the Residual Powers Clause of the Tenth Amendment, which states that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” U.S. CONST, amend. X. See United States v. Darby, 312 U.S. 100, 124, 61 S.Ct. 451, 85 L.Ed. 609 (1941) (acknowledging the extant truism “that all is retained[by the states] which has not been surrendered”). Thus, while the states retain a significant amount of power under the Tenth Amendment, where the constitutional line is drawn is unclear. We are therefore left with the arduous task of discerning the degree of sovereign authority reserved to the states.
We must examine United States Supreme Court case law to decide upon the appropriate division between state and federal spheres of power. The Supreme Court has made it clear that “Congress has substantial powers to govern the Nation directly, including in areas of intimate concern to the States.” New York v. United States, 505 U.S. 144, 162, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992). Congress may not, however, require the states to enact or administer federal regulatory programs. See Printz v. United States, 521 U.S. 898, 925, 117 S.Ct. 2365, 138 L.Ed.2d 914 (1997); FERC v. Mississippi, 456 U.S. 742, 762-65, 102 S.Ct. 2126, 72 L.Ed.2d 532 (1982); Hodel v. Virginia Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264, 288, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981). While EPA may directly regulate issues surrounding stormwater discharge, it may not compel the states to enact and enforce such regulation.
The federal government may persuade the states to adopt a regulatory scheme in a preempted field, but such persuasion must stop short of coercion. See South Dakota v. Dole, 483 U.S. 203, 211, 107 S.Ct. 2793, 97 L.Ed.2d 171 (1987); New York, 505 U.S. at 176-77, 112 S.Ct. 2408; Hodel, 452 U.S. at 288, 101 S.Ct. 2352; Board of Natural Resources v. Brown, 992 F.2d 937, 947 (9th Cir.1993). The fundamental distinction between persuasion and compulsion is whether the states have a choice to either participate and accept a federal regulatory scheme, or to not participate at all and allow the federal government itself to regulate. See Hodel, 452 U.S. at 288, 101 S.Ct. 2352. The majority holds that the states have the choice of either adopting and enforcing the Phase II Rule or stopping municipal stormwater from discharging to federal waters by, for example, building wetlands or recycling stormwater. Majority Op. at 417-418. The majority asserts that because of this “choice” the Phase II Rule is not coercive, and is akin to the provision upheld by the *452Supreme Court in Hodel. Majority Op. at 414-415.
Contrary to the majority’s conclusion, the “choice” not to discharge differs substantially from the choice the states faced in Hodel. In Hodel, the Supreme Court held that the states were not compelled “in any manner whatsoever” because if the states chose not to regulate, “the full regulatory burden will be borne by the Federal Government.” 452 U.S. at 288, 101 S.Ct. 2352. EPA has included no such provision here, presumably because EPA does not have the resources to do the job alone. The states have been given only one option: regulating citizens in furtherance of a federal program. Thus, Hodel does not support the reasoning that the Phase II Rule is not coercive. To survive constitutional scrutiny under Hodel, EPA would need to offer the states the choice to adopt the Phase II Rule or to decline and allow EPA to regulate for itself.
While the case at hand is clearly distinguishable from Hodel, it is strikingly analogous to our decision in Brown. The Phase II Rule bears a strong resemblance to the Forest Resources Conservation and Shortage Relief Act that we found to be coercive in Brown. The challenged legislation in Brown contained a provision that called for the states to issue regulations in accordance with an export ban on timber from federal lands. In Brown, we considered an argument much like that presented here: that Washington State was making a “choice” because it had the option to halt all sales of timber. Following the Supreme Court’s decision in New York, we held that this was a Hobson’s choice and that Congress did not have the authority to command such an option. Brown, 992 F.2d at 947. The “choice” being offered by EPA in this case is even more of a Hobson’s choice than that in Brown or New York. Here, it is not that Congress lacks the power to command the alternative, but that the alternative cannot realistically be accomplished. As the states have no real choice but to adopt EPA’s scheme, the Phase II Rule is unconstitutional.
B
The Phase II Rule also violates the Tenth Amendment by requiring the states to regulate third parties. As stated above, the federal government may not force the states to use their sovereign power to address federal issues. See Printz, 521 U.S. at 925, 935, 117 S.Ct. 2365. 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, 120 S.Ct. 666, 145 L.Ed.2d 587 (2000) (upholding federal statutory scheme because it “does not require the States in their sovereign capacity to regulate their own citizens”).
The majority concedes that the Construction Measure, 40 C.F.R. § 122.34(b)(4)(i)-(ii), requires an MS4 to “enact and enforce a federal regulatory program,” but contends that the other two contested Measures do not because the municipalities can block off the entry points to their stormwater system and avoid regulating the dischargers. Majority Op. at 415-416. I agree that the Construction Measure forces municipalities to regulate third parties, but I believe that the other two contested Measures require the same unconstitutional regulation.
The Illicit Discharge Measure does so by requiring the states to prohibit illicit discharge “through ordinance, or other regulatory mechanism .... ” 40 C.F.R. § 122.34(b)(3)(ii)(B). The Post Construction Measure does so by requiring that permit seekers “[u]se an ordinance or other regulatory mechanism to address post-construction runoff from new development *453...” Id. at § 122.34(b)(5)(ii)(B). Again, the majority contends that these mandates are not forced on the states because municipalities can choose not to accept discharge from illicit dischargers and runoff from construction sites. Majority Op. at 415. This is no more of a choice than whether or not the municipalities will discharge directly into federal waters. The law of gravity is inflexible; the stormwater will run downhill through the municipalities into federal waters whether the sewer system is open or blocked. No matter how much we may want to uphold EPA’s regulatory scheme, we cannot change the law of gravity.
We need not consider such options, however, in determining if the Construction Site Measure requires municipalities to regulate third parties. The majority concedes that the language of the Construction Site Measure requires such regulation outright. It does so by mandating MS4s to develop and promulgate “requirements for construction site operators to implement appropriate erosion and sediment control[and] to control waste .... ” 40 C.F.R. § 122.3S(b)(4)(ii)(B)-(C). Whereas the other two contested Measures require the regulation of third parties by default, this Measure does so explicitly. The majority holds that the choice not to discharge removes this Measure from Tenth Amendment scrutiny. Majority Op. at 415-416. I cannot agree. The Phase II Rule violates the Tenth Amendment by compelling the states to enact and enforce a federal regulatory program that requires the states to regulate third parties.1
C
Finally, the Court holds that the states are not compelled under the Phase II Rule because the Alternative Permit Option provides a constitutional choice for the states. Majority Op. at 416-417. I disagree. The Alternative Permit Option is not qualitatively different from the Phase II General Permit Option described above.
Under the Alternative Permit Option of the Phase II Rule, a permit applicant may also seek a permit under the previous Phase I Rule. 40 C.F.R. § 122.33(b)(2)(ii). Under the Phase I Rule, a petitioner must submit descriptions of programs that accomplish essentially the same regulation of third parties as do the three Minimum Measures of the Phase II Rule. See 40 C.F.R. § 122.26(d)(2)(iv)(B), (D). Under subsection (B) a petitioner must submit a program that will implement by ordinance or other regulatory device the detection and removal of “illicit discharges and improper disposal into the storm sewer.” Id. at § 122.26(d)(2)(iv)(B). This is essentially the same as the Illicit Discharge Minimum Measure and similarly compels the states to regulate third parties.
Subsection (D) calls for municipalities to submit a program to “implement and maintain structural and non-structural *454best management practices to reduce pollutants in storm water runoff from construction sites.” Id. at § 122.26(d)(2)(iv)(D). This section is nearly identical to the Construction and Post-Construction Minimum Measures and runs afoul of the same constitutional restriction. In short, the Phase II Rule cannot defeat a facial challenge by pointing to an Alternative Permit Option that requires the same regulation of third parties as the General Permit Option.
D
While I concede that one of our most difficult judicial undertakings may be to determine the appropriate exercise of state and federal power, I would hold in this case that the three contested Minimum Measures unconstitutionally compel the states to adopt a federal program that requires the states to regulate third parties, and that the Alternative Permit Option is similarly flawed. Because the Phase II Rule violates the principles of federalism embodied in the Tenth Amendment, I respectfully dissent.
II
I also cannot agree with Section II.B of the Court’s opinion, which remands the Phase II Rule because EPA acted arbitrarily and capriciously in creating a general permitting system supported by notices of intent (“NOIs”). Majority Op. at 423. This Court must give deference to EPA’s interpretation of the laws it is charged with enforcing, so long as EPA’s reading of those laws is permissible. Because EPA acted reasonably in designing a National Pollutant Discharge Elimination System (“NPDES”) based on general permits and supported by NOIs, I respectfully dissent from the Court’s decision to remand this portion of the Phase II Rule.
A
As the majority concedes, we evaluate EPA’s interpretation of the Clean Water Act with deference. Majority Op. at 428. 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).
B
As an initial matter, then, we must ask if Congress was clear in its intent concerning the propriety of a system of general permits augmented by NOIs.
Five legislative commands guide this inquiry. First, 33 U.S.C. § 1342(p)(6) charges EPA with creating a system to regulate stormwater discharges. Plainly, nothing 'in this section speaks to whether EPA may utilize a general permit approach in regulating stormwater discharge.
Second, 33 U.S.C. § 1311(a) makes it illegal to discharge pollutants “except as in compliance” with several sections of the Clean Water Act. Again, nothing in this section addresses whether EPA may make use of general permits reinforced by NOIs.
Third, 33 U.S.C. § 1342 in general (as opposed to the limited charge in section 1342(p)(6) discussed above) authorizes EPA to issue NPDES permits, provided that the permits satisfy several conditions. But nothing in section 1342 prohibits the use of a system of general permits.
Fourth, the Clean Water Act mandates that “a copy of each permit application and each permit issued under” the NPDES permitting program be made availablé to the public for inspection and photocopying. 33 U.S.C. § 1342(j). The Act does not elaborate on this naked requirement. *455There is no explanation of the manner in which NPDES permits and applications are to be made publically available. Nor does the Act define what constitutes a “permit” that would trigger these requirements.
And fifth, the Clean Water Act authorizes the issuance of an NPDES “permit” “after opportunity for public hearing.” 33 U.S.C. § 1342(a)(1). The Act does not provide a definition of “permit,” nor does it further detail what triggers the requirement of a public hearing.
In short, the Clean Water Act fails to address the propriety of a general permit system, or whether NOIs ought to be considered “permits.” Therefore, EPA’s creation of a system of general permits buttressed by NOIs should be upheld by this Court so long as it is “permissible.” See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Our duty to defer to EPA in such a situation is based on sound policy. Given the overwhelming challenge and complexity of the programs administered by federal agencies today, it is sensible to trust agencies with the design of those programs so long as the programs are reasonable interpretations of congressional mandates.
The central issues regarding EPA’s general permit system are whether the Clean Water Act allows such a system and whether NOIs should be considered “permits.” The resolution of these issues requires a complicated weighing of policies (e.g., administrative streamlining vs. robust inquiry) that is precisely what agencies are designed to do and courts are without the resources or expertise to do. “[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction.” Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
C
The Phase II Rule promulgates a system of general permits. EPA contemplated that these general permits will be issued on a watershed basis, with individual stormwater dischargers then filing NOIs to operate under general permits. The federal regulations implementing this system repeatedly emphasize that “[t]he use of general permits, instead of individual 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, 568 F.2d 1369 (D.C.Cir.1977), the District of Columbia Circuit considered a challenge to EPA’s regulations under the Federal Water Pollution Control Act, which was the precursor to the Clean Water Act. In Costle, EPA sought approval of its, design for the NPDES system. EPA had issued regulations exempting broad categories of point sources from the requirement that an NPDES permit be obtained before discharging into federal waters. Part of EPA’s rationale in creating the exempted categories was that otherwise EPA would be overwhelmed by the administrative burden of issuing NPDES permits. Id. at 1377-79. The Costle court affirmed the lower court’s rejection of these exemptions because the legislation in question plainly required that all point sources obtain some kind of NPDES permit. Id. But in rejecting EPA’s regulations, the Costle court discussed the options available to EPA in promulgating an NPDES system that was considerate of the enormous burden such a *456system 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 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 the discharge to the maximum extent practicable.” Majority Op. at 427. But the majority’s analysis ignores the effects of the general permit. By filing an NOI, a dis-charger obligates itself to comply with the limitations and controls imposed by the general permit under which it intends to operate. EPA mandates that all permits (including general permits) condition their issuance on satisfaction of pollution limitations imposed by the Clean Water Act. 40 C.F.R. § 122.44. In particular, EPA requires permits to satisfy the restrictions imposed by Clean Water Act section 307(a). Id. at § 122.44(b)(1). Therefore, the general permit imposes the obligations with which the discharger must comply (including applicable Clean Water Act standards), and EPA’s decision not to review every NOI is not a failure to insure compliance with the Clean Water Act.
The Court also objects to EPA’s general permit system because it fails to allow for sufficient public participation in the NOIs. Majority Op. at 427-428. The majority’s position fails to give deference to EPA and imposes the majority’s own wishes instead. EPA would have been justified in creating a system entirely reliant on general or area permits. Its imposition of NOIs is an indulgence to certain policy prerogatives, namely public involvement and the collection of additional information. But the power to create a general permit system necessarily implies the power to require subordinate steps for NOIs that do not quite reach the level of inquiry associated with actual permits.
D
We function as an adjudicator of disputes, not as a policymaking body. Where an agency promulgates rules after a deliberative process, it is incumbent upon us to respect the agency’s decisions or else risk trivializing the function of that agency. In this case, EPA made a permissible decision to create a general permit program supported by NOIs. Therefore, I also respectfully dissent from Section II.B of the Court’s opinion.

. The majority also contends that EPA’s interference with state sovereignty is permissible because the Phase II Rule is a rule of general applicability. While I agree with this classification of the Phase II Rule, I disagree that it has any bearing on the outcome here because the question of coercion is a threshold determination. Both of the Supreme Court cases cited by the majority as examples of the rule of general applicability exception specifically mention the voluntary participation of the states in a field of federal preemption. See Condon, 528 U.S. at 150, 120 S.Ct. 666; South Carolina v. Baker, 485 U.S. 505, 514-515, 108 S.Ct. 1355, 99 L.Ed.2d 592 (1988) ("That a State wishing to engage in certain activity must take administrative and sometimes legislative action ....’’) (emphasis added);. Thus, while the Phase II Rule is a rule of general applicability, it is still unconstitutional because it is coercive.