The Ninth Circuit Court of Appeals on August 5 dismissed a challenge to EPA guidance documents in Southern California Alliance of Publicly Owned Treatment Works, et al. v. U.S. Environmental Protection Agency.
Guidance documents are often issued by agencies such as the EPA to provide government entities with a means to move quickly without having to go through the often time-consuming process of filing public notice and accepting comments. They are generally used to provide clarification and instruction to regulated entities. Agencies often treat guidance as binding regulations, which can result in frustration for regulated entities and lead them to challenge guidance documents in court.
“This frustration can be amplified if a judicial challenge is dismissed on the basis that the guidance is not a final agency action under the Administrative Procedures Act (‘APA’),” according to a JD Supra article by Mitchell, Williams, Selig, Gates & Woodyard, PLLC.
Guidance in question
The water treatment alliance trade association challenged the EPA’s guidance about a method that can be used to assess water toxicity under the Clean Water Act (CWA).
Certain permittees operating under a CWA National Pollution Discharge Elimination System (NPDES) are required to pass whole effluent toxicity (WET) tests, which measure the complete effects of chemical discharges on aquatic life. The data from these types of tests is used by the EPA to implement the CWA’s regulations against toxic amounts and types of discharges.
“WET tests measure wastewater’s effects on specific organisms’ ability to survive, grow and reproduce,” says Mitchell Williams. “For example, a test population of minnows may be exposed to a permittee’s wastewater effluent. The number of organisms that die or become immobilized will then be counted to determine whether the wastewater is ‘toxic.’
“EPA issued guidance in 2010 that relates to the [CWA] WET test regulations. The agency stated the guidance was issued in an attempt to limit false positive results (i.e., test results that incorrectly indicate that wastewater is toxic) to no more than five percent. The guidance provides an explanation of how to use what is referenced in the Opinion as: … ‘a new statistical method called the Test of Significant Toxicity (TST).’”
The lawsuit
The trade association challenged the EPA’s use of the TST in the U.S. District Court for the Eastern District of California.
“They argued that EPA’s use of TST violated the [Administrative Procedures Act (APA)] when the State of California’s application to use the TST as an ‘alternative test procedure’ for permits under 33 U.S.C. 1314(h) was approved by EPA,” Mitchell Williams adds.
Because the EPA withdrew its approval of California’s alternate test procedure before the court heard the case, the district court dismissed the case.
The next step for the plaintiffs involved filing a new action, in which they claimed an APA violation because the TST guidance was issued without formal rulemaking processes. They also asserted requiring the use of TST tests for certain NPDES discharge permits violated CWA regulations.
The court dismissed the complaint. The APA violation was dismissed because it was past the APA six-year statute of limitations. Regarding the CWA violation complaint, the “Court stated that placing a different label on the action did nothing to change the substance of their allegations,” Mitchell Williams notes.
The plaintiffs appealed the district court’s decision.
As the basis of its decision, the Ninth Circuit stated two requirements established by the U.S. Supreme Court for determining if agency actions are “final” under the APA.
“First, the action must mark the ‘consummation’ of the agency’s decision-making process—it must not be of a merely tentative or interlocutory nature. And second, the action must be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow,’” Justice Eric D. Miller wrote in the opinion for the court.
The EPA agreed that the TST test met the first requirement but argued that the guidance did not impose any rights, obligations, or legal consequences, so the guidance does not meet the second requirement.
“The Plaintiffs argued that the TST guidance changed the legal regime by allowing Clean Water Act NPDES permitting authorities to use the TST. EPA disagreed, citing language in a prior WET rule that describes the selective method for interpreting test data as: … ‘not the only appropriate techniques.’
“The Ninth Circuit concludes that even if the TST guidance ‘represents a departure from the view reflected in earlier regulations,’ it does not create its own consequences,” according to Mitchell Williams.
“But it is permits, not guidance documents, that create consequences for regulated entities like plaintiffs,” Miller wrote. “Plaintiffs point out that permit holders may be subject to criminal penalties or civil enforcement actions for failing the TST if a state or federal permit requires it … but the ‘if’ is key. The statute authorizes civil enforcement actions and criminal penalties for violations of ‘permit conditions.’”
State or federal NPDES permit holders are only subject to CWA consequences if the permittee incorporates the TST.
The court also noted that documents cited by the plaintiffs in their legal briefs referred to the TST as an “option” rather than a “requirement.”
Finally, the court addressed the plaintiffs concern that TST tests can only be challenged in district courts by stating that “State courts can interpret federal law” and “review and enjoin state authorities from issuing NPDES permits that violate Clean Water Act requirements.”
In conclusion, the Ninth Circuit dismissed the plaintiffs’ TST guidance challenge and affirmed the district court’s decision.
Takeaways
- For industry wishing to challenge guidance issued by permitting authorities, the takeaway is to ensure it is the guidance that is creating a requirement, not terms the permittee incorporated into its permit.
- It’s also important to check the date of the issue to ensure the Six-Year APA statute of limitations has not been exceeded.