Reply Brief — New York, et al., Petitioners v. Environmental Protection Agency, et al.

No. 17-418

IN THE

Supreme Court of the United States

STATES OF NEW YORK, CONNECTICUT,

DELAWARE, ILLINOIS, MAINE, MICHIGAN,

WASHINGTON, AND THE PROVINCE OF

MANITOBA, CANADA,

Petitioners,

v.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

REPLY BRIEF

ERIC T. SCHNEIDERMAN

Attorney General

State of New York

LEMUEL SROLOVIC

BARBARA D. UNDERWOOD*

Environmental Protection

Solicitor General

Bureau Chief

STEVEN C. WU

Deputy Solicitor General

PHILIP BEIN

Watershed Inspector General JUDITH N. VALE

Senior Assistant

MEREDITH LEE-CLARK

Solicitor General

Assistant Attorney General

120 Broadway

New York, NY 10271

(212) 416-8020

barbara.underwood@ag.ny.gov

*Counsel of Record

Attorneys for Petitioners

(Additional Counsel Listed on Signature Page)

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TABLE OF CONTENTS

Page

INTRODUCTION ........................................................ 1

ARGUMENT................................................................ 2

I.

Certiorari Is Warranted to Resolve a Question

of Grave Importance About Whether the Clean

Water Act’s Nationwide Permit Protections

Apply to Polluting Water Transfers. ................2

II. The Court of Appeals’ Deference to an

Agency’s Reliance on a Factual Analysis It

Never Conducted Also Merits Certiorari. ......11

CONCLUSION .......................................................... 13

ii

TABLE OF AUTHORITIES

Cases

Page(s)

Arkansas v. Oklahoma, 503 U.S. 91 (1992) ................ 3

Artis v. District of Columbia, No. 16-460,

(U.S. Jan. 22, 2018) ................................................ 8

Chevron, U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837 (1984) .................... 5,11

Friends of the Everglades v. South Fla.

Water Mgmt. Dist., 570 F.3d 1210 (11th

Cir. 2009) ................................................................ 5

Michigan v. EPA, 135 S. Ct. 2699 (2015) ................. 12

National Ass’n of Mfrs. v. Department of

Def., No. 16-299 (U.S. Jan. 22, 2018)............... 7,8,9

PUD No. 1 of Jefferson County v.

Washington Dep’t of Ecology, 511 U.S.

700 (1994) ............................................................... 9

South Fl. Water Mgmt. Dist. v. Miccosukee

Tribe of Indians, 541 U.S. 95 (2004) ................ 6,10

Utility Air Regulatory Grp. v. EPA, 134 S.

Ct. 2427 (2014) ..................................................... 11

Laws

33 U.S.C.

§ 1251 ...................................................................... 9

§ 1313 ...................................................................... 6

§ 1342 ...................................................................... 6

§ 1362 ...................................................................... 1

§ 1370 ...................................................................... 9

42 U.S.C. § 300f et seq. ................................................ 3

iii

Laws

Page(s)

40 C.F.R.

§ 125.3 ..................................................................... 6

§ 131.13 ................................................................... 6

Miscellaneous Authorities

123 Cong. Rec. 39,212 (1977) .................................... 10

EPA, NPDES State Program Information,

at https://www.epa.gov/npdes/npdesstate-program-information .................................... 7

Mem. from EPA Div. of Water & Waste

Mgmt. to Reg’l Admin’rs, State Authority

to Allocate Water Quantities—Section

101(g) of the Clean Water Act (Nov. 7,

1978), at https://www.epa.gov/sites/

production/files/2015-01/documents/

waterquantities-section101.pdf ........................... 10

INTRODUCTION

As the Environmental Protection Agency concedes,

“[w]ater conveyed in a water transfer often contains

‘pollutant[s]’ under the [Clean Water Act’s] broad

definition.” U.S. Br. 6. When a water transfer adds

such pollutants to a “navigable” water body subject to

the Act’s protections, both common sense and ordinary

English compel the conclusion that there has been an

“addition of any pollutant to navigable waters.” 33

U.S.C. § 1362(12). EPA’s assertion to the contrary in

the Water Transfers Rule defies both the plain

language of the statute and multiple federal- and

state-court decisions rejecting EPA’s interpretation.

Certiorari is warranted to review the court of appeals’

incorrect decision upholding the Rule, and to resolve a

dispute of great importance over whether the States

can rely on the Clean Water Act’s flagship permit

program to protect themselves from polluting water

transfers.

Respondents’ strained attempts to reconcile EPA’s

interpretation with the actual text of the Clean Water

Act have already been rejected by this Court and the

courts of appeals. And their policy argument that this

Court should let the decision below stand because it

reaches a good outcome is both incorrect and

irrelevant. Respondents’ rosy view of the States’

environmental future without the permitting program

mandated by the Act simply ignores the many ways in

which, absent such oversight, water transfers can

move contaminants from one water body to another—

by conveying saltwater into freshwater, water infected

with fecal coliform into a pristine stream, or invasive

species into a previously unsullied lake. These injuries

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are far from abstract. Rather, they are concrete,

serious, and ongoing, and the various substitute

protections that respondents propose in place of the

Act’s permit program have proven inadequate to

resolve them. This Court should accordingly grant

certiorari to resolve an important legal dispute that

has divided the courts and to prevent EPA from

upending Congress’s judgment about the scope of the

Clean Water Act’s protections.

ARGUMENT

I. Certiorari Is Warranted to Resolve a Question

of Grave Importance About Whether the Clean

Water Act’s Nationwide Permit Protections

Apply to Polluting Water Transfers.

This case presents long-standing issues of critical

importance to the States and their residents about

whether the environmental protections of the Clean

Water Act’s permitting program apply to polluting

water transfers. The court of appeals resolved these

issues by accepting EPA’s untenable interpretation of

the Act’s discharge prohibition, which requires a

permit for any “addition” of pollutants to “navigable

waters” via a point source. (Pet. App. 286a.) EPA’s

reading of the discharge prohibition has already been

rejected by other courts as contrary to the provision’s

ordinary meaning, structure, and purpose. Respondents

assert several reasons for denying certiorari despite

this conflict concerning an issue of nationwide

importance. But none of these assertions justifies

declining review.

1. First, several respondents attempt to minimize

the importance of this case by asserting that the Rule

merely exempts water transfers from the Act’s

3

National Pollutant Discharge Elimination System

(NPDES), while leaving States free to invoke other

provisions of the Clean Water Act or other federal and

state programs. See Western Br. 25-31; NYC Br. 1, 1215. But this argument severely downplays the central

importance of NPDES permitting, which Congress

selected as the “primary means” for protecting the

nation’s waters from harmful pollutants. Arkansas v.

Oklahoma, 503 U.S. 91, 101-02 (1992). Indeed, the

NPDES program is the specific mechanism that

Congress chose for controlling the type of pollution at

issue here—namely, pollution conveyed into navigable

waters via point sources.

The significant harms that certain water transfers

have already inflicted on water users, local businesses,

and the environment (Pet. 16-17) demonstrate that

the other water-protection programs cited by

respondents are not effective substitutes for the

NPDES regime selected by Congress. The possibility

of interstate compacts (Western Br. 30) is cold comfort

when such compacts require the cooperation of the

polluting State. States’ authority to impose pollution

controls above the Act’s minimum standards does not

protect them from upstream States, which will have

little incentive to impose more stringent protections

than federal law requires when the harms of polluting

transfers are felt elsewhere. And other statutes such

as the Safe Drinking Water Act, see 42 U.S.C. § 300f

et seq., serve distinct and narrow purposes and are not

designed to achieve the Clean Water Act’s goal of

comprehensively protecting the water quality of all

navigable waters.

Respondents’ other attempts to minimize the

impact of the Rule are also without merit. Respondents

are simply incorrect to suggest that any harms under

4

the Rule will be rare because water transfers do not

often have interstate effects (Western Br. 29): as

respondents themselves acknowledge (id. at 5-6),

many significant water transfers that the Rule

exempts from the Act’s permit protections convey

water across state boundaries or into navigable waters

used by residents of multiple States. (See Pet. App.

305a.) Respondents further contend that water

transfers convey only “natural” pollutants—such as

sand or suspended solids—into receiving water bodies.

Western Br. at 1, 23-24. But the water transfers that

led the States to challenge the Rule include transfers

that dumped cancer-causing chemicals or toxic algae

into navigable waters. Pet. 16. And respondents’

characterization of certain pollutants as “natural”—

and thus harmless—improperly ignores the severe

harms that may be caused by transferring pollutants

that are “natural” to one water body (such as heat,

sediment, or marine species) but are highly destructive in another water body.

Respondents’ attempts to minimize the nationwide importance of this case are further belied by the

sheer number and diversity of parties involved here—

including eleven States, dozens of cities and municipalities, and a Canadian province that intervened in

this lawsuit. These respondents confirm that water

transfers are “critically important” (Western Br. 1),

and many of them previously urged the Court to

address the vital issue of whether water transfers are

subject to NPDES permitting. See Br. of Amici Curiae

States in Support of Resp. 4, Friends of the Everglades

v. South Fl. Water Mgmt. Dist., 562 U.S. 1082 (2010)

(Nos. 10-196, 10-252), 2010 WL 4232627 (supporting

respondent’s request for certiorari). Indeed, the grave

importance of the question presented explains why the

5

answer has sharply divided the States for over a

decade. The Court should grant certiorari now that

this critical water-quality issue has finally reached the

Court in a posture appropriate for review.

2. Second, respondents assert that the decision

below does not conflict with decisions of other federal

and state courts that required NPDES permits for

water transfers because those decisions predated the

Water Transfers Rule and did not “‘follow[] from the

unambiguous terms of the statute.’” U.S. Br. 19

(quoting National Cable & Telecomms. Ass’n v. Brand

X Internet Servs., 545 U.S. 967, 982 (2005)). But the

decisions concluding that the discharge prohibition

applies to water transfers all made clear that the

result was dictated by the discharge prohibition’s

plain meaning. Pet. 19-20. And respondents do not

dispute that these courts rejected every interpretive

argument accepted by the decision below, on the

ground that those arguments contradicted the Clean

Water Act’s plain language, structure, and purpose.

Pet. 20-22.

Because the decisions requiring permits for water

transfers thus followed from the “unambiguous plain

meaning” of the discharge prohibition (Pet. App.

104a), they cannot be reconciled with the contrary

conclusion of the court below and the Eleventh Circuit

that the same words in the same discharge prohibition

are ambiguous. See Friends of the Everglades v. South

Fla. Water Mgmt. Dist., 570 F.3d 1210, 1223-27 (11th

Cir. 2009). And EPA’s promulgation of the Rule also

cannot override this judicial conflict because EPA

receives no deference for an interpretation that

conflicts with the Act’s unambiguous meaning. See

Chevron, U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837 (1984).

6

3. Third, respondents defend the decision below as

appropriately upholding EPA’s “longstanding view”

(U.S. Br. 15) that water transfers should be exempt

from the NPDES program because of the burdens that

the permitting process would impose on water

transfers that “remain an integral part of the Nation’s

infrastructure” (id. 5). See also Western Br 1-2, 10-12.

But the vintage of an agency’s incorrect statutory

interpretation cannot override Congress’s clear

contrary judgment—particularly when, as here, the

courts repeatedly rejected EPA’s position. See Pet. 67. And respondents’ concerns about the burdens of

NPDES permits are overstated. Congress has already

provided multiple flexibilities in the NPDES program

to ensure that permits will not impose undue

constraints on essential water transfers. As this Court

has explained, permitting authorities may “control

regulatory costs by issuing general permits to point

sources associated with water distribution programs.”

South Fl. Water Mgmt. Dist. v. Miccosukee Tribe of

Indians, 541 U.S. 95, 108 (2004); see id. at 108 n.*

(general permits “greatly reduce” burdens by allowing

entities to discharge pollutants without “further

action” except adhering to permit). And in issuing

general or individual permits, permitting authorities

may also consider costs in setting effluent limitations,

40 C.F.R. § 125.3, and grant variances from specific

effluent limitations, see id. § 131.13.

Congress further ensured that States may retain

control over any permits issued for their watermovement systems by allowing States to run the

NPDES process within their own jurisdictions, so long

as they meet minimal federal pollution-control

standards. 33 U.S.C. §§ 1313, 1342(b). For example,

Colorado issues NPDES permits within its borders

7

and thus remains free to use the NPDES program’s

built-in flexibilities to alleviate burdens that might

result from requiring permits for water transfers. See

EPA, NPDES State Program Information. New York

City has applied for variances for the Shandanken

Tunnel and has continued to transfer massive amounts

of water while its application is pending. NYC Br. 910. And Pennsylvania has routinely issued NPDES

permits for water transfers without experiencing the

ill effects predicted by respondents. See Br. for

Pennsylvania Dep’t of Environmental Protection 1118, Miccosukee, 541 U.S. 95 (No. 02-626), 2003 WL

22793537.

If requiring permits for water transfers would

actually be too burdensome, Congress remains free to

amend the Act to exempt water transfers from the

discharge prohibition. Indeed, Congress has exempted

specific categories of point-source discharges from

NPDES permitting, often in response to concerns,

similar to the ones raised here, that such discharges

present distinct problems warranting a different

regulatory scheme. (Pet. App. 276a-278a, 280a-284a.)

But absent such an express legislative exemption for

water transfers, EPA and the courts “are required to

give effect to Congress’ express inclusions and

exclusions, not disregard them” by creating an

unauthorized permit exemption from whole cloth. See

National Ass’n of Mfrs. v. Department of Def. (“NAM”),

No. 16-299, slip op. at 14 (U.S. Jan. 22, 2018).

4. Finally, respondents argue that certiorari is not

warranted because EPA reasonably interpreted the

Clean Water Act. Respondents are incorrect.

a. Both ordinary English usage and common sense

compel the conclusion that transferring polluted water

8

from one navigable water body into a separate,

unpolluted navigable water body constitutes an

“addition” of pollutants to “navigable waters,” which

requires a permit. Respondents attempt to infuse this

unambiguous language with uncertainty by asserting

that pollutants are “added” to “navigable waters” only

when the “pollutants are introduced from outside the

waters being transferred”—for example, from “the

transfer activity itself.” U.S. Br. 16. But it makes no

difference to the receiving water body how pollutants

got into the “waters being transferred”: whatever their

origin, the pollutants are unambiguously added to the

receiving water body by the transfer.

The commonsense interpretation of “addition” is

reinforced by the fact that, as several respondents

acknowledge, NPDES permits are designed to protect

the individualized quality of navigable water bodies

that differ markedly from one another. See Western

Br. 2-3. Given the Act’s overwhelming focus on the

water quality of individual water bodies, EPA’s

unitary-waters theory, which treats all navigable

waters as an indistinguishable whole (see U.S. Br. 16),

makes no sense: the Act’s animating purpose is not to

protect some ill-defined conglomerate “waters of the

United States,” but rather the specific water bodies

where people drink, fish, and swim. The court of

appeals improperly disregarded this critical statutory

context in upholding the Rule. See NAM, slip op. at 10

(relying on “text and structure” for statutory

interpretation); Artis v. District of Columbia, No. 16460, dissenting slip op. at 5 (U.S. Jan. 22, 2018)

(Gorsuch, J.) (relying on “textual and contextual clues”

for statutory interpretation).

b. Respondents also assert that EPA properly

relied on various provisions of the Act that purportedly

9

demonstrate Congress’s intent to exempt water

transfers from the Act’s permit program. But this

“holistic approach” to interpreting the Act (Pet. App.

319a) conflicts with this Court’s precedents and is

“completely unmoored” from the Act’s plain language

and purpose. See NAM, slip op. at 17 (rejecting EPA’s

“functional interpretative approach”).

Respondents argue that two provisions of the

Act—concerning the States’ authority over water

allocations—support exempting water transfers from

the permit program. U.S. Br. 17-18; Western Br. 8-9.

But this argument directly conflicts with the Court’s

holding in PUD No. 1 that exactly the same waterallocation provisions do not “limit the scope” of the

Act’s water-quality protections. PUD No. 1 of Jefferson

County v. Washington Dep’t of Ecology, 511 U.S. 700,

720 (1994). EPA attempts to avoid this square conflict

by asserting that the Rule does not exempt all of the

Act’s water-quality protections—only the protections

of the NPDES program. See U.S. Br. 20-21. But this

argument improperly disregards the NPDES program’s

central role in achieving the Act’s water-quality goals.

EPA’s reliance on these water-allocation provisions

also ignores the fact that the same provisions preserve

rather than displace the Act’s focus on protecting

water quality. One of the allocation provisions, 33

U.S.C. § 1370, expressly provides that States must

abide by the Act’s minimum pollution-control measures

(Pet. App. 286a-287a)—sweeping language that necessarily includes the NPDES permit program. And the

legislative history of the other allocation provision, 33

U.S.C. § 1251(g), makes clear that Congress never

intended this provision to exempt States from the

Act’s water-quality controls—even if those controls

might “incidentally affect individual water rights.”

10

123 Cong. Rec. 39,212 (1977) (Sen. Malcolm Wallop,

Wyoming). As EPA explained shortly after § 1251(g)’s

enactment, this provision did not disturb Congress’s

mandate that “without exception ... point source discharges be controlled” through NPDES permitting “to

meet water quality standards.” Mem. from EPA Div.

of Water & Waste Mgmt. to Reg’l Admin’rs, State

Authority to Allocate Water Quantities—Section

101(g) of the Clean Water Act 3 (Nov. 7, 1978).

The Clean Water Act’s provisions addressing

nonpoint source pollutants also do not support the

Rule (see U.S. Br. 18-19) because water transfers, by

definition, convey pollutants through point sources—

which Congress chose to regulate through the NPDES

permit program. EPA had no authority to disregard

Congress’s choice based on EPA’s own policy view that

point-source discharges from water transfers can be

dealt with effectively through nonpoint-source

regulations.

Respondents are also incorrect to assert that the

Rule properly excused water transfers from NPDES

permitting because such transfers do not themselves

generate the pollutants they add to water bodies. See

U.S. Br. 18-19; Western Br. 23-25. Congress has

expressly made point-source operators responsible for

obtaining NPDES permits for all of their discharges of

pollutants—regardless of where the pollutants originated. As this Court has explained, “a point source need

not be the original source of the pollutant” to be

subject to permitting; rather, the point source “need

only convey the pollutant to ‘navigable waters’” to fall

under the NPDES program. Miccosukee, 541 U.S. at

105. Water transfers are plainly subject to the NPDES

permit program under this interpretation.

11

II. The Court of Appeals’ Deference to an

Agency’s Reliance on a Factual Analysis It

Never Conducted Also Merits Certiorari.

Review is also warranted for the separate reason

that the decision below allows EPA and other agencies

to justify regulations based on an asserted factual

analysis that the agency never conducted. This

determination squarely conflicts with decisions of

other circuit courts that have rejected precisely the

same type of unreasonable decision-making under the

principles governing deference to agency decisionmaking set forth in Chevron, 467 U.S. 837. See Pet.

27-29.

Respondents contend (U.S. Br. 29) that EPA was

not required to conduct an empirical analysis of the

costs and benefits of NPDES permitting because it

was merely discerning Congress’s cost-benefit analysis.

But this reasoning improperly collapses the two

distinct steps of the Chevron doctrine, which require

courts to consider first whether any statutory

ambiguity exists and then, if so, whether the agency

reasonably resolved such ambiguity. See Utility Air

Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2439 (2014).

By relying on exactly the same purported congressional intent both to find statutory ambiguity and

then to resolve such ambiguity, EPA simply failed to

exercise any reasoned judgment at step two.

More fundamentally, EPA’s assertion that

Congress has already made a dispositive cost-benefit

analysis contradicts its position that the Act is

ambiguous about whether water transfers are subject

to the NPDES permit program at all. EPA’s ambiguity

argument necessarily implies that Congress left a

policy gap for EPA to resolve. As a result, Congress’s

12

concerns about “water quantity management activities”

and “water resource allocation” (U.S. Br. 29) do not

reflect a conclusive empirical judgment about the costs

and benefits of requiring permits for water transfers,

but rather, at most, identify areas that Congress

intended EPA to address through reasonable exercise

of its expertise. Cf. Michigan v. EPA, 135 S. Ct. 2699,

2707-08 (2015) (interpreting Clean Air Act provision

as requiring EPA to consider economic costs). EPA

simply failed to do so here, instead assuming that

permits would unnecessarily burden water transfers,

without conducting any evaluation—let alone a

detailed or empirical evaluation—of whether any such

burdens existed, whether general permitting or

variances would alleviate any such burdens, or

whether the water-protection benefits of permitting

would outweigh any residual costs. EPA’s justification

of the Rule based on a factual evaluation that it never

conducted reflects quintessentially unreasonable and

arbitrary decision making that does not warrant

deference.

13

CONCLUSION

The petition should be granted.

Respectfully submitted,

ERIC T. SCHNEIDERMAN

Attorney General

State of New York

LEMUEL SROLOVIC

BARBARA D. UNDERWOOD*

Environmental Protection

Bureau Chief

STEVEN C. WU

PHILIP BEIN

Watershed Inspector General

MEREDITH LEE-CLARK

Solicitor General

Deputy Solicitor General

JUDITH N. VALE

Assistant Attorney General

Senior Assistant

Solicitor General

barbara.underwood@ag.ny.gov

February 2018

*Counsel of Record

(Counsel listing continues on next page.)

14

GEORGE JEPSEN

BILL SCHUETTE

Attorney General

State of Connecticut

Attorney General

State of Michigan

55 Elm Street

Hartford, CT 06106

P.O. Box 30755

Lansing, MI 48909

MATT DENN

ROBERT W. FERGUSON

Attorney General

State of Delaware

Attorney General

State of Washington

102 W. Water St.

Dover, DE 19904

2425 Bristol Court SW,

2nd Floor

Olympia, WA 98502

LISA MADIGAN

Attorney General

State of Illinois

100 W. Randolph Street,

12th Floor

Chicago, IL 60601

JANET T. MILLS

Attorney General

State of Maine

6 State House Station

Augusta, ME 04333

GARVEY SCHUBERT BARER

1000 Potomac St., N.W.

Suite 200

Washington, D.C. 20007

Attorneys for the

Province of Manitoba