Petition for Writ of Certiorari — Carlota Copper Co. v. Friends of Pinto Creek (No. 07-1524)

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oO Supreme ¢ ourt, U.8.

A — 071524 JUN 4- 2008

OFFICE OF THE CLERK

gn The

Supreme Court of the Anited States

CARLOTA COPPER COMPANY,

Petitioner,

FRIENDS OF PINTO CREEK, et al.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

RODERICK E. WALSTON

(Counsel of Record)

Best Best & KRIEGER LLP

2001 North Main Street, Suite 390

Walnut Creek, CA 94596

Telephone: (925) 977-3300

Facsimile: (925) 977-1870

COCKLE LAW BRIEF PRINTING CU (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

1. Whether the Ninth Circuit erred in holding —

contrary to this Court’s decision in Arkansas v. Ohkla-

homa, 503 U.S. 91 (1992), a recent Minnesota Supreme

Court decision, and the Environmental Protection

Agency’s interpretation and practice — that the Clean

Water Act, 33 U.S.C. § 1251 et seg., and an implement-

ing regulation, 40 C.F.R. § 122.4(i), prohibit the Envi-

ronmental Protection Agency and the states from

issuing permits for discharges from “new” sources

into “impaired” waters, even though conditions are

imposed that reduce net pollution of such waters and

improve overall water quality.

PARTIES TO THE PROCEEDINGS

Carlota Copper Company is the petitioner in this

Court and was an intervenor in the court of appeals.

The United States Environmental Protection was

the respondent in the court of appeals.

The following parties are respondents in this

Court and were petitioners in the court of appeals:

Friends of Pinto Creek, Grand Canyon Chapter of the

Sierra Club, Maricopa Audubon Society, and Citizens

for the Preservation of Powers Gulch and Pinto

Creek.

CORPORATE DISCLOSURE STATEMENT

Petitioner Carlota Copper Company’s parent

companies are Carlota Holdings Company (formerly

known as Cambior USA, Inc.), a Delaware corpora-

tion; Robinson Holdings (USA) Ltd., a Nevada corpo-

ration; Robinson Holdings (Canada) Ltd., a British

Columbia, Canada, corporation; and Quadra Mining,

Ltd., a British Columbia, Canada, corporation.

Quadra Mining, Ltd., is a publicly traded company

listed on the Toronto Stock Exchange. Carlota Copper

Company, Carlota Holdings Company, Robinson

Holdings (USA) Ltd., and Robinson Holdings (Can-

ada) Ltd., do not issue any shares of stock to the

public.

ill

TABLE OF CONTENTS

) Page

I tl 1

"EEF gas a eee er mE ene E 1

STATUTORY AND REGULATORY PROVI-

EERE CERNE AUPE srg Ca ee Oe ee ea 1

STATEMENT OF THE CASE ................cccceseeeceeeees 1

1. .Statutory and Regulatory Background....... 1

Be I BN oaks crevecccsescscessesccsesceccosss 5

3. Procedural Background............................. atom

REASONS FOR GRANTING THE WRIT.............. . @g

I. THE NINTH CIRCUIT DECISION CON-

FLICTS WITH A RECENT MINNESOTA

SUPREME COURT DECISION ................. 16

Il. THE NINTH CIRCUIT DECISION CON-

FLICTS WITH THIS COURT’S DECI-

SION IN ARKANSAS v. OKLAHOMA ....... 20

A. The Arkansas Decision..................0..0060 20

B. The Ninth Circuit’s Distinction of Ar-

FERS as nose Ne See a ee 23

Ill. THE NINTH CIRCUIT FAILED TO

APPLY THE APPROPRIATE STANDARD

OF REVIEW BY NOT DEFERRING TO

THE ENVIRONMENTAL PROTECTION

AGENCY'S INTERPRETATION OF ITS

NUIT sccccinncchi:cdenmidticcinenctenesnacedbooovnine

“a

TABLE OF CONTENTS -— Continued

Page

IV. THE CLEAN WATER ACT AND THE

REGULATION AUTHORIZE - AND DO

NOT PROHIBIT — THE ISSUANCE OF

PERMITS FOR DISCHARGES INTO IM-

PAIRED WATERS, SUBJECT TO CONDI-

TIONS THAT REDUCE NET POLLUTION

AND IMPROVE WATER QUALITY............ 35

—§ tae

a ect ercintild icntinibsinetinielvogs 38

I ic iliac ietchasrmiicsinneecenii 40

APPENDIX DOCUMENTS

Opinion, U.S. Court of Appeals..................cceeeee App. 1

Order Denying Review, EPA Environmental

I isid cinicillibsincaissinisininsicisinciinpibaiietibaiie App. 25

Order Denying Petition for Rehearing

SE ciibesinipkdeesilibireutniuiniassonstecninseiuctobieeabell App. 221

Statutes and Regulations.......................seceeees App. 222

TABLE OF AUTHORITIES

Page

CASES

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

Auer v. Robbins, 519 U.S. 452 (1997)....... 29, 30, 31, 34

Babbitt v. Sweet Home Chapter, 515 U.S. 687

SST SER Oe OF SP EM Oy CORDS Ee PROSENSE: 30

Baltimore Gas & Elec. Co. v. Natural Resources

Defense Council, Inc., 462 U.S. 87 (1983) .............. 29

Bowles v. Seminole Rock & Sand Co., 325 U.S.

a te 29, 34

Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984) ............ 30

Christensen v. Harris County, 529 U.S. 576

EIS EEE ee re Rn SO re per Te Ce eee OR: 29

Crutchfield v. State Water Control Board, 45

Va.App. 546, 612 S.E.2d 249 (2005) .....14, 18, 19, 33

Friends of Pinto Creek, et al. v. Environmental

Protection Agency, et al., 504 F.3d 1007 (9th

ee I iis citaiinasiehanentcninnnincedtemeighdiondiadiattentet siete aiasuiial 8

Gardebring v. Jenkins, 485 U.S. 415 (1988)........ 29, 31

In re Carlota Copper Company, 11 E.A.D. 692

Re I he cacao nintnceieinnicesiailaigehdad lial 7

In re Cities of Annandale, et al., 731 N.W.2d

Re Cs TONING P ectesisvinsunddcrivinssseaentghinniibaaenaion passim

TABLE OF AUTHORITIES - Continued

Page

In re City of Moscow, 10 E.A.D. 135 (EAB 2001)....... 27

Lyng v. Payne, 476 U.S. 926 (1986)..................008 29, 34

Martin v. Occupational Safety and Health

Review Comm’n, 499 U.S. 144 (1991)............... 29, 34

National Ass’n of Home Builders v. Defenders

of Wildlife, 127 S.Ct. 2518 (2007)................... 2, 5, 30

Natural Resources Defense Council v. Costle,

568 F.2d 1369 (D.C. Cir. 1977).................... 20, 28, 36

Natural Resources Defense Council v. Envi-

ronmental Protection Agency, 915 F.2d 1314

ERR ESR SS ST SS a ETE 26

Pauley v. Director, Office of Worker’s Compensa-

tion Programs, 501 U.S. 680 (1991) .......... ee. 30

Robertson v. Methow Valley Citizens Council,

EE 29

Sierra Club v. Meiburg, 296 F.3d 1021 (11th

EEE EEE ERE COC Ce 26

Sierra Club, et al. v. Clifford, Civ. No. 96-0527

EE ce 31, 32

South Florida Water Management Dist. v.

Miccosukee Tribe, 541 U.S. 95 (2004)...............0.0000. 2

Thomas Jefferson University v. Shalala, 512

eee 29, 24

Udall v. Tallman, 380 U.S. 1 (1965).............. 29, 30, 34

United States v. Larionoff, et al., 431 U.S. 864

Tl sciaecetitontagebetcinen 29

vil

TABLE OF AUTHORITIES - Continued

Page

STATUTES

5 REESE NENESS Sena ODEN RRE eo 27

ET Ra EE IT 1

tae calannall passim

I i epieansnaiiiiaan 11, 37

I i el nhl 1

ES nL RT 2

ESE Ea nr en Ce! 2

A Rs ie GD on cccccscevensecescovseccesenensesenedon 3, 36

NI ee aT TE See IN 3

idl dinhaliai ie ai 3

EE 1

re D .. ccs csnnnsnncessmenematecebebeus 3, 4, 37

sc saiceslenienssiiciaeiniademneniediniiain 3

css cruienaebael ieaiedinnell 26

I eae 6

I acetal 1

EN Se eee me RD re | 2

I i csieiemseeeaianlll 36

EEL TERA OER LCE TE 2, 20

ee esscseonsnsedesmiiaie 2

nc cceconmnusswnionn 2, 20

TS RA RT AE SED IED AIS i 2

vill

TABLE OF AUTHORITIES — Continued

Page

ET ae TRE mR 2

on ceinantsnmininenieninadiadeandl 2

|, ASI ASR 8

FEDERAL REGULATIONS

Ne I iinscsecicccntiinnaininnis sich iaiinetaiieddpatiiethi adie 3

SE Te ae a ae Sor 25

ETN ee ALLIEN aR SET passim

i sain an dcinmtlalnednuianaiitein 2, 20

LA DOT EE REET EEF

Oe EI ocicicicccencncoscnssvecsntccesocctoretiiien 23, 26

I i dc cstshiniemincsiinnaconnabiiognnnil 23, 25

I 0 dinsonesintnenitcasibiebusilnnnnbpnanbianll 3

I 2 clsiediiepeanieienl 3

I rl 4

i sisacitamennniaideenonnntie 4

68 Fed. Reg. 1608 (Jan. 13, 2003)............ cece 33

68 Fed. Reg. 1609-1610 (Jan. 13, 2003)...........00.000.... 33

STATE REGULATIONS

State of Virginia, 9 VAC 25-31-50(C)(9)....... eee. 18

TABLE OF AUTHORITIES — Continued

MISCELLANEOUS

Supreme Court Rule 10(a) .................ccccsccseeeseseees 15, 16

EPA, National Water Quality Inventory: Report

to Congress, 2002 Reporting Cycle, at ES-2

a sibstenenecoes g

U.S. Environmental Protection Agency, Na-

tional Pollutant Discharge Elimination Sys-

tem, http://c{pub.epa.gov/npdes (last accessed

FREES ISIS PRES ae oN Aa 10

U.S. Environmental Protection Agency, Na-

tional Pollutant Discharge Elimination Sys-

tem, http://cfpub.epa.gov/npdes/statestats.cfm

(last accessed Mar. 27, 2008)........................0.c0000- 2-3

OPINIONS BELOW

The Ninth Circuit’s opinion (App. 1) is reported

at 504 F.3d 1007. The opinion of the U.S. Environ-

mental Protection Agency Environmental Appeals

Board (App. 25) is reported at 11 E.A.D. 692 (EAB

2004).

JURISDICTION

The Ninth Circuit issued its judgment on October

4, 2007. App. 1. The Ninth Circuit denied Carlota

Copper Company's timely petition for rehearing en

banc on March 7, 2008. App. 221. This Court has

jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY AND

REGULATORY PROVISIONS

The relevant provisions of sections 301, 306 and

402 of the Clean Water Act, 33 U.S.C. §§ 1311, 1316,

1342, and 40 C.F.R. § 122.4(i), are set forth in the

Appendix. App. 222-226.

STATEMENT OF THE CASE

1. Statutory and Regulatory Background

The Clean Water Act (“Act”), 33 U.S.C. § 1251 et

seq., prohibits the discharge of pollutants except as

authorized by specific provisions of the Act. 33 U.S.C.

§§ 1311(a). One such provision, section 402, estab-

lishes the National Pollutant Discharge Elimination

System (NPDES); the NPDES authorizes the Envi-

ronmental Protection Agency (EPA) to issue permits

for discharges of effluent from point sources, such as

pipes and conduits, into water.' 33 U.S.C. §§ 1342(a),

1362(14); App. 223. The permits must establish

effluent limits for the discharges based on technologi-

cally-based standards. Id. at § 1311(b)(1)(A).

The EPA is required to delegate its NPDES

permit authority to a state, if the state submits a

program that meets statutory criteria. 33 U.S.C.

§ 1342(b); National Ass’n of Home Builders v. Defend-

ers of Wildlife, 127 S.Ct. 2518, 2525 (2007). These

statutory criteria establish requirements similar to

those applicable to the EPA-administered program. 33

U.S.C. § 1342(b) 1A); 40 C.FR. § 123.25. The EPA

program must, in turn, meet the “same terms, condi-

tions, and requirements” applicable to the state

programs. 33 U.S.C. § 1342(a\3). Thus, the same

statutory requirements apply to both the EPA and

state programs. To date, forty-five states have been

delegated authority to administer their NPDES

permit programs. U.S. Environmental Protection

Agency, National Pollutant Discharge Elimination

' More precisely, the NPDES applies to discharges into

“navigable waters,” 33 U.S.C. § 1362/12), which is defined as

“waters of the United States,” id. at § 1362/7). See South Florida

Water Management Dist. v. Miccosukee Tribe, 541 U.S. 95 (2004).

System, http://cfpub.epa.gov/npdes/statestats.cfm (last

accessed Mar. 27, 2008).’

Although the NPDES focuses on the discharge of

pollutants from point sources, the Act also establishes

controls for the quality of the receiving waters. Sec-

tion 303 requires the states to adopt “water quality

standards” for bodies of water, such as rivers and

lakes. 33 U.S.C. $ 1313(a). If a water body fails to

meet the water quality standards, the state must

adopt a “Total Maximum Daily Load” (TMDL) for the

water body. Jd. at § 1313(d). A TMDL establishes the

maximum “load” of pollutants that a water body can

receive from all sources, including both point sources

and non-point sources, without violating state water

quality standards. 40 C.F.R. §§ 130.2(g)-(i), 130.7(c)(1).

Under section 301(b)(1)(C), an NPDES permit must

require that the permitted discharges comply with

applicable state water quality standards. 33 U.S.C.

§ 1311(b)(1\C); 40 C.F.R. § 122(d).

Another provision, section 306, requires the EPA

to adopt “national standards of performance” for “new

sources,” that is, sources constructed after adoption of

the national performance standards. 33 U.S.C.

§ 1316(a)(1), -(a)(2); App. 223. The national perform-

ance standards must reflect “the greatest degree of

effluent reduction” that can be achieved through the

* The only states that have not been delegated such author-

ity are Alaska, Idaho, Massachusetts, New Hampshire and New

Mexico. Jd.

best available technology. 33 U.S.C. § 1316(a)(1).

The EPA has promulgated national standards of

performance for several categories of point sources,

including copper-producing mines, which include

Carlota Copper Company’s mining project. 40 C.F.R.

§§ 440.100 et seg., 440.100(a){1).

Pursuant to section 306, the EPA has adopted a

regulation authorizing the issuance of NPDES per-

mits for discharges by a “new source” or “new dis-

charger” into waters that do not meet state water

quality standards. 40 C.F.R. § 122.4(i); App. 224.° The

first sentence of the regulation prohibits the issuance

of a permit if the discharge will “cause or contribute

to the violation of water quality standards.” Jd. The

second sentence provides that — if a TMDL has been

* 40 C.F.R. section 122.4(i) provides in relevant part:

No permit may be issued .. . [{) [tlo a new source or a

new discharger, if the discharge from its construction

or operation will cause or contribute to the violation of

water quality standards. The owner or operator of a

new source or new discharger proposing to discharge

into a water segment which does not meet applicable

water quality standards . .. and for which the State or

interstate agency has performed a pollutants load al-

location for the pollutant to be discharged, must dem-

onstrate, before the close of the public comment, that:

(1) There are sufficient remaining pollutant load al-

locations to allow for the discharge; and

(2) The existing dischargers into that segment are

subject to compliance schedules designed to bring the

segment into compliance with applicable water qual-

ity standards.

adopted that establishes load allocations for the

waters — the discharger must demonstrate that (1)

there are “sufficient remaining pollutant load alloca-

tions” for its discharge, and (2) “existing dischargers”

are subject to “compliance schedules” designed to

achieve compliance with water quality standards. /d.

2. Factual Background

In 1996, Carlota Copper Company (“Carlota”)

applied to the EPA for an NPDES permit authorizing

discharges from a copper mine that Carlota planned

to build and operate in Arizona. The discharges will

consist of storm water runoff, containing detectable

amounts of copper, during extreme storms. The

discharges will reach Pinto Creek, which does not

meet Arizona’s water quality standards for copper.

The EPA has adopted a TMDL establishing copper

load allocations for Pinto Creek, including specific

load allocations for Carlota’s storm water runoff. App.

44, 172.

In 2000, four years after Carlota’s application,

the EPA issued an NPDES permit to Carlota author-

izing the storm water discharges into Pinto Creek.*

The permit contained an offset condition designed to

* Although Arizona, where Carlota’s mine is located,

received approval to administer its NPDES program as a result

of this Court’s decision in National Ass'n of Home Builders v.

Defenders of Wildlife, 127 S.Ct. 2518 (2007), the EPA issued the

permit before Arizona received such approval, and has continued

to exercise jurisdiction over the permit since then.

improve the creek’s water quality and ensure compli-

ance with Arizona’s water quality standards. App. 42.

The condition requires Carlota to offset the storm

water discharges by remediating — that is, removing —

copper pollution at an abandoned upstream mine, the

Gibson Mine, located on the same creek. App. 42.° The

EPA’s Environmental Appeals Board determined that

the copper loadings that will be remediated at the

abandoned mine “far exceed Carlota’s projected

copper loadings” from the storm water runoff, and

thus the offset condition will result in a “significant

improvement” of the creek’s water quality. App. 122,

124.°

The permit also requires that Carlota’s dis-

charges comply with Arizona’s water quality stan-

dards. App. 42 n. 19. The State of Arizona has

certified, pursuant to section 40l(a) of the Act, 33

U.S.C. § 1341(a), that, in light of the offset condition,

* Carlota has largely completed construction of its mine

pursuant to the EPA permit, and has already remediated

pollution at the Gibson Mine. Carlota does not have any owner-

ship or operational interest in the Gibson Mine.

* The permit authorizes Carlota to discharge from Outfall

no. 005 — the outfall involved in this case — only the amount of

storm water runoff that exceeds a 100-year, 24-hour storm

event, i.e., 6.2 inches of rainfall. App. 119. The EPA determined

that the amount of copper pollutants added to Pinto Creek from

Carlota’s storm water discharges would be 2.01 kilograms per

day (kg/day), compared with the reduction of copper pollutants

resulting from remediation of the abandoned Gibson Mine of

83,138 kg/day, App. 122 — a reduction of more than 40,000 times

the pollution caused by Carlota’s storm water discharges.

Carlota’s discharges will meet Arizona’s water quality

standards. App. 42, 44 n. 21.

The EPA concluded that Carlota’s discharges will

not “cause or contribute” to a violation of water

quality standards and are not prohibited by the Act or

the regulation, because the offset condition will

reduce net pollution in Pinto Creek and Arizona has

certified that the discharges will meet its water

quality standards. App. 170. Based on these findings,

the EPA issued the permit. /d.

3. Procedural Background

Friends of Pinto Creek, et al. (“Friends”), filed a

petition for review with the EPA’s Environmental

Appeals Board, challenging the EPA's issuance of the

permit. The Appeals Board, in a 136-page opinion,

concluded that the permit had been properly issued

under the Act and the regulation, and denied review.

In re Carlota Copper Company, 11 E.A.D. 692 (EAB

2004); App. 25.’

‘ The EPA’s Regional Office [IX had concluded that the

second sentence of the regulation — which establishes load

allocations and compliance schedules requirements — does not

apply to discharges, such as Carlota’s, that do not “cause or

contribute” to water quality violations and are not prohibited by

the first sentence of the regulation. App. 163 n. 101. The EPA

Appeals Board “assume[d], without deciding,” that both sen-

tences apply, id., and concluded that Carlota’s discharges comply

with both sentences. App 163 n. 101, 164-176.

Friends filed a petition for review in the Ninth

Circuit pursuant to section 509(b)(1)(F) of the Act, 33

U.S.C. § 1369(b)\(1)(F), again challenging the EPA’s

issuance of the permit. The EPA was the respondent

and Carlota was granted intervention.

The Ninth Circuit held that the permit violates

the Act and the regulation, 40 C.FR. § 122.4(i).

Friends of Pinto Creek, et al. v. Environmental Protec-

tion Agency, et al., 504 F.3d 1007 (9th Cir. 2007); App.

1. The court held that the Act and regulation prohibit

new source discharges into “impaired waters” — i.e.,

waters that do not meet state water quality stan-

dards — and that “there is nothing in the Clean Water

Act or the regulation that provides an exception for

an offset when the waters remain impaired and the

new source is discharging pollution into that im-

paired water.” App. 10-11. The court concluded,

without any citation to authority, that Carlota’s

discharges “cause or contribute” to water quality

violations, as prohibited by the regulation. Jd. The

court also held that Carlota’s discharges do not com-

ply with the second sentence of the regulation, which

authorizes new source discharges if (1) there are

“sufficient remaining pollutant load allocations” and

(2) “existing dischargers” are subject to “compliance

schedules.” App. 11-12. The court vacated and re-

manded the permit to the EPA. App. 24.

REASONS FOR GRANTING THE WRIT

This petition raises the question whether the

Clean Water Act (“Act”) and an implementing EPA

regulation, 40 C.F.R. § 122.4(i), prohibit the EPA and

the states from issuing permits for discharges from

“new” sources into “impaired” waters — that is, waters

that do not meet state water quality standards — if

conditions are imposed that reduce net pollution of

such waters and improve overall water quality. The

Act authorizes the EPA to issue NPDES permits for

point source discharges into water, including new

sources of discharge, and requires that the discharges

comply with state-established water quality stan-

dards. The Act also requires the EPA to delegate its

NPDES permit authority to a state, if the proposed

state program meets the statutory criteria. The

question presented is whether the EPA — and states

that have NPDES-delegated authority — may properly

issue NPDES permits for new source discharges into

impaired waters subject to conditions that reduce net

pollution and improve water quality.

This issue is one of national importance. Accord-

ing to the EPA, 45% of the nation’s rivers and

streams, and 47% of its lakes, ponds and reservoirs,

are considered “impaired or not clean enough to

support their designated uses, such as fishing and

swimming.” EPA, National Water Quality Inventory:

Report to Congress, 2002 Reporting Cycle, at ES-2

(October 2007). If the EPA and the states cannot

approve new source discharges into impaired waters,

they would be unable to approve the construction and

operation of new projects and facilities that discharge

into almost one-half of the nation’s waters. These

projects and facilities consist of the national infra-

structure necessary to accommodate much of the

nation’s population growth and economic develop-

ment — commercial and residential development

projects, public waste treatment facilities, industrial

projects, mining projects, agricultural operations, and

others.° Thus, this issue has broad national signifi-

cance.

In administering their NPDES permit programs,

the EPA and the states do not categorically prohibit

new source discharges into impaired waters. Instead,

they determine on a case-by-case basis whether to

approve such discharges, depending on whether the

discharges will adversely affect water quality and

whether conditions can be imposed that would im-

prove water quality. This approach allows the EPA

and the states to exercise discretion and flexibility in

administering their NPDES programs, by approving

discharges into impaired waters in individualized

* According to the EPA, NPDES permits are typically

required for discharges from certain municipal facilities (such as

publicly owned treatment works and wastewater systems, and

municipal storm sewer systems), industrial and commercial

facilities, some agricultural operations (such as animal feeding

operations), and construction activities and other land-

disturbing activities that involve one acre or more, among

others. U.S. Environmental Protection Agency, National] Pollut-

ant Discharge Elimination System, http://cfpub.epa.gov/

npdes (last accessed April 11, 2008).

cases subject to conditions that reduce net pollution

and improve overall water quality. The most common

example of such a condition is an “offset.” An offset

condition requires the discharger to offset its pollu-

tion by remediating more pollution from other sources

than is caused by discharges from its own source — in

effect, to remove more pollutants from the impaired

waters than it adds. By requiring remediation of

other sources of pollution, an offset condition reduces

net pollution and improves overall water quality, and

facilitates compliance with water quality standards.

Such environmental “tradeoffs” allow the EPA and

the states to approve new projects and facilities that

discharge into impaired waters while still achieving

the Act’s goal, which is to “restore and maintain”

water quality. 33 U.S.C. § 125l(a). Such tradeoffs

provide a practical solution to the competing de-

mands of developing new infrastructure projects and

protecting water quality by allowing fulfillment of

both within the statutory framework.

In this case, the EPA issued an NPDES permit

authorizing Carlota to discharge storm water runoff

during extreme, 100-year storms into an impaired

creek, and imposed an offset condition requiring

Carlota to remediate pollution at an abandoned

upstream mine that discharges mining waste into the

creek. The EPA determined that the permit and

condition will greatly improve the creek’s water

quality, because the upstream pollution that Carlota

is required to remediate greatly exceeds in amount

(and occurs more frequently than) the pollution

caused by Carlota’s nominal storm water runoff. The

permit also requires that Carlota’s storm water

discharges comply with Arizona’s water quality

standards. Arizona has certified that the discharges

will comply. with its water quality standards by

improving the creek’s water quality.

The Ninth Circuit invalidated the permit on

grounds that the Act and the EPA regulation prohibit

new source discharges into impaired waters and

make no exception for offset conditions that improve

water quality. The decision precludes the EPA and the

states from determining, on a case-by-case basis,

whether specific discharges will adversely affect

water quality, and if so, whether conditions can and

should be imposed that reduce net pollution and

improve water quality. The decision thus precludes

the EPA and the states from approving infrastructure

projects designed to improve water quality, if the

projects discharge into impaired waters. For example,

the decision would prohibit a municipal sewage

agency from being allowed to replace an old, out-of-

date sewage treatment facility with a modern, state-

of-the-art facility that produces cleaner effluent.

Under the Ninth Circuit decision, the EPA and the

states have no discretion to approve discharges into

impaired waters, regardless of the water quality

effects of the discharges and regardless of whether

conditions can be imposed to avoid these effects. No

other court has held or suggested that the Act and the

regulation impose such stringent restrictions on the

permitting agencies’ discretion in administering their

NPDES programs.

The Ninth Circuit decision conflicts with this

Court’s decision in Arkansas v. Oklahoma, 503 U.S.

91 (1992). There, this Court held that the EPA and

the states have “broad authority” under the Act’s

NPDES provisions to develop “long-range, areawide

programs” to prevent water pollution, and that they

may approve new source discharges into impaired

waters if this would “improve existing conditions.”

Arkansas, 503 U.S. at 108. Although the Court did

not specifically consider the validity of offset condi-

tions, its decision strongly implies that such condi-

tions are valid, because offset conditions “improve

existing conditions” by reducing net pollution. While

Arkansas held that the permitting agencies have

“broad authority” under the Act, the Ninth Circuit

held that their discretion is very narrow.

The Ninth Circuit failed to apply the proper

standard of review in interpreting the EPA’s regula-

tion, by not deferring to, and instead rejecting, the

EPA’s interpretation. The EPA has interpreted its

regulation as authorizing the EPA and the states, in

their discretion, to approve new source discharges

into impaired waters subject to offset conditions that

reduce net pollution and improve water quality, and

the EPA’s administrative practice has conformed to

that interpretation. This Court has held that the

courts should defer to an agency’s interpretation of

its regulation, unless the “plain language” dictates

otherwise — and no such contrary “plain language”

appears in the agency regulation here. The Ninth

Circuit’s failure to apply the appropriate standard of

review in interpreting the EPA regulation provides an

additional ground for review of its decision.

Most significantly, the Ninth Circuit decision

conflicts with recent state court decisions, particu-

larly a Minnesota Supreme Court ‘tecision. The

Minnesota Supreme Court recently hela that the Act

and the regulation authorize Minnesota’s NPDES-

permitting agency to approve new source discharges

into impaired waters, subject to offset conditions that

prevent impairment of water quality. Jn re Cities of

Annandale, et al., 731 N.W.2d 502: (Minn. 2007). The

Minnesota Supreme Court substantially relied on this

Court’s decision in Arkansas, which as noted above

held that the EPA and the states may flexibly ap-

prove new source discharges into impaired waters if

they “improve existing conditions.” Arkansas, 503

U.S. at 108. Similarly, the Virginia Court of Appeals

recently held that Virginia’s NPDES-permitting

agency can properly approve new source discharges

into impaired waters subject to limitations that

improve water quality. Crutchfield v. State Water

Control Board, 45 Va.App. 546, 612 S.E.2d 249

(2005). The Minnesota and Virginia decisions allow

the permitting agencies to flexibly decide on a case-

by-case basis whether to approve new source dis-

charges into impaired waters, depending on their

water quality effects. The Ninth Circuit decision, by

contrast, precludes the agencies from approving such

discharges regardless of their water quality effects.

Since the Ninth Circuit decision conflicts with the

decision of the Minnesota Supreme Court, which is

Minnesota’s “state court of last resort,” this case is

appropriate for a grant of certiorari on that ground

alone under Supreme Court Rule 10(a).

As a result of the conflict between the Minnesota

and Virginia decisions and the Ninth Circuit decision,

the rules applicable to the states’ NPDES permit

programs in Minnesota and Virginia — and in other

states that follow the court decisions of those two

states — are different from the rules applicable to the

EPA’s NPDES permit program under the Ninth

Circuit decision. Under the Act, however, the EPA and

the state programs are governed by the same re-

quirements and cannot properly be subject to differ-

ent rules. To date, forty-five states have been

authorized to administer their own NPDES pro-

grams. Thus, the Ninth Circuit decision has a poten-

tially far-reaching effect on state water quality

programs throughout the nation.

The conflict created by the Ninth Circuit decision

will continue to exist regardless of whether the EPA

seeks review of the decision. If, for example, the EPA

decides no longer to apply offset conditions because of

the Ninth Circuit decision, the states’ authority to

apply such conditions under the Minnesota and

Virginia decisions would remain unaffected. This

Court can resolve the conflict concerning the national

rules governing the NPDES program, and should do

so.

I. THE NINTH CIRCUIT DECISION CON-

FLICTS WITH A RECENT MINNESOTA

SUPREME COURT DECISION.

Under Rule 10(a) of the Supreme Court Rules,

one of the grounds for granting a writ of certiorari is

where “a United States court of appeals ... has

decided an important federal question of law in a way

that conflicts with a decision by a state court of last

resort....” The Ninth Circuit decision directly con-

flicts with the Minnesota Supreme Court’s recent

decision in In re Cities of Annandale, et al., 731

N.W.2d 502 (Minn. 2007). Under Rule 10(a), this case

is appropriate for the grant of a writ of certiorari on

that ground.

In Annandale, the Minnesota Supreme Court

held that the Act and the EPA regulation, 40 C.F.R.

§ 122.4(i), authorized the Minnesota Pollution Con-

trol Agency (MPCA), which administers the NPDES

program in Minnesota, to issue permits for new

source discharges into impaired waters, subject to

offset conditions that prevent impairment of water

quality. There, the permit authorized a municipal

waste treatment agency to discharge a pollutant

(phosphorus) from a new waste treatment facility

into impaired waters, and contained an offset condi-

tion requiring the agency to remove substantially

more phosphorus from an old, out-of-date treatment

facility than was added by the new facility. The Court

held that — because of the offset condition — the

discharges did not “cause or contribute” to water

quality violations in the watershed, and therefore

were not prohibited by the EPA regulation. 731

N.W.2d at 516-522. This conclusion, the Court stated,

was supported by the U. S. Supreme Court’s decision

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

will be discussed in the next part of this petition, and

which had held that “nothing in the Act” “prohibit(s]

any discharge of effluent that would reach waters in

violation of existing water quality standards.” 731

N.W.2d at 520, 524; Arkansas, 503 U.S. at 107. Citing

the Arkansas decision, the Minnesota Supreme Court

stated that its conclusion is consistent with the Act’s

goal of granting “flexibility and broad authority” to

the EPA and the states to develop “long-range, area-

wide programs” for water quality. 731 N.W.2d at 524.

The Court stated:

[W]e conclude that, when dealing with a

situation like the one presented in this case —

two aging wastewater treatment facilities

with expired NPDES permits, which are at

or near capacity ‘n a region of the state that

is experiencing significant growth — it was

not unreasonable for the MPCA to allow a

2,200-pound per year (at capacity) increase

in phosphorus discharge from a new waste-

water treatment facility to be offset by a con-

temporaneous 53,500-pound per _ year

decrease in a nearby facility that is located

in the same watershed.

Id. at 524. Thus, the Minnesota Supreme Court

decision held that both the Act — as interpreted by

this Court's decision in Arkansas — and the regulation

authorize the EPA and the states to approve new

source discharges into impaired waters subject to

offset conditions that improve water quality.

The Virginia Court of Appeals followed the same

approach in Crutchfield v. State Water Control Board,

45 Va.App. 546, 612 S.E.2d 249 (2005). There, the

court held that the Act and a Virginia regulation

identical to the EPA regulation’ authorized Virginia’s

State Water Control Board, which administers the

NPDES program in that state, to issue a permit

allowing the discharge of treated effluent from a new

waste treatment plant into impaired waters. The

permit contained a limitation — described as a “self-

sustaining limit” — that protected water quality and

required compliance with Virginia’s water quality

standards. The limitation required that the concen-

tration of the pollutant (dissolved oxygen) in the

discharged effluent must be lower than the concen-

tration of the pollutant in the river — in effect, that

the water quality of the discharges must be higher

than the water quality of the river. The court held

that since the water quality of the discharges must be

higher than that of the river, the discharges will

actually improve the river’s water quality and reduce

net pollution. The court concluded that the discharges

will comply with water quality requirements and that

* The Virginia regulation, 9 VAC 25-31-50(C)\(9), contains

identical language to that found in the EPA regulation, 40 C.F.R.

§ 122.4(i). See Crutchfield, 45 Va_App. at 557-558, 612 S.W.2d at

255.

the permit did not violate the Act or the regulation.

Crutchfield, 45 Va.App. at 557, 612 S.E.2d at 255.

The Minnesota and Virginia decisions allow the

agencies administering the NPDES program to

flexibly decide, on a case-by-case basis, whether

specific discharges into impa‘red waters will meet

water quality standards, ard if not, whether condi-

tions can and should be imposed that will ensure that

the standards are met. Although the permit condi-

tions in the Minnesota and Virginia cases were differ-

ent — one was an offset condition and the other a

“self-sustaining limit” — both conditions reduced net

pollution and improved water quality, and both

facilitated compliance with state water quality stan-

dards. Rather than categorically prohibiting the

discharges, the Minnesota and Virginia decisions

approved the discharges because, as limited by their

conditions, they would improve rather than impair

water quality. The Ninth Circuit decision, by contrast,

prohibits discharges into impaired waters regardless

of their water quality effects, and regardless of

whether conditions can be imposed to protect water

quality. Although the Minnesota and Virginia deci-

sions required a case-by-case analysis of water qual-

ity effects, the Ninth Circuit adopted a blanket

approach that disregards such effects.

The Ninth Circuit decision, which greatly cir-

cumscribes the discretion of the EPA and the states in

administering their NPDES programs, directly con-

flicts with the Minnesota and Virginia decisions,

which broadly interpret their discretion. Because of

the conflict, the rules governing the states’ NPDES

programs in Minnesota and Virginia are different

from those governing the EPA program under the

Ninth Circuit decision. Under the Act, however, the

same NPDES permit requirements apply to both the

EPA’s program and the states’ programs. 33 U.S.C.

§§ 1342(a)(3), -(b)(1A); 40 C.F.R. § 123.25. Other

states that administer their NPDES programs -—

forty-five states have been granted such authority to

date — are apparently free to follow the Minnesota

and Virginia decisions, which allow them flexibility in

administering their NPDES programs, or instead to

follow the Ninth Circuit decision, which precludes the

exercise of flexibility. This Court should review this

case to resolve the conflict concerning the national

rules governing the Act’s NPDES program, which is

the “primary means” for achieving the Act’s effluent

limit goals. Natural Resources Defense Council v.

Costle, 568 F.2d 1369, 1371 (D.C. Cir. 1977).

II. THE NINTH CIRCUIT DECISION CON-

FLICTS WITH THIS COURT’S DECISION

IN ARKANSAS v. OKLAHOMA.

A. The Arkansas Decision

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

this Court held that the Act authorizes the EPA and

the states, in administering their NPDES programs,

to issue permits for new source discharges into im-

paired watcrs. There, the EPA issued an NPDES

permit for a sewage treatment plant in Arkansas,

which authorized discharges of effluent into Arkansas

waters that reached impaired waters in Oklahoma.

The permit contained limitations and conditions

requiring that the discharges comply with Okla-

homa’s water quality standards. The EPA approved

the permit because it would not cause detectable

violations of Oklahoma’s water quality standards.

The Tenth Circuit reversed the EPA’s approval of the

permit, holding that the Act “requires that ‘where a

proposed source would discharge effluents that would

contribute to conditions currently constituting a

violation of applicable water quality standards, such

[a] proposed source may not be permitted.” 503 U.S.

at 98. This Court reversed the Tenth Circuit, stating:

The Court of Appeals construed the Clean

Water Act to prohibit any discharge of efflu-

ent that would reach waters already in viola-

tion of existing water quality standards. We

find nothing in the Act to support this read-

ing.... [9] [Rlather than establishing the

categorical ban announced by the Court of

Appeals — which might frustrate the con-

struction of new plants that would improve

existing conditions — the Clean Water Act

vests in the EPA and the States broad au-

thority to develop long-range, areawide pro-

grams to alleviate and eliminate existing

pollution.

503 U.S. at 107, 108.

The Court’s above-quoted statement — that the

EPA and the states have “broad authority” to develop

“long-range, areawide programs to alleviate and

eliminate existing pollution” and to allow construc-

tion of “new plants” that would “improve existing

conditions” — strongly suggests that the EPA and the

states have broad authority to approve discharges

into impaired waters subject to offset conditions,

because offset conditions “improve existing condi-

tions” by reducing net pollution. Although the Court

did not specifically consider the validity of offset

conditions, the Court’s analysis strongly suggests that

such conditions are valid. The Arkansas decision,

unlike the Ninth Circuit decision here, held that the

permitting agencies have broad rather than narrow

discretion in deciding whether to approve new source

discharges into impaired waters.

Indeed, the Minnesota Supreme Court in Annan-

dale substantially relied on the Arkansas decision in

upholding the validity of the offset condition in that

case. Annandale, 731 N.W.2d at 520, 525. The Minne-

sota Supreme Court stated that the opposite view —

that offset conditions are invalid — would “perpetuate

the very outcome the Supreme Court sought to avoid

with its decision in Arkansas v. Oklahoma — namely,

the adoption of such a rigid approach that construc-

tion of new facilities that would improve existing

conditions would be thwarted.” Jd. at 525.

B. The Ninth Circuit’s Distinction of

Arkansas

The Ninth Circuit distinguished Arkansas on the

ground that Arkansas simply rejected a “categorical

ban” on discharges into impaired waters, and the EPA

regulation does not impose a categorical ban but

instead allows such discharges under limited circum-

stances. App. 14-17. As noted earlier, the second

sentence of the EPA regulation authorizes discharges

into impaired waters if a TMDL establishing load

allocations has been adopted for the waters, and if (1)

there are “sufficient remaining pollutant load alloca-

tions” for the proposed discharge and (2) “compliance

schedules” have been adopted for “existing discharg-

ers” to achieve compliance with water quality stan-

dards. Id.; 40 C.F.R. § 122.4(i)(1), -(i)(2). The Ninth

Circuit held that since the regulation authorizes

discharges into impaired waters under limited condi-

tions, Arkansas does not apply. App. 17."

'° Carlota argued in the case below that the second sentence

of the EPA regulation does not apply to discharges, such as those

involved here, that are not prohibited by the first sentence,

which prohibits discharges that “cause or contribute” to water

quality violations. Since the purpose of the second sentence is to

allow discharges into impaired waters even though they “cause

or contribute” to water quality violations and are thus otherwise

prohibited by the first sentence, it would be illogical to apply the

second sentence to discharges that do not fall within the prohibi-

tory scope of the first sentence. In the case below, the Ninth

Circuit “assume([d], without deciding,” that both sentences apply

to all discharges into impaired waters, because the EPA's

Appeals Board had also “assume[d], without deciding,” that both

(Continved on following page)

The Ninth Circuit’s distinction of Arkansas is

misplaced for two main reasons. First, Arkansas did

not hold simply that the Act does not impose a “cate-

gorical ban” on discharges into impaired waters, as

the Ninth Circuit stated. Rather, Arkansas held, more

broadly, that the EPA and the states have “broad

authority” to develop “long-range, area-wide pro-

grams” to accommodate new sources of development

in ways that will “improve existing conditions.” 503

U.S. at 108. Thus, Arkansas held that the EPA and

the states have broad discretion and flexibility in

administering their permit programs, and in deciding

whether and under what conditions to approve new

source discharges into impaired waters. The decision

does not narrowly hold, as the Ninth Circuit sug-

gested, that their only discretion is in not categori-

cally prohibiting such discharges. Under Arkansas,

the agencies’ discretion in administering their

NPDES programs is broad and substantial, not, as

the Ninth Circuit held, narrow and cramped.

Second, the Ninth Circuit interpreted the EPA

regulation as imposing such rigid limitations on

discharges into impaired waters that the practical

effect is to virtually — if not categorically — prohibit all

sentences apply. App. 13, 163 n. 101; see note 7, supra. The

question whether both sentences of the regulation apply to all

new source discharges into impaired waters — even where the

discharges do not “cause or contribute” to water quality viola-

tions and are not prohibited by the first sentence — is encom-

passed within the questions presented for review.

such discharges, contrary to the Arkansas decision.

The Ninth Circuit rejected the EPA’s position tliat the

regulation does not impose these rigid limitations.

More specifically, the Ninth Circuit held that the

regulation prohibits discharges into impaired waters

unless the EPA has issued compliance schedules for

both permitted and non-permitted point source dis-

chargers. App. 12. The regulation provides that

compliance schedules must be issued for “existing

dischargers,” 40 C.F.R. § 122.4(i)(2), and the Ninth

Circuit construed “existing dischargers” as referring

to all point source dischargers, whether permitted or

not. App. 12. On the contrary, and as the EPA has

concluded, “existing dischargers” refers to permitted

point source dischargers, because a “schedule of

compliance” is defined under the regulations as a

“schedule of remedial measures included in a ‘per-

mit.’” App. 174-175, & n. 108; 40 C.F.R. § 122.2

(emphasis added). In holding otherwise, the Ninth

Circuit misquoted the regulation — stating that it

refers to “existing discharges” rather than “existing

dischargers,” App. 12 (emphasis added) — and then

relied on its misquotation to extend the regulatory

reach to non-permitted dischargers."

" The Ninth Circuit stated that the regulation requires that

compliance schedules must be adopted for “existing discharges,”

App. 12 (emphasis added), although the regulation requires

instead that such schedules must be adopted for “existing

dischargers.” 40 C.F_.R. § 122.4(iX2) (emphasis added). The court

then stated that the misquoted word — “discharges” —- refers to

(Continued on following page)

Additionally, the Ninth Circuit held that — if com-

pliance schedules for permitted point source discharg-

ers are insufficient to achieve water quality compliance

— compliance schedules must also be adopted for non-

point source dischargers. App. 16. Under the Act, how-

ever, non-point source dischargers are not subject to

regulation under the NPDES, and instead are regu-

lated by the states. 33 U.S.C. § 1329; Sierra Club v.

Meiburg, 296 F.3d 1021, 1026 (11th Cir. 2002); Natural

Resources Defense Council v. Environmental Protection

Agency, 915 F.2d 1314, 1316 (9th Cir. 1991). The Ninth

Circuit improperly extended NPDES requirements to

non-point source dischargers not subject to NPDES

regulation, and imposed on EPA a permitting responsi-

bility beyond its statutory authority.

Finally, the Ninth Circuit held that the regula-

tion prohibits discharges into impaired waters unless

the EPA determines not only that the TMDL load

allocations are “sufficient” for the proposed discharge,

as the regulation expressly requires, 40 C.F.R.

§ 122.4(i1)(1), but also that TMDL load allocations will

be “met .. . under existing circumstances,” App. 11-12

— in other words, that other dischargers will meet

their own load allocations. The latter requirement

does not appear in the regulation.”

the “discharge of a pollutant” and therefore the regulation

applies to “any” point source discharge, not just “permitted”

point source discharges. App. 12.

‘* The EPA's Appeals Board determined that the regulation re-

quires only a showing that there are “sufficient” load allocations

(Continued on following page)

To summarize, the Ninth Circuit held that the

EPA — and by extension, the states — are prohibited

from approving new source discharges into impaired

waters unless the following requirements are met: (1)

unpermitted point source dischargers have been

identified and contacted, and permits containing

compliance schedules have been issued to them —-

which, as in Carlota’s case, may take many years, or

even be impossible because the discharge may be

from an “orphan” source (such as an abandoned mine)

with no solvent entity that can be subjected to permit

conditions; (2) if necessary, non-point source discharg-

ers who are noi subject to NPDES regulation have

also been identified and contacted, and compliance

schedules have also been issued for them; and (3) the

permitting agency has determined not only the suffi-

ciency of TMDL load allocations for the discharger

but also that other dischargers will meet their own

TMDL load allocations.

None of the above italicized requirements ap-

pears in the regulation. The Ninth Circuit held,

for the proposed discharge, as the regulation expressly requires,

and that this requirement was satisfied because the Pinto Creck

TMDL establishes specific load allocations for Carlota’s proposed

discharges. App. 170-174. The Appeals Board concluded that the

petitioners were in effect challenging the TMDL and its imple-

mentation, and that a TMDL — which is a form of a state water

quality standard — and its implementation cannot be challenged

in an NPDES permit hearing and can only be challenged in a

separate federal court action brought under the Administrative

Procedures Act, 5 U.S.C. § 706(2). App. 172, & n. 105; Jn re City

of Moscow, 10 E.A.D. 135, 161 (EAB 2001).

nonetheless, that all three requirements must be met

before the permit can be issued.

By imposing these additional requirements, the

Ninth Circuit has made it difficult if not virtually

impossible for the EPA and the states to approve new

source discharges into impaired waters under all but

exceptional circumstances. The practical effect of the

Ninth Circuit decision is to impose a virtual de facto

moratorium on new source discharges into impaired

waters. On the contrary, this Court in Arkansas held

that the EPA and the states have broad flexibility and

discretion in administering their NPDES programs,

and in approving new projects that will “improve

existing conditions.” 503 U.S. at 108. As the District

of Columbia Circuit has stated, where the permitting

agency’s authority under the Act is unclear, “we are

instructed to afford the administering agency the

flexibility to achieve the general objectives of the Act.”

Natural Resources Defense Council v. Costle, 568 F.2d

1369, 1382 (D.C. Cir. 1977). The question whether the

EPA and the states have such flexibility, as this Court

held in Arkansas, or instead whether they lack flexi-

bility, as the Ninth Circuit held, is the primary ques-

tion presented in this petition.

Ill. THE NINTH CIRCUIT FAILED TO APPLY

THE APPROPRIATE STANDARD OF RE-

VIEW BY NOT DEFERRING TO THE EN-

VIRONMENTAL PROTECTION AGENCY’S

INTERPRETATION OF ITS REGULA-

TION.

The standard of review applicable in interpreting

an administrative regulation is that deference should

be accorded to an agency’s interpretation of its own

regulation, unless the “plain language” dictates

otherwise. Auer v. Robbins, 519 U.S. 452, 461 (1997);

Thomas Jefferson University v. Shalala, 512 U.S. 504,

512 (1994); Martin v. Occupational Safety and Health

Review Comm’n, 499 U.S. 144, 150 (1991); Robertson

v. Methow Valley Citizens Council, 490 U.S. 332, 359

(1989); Gardebring v. Jenkins, 485 U.S. 415, 430

(1988); Lyng v. Payne, 476 U.S. 996, 939 (1986);

United States v. Larionoff, et al., 431 U.S. 864, 872

(1977); Udall v. Tallman, 380 U.S. 1, 16-17 (1965);

Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,

413-414 (1945); see Christensen v. Harris County, 529

U.S. 576, 588 (2000). “(T]he agency’s interpretation of

its own regulation must be given ‘controlling weight

unless it is plainly erroneous or inconsistent with the

regulation.’” Thomas Jefferson University, 512 U.S.

at 512, quoting from Bowles, 325 U.S. at 414. Such

deference is particularly appropriate where the

regulation involves technical or scientific matters

within the agency’s expertise. Baltimore Gas & Elec.

Co. v. Natural Resources Defense Council, 462 U.S.

87, 103 (1983). “When the construction of an adminis-

trative regulation rather than a statute is in issue,

deference is even more clearly in order.” Udall, 380

U.S. at 16."

The EPA regulation prohibits the issuance of

NPDES permits for new source discharges into im-

paired waters if the discharges “cause or contribute”

to violations of water quality standards. 40 C.F.R.

§ 122.4(i). The EPA has interpreted this language as

not prohibiting new source discharges into impaired

waters subject to conditions that improve water

quality, and the EPA’s administrative practice has

conformed to this interpretation. The EPA’s Appeals

Board adopted that interpretation in this case, App.

164-170, and stated that this interpretation is “con-

sistent with prior Agency interpretation of that

section.” App. 165. In earlier proceedings, the EPA

has taken the position that new source discharges

into impaired waters may be approved if (1) the

discharges do not contain the pollutant causing the

impairment, (2) the effluent limits for the discharge

meet water quality standards, or (3) the discharges

are subject to offset conditions that prevent water

‘* Under the principle established in Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),

deference should be accorded to an agency’s interpretation of a

statute that it is responsible for enforcing, if the statute is

ambiguous and the agency interpretation reasonable. Chevron,

467 U.S. at 842-843; National Ass'n of Home Builders v. Defend.

ers of Wildlife, 127 S.Ct. 2518, 2534 (2007); Auer, 519 U.S. at

457; Babbitt v. Sweet Home Chapter, 515 U.S. 687, 703 (1995);

Pauley v. Director, Office of Workers’ Compensation Programs,

501 U.S. 680, 696 (1991).

~ ee ee ee oe

quality impairment. Describing the third category —

involving offset conditions — the EPA stated:

[I]t is possible for a discharger to be issued a

permit where it is demonstrated that other

pollutant source reductions (such as non-

point source reductions implemented by the

discharger) will offset the discharge in a

manner consistent with water quality stan-

dards. The ultimate result of this type of

“offset” or “trade” may be a net decrease in

the loadings of the pollutant of concern in

the CWA § 303(d) listed water, and, there-

fore, EPA, by practice has considered a dis-

charge which has been offset in accordance

with permit requirements not to “cause or

contribute to a violation of water quality

standards.”

In re Cities of Annandale, et al., 731 N.W.2d 502, 521

‘Minn. 2007). According to the EPA, whether a dis-

charge will “cause or contribute” to a violation of

water quality standards must be determined on a

“case-by-case basis” and not by application of “per se”

’ This EPA interpretation was set forth in the EPA's

Response Memorandum in Sierra Club, et al. v. Clifford, at 50-

54, Civ. No. 96-0527 (E.D. La. 1999), which was referred to by

the EPA’s Appeals Board below. App. 165. This Court has

deferred to an agency’s interpretation of a regulation expressed

in litigation — even the instant litigation — if the interpretation

was not a “post hoc rationalization” advanced to defend a past

position and reflects the agency’s “fair and considered judg-

ment.” Auer v. Robbins, 519 U.S. 452, 462 (1997); see Gardebring

v. Jenkins, 485 U.S. 415, 430 (1988).

or “categorical” standards.” Applying the “case-by-

case” analysis here, the EPA’s Appeals Board deter-

mined that “rather than ‘causing or contributing’ a

degradation, Carlota will be improving Pinto Creek’s

water quality, or at the very least maintaining water

quality.” App. 170.

The EPA’s interpretation of its regulation is

consistent with its Water Quality Trading Policy,

which states:

Finding solutions to these complex water

quality problems requires innovative ap-

proaches that are aligned with core water

programs. Water quality trading is an ap-

proach that offers greater efficiency in

achieving water quality goals on a watershed

basis. It allows one source to meet its regula-

tory obligations by using pollutant reduc-

tions created by another source that has

lower pollution control costs. Trading capital-

izes on economies of scale and the control cost

differentials among and between sources. [4]

The United States Environmental Protection

Agency (EPA) believes that market-based

approaches such as water quality trading

provide greater flexibility and have potential

to achieve water quality and environmental

benefits greater than would otherwise be

achieved under more traditional regulatory

approaches.

'* See EPA brief filed in Sierra Club, et al. v. Clifford, at 52,

note 14, supra.

68 Fed. Reg. 1608, 1609 (Jan. 13, 2003); see In re

Cities of Annandale, et al., 731 N.W.2d 502, 522

(Minn. 2007). The trading policy establishes several

objectives, one of which to encourage water quality

trading where trading “[o]ffsets mew or increased

discharges resulting from growth in order to maintain

levels of water quality that support all designated

uses.” 68 Fed. Reg. at 1609-1610.

The EPA’s interpretation of the regulation does

not contravene its “plain language” and is entitled to

deference. As the EPA’s Appeals Board concluded,

discharges subject to offset conditions do not “cause or

contribute” to water quality violations because they

improve rather than impair water quality. App. 164-

170. The EPA’s interpretation is also consistent with

the Minnesota Supreme Court’s decision in the An-

nandale case, which held that the EPA regulation

does not prohibit discharges into impaired waters

subject to offset conditions that improve water qual-

ity. In re Cities of Annandale, et al., 731 N.W.2d 502,

521 (Minn. 2007); see also Crutchfield v. State Water

Control Board, 45 Va.App. 546, 612 S.E.2d 249, 557-

558 (2005). The Minnesota Supreme Court stated

that the regulation is, at a minimum, “ambiguous,”

and therefore deference should be accorded to the

Minnesota water quality agency’s interpretation,

which was the same as the EPA interpretation.

Annandale, 731 N.W.2d at 519.

The Ninth Circuit did not defer to the EPA’s

interpretation of its regulation, nor even mention this

Court’s decisions requiring such deference. The Ninth

Circuit instead adopted the opposite interpretation,

holding that offset conditions are invalid regardless of

their water quality effects. App. 10-11. The Ninth

Circuit failed to apply the appropriate standard of

review in construing the regulation, which requires

deference to the agency’s interpretation unless the

“plain language” dictates otherwise — and no such

contrary “plain language” appears in the EPA regula-

tion here. The Ninth Circuit’s failure to apply the

appropriate review standard provides an additional

ground for review of its decision.

Although this case raises questions concerning

the interpretation of both a statute and a regulation,

this Court has reviewed cases involving solely the

interpretation of a regulation." In one such case,

Thomas Jefferson University v. Shalala, 512 U.S. 504

(1994), this Court resolved a conflict between two

federal circuit courts in interpreting a regulation. In

** As stated earlier, this Court has held in several cases that

deference should be accorded to an agency's interpretation of its

regulation unless the “plain language” dictates otherwise. See,

e.g., Auer v. Robbins, 519 U.S. 452, 461 (1997); Thomas Jefferson

University v. Shalala, 512 U.S. 504 (1994); see page 29, supra.

Although some of the cited cases involved interpretations of both

a statute and a regulation, such as Auer, others involved solely

the interpretation of a regulation, such as Thomas Jefferson

University. Other cases involving solely the interpretation of a

regulation are Martin v. Occupational Safety and Health Review

Comm'n, 499 U.S. 144 (1991), Lyng v. Payne, 476 U.S. 926

(1986), Udall v. Tallman, 380 U.S. 1 (1965), and Bowles v.

Seminole Rock & Sand Co., 325 U.S. 410 (1945).

the sarae vein, this case involves a conflict between a

federa. circuit court (Ninth Circuit) and a state’s

highest court (Minnesota Supreme Court) in inter-

preting a regulation. Additionally, the case presents

issues of national importance; the Ninth Circuit’s

interpretation restricts the EPA’s and the states’

discretion in administering their NPDES programs,

and conflicts with this Court’s decision in Arkansas v.

Oklahoma, 503 U.S. 91 (1992). Because of the con-

flicts and the nationally-important issue, this case

would be worthy of review even if the sole question

concerned the interpretation of the regulation.

IV. THE CLEAN WATER ACT AND THE

REGULATION AUTHORIZE - AND DO

NOT PROHIBIT - THE ISSUANCE OF

PERMITS FOR DISCHARGES INTO IM-

PAIRED WATERS, SUBJECT TO CONDI-

TIONS THAT REDUCE NET POLLUTION

AND IMPROVE WATER QUALITY.

On the merits, the Act and the EPA regulation

authorize — and do not prohibit — the issuance of

NPDES permits for discharges into impaired waters

subject to conditions, such as offset conditions, that

reduce net pollution and improve water quality.

A. The Statute

The Act grants “broad authority” to the EPA and

the states to develop NPDES programs “to alleviate and

eliminate existing pollution” and “improve existing

conditions,” as this Court held in Arkansas v. Ohla-

homa, 503 U.S. 91, 102 (1992). This “broad authority”

allows the NPDES permitting agencies to flexibly

decide, on a case-by-case basis, whether discharges

into impaired waters will violate water quality stan-

dards, and whether conditions can and should be

imposed to prevent such violations. Nothing in the

statute precludes the permitting agencies from exer-

cising such broad authority.

The conclusion that the Act grants such broad

authority is supported by the statutory language.

Section 402(a)(1) authorizes the EPA to issue NPDES

permits for point source discharges subject to “such

conditions as the Administrator [of the EPA] deter-

mines necessary to carry out the provisions of this

chapter.” 33 U.S.C. § 1342(a)(1); App. 224. Section

301(b)(1XC) provides that NPDES permits must

include effluent limitations necessary to “implement

any applicable water quality standard” established by

a state under section 303. 33 U.S.C. § 1311(b\(1)(C);

App. 222-223. Thus, the statute specifically requires

that NPDES permits implement state “water quality

standard[s],” and specifically authorizes “conditions”

to achieve such standards. Accordingly, the statute by

its terms authorizes offset conditions, because offset

conditions are intended to achieve compliance with

water quality standards. Cf. Natural Resources

Defense Council v. Costle, 568 F.2d 1369, 1375 (D.C.

Cir. 1977) (Under section 402, “the [EPA] Administra-

tor has discretion either to issue a permit or to leave

the discharges subject to the total proscription of

[section] 301.”). .

Section 306 of the Act requires the EPA to adopt

“national standards of performance” for new sources

that “reflect[] the greatest degree of effluent reduc-

tion” achievable through available technology. 33

U.S.C. § 1316(a)(1); App. 223. An offset condition

necessarily achieves “the greatest degree of effluent

reduction,” as required by the statute, because it

reduces net pollution caused by discharges of efflu-

ents.

Section 101(a) declares that the Act’s goal is to

“restore and maintain” the nation’s water quality. 33

U.S.C. § 1251(a). An offset condition that reduces net

pollution and improves water quality necessarily

furthers the statutory goal of “restor[ing] and main-

tain{ing]” water quality. By contrast, the Ninth

Circuit’s all-or-nothing approach to the attainment of

water quality standards obstructs the statutory goal.

The Ninth Circuit decision imposes a virtual de facto

moratorium on the issuance of NPDES permits for

new source discharges into impaired waters, thus

reducing incentives for dischargers to clean up such

waters through the NPDES permit process — and

limiting the discretion of permitting agencies to offer

such incentives. The decision, for example, would

make it difficult for permitting agencies to authorize

municipal sewage agencies to replace out-of-date

sewage facilities with modern ones that produce

cleaner effluent, as the municipal agency did in the

Annandale case decided by the Minnesota Supreme

Court. In re Cities of Annandale, et al., 731 N.W.2d

502, 524 (Minn. 2007). The Ninth Circuit. decision

impedes the development of infrastructure projects

that would further the statutory goal of improving

the nation’s water quality.

B. The Regulation

The EPA regulation prohibits the issuance of

NPDES permits for new source discharges into im-

paired waters that will “cause or contribute to the

violation of water quality standards.” 40 C.F.R.

§ 122.4(i); App. 224. The regulation, on its face, does

not prohibit a// discharges into impaired waters,

regardless of their effects on water quality. Instead,

the regulation facially prohibits only discharges that

will “cause or contribute” to water quality violations.

A discharge subject to an offset condition requiring

remediation of other sources of pollution does not, by

definition, “cause or contribute” to water quality

violations; although the permit authorizes the dis-

charge of pollutants, the condition requires the re-

moval of more pollutants than are discharged, and

thus improves overall water quality. Rather than

“caus([ing] or contribut[ing]” to water quality viola-

tions, an offset condition causes a reduction of such

violations. The EPA regulation prohibits discharges

that impair water quality, not improve it. The regula-

tion plainly does not prohibit offset conditions.

The Ninth Circuit’s observation that the Act and

the regulation make no “exception” for offset condi-

tions, App. 10-11, is beside the point. A discharge

subject to an offset condition that reduces net pollu-

tion does not “cause or contribute” to water quality

violations and thus does not fall within the scope of

the regulatory prohibition. A prohibition that does not

apply by its own terms does not require an “excep-

tion” to render it non-applicable.

In sum, the Act and the regulation grant broad

authority to the EPA and the states to adopt meas-

ures to protect and improve water quality, and to

impose conditions in NPDES permits that further

this goal. This grant of authority includes the discre-

tion to impose offset conditions that improve the

quality of impaired water bodies. Nothing in the Act

or the regulation prohibits the EPA and the states

from imposing such conditions. The Ninth Circuit

decision, by reading requirements into the statute

and the regulation that do not appear on their face,

greatly restricts the EPA’s and the states’ discretion

in administering their NPDES programs. The deci-

sion makes it difficult for the EPA and the states to

approve new development projects necessary to

accommodate the nation’s demographic and economic

growth, even though conditions are imposed that

achieve the Act’s goal of improving water quality. This

Court should grant review and reverse.

CONCLUSION

The petition for writ of certiorari should be

granted.

Respectfully submitted,

RODERICK E. WALSTON

Attorney for Carlota

Copper Company

App. 1

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FRIENDS OF PINTO CREEK;

GRAND CANYON CHAPTER OF THE

SIERRA CLUB, MARICOPA AUDU-

BON SOCIETY AND CITIZENS FOR

THE PRESERVATION OF POWERS

GULCH AND PINTO CREEK,

Petitioners,

CARLOTA COPPER COMPANY,

Intervenor,

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ENVIRON-

MENTAL APPEALS BOARD;

STEPHEN L. JOHNSON, Acting

Administrator, United States

Environmental Protection

Agency,

Respondents.

No. 05-70785

OPINION

On Petition for Review of an Order of the

Environmental Protection Agency

Argued amd Submitted

November 13, 2006 — San Francisco, California

Filed October 4, 2007

App. 2

Before: Procter Hug, Jr., A. Wallace Tashima,

and Ronald M. Gould, Circuit Judges.

Opinion by Judge Hug

COUNSEL

Roger Flynn, Western Mining Action Project, Lyons,

Colorado, for the petitioners.

D. Judith Keith, United States Department of Jus-

tice, Environmental Defense Section, Washington,

DC; John S. Most, United States Department of

Justice, Natural Resources Section, Washington, DC,

for the respondents.

Amy R. Porter, Lewis and Roca LLP, Phoenix, Ari-

zona, for the intervenor.

OPINION

HUG, Circuit Judge:

In this case, we determine whether the Environ-

mental Protection Agency (“EPA”) properly issued a

National Pollution Discharge Elimination System

(“NPDES”) permit under the Clean Water Act to

Carlota Copper Company (“Carlota”). The permit

allows mining-related discharges of copper into

Arizona’s Pinto Creek, a waterbody already in excess

of water quality standards for copper. Based upon

provisions of the Clean Water Act, the implementing

regulations, and their applicability to the factual

scenario of this case, we vacate the permit and re-

mand.

App. 3

I. FACTUAL BACKGROUND

Pinto Creek is a desert river located near Miami,

Arizona, approximately 60 miles east of Phoenix. It

has been listed by the American Rivers Organization

as one of the country’s most endangered rivers due to

threats from proposed mining operations. Pinto Creek

and its riparian environs are home to a variety of

fish, birds, and other wildlife, some of which are

specially protected. Due to excessive copper contami-

nation from historical mining activities in the region,

Pinto Creek is included on Arizona’s list of impaired

waters under § 303(d) of the Clean Water Act, 33

U.S.C. § 1313(d), as a water quality limited stream

due to non-attainment of water quality standards for

dissolved copper.

Carlota proposed to construct and operate an

open-pit copper mine and processing facility approxi-

mately six miles west of Miami, Arizona, covering

over 3000 acres while extracting about 100 million

tons of ore. Part of the operation plan includes con-

structing diversion channels for Pinto Creek to route

the stream around the mine, as well as groundwater

cut-off walls to block the flow of groundwater into the

mine.

In compliance with the National Environmental

Policy Act (“NEPA”), 42 U.S.C. §§ 4321 et seq., the

U.S. Forest Service prepared an Environmental

Impact Statement (“EIS”), after determining the

project would potentially have a significant impact on

the environment, and later finalized the document as

App. 4

its Final EIS (“Forest Service FEIS”). The Army

Corps of Engineers also prepared an Environmental

Assessment (“Corps EA”) covering the physical con-

struction of proposed diversion channels redirecting

water from Pinto Creek and the Powers Gulch stream

around the mine and into Pinto Creek. Because the

proposed action would involve the discharge of pol-

lutants into Pinto Creek, Carlota applied to the EPA

for an NPDES permit under § 402 of the Clean Water

Act, 33 U.S.C. § 1342, in 1996. The EPA ultimately

issued the permit, and the Environmental Appeals

Board (“Appeals Board”), the internal appellate board

of the EPA, denied review.

Il. ISSUES

A. Whether the issuance of the permit to

discharge a pollutant, dissolved copper,

into Pinto Creek, which already ex-

ceeded the amount of dissolved copper

allowed under the Section 303(d) Water

Quality Standard, is in violation of the

Clean Water Act and the applicable

regulations.

B. Whether the EPA’s failure to include and

regulate all discharges from the Carlota

Copper Mine in the NPDES permit vio-

lates the Clean Water Act and the appli-

cable regulations.

C. Whether the EPA complied with the re-

quirements of the National Environ-

mental Policy Act (“NEPA”).

App. 5

Ill. PROCEDURAL BACKGROUND

The EPA published for public comment a draft

NPDES permit for Carlota in 1998. To fulfill its

information-gathering requirements under NEPA, 42

U.S.C. §§ 4321-4370f, the EPA adopted the Forest

Service FEIS and the Corps EA. In response to com-

ments received on its draft NPDES permit, the EPA

amended the draft permit by adding two new condi-

tions -— (1) requiring additional groundwater dis-

charges to augment the stream flow into Pinto Creek,

and (2) an offset provision whereby Carlota would be

required to remediate sources of copper loading from

an upstream inactive mine site called the Gibson

Mine.

On June 30, 2000, the Arizona Department of

Environmental Quality (“Arizona DEQ”) certified the

final permit with the two new conditions as meeting

state water quality standards under § 401 of the

Clean Water Act, 33 U.S.C. § 1341, and on July 24,

2000, the EPA issued an NPDES permit to Carlota, as

well as a Record of Decision formally adopting the

Forest Service FEIS and the Corps EA for the current

permit.

On August 24, 2000, the Petitioners filed their

first Petition for Review of the NPDES permit and

the NEPA documents with the Appeals Board. The

Petitioners argued that: (1) because Pinto Creek is an

impaired water under the Clean Water Act, the EPA

should establish a Total Maximum Daily Load

(“TMDL”) for copper discharges into Pinto Creck

App. 6

before issuing Carlota’s permit, (2) the EPA did not

provide public notice of and a public comment period

for the two new permit conditions, (3) Carlota needed

an additional NPDES permit for discharges from the

Gibson Mine site, and (4) the Forest Service FEIS

and Corps EA documents did not consider environ-

mental impacts of the two new permit conditions.

The EPA did not respond and, instead, withdrew

portions of the challenged NPDES permit stating that

the permit was not severable from the contested

conditions and that the permit should be stayed

pending final agency action. The EPA then prepared a

supplemental environmental assessment (“EPA’s

supplemental EA”) analyzing only the two new condi-

tions. In response to the Petitioners’ contention of the

necessity to establish a TMDL, the EPA completed a

TMDL for dissolved copper in Pinto Creek. The EPA

then provided a public comment period, but only for

the two new permit conditions and the EPA's supple-

mental EA. The Arizona Department of Environ-

mental Quality issued a second certification under

§ 401 of the Clean Water Act in February 2002. In

accordance with its new analysis, the EPA issued a

Finding of No Significant Impact on February 27,

2002, determining it would not have to prepare a new

EIS, and issued the permit.

On April 1, 2002, the Petitioners filed a second

Petition for Review with the Appeals Board challeng-

ing the EPA’s decision to issue the Carlota permit.

The principal challenges were that: (1) the permit

should have covered the diversion channels that

App. 7

discharged into Pinto Creek, (2) the EPA must regu-

late all project discharges, (3) the permitted discharges

violated Arizona anti-degradation requirements and

water quality standards, and (4) the EPA violated

NEPA in several ways.

The Appeals Board entered its order denying

review on September 30, 2004. The EPA issued the

final NPDES permit to Carlota, and the Petitioners

filed for review in this court.

IV. ANALYSIS

A. Objective of the Clean Water Act.

It is important to consider the objectives and

purpose of the 1972 revisions of the Clean Water Act,

which are presently applicable to the considerations

involved here. 33 U.S.C. § 1251 (1987) provides:

The objective of this chapter is to restore and

maintain the chemical, physical, and biologi-

cal integrity of the nation’s waters. In order

to achieve this objective it is hereby declared

that, consistent with the provisions of this

chapter — (1) it is the national goal that the

discharge of pollutants into the navigable

waters be eliminated by 1985... . (3) it is the

national policy that the discharge of toxic

pollutants in toxic amounts be prohibited.

Under the 1972 revisions of the Clean Water Act,

there is direct federal regulation of the discharge of

pollutants from po.nt sources. Pronsolino v. Nastri,

291 F.3d 1123, 1126 (9th Cir. 2002). “[P]Joint sources of

App. 8

pollution are those [where the pollutant flows] from a

discrete conveyance, such as a pipe or tunnel. Non-

point sources of pollution are non-discrete sources”

and are the responsibility of the states, with certain

federal oversight. Jd. at 1125-27. An example of a

non-discrete source is runoff from a farmland or

timber harvesting.

Our Pronsolino opinion provides a detailed

description of the operation of the Clean Water Act.

We here summarize the provisions pertinent to this

case.

Under § 303 of the Clean Water Act, 33 U.S.C.

§ 1313, the states are required to set water quality

standards for all waters within their boundaries,

regardless of the sources of the pollution entering the

waters. Pursuant to § 303(d)(1), 33 U.S.C. § 1313(d)(1),

each state is required to identify those waters that do

not meet the water quality standard which is fre-

quently called the “§ 303(d)(1) list.” For impaired

waters identified in the § 303(d)(1) list, the states

must establish a TMDL for pollutants identified by

the EPA. A TMDL specifies the maximum amount of

pollutant that can be discharged or loaded into the

waters from all combined sources, so as to comply

with the water quality standards.

Each state is required to submit its § 303(d)(1)

list and its TMDL to the EPA for its approval or

disapproval. If the EPA disapproves either of those

documents, the EPA is responsible for preparing that

document. The state then incorporates its § 303(d)(1)

App. 9

list and its TMDL or the EPA’s approved document

into its continuing planning process as required by

§ 303(e), 33 U.S.C. § 1313(e).

. In this case, the state had prepared the

§ 303(d)(1) list, but it had not prepared a TMDL.

Therefore, in response to the Petitioners’ objection,

the EPA prepared the TMDL utilized in its awarding

of the permit.

B. Carlota’s Discharge into an Impaired

Waterway.

The Petitioners contend that as a “new dis-

charger” Carlota’s discharge of dissolved copper into a

waterway that is already impaired by an excess of the

copper pollutant violates the intent and purpose of

the Clean Water Act. Under the NPDES permitting

program, 40 C.F.R. § 122.4(i) addresses the situation

where a new source seeks to permit a discharge of

pollutants into a stream already exceeding its water

quality standards for that pollutant. Section 122.4

states in relevant part:

No permit may be issued:

(i) To a new source or a new discharger if

the discharge from its construction or opera-

tion will cause or contribute to the violation

of water quality standards. The owner or op-

erator of a new source or new discharger

proposing to discharge into a water segment

which does not meet applicable water quality

App. 10

standards or is not expected to meet those

standards ... and for which the State or in-

terstate agency has performed a pollutants

load allocation for the pollutant to be dis-

charged, must demonstrate, before the close

of the public comment period, that:

(1) There are sufficient remaining pollutant

load allocations to allow for the discharge;

and .

(2) The existing dischargers into that seg-

ment are subject to compliance schedules de-

signed to bring the segment into compliance

with applicable water quality standards.

40 C.F.R. § 122.4 (2000).

The plain language of the first sentence of the

regulation is very clear that no permit may be issued

to a new discharger if the discharge will contribute to

the violation of water quality standards. This corre-

sponds to the stated objectives 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) (1987). And that “it is the national policy

that the discharge of toxic pollutants in toxic amounts

be prohibited.” 33 U.S.C. § 1251(a)(3) (1987).

The EPA contends that the partial remediation of

the discharge from the Gibson Mine will offset the

pollution. However, there is nothing in the Clean

Water Act or the regulation that provides an excep-

tion for an offset when the waters remain impaired

>. rns

;

App. 11

and the new source is discharging pollution into that

impaired water.’

The regulation does provide for an exception

where a TMDL has been performed and the owner or

operator demonstrates that before the close of the

comment period two conditions are met, which will

assure that the impaired waters will be brought into

compliance with the applicable water quality stan-

dards. The plain language of this exception to the

prohibited discharge by a new source provides that

the exception does not apply unless the new source

can demonstrate that, under the TMDL, the plan is

designed to bring the waters into compliance with

applicable water quality standards.

The EPA argues that under the requirements of

clause (1), there are sufficient remaining load alloca-

tions to allow for the discharge because the TMDL

provides a method by which the allocations could be

established to allow for the discharge. There is no

contention, however, that these load allocations

represent the amount of pollution that is currently

discharged from the point sources and nonpoint

sources, and there is no indication of any plan that

will effectuate these load allocations so as to bring

Pinto Creek within the water quality standards. The

TMDL merely provides for the manner in which Pinto

Creek could meet the water quality standards if all of

' It is questionable whether there really is an offset. See

discussion in the next section.

App. 12

the load allocations in the TMDL were met, not that

there are sufficient remaining pollutant load alloca-

tions under existing circumstances.

With regard to the requirements of clause (2), the

EPA argues that the requirement of “compliance

schedules” pertains only to point sources for which

there is a permit. This does not correspond to the

plain language of clause (2), which provides “the

existing discharges into that segment [of Pinto Creek]

are subject to compliance schedules designed to bring

the segment into compliance with applicable water

quality standards.” 40 C.F.R. § 122.4(i)(2) (2000).

We examine that language utilizing the defini-

tions provided in the regulation. The term “discharge”

is defined to mean “the discharge of a pollutant.” 40

C.F.R. § 122.2 (2000). The term “discharge of a pollut-

ant,” is defined as any addition of any “pollutant” or

combination of pollutants to “waters of the United

States” from “any point source.” Id. at § 122.2(a)

(emphasis added). Thus, under the plain language of

the regulation, cornpliance schedules are not confined

only to “permitted” point source discharges, but are

applicable to “any” point source.

The EPA contends that this would amount to a

complete ban of the discharge of pollution to impaired

waters. This is based on its misreading of the plain

language of the regulation to state that the remedia-

tion has to be completed before Carlota’s discharge.

The plain language of clause (2) of the regulation,

instead, provides that existing discharges into that

App. 13

segment (of the waters) are “subject to compliance

schedules designed to bring the segment into compli-

ance with applicable water quality standards.” 40

C.F.R. § 122.4(i)(2) (2000) (emphasis added). This is

not a complete ban but a requirement of schedules to

meet the objective of the Clean Water Act.

Here the existing discharges from point sources

are not subject to compliance schedules designed to

bring Pinto Creek into compliance with water quality

standards. Thus, Carlota has not demonstrated that

clause (2) of 40 C.F.R. § 122.4(i) has been met. This is

the regulation upon which Carlota and the EPA rely

for issuance of the permit.

Initially, Carlota and the EPA contended that the

first and second sentences of § 222.4(i) could be

construed to apply independently, thus not requiring

compliance with clauses (1) and (2) when an offset

would result in a substantial net reduction of pollu-

tion to the impaired waters. The Petitioners, on the

other hand, maintained that the two sentences must

be read together, not independently. However, the

EPA subsequently asked the Appeals Board to as-

sume, for purposes of this decision, that clauses (1)

and (2) do apply. See In re Carlota Copper Co., 11

E.A.D. 692, 766 (EAB 2004). Thus, we are concerned

in this case with whether the EPA required Carlota to

fulfill all of the requirements of § 122.4(i), including

clauses (1) and (2), in order to issue a permit to it as a

new discharger.

App. 14

The Respondents and Carlota rely on Arkansas v.

Oklahoma, 503 U.S. 91 (1992) in support of their

contentions. That case involved the issuance of a

permit for a city in Arkansas to discharge effluent

into a stream in Arkansas that entered a river that

eventually flowed into Oklahoma. Oklahoma chal-

lenged the permit before the EPA, alleging that the

discharge violated Oklahoma Water Quality Stan-

dards. In that case, the EPA found that the discharge

would not lead to a “detectable change in water

quality,” which the Supreme Court held was sup-

ported by substantial evidence. Arkansas, 503 U.S. at

112. In the opinion, the Court stated that “the parties

have pointed to nothing that mandates a complete

ban on discharges into a waterway that is in violation

of those standards. The statute does, however, con-

tain provisions designed to remedy existing water

quality violations and to allocate the burden of reduc-

ing undesirable discharges between existing sources

and new sources. See, e.g. §1313(d).” Id. at 108.

Section 1313(d) of the Clean Water Act, referred to by

the Court, is the one that provides for the establish-

ment of water quality standards and TMDLs.

The Supreme Court in Arkansas v. Oklahoma

also referred to § 1288(b)(2), which provides for the

development of area-wide programs to eliminate

existing pollution in the context of area-wide waste

treatment management. /d. That section provides

details required of any plan to eliminate the pollu-

tion, including schedules, time lines, identification of

App. 15

agencies, and identification of measures necessary to

carry out the plan.

The Appeals Board stated that prior Agency

pronouncements “confirm our position that, rather

than completely banning new source discharges,

§ 122.4(i) provides new sources with the opportunity

to obtain a permit if the requirements specified in

that section are met.” Jn re Carlota Copper Co., 11

E.A.D. 692, 765 (EAB 2004). The prior Agency posi-

tion quoted states:

A new source or new discharger may, how-

ever, obtain a permit for discharge into a wa-

ter segment which does not meet applicable

water quality standards by submitting in-

formation demonstrating that there is suffi-

cient loading capacity remaining in waste

load allocations (WLAs) for the stream seg-

ment to accommodate the new discharge and

that existing dischargers to that segment. are

subject to compliance schedules designed to

bring the segment into compliance with the

applicable water quality standards.

Id. (emphasis added). The language quoted by the

Appeals Board from the prior agency action requires

compliance schedules designed to bring the water

segment into compliance with the applicable water

quality standards.

In Carlota’s case, there are no plans or compli-

ance schedules to bring the Pinto Creek segment

“into compliance with applicable water quality stan-

dards,” as required by § 122.4(i)(2), which Carlota

App. 16

and the EPA both acknowledge is the applicable

section with which Carlota must comply. The error of

both the EPA and Carlota is that the objective of that

section is not simply to show a lessening of pollution,

but to show how the water quality standard will be

met if Carlota is allowed to discharge pollutants into

the impaired waters.’

The EPA has the responsibility to regulate dis-

charges from point sources and the states have the

responsibility to limit pollution coming into the

waters from non-point sources. If point sources, other

than the permitted point source, are necessary to be

scheduled in order to achieve the water quality

standard, then the EPA must locate any such point

sources and establish -ompliance schedules to meet

the water quality standard before issuing a permit. If

there are not adequate point sources to do so, then a

permit cannot be issued unless the state or Carlota

agrees to establish a schedule to limit pollution from

a nonpoint source or sources sufficient to achieve

water quality standards.

* The only step the EPA or Carlota has taken to meet the

requirements of § 122.4(i)(2) is the partial remediation of the

Gibson Mine discharge. The following statement illustrates the

Appeals Board's erroneous view of the objective of § 122.4(i)(2):

The goal of the proposal is not, as Petitioners and

other commenters seemed to believe, the restoration

of the entirety of Pinto Creek to water quality stan-

dards. While desirable, this is not the intent of the

proposed action.

In re Carlota Copper Co., 11 E.A.D. 692, 784 (EAB 2004).

App. 17

The EPA contends that it cannot be judicially

compelled to act against point sources that are ille-

gally discharging into Pinto Creek. The EPA notes

that while it has the authority to act against viola-

tors, its decision to do so in ordering its priorities is a

matter that is typically committed to its absolute

discretion, citing Sierra Club v. Whitman, 268 F.3d

898, 903 (9th Cir. 2001) and Heckler v. Chaney, 470

U.S. 821, 831-32 (1985).

In Carlota’s case, there is nothing in § 122.4(i)

that compels the EPA to act against point sources

that are violating the Clean Water Act by their dis-

charges into Pinto Creek or requiring judicial review

of the EPA’s ordering of priorities in any failure to act.

The requirement of § 122.4(i)(2) is simply a condition

that must be met before a permit can be issued to a

new discharger into impaired waters. There is no

compulsion on the EPA to act against point source

violators, as in Sierra Club or Heckler. The EPA

remains free to establish its priorities; it just cannot

issue a permit to a new discharger until it has com-

plied with § 122.4(i)(2).

In this case, the Petitioners do not argue for an

absolute ban on discharges into a waterway that is in

violation of the water quality standards. Rather, the

Petitioners point to the § 122.4(i) exception by which

a new discharger can comply with the Clean Water

Act requirements. Those requirements simply were

not met. Thus, no conflict exists with the Supreme

Court’s opinion in Arkansas v. Oklahoma.

App. 18

C. Pollution From the Diversion Chan-

c nels.

Carlota proposed to construct two diversion

channels that would divert surface and groundwater »

around the mine facilities. The Pinto Creek diversion

channel would extend approximately 5250 feet and

then into Pinto Creek. The Powers Gulch stream

diversion channel would extend approximately 7900

feet into the Powers Gulch stream, which eventually

connects to Pinto Creek. Both channels will eventu-

ally add pollutants, including copper, into Pinto

Creek especially from the groundwater that Carlota

will be directing into the channels for discharge into

Pinto Creek.

In order to block groundwater from entering the

main Carlota Mine pit, Carlota will construct a cutoff

wali down to bedrock that will divert the groundwa-

ter to the surface and into the Pinto Creek diversion

channel. The Forest Service FEIS stated: “The cutoff

wall would be an impermeable barrier extending from

the surface down through the alluvium and into the

bedrock. The cutoff wall would be designed to prevent

water from moving toward the pit and would encour-

age the alluvial flow to surface into the diversion

channel to be routed around the pit.” Fed. Envtl.

Impact Statement for Carlota Copper Project, Vol. 1,

Ch. 2, p. 16 (1997). The Forest Service FEIS also

noted that the alluvial groundwater that will enter

the diversion channel contains dozens of pollutants,

including copper, that will be added to Pinto Creek.

According to the Forest Service FEIS, the amount of

App. 19

dissolved copper in this groundwater would be sig-

nificant. In addition to the groundwater directed into

Pinto Creek via the Pinto Creek diversion channel, a

similar cutoff wall is proposed to direct groundwater

into the Powers Gulch stream diversion channel and

ultimately into Pinto Creek. Like the groundwater

added to the Pinto Creek via the Pinto Creek diver-

sion channel, the groundwater added to the Powers

Gulch stream contains elevated levels of copper and

other pollutants. The EPA did not consider the copper

contributions from the use of the proposed diversion

channels and groundwater cutoffs. The Appeals

Board refused to consider these additional sources of

copper pollution because it was not raised in the first

comment period for the permit.

In the Petitioners’ first Petition for Review of the

NPDES permit and ihe NEPA documents before the

Appeals Board, the Petitioners contended, among

other things, that the EPA had not allowed a com-

ment period on the two new conditions added to

the permit and that the EPA should establish a

TMDL for copper discharges into Pinto Creek before

issuing Carlota’s permit. The EPA did not respond

and, instead, withdrew portions of the challenged

NPDES permit stating that the permit was not

severable from the contested conditions and that the

permit should be stayed until pending final agency

action.

After establishing a TMDL for copper in Pinto

Creek, Carlota then pursued a renewal of the permit

based upon 40 C.F.R. § 122.4(i). Carlota has conceded

App. 20

that for the purpose of this decision § 122.4(i), includ-

ing clauses (1) and (2), is applicable. Carlota was thus

proceeding on the basis that a TMDL had been issued

and that it was required to comply with clauses (1)

and (2). Section 122.4(i) requires that a new dis-

charger into impaired waters for which a pollutant’s

load allocation for the pollutant to be discharged

“must demonstrate, before the close of the comment

period,” the compliance with clauses (1) and (2). 40

C.F.R. § 122.4(i) (2000) (emphasis added). The com-

ment period referred to could not have been the

initial comment period before a TMDL was sought or

established. The comment period had to relate to the

new basis for Carlota’s permit under § 122.4(i).

All of the claims that the Petitioners now rely

upon were raised during the comment period after

the TMDL was performed. They could not have been

raised in the first comment period. These claims were

made known to the EPA not only in the second com-

ment period but also at the time of the preparation of

the TMDL by a letter that raised the point, a copy of

which was furnished directly to the EPA. Thus, the

claim with regard to the copper discharge from

the diversion channels and the cutoff walls was

timely raised and should not have been deemed

forfeited, but it should have been considered by the

Appeals Board. This would be important in determin-

ing whether the requirement for compliance sched-

ules set out in § 122.4(i2) had been met and also it

would be important in determining the extent of the

App. 21

pollutants contributed by Carlota that would be offset

by the Gibson Mine remediation.

D. The State of Arizona’s Requirements.

In addition to violating 40 C.F.R. § 122.4(i), the

Petitioners contend that the permit also violates the

provisions of 40 C.F.R. § 122.4(d), which provides that

no permit may be issued “[wJhen the imposition of

conditions cannot ensure compliance with the appli-

cable water quality requirements of all affected

States.” 40 C.F.R. § 122.4(d) (2000). This must be

considered in connection with § 122.4(a), which states

that no permit may be issued “when the conditions of

the permit do not provide for compliance with the

applicable requirements of the Clean Water Act or

regulations promulgated under the Clean Water Act.”

Id. at § 122.4(a). Thus, the requirements of § 122.4(d)

are in addition to complying with all of the require-

ments of the Clean Water Act and the regulations

promulgated under the Clean Water Act.

Since we here hold that the permit does not

comply with § 122.4(i), the additional requirement of

§ 122.4(d) need not be considered at this time. It

would be appropriate to consider the requirements of

§ 122.4(d) if a permit is properly issued under

§ 122.4(i).

App. 22

E. Compliance With the Requirements of

NEPA.

NEPA requires agencies to examine potential

environmental effects of any proposed action, and to

inform the public of its studies and resulting con-

cerns. If any agency determines that its action may

have a significant impact on the environment, the

agency is required to prepare an EIS describing the

impacts of the action and possible alternatives. 42

U.S.C. § 4332(2)(C) (1975). To determine if the action

will require an EIS, the agency may first prepare an

environmental assessment (“EA”). 40 C.F.R. § 1508.9

(1998). If the EA indicates that there will not be a

significant impact on the environment, the agency

may issue a Finding of No Significant Impact, in

which case an EIS is not required. 40 C.F.R. § 1508.13

(1998).

In the first appellate review before the Appeals

Board, the Petitioners challenged the EPA’s failure to

allow comments on the two new permit conditions

and also the failure to conduct a TMDL prior to

issuing the permit. The supplemental EA issued by

the EPA addressed only the environmental effect of

the two new conditions, not the effect of a permit

issued to a new discharger under § 122.4(i), including

clauses (1) and (2). There is nothing wrong with

incorporating and relying upon the Forest Service

FEIS because it had discussed the effect on waters by

the proposed Carlota Mine. However, the EA pro-

duced by the EPA should have discussed the revised

App. 23

permit issued under § 122.4(i), including clauses (1)

and (2).

The Petitioners argued that the EPA failed to

take a “hard look” at its failure to consider the dis-

charges from the two diversion channels, including

the walls to be established to prevent groundwater

from reaching the mine facilities, which would con-

tribute alluvial water, including copper pollution, to

Pinto Creek. The Appeals Board refused to consider

this argument because it contended that it had not

been raised during the first comment period. As we

have previously explained, it was not possible to

comment upon the request for a permit based upon

the TMDL and the requirements of § 122.4(i) until

after the TMDL had been issued. Thus, for the rea-

sons we expressed in the prior section, it was error for

the Appeals Board not to consider additional dis-

charges from the diversion channels.

The Petitioners also raised other questions

concerning the compliance with NEPA, such as rea-

sonable alternatives to the proposed action. Because

we have held that the permit was improperly issued

under the provisions of § 122.4(i), including clauses

(1) and (2), these NEPA issues need not be considered

at this time.

Vv. CONCLUSION

Because the issuance of the NPDES Permit to

Carlota Copper Mine was based on errors of law

under the Clean Water Act, 40 C.F.R. § 122.4(i), and

App. 24

the NEPA, we vacate and remand the permit to the

EPA for further proceedings consistent with this

opinion.

VACATED and REMANDED.

App. 25

BEFORE THE ENVIRONMENTAL

APPEALS BOARD UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C.

In re:

Carlota Copper Company ) bag a ~—

NPDES Permit No. AZ0024112 ‘

[Decided September 30, 2004]

ORDER DENYING REVIEW

Before Environmental Appeals Judges Scott

C. Fulton, Edward E. Reich, and Kathie A. Stein.

NPDES Appeal Nos. 00-23 & 02-06

ORDER DENYING REVIEW

Decided September 30, 2004

Before Environmental Appeals Judges Scott

C. Fulton, Edward E. Reich, and Kathie A. Stein.

Opinion of the Board by Judge Stein:

I. INTRODUCTION

In July 2000, U.S. Environmental Protection

Agency (“EPA” or “Agency”) Region [X (the “Regidn”)

App. 26

issued a National Pollutant Discharge Elimination

System (“NPDES”)' permit decision (the “Permit”),

number AZ0024112 (the “Permit”), to the Carlota

Copper Company (“Carlota”). The Permit authorizes

Carlota to discharge from its proposed open-pit

copper mine project located near Miami, Arizona (the

“Project”). On August 25, 2000, Friends of Pinto

Creek, the National Wildlife Federation, the Arizona

Wildlife Federation, Grand Canyon Chapter of the

Sierra Club, Mineral Policy Center, Maricopa Audu-

bon Society, and Citizens for the Preservation of

Powers Gulch and Pinto Creek (collectively the “Peti-

tioners”) timely filed a petition requesting that the

Environmental Appeals Board (“EAB” or “Board”)

review the Permit.’ See Petition for Review of NPDES

Permit (Aug. 24, 2000) (“First Petition”).

Thereafter, the Region withdrew two conditions

of the Permit and asked the EAB to stay its consid-

eration of the First Petition.’ See Notification to

' Under the Clean Water Act (“CWA”), persons who dis-

charge pollutants from point sources into waters of the United

States must have a permit in order for the discharge to be

lawful. CWA § 301, 33 U.S.C. § 1311. The National Pollutant

Discharge Elimination System is one of the principal permitting

programs under the CWA. See CWA § 402, 33 U.S.C. § 1342.

* On September 7, 2000, Carlota filed a motion to intervene

and requested leave to file a responsive pleading and otherwise

participate in this proceeding, which request the EAB granted

by order dated September 11, 2000.

* The Region withdrew Permit Condition I.11.a (“Reclama-

tion Work Required Prior to Discharging into Pinto Creek”) and

Permit Condition I.11.b (“Wellficld Mitigation Program”).

App. 27

Board and Interested Parties of Withdrawal of Permit

Conditions and Request for Stay of Petitions (Nov. 9,

2000). The EAB granted the Region’s request for a

stay.’ Order Staying Proceedings in Part (Dec. 5,

2000). The Region then opened a new public comment

period on the withdrawn conditions. On February 27,

2002, the Region reissued the Permit. The reissued

Permit contained the two conditions previously

withdrawn, supported this time by an Amended

Record of Decision (“ROD”) and a Finding of No

Significant Impact (“FONSI”). Thereafter, on April 1,

2002, the Petitioners filed a second petition, this time

seeking review of the Region’s February 27, 2002

decision to reissue the two withdrawn conditions of

the Permit. See Petition for Review of NPDES Permit

(Mar. 29, 2002) (“Second Petition”).

* At the time of the Board’s Order, the Board had before it

two petitions for consideration — the First Petition described

above, and a petition by the Hopi Tribe (“Hopi Tribe Petition”) —

both seeking review of the Region’s decision to issue Permit

AZ0024112 to Carlota. In its November 9, 2000 request, the

Region asked the Board to stay both petitions. See Notification

to Board and Interested Parties of Withdrawal of Permit

Conditions and Request for Stay of Petitions (Nov. 9, 2000). The

Board stayed the First Petition but declined to stay considera-

tion of the Hopi Tribe Petition, thereby staying the proceedings

in part. See Order Staying Proceedings In Part (Dec. 5, 2000).

The Board in a separate order denied review of the Hopi Tribe

Petition. See In re Carlota Copper Co., Order Denying Hopi

Tribe Petition for Review, NPDES Appeal No. 00-24 (EAB Dec.

5, 2000).

App. 28

For the reasons described below, we deny review of

the Permit.

Il. BACKGROUND

A. Statutory and Regulatory Background

1. The Clean Water Act

The CWA prohibits any person from discharging

any pollutant into waters of the United States from a

point source,’ unless the discharge complies with the

statutory requirements. CWA §30l1(a), 33 U.S.C.

§ 1311(a). Section 402 of the CWA authorizes the EPA

Administrator to issue permits for the discharge of

pollutants, provided the discharge meets certain

statutory requirements. CWA § 402(a), 33 U.S.C.

§ 1342(a). Section 402, in turn, provides that permit-

ted discharges must, among other things, comply

with sections 301 and 306. CWA § 402(a)(1), 33 U.S.C.

§ 1342(a)(1).

CWA section 301 provides for the inclusion in

NPDES permits of two different kinds of effluent

limits for point sources: those based on the technol-

ogy available to treat a pollutant, and those neces-

sary to protect the designated and existing uses of

* The CWA defines a point source as “any discernable,

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.” CWA § 502, 33 U.S.C. § 1362.

a 4

App. 29

the receiving water body. The first type, known as

technology-based limits, reflect a specified level of

pollutant-reducing technology required for the type of

facility that is seeking a permit. CWA § 301(b)(1)(A),

33 U.S.C. § 1311(b)(1)(A). The second type, known as

water quality-based effluent limits, apply when

technology-based effluent limits are insufficient to

meet the applicable state water quality standards.

Under the CWA, states must develop water

quality standards for all water bodies within the

state. CWA § 303, 33 U.S.C. $1313. These water

quality standards, which states promulgate and then

submit to EPA for approval, have three components:

(1) one or more “designated uses” of each water body

or water body segment; (2) water quality “criteria”

specifying the amounts of various pollutants that the

water may contain without impairing designated

uses; and (3) an antidegradation provision. CWA

§ 303(c 2A), 33 U.S.C. § 1313(c\2A); 40 C.F.R.

§§ 131.10-.12. The first part, designated uses, basi-

cally classifies water bodies based on the expected

beneficial uses of those water bodies and sets goals

for the water body segment.” The second component,

water quality criteria, are numeric or narrative

criteria “expressed as constituent concentrations,

levels or narrative statements” and designed to attain

* In re Teck Cominco Alaska Inc., NPDES Appeal No. 03-09,

slip op. at 10 (EAB June 15, 2004), 11 EAD. __ (citing US.

EPA Office of Water, NPDES Permit Writers’ Manual § 6.1.1, at

89 (1996)).

App. 30

and maintain each designated use. 40 C.FR.

§ 131.3(b). The third part, the state’s antidegradation

policy, focuses on protecting “existing uses” by gener-

ally prohibiting degradation of water quality below

that necessary to maintain existing uses. Existing

uses are those uses actually attained in the water

body on or after November 28, 1975. Id. § 131.3(e).

Each state’s antidegradation policy must comply with

the federal antidegradation regulations codified at 40

C.F.R. § 131.12° and identify the methods to imple-

ment such policy.

The federal antidegradation policy establishes

three tiers to protect water quality. The first tier

consists of a minimum floor that protects all waters of

the United States,’ and it applies to Pinto Creek, the

water body of interest in this case. See infra Part

IlI.B.1.a. This tier requires maintaining and protect-

ing all existing uses of a water body as well as the

level of water quality mecessary to preserve those

uses. See 40 CFR. § 131.12(a\(1). This means that

the water quality in the water body may be lowered

"US. EPA Office of Water, NPDES Permit Writers’

Manual § 6.1.1, at 89 (1996).

"U.S. EPA Office of Water, NPDES Permit Writers’

Manual § 6.1.1, at 90 (1996).

* The EPA has described this provision as the “absolute

floor of water quality in all waters of the United States.” Water

Quality Standards Regulation, 48 Fed. Reg. 51,400, 51,403 (Nov.

8, 1983); see also Water Quality Standards Regulation, 63 Fed.

Reg. 36,742, 36,781 (July 7, 1998) (Advance Notice of Proposed

Rulemaking); Teck Cominco, slip op. at 11, 11 E.A.D. at ___.

App. 31

but only to the point where all existing uses are

maintained and protected, and that it is not permis-

sible to lower water quality such that existing uses

are impaired.” Note that the first tier focuses on

existing rather than designated uses.'' The second

and third tiers focus on protecting and maintaining

“high quality” and “outstanding” water bodies, re-

spectively. See id. § 131.12(a)(2)-(3). We will not

concern ourselves here with the second and third

tiers because it is undisputed that the State of Ari-

zona has placed Pinto Creek in the first tier, rather

than in these latter two categories.

The CWA also requires states to identify those

water segments where technology-based effluent

limits are insufficient to achieve the applicable water

"© See Proposed Water Quality Guidance for the Great

Lakes System, 58 Fed. Reg. 20,802, 20,886 (Apr. 16, 1993).

" The EPA has explained the difference between these two

concepts as follows:

Designated uses are defined as those uses specified in

water quality standards for each water body or seg-

ment whether or not they are being attained. EPA in-

terprets existing uses as those uses actually attained

in the water body on or after November 28, 1975 (the

date of EPA’s initial water quality standards regula-

tion), whether or not they are included in water qual-

ity standards. 40 C.F.R. § 131.3(e). Designated uses

focus on the attainable condition while existing uses

focus on the past or present condition.

Teck Cominco, slip op. at 12, 11 E.A.D. at __ (citing Water

Quality Standards Regulation, 63 Fed. Reg. 36,742, 36,748 (July

7, 1998) (Advance Notice of Proposed Rulemaking)).

;

App. 32

quality standards, and which are therefore “water

quality limited.” CWA § 303(d)(1)(A), 33 U.S.C.

§ 1313(d)(1)(A). Once a state identifies a segment as

water quality limited, the statute requires the state

to develop total maximum daily loads (“TMDLs”)

for that segment.” CWA § 303(d)(1)(C), 33 U.S.C.

§ 1313(d)(1(C). A TMDL sets forth the total amount

of a pollutant from point sources, nonpoint sources,

and natural background that a water-quality limited

segment can tolerate without violating water quality

standards. 40 C.F.R. § 130.24). TMDLs consist of

waste load allocations (“WLAs”)” for point sources

discharging into the impaired segment and load

* In the instant case, Region IX, in collaboration with the

Arizona Department of Environmental Quality (“ADEQ”),

developed a TMDL for Pinto Creek. Generally, if a state fails to

submit TMDLs for its impaired waters, the EPA may initiate

the process of developing applicable TMDLs. In some cases, EPA

may be obligated to develop federally created TMDLs in light of

a state’s lack of action to create its own. A few federal circuit

courts, including the Ninth Circuit, have found such an obliga-

tion when a state “constructively submits” no TMDLs. Because

this is not an issue in the instant case, we will not concern

ourselves with the subtleties of the “constructive submission

doctrine.” For a discussion of the doctrine see Ala. Ctr. for the

Env’t v. Reilly, 762 F. Supp. 1422 (W.D. Wash. 1991); Ala. Ctr.

for the Env’t v. Reilly, 796 F.Supp. 1374 (W.D. Wash. 1992), aff'd

sub nom. Ala. Ctr. for the Env’t v. Browner, 20 F.3d 981 (9th Cir.

1994).

" The regulations define the term “waste load allocation” as

“(tlhe portion of a receiving water’s loading capacity that is

allocated to one of its existing or future point sources of pollu-

tion. WL.As constitute a type of water quality-based effluent

limitation.” 40 C.F.R. § 130.2(h).

App. 33

allocations (“LAs”) for nonpoint sources and natural

background.

Section 306 establishes additional limitations

that apply only to “new sources.” CWA § 306, 33

U.S.C. § 1316. The CWA defines the term “new

source” as “any source, the construction of which is

commenced after the publication of proposed regula-

tions prescribing a standard of performance, which

will be applicable to such source,” if such standard is

promulgated in accordance with CWA section 306.

CWA § 306(a)(2), 33 U.S.C. § 1316(a)(2); see also 40

C.F.R. § 122.2 (regulatory definition of “new source”).

EPA has promulgated such standards for a wide

array of point source categories, including ore mining

and the subcategory of copper, lead, zinc, gold, silver,

and molybdenum ore mines applicable to Carlota’s

proposed project. See 40 C.F.R. pt. 440, subpt. J. The

parties here do not dispute that Carlota’s proposed

open-pit copper mine would be a “new source” within

the meaning of section 306(a)(2) of the CWA and 40

C.FR. § 122.2.

As discussed more fully belov’, the CWA and its

implementing regulations also provide that, in cer-

tain circumstances, the EPA must comply with the

National Environmental Policy Act (“NEPA”), 42

“ The term “load allocation” means “the portion of a

receiving water's loading capacity that is attributed either to one

of its existing or future nonpoint sources of pollution or to

natural background sources.” 40 C.F.R. § 130.2(g).

App. 34

U.S.C. §§ 4321-4370e, when issuing an NPDES

permit. See CWA § 51lic)(1), 33 U.S.C. § 1371(c\(1);

see also 40 C.F.R. § 122.29(c). More specifically, when

the Agency issues an NPDES permit to a “new

source,” as defined in CWA section 306, the Agency

must comply with NEPA’s procedural requirements.

See CWA § 511(c)\(1), 33 U.S.C. § 1371(c)(1); see also

40 C.F.R. § 122.29(c)(1)().

2. The National Environmental Policy Act

NEPA is an “action-forcing” statute,” intended to

“promote efforts which will prevent or eliminate

damage to the environment and biosphere and stimu-

late the health and welfare of man” and “enrich the

understanding of the ecological systems and natural

resources.” NEPA § 2, 42 U.S.C. § 4321. NEPA’s

requirements are procedural, in that they call upon

federal agencies to examine the environmental conse-

quences of possible agency actions. See In re Dos

‘* See Marsh v. Or. Natural Res. Council, 490 U.S. 360, 371

n.14 (1989) (“The term ‘action forcing’ was introduced during the

Senate’s consideration of NEPA, * * * and refers to the notion

that preparation of an [environmental impact statement)

ensures that the environmental goals set out in NEPA are

‘infused into the ongoing programs and actions of the Federal

Government,’ 115 Cong. Rec. 40416 (1969) (remarks of Sen.

Jackson).”); see also Kleppe v. Sierra Club, 427 U.S. 390, 409

n.18 (1976); 40 C.F.R. § 1500.1(a) (1987) (stating that NEPA

§ 102(2XC) is an action-forcing provision intended to assure that

all agencies consider the environmental impact of their actions

in decisionmaking).

App. 35

Republicas Res. Co., 6 E.A.D. 643, 647 (EAB 1996).

Accordingly, NEPA does not mandate any particular

substantive results. Robertson v. Metiiow Valley

Citizens Council, 490 U.S. 332, 350-51 (1989). As the

Court stated in Robertson: “Although these proce-

dures are almost certain to affect the agency’s sub-

stantive decision, it is well settled that NEPA itself

does not mandate particular results, but simply

prescribes the necessary process. * * * NEPA merely

prohibits uninformed — rather than unwise — agency

action.” Jd. By focusing the agency’s attention on the

environmental consequences of possible agency

action, “NEPA ensures that important effects will not

be overlooked or underestimated only to be discovered

after resources have been committed.” Id. at 349.

NEPA’s action-forcing procedures require agencies to

take a “hard look”” at environmental consequences

and to broadly disseminate relevant environmental

information. Jd. at 350.

The environmental impact statement (“EIS”)

requirement comprises the heart of NEPA. This

provision mandates that federal agencies compile and

consider detailed information on the environmental

impact of the proposed federal action, adverse envi-

ronmental effects that cannot be avoided if the pro-

posal is implemented, alternatives to the proposed

action, the relationship between local short-term uses

of the human environment and the maintenance and

'* See discussion infra Part III.C.2.b.

App. 36

enhancement of long-term productivity, and any

irreversible and irretrievable commitments of re-

sources that would be involved in the proposed action

if it is implemented. NEPA § 102(2\C)(i)-(v), 42 U.S.C.

§ 4332(2\C)\i)-(v); see 40 C.F.R. pts. 1502, 1508 (NEPA

EIS regulations and definitions promulgated by the

Council on Environmental Quality (“CEQ”), which

apply to all federal agencies); 40 C.F.R. pt. 6 (EPA-

specific NEPA regulations); see also In re Phelps Dodge

Corp., 10 E.A.D. 460, 473 (EAB 2002).

Each agency action does not necessarily require

the preparation of an EIS. Under NEPA, a federal

agency must prepare an EIS only when the proposed

action is a “major federal action significantly affecting

the quality of the human environment.” NEPA

§ 102(2)(C), 42 U.S.C. § 4332(2)(C) (emphasis added).

B. Factual and Proce”rai Background

1. Overview

Carlota has proposed to construct, operate, and

reclaim an open-pit copper mine and associated

"In enacting NEPA, Congress created the CEQ in the

Executive Office of the President. The CEQ is a three-member

body composed of persons the President appoints, with the

advice and consent of the Senate. Congress envisioned that the

CEQ would be “exceptionally well qualified to analyze and

interpret € avironmental trends and information of all kinds * * *

and to formulate and recommend national policies to promote

the improvement of the quality of the environment.” NEPA

§ 202, 42 U.S.C. § 4342.

App. 37

processing facilities on private land near the town of

Miami in Gila and Pinal Counties, Arizona, and on

lands the Globe Ranger District of the Tonto National

Forest administers. The Tonto National Forest man-

agement determined that the proposed Project poten-

tially would result in significant environmental

impact, and thus it required an EIS. The U.S. Forest

Service served as the lead agency and prepared a

final EIS (the “FEIS”). The U.S. Army Corps of Engi-

neers (“ACOE”) and the Arizona Department of

Environmental Quality (“ADEQ”) participated as

cooperating agencies.” The U.S. EPA played a role by

filing comments on the draft EIS. See FEIS App. 2 G

(Letter 1). Because the Project contemplates discharg-

ing pollutants into waters of the United States, that

is, the Pinto Creek watershed, Carlota applied for an

individual NPDES permit that would allow the

discharges.

2. The Project

Three water drainage systems currently exist

within the Project area: Pinto Creek, Haunted Can-

yon, and Powers Gulch. NPDES Permit Fact Sheet at

" As explained more fully below, the Project contemplates

constructing two diversion channels which, under CWA § 404,

fall under the jurisdiction of the ACOE. See CWA § 404, 33

U.S.C. § 1344. The ACOE developed a supplemental environ-

mental impact assessment (“ACOF’s SEA”) in January 1998 to

address additional ACOE regulatory responsibilities that the

FEIS did not cover.

Ps a ew “ Ne be 4

App. 38

3 (Sept. 1998) (“Fact Sheet”). Powers Gulch drains

into Haunted Canyon, which in turn drains into Pinto

Creek north of the Project area. Pinto Creek ulti-

mately drains into Roosevelt Lake. Jd. Carlota’s

proposed Project would impact Pinto Creek and

Powers Gulch.

More specifically, Carlota contemplates creating

two diversion channels that would divert surface and

ground water away from the main mining pit in Pinto

Creek and away from a sulfuric acid heap leach

facility in Powers Gulch. The Pinto Creek diversion

channel would eliminate approximately 5,300 feet of

the existing Pinto Creek stream, while the Powers

Gulch diversion channel would eliminate approxi-

mately 7,300 feet of Powers Gulch stream. /d. at 2.

Carlota has obtained a permit under section 404 of

the CWA that allows and governs the creation of the

two diversion channels. See Carlota Copper Project

404 Permit, Permit No. 944-0899 (Jan. 23, 1998).

The proposed Project, as the Region described it

in the Fact Sheet, “would consist of open pits, a

solvent extraction/electrowinning (SX/EW) plant,

heap leach pad, process solution ponds, waste rock

disposal areas, and ancillary facilities.” Fact Sheet at

2. Carlota’s plans call for the mine pits to drain

internally so that “there will be no discharges of mine

water during operations.” Jd. Carlota will also design

the leach system as a “closed loop system.” Carlota

intends to line the heap leach pad and solution ponds

with synthetic liners so that “there will be no dis-

charges from the leach system.” /d.

App. 39

Carlota plans to use five separate areas for waste

rock disposal. Two disposal areas would consist of

backfill to the Carlota/Cactus pit and the Eder pit. Jd.

Carlota plans to construct three other waste rock

disposal areas, consisting of waste rock dumps: (1)

the Main Dump; (2) the Cactus Southwest Dump; and

(3) the Eder Dump. Jd. Downgradient from the faces

of the Main Dump and the Eder Dump, Carlota will

build seven storm water and sediment retention

basins, or retention ponds, to capture storm water

runoff and sediment from the slopes of the waste rock

dumps. /d. at 3-4. The basins will contain outlet

structures to release storm water if a storm event

exceeds the design criteria. Jd. These outlets, where

discharges could occur during large precipitation

events, are outfalls that require an NPDES permit.

Id. at 4.

There will be seven of these outfalls: four from

retention ponds designed to collect and manage storm

runoff from the west side of the Main Dump (Nos. 001

to 004), one from the retention pond designed to

collect and manage storm runoff from the north and

east sides of the Main Dump (No. 005), and two from

the retention ponds designed to collect and manage

storm runoff from the east side of the Eder Dump

(Nos. 006 & 007). Jd. at 4, 6. All of these retention

ponds and outfalls will have a similar design. Carlota

will build the ponds using rock embankments and

will design them to hold ten times the average annual

sediment yield associated with the respective drain-

age area. Id. at 4-6. The Permit requires periodic

a Se ee eek,

App. 40

removal of sediments, and Carlota will in turn place

the removed sediments on top of the waste rock

dumps. Jd. Each pond will retain runoff from precipi-

tation events less than the design criteria, and dis-

posal will occur through evaporation. Jd. Discharges

from precipitation events that exceed design criteria

will be “through a ‘Morning Glory’ type outlet (i.e., a

screened vertical pipe inside the retention pond), if

the depth of storm water within the pond exceeds the

top level of the outlet pipe.” /d. at 4-5.

In a precipitation event that exceeds design

capacity by ten percent, the retention ponds are

estimated to have a ninety-five percent trap efficiency

for the collection of sediments. Jd. at 5-7. Carlota will

design the retention ponds associated with Outfall

Nos. 001 to 004 and 006 to 007 so that discharges

would occur only from storm events that exceed the

volume of runoff from a 10-year, 24-hour precipitation

event. Id. at 4-6. All of these outfalls will discharge

into Powers Gulch. The retention pond associated

with Outfall No. 005 will be designed so that dis-

charges will occur only for storm events that exceed

the volume of runoff from a 100-year, 24-hour precipi-

tation event. Jd. at 5. This outfall is the only storm

water discharge point that will discharge directly into

Pinto Creek and Haunted Canyon Creek.

The Project will need a water supply of, on aver-

age, 590 gallons per minute (“gpm”). In order to

partially satisfy the Project’s needs, Carlota will

develop a water supply wellfield along Haunted

Canyon and Pinto Creck to provide supplemental

App. 41

water for the Project. The Forest Service determined

that pumping from this wellfield might reduce stream

flows in Haunted Canyon and Pinto Creek. Accord-

ingly, the Forest Service required Carlota to develop

mitigation measures, which include augmenting the

stream flows with either ground water pumped from

the wellfield or water from other suitable sources.

This creates an eighth outfall (No. 008), which the

NPDES regulations also govern.

3. Procedural Background

In September 1998, the Region issued an NPDES

draft permit and published notice that the public

could comment on the draft permit from September

29, 1998, through December 31, 1998 (hereinafter the

“1998 Public Comment Period” or “First Public Com-

ment Period”). During the First Public Comment

Period, the Region held two public hearings on the

draft permit, one on November 12, 1998, in Mesa,

Arizona, and the second on November 13, 1998, in

Globe, Arizona. The Region received approximately

1,000 comments on the draft permit, including com-

ments from the Petitioners.

The draft permit would have authorized dis-

charges of storm water from Outfalls Nos. 001

through 007, but it did not authorize mitigation

discharges to augment the Haunted Canyon and

Pinto Creek stream flows (Outfall No. 008). The

Petitioners’ comments, among other things, argued

that Carlota needed an NPDES permit for any such

App. 42

mitigation discharges. After the public comment

period concluded, Carlota amended its permit appli-

cation to request permission to discharge into

Haunted Canyon to augment the stream flow. In

addition, in response to comments concerning copper

loading in Pinto Creek, Carlota proposed to partially

remediate the nearby Gibson Mine to offset dis-

charges of copper from Outfalls Nos. 001 through 007.

On June 30, 2000, the ADEQ certified the Permit

pursuant to section 401 of the CWA.” Thereafter, on

July 24, 2000, the Region issued the final Permit to

Carlota. The final Permit contained conditions au-

thorizing mitigation discharges from Outfall No. 008,

and it required Carlota to partially remediate Gibson

Mine before discharging from Outfalls Nos. 001

through 007.

As already noted, the CWA requires the Region to

conduct a NEPA review before the Region could issue

the NPDES Permit to Carlota.” In making the July

2000 permit decision, the Region relied on the NEPA

'* All NPDES permit applicants must obtain a certification

from the appropriate state agency validating the permit’s

compliance with the pertinent federal and state water pollution

control standards. CWA § 401(a)(1), 33 U.S.C. § 1341(a\(1). EPA

may not issue a permit until the state in which the discharge

originates grants or waives certification. 40 C.F.R. § 124.53(a).

The regulations further provide that “when certification is

required * * * no final permit shall be issued * * * [uJnless the

final permit incorporates the requirements specified in the

certification.” Jd. § 124.55(a).

*” See CWA § 511(cK1), 33 U.S.C. § 1371(c(1).

App. 43

analyses the Forest Service and the ACOE had pre-

pared. See Fact Sheet at 20. During the First Public

Comment Period, the public could comment on the

Region’s decision to adopt these NEPA documents.

See Response to Comments on the Following EPA

Proposed Actions: Issuance of an NPDES Permit and

Adoption of NEPA Documents: FEIS, U.S. Forest

Service, July 1997 and SEA, ACOE, January 1998

{hereinafter Response to Comments First Public

Comment Period].

Dissatisfied with the Region’s July 2000 decision,

Petitioners timely filed their First Petition with the

Board, which argued, among other things, that: (1)

because Pinto Creek is a water quality-limited seg-

ment, the Region must develop and implement a

TMDL before issuing a permit to a new source; thus,

the Region could not issue a permit to Carlota until

the TMDL process takes place; (2) the Region did not

properly provide the public with notice of the two new )

permit conditions governing the Gibson Mine partial |

remediation and the discharges from Outfall No. 008;

(3) Carlota must obtain an NPDES permit for dis-

charges associated with the Gibson Mine; and (4) the

Region should not have relied solely on the FEIS and

the ACOE’s SEA to fulfill its NEPA requirements

because those documents did not consider the envi-

ronmental impacts of the Gibson Mine cleanup and

the mitigation discharges from Outfall 008 into

Haunted Canyon. See First Petition at 7, 21, 35, 46.

On November 7, 2000, pursuant to 40 C.F.R.

§ 124.19(d), the Region withdrew the two contested

i ei ei sae: 6

‘

App. 44

permit conditions so that the public could comment

on these conditions. The Region asked the Board to

stay the remaining conditions of the Permit; as noted

in Part I above, we granted this request through an

order dated December 5, 2000. On April 27, 2001, the

Region approved a Final Total Maximum Daily Load

for Copper in Pinto Creek, Arizona (the “Pinto Creek

TMDL”). Thereafter, on May 9, 2001, the Region

provided an opportunity for the public to comment on

the two withdrawn permit conditions — Permit Condi-

tions I.A.1l.a & .b — and on a supplemental environ-

mental assessment EPA prepared (the “Region’s

SEA”) analyzing these conditions of the Permit under

NEPA’s requirements. The public comment period ran

from May 9, 2001, through June 25, 2001 (the “2001

Public Comment Period” or “Second Public Comment

Period”). The ADEQ issued a new section 401 certifi-

cation on February 8, 2002.” See Region’s Response to

* The ADEQ Section 401 Certification states as follows:

On June 30, 2000, the [ADEQ)] provided certification

under Section 401 of the [CWA] for a proposed

NPDES permit * ** . This permit was subsequently

appealed, and EPA advises that it is finally being is-

sued without changes to any oi the permit conditions.

Based on this understanding and with consideration

that Arizona water quality standards have not

changed for this area, we consider the previous certi-

fication to still be applicable amd the permit to be pro-

tective of the water quality requirements of the State

of Arizona.

Region’s Response Ex. 17 (Letter from Karen L. Smith, Director,

Water Quality Division, ADEQ, to Terry Oda, U.S. EPA Region

9 (Feb. 8, 2002)).

_— —— -_-

App. 45

Petition for Review (“Region’s Response”) Ex. 17

(Letter from Karen L. Smith, Director, Water Quality

Division, ADEQ, to Terry Oda, U.S. EPA Region 9

(Feb. 8, 2002)).

Based on its NEPA analysis, the Region made “a

finding of no significant impact” (“FONSI”), determin-

ing that it did not have to develop its own EIS be.

cause the FEIS along with the ACOE’s SEA and the

Region’s SEA collectively met NEPA’ s requirements.

See Amended Record of Decision/Finding of No Sig-

nificant Impact (Feb. 27, 2002) (“ROD/FONSI’). Thus,

on February 27, 2002, the Region reissued the with-

drawn conditions of the Permit along with an

amended ROD and a FONSI.

On April 1, 2002, Petitioners filed a second

petition, arguing, among other things, that: (1) the

Region failed to properly regulate discharges from the

Project site; (2) the discharges from the Project vio-

late the CWA; and (3) the Region violated NEPA. See

Second Petition at 2, 15, 27. The Region filed its

response on June 17, 2002. See Region’s Response. On

June 21, 2002, Carlota filed a response to both Peti-

tions and a motion to dismiss. See Response of Inter-

venor Carlota Copper Company to Petitions for |

Review and Motion to Dismiss (“Carlota’s Response”).

On July 24, 2002, Petitioners filed a third brief, this

time a consolidated reply in response to the Region’s |

and Carlota’s responses. See Petit:oners Consolidated

Reply (“Reply Brief”).

icine

App. 46

The Board held oral argument on October 24,

2002, during which the Board questioned Petitioners,

the Region, and Carlota about several issues the

Board had previously identified. See Order Regarding

Oral Argument (Oct. 15, 2002). Following oral argu-

ment, the Board ordered the Region to respond to

further questions that arose out of the oral argument.

See Order for Additional Briefing (Jan. 14, 2003). The

Region and Carlota filed supplemental briefs on

March 11, 2003. See Supplemental Brief of EPA

Region 9 (“Region's Supplemental Brief”); Response

of Intervenor Carlota Copper Company to Order for

Additional Briefing (“Carleta’s Additional Briefing”).

On March 25, 2003, Petitioners filed a consolidated

response to the supplemental briefs the Region and

Carlota filed. See Petitioner’s Consolidated Response

te the Supplemental Briefs Filed by Region 9 of the

Environmental Protection Agency and the Carlota

Copper Company (“Petitioners’ Response to the

Supplemental Briefs”).”

a eS

“ On April 13, 2003, Petitioners filed a notice of supplemen-

tal authority requesting that the Board consider in its decision-

making a recent case issued by the Federal Court of Appeals for

the Ninth Circuit - Northern Plains Resource Council v. Fidelity |

Exploration and Development Co., 325 F.3d 1155 (9th Cir. 2003). |

In their motion, Petitioners explain how, in their view, the cited |

case is relevant to some of the issues Petitioners raise on appeal.

On April 25, 2003, Carlota filed a motion for leave to file a |

response to Petitioners’ notice of supplemental authority. While

we take official notice of the case, we nonetheless deny Petition-

ers’ motion and reject Petitioners’ attempt to further argue their

(Continued on following page)

App. 47

III. DISCUSSION

Under the rules governing this proceeding, the

unless the Region based the permit on a clearly

erroneous finding of fact or conclusion of law or the

permit appeal raises an important matter of policy or

exercise of discretion that warrants review. 40 C.F.R.

§ 124.19(a); see In re Phelps Dodge Corp., 10 E.A.D.

460, 471 (EAB 2002); In re Gov't of D.C. Mun. Sepa-

rate Storm Sewer Sys., 10 E.A.D. 323, 333 (EAB

2002). In reviewing NPDES permits, the Beard is

guided by the concept articulated in the preamble to

the part 124 permitting regulations, which states

that the Board’s power of review “should be only

sparingly exercised” and that “most permit conditions

should be finally determined at the [rlegional level.”

45 Fed. Reg. 33,290, 33,412 (May 19, 1980); accord In

re City of Moscow, 10 E.A.D. 135, 141 (BAB 2061).

Petitiomer bears the burden of demonstrating

that the Board should review the permit. First, a

petitioner seeking review must demonstrate that

any issues it raises on appeal have been preserved

for Beard review. 40 C.F.R. §$§ 124.13, .19. See City

of Moscow, 10 E.A.D. at 141; Jm re City of Phoenix,

9 E.A.D. 515, 524 (EAB 2000), appeal ‘iismissed

per stipulation, No. 01-70263 (9th Cir. Mar. 21,

2002). Assuming the issues have been preserved, the

case. In light of our disposition of Petitioners’ motion, we deny

Carlota’s motion for .eave to file a response brief.

App. 48

petitioner must then state its objections to the permit

and explain why the permit issuer’s previous re-

sponse to those objections is clearly erroneous, an

abuse of discretion, or otherwise warrants review. 40

C.F.R. § 124.19(a); see In re Town of Ashland Waste-

water Treatment Facility, 9 E.A.D. 661, 668 (EAB

2001); In re Haw. Elec. Light Co., 8 E.A.D. 66, 71-72

(EAB 1998). Significantly, a petitioner seeking review

of issues that are technical in nature bears a heavy

burden because the Board generally defers to the

Region on questions of technical judgment. Town of

Ashland, 9 E.A.D. at 667; In re NE Hub Partners,

L.P., 7 E.A.D. 561, 567 (EAB 1998), review denied sub

nom. Penn Fuel Gas, Inc. v. U.S. EPA, 185 F.3d 862

(3d Cir. 1999).

As previously stated, Petitioners have grouped

their arguments into three broad categories. Petition-

ers argue that: (1) the Project will produce pollutant

discharges to waters of the United States that the

Permit does not regulate, see Second Petition at 2-15;

(2) the discharges from the Project that the Permit

does regulate will violate the CWA because a number

of discharges will, or potentially will, violate Ari-

zona’s water quality standards and its antidegrada-

tion requirements, id. at 15-26; and (3) the Region’s

permitting decision violates NEPA because the Re-

gion failed to consider a reasonable range of feasible

alternatives, predetermined the outcome of the FONSI,

and failed to take the required “hard look” at the

impacts from the discharges. Id. at 27-40.

App. 49

As explained in more detail below, we deny

review of the Permit. With regard to Petitioners’ first

category of arguments, Petitioners failed to show that

some of those arguments were preserved for Board

review, see infra Parts III.A.2-.3, and where the

arguments were preserved, Petitioners failed to show

that the Region clearly erred by not requiring Carlota

to apply for a permit to cover discharges from the

Gibson Mine site during remediation, see infra Part

III.A.1. With regard to the arguments raised in the

second category, our examination of the record shows

that the Permit does-not violate Arizona water qual-

ity standards for copper and temperature, as Peti-

tioners claim, see infra Parts III.B.1.a-.b, and that the

Region did not violate the requirements of 40 C.F.R.

§ 122.4(i), see infra Part. III.B.2. Finally, as to Peti-

tioners’ arguments that the Region violated NEPA,

we find, as with the first category, that Petitioners

failed to preserve for Board review some of the argu-

ments in support of their claim; and with respect to

those arguments that were preserved, Petitioners did

not meet their burden to show clear error. Our analy-

sis follows.

A. Discharges That Petitioners Contend the

Permit Should Regulate

Petitioners identify three sources of pollutant

discharges that Petitioners claim the Permit should,

but does not, cover: (1) discharges from the Gibson

Mine site during and after the partial remediation of

that site, see First Petition at 35-43; Second Petition

App. 50

at 14-15; (2) discharges from the two diversion chan-

nels Carlota intends to build in Pinto Creek and

Powers Gulch to divert surface and ground water

flows from the main Carlota/Cactus pit and the

sulfuric acid leach facility, see Second Petition at 3-11;

and (3) discharges from abandoned mines located on

property allegedly controlled or claimed by Carlota,

see id. at 11-12.

1. Discharges from the Gibson Mine Rec-

lamation

Petitioners challenge the proposed Gibson Mine

partial reclamation portion of the Project from two

different perspectives. Petitioners first argue that the

reclamation work itself requires an NPDES permit

because pollutants will be discharged from the Gibson

Mine site. We will consider this argument in this

section of our decision, Part III.A.1. Petitioners also

object to certain aspects of the proposed use of the

Gibson Mine partial reclamation to offset Carlota’s

discharges. We will consider these arguments in a

later part of this decision, Part III.B.1.a.

We begin by reviewing Petitioners’ argument,

which has changed during the course of this appeal.

In their First Petition, Petitioners argued that dis-

charges from the Gibson Mine site must be regulated

by an NPDES permit. First Petition at 35-43. Peti-

tioners claimed that an NPDES permit is required

because: (1) the Gibson Mine is, or contains, a point

source; (2) Carlota would add pollutants to navigable

App. 51

waters of the United States; and (3) Carlota would be

an operator of the Gibson Mine. Jd. Petitioners also

claimed that because the Region based its decision to

authorize Carlota’s discharges on Carlota’s successful

reduction of copper loading at the Gibson site, requir-

ing an NPDES permit for Carlota at the Gibson Mine

would ensure that the offset is successful. See id. at

44-46. Petitioners stated their conceits as follows:

The requirement for a[n] NPDES permit at

Gibson will help ensure that the “offset” has

actually occurred and that copper loadings

have been reduced as planned. Such a permit

would necessarily include upstream and

downstream monitoring and compliance points

to gauge the effectiveness of the remediation

work. In addition, such permit-required moni-

toring will determine if the loadings are indeed

eliminated forever, rather than just temporar-

ily abated. * * * Such long-term monitoring

is especially important given the projected

20-year operating life of the Mine.

Id. at 44.

In their Second Petition, Petitioners also argue

that the Region failed to require an NPDES permit

for Carlota’s work as an operator of the Gibson Mine

site. Second Petition at 3. The theory Petitioners

advance in the Second Petition, however, is that the

Agency has, allegedly, a mandatory duty to regulate

unpermitted discharges, and therefore, the Region

clearly erred by failing to require an NPDES permit

for Carlota’s work as an operator of the Gibson Mine.

App. 52

Id. at 13. Premised on the existence of such a duty,

Petitioners request that the Region issue an NPDES

permit to Carlota as an operator of the Gibson Mine

site and also issue another NPDES permit to the

landowners of the site. Jd. at 14.

In their Reply Brief, Petitioners’ focus evolved

again; in this brief, they expressly claim that this

NPDES Permit (i.e., the same NPDES Permit author-

izing the discharges at the Carlota project), as op-

posed to a potentially separate NPDES permit, must

regulate the post-remediation discharges from the

Gibson Mine site. Reply Brief at 29. In their Reply

Brief, Petitioners raise concerns that this Permit did

not contain monitoring conditions to determine

whether the Gibson cleanup is successful. In Peti-

tioners’ words, having post-remediation monitoring

“would eliminate the very real possibility that while

the discharges may be reduced in the short-term,

pollution levels could creep back in the long-term.”

Reply Brief at 31.

The Region, for its part, argues that the issue of

whether EPA has a mandatory duty to regulate all

unpermitted discharges, including the Gibson Mine,

was never raised during the public comment periods

and, therefore, was not preserved for Board review.

See Region’s Response at 8. In addition, the Region

maintains that Petitioners’ arguments do not warrant

Board review because the arguments do not consti-

tute a challenge to a permit condition. Jd. at 10-11.

Carlota raises a similar argument in its response.

Carlota argues that 40 C.F.R. § 124.19 “does not

App. 53

authorize review based upon the absence of condi-

tions in a permit” and that “Petitioners’ request for

the addition of conditions authorizing other discharge

points does not meet this requirement and should be

rejected.” Carlota’s Response at 13.

In any event, the Region argues, its decision to

not require a permit covering remediation activities

at the Gibson site is justified. The Region explains on

appeal that it decided not to require an NPDES

permit for Carlota’s remediation because Carlota does

not intend to discharge during remediation and

Carlota’s partial remediation of a small portion of the

Gibson Mine site will not transform Carlota into an

operator of the entire site such that it would be liable

for all discharges from the site after completion of the

remediation. See Region’s Response at 22-26.

At the outset, we reject the Region’s assertions

that Petitioners did not preserve the issue of the

Region’s alleged duty to require an NPDES permit for

the Gibson Mine remediation activities. Because the

Gibson Mine offset was not proposed during the First

Public Comment Period, Petitioners had no obligation

to raise a concern that the offset required an NPDES

permit during that period. During the Second Public

Comment Period, Petitioners specifically argued that

Carlota needed an NPDES permit for its work at the

Gibson Mine, and Petitioners incorporated by refer-

ence in those comments the arguments they raised in

the First Petition objecting to the inclusion of the

Gibson Mine offset without a prior opportunity to

comment on this issue. See Comments of Friends of

App. 54

Pinto Creek, et al., Letter from Roger Flynn, Western

Mining Action Project, & Kimberly J. Graber, Na-

tional Wildlife Federation 5 (June 21, 2001) (“(T)he

EPA fails to ensure that Carlota obtain a CWA § 402

discharge permit for its work at the Gibson site. See

Friends of Pinto Creek’s EAB appeal (incorporated

herein by reference).”).

In addition, we reject Carlota’s effort to charac-

terize Petitioners’ contention that the Permit should

contain discharge limits applicable to the Gibson

Mine remediation as improperly seeking the “addition

of permit conditions” or improperly seeking review

based upon “the absence of permit conditions.” Simi-

larly, we are not persuaded by the Region’s contention

that Petitioners’ arguments do not challenge a permit

condition. We view the remediation work that Carlota

proposes to perform at the Gibson Mine site as part of

the Permit allowing Carlota’s discharges at the

Project since the Permit itself makes discharges at

the Project contingent upon Carlota’s partial reme-

diation of the Gibson Mine. Specifically, Petitioners

have raised these issues as part of their request tha.

we review Permit Conditions I.A.1 and I.A.11.a,

which require Carlota to partially remediate the

Gibson Mine site before discharging from any of the

eight outfalls listed in the Permit. Therefore, the

question whether the conditions requiring partial

remediation must contain further limitations to

ensure the success of the offset falls within our juris-

diction “to review any condition of the permit deci-

sion.” 40 C.F.R. § 124.19.

App. 55

Accordingly, having rejected the foregoing argu-

ments of the Region and Carlota, we now consider: (1)

whether the Region had a mandatory duty to issue or

require an NPDES permit for the remediation work

at the Gibson Mine site; (2) whether the Region

abused its discretion in not requiring Carlota to

obtain such a permit; and (3) whether the Region

clearly erred by not including post-remediation

conditions in Carlota’s Permit.

As discussed more fully below, Petitioners have

not cited any authority, and we are unaware of any,

that mandates that the Agency must issue or require

Carlota to apply for an NPDES permit to cover al-

leged discharges from the Gibson Mine site. Nor have

Petitioners shown that the Region clearly erred or

abused its discretion in not requiring Carlota to take

such action. Finally, as to whether this Permit should

contain conditions to ensure the success of remedia-

tion, we find that Petitioners failed to preserve this

particular issue for Board review. We address the

specifics of each of these issues in turn.

a. Whether the Region Had a Mandatory

Duty to Issue or Require a Permit

Petitioners rely on section 123.1(g)(1) of 40

C.F.R.~ and several court cases to support their

“ Petitioners cite to section 123.2(g)(1). As there is no

section 123.2(g)(1), we construe this as a typographical error,

and read it instead as section 123.1(g)(1).

App. 56

proposition that EPA must “regulate all known dis-

charges” and, therefore, the Region was required to

either issue a permit to Carlota that would cover

discharges from the Gibson Mine or require Carlota

to apply for such a permit. See Second Petition at 13.

Petitioners also rely on section 309(a)(3) of the CWA,

33 U.S.C. § 1319(a\3), to further bolster their argu-

ment. Jd. at 14. According to Petitioners, EPA has a

nondiscretionary duty to take corrective action, which

includes issuing permits to known dischargers. Id.

Neither the cases nor the provisions Petitioners

cite stand for the proposition Petitioners urge the

Board to adopt. Section 123.1, the first authority

Petitioners cite, merely states the procedures EPA

will follow in approving a state NPDES program and

the requirements a state must meet in order for the

Administrator to approve its program. In particular,

section 123.1(g)(1) provides: “(T]he [s]tate program

must prohibit all point source discharges of pollut-

ants.” 40 C.F.R. § 123.1(g)(1). Petitioners suggest we

derive from this specific section a mandatory obliga-

tion on EPA’s part to take specific action in the form

of issuing permits or requiring the owner or operator

of a particular site with illegal discharges to apply

for a permit. We do not read the section in this

narrow way, and we disagree that such mandatory

duties flow from this section.“ That the state permit

*“ The agency’s discretion to act is different from a dis-

charger’s or prospective discharger’s duty to apply. As explained

below, a discharger or potential discharger of pollutants has an

(Continued on following page)

App. 57

program must prohibit all point source discharges

does not, without more, limit EPA’s discretion to

prioritize its permitting activities or to make choices

about how best to bring facilities into compliance. The

interpretation Petitioners propose is clearly in con-

flict with the well-settled principle that an agency

decision whether to act against a violator falls within

its discretionary authority. As the Supreme Court has

stated:

[A]n agency decision not to enforce often in-

volves a complicated balancing of a number

of factors which are peculiarly within its ex-

pertise. Thus, the agency must not only as-

sess whether a violation has occurred, but

whether agency resources are best spent on

this violation or another, whether the agency

is likely to succeed if it acts, whether the

particular enforcement action requested best

fits the agency’s overall policies, and, indeed,

whether the agency has enough resources to

undertake the action at all. An agency gen-

erally cannot act against each technical vio-

lation of the statute it is charged with

enforcing. The agency is far better equipped

than the courts to deal with the many vari-

ables involved in the proper ordering of its

priorities.

Heckler v. Cheney, 470 U.S. 821, 831 (1985) (emphasis

added); accord In re Borough of Ridgeway, 6 E.A.D.

obligation to apply for an NPDES permit to, if granted, lawfully

discharge into waters of the United States.

App. 58

479, 494 (EAB 1996) (stating that EPA is “entitled to

flexibility in its choice of an enforcement action to the

fullest extent consistent with the statu‘ ”).

In keeping with the principles laid out in Heck-

ler, we also reject Petitioners’ reliance on section

309(a)(3) of the CWA as authority for the mandatory

duty Petitioners claim — that EPA has to issue a»

NPDES permit in this case. Section 309(a)(3) reads as

follews:

Whenever on the basis of any information

available to him the Administrator finds that

any person is in violation of section 1311,

1312, 1316, 1317, 1318, 1328, or 1345 of this

title, or is in violation of any permit condi-

tion or limitation implementing any of such

sections in a permit issued under section

1342 of this title by him or by a State or ina

permit issued under section 1344 of this title

by a State, he shall issue an order requiring

such person to comply with such section or

requirement, or he shall bring a civil action

in accordance with subsection (b) of this sec-

tion.

CWA § 309(a)(3), 33 U.S.C. § 1319(aX(3). This subsec-

tion addresses enforcement mechanisms available to

the Administrator updn the finding of a violation.”

Notably, it does not state that upon finding a viola-

tion, the Administrator must issue a permit. Rather,

* Indeed, section 309 of the CWA is titled “Enforcement,”

and subsection (a) is titled “State Enforcement Orders.”

App. 59

it provides that upon finding of a violation, the Ad-

ministrator “shall issue an order requiring such

person to comply” or “bring a civil action.”” These

actions, the issuance of a compliance order and initia-

tion of enforcement action, are consistent with the

well-established principle that EPA retains discretion

as to how to bring facilities into compliance and

inconsistent with Petitioners’ suggestion that EPA’s

sole option is the mandatory issuance of a permit. See

Heckler, 470 U.S. at 831.

We find support for our interpretation in a recent

Tenth Circuit decision, Bravos v. EPA, 324 F.3d 1166

(10th Cir. 2003), which held that this section does not

mandate issuance of an NPDES permit. Bravos, 324

F.3d at 1173. There, the court stated, “The view that

§ 309(aX(3) does not restrict the Administrator’s

discretion is in keeping with the Supreme Court’s

pronouncements [in Heckler v. Cheney, 470 U.S. 821,

831 (1985)],” id. at 1171, and “[elven if § 309(a)(3)

mandates certain action, it certainly did not mandate

what the EPA ended up doing in this case [that is,

issuing a permit].” /d. at 1173.

* We also note that this is not a case where a finding of

violation within the meaning of section 309(a)(3) has been made.

See Bravos v. EPA, 324 F.3d 1166, 1172 (10th Cir. 2003) (reject-

ing plaintiff's argument that EPA had a nondiscretionary duty

under CWA § 309 to take enforcement action against illegal

discharger because, among other things, plaintiff failed to show

that a finding of violation had been made by the delegated

authority).

App. 60

Moreover, Petitioners have not cited to any other

provisions of the CWA, and we are unaware of any,

that create the specific obligations Petitioners claim.

See Bravos, 324 F.3d at 1173-74 (finding that a man-

datory duty to issue permits does not follow from

CWA sections 301(a), 301(e), 402(a)(1), and 309(a\3)).

Although a discharger of pollutants to waters of the

United States has a duty under the CWA to apply for

an NPDES permit to allow those discharges, this

duty to apply for a permit differs from the duty

Petitioners claim. The EPA simply does not have a

mandatory duty, on its own initiative and in the

absence of a permit application, to issue a permit to

an illegal discharger. Likewise, pursuant to Heckler,

EPA does not have a mandatory duty to compel an

application for a permit, even though in many in-

stances it will choose to take such action.

Petitioners also cite to a number of cases that

they claim stand for the proposition that EPA has a

mandatory duty to issue an NPDES permit. See

Second Petition at 13. None of the cases on which

Petitioners rely, however, convinces us that the

Agency has a mandatory duty to either issue a permit

or order a party to apply for a permit. For example,

Petitioners rely on United States v. Tom-Kat Devel-

opment, Inc., 614 F. Supp. 613 (D. Alaska 1985), to

support their contention that the CWA establishes an

“unconditional and absolute” requirement that all

illegal discharges have an NPDES permit. Jd. at 614

(quoting Kitlutsisti v. Arco Laska, Inc., 592 F. Supp.

835, 839 (D. Alaska 1984), rev’d on other grounds, 782

App. 61

F.2d 800 (9th Cir. 1986)). Petitioners maintain that

because the CWA establishes an “unconditional and

absolute” requirement that illegal discharges be

covered by NPDES permits, the Agency has a manda-

tory duty to issue permits to abate illegal discharges.

Neither the Tom-Kat decision, nor the Kitlutsisti

decision ~ the case relied upon by the court in Tom-

Kat — stand for the particular proposition Petitioners

propound. The court in Tom-Kat spoke about the duty

to obtain a permit — a discharger’s duty to obtain an

NPDES permit before discharging pollutants into

waters of the United States. In Kitlutsisti, the court

also spoke about a different duty — EPA’s duty to act

promptly upon license applications. Kitlutsisti, 592

F. Supp. at 839. The court in Kitlutsisti stated that

“because NPDES permits are licenses required by

law, [section] 9(b) of the [Administrative Procedure

Act] makes it mandatory that the BPA promptly

process such permits.” Jd.

Petitioners also mistakenly rely on Natural

Resource Defense Council, Inc. v. Costle, 568 F.2d

1369 (D.C. Cir. 1977), for a similar proposition. In

Costle, the court considered a challenge to an EPA

* Petitioners omit that the court in Kitlutsisti declined to

address a question similar to the one presented here. In Kit-

lutsisti, the court was asked to decide whether EPA had a duty

to order Arco to apply for an NPDES permit, but the court

declined review because, among others things, the controversy

did not concern a mandatory duty of the Administrator and,

therefore, the court did not have jurisdiction. Kitlutsisti, 592

F. Supp. at 840.

App. 62

rulemaking in which the Agency exempted certain

categories of point sources from the NPDES permit

requirements. Jd. at 1373. The Costle court stated:

“The EPA Administrator does not have authority to

exempt categories of point sources from the permit

requirements of § 402.” Jd. at 1377 (emphasis added).

Petitioners erroneously imply, based on this state-

ment, that the Region’s alleged failure to require an

NPDES permit for the Gibson Mine at this time

amounts to an illegal exemption of a known point

source discharge. In our view, the categorical exemp-

tion at issue in Costle is notably different from the

situation at hand. The case before the Board concerns

not a categorical exemption tantamount to abandon-

ment of EPA’s statutory responsibilities, but rather,

whether in this particular instance, the statute

circumscribes the Region’s discretion and mandates

that it must issue an NPDES permit to Carlota for

the Gibson Mine before Carlota may remediate part

of the Gibson Mine as an offset for Carlota’s proposed

discharges at the Project. In essence, Petitioners urge

that we overlook the fact that Carlota is not the

owner of the Gibson Mine and will only be the opera-

tor of the site for, at most, a limited time period. This

we will not do. We thus decline to hold that EPA has a

mandatory duty to issue an NPDES permii to Carlota

for discharges at the Gibson Mine site.

Costle also undermines Petitioners’ arguments by

highlighting the discretion the statute entrusts t

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