Amicus Curiae Brief — Carlota Copper Co. v. Friends of Pinto Creek (No. 07-1524)

“7 0 CS? riLev |

JUL - 3 2008

No. 07-1524 SUPREME COURT OM Tf

In The

Supreme Court of the United States

CARLOTA COPPER COMPANY,

Petitioner,

Vv.

FRIENDS OF PINTO CREEK, et ai.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF THE ARIZONA MINING ASSOCIATION,

COLORADO MINING ASSOCIATION,

NEW MEXICO MINING ASSOCIATION,

AND NEVADA MINING ASSOCIATION AS

AMICI CURIAE IN SUPPORT OF PETITIONER

KENNETH VON SCHAUMBURG __ D.. LEE DECKER

Counsel of Record RHETT B. LARSON

GALLAGHER & KENNEDY, P.A. GALLAGHER & KENNEDY, P.A.

1101 PENNSYLVANIA AVENUE 2575 East CAMELBACK ROAD

6TH FLOOR PHOENIX, AZ 85016-9225

WASHINGTON, 1D.C. 20004 (602) 530-8500

(202) 756-4392

Counsel for Amici Curiae

July, 2008

— ~ —- -<-- — —

Becker Gallagher - Cincummati, OH + Washington, D.C. - 800.890.5001

5 y

i

QUESTIONS PRESENTED

1. Whether — contrary to this Court’s holdings and

relevant holdings of state courts of last resort — the

Ninth Circuit erred in holding that the federal

Clean Water Act (“CWA”) (33 U.S.C. § 1251 et seq.)

prohibits the U.S. Environmental Protection

Agency (“EPA”) and states implementing the CWA

from issuing permits for discharges to “impaired”

waters where the agency conditions that permit on

offsets having the net effect of improving water

quality.

2. Whether - contrary to this Court’s holdings and

relevant holdings of state courts of last resort — the

Ninth Circuit failed to properly defer to EPA’s

consistent and long-standing interpretation of the

CWA and its own regulation (40 C.F.R. § 122.4(i))

promoting a policy of encouraging offsets to

improve water quality.

ii

TABLE OF CONTENTS

QUESTIONS PRESENTED ..................- i

peo Be. Er il

ye) OP Le Poy) 6 cy y | -. Se iii

STATEMENT OF INTEREST OF AMICI

Ce ook Pen aah ga Mae ws kb 4.0 0.0 & 4b & ee 1

SUMMARY OF ARGUMENT ................. 7

REASONS FOR GRANTING CERTIORARI ..... 9

I. THE COURT SHOULD GRANT CERTIORARI

TO ENSURE CONSISTENCY WITH

CURRENT SUPREME COURT PRECEDENT

INTERPRETING THE CWA .............. 10

fl. THE COURT SHOULD GRANT CERTIORARI

TO ENSURE THAT FEDERAL COURTS

INTERPRET THE CWA AND ITS

REGULATIONS CONSISTENT WITH STATE

SUPREME COURT DECISIONS .......... 16

Il. THE COURT SHOULD GRANT CERTIORARI

TO ENCOURAGE DEFERENCE TO EPA

INTERPRETATIONS AND POLICIES WHICH

HAVE THE NET AFFECT OF IMPROVING

WATER QUALITY IN IMPAIRED WATERS . 19

EE foes is cea ee a chee cee bes 868 26

iil

TABLE OF AUTHORITIES

CASES

Arkansas v. Oklahoma,

PURSE og cccccsesccesevvess passim

Auer v. Robbins,

sb ods whee es eee ue 22

Baltimore Gas & Elec. Co. v. NRDC,

ES ng a ves e eevee dcvesecce 8, 22

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

Council, Inc.,

ee ee OD on ees cac tues 8, 9, 20, 22

Crutchfield v. State Water Control Board,

GES B..2e BOO CAIUS) 0. nw cc ccc ce eees 8,9, 18

Friends of Pinto Creek v. U.S. EPA,

504 F.3d 1007 (9th Cir. 2007) .......... passim

Household Credit Servs. v. Pfennig,

i 20

In re Cities of Annandale,

731 N.W.2d 502 (Minn. 2007) ... 8,9, 16, 17,18

INS v. National Center for Immigrants’ Rights,

I os an do wg 0 6a base SN OS 23

King v. St. Vincent’s Hops.,

ee a rs Oe 17

iv

Motor Vehicle Mfrs. Assn. of United States, Inc. v.

State Farm Mut. Automobile Ins. Co.,

I ia ds 6 ses dew ows 00 0's 21, 22

Robertson v. Methow Valley Citizens Council,

GP PEED oc cme ccc deescveseces 22

Robinson v. Shell Oil Co.,

IED Svc ces cconseccsceesess 19

Thomas Jefferson Univ. v. Shalala,

ee a hwernccasecceevees os 8

United States v. Ron Pair Enterprises, Inc.,

SPE PED Swreedereccevecevecscn 19

STATUTES

SP Dn wale tb ceeeseccteweews 3,4, 10

EET Re Eee yar o 5, 14

eee ree errr ree Te ry 19

i a lie Sale wn ae we ea ee 4

is one's cb oN Whe Cow ewe es 15

Ge Sas © CE SD oe ccc cece sesceess 24

RULES

IE Ss a eS ae 8, 16

a i lie as be a ees ae ee ]

aK vcike cee in dnetdded dt esadeede 1

REGULATIONS

fk et rer eres 6, 15

Se aera EE 8 kwh bk oe eb cees passim

OTHER AUTHORITIES

41 Fed. Reg. 55524 (December 1976) .......... 24

America’s Climate Security Act of 2007, S. 1291,

110” Cong. §§ 2401-2411 (2007) ........... 24

Arizona Department of Environmental Quality,

“Pinto Creek Site-Specific Water Quality

Standard for Dissolved Copper,” Water Quality

Division, Phoenix, AZ (March 12, 2007) ..... 23

Breetz, Hanna, Karen Fisher-Vanden, Laura

Garzon, Hannah Jacobs, Kailin Kroetz, Rebecca

Terry, “Water Quality Trading and Offset

Initiatives in the US: A Comprehensive Study,”

Dartmouth College, Hanover, NH (August 5,

és 56604485 ERS eke eee 26

Leaming, George F., “The Economic Impact of the

Arizona Copper Industry 2007,” Western

Economic Analysis Center, June 2008 ....... 2

U.S. EPA, “EPA Estimates Costs of Clean Water

TMDL Program,” Press Release, Washington

Ass SE a POD < kos 0b 6 wee cereaue 5

vi

U.S. EPA, “TMDL Development Cost Estimates:

Case Studies of 14 TMDLs,” Office of Water,

Washington, D.C. (May 1996) ............. 14

U.S. EPA, “Water Quality Trading Policy,” Office

of Water, Washington, D.C. (January 13,

cE LS ng 5a kek ube eeed es 6, 25

1

STATEMENT OF INTEREST OF

AMICI CURIAE’

The Arizona Mining Association, Colorado Mining

Association, New Mexico Mining Association, and

Nevada Mining Association (collectively, the “Amici”)

are non-profit business leagues. The Amici acquire

and disseminate scientific and business information

essential to sound public policies affecting the mining

industry throughout the Southwestern United States.

Importantly, the Amici associations have operations

within the jurisdiction of the Ninth Circuit.

Amici members produce products essential to

modern life and public infrastructure, forming integral

components in such varied areas as mass transit

systems, national defense, information technology and

communication systems, energy, medical devices and

homes.

This case poses significant legal, practical and

economic issues for the mining industry in the regions

in which members of the Amici conduct business. The

Ninth Circuit’s decision in this case threatens the

vitality of this essential industry and the jobs of the

' Pursuant to this Court’s Rule 37.2(a), the Amici states that

counsel of record for all parties received notice at least 10 days

prior to the due date of the amici curiae’s intention to file this

brief. Pursuant to Rule 37.6, the Amici further note that no

counsel for a party authored this brief in whole or in part, and no

counsel made a monetary contribution intended to fund the

preparation or submission of this brief. The parties have

consented to the filing of this brief, copies of the consent letters

have been filed with the Clerk.

2

families which depend on its continued contribution to

the prosperity of the Nation.

The mining industry in Arizona directly employs

more than 10,300 people, and indirectly generates over

30,000 additional jobs in related support industries in

2007. The direct impact to the state’s economy from

the mining industry amounted to $3.2 billion in 2007,

with the combined direct and indirect impact

exceeding $6.8 billion, not to mention over $138

million in state and local taxes.’

The mining industry in Colorado directly employs

more than 5,000 people, and generates more than

5,000 additional jobs in related sectors. Colorado

mining companies paid more than $320 million in

taxes in 2006 alone, and generated nearly $2 billion in

direct impact to the state’s economy in that same

year.®

In New Mexico, the mining industry provided a

direct economic impact to the state of over $1.5 billion

in 2005 (with the combined direct and indirect gain for

the state being over $3 billion), and the mining

industry paid over $200 million in total taxes in that

same year.‘ The mining industry in New Mexico

* See Leaming, George F., “The Economic Impact of the Arizona

Copper Industry 2007,” Western Economic Analysis Center, June

2008.

> http://www.coloradomining.org/mc_miningfacts. php

* http://minerals.usgs.gov/minerals/pubs/state/2005/m yb2-2005-

nm.pdf

3

employed over 6,000 people directly in 2005, and with

a combined direct/indirect employment of over 12,000

people.®

The mining industry in Nevada generated over

12,000 mining jobs in 2005 alone, with a total of nearly

32,000 considering related industries supporting the

mining industry. The Nevada mining industry

generated over $345 million in economic gains to the

state in 2005 alone.®

In total, the mining industries represented by the

Amici directly employ over 33,000 people, and directly

and indirectly generate jobs for over 91,000 people.

This industry generates over $6 billion in economic

gains to their respective states, with the related

payments of well over $600 million in taxes in a single

year.

This case raises important issues as to the ultimate

purpose of the federal Clean Water Act (“CWA” or the

“Act”) (33 U.S.C. § 1251 et seq.), how federal and state

agencies go about achieving those purposes, and the

role of courts in reviewing interpretations and actions

taken by those agencies under the CWA. Amici have

keen interests in its ultimate disposition, because

Amici association members undertake activities that

discharge to “waters of the United States” requiring

approvals under the CWA from the US.

Environmental Protection Agency (“EPA”) and state

* http://www.nma.org/pdf/states_04/nm 2004. pdf

* http://www nma org/pdf/states_04/nv2004 pdf

4

agencies administering the CWA in pursuant to a

grant of primacy by EPA under CWA Section 402(b).

33 U.S.C. § 1342(b). Amici’s interests in this case arise

from three concerns.

First, the Ninth Circuit’s decision in Friends of

Pinto Creek v. U.S. EPA, 504 F.3d 1007 (9th Cir. 2007)

undermines the express purpose of the CWA - to

“restore and maintain the chemical, physical and

biological integrity of the Nation’s waters.” 33 U.S.C.

§ 1251(a). The Ninth Circuit’s holding potentially

forecloses to AMA members (as well as federal and

state environmental agencies implementing the CWA

in the Ninth Circuit) the ability to condition the

permitting of important mining projects that may

discharge to impaired waters on the performance of

offset projects that will result in a net improvement to

water quality. AMA members frequently engage in

remediation efforts both to facilitate permitting under

the CWA and to accomplish the purposes of the CWA.

Such remediation/offset conditions constitute an

important, cost-effective and long-relied upon option

for improving and maintaining water quality.

Second, the Ninth Circuit’s decision creates a

precedent that could result in future federal court

decisions that (i) fail to properly consider relevant

state supreme court decisions upon which Amici

members rely; and (ii) fail to properly defer to agency

interpretations which Amici members must have

confidence will be deferred to by courts because of an

agency's regional and technical expertise. Amici have

a profound interest in ensuring that relevant state

supreme court decisions be given proper weight in

federal courts to promote respect for principles of

5

federalism and state sovereignty. Furthermore, Amici

have an acute interest in judicial deference to

administrative actions taken after the expenditure of

significant time and resources (both by the agency and

the permittee), and implemented by regional experts

best positioned to make the highly technical

determinations characteristic of CWA permitting.

Third, the Ninth Circuit’s failure to defer to EPA’s

interpretation of the CWA and its own regulations

could impose significant costs on Amici associations’

members. The Ninth Circuit’s holding appears to

require that states administering the CWA make

demonstrations of sufficient remaining pollutant load

allocations in receiving waterbodies beyond the

formulation of “total maximum daily loads” (“TMDLs”)

under 33 U.S.C. § 1313(d). Friends of Pinto Creek, 504

F.3d at 1012. The formulation of a TMDL is an

already costly and time-consuming process, which

delays mining projects and requires extensive

participation from the mining industry. In 2001, the

cost of formulating a TMDL averaged $52,000 per

listing and, the TMDL program in total costs the

Nation between $900 million and $4 billion annually.’

Imposing unspecified additional judicially-crafted

demonstrations, not required by the CWA, would

divert scarce resources from more important water

quality protection measures, and would delay, or even

forestall, important mining projects critical to state

and local projects and to the state and local economies,

because these mining projects depend on CWA

’ U.S. EPA, “EPA Estimates Costs of Clean Water TMDL

Program,” Press Release, Washington D.C. (August 3, 2001).

6

permits. Of course, the mining industry would not be

alone in facing the tremendous practical and financial

implications of this case. Virtually every federal, state

or municipal project or infrastructure (e.g., roads,

bridges, wastewater treatment plants, storm sewers)

depends on CWA permitting, and many (if not most)

industries and private construction projects require

CWA permitting in order to proceed expeditiously and

responsibly.

If CWA permits for discharges to impaired waters

(which make up more than 45% of the Nation’s

waters)® are precluded or forestalled by additional,

costly requirements, the Ninth Circuit’s decision could

have a paralyzing effect on all of these important

projects, and eliminate the option to allow those

projects to proceed subject to offsetting their

discharges through remediation activities. The Ninth

Circuit’s decision also suggests that agencies and CWA

permittees would have to somehow implement

compliance schedules on all dischargers, including

dischargers not subject to the CWA (i.e., non-point

source dischargers). Friends of Pinto Creek, 504 F.3d

at 1012-1013. Such an undertaking would prove

impractical (and nearly impossible in many instances),

and would be contrary to CWA requirements, which

expressly require compliance schedules only for

permitted discharges. See 40 C.F.R. § 122.2.

®* U.S. EPA, “Water Quality Trading Policy,” Office of Water,

Washington, D.C. (January 13, 2003), pp. 1.

7

SUMMARY OF ARGUMENT

Amici curiae Arizona Mining Association, Colorado

Mining Association, Nevada Mining Association, and

New Mexico Mining Association (collectively “Amici”)

endorse the Petitioners’ reasons for granting certiorari,

i.e., that the Ninth Circuit’s decision conflicts with

decisions of this Court and with relevant state

supreme court decisions, and that the Ninth Circuit

failed to properly defer to EPA’s interpretation of the

CWA and its own regulations. Amici submit this amici

brief to underscore three important points which favor

the Court granting certiorari:

First, the Ninth Circuit’s decision deviates sharply

from the plain language of the CWA as interpreted by

this Court in Arkansas v. Oklahoma, 503 U.S. 91

(1992). The Ninth Circuit failed to apply this Court’s

interpretation of the CWA, and thereby failed to give

effect to the clear legislative intent and express

purposes of the Act. The Ninth Circuit’s decision

would therefore climinate essential flexibility built

into the Act by Congress, and upheld by this Court,

which allow EPA and states to improve water quality

while at the same time conserving agency resources

and facilitating the permitting of important projects.

Furthermore, the Ninth Circuit’s overly-expansive

interpretation of CWA permitting requirements, and

disregard for the broad authority granted to EPA in

the CWA, effectively creates the categorical ban on

discharges to impaired waters rejected by this Court in

Arkansas, because the Ninth Circuit’s holding will

impose baseless and impractical conditions on

discharges to impaired waters, even where those

,

8

discharges have the net effect of improving water

quality.

Second, the Ninth Circuit’s decision fails to take

into consideration relevant state supreme court

decisions, thus favoring Petitioners writ under

Supreme Court Rule 10(a). The Minnesota Supreme

Court held, under facts strikingly similar tu those at

issue here, that the CWA accords “flexibility and broad

authority” to permit discharges to impaired waters

where those discharges are offset by permit conditions

requiring remediation. Jn re Cities of Annandale, et

al., 731 N.W.2d 502 (Minn. 2007). Additionally, the

Virginia Court of Appeals, interpreting a regulation

virtually identical to the one at issue here, held that

the CWA and the regulation did not prohibit the

implementation of permit conditions on discharges to

impaired waters which would have the net effect of

improving water quality. Crutchfield v. State Water

Control Board, 612 S.E.2d 249 (2005).

Third, the Ninth Circuit’s decision utterly ignores

its obligation to accord proper deference to EPA’s

interpretation and implementation of the CWA and its

expertise in permitting matters. See, e.g., Chevron

U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 842 (1984); see also Thomas Jefferson

Univ. v. Shalala, 512 U.S. 504, 512 (1994); Baltimore

Gas & Elec. Co. v. NRDC, 462 U.S. 87, 103 (1983).

Indeed, the Ninth Circuit did not even address the

issue of deference in its decision.

9

REASONS FOR GRANTING CERTIORARI

The Ninth Circuit has brazenly forged a new path

in statutory interpretation and the role of the judiciary

in administrative matters. In so doing, the Ninth

Circuit ignored this Court’s decision in Arkansas uv.

Oklahoma, 503 U.S. 91 (1992), in Chevron U.S.A. Inc.

v. Natural Resources Defense Council, Inc., 467 U.S.

837, 842, 81 L.Ed.2d 694, 104S.Ct. 2778 (1984), and at

least two state court decisions addressing nearly

identical issues. See In re Cities of Annandale, et al.,

731 N.W.2d 502 (Minn. 2007); Crutchfield v. State

Water Quality Control Board, 612 S.E.2d 249 (Vir.

2005). Unfortunately, the Ninth Circuit’s new path

threatens the quality of the Nation’s waters, impedes

critical state, local, and industrial projects, and

disregards long standing principles of stare decisis and

judicial deference to relevant state supreme court

decisions, reasonable administrative interpretations,

and related agency actions. This Court should take

this opportunity to guide the Ninth Circuit back to the

clear path blazed by Congress in the CWA, reinforced

by this Court’s decisions, and reasonably and

consistently implemented by EPA and the states.

The Court should therefore grant Petitioner’s writ

for certiorari to address three deficiencies in the Ninth

Circuit’s holding: (1) its failure to apply this Court’s

interpretation of the CWA; (2) its failure to consider

relevant state supreme court precedent; and (3) its

failure to defer to EPA’s reasonable interpretation of

the CWA and its regulations, as required by this

Court’s holdings.

10

I. THE COURT SHOULD GRANT CERTIORARI

TO ENSURE CONSISTENCY WITH CURRENT

SUPREME COURT PRECEDENT

INTERPRETING THE CWA.

The overriding purpose of the CWA is to “restore

and maintain the chemical, physical and biological

integrity of the Nation’s waters.” 33 U.S.C. § 1251(a).

This Court has addressed this paramount goal in its

own interpretation of the CWA in Arkansas v.

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

issued a National Pollutant Discharge Elimination

System (“NPDES”) permit, similar to the one at issue

here. The permit was for discharges that would reach

a water not in compliance with surface water quality

standards — an impaired water. The Tenth Circuit had

invalidated that permit, holding that the CWA

categorically prohibits discharges to such impaired

waters. This Court, however, reversed on appeal,

holding:

The Court of Appeals construed the Clean

Water Act to prohibit any discharge of effluent

that wou!d reach waters already in violation of

existing water qualily standards. We find

nothing in the Act to support this reading. [{]

[Rlather than establishing the categorical ban

announced by the Court of Appeals — which

might frustrate the construction of new plants

that would improve existing conditions —

the Clean Water Act vests in the EPA and the

States broad authority to develop long-range,

11

areawide programs to alleviate and eliminate

existing pollution.

503 U.S. at 107, 108 (emphasis added).

This Court therefore upheld EPA’s interpretation

of the CWA — that the preeminent concern of the Act

is to improve water quality conditions, and that EPA

and the States therefore have significant flexibility in

permitting decisions to achieve that goal. Indeed,

elsewhere in Arkansas, this Court made a more

general statement with respect to this flexibility. This

Court stated that “Congress has vested in the [EPA]

Administrator broad discretion to establish conditions

for NPDES permits.” 503 U.S. at 105. The legislative

intent of the CWA, according to this Court, was to

provide maximum administrative flexibility in

establishing NPDES permit conditions in order to

achieve the primary purposes of the CWA — the

restoration and maintenance of water quality. In this

case, EPA conditioned Carlota Copper Company’s

(“Carlota”) NPDES permit on Carlota’s remediation of

the historic Gibson Mine, a significant contributor of

pollutants to Pinto Creek. EPA, acting in accordance

with the flexibility granted it by Congress in the CWA

and upheld by this Court, accomplished the primary

goal of the Act by improving water quality in Pinto

Creek through its broad authority to impose NPDES

permit conditions, such as the offset/remediation

condition at issue here.

The Ninth Circuit distinguishes Arkansas from the

present case by noting that Arkansas, unlike the

present case, addressed a categorical ban on

discharges to impaired waters. Friends of Pinto Creek,

12

504 F.3d at 1013-1014. The Ninth Circuit, however,

fails to take several issues into consideration in

making this distinction.

First, this Court articulated in Arkansas the

overriding principle of the CWA — to improve and

maintain water quality. This principle is reinforced,

according to this Court, by the “broad discretion” EPA

and states have in conditioning permits. This Court

did not limit its holding in Arkansas only to categorical

bans on discharges to impaired waters, but instead

stated that this flexibility applies to EPA and states

specifically in establishing “conditions for NPDES

permits” that “would improve existing conditions.”

This case poses an extremely similar factual scenario

addressed by this Court in Arkansas — an agency using

its broad CWA authority to condition NPDES permits

for discharges to an impaired water to improve water

quality. The Ninth Circuit’s statements that permit

conditions designed to improve water quality are

irrelevant are therefore contrary to this Court’s ruling

in Arkansas.

The regulation the Ninth Circuit relies upon

expressly provides for the type of flexibility built into

the CWA and reinforced by this Court’s ruling in

Arkansas. The regulation states:

No permit may be issued: (i) to a new source or

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

13

applicable water quality standards or is not

expected to meet those standards... and for

which the State or interstate agency has

performed a pollutants load allocation for the

pollutant to be discharged, 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 segment

are subject to compliance schedules designed to

bring the segment into compliance with

applicable water quality standards.

40 C.F.R. § 122.4(i) (emphasis added).

The prohibition in this regulation applies only to

new discharges or new sources which “will cause or

contribute to the violation of water quality standards.”

The regulation retains, therefore, the necessary

flexibility to permit discharges which improve water

quality, as is the case here, and as was the case in

Arkansas.

Second, the Ninth Circuit fails to understand the

implications of its holding. Its holding effectively

amounts to the categorical ban on discharges to

impaired waters struck down by this court in

Arkansas.

The Ninth Circuit reads 40 C.F.R. § 122.4(i) to

prohibit new discharges to impaired waters unless the

permitting agency can demonstrate (i) sufficient

remaining pollutant load allocations beyond the

formulation of a TMDL; and (ii) that all existing

dischargers, including unpermitted non-point source

14

dischargers not regulated under NPDES requirements,

are subject to compliance schedules. Friends of Pinto

Creek, 504 F.3d at 1012-1013. As to the Ninth

Circuit’s first condition — there is nothing in the CWA

or its regulations suggesting that a TMDL is

insufficient to demonstrate adequate remaining

pollutant load allocations. Quite the contrary, a

TMDL is the maximum amount of a pollutant a water

body can receive and still achieve water quality

standards. 33 U.S.C. § 1313(d). EPA and states

administering the CWA spend significant time and

resources developing a single TMDL as a precise

means to achieving water quality standards and

allocating pollutant loading limitations among NPDES

permittees. By requiring an unspecified leap beyond

the formulation of a TMDL, the Ninth Circuit places

any permitting to impaired waters practically out of

reach, even where permits would have the net effect of

improving the water quality, because the

demonstration of sufficient remaining pollutant load

allocations beyond a TMDL would be prohibitively

costly and time consuming.

For example, the Nevada Department of

Environmental Protection (“NDEP”) established a

TMDL for a segment of the Truckee River. The

establishment of this one TMDL for this one river

segment took three years and cost the state $158,387.°

The Ninth Circuit, with no statutory or regulatory

basis, would require more time and more resources

°U.S. EPA, “TMDL Development Cost Estimates: Case Studies of

14 TMDLs,” Office of Water, Washington, D.C., (May 1996), pp.

111.

15

expended in demonstrating remaining pollutant load

allocations in order to permit discharges which would

improve water quality. The time and cost of meeting

the Ninth Circuit’s unspecified requirements beyond a

TMDL amount to the categorical ban on discharges to

impaired waters which this Court expressly rejected in

Arkansas.

Additionally, the Ninth Circuit would require the

permitting agency to subject all dischargers, even

those not regulated under the NPDES program, to

compliance schedules. Friends of Pinto Creek, 504

F.3d at 1012-1013. NPDES regulations apply only to

point-source discharges. 33 U.S.C. § 1362(12).

Nevertheless, the Ninth Circuit expects permitting

agencies to subject non-point source dischargers to

compliance schedules. This is a legal impossibility,

because a “compliance schedule” is defined as “a

schedule of remedial measures in a permit.” 40 C.F.R.

§ 122.2 (emphasis added). States cannot subject

dischargers not subject to permitting requirements to

compliance schedules when, by definition, a

compliance schedule can only be imposed through a

permit. As such, the Ninth Circuit’s holding requiring

compliance schedules for all dischargers to an

impaired water effectively amounts to the categorical

ban on discharges to impaired waters expressly

rejected by this Court in Arkansas.

The Ninth Circuit’s decision leaves its

requirements for permitting discharges to impaired

waters so amorphous, so costly, and so impractical that

the court’s interpretation transforms EPA's regulation

from one expressly allowing for discharges which do

not. cause or contribute to exceedances of water quality

16

standards to a regulation which effectively bans all

discharges to impaired waters, including beneficial

discharges associated with offsets and remediation.

The Ninth Circuit’s effective ban on these beneficial

discharges, and its abrogation of the critical statutory

flexibility built into the CWA to allow for such

discharges, is in direct contravention to the express

legislative intent of the CWA and this Court’s

interpretation of that language in Arkansas. Under

Supreme Court Rule 10(a), this Court may grant

certiorari in cases where, as here, an appellate court

has deviated from established Supreme Court

precedent.

Il. THE COURT SHOULD GRANT CERTIORARI

TO ENSURE THAT FEDERAL COURTS

INTERPRET THE CWA AND ITS

REGULATIONS CONSISTENT WITH STATE

SUPREME COURT DECISIONS.

Supreme Court Rule 10(a) establishes another

important reason for this Court granting Petitioner’s

writ for certiorari, one which engenders respect for

principles of federalism and promotes consistent

application of the law in courts throughout the nation.

The rule specifies one of the chief reasons for which

this Court will grant certiorari is to settle an

important federal question decided by a federal court

that conflicts with a decision by a state court of last

resort. The Ninth Circuit’s decision failed to consider

directly contradictory decisions by state courts of last

resort.

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

(Minn. 2007), the Minnesota Supreme Court upheld a

17

NPDES permit for discharges to an impaired water

against a challenge based on 40 C.F.R. § 122.4(i)

because the discharge associated with the permit was

offset by a reduction in pollutant loading to the river

from a separate point source. The question at issue

there is identical to the question here — whether an

agency may consider offsets from another source in

determining whether a discharge causes or contributes

to the violation of water quality standards under 40

C.F.R. § 122.4(i). The Minnesota Supreme Court

answered that question in the affirmative, relying on

this Court’s decision in Arkansas, including the

bedrock principle that courts should defer to an

agencys interpretation of its own regulation.

Annandale, 731 N.W.2d at 512-513. See also

Arkansas, 503 U.S. at 112. The Minnesota Supreme

Court held that the agency is presumed to have the

expertise necessary to decide technical matters within

the scope of its authority. Annandale 731 N.W.2d at

512.

Furthermore, the Minnesota Supreme Court held

that the phrase “cause or contribute to a violation of

water quality standards” set forth in 40 C.F.R.

§ 122.4(i) must be read in the context of the facts of the

case in determining its plain meaning. Citing King v.

St. Vincent’s Hops., 502 U.S. 215, 221 (1991). When

read in the context of the permit conditions requiring

offsets to discharges, the Minnesota Supreme Court

held that the discharges associated with the permit at

issue did not cause or contribute to violations of water

quality standards, and thus were not precluded or

conditioned under 40 C.F.R. § 122.4(i). Annandale,

731 N.W.2d at 518-519.

18

The Ninth Circuit’s decision failed to consider the

Minnesota Supreme Court’s holding in Annandale,

despite the nearly identical facts and questions of law.

This Court should therefore accept certiorari for this

case under its Rule 10(a) to resolve the inconsistency

between the Ninth Circuit’s decision and the

Minnesota Surpeme Court decision in Annandale.

Such a decision would reflect this Court’s dedication to

principles of federalism and cooperation between the

state and federal court systems.

The Ninth Circuit similarly failed to consider the

holdings of the Virginia Court of Appeals, interpreting

a regulation virtually identical to 40 C.F.R. § 122.4(i)

to allow for implementation of permit conditions on

discharges to impaired waters which would have the

net effect of improving water quality. Crutchfield v.

State Water Control Board, 612 S.E.2d 249 (2005).

Resolution on grounds similar to those in

Annandale and Crutchfield would not only

demonstrate this Court’s respect for principles of

federalism and regional expertise, but would reinforce

the overarching principle of stare decisis, already

flouted by the Ninth Circuit’s disregard for this Court’s

opinions on the meaning of the CWA in Arkansas and

on judicial deference to agency interpretations

(discussed below).

19

il THE COURT SHOULD GRANT

CERTIORARI TO ENCOURAGE

DEFERENCE TO EPA

INTERPRETATIONS AND POLICIES

WHICH HAVE THE NET AFFECT OF

IMPROVING WATER QUALITY IN

IMPAIRED WATERS.

This Court has consistently upheld the bedrock

principle of deferring to an agency’s interpretations of

the statutes the agency administers and the

regulations the agency promulgates and implements

under that statute. The Ninth Circuit’s decision is

striking in its complete disregard for judicial deference

to administrative interpretations.

When dealing with statutory construction, a court

begins by “determining whether the language at issue

has a plain and unambiguous meaning with regard to

the particular dispute in the case.” Robinson v. Shell

Oil Co., 519 U.S. 337, 340 (1997), citing United States

v. Ron Pair Enterprises, Inc., 489 U.S. 235, 240 (1989).

The plain language of the statutory provision dealing

with agency flexibility in administering NPDES

permits is found under CWA Section 402(a), which

provides that EPA “shall prescribe conditions [for

NPDES permits]... to assure compliance with the

requirements of [CWA Section 402(a)(1)] and such

other requirements as [it] deems appropriate.” 33

U.S.C. § 1342(aX2) (emphasis added). As such, the

CWA plainly and unambiguously accords EPA and

states significant discretion in promulgating any

permit conditions deemed appropriate, so long as the

permit meets the requirements of CWA Section

402(a)(1).

20

The permit at issue here complies with the

requirements of CWA Section 402(a)(1). Indeed,

Respondent made no attempt to challenge the permit

on those grounds. In accordance with the plain

language of CWA Section 402(a)(2), EPA had authority

to prescribe appropriate permit conditions, including

the conditions requiring remediation of the Gibson

Mine for offset purposes. This court affirmed in

Arkansas that the Act granted “broad discretion” to

EPA in establishing permit conditions. Arkansas, 503

U.S. at 105. As such, the CWA allows, and even

promotes, the precise types of permit conditions which

EPA employed in this case to improve water quality.

The Ninth Circuit not only failed the initial step of

relying on the plain and unambiguous statutory

language of the CWA, but failed in the secondary steps

of statutory interpretation prescribed by this Court in

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

Council, Inc. 467 U.S. 837 (1984). When reviewing an

agency’s interpretation of a statute it administers

under the Chevron analysis, a court engages in the

following two-step inquiry: (1) if “Congress has

directly spoken to the precise question at issue,” then

the courts and agency “must give effect to the

unambiguously expressed intent of Congress,” or (2)

if Congress has “explicitly left a gap for the agency to

fill,” the agency’s regulation is “given controlling

weight unless [it is] arbitrary, capricious, or manifestly

contrary to the statute.” Household Credit Servs. v.

Pfennig, 541 U.S. 232, 239 (2004) (quoting Chevron,

467 U.S. at 842-844) (internal citations omitted).

As already discussed, under the first step of the

Chevron analysis, Congress has_ spoken

21

unambiguously to EPA’s authority to promulgate

NPDES permit conditions however it deems

appropriate under CWA Section 402(a)(2). However,

even if Congress had left a gap to be filled in by the

agency, that agency’s action is given controlling weight

under Chevron Step 2 unless the action is arbitrary,

capricious or manifestly contrary to the statute.

Importantly, this Court has held that an agency ruling

is “arbitrary and capricious if the agency has...

entirely failed to consider an important aspect of the

problem.” Motor Vehicle Mfrs. Assn. of United States,

Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S.

29, 43 (1983).

The regulation at issue here is entirely consistent

with the broad discretion Congress granted to EPA in

promulgating NPDES permit conditions. As noted

above, 40 C.F.R. § 122.4(i) expressly applies only to

discharges which “cause or contribute” to violations of

water quality standards. This language fills in any

gaps left by Congress in the CWA by expressly

excluding from discharge prohibitions those permits

subject to conditions which result in a_ net

improvement of water quality in the receiving water.

EPA’s exclusion of discharges resulting in a net

improvement of water quality from application of 40

C.F.R. § 122.4(i) is entirely consistent with the CWA’s

purpose of restoring and maintaining water quality,

and the Act’s express grant of broad authority to

establish NPDES permit conditions. The regulations

are therefore not arbitrary and capricious, but rather

a reaffirmation of the goals and flexible permitting

approach established by the CWA. The Ninth Circuit

therefore failed to properly defer to EPA's

interpretation of the CWA and to give effect to EPA’s

22

regulatory exclusion of permits subject to offset

conditions from discharge prohibitions under 40 C.F.R.

§ 122.4(i), as required by this Court under Chevron.

The Ninth Circuit also failed to identify how EPA’s

ruling upholding Carlota’s permit failed to consider an

important aspect of the problem, as required under

State Farm. 463 U.S. at 43 As such, EPA’s ruling,

under this Court’s own holdings, cannot be arbitrary

and capricious.

In any event, the Ninth Circuit should have

deferred to EPA’s interpretation of its own regulations.

This Court has consistently held that courts owe

deference to an agency’s interpretation of its own

regulations so long as that interpretation is not

“plainly erroneous or inconsistent with the regulation.”

Arkansas, 503 U.S. at 112. See also Robertson v.

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

(1989); Auer v. Robbins, 519 U.S. 452 (1997). This

deference to agency regulatory interpretations is all

the more critical in instances, such as this case, where

the agency has made an interpretation that is highly

technical and involves scientific matters within the

agency’s expertise. Baltimore Gas & Elec. Co. v.

Natural Resource Defense Council, 462 U.S. 87, 103

(1983). The Ninth Circuit failed to defer, consistent

with this Court’s rulings, to EPA’s interpretation that

40 C.F.R. § 122.4(i) does not apply to discharges

associated with permits subject to offset conditions,

because those discharges do not “cause or contribute”

to violations of surface water quality standards.

EPA’s interpretation reasonably limiting the scope

of the regulation (i.e., it applies only to discharges

which cause or contribute to violations of water quality

23

standards) is not plainly erroneous or inconsistent

with the regulation. The application of the regulation

under EPA’s interpretation is based on contextual

information relating to pollutant loading, and is thus

a highly technica! determination of how best to achieve

the purpose of the CWA based on the agency’s own

scientific expertise. Moreover, questions of water

quality are highly nuanced due to regional geology and

localized conditions. For example, in this particular.

case, Pinto Creek (the impaired water at issue), has a

naturally elevated concentration of copper, as

determined by the Arizona Department of

Environmental Quality.’° As such, determinations of

pollutant load allocations and water quality standards

in that waterbody rely heavily on an agency’s technical

expertise and understanding of local conditions. It is

precisely these types of issues relating to unique

regional conditions that are best addressed by state

agencies or regional offices of federal agencies more

familiar with local waters and their natural

backgrounds. The Ninth Circuit, therefore, should

have deferred to EPA’s regional officers out of respect

for regional expertise and as an acknowledgment that

local agencies are better equipped to make water

quality determinations when based on reasonable

interpretations of statutes and regulations.

Furthermore, this Court has stated that an

agency’s “reasonable, consistently held interpretation”

is entitled to substantial deference. INS v. National

Arizona Department of Environmental Quality, “Pinto Creek

Site-Specific Water Quality Standard for Dissolved Copper,”

Water Quality Division, Phoenix, AZ (March 12, 2007).

24

Center for Immigrants’ Rights, 502 U.S. 183, 189-190

(1991). The EPA and states administering the CWA

have consistently relied upon offsets as an integral

part of improving water quality throughout the

country." Indeed, the EPA has based much of its

water quality policy on the concept of offsets, which

are synonymous with water quality trading — wherein

one discharger decreases pollutant loading to offset

another (just as Carlota offset its discharges by

remediating the Gibson Mine). EPA has commented

on this policy, stating:

The purpose of this policy is to encourage states,

interstate agencies and tribes to develop and

implement water quality trading programs for

nutrients, sediments and other pollutants

where opportunities exist to achieve water

quality improvements at reduced costs.

More specifically, the policy is intended to

encourage voluntary trading programs that

facilitate implementation of TMDLs, reduce the

cost of compliance with CWA regulations,

establish incentives for voluntary reductions

and promote watershed-based initiatives. A

" Offsets constitute a critical mechanism under our

environmental laws to balance economic and environmental

interests. See, e.g., 41 Fed. Reg. 55524 (December 1976) (1976

EPA “interpretive ruling” endorsing the use of offsets to allow

permitting of new air pollution sources in nonattaining areas

under the Clean Air Act); Clean Air Act § 173(c), 42 U.S.C.

§ 7503(c) (2008) (allowing offsets under the Clean Air Act permit

program); America’s Climate Security Act of 2007, S. 1291, 110”

Cong. §§ 2401-2411 (2007) (featuring offsets to address

greenhouse gas emissions).

25

number of states are in various stages of

developing trading programs.

See U.S. EPA, “Water Quality Trading Policy,”

Office of Water, Washington, D.C. (January 13, 2003),

pp. 2 (emphasis added).

As evidenced by this policy, EPA consistently

encourages reliance on offsets as a reasonable

interpretation of the CWA and its own regulations.

This reasonable, consistent interpretation is the

foundation for an integral tool in improving water

quality while lowering compliance costs. The Ninth

Circuit’s decision here eliminates the incentive for

states to implement, and permittees to accept, permit

conditions requiring offsets in those waters bodies

most in need of improvement — impaired waters —

because its holding effectively prohibits such

conditions absent the permitting agency making

impossible demonstrations demanded by its erroneous

reading of 40 C.F.R. § 122.4(i). That regulation,

according to EPA’s reasonable and consistently held

interpretation, does not apply to discharges associated

with offsets, because those discharges do not “cause or

contribute” to violations of water quality standards,

but rather result in improved water quality. The

Ninth Circuit owed substantial deference to this

interpretation. Its failure to honor this Court’s

holdings in support of such deference now threatens

important public policy initiatives to improve water

quality.

For example, the Cities of Reno and Sparks, and

Washoe County in Nevada, as well as the NDEP have

developed a trading program between the cities, the

26

county and several point source dischargers to the

Truckee River, an impaired water flowing from Lake

Tahoe to Pyramid Lake. This innovative program,

initiated under EPA’s policy, described above,

encouraging offsets and trading programs, has

resulted in improved water quality in the Truckee

River.” The Ninth Circuit’s failure to defer to

reasonable, consistent agency interpretations of the

CWA and its regulations could foreclose new

dischargers from participating in this program, and

similar programs throughout the country, and thereby

eliminate a critical incentive for participation in water

remediations in connection with permitting important

public and private projects under the CWA.

CONCLUSION

For the reasons stated in the Petition and in this

amicus brief, the Court should grant the writ of

certiorari and, on review, reverse the decision of the

United States Court of Appeals for the Ninth Circuit.

'’? Breetz, Hanna, et al., “Water Quality Trading and Offset

Initiatives in the US: A Comprehensive Study,” Dartmouth

College, Hanover, NH (August 5, 2004), pp. 190.

27

Respectfully submitted,

KENNETH VON SCHAUMBURG

Counsel of Record

GALLAGHER & KENNEDY, P.A.

1101 PENNSYLVANIA AVE.,

6™ FLOOR

WASHINGTON, D.C. 20004

(202) 756-4392

D. LEE DECKER

RHETT B. LARSON

GALLAGHER & KENNEDY, P.A.

2575 EAST CAMELBACK ROAD

PHOENIX, ARIZONA 85016-9225

(602) 530-8500

Counsel for Amici Curiae

" en >

— ees ee ee ee eee Oe of, oS