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

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No. 07-1524

CARLOTA COPPER COMPANY,

Petitioner,

Vv.

FRIENDS OF PINTO CREEK, ET AL.,

Respondents.

On Petition For A Writ Of Certivrari i

To The United States Court Of Appeals

For The Ninth Circuit

BRIEF OF THE NATIONAL ASSOCIATION

OF CLEAN WATER AGENCIES, CALIFORNIA

ASSOCIATION OF SANITATION AGENCIES,

LEAGUE OF CALIFORNIA CITIES, AS AMICI

CURLAE IN SUPPORT OF PETITIONER

CARLOTA COPPER COMPANY

KEITH J. JONES

(Counsel of Record)

NATHAN GARDNER-ANDREWS

NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES

1816 Jefferson Place, NW

Washington, DC 20036-2505

Telephone: (202) 533-1803

Attorneys for Amici Curiae

ROBERTA L. LARSON KOURTNEY BURDICK

CASSIE N. AW-YANG LEAGUE OF CALIFORNIA CITIES

SOMACH SIMMONS & DUNN 1400 K Street, Suite 400

Hall of Justice Building Sacramento, CA 95814

813 Sixth Street, Third Floor Telephone: (916) 444-5790

Sacramento, CA 95814

Telephone: (916) 446-7979

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 42 2831

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST OF AMICI

SEAS Ea 1

SUMMARY OF ARGUMENT. ...........:cececccccceseesee 3

SECIS a a 7

I. NEW DISCHARGES THAT REDUCE

POLLUTION THROUGH THE USE OF

OFFSETS DO NOT CAUSE OR CON-

TRIBUTE TO VIOLATIONS OF THE

A. Annandale and Crutchfield Are Con-

sistent With this Court’s Decision in

FASO SORA NIN RED AIO 7

B. The Use of Offsets Is Consistent With

the CWA and Can Ensure Attainment

of Water Quality Standards.................. 9

Il. PINTO CREEK WILL ELIMINATE VALU-

ABLE OFFSET PROGRAMS THAT IM-

PROVE WATER QUALITY ......................... 19

I Ants tclchuindiviidiesibthevkinntnetionininescesitins 26

;

Baad at b _

TABLE OF AUTHORITIES

Page

CASES

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

City of Arcadia v. State Water Resources Con-

trol Board, 135 $=Cal.App.4th 1392

TEER SRE TASC DANS yen ome ee 22

Crutchfield v. State Water Control Board, 612

S.E.2d 249 (Va.Ct.App. 2005) ..................00.22.. passim

Crutchfield v. State Water Control Board, No.

ee es MU ST MI Rceviacccccccsncsvasieraronsecencessoess 3

Friends of Pinto Creek v. EPA, 504 F.3d 1007

iii iininii siti ccchenmemnticsitinnimaadaiandoe’ passim

In re Carlota Copper Co., 11 E.A.D. 692 (Sept.

CICA NEE eS ORB TON CoE 6, 24, 27

In re Cities of Annandale & Maple Lake, 731

N.W.2e SOZ (Minn. 2007) .......cccccccrsccovcccssoresees passim

Or. Natural Desert Ass’n v. Dombeck, 172 F.3d

RIA TIIIIEE di-tevinnscentrcndvasiinioouneiniicinteloanigneca 23

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

ablated 23

Thomas Jefferson University v. Shalala, 512

eT iiaditcpatnihbcisiedeveceetpencsanatitinnniintbtennsieonbiiied 8

STATUTES

Se EE NE WN on Sd kicenivxivcncscswhmhasedivcnnes chdmeabieaele 1

Be non scisivs iccpnicisievinioptionnocaahmbecceensaccaaaadan 9

ill

TABLE OF AUTHORITIES — Continued

I I id sienna iloeetieiecunebeienancatentantiiial

I i aa cs ci cendendelaananctiguibiaina

RULES

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

oi cicipealiredoneneetion 4

Rule 37.2(a) of the Rules of the Supreme Court

i il isa seaddensdonesereessen 1

Rule 37.6 of the Rules of the Supreme Court of

cil iaicad beindaonensinedeoninntentin 1

REGULATIONS

a a puntinaninninnbindl 21, 22

a sacs ieicniicidedgipeseaiianptiolaiin passim

i a ccineincaenaieinaiclieionleiaii 22

I ERA ee REE ERA vO 8

SSE SERIE Sec eee eee eS RE 10

64 Fed. Reg. 46058, 46065 (Aug. 23, 1999)................ 10

68 Fed. Reg. 1608 (Jan. 13, 2003)........................ 12,13

Conn. Public Acts 01-180 (2001)...................0....0..2200 19

ap Be 8 5 eee 15, 19

Rh, My SR, Ses BN, Be BP wcccessccnusesvacccscnccvesveccessons 15

TABLE OF AUTHORITIES — Continued

Page

OTHER AUTHORITIES

Cal. Regional Water Quality Control Board,

North Coast Region, Draft Res. No. R1-2008-

0061, available at http://www.waterboards.

ca.gov/northcoast/board_info/board_meetings/

07_2008/pdf/sr_res_0008_0061/08_0061_Res.

SUT sedgiihaiisbisanichaiasiarkeciiunencaninlinkshbtidssdinicennacieadighiabagta’ 17, 18, 19

Cal. Regional Water Quality Control Board,

North Coast Region, Order No. R1-2006-0045

(Sept. 20, 2006), available at http://www.

waterboards.ca.gov/northcoast/board_decisions/

adopted_orders/pdf/2006/061003_0045_Santa

IE hiked sbiiitentnceincninninhicbtinibebisibliindicicsesees 18

Cal. Regional Water Quality Control Board, San

Francisco Bay Region, Mercury in San Francisco

Bay, Proposed Basin Plan Amendment and

Staff Report, etc. (Aug. 1, 2006), available at

http://www.swrcb.ca.gov/sanfranciscobay/water_

issues/programs/tmdls/sfbaymercury/sr080906.

OY EADIE RE ORIEL arg EN 16, 23, 25

Cal. Regional Water Quality Control Board, San

Francisco Bay Region, Order No. R2-2007-

0077 (Nov. 1, 2007), available at http://www.

waterboards.ca.gov/sanfranciscobay/water_issues/

programs/tmdls/sfbaymercury/r2-2007-0077final.

TABLE OF AUTHORITIES -— Continued

Page

Cal. State Water Resources Control Board, Res.

No. 2007-0045, Approving an Amendment to

the Water Quality Control Plan for the San

Francisco Bay Region to Establish Mercury

Fish Tissue Objectives, etc. (July 17, 2007),

available at http://www.waterboards.ca.gov/

board_decisions/adopted_orders/resolutions/2007/

rs2007_0045.pdf............... \dappibiahipiidcisianehnghetiiecseassecs 15

Colo. Dept. of Pub. Health and Env’t., Colorado

Pollutant Trading Policy 1 (Oct. 2004), available

at http:?//www.cdphe.state.co.us/wq/PermitsUnit/

EPA, 2006 Section 303(d) List Fact Sheet for

California, available at http://iaspub.epa.gov/

waters 10/state_rept.control?p_state=CA&p_

NEES ieittensenintionneccscscsasceinivibipedearerscsccecs 21

EPA, Assessment Data for the State of Califor-

nia Year 2004, available at http/Aaspub.epa.gov/

waters 10/w305b_report_control.get_report?p_

i niiccidicineninniniadisudentdtebétntnttnngnenssoveee 5

EPA, Assessment Data for the State of Nevada

. ESSA ETSI Romper naD cA ea ee nN Nr) 5

EPA, Draft Framework for Watershed-Based

Trading (May 30, 1996), available as docu-

ment number 800R96001 at http://nepis.epa.

gov/EPA/htmI/Pubs/pubtitleOW. htm................ 11, 12

EPA, Fact Sheet Water Quality Trading Policy

(Jan. 13, 2003), available at http://www.epa.

gov/owow/watershed/trading/finalpolicy2003.

TABLE OF AUTHORITIES — Continued

Page

EPA, List of Impaired Waters for 2006 (2006),

available at http:/Aaspub.epa.gov/tmd]_waters

10/waters_list.control?state=MD&wbtype=BAY

I ieiicekciduchictondininiddsenincdaiiupsecserecsscoveees 15

EPA, Memorandum: Clarification Regarding

“Phased” Total Maximum Daily Loads 3

(Aug. 2, 2006), available at http://;www.epa.

gov/owow/tmdl/tmdl_clarification_letter.htm]....... 25

EPA, National Water Quality Inventory: Re-

port to Congress, 2002 Reporting Cycle (Oc-

EERIE SSA aE SSH eh PC ne a 5

EPA, State and Individual Trading Programs,

www.epa.gov/owow/watershed/trading/trading

a scacliariabanecococecs 14

EPA, Total Maximum Daily Load for Copper in

Pinto Creex, Arizona (2001), available at http://

www.cpa.gov/region09/water/tmdl/pinto/pinto.

EPA, Total Maximum Daily Loads: National Sec-

tion 303(d) List Fact Sheet, available at http://

oaspub.epa.gov/waters/national_rept.contro) ........ 21

EPA, Water Quality Trading Assessment Hand-

book, (Nov. 2004), available at http://www.

epa.gov/owow/watershed/trading/handbook/docs/

chl-national-wqt-handbook-2004.pdf .................... 12

EPA, Water Quality Trading Toolkit for Permit

Writers 4 (Aug. 2007), available at http//www.epa.

gov/npdes/pubs/watradingtoolkit_fundamentals.

SE tel telaabeidictanadtah Radia iainenntnmindiabbidbonttondinnts 11, 13, 14

vii

TABLE OF AUTHORITIES — Continued

EPA, Watershed-based National Pollutant

Discharge Elimination System (NPDES)

Permitting Technical Guidance (Aug. 2007),

available at http://www.epa.gov/npdes/pubs/

watershed_techguidance_entire.pdf (last vis-

TE iG I aittincncsnsctinssrseesanievenvinsesexccces:

Maryland Dep’t of the Env’t, Maps and Water

Resources Aid to Local Planning (2006),

available at http://www.mde.state.md.us/Water/

HB1141/Water_Quality_Maps.asp ....................

U.S. Census Bureau, 2004, Table 2a, US.

Interim Projections by Age, Sex, Race and

Hispanic Origin, available at http://www.

census.gov/ipc/www/usinterimproj/...................

Water Env’t Research Found., Executive Sum-

mary—Credit Trading in the Fox-Wolf Basin:

Exploring Legal, Economic, and Technical

LE EAN TT Ne eS AARP P ICT ee

Water Env’t Research Found., Executive Sum-

mary—Nitrogen Credit Trading in Maryland:

A Market Analysis for Establishing a State-

WES PYOMROWOTE (BOOB) ......ccccccccsccccceccccccccccscecs:

William L. Andreen, Water Quality Today—Has

the Clean Water Act Been a Success?, 55 Ala.

Fie) IEE NO A icintisincsctimninnsnsntincnaicesidasetabingacten

Page

STATEMENT OF INTEREST

OF AMICI CURIAE'

The National Association of Clean Water Agen-

cies [hereinafter NACWA\], California Association of

Sanitation Agencies [hereinafter CASA] and League

of California Cities [hereinafter League] [collectively

hereinafter Associations] are trade and municipal

associations that represent the interests of cities,

counties, utilities and other local public agencies

throughout the United States. Members of the Asso-

ciations are responsible for the collection, treatment,

disposal, and reuse of water—the most precious of

commodities.

The Associations members own and operate

water and wastewater infrastructure in watersheds

where waters fail to attain water quality standards

established under the Federal Water Pollution Con-

trol Act, 33 U.S.C. §1251 et seg. [hereinafter CWA).

The decision of the United States Court of Appeal for

the Ninth Circuit in Friends of Pinto Creek v. EPA,

504 F.3d 1007 (9th Cir. 2007) [hereinafter Pinto

Creek] unduly restricts the ability of EPA and states

' Pursuant to Rule 37.2(a) of the Rules of the Supreme

Court of the United States, amici curiae provided timely notice

of their intent to file this brief to counsel for Petitioner and

Respondent. Counsel for Petitioner, Respondent and the Solici-

tor General of the United States furnished written consent to

file this brief. Pursuant to this Court's Rule 37.6, this brief was

not authored in whole or part by counsel for any party, and no

person or entity other than amici curiae made a monetary

contribution to this brief’s preparation or submission.

to authorize discharges by new sources and new

dischargers, including the Associations’ members.

Consequently, Pinto Creek will frustrate the ability

and efforts of the Associations’ members to provide

critical municipal services in the most environmen-

tally beneficial manner.

The Associations filing this brief are as follows:

NACWA is a trade association that represents

the interests of more than 300 of the Nation’s publicly

owned treatment works [hereinafter POTWs].

NACWA’s membership includes over 30 California

public wastewater utilities and more than 60 public

wastewater utilities within the Ninth Circuit’s juris-

diction. Collectively, NACWA member agencies serve

the majority of the sewered population in the United

States and treat and reclaim more than 18 billion

gallons of wastewater daily. NACWA advocates on

behalf of its members in the legislative, regulatory

and legal arenas.

CASA is a trade association of 114 public agen-

cies that collect, treat and recycle wastewater for

more than 36 million Californians. CASA is a na-

tional leader in identifying and resolving clean water

and beneficial reuse issues to protect public health

and the environment. CASA represents its members

in legislative, regulatory and legal proceedings to

ensure that all Californians have access to high

quality wastewater treatment and water reclamation

services.

The League is an association of 478 California

cities dedicated to protecting and restoring the ability

of local governments to provide for the public health,

safety and welfare of their residents and enhancing

the quality of life for all Californians. The League is

advised by its Legal Advocacy Committee [hereinafter

Committee], which consists of 24 city attorneys from

all regions of the State. The Committee monitors

litigation of concern to municipalities and identifies

cases of statewide or national significance. The Com-

mittee identified this case as being of such signifi-

cance.

SUMMARY OF ARGUMENT

A significant conflict exists between the Ninth

Circuit’s decision in Pinto Creek, the subject of this

Petition, and this Court’s decision in Arkansas uv.

Oklahoma, 503 U.S. 91 (1992) (hereinafter Arkansas].

This conflict comes before the Court as a direct split

of authority between Pinto Creek and the decisions of

two state courts—In re Cities of Annandale & Maple

Lake, 731 N.W.2d 502 (Minn. 2007) [hereinafter

Annandale} of the Minnesota Supreme Court and

Crutchfield v. State Water Control Board, 612 S.E.2d

249 (Va.Ct.App. 2005) [hereinafter Crutchfield] of the

Virginia Court of Appeals.’ Resolution of the split will

* The Virginia Supreme Court dismissed the appeal from

the decision of the Court of Appeals without opinion. Crutchfield

v. State Water Control Board, No. 051148 (Va. Sept. 27, 2005).

“7

profoundly affect the ability of the Associations’

members to provide essential public services—the

provision of high quality wastewater treatment—to

their growing constituencies.

For the significant policy reasons discussed

herein, the Associations request that this Court grant

the Carlota Copper Company’s Petition for Certiorari

to resolve the following question:

Whether a regulatory authority may issue

a permit under the National Pollutant Dis-

charge Elimination System [hereinafter

NPDES] program of the CWA to a new source

or new discharger when the authority de-

termines that the new discharge will be off-

set by remediating pollutants from other

sources so as not to cause or contribute to the

violation of water quality standards for the

impaired water body.

The direct split of authority and the far-ranging

policy implications of this important federal question

warrant this Court’s exercise of jurisdiction to grant

certiorari under Sup. Ct. R. 10(a). It is neither feasi-

ble nor prudent for the Environmental Protection

Agency [hereinafter EPA] and 45 states with dele-

gated authority under the NPDES program to pro-

hibit all new discharges to waters listed as impaired

under Section 303(d) of the CWA. 33 U.S.C. §1313(d).

The United States’ population is anticipated to grow

by 206 million people between the years 2000 and

2050,° and much of that growth will be in urban

communities where many waters are listed as im-

paired.* See, e.g., Maryland Dep’t of the Env’t, Maps

and Water Resources Aid to Local Planning (2006),

available at http://www.mde.state.md.us/Water/HB1141/

Water_Quality_Maps.asp (last visited June 20, 2008)

(reflecting extensive impairment for nutrients in

Baltimore City and County). To address this growth

and the resulting need to upgrade aging wastewater

infrastructure, EPA and states combine traditional

command and control NPDES permitting with the

use of tools such as offsets and water quality trading.

The use of offsets and trading may alleviate or pre-

vent the impaired state of waters and provide other

water quality benefits.

* U.S. Census Bureau, 2004, Table 2a, U.S. Interim Projec-

tions by Age, Sex, Race and Hispanic Origin, available at http://

www.census.gov/ipc/www/usinterimproj/ (last visited June 20,

2008).

* Approximately 45% of water bodies nationwide are

classified as impaired under the CWA for failure to comply with

water quality standards. See generally EPA, Nationa] Water

Quality Inventory: Report to Congress, 2002 Reporting Cycle at

ES-2 (October 2007). The percentage of impaired water bodies in

some states, such as California, can be upwards of 90%. See

EPA, Assessment Data for the State of California Year 2004,

available at http//iaspub.epa.gov/waters10/w305b_report_control.

get_report?p_state=CA&p_cycle= (last visited June 20, 2008). Cf.

EPA, Assessment Data for the State of Nevada Year 2006

(impairment in 50-70 percent of assessed water bodies, notwith-

standing that much of the state is largely uninhabited).

The Minnesota Supreme Court in Annandale

found EPA’s water quality trading policy and decision

in this case, Jn re Carlota Copper Co., 11 E.A.D. 692

(Sept. 30, 2004), available at http://www.epa.gov/eab/

disk11/carlota.pdf (last visited June 27, 2008), per-

suasive on the meaning of “cause or contribute” in 40

C.F.R. §122.4(i) [hereinafter Section 122.4(i)]. Unlike

Pinto Creek, Annandale properly construed this

Court’s decision in Arkansas to allow new discharges

to impaired waters as part of a state’s “long[-Jrange,

area(-]wide program for water quality” where the

discharges produce a net improvement in water

quality. Annandale, 731 N.W.2d at 524.

New and more efficient wastewater treatment

facilities such as those at issue in Annandale and

Arkansas improve water quality, particularly after

implementation of offsets that reduce net loading to

receiving waters. Should Pinto Creek set the standard

for a new source or new discharger to obtain a

NPDES permit for discharges to the Nation’s thou-

sands of impaired waters, few if any public agencies

will build or expand wastewater treatment plants—

even as populations soar.

‘

;

@ 2p! - 4 aed, Ae

ARGUMENT

I. NEW DISCHARGES THAT REDUCE POL-

LUTION THROUGH THE USE OF OFF-

SETS DO NOT CAUSE OR CONTRIBUTE

TO VIOLATIONS OF THE CWA

In Pinto Creek, the Ninth Circuit rejected EPA’s

reasonable interpretation of Section 122.4(i), which

allows a new source or new discharger to discharge to

an impaired water body if an offset achieved through

reduction of an existing pollution source would im-

prove overall water quality. The court ruled that a net

improvement is not sufficient in that the potential

discharger must demonstrate attainment of all appli-

cable water quality standards before EPA may issue

the permit. Pinto Creek, 504 F.3d at 1014. By misin-

terpreting the phrase “cause or contribute,” the Ninth

Circuit calls into question ongoing federal and state

efforts to attain water quality standards. Pinto Creek

will obstruct critical infrastructure projects that

improve water quality while providing wastewater

services to a growing population.

A. Annandale and Crutchfield Are Con-

sistent With this Court’s Decision in

Arkansas

Pinto Creek, Annandale and Crutchfield involved

proposed new discharges to impaired waters and

turned on the meaning of Section 122.4(i). Section

122.4(i) generally prohibits the issuance of a NPDES

permit to a new source or new discharger if its

discharge will “cause or contribute to the violation of

water quality standards” for an impaired water body.”

As the Minnesota Supreme Court recognized in

Annandale, the meaning of “cause or contribute” in

the regulation is ambiguous. Annandale, 731 N.W.2d

at 522 (“[Wle conclude that 40 C.F.R. §122.4(i) is

unclear and susceptible to different reasonable inter-

pretations.”).

In Pinto Creek, the Ninth Circuit disregarded the

deference afforded to an agency’s reasonable interpre-

tation of its own regulation.*° The court substituted its

judgment for EPA’s and held that under Section

122.4(i), a discharge from a new source or new dis-

charger to an impaired water body causes or contrib-

utes to the violation of water quality standards—even

where the pollution is offset in the same water body.

Pinto Creek, 504 F.3d at 1012. The court distin-

guished Arkansas and claimed not to issue a categori-

cal ban by stating that Section 122.4(i) still allows

new discharges under certain circumstances. As

explained in Sectiorm il infra, the circumstances as

articulated by the Ninth Circuit are entirely illusory.

* Section 122.4(i) applies regardless of whether EPA or a

state is the NPDES permitting authority. See 40 C.F.R. §123.25.

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

512 (1994) (“(T]he agency’s interpretation [of its regulation]

must be given controlling weight unless it is plainly erroneous or

inconsistent with the regulation.”) (Internal citations omitted).

The Minnesota Supreme Court properly con-

strued the “cause or contribute” language of Section

122.4(i) in Annandale. The court found Arkansas to

be inconsistent with a categorical ban on discharges

in impaired waters and consistent with CWA permit-

ting authorities having broad discretion to determine

which NPDES discharges serve the public interest.

Annandale, ‘731 N.W.2d at 520-21, 524. Accordingly,

the Minnesota Supreme Court held that a NPDES

permit may properly issue for a new discharge to

impaired waters—provided the permitting authority

used its specialized expertise and skill to determine

that the discharge will not harm water quality. Jd.

Crutchfield likewise acknowledges that the CWA

vests broad discretion in the NPDES permitting

authority to ascertain whether a new discharge would

cause or contribute to the violation of water quality

standards. Crutchfield, 612 S.E.2d at 255.

B. The Use of Offsets Is Consistent With

the CWA and Can Ensure Attainment

of Water Quality Standards

Pinto Creek frustrates not just the ability of a

new source or new discharger to obtain a permit, but

the use of offsets to achieve water quality standards.

The 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). Accordingly, the

CWA establishes a framework for water quality

control and authorizes EPA and states to use their

expertise to develop and implement the specifics. For

example, the CWA requires states to adopt and com-

ply with water quality standards to protect the desig-

nated uses of the Nation’s waters. 33 U.S.C. §1313(c).

For waters that do not meet their water quality

standards, the CWA requires EPA and the states to

develop total maximum daily loads’ [hereinafter

TMDL] to bring the impaired waters into compliance.

33 U.S.C. §1313(d).

Offsets, which involve reducing pollutant contri-

butions from sources other than the permit holder,

can be a fundamental component of long-range, area-

wide programs contemplated under Arkansas to

alleviate and eliminate water pollution consistent

with the CWA. Offsets may occur between point

sources or between point sources and nonpoint

sources, which are not subject to NPDES permitting

and can cause or contribute to water quality impair-

ment. As subsequently explained, offsets provide

opportunities to comply with or do better than water

quality standards at lower costs and sooner than .

traditional regulatory approaches. Consequently,

offsets may eliminate the need for a TMDL or be vital

to its implementation.

Offsets can lead to or take the form of a market-

based trading program. See 64 Fed. Reg. 46058,

" A TMDL allocates the loading capacity of a water body or

segment thereof for a pollutant among point sources, nonpoint

sources and natural background to implement the applicable

water quality standards. 33 U.S.C. §1313(dx1\C); 40 C.FR.

§130.2(f), (i).

46065 (Aug. 23, 1999). As the Supreme Court of

Minnesota recognized in Annandale, much of the

rationale for market-based trading applies to the use

of offsets to administer and enforce water quality

regulations. Annandale, 731 N.W.2d 502, 522.

1. Offsets in the Form of Market-

Based Trading Improve Water Qual-

ity and Provide Other Benefits

Like offsets in general, water quality trading is

an innovative and incentive-based tool that allows

sources to meet regulatory obligations through pol-

lutant reductions from other sources that discharge to

the same watershed. EPA Fact Sheet, Water Quality

Trading Policy (Jan. 13, 2003), available at http://

www.epa.gov/owow/watershed/trading/finalpolicy2003.

pdf (last visited June 27, 2008); EPA Water Quality

Trading Toolkit for Permit Writers, 4 (Aug. 2007), avail-

able at http//www.epa.gov/npdes/pubs/watradingtoolkit_

fundamentals.pdf (last visited June 27, 2008) [here-

inafter Water Quality Trading Toolkit for Permit

Writers). Trading allows new and expanding sources

to offset their additional pollution loads. EPA, Draft

Framework for Watershed-Based Trading xiv (May

30, 1996), available as document number 800R96001

at http://nepis.epa.gov/EPA/html/Pubs/pubtitleOW. htm

(last visited June 27, 2008) [hereinafter Draft

Framework for Watershed-Based Trading].

Water quality trading is more cost-effective than

traditional approaches for achieving water quality

standards and benefits. EPA, Water Quality Trading

Assessment Handbook 1 (Nov. 2004), available at http://

www.epa.gov/owow/watershed/trading/handbook/docs/

ch1-national-wqt-handbook-2004.pdf (last visited June

27, 2008) [hereinafter Water Quality Trading Assess-

ment Handbook]. Trading relies on stakeholder

involvement and provides flexibility for communities

within a watershed to grow and prosper while they

protect or restore water quality. Id.; see Water Env’t

Research Found., Executive Summary—Credit Trad-

ing in the Fox-Wolf Basin: Exploring Legal, Eco-

nomic, and Technical Issues (2001); Water Env't

Research Found., Executive Summary—Nitrogen

Credit Trading in Maryland: A Market Analysis for

Establishing a Statewide Framework (2002). The

affordability and flexibility of trading allows commu-

nities to accelerate or increase the implementation of

pollution control measures. Water Quality Trading

Assessment Handbook, supra, at 1; Draft Framework

for Watershed-Based Trading, supra, at xii. Commu-

nities that trade pollutant loadings may realize water

quality benefits sooner or to a greater degree than

otherwise possible and add design*ted uses for wa-

ters. Water Quality Trading Assessment Handbook,

supra, at 1; Draft Framework for Watershed-Based

Trading, supra, at xii.

In January 2003, EPA adopted the Water Quality

Trading Policy [hereinafter Trading Policy] to guide

states and tribes on how to develop and implement

water quality trading programs. 68 Fed. Reg. 1608

(Jan. 13, 2003). EPA explained that despite the

NPDES program, about half of the Nation’s waters do

not support their designated uses. 68 Fed. Reg. at \

1609. EPA further explained that trading capitalizes

on economies of scale and control-cost differentials

among and between sources to offer greater efficiency

in achieving water quality goals. /d.

EPA’s Trading Policy encourages trading for

myriad purposes, including to implement TMDLs or

“offset{ ] new or increased discharges resulting from

growth in order to maintain levels of water quality

that support all designated uses.” 68 Fed. Reg. at

1610. In fact, “EPA interprets 40 CFR 122.4(i) to

allow for a new source or new discharger to compen-

sate its entire increased load through trading.” Water

Quality Trading Toolkit for Permit Writers, supra, at

24. The Trading Policy encourages “pre-TMDL trad-

ing in impaired waters to achieve progress towards or

the attainment of water quality standards.” 68 Fed.

Reg. at 1610. EPA supports pre-TMDL trading that

achieves a net reduction of the pollutant traded or

reduces loadings to a specified cap supported by

baseline information on pollutant sources and load-

ings. Jd. EPA also supports pre-TMDL trading that

achieves a direct environmental benefit relevant to

the causes or conditions of the impairment. 7d. “If

pre-TMDL trading does not result in the attainment

of applicable water quality standards, EPA expects a

TMDL to be developed.” /d.

The Trading Policy encourages states to develop

regulations, guidance or other tools to facilitate

statewide or watershed-based trading programs.

Water Quality Trading Toolkit for Permit Writers,

supra, at 7. Twenty-four states have or are developing

frameworks for water quality trading or otherwise

allow trading. These states include Oregon, Idaho,

Colorado, Michigan, Ohio, Pennsylvania, Vermont,

Minnesota, Florida, West Virginia, Delaware, Vir-

ginia, Maryland, Connecticut, California, Nevada,

Arizona, New Mexico, Wisconsin, North Carolina,

Georgia, New Jersey, New York, and Massachusetts.

EPA, State and Individual Trading Programs, www.

epa.gov/owow/watershed/trading/tradingmap.htm] (last

visited June 27, 2008).

For example, Colorado issued a statewide pollut-

ant trading policy in 2004 after 25 years of implement-

ing traditional pollutant controls that did not prevent

or eliminate the impaired status of waters. Colo. Dept.

of Pub. Health and Env’t, Colorado Pollutant Trading

Policy 1 (Oct. 2004), available at http://www.cdphe.

state.co.us/wq/PermitsUnit/PolicyandGuidance/Trading

Policy.pdf (last visited June 27, 2008). The policy

provides a framework for trading and outlines use

limitations and minimum trade criteria. Jd. The

policy allows for long-term improvements in water

quality through the purchase or retirement of credits.

Id. at 3. The policy also allows offsets for new or

increased discharges. Jd. Further, the policy encour-

ages trading in impaired waters before, during and

after the development of a TMDL. 7d. at 12-13.

Trading is an important means for states to

address the impairment of interstate waters such as

the Chesapeake Bay. Nutrients and other pollutants

impair the Chesapeake Bay, which does not yet have

TMDLs in place. EPA, List of Impaired Waters for

2006 (2006), available at http://iaspub.epa.gov/tmdl_

waters 10/waters_list.control?state=MD&wbtype=BAY

&p_cycle=2006 (last visited June 27, 2008). To ad-

dress the impairment and accommodate population

growth, Maryland, Pennsylvania, Virginia, the Dis-

trict of Columbia, and EPA formally agreed to reduce

nutrients to specified levels [hereinafter Chesapeake

Agreement]. Accordingly, the states are turning to

trading to control nutrients in the Chesapeake Bay

and its tributaries. For example, Virginia adopted a

trading program that requires new or expanded

facilities and significant dischargers to meet annual

nutrient load allocations. See Va. Code Ann. §62.1-

44.19:15. Virginia’s trading program authorizes the

reduction of nutrients from both point- and nonpoint

sources. See Va. Code Ann. §62.1-44.19:12. Id.

2. The Availability of Offsets Outside

the Trading Context Is Critical For

States to Comply With Water Qual-

ity Standards

States use offsets outside the market-based

trading context to address factors that cause or

contribute to violations of water quality standards.

For example, offsets are essential to California’s

strategies to attain water quality standards for waters

impaired by mercury and nutrients. In July 2007,

California approved a revised TMDL for mercury in

the San Francisco Bay. Cal. State Water Resources

Control Board, Res. No. 2007-0045, Approving an

Amendment to the Water Quality Control Plan for

the San Francisco Bay Region to Establish Mercury

Fish Tissue Objectives, etc. (July 17, 2007), avail-

able at http://www.waterboards.ca.gov/board_decisions/

adopted_orders/resolutions/2007/rs2007_0045.pdf (last

visited June 27, 2008). The implementation plan for

the TMDL calls for aggressive strategies to prevent and

reduce mercury loadings to attain the wasteload alloca-

tions. Cal. Regional Water Quality Control Board, San

Francisco Bay Region, Mercury in San Francisco Bay,

Proposed Basin Plan Amendment and Staff Report,

etc. (Aug. 1, 2006) [hereinafter Mercury in San Fran-

cisco Bay] at III-1, III-5, available at http://www.

swrcb.ca.gov/sanfranciscobay/water_issues/programs/

tmdls/sfbaymercury/sr080906.pdf (last visited June

27, 2008). The implementation plan includes adaptive

management to refine the TMDL every five years and

the allowance of offsets in new and modified NPDES

permits. Mercury in San Francisco Bay, supra, at

Appendix pp. A-24—A-27.

In November 2007, California issued a general

NPDES permit for municipal and industrial waste-

water discharges of mercury to the San Francisco

Bay. Cal. Regional Water Quality Control Board, San

Francisco Bay Region, Order No. R2-2007-0077 (Nov.

1, 2007) (hereinafter Order No. R2-2007-0077], avail-

able at http://www. waterboards.ca.gov/sanfranciscobay/

water_issues/programs/tmdls/sfbaymercury/r2-2007-0077

final.pdf (last visited June 27, 2008). The permit

contains provisions to implement the TMDL and

anticipates the development of an offset program as a

“necessary” tool to achieve the wasteload allocations.

Id. at 22 and F-15. In response to the TMDL and

because mercury impairs nearby waters of the Sac-

ramento-San Joaquin River Delta, California is

developing an offset program for mercury discharges

to the entire Bay-Delta system. Jd. at 1. The state

expects that the offset policy will not only allow

dischargers to meet their wasteload allocations, but

also permit the expansion of existing discharges and

initiation of new discharges. Jd. at 1. The state also

expects the offset policy to reflect that point sources

alone cannot reduce or eliminate mercury loadings to

achieve the water quality standards. Jd. at 2. Rather,

nonpoint sources must be a part of the offset strategy.

Id. at 2. Under the offset policy contemplated, pro-

jects must produce a net environmental benefit,

dischargers must implement technology-based con-

trols required by the CWA, and offset requirements in

NPDES permits must be enforceable. Jd. at 3-4.

In addition, California is proposing a nutrient

offset program for the POTW of the City of Santa

Rosa [hereinafter City] that discharges into the

Laguna de Santa Rosa [hereinafter Laguna]. See Cal.

Regional Water Quality Control Board, North Coast

Region, Draft Res. No. R1-2008-0061 [hereinafter

Draft Res. No. R1-2008-0061], available at http://www.

waterboards.ca.gov/northcoast/hoard_info/board_meetings/

07_2008/pdf/sr_res_0008_0061/08_0061_Res.pdf (last

visited June 27, 2008). The Laguna is impaired for

nutrients, and the TMDL to correct the impairment

will not be complete until the year 2019. Id.; Cal.

Regional Water Quality Control Board, North Coast

Region, Draft Res. No. R1-2008-0061; Proposed 2006

CWA Section 303(d) List Of Water Quality Limited

Segments, North Coast Regional Board (Sept. 15,

2006), available at http://www.swrcb.ca.gov/tmdl/docs/

303dlists2006/proldraft303d.pdf (last visited June 27,

2008).

The draft resolution for the offset program for the

City’s POTW explains: “The Nutrient Offset Program

will provide a framework for achieving additional

nutrient load reductions during the interim period

before the nutrient TMDL for the Laguna de Santa

Rosa is implemented.” Draft Res. No. R1-2008-0061.

The offset program encourages the City to take

actions it would not otherwise take to improve water

quality in the Laguna, such as removal of sediment

and an invasive weed that contributes to the impair-

ment. Draft Res. No. R1-2008-0061. The City’s

NPDES permit includes effluent limitations of “no

net loading” for nutrients that take effect in the year

2011 if the TMDL is not complete. Cal. Regional

Water Quality Control Board, North Coast Region,

Order No. R1-2006-0045 (Sept. 20, 2006) at 12-13,

available at http://www.waterboards.ca.gov/northcoast/

board_decisions/adopted_orders/pdt/2006/061003_0045_

SantaRosaWDRs.pdf (last visited June 27, 2008). The

permit authorizes the City to use offsets to comply

with the effluent limitations. Jd. at 13, n.5. The offset

program would allow the City to accrue offsets by

improving the Laguna’s water quality before the year

2011 and, consequently, before the TMDL’s comple-

tion. Draft Res. No. R1-2008-0061.

Pinto Creek calls into question the use of offsets

in the pre-TMDL context and could frustrate future

attempts of the City to expand its wastewater capac-

ity or construct new POTWs to accommodate in-

creased growth. This squarely conflicts with offset

and trading programs and, more importantly, the

CWA’s goal to improve water quality through the

elimination of factors that cause or contribute to

impairment.

Il. PINTO CREEK WILL ELIMINATE VALU-

ABLE OFFSET PROGRAMS THAT IM-

PROVE WATER QUALITY

Offset programs may range from a relatively

simple offset arrangement between two point sources,

as in Pinto Creek and Annandale, to formal credit

exchange programs such as those in Connecticut and

Virginia, see Va. Code Ann. §62.1-44.19:12, Conn.

Public Acts 01-180 (2001). See EPA, Watershed-based

National Pollutant Discharge Elimination System

(NPDES) Permitting Technical Guidance 47, 49 (Aug.

2007), available at http://www.epa.gov/npdes/pubs/

watershed_techguidance_entire.pdf (last visited June

27, 2008). Whatever the form, all offset and trading

programs share the goal to protect designated uses of

waters in the most flexible and cost-efficient manner

practicable.

Pinto Creek jeopardizes progress made by EPA

and the states with the use of offsets and market-

based trading programs. Under the Ninth Circuit’s

ruling, if a permit for a new source or new discharger

allows any loading of a pollutant for which the receiv-

ing water is listed as impaired, the discharge is

presumed to “cause or contribute” to a violation of

water quality standards—even if the discharge is

offset so as to improve the water’s overall health.

Pinto Creek, 504 F.3d at 1014. The Ninth Circuit’s

interpretation of “cause or contribute” in this manner

undermines the CWA.

Prior to Pinto Creek, EPA and states could rea-

sonably conclude that a discharge “causes or contrib-

utes” to a violation of water quality standards only if

the discharge degrades water quality. Cf. Arkansas,

503 U.S. at 1059-60 (deferring to EPA administrative

law judge’s finding that there would be no “detectable

change in water quality” and therefore no violation of

water quality standards). This interpretation is

critical to the success of state water quality programs.

The Ninth Circuit’s overly restrictive interpretation

of Section 122.4(i) will frustrate state permitting

efforts as states interpret “cause or contribute” under

their offset and trading policies.

Based on the Ninth Circuit’s erroneous interpre-

tation of “cause or contribute,” all new sources

and new dischargers that discharge to impaired

waters may now receive a NPDES permit only upon

demonstration that: (1) a TMDL that assigns load

allocations to the new discharger is in place; (2) there

are compliance schedules for “any” discharges to the

impaired water; and (3) the TMDL and compliance

schedules evince attainment of water quality stan-

dards. Pinto Creek, 504 F.3d at 1012-14.

Many of the Nation’s impaired waters lack ap-

proved TMDLs. See EPA, Total Maximum Daily Loads:

National Section 303(d) List Fact Sheet, available at

http://oaspub.epa.gov/waters/national_rept.control (last

visited June 27, 2008) (indicating 40,752 impaired

waters on 303(d) list and 33,399 TMDLs developed

since 1995). In California, there are currently 691

water bodies listed and most are listed for multiple

pollutants. See EPA, 2006 Section 303(d) List Fact

Sheet for California, available at http:/Aaspub.epa.

gov/waters10/state_rept.control?p_state=CA&p_cycle=

2006#TPOL (last visited June 18, 2008). A TMDL

must be developed for each cause of impairment, but

most of these TMDLs will not be complete until the

year 2019. Id.

Indeed, TMDLs may take 13 years or more to

complete—a very long time for a local government

* The Ninth Circuit’s use of “any” implies that “all” discrete

conveyances of pollutants that may be a “discharge” under 40

C.F.R. §122.2 must be subject to compliance schedules—even

where scheduling of less than all sources would attain water

quality standards.

considering construction of a new POTW to wait.’

Even where a TMDL is in place, the TMDL often will

not include a load allocation for new sources. Grant-

ing a new source or new discharger a load allocation

after initial TMDL adoption will often take many

years and require revision to the entire TMDL

framework—assuming that additional wasteload

allocations are even available. See generally City of

Arcadia v. State Water Resources Control Board, 135

Cal.App.4th 1392 (Cal.Ct.App. 2006) (TMDL with a

waste load allocation of “zero”).

Moreover, Section 122.4(i)(2) as interpreted in

Pinto Creek requires a practical impossibility. The

permitting authority must issue “compliance sched-

ules” to all “discharges” in the impaired segment.”

Pinto Creek suggests that compliance schedules

would need to issue to essentially any anthropogenic

source of water pollution in the impaired water

body—which is simply not a regulatory option pro-

vided by or enforceable under the CWA.”

* See generally William L. Andreen, Water Quality Today—

Has the Clean Water Act Been a Success?, 55 Ala. L. Rev. 537,

592 (2004).

Section 122.4(i(2) speaks of subjecting “dischargers” (not

“discharges”) to compliance schedules, but the Ninth Circuit

confused the two distinct concepts in concluding that EPA must

make all discharges subject to compliance schedules. Pinto

Creek, 504 F.3d at 1014.

‘' “Schedules of compliance” means a “schedule of remedial

measures included in a permit... .” 40 C.F.R. §122.2 (emphasis

added). CWA permitting authorities generally have no ability to

(Continued on following page)

> | es

Assuming that a new source or new discharger

demonstrates compliance with Section 122.4(i), the

Ninth Circuit would still require the source to show

with scientific certainty before the close of the com-

ment period for the permit that implementation of the

TMDL would be effective. For a majority of TMDLs,

this will be an impossible task. Where a permitting

authority has insufficient information to understand

entirely the causes of impairment in a particular

water body, interim load allocations may be estab-

lished based upon current information and under-

standings, but these interim limitations are subject to

revision upon further data generation and study. See

Mercury in San Francisco Bay, supra, at Appendix pp.

A-24—A-27. The implementation phase of the TMDL

then generates needed data and allows a permitting

authority to evaluate the effectiveness of best rnan-

agement practices. If the data or special studies

reveal that adjustments are necessary, the permitting

authority revises the load and wasteload allocations.

The Ninth Circuit’s approach to Section 122.4(i)

seems to foreclose this type of critical adaptive

management in the TMDL context by apparently

requiring that the permitting authority be certain of

attainment of water quality standards prior to issu-

ance of the permit. All of the elements of Section

subject a nonpoint source to a NPDES permit or compliance

schedule. See Sierra Club v. Meiburg, 296 F.3d 1021, 1026 (11th

Cir. 2002); Or. Natural Desert Ass’n v. Dombeck, 172 F.3d 1092,

1097 (9th Cir 1998).

122.4(i) appear to have been met in Pinto Creek. A

TMDL that contained load allocations for Carlota (the

permit applicant) was in place. Jn ;2 Carlota Copper

Co., 11 E.A.D. at 759-60. Carlota’s permit contained a

list of compliance measures to be completed prior to

commencement of any discharge, and the TMDL

projected future attainment based upon Carlota’s

nonpoint source offsets. Id. at 703-04, 741, 759-60.

The offsets would remediate an abandoned mine site

reasonably believed to be one of the primary sources

of loading to the watershed. Jd. at 738, 743, 770.

However, because of residual uncertainty associated

with the manner in which the abandoned mine con-

tributes pollutant loadings and the variability of

anticipated loadings under different precipitation

scenarios, EPA believed out of an abundance of cau-

tion that further study and data gathering were

appropriate. EPA, Total Maximum Daily Load for

Copper in Pinto Creek, Arizona 34-36 (2001), avail-

able at http://www.epa.gov/region09/water/tmdl/pinto/

pinto.pdf (last visited June 28, 2008).

The Ninth Circuit deemed EPA's approach insuf-

ficient to satisfy Section 122.4(i). Though the reason-

ing of the Ninth Circuit on this point is difficult to

discern, it appears that the court’s primary concern

was EPA’s factual determination that “partial reme-

diation of the Gibson Mine discharge” would ensure

attainment of water quality standards. Pinto Creek,

504 F.3d at 1014. Such judicial scrutiny of the

technical conclusions of regulatory agencies bodes

dangerously for any number of TMDLs currently

in development because TMDLs are complex and

uncertain undertakings that can take years of

continued monitoring to confirm the efficacy of

mandated reductions and best management prac-

tices. See generally EPA, Memorandum: Clarification

Regarding “Phased” Total Maximum Daily Loads 3

(Aug. 2, 2006), available at http://www.epa.gov/owow/

tmdl/tmdl_clarification_letter.htm] (last visited June

27, 2008).

Offset programs across the United States rely

upon adaptive management to improve water quality,

see Mercury in San Francisco Bay, supra, at Appendix

pp. A-24—A-27, subject to adjustment of the TMDL

where data support such adjustments. If, as sug-

gested by Pinto Creek, potential new sources or new

discharges must wait until the permitting authority

obtains absolute certainty cf future attainment of

water quality standards, the sources may wait many

years—well past the 13 years that it takes for permit-

ting authorities to develop a TMDL and far too long

for Section 122.4(i) to be useful.

Offsets and market-based trading programs are

elegant solutions for EPA and states to address

complex water quality problems that involve multiple

sources. Trading and offsets present a “win-win”

scenario: the watershed gets more reductions than it

would with an effective compliance schedule because

of the offset ratios of state offset and trading poli-

cies,” and the new point source is able to enter

the watershed to provide critical municipal utility

* See, e.g., Annandale, 731 N.W.2d at 524 (25:1 offset ratio).

services to a growing population. Pinto Creek pre-

sents a “lose-lose” scenario. The potential new source

or new discharger chooses not to build a new facility

because compliance with the Ninth Circuit’s restric-

tive interpretation of Section 122.4(i) is financially

infeasible. Impaired waters lose because existing

pollutant sources will not be further reduced. Com-

munities lose because new state of the art treatment

facilities may be precluded from discharging, which

prolongs reliance on outdated facilities that discharge

to land and are not subject to the NPDES program.

The inflexible approach of the Ninth Circuit in

Pinto Creek jeopardizes the states’ use of offsets and

trading programs. This Court should step in to clarify

that the Annandale approach, which allows new

permits in impaired waters upon demonstrated

improvement to water quality, is the correct one.

CONCLUSION

State and local populations across the United

States continue to grow, and with this growth comes

increased strains on natural resources and greater

challenges for state and local governments to provide

adequate and environmentally responsible wastewa-

ter treatment services. The Ninth Circuit’s interpre-

tation of Section 122.4(i) in Pinto Creek does not solve

the environmental problems associated with growth.

Instead, the decision precludes promising solutions.

Requiring POTWs to demonstrate current attainment

of water quality standards prior to the issuance of a

NPDES permit will impose a categorical ban on new

discharges in all but the rarest of circumstances.

Pinto Creek will serve only to slow water quality

improvement and frustrate local government efforts

to provide vital municipal wastewater services in a

more environmentally beneficial manner. The Ninth

Circuit’s second-guessing of EPA eliminates tools used

effectively by permitting authorities to comply with

water quality standards and generally improve water

quality as populations grow.

In Arkansas, this Court appreciated the difficult

task that EPA and the 45 states that administer

NPDES programs face in developing strategies and

incentives to meet the CWA’s goals. As in Arkansas,

503 U.S. at 113-14, EPA made a reasoned policy choice

in Pinto Creek premised upon site-specific facts. EPA

used its technical expertise to determine that allow-

ing the new discharge offset by pollution reductions

would produce a net benefit in water quality. 11

E.A.D. at 784. In substituting its judgment for the

reasoned decision that EPA made in interpreting its

own regulation, the Ninth Circuit did precisely what

this Court cautioned against in Arkansas. The court

established a “categorical ban” that frustrates “the

construction of new plants that would improve exist-

ing conditions.” Arkansas, 503 U.S. at 108.

This Court should grant certiorari to rule that

the courts in Annandale and Crutchfield correctly

held that the CWA allows the use of offsets to improve

water quality and the Ninth Circuit misread the CWA

in disallowing the use of offsets. Permitting authori-

ties need regulatory flexibility to issue NPDES

il —

pg a pe

fn ee oo et

’

permits to new sources and new dischargers to im-

paired waters where the discharges are offset to

provide a net improvement in water quality. The

Ninth Circuit erred when it held otherwise.

Dated: July 3, 2008

Respectfully submitted,

KEITH J. JONES ROBERTA L. LARSON

(Counsel of Record) CASSIE N. AW-YANG

NATHAN GARDNER-ANDREWS SOMACH SIMMONS & DUNN

NATIONAL ASSOCIATION OF Hall of Justice Building

CLEAN WATER AGENCIES 813 Sixth Street, Third Floor

1816 Jefferson Place, NW Sacramento, CA 95814

Washington, DC 20036-2505 Telephone: (916) 446-7979

Telephone: (202) 533-1803

Attorneys for Amici Curiae

KOURTNEY BURDICK

LEAGUE OF CALIFORNIA CITIES

1400 K Street, Suite 400

Sacramento, CA 95814

Telephone: (916) 444-5790

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.