After three years of regulatory wrangling with the State Water Resources Control Board (State Water Board) and after two years of litigation, Judge Lloyd Connelley has handed down a victory for the building industry–tossing out the inappropriate numeric effluent limits that the State Water Board had sought to impose through the statewide Construction Storm Water Permit (Permit).  This victory is substantial in that it emphasizes the need for practical, scientifically-founded regulation of water quality.

From 2007 through 2009, I worked with the California Building Industry Association (CBIA) and others in the regulated community as we sought to affect change of the drafts of the Permit being circulated by the State Water Board.  There were many objections to the Permit raised by the building industry, but the preeminent complaint was that the Permit improperly established statewide, not-to-exceed, end-of-pipe numeric effluent limits (NELs) for turbidity and pH that defied science and were not established pursuant to federal or state law.  (The NELs included in the permit were 500 NTU for turbidity and 6-9 pH for all construction sites considered Risk 3 or high water quality risk sites.)

A lawsuit brought by CBIA and others challenged these NELs and the Court agreed with the building industry that the NELs had not been properly included in the Permit.  Specifically, the Court found that the State Water Board had not supported the NELs through sufficient scientific evidence, namely the data that the State Water Board used was faulty as it: did not address construction storm water, did not identify the best management practices used on the construction sites, was not indicative of California locations, or did not prove that best management practices in place at various sites caused any high levels of pollutants in storm water runoff.

Furthermore, the Court found that because of a lack of supporting data, the State Water Board had not complied with federal law in establishing the NELs.  The Board must identify available technologies, through the gathering of performance data under various site conditions, in order to derive an NEL.  “The Board cannot properly base . . . [an] NEL on theory and inferences drawn from limited or inconclusive studies….”  (Slip Opinion at 16)  And until the performance data is properly assessed, the State Water Board cannot examine the other technical aspects and cost-benefits of the proposed NELs as required by the federal Clean Water Act.  Thus, the Court found both the turbidity and the pH NELs to be invalid and unenforceable.

So What Now…

The Court’s decision prevents the State Water Board from enforcing any alleged violations of the NELs and the Board must revise the permit to remove the NELs.  The State Water Board is free to propose NELs in the future, however, it must do so in accordance with federal and state law.  Only if properly established, would California construction sites be subject to NELs on their storm water runoff.

Numeric action levels (NALs) are included in the Permit and are not-enforceable numbers but require sampling and serve as guideposts to permittees to adjust practices on their sites.  The NALs remain in place after the Court’s ruling and Risk 2 and 3 sites that are subject to NALs must continue to implement their monitoring and reporting programs related to the NALs.  All other aspects of the Construction Storm Water Permit not related to the NELs remain in tact and continue to be required of permittees.

Relationship to EPA’s Withdrawal of Turbidity Number

An interesting parallel between the Court’s decision and recent U.S. EPA action cannot be overlooked.  As was pointed out to the Court in the California construction permit litigation, the U.S. EPA has been struggling to establish national Effluent Limitation Guidelines (ELGs) for construction storm water.  EPA established a numeric ELG on turbidity (of 280 NTU) from construction sites, but had that rule challenged by the building industry and small business trade groups.  In 2010, while the challenge was ongoing, EPA stated it would revise the proposed number.  However, in August of this year, EPA withdrew its numeric ELG altogether declaring that it needed to collect additional data on treatment performance from construction sites.

The Court deciding the fate of the NELs in the Permit recognized and was likely influenced by EPA’s decision to seek additional data before attempting to set a numeric limit for construction storm water.  (See Slip Opinion at 4.)

Influence on Other California Permits

The State Water Board is in the midst of issuing a new general storm water permit for numerous industrial sites statewide.  The State Water Board had previously proposed to include NELs in the permit based upon benchmark (non-enforceable numbers) established by EPA.  However, the State Water Board is in the process of revising the draft industrial permit, and has indicated in testimony before the California State Legislature that it will not be including any new NELs in the permit (aside from those already established by federal law) due to a lack of sufficient data to justify the proposed NELs.

After this loss on the construction storm water permit NELs, it is likely that neither the State Water Board or any of the Regional Water Quality Control Boards will seek to establish any NELs in storm water permits unless they can properly justify them in terms of having sufficient scientific data and through strict adherence to the requirements of federal and state laws governing the establishment of NELs.

The United States Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) jointly issued a draft document on May 2, 2011, entitled “Draft Guidance on Identifying Waters Protected by the Clean Water Act.”  (Draft Guidance)  After having had a few days to review the Draft Guidance as well as reactions to it in the environmental press, I provide a summary below.

Scope and Background of Draft Guidance

The Draft Guidance seeks to better define “waters of the United States” as that term is used throughout the federal Clean Water Act (CWA).  Ultimately, the jointly issued Guidance will have far reaching effects on water issues throughout the country.  Releases to “waters of the United States” are subject to many requirements found in the Clean Water Act, including: Corps issued dredge and fill permits (CWA §404), water quality certifications (CWA §401) necessary to obtain dredge and fill permits, oil spill requirements (CWA §311), impaired waters requirements (CWA §303) including Total Maximum Daily Loads, water quality standards (CWA §303), and EPA- and state-issued National Pollutant Discharge Elimination System permits (CWA §402).

The new guidance purports to harmonize several U.S. Supreme Court cases:  United States v. Riverside Bayview Homes, Inc., Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers, and Rapanos v. United States.  The three cases, all purporting to clarify the definition of “waters of the United States,” did not necessarily do so, especially considering that the Rapanos case included 5 separate opinions and no majority opinion from the Court (one plurality, two concurring, and two dissenting).

Draft Guidance Will Expand Federal Jurisdiction

While EPA and the Corps state that they are implementing the Supreme Court’s decisions and that the Draft Guidance is consistent with those decisions, it would appear that the Draft Guidance selects elements from the decisions that lead to the broadest possible definition of “waters of the United States.”  In fact, the agencies fully admit that “under this proposed guidance the number of waters identified as protected by the Clean Water Act will increase compared to current practice.”

Waters Now Deemed Waters of the United States

Replacing prior guidance issued in 2008, the Draft Guidance asserts federal jurisdiction over the following types of waters:

• Traditional navigable waters
• Interstate waters
• Wetlands adjacent to either traditional navigable waters or interstate waters
• Non-navigable tributaries to traditional navigable waters that are relatively permanent, meaning they contain water at least seasonally, and
• Wetlands that directly abut relatively permanent waters.

In addition, EPA and the Corps will take jurisdiction over the following types of waters if a fact-specific analysis determines they have a significant nexus to traditional navigable waters or interstate waters:

• Tributaries to traditional navigable water or interstate waters
• Wetlands adjacent to jurisdictional tributaries to traditional navigable waters or interstate waters, and
• Waters that fall under the “other waters” category of the regulations (including waters that are physically proximate to other jurisdictional waters, as well as those that are not).

Major Changes Found in the Draft Guidance

Previously, all interstate waters were not automatically jurisdictional; however, the Draft Guidance would make such waters so, regardless of their being navigable in fact or being hydrologically connected to other waters.  Furthermore, with regard to “other waters” the Draft Guidance asserts federal jurisdiction over “isolated, intrastate, non-navigable waters and wetlands, even if they are not physically proximate to other jurisdictional waters, if there is a ‘significant nexus’ to traditional navigable water or interstate water.” Thus, some “other waters” such as small natural ponds, playa lakes, mudflats, or vernal pools may be deemed “waters of the United States” under the CWA with all of the applicable regulation coming with such a status.

Another change found in the Draft Guidance is that “certain waters that were not subject to the CWA under the 2008 guidance may become jurisdictional under the proposed guidance. For example, ditches may be considered tributaries and ditches or swales may be considered wetlands, and thus be subject to the ‘significant nexus’ test.”

Also of note is that the Draft Guidance in determining jurisdictional waters through the “significant nexus” test will treat the same not only waters in the same “region” as past guidance did, but waters in the same watershed.  Watersheds can be extremely large—as large as 250,000 acres. Under the Draft Guidance, once an area (ditch, wetland, or other proximate water) has been deemed jurisdictional, other “waters” of the same type and in the same watershed can be deemed jurisdictional based upon the “significant nexus” test.

All of these changes from prior guidance found in the Draft Guidance guarantee that agency staff following the terms of the new document will find additional waters to be within federal jurisdiction than previously.

A Rule That Isn’t a Rule

Even before the Draft Guidance was officially released, members of Congress realized that it was a “de facto” rule despite the EPA and Corps stating that the Draft Guidance is “not a rule, and hence it is not binding and lacks the force of law.” In 2009 and 2010, Congress had the opportunity to expand the scope of the Clean Water Act in a way similar to what the Draft Guidance is now doing, but refused to do so.   With a lack of Congressional directive, and in light of the lack of a clear judicial direction, it is quite possible that the Draft Guidance will be treated as a de facto rule by the agencies despite statements to the contrary.

How You Can Impact the Process

EPA and the Corps are currently accepting comments on the Draft Guidance until July 1.  Parties with lands that may become subject to CWA jurisdiction due to application of the tenets in the Draft Guidance should provide comment and track further opportunities for comment on the rulemaking that the agencies have promised will follow after final adoption of the Draft Guidance.

Impact on Ongoing California Policymaking

The California State Water Resources Control Board is presently developing a policy to govern all non-federal, state-only waters.  Comments on the CEQA scoping document for the policy are due on May 20, 2011.  It is unknown how the State Water Board will react to the growing federal jurisdiction presented by the Draft Guidance.  However, with a growing federal jurisdiction, it is likely that the state-only policy may lose some sense of necessity, should the scope of the state-only policy become so narrow as to be immaterial.

After having gone through a protracted reissuance process for the construction site general permit, the new draft of the industrial permit incorporates several of the new requirements from that permit into the present draft—items that will significantly change the design and management of most industrial facilities in California, that will add significant compliance costs to these facilities, and that will potentially expose these facilities to significant risk of fines from either agency enforcement actions or citizen-initiated lawsuits.

The permit governs most industrial facilities throughout the state, including manufacturing facilities, oil and gas facilities, mines, recycling facilities, steam electric power generation facilities, transportation-related facilities (including vehicle maintenance shops), sewage treatment plants, confined animal feeding operations (e.g., dairies), and landfills.

Most significantly, the draft permit deemphasizes the current approach of protecting water quality through iterative implementation of structural and nonstructural Best Management Practices (BMPs). Instead, the draft permit introduces numeric standards for storm water runoff—something most California industrial facilities have never had to comply with before now.  The numeric effluent limits have been borrowed from U.S. EPA benchmark numbers that were not intended to be applied as not-to-exceed limitations, and many of the proposed limits represent “one-size-fits-all” standards that appear to lack robust scientific and economic justification and fail to consider natural background conditions throughout the state.

Key new requirements for industrial sites contained in the draft permit include:

• Numeric effluent and numeric action levels.  Taken from the U.S. EPA’s industrial storm water permit, the proposed numeric action levels include between 4 and 22 pollutants (or more depending upon the industry).  The action levels are benchmarks, exceedance of which will trigger increased monitoring and increased application of pollution controls.  After several exceedances of the action levels, the levels will morph into not-to-exceed effluent limits, any exceedance of which (by any amount) will subject the discharger to enforcement actions.  Mandatory minimum penalties can also apply for certain exceedances.

• Electronic Filing of Documents.  All permit-related documents will be required to be submitted electronically to the State Board, including applications for coverage, Storm Water Pollution Prevention Plans (SWPPPs), sampling data, exceedance notices for numeric limits, annual compliance reports, etc.  The State Board will make electronically submitted information available to the public on the Internet.  Applications for permit coverage will be subject to public comment and possible rescission by local water boards.

• Increased inspections and sampling.  Inspections under the draft permit will increase to more than 70 inspections per year (compared with 14 under the current permit).  Sampling requirements will increase from 2 sampling events per year under the current permit to at least 4 sampling events (or many more if numeric action levels are exceeded).  Options for cost-saving group monitoring are not available under the new draft permit.

• Minimum Best Management Practices. Unlike the prior permit that allowed dischargers to self-select appropriate pollution controls, the new permit establishes specific minimum BMPs.  Failure to implement consistently the minimum requirements will be considered permit violations.  Minimum requirements include emphases on cover and containment of materials, diversions of run-on from adjacent sites and non-industrial areas, daily inspection and cleaning of outdoor material or waste handling containers, erosion and sediment control, and spill prevention and clean up.

• Minimum training requirements. Certain documents under the new draft permit must be prepared by Qualified SWPPP Developers (having a specific registration such as registered civil engineers), and pollution controls must be implemented by a Qualified SWPPP Practitioner.  Both of these individuals must have completed State Board-approved training courses.

Once adopted, penalties for violations of the permit can be as high as $25,000 to $37,500 per day per violation in either state or federal court, with six- and seven-figure penalties not uncommon. Mandatory minimum penalties will apply for certain types of violations (e.g., exceeding numeric effluent limits and filing reports late).

State Board staff has indicated their intent to have the permit finalized within the next several months.  Industrial facility operators have a substantial stake in this permit, as its terms will affect not only management budgets, but also will dictate specific operational and facility design elements.

Additionally, the potential liability for administrative enforcement or citizen-initiated lawsuits is extremely high, with any violation of the permit subjecting site owners to possible fines and other penalties.

The State Board will be accepting public comment on the draft permit at a hearing on March 29^th and written comments are due no later than April 18^th.

Please contact Shanda Beltran if you have questions regarding the draft permit, would like assistance preparing comments on the permit, or would like help developing a compliance program for your company.

In December 2009, EPA adopted a regulation placing a limit of 280 turbidity units on the sediment in storm water flows from construction sites 10 acres and larger—the first time the agency had ever adopted a numeric limit for construction storm water.  This numeric effluent limit was seen by many in the building industry as scientifically unjustified, potentially unachievable in certain instances, and extremely costly. 

The National Association of Home Builders (NAHB) and the Small Business Administration, among others, filed legal challenges to the numeric limit.  The challenges centered upon the flawed science that EPA used to support its rule as well as the extreme cost of implementation—claimed by NAHB to be up to $10 billion annually, a cost that could significantly hurt small businesses and affordable housing. 

On August 13, 2010, EPA filed papers with the 7th Circuit Court of Appeals asking the Court to vacate the numeric limit and place the lawsuit on hold while EPA proposes a revised rule.  EPA admitted that it had improperly interpreted the data underlying the numeric limit, and thus, would seek additional public comment and data and revise its rule in light of new comments, new data, and with proper interpretation of the data.    

While the numeric limit in EPA’s construction storm water regulations would be placed on hold, other non-numeric aspects of EPA’s rules will remain in effect—regulations specifying minimum best management practices and other similar requirements. 

In California, a lawsuit filed by the California Building Industry Association is challenging a similar type of numeric storm water effluent limit.  That limit is contained in the statewide general construction storm water permit adopted in September 2009 by the State Water Resources Control Board.  Although the two numeric limits are different (280 turbidity units for all sites 10 acres or larger for EPA and 500 turbidity units for all “risk three” sites in California), EPA’s decision to go back to the drawing board on its numeric limit could have an effect on the lawsuit pending in California.  Briefs have not yet been filed in the California case.

No other court has previously found anyone liable under Superfund for “arranging to dispose” of storm water runoff.  The court found that by designing the drainage system for the highways, the state Department of Transportation was liable for the release of hazardous substances contained in the storm water.  The pollutants were those one would commonly expect in highway runoff and included several metals (cadmium, lead, zinc, nickel) as well as petroleum hydrocarbons and phthalates.

The particular highways at issue drained to two waterways located within the Commencement Bay-Nearshore Tideflats Superfund site on the Puget Sound in Tacoma, Washington.  The result of the court’s determination of Superfund liability now makes the Department of Transportation liable as a potentially responsible party for some or all of the $6.8 million in costs incurred by the government in cleaning up the Superfund site. 

The court did not rule on the state’s argument that its storm water permit (a National Pollutant Discharge Elimination System permit) issued under the authority of the federal Clean Water Act should shield the state from Superfund liability.  A decision on that argument is expected in February 2011.

It remains to be seen what the potential fallout from this case may be.  The federal trial court’s decision on the impact of the storm water permit and any appeal to the 9^th Circuit Court of Appeals (a circuit with jurisdiction over all the states on the West Coast, Hawaii & Alaska) may have broad influence.  Alternatively, the Washington case may be seen as an anomaly with other courts refusing to follow its holding.  However, just the potential for storm water dischargers to be liable under Superfund is significant.

Government Pronouncements—On May 25^th, the U.S. Environmental Protection Agency’s (EPA) deputy assistant administrator for water, Nancy Stoner, stated that “stormwater is a large cause of U.S. Water pollution” and confirmed that EPA is making storm water runoff a regulatory priority for the agency.  While in April, the chief of the U.S. Department of Justice’s Environmental Crimes Section, Stacey Mitchell, announced the U.S. government’s intent to bring more criminal enforcement matters against violators of the federal Clean Water Act as she stated:  “I expect to see an influx of Clean Water Act cases, which is fantastic.” 

EPA Enforcement—EPA has been holding true to its prior promise of more stringent water quality management with recent high-profile enforcement actions against construction storm water permit holders.  In April, EPA announced its settlement with a major national residential builder, for a one-million-dollar penalty to resolve alleged storm water violations at more than 500 sites in several states.  This action came after other construction storm water permit-related settlements between EPA and four national homebuilders for approximately 4.3 million dollars (combined) resolving allegations at more than 2000 sites across 34 states. 

California Water Quality Enforcement—Enforcement actions in California are already on the rise for water quality violations and will likely continue to rise as the major water quality permits in California are revised.  Recently, the State Water Board and its regional boards, most notably the Los Angeles Regional Water Board, have issued hundreds of enforcement actions against construction sites, waste water treatment plants, and building operators (to name a few) under the Mandatory Minimum Penalty program for alleged violations of objective requirements in general permits (e.g., dewatering permits).

More Enforcement Using Objective Standards—The surge in proceedings under the Mandatory Minimum Penalty statute follows a trend of vigorously enforcing the objective permit requirements, such as numeric effluent limits and scheduled reporting.  For storm water permits, which have traditionally relied on more subjective standards, the trend in these permits is now toward more objective standards.  The statewide general construction storm water permit for example, reissued in September 2009, contains for the first time in its history numeric effluent limitations on storm water discharges as well as other objective requirements, such as mandatory best management practices.  Regional Board staff members acknowledge these types of objective standards could lead to an increase in the overall number of enforcement actions.  The forthcoming storm water permits for industrial sites and Caltrans projects are expected to contain more objective standards in light of the new construction storm water permit’s requirements, heightening the odds of increased enforcement. 

The regulated community must be vigilant in its awareness of water quality permit requirements (both existing permits and proposed new permits).  Furthermore, in order to avoid potential enforcement activities, regulated entities must take all necessary steps to ensure compliance programs are sufficient and consistently implemented.

I intend to use this blog primarily to provide updates on new water regulations, cases, and news items.  Because my practice is based in Southern California, I will be providing information on noteworthy water law issues for SoCal, but I will also be staying abreast of other areas of the state (e.g., the Delta) and will post about noteworthy items there also.  And because so much of water law (especially water quality law) is federal, I will provide info on key developments at the federal level and precedent-setting events in other states. 

Reflecting the split in my practice between water resources issues and land use, I intend to blog also about key developments in land use–especially CEQA.

I also will use this blog to provide success stories for my firm, notice of speeches I am giving or conferences I am attending, and key information gained from seminars and other events attended. 

Hopefully, you will find this blog to be informative and will visit often.