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EPA Issues Final Rule Excluding Water Transfers from NPDES Permitting

Beveridge & Diamond, P.C., June 11, 2008

On June 9, 2008, the Environmental Protection Agency (“EPA”) finalized a long-awaited rule establishing that water transfers do not require a National Pollution Discharge Elimination System (“NPDES”) permit under the Clean Water Act (“CWA”) because they do not result in the addition of a pollutant. (“Water Transfer Rule”).  According to EPA, thousands of water transfers occur throughout the U.S. each year, including sixteen major water diversion projects in the West.  In a typical water transfer, water is routed through tunnels, channels, or natural streams for use as a public water supply, irrigation, power generation, flood control, and/or environmental restoration. 

Under the final NPDES Water Transfer Rule, an activity that conveys or connects waters of the U.S. without subjecting the transferred water to any intervening industrial, municipal, or commercial use is a “water transfer” exempt from CWA NPDES requirements.  To fall within the exemption, both the source water and receiving water must be waters of the U.S.  Conveyances of water within the same waterbody are not subject to NPDES permitting, even if the transferred water contains pollutants.

EPA addressed certain distinct discharge situations in the Water Transfer Rule.  First, discharges from impoundments or ponds used to settle or treat wastewater (such as mining waste) are not water transfers under the new rule, but rather, remain subject to NPDES permitting.  Second, the final rule does not alter the existing regulatory exemptions for certain agricultural and pesticide activities.  Similarly, the rule does not impact the current CWA regulatory regime for discharges of dredge or fill.  Finally, the final rule leaves intact EPA’s position that hydroelectric dams generally do not require NPDES permits.

The Water Transfer Rule is nearly identical to the rule proposed by the Agency two years ago, which was largely based on a 2005 Interpretive Memorandum. (See http://www.bdlaw.com/news-news-archive-58.html.)   The CWA prohibits the discharge of a pollutant except as permitted under Section 402 of the CWA.  Under Section 402, the “discharge of a pollutant” is defined as “any addition of any pollutant to navigable waters from any point source.”  The statute does not define “addition,” and a key issue in the rulemaking was whether the transfer of already polluted water from one water body to another constitutes an “addition.”  The final rule relies upon EPA’s interpretation  that, taken as a whole, the language and regulatory scheme of the CWA (1) does not require permits for water transfers of already polluted water because such actions do not involve an “addition” of a pollutant to navigable waters, and (2) signifies that Congress intended to leave primary oversight of water transfers to state authorities, not the NPDES permitting regime.

The question of whether an NPDES permit is necessary for water transfers arose in the U.S. Supreme Court and several other lower courts.  In South Florida Water Management District v. Miccosukee Tribe of Indians, 541 U.S. 95 (2004), the U.S. Supreme Court remanded the case for further fact-finding and did not rule directly on the water transfer issue.  The First and Second Circuits held that NPDES permits are mandatory for certain water transfers. Dubois v. U.S. Department of Agriculture, 102 F.3d 1273 (1st Cir. 1996)(ski resort) and Catskill Mountains Chapter of Trout Unlimited, Inc. v. City of New York, 273 F.3d 481 (2d Cir. 2001); aff’d Catskill Mountains Chapter of Trout Unlimited, Inc., 4451 F.3d 77 (2d Cir. 2006)(drinking water supply).  In Friends of the Everglades, Inc. v. S. Florida Water Management District, No. 02-80309 (S.D. Fla. 2006), the court held that an NPDES permit was required for the back-pumping of agricultural waters.  EPA took the same position in these cases that it is taking under the NPDES Water Transfer Rule -- namely, that a “holistic” reading of the CWA renders the requirement for NPDES permits inapplicable for water transfers. 

Environmental groups, concerned over the potential effect of water transfers on drinking water supplies and other water quality issues, are poised to challenge the final Water Transfer Rule, while other interests, such as public water agencies, will likely intervene in any such litigation to uphold EPA’s approach.

For additional information, please contact Karen Hansen, khansen@bdlaw.com, Richard Davis, rdavis@bdlaw.com, Ami Grace-Tardy, agrace@bdlaw.com, or Parker Moore, pmoore@bdlaw.com.

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