Letting the States Go First: District Court Upholds EPA Deference to States on CWA Nutrient Regulation, For Now

The US Environmental Protection Agency (EPA or Agency) won another victory last week in its continuing effort to maintain its considerable discretion to choose to act—or choose not to act—to address nutrient pollution in the nation's waters. In Gulf Restoration Network v. Jackson,¹ the US District Court for the Eastern District of Louisiana upheld EPA's discretion not to act on a petition from environmental groups requesting that EPA use its authority under the Clean Water Act (CWA) to establish federal numeric nutrient criteria for numerous unspecified waters of the Mississippi River Basin. The Court found that EPA's decision to continue to allow the states to address nutrients without direct federal action is consistent with the broad federalist principles of the CWA, and that Plaintiffs had not demonstrated—at least, not as yet—that EPA's approach was arbitrary and capricious.

The District Court decision is the most recent development in a years-long litigation over the appropriate role of EPA and the states in regulating nutrients in the Mississippi River Basin. The case stemmed from a 2008 petition by environmental groups requesting that EPA set numeric nutrient criteria (NNC) for waterbodies in the states of the Mississippi River Basin.² The environmental group petitioners argued that these waters suffer major nutrient pollution problems that have not been and are not being adequately addressed by the states.³They urged EPA to use its authority under section 303(c)(4)(B) of the federal Clean Water Act to find that federal NNC were therefore "necessary" for these waters.⁴ Under Section 303(c)(4)(B), such a finding of necessity would trigger a requirement that EPA initiate rulemaking to establish NNC for all of the affected waters.⁵ EPA rejected the petition, but declined to take a position on the alleged legal trigger that federal NNC were "necessary" for these waters.⁶ Rather, EPA responded that for a variety of reasons—cost, administrative burden, the collaborative federalism framework of the Clean Water Act, the progress states were making in addressing nutrient issues without establishing NNC, the technical challenges of setting NNC due to the complex relationship between nutrient levels and biological impacts to a water body—it determined not to use its Section 303(c)(4)(B) authority to set NNC.⁷

The environmental group petitioners filed suit against EPA, asserting (among other things) that EPA was legally obligated to make a finding that NNC are "necessary" for the waters of the Mississippi River basin.⁸ The District Court in 2013 found that EPA did have an obligation to address the issue of necessity, but that EPA could properly consider non-technical factors, such as cost, feasibility, and the administrative burden of setting NNC for many states (possibly as many as 34, under the environmental groups' imprecise petition), in making a determination of necessity.⁹

EPA appealed the District Court decision to the Fifth Circuit, arguing that the District Court did not properly apply the doctrine of Massachusetts v. EPA,¹⁰ which allows the Agency to decline to make a finding of necessity if it provides a "reasonable basis" that is "grounded in the statute" for not making such a finding. The Fifth Circuit agreed with EPA on this issue, and remanded to the District Court to determine whether EPA had indeed provided such a "reasonable explanation," and whether the Agency's explanation was legally sufficient.¹¹ While leaving the ultimate decision to the District Court, the Fifth Circuit took pains to point out that the District Court's review of EPA's basis for not reaching the issue of necessity is "extremely limited" and "highly deferential," provided EPA's explanation for not reaching the necessity issue is grounded in the Clean Water Act.¹²

The District Court, applying the Fifth Circuit test, found that EPA's justification for denying the petition and not addressing the necessity issue one way or the other "is sufficiently 'grounded in the statute'"¹³ The Court focused on the overall framework of the CWA that gives primacy to states in setting water quality criteria, and which designates for EPA a role that "is properly characterized as a secondary or backstop role."¹⁴The Court further found that EPA's broad invocation of federalist principles was sufficiently based on statutory text, and that EPA's denial "need not necessarily contain a verbatim recitation of a statute or parse its provisions to the letter."¹⁵ Moreover, the Court agreed with EPA that the Agency may properly rely on policy grounds, such as its policy of partnering with the states to address nutrient pollution, rather than merely on technical considerations in denying the Petition.¹⁶

The District Court did leave the door open—if very slightly—for a future claim by Plaintiffs. The Court opined that Plaintiffs' underlying concern in the litigation is whether EPA's policy of ongoing deference to the states can continue to be deemed reasonable in the absence of what appears to Plaintiffs to be sufficient progress in addressing nutrient pollution.¹⁷ While the Court asserted that any such review of the Agency would be very deferential, it also stated that "Presumably, there is a point in time at which the agency will have abused its great discretion by refusing to concede that the current approach—albeit the one of first choice under the CWA—is simply not going to work." But the Court asserted that for the present, Plaintiffs have not made such a showing.¹⁸

The District Court decision is in most respects a win for EPA. The Court upheld EPA's discretion to defer to the states and not use its Section 303(c)(4)(B) authority, or even to take an Agency action under Section 303(c)(4)(B) at all. This decision, following the earlier Fifth Circuit decision, is likely a setback to legal challenges to EPA for failing to undertake a "non-discretionary" duty to regulate, either under the CWA or other environmental laws. EPA's policy decision here—now upheld by the Fifth Circuit and by the District Court on remand—appears to be broadly consistent with the incoming administration's apparent policy of greater deference to the states to act as environmental regulators in the first instance.

At the same time, the District Court allowed that there may come a point in time that EPA's policy of deferring to the states could be challenged as arbitrary and capricious, despite the CWA's emphasis on states as regulators in the first instance. Even under the "highly deferential and limited review" established by the Fifth Circuit and reaffirmed by the District Court, EPA's policy of "letting the states go first" may not constitute an unlimited and permanent legal justification for failing to take federal action. When and on what basis the Agency's broad discretion to decline to act would be vulnerable to attack, however, is far from clear, as the District Court offered no guidance on those questions other than to say it might be reached "at some point." It will not be surprising if future litigants seek to define that "point" if and when dissatisfied with the progress of state actions on nutrient regulation or other of EPA's decisions to defer taking discretionary federal action.