Natural Resources Defense Council v. U.S. EPA

May 23: In the U.S. Court of Appeals, Ninth Circuit, Case No. 06-73217. The Natural Resources Defense Council (NRDC), along with the Oil and Gas Accountability Project (OGAP), Amigos Bravos, and Powder River Basin Resource Council (Powder River), challenged aspects of U.S. EPA's Clean Water Act (CWA) storm water discharge rule. This rule, known as “Amendments to the National Pollutant Discharge Elimination System (NPDES) Regulations for Storm Water Discharges Associated With Oil and Gas Exploration, Production, Processing, or Treatment Operations or Transmission Facilities” [71FR 33,628, 6/12/06, codified at 40 C.F.R. § 122.26)]. The rule exempts from the permitting requirements of the CWA discharges of sediment from oil and gas construction activities that contribute to violations of water quality standards.

NRDC, et al contend that the rule’s NPDES permitting requirement exemption for storm water discharges of sediment from oil and gas construction activities is unlawful under section 402(l)(2) of the CWA, as amended by section 323 of the Energy Policy Act of 2005, and under the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A). The Appeals Court granted their request and vacated the rule, and remanded the matter to EPA for further proceedings in accordance with the opinion.

The two Judge majority concluded in part, ". . . Clearly, EPA’s June 12, 2006, storm water discharge rule, codified at 40 C.F.R. § 122.26, represents a complete departure from its previous interpretation of what constitutes “contamination” under section 402(l)(2). As such, we conclude that EPA’s inconsistent and conflicting position regarding the discharge of sediment-laden storm water from oil and gas construction sites causes its interpretation of amended section 402(l)(2), as reflected in the storm water discharge rule, 40 C.F.R. § 122.26, to be an arbitrary and capricious one. . . This conclusion is reinforced by the fact that neither the amending statute (section 323), the statutory definition (section 503(24)), nor the statutory exemption (402(l)(2)) make any mention at all of 'sediment' -- or of whether it is covered or not.

In a dissenting opinion, Justice Callahan said, ". . . as the majority correctly concludes, this dispute must be resolved at step two of the Chevron analysis, with the question of whether the Environmental Protection Agency (EPA) provided a -- not the only or the best -- permissible interpretation of section 402(l)(2). It is at this point that I respectfully part course with the majority and accord EPA’s permissible interpretation appropriate deference. . . because EPA’s 'interpretation is at least as plausible as competing ones,' this court should defer to its construction."

Commenting on the decision, Aaron Colangelo, senior attorney at NRDC said, "It is well known that sediment pollution from oil and gas development can impair water quality and destroy aquatic habitat. Yet under the guise of enforcing the 2005 Energy Act, EPA exempted projects from the requirements of the Clean Water Act. Today, the court rightly decided that the EPA rule was arbitrary and capricious. The law clearly requires oil and gas projects to apply for permits and install pollution controls to protect water quality. The explosion of oil and gas exploration and production poses a serious threat to water quality throughout the West. Sediment from projects runs off into streams and rivers; harming aquatic life; increasing water treatment costs for towns and cities; decreasing property values; and interfering with recreational activities, such as boating, swimming and fishing."

Access the complete opinion (click here). Access a statement from NRDC (click here). Access more information about exemptions in federal environmental laws for the oil and gas industry in the NRDC report, Drilling Down: Protecting Western Communities from the Health and Environmental Effects of Oil and Gas Pollution (click here). Access EPA's docket for this rulemaking (click here).