Supreme Court Lets EPA’s 2008 Water Transfers Rule Stand

On February 26, 2018, the U.S. Supreme Court declined to take up a case challenging the Environmental Protection Agency’s (“EPA”) 2008 rule exempting water transfers from coverage under the Clean Water Act’s (“CWA’s”) National Pollutant Discharge Elimination System (“NPDES”) permitting program. The rule, commonly referred to as the “Water Transfers Rule,” was designed to allow the transfer of water between water bodies without the regulatory burden of obtaining a discharge permit. The Court’s denial lets the U.S. Court of Appeals for the Second Circuit decision to uphold the rule stand.

Generally, Section 402 of the CWA prohibits the discharge of pollutants into waterways that are within the CWA’s jurisdiction without first obtaining a discharge permit under the NPDES permitting program—in Texas, a Texas Pollutant Discharge Elimination System (“TPDES”) permit. However, EPA’s long-established position was that water transfers that did not involve an intervening industrial, municipal, or commercial use did not require an NPDES permit because such transfers do not constitute an addition of pollutants into the receiving waterway. In 2008, EPA formalized its position that water transfers are exempt from NPDES permitting in the Water Transfers Rule. Particularly, EPA codified its longstanding internal definition of a water transfer as “an activity that conveys or connects waters of the United States without subjecting the transferred water to intervening industrial, municipal, or commercial use.” 40 C.F.R. § 122.3(i). EPA clarified that such transfers did not constitute a “discharge of pollutants,” which would subject those transfers to coverage under the NPDES permitting program because the transfers are not “any addition of any pollutant to navigable waters from any point source.” 73 Fed. Reg. 33,697, 33,701 (June 13, 2008).

This codification triggered a litany of legal actions challenging EPA’s 2008 Water Transfers Rule and EPA’s interpretation of how the CWA’s NPDES permitting program is applied to water transfers. In 2017, the Second Circuit reversed the district court’s ruling that vacated the 2008 Water Transfers Rule, upholding the 2008 Water Transfers Rule as a valid exercise of deference to agency expertise embodied in a rule, thereby reinstating the rule. Catskill Mountains Ch. of Trout Unlimited, Inc. v. Envtl. Prot. Agency 846 F.3d 492 (2nd Cir. 2017) (“Catskills III”), cert. denied, Riverkeeper, Inc. v. Envtl. Prot. Agency, — U.S.–, No. 17-446 (Feb. 26, 2018). Challengers petitioned the Supreme Court, but the Court declined to take up the case, thus allowing the Second Circuit’s reinstatement of the rule to stand. Riverkeeper, Inc., — U.S.–, No. 17-446.

The Supreme Court’s decision not to take up the challenge to the Water Transfers Rule means that water transfers are definitively exempt from TPDES permitting requirements in Texas. Therefore, entities interested in or dependent upon water transfers as part of their overall water supply portfolio can utilize such transfers without being subject to costly and potentially prohibitive TPDES permitting requirements.

If you have any questions related to this article or other matters, please contact Nathan Vassar,  Principal in the Water Practice Group at 512.322.5867 or nvassar@lglawfirm.com.