KY Waterways v. Johnson ( 2008 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 08a0333p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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KENTUCKY WATERWAYS ALLIANCE; SIERRA CLUB
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CUMBERLAND CHAPTER; KENTUCKIANS FOR THE
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COMMONWEALTH; FLOYDS FORK ENVIRONMENTAL
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No. 06-5614
ASSOCIATION,
,
Plaintiffs-Appellants, >
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v.
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STEPHEN L. JOHNSON, in his official capacity as
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ADMINISTRATOR OF THE UNITED STATES
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ENVIRONMENTAL PROTECTION AGENCY,
Defendant-Appellee, -
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COMMONWEALTH OF KENTUCKY; KENTUCKY COAL
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ASSOCIATION; ASSOCIATED INDUSTRIES OF
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KENTUCKY; KENTUCKY CHAMBER OF COMMERCE;
KENTUCKY LEAGUE OF CITIES, -
Intervening Defendants-Appellees. -
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Appeal from the United States District Court
for the Western District of Kentucky at Bowling Green.
No. 04-00145—Thomas B. Russell, District Judge.
Argued: January 30, 2008
Decided and Filed: September 3, 2008
Before: SILER, CLAY, and COOK, Circuit Judges.
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COUNSEL
ARGUED: Albert F. Ettinger, ENVIRONMENTAL LAW & POLICY CENTER, Chicago, Illinois,
for Appellants. Robert J. Lundman, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellees. ON BRIEF: Albert F. Ettinger, ENVIRONMENTAL LAW & POLICY
CENTER, Chicago, Illinois, Thomas J. FitzGerald, KENTUCKY RESOURCES COUNCIL, INC.,
Frankfort, Kentucky, for Appellants. Robert J. Lundman, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., Sharon R. Vriesenga, Brenda Gail Lowe, KENTUCKY
ENVIRONMENTAL AND PUBLIC PROTECTION CABINET, Frankfort, Kentucky, Timothy J.
1
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 2
Hagerty, FROST BROWN TODD, LLC, Louisville, Kentucky, Carolyn M. Brown, John C. Bender,
GREENEBAUM, DOLL & McDONALD, PLLC, Lexington, Kentucky, Mark S. Riddle,
GREENEBAUM, DOLL & McDONALD, PLLC, Louisville, Kentucky, Culver V. Halliday,
Kenneth T. Williams, STOLL KEENON OGDEN, PLLC, Louisville, Kentucky, Ronald R. Van
Stockum, Jr., Louisville, Kentucky, for Appellees. Kevin Reuther, MINNESOTA CENTER FOR
ENVIRONMENTAL ADVOCACY, St. Paul, Minnesota, Nancy K. Stoner, NATURAL
RESOURCES DEFENSE COUNCIL, INC., Washington, D.C., Karla Raettig, Michele Merkel,
ENVIRONMENTAL INTEGRITY PROJECT, Washington, D.C., Scott L. Long, BROWN,
WINICK, GRAVES, GROSS, BASKERVILLE & SCHOENEBAUM, Des Moines, Iowa, for Amici
Curiae.
CLAY, J., delivered the opinion of the court. COOK, J. (pp. 21-24), delivered the remainder
of the court’s opinion in a separate concurring opinion, in which SILER, J., joined.
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OPINION
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CLAY, Circuit Judge. Plaintiffs, Kentucky Waterways Alliance, Sierra Club Cumberland
Chapter, Kentuckians for the Commonwealth, and Floyds Fork Environmental Association, appeal
the district court’s grant of summary judgment in favor of Defendants, Stephen L. Johnson, in his
official capacity as Administrator of the United States Environmental Protection Agency (“EPA”),
the Commonwealth of Kentucky, the Kentucky Coal Association, Associated Industries of
Kentucky, the Kentucky Chamber of Commerce, and the Kentucky League of Cities, on Plaintiffs’
challenge, brought pursuant to the Administrative Procedures Act (“APA”), 5 U.S.C. § 701 et seq.
(2000), of the EPA’s approval, under § 303(c) of the Clean Water Act, 33 U.S.C. § 1313(c) (2000),
of Kentucky’s regulatory implementation of its Tier II water quality antidegradation rules. For the
reasons set forth in parts I, II, and III-A of this opinion as well as for the reasons expressed in Judge
Cook’s concurring opinion, we AFFIRM in part and REVERSE in part the district court’s opinion
and order, VACATE in part the EPA’s approval of Kentucky’s Tier II antidegradation rules, and
REMAND the matter to the EPA for further proceedings consistent with these opinions.1
I. BACKGROUND
A. Statutory and Regulatory Framework
The Federal Water Pollution Control Act, commonly known as the Clean Water Act
(“CWA”), 33 U.S.C. § 1251 et seq., “is a comprehensive water quality statute designed to ‘restore
and maintain the chemical, physical, and biological integrity of the Nation’s waters.’” PUD No. 1
of Jefferson County v. Wash. Dept. of Ecology, 511 U.S. 700, 704 (1994) (quoting 33 U.S.C.
§ 1251(a)). In passing the CWA, Congress sought to eliminate “the discharge of pollutants into the
[nation’s] navigable waters”2 and to attain “an interim goal of water quality which provides for the
protection and propagation of fish, shellfish, and wildlife.” 33 U.S.C. § 1251(a)(1)-(2).
1
Part III-A of this opinion contains the Court’s holding with respect to Plaintiffs’ first argument. The Court’s
holding with respect to Plaintiff’s second claim is set forth in Judge Cook’s concurring opinion. Part III-B of this opinion
expresses the views of Judge Clay only.
2
The CWA defines “pollutant”as “dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage
sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment,
rock, sand, cellar dirt and industrial, municipal, and agricultural waste discharged into water.” 33 U.S.C. § 1362(6).
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 3
To achieve these goals, the CWA “provides for two sets of water quality measures.”
Arkansas v. Oklahoma, 503 U.S. 91, 101 (1992). First, the CWA requires the EPA “to establish and
enforce technology-based limitations on individual discharges into the country’s navigable waters
from point-sources.”3 PUD No. 1 of Jefferson County., 511 U.S. at 704 (citing 33 U.S.C. §§ 1311,
1314). These effluent limitations “restrict the quantities, rates, and concentrations of specified
substances which are discharged from point sources.” Arkansas v. Oklahoma, 503 U.S. at 101. In
order to comply with the CWA, an individual point-source discharger must obtain and adhere to the
terms of a National Pollutant Discharge Elimination System (“NPDES”) permit issued by the EPA
or an EPA-authorized state agency. 33 U.S.C. § 1342(a)-(d). The EPA has authorized Kentucky
to issue NPDES permits for waters within the Commonwealth, see Approval of Kentucky’s NPDES
Program, 48 Fed. Reg. 45,597 (Oct. 6, 1983), under a program referred to as the Kentucky Pollution
Discharge Elimination System (“KPDES”). 401 Ky. Admin. Regs. 5:050 (2007).
Second, § 303 of the CWA “requires each State, subject to federal approval, to institute
comprehensive water quality standards establishing water quality goals for all intrastate waters.”
PUD No. 1 of Jefferson County, 511 U.S. at 704 (citing 33 U.S.C. §§ 1311(b)(1)(C), 1313). The
statute provides that these water quality standards “shall consist of the designated uses of the
navigable waters involved and the water quality criteria for such waters based upon such uses. Such
standards shall be such as to protect the public health or welfare, enhance the quality of water and
serve the purposes of [the CWA].” 33 U.S.C. § 1313(c)(2)(A). The Supreme Court has further
explained that “[t]hese state water quality standards provide ‘a supplementary basis . . . so that
numerous point sources, despite individual compliance with effluent limitations, may be further
regulated to prevent water quality from falling below acceptable levels.’” PUD No. 1 of Jefferson
County, 511 U.S. at 704 (quoting EPA v. California ex rel. State Water Resources Control Bd., 426
U.S. 200, 205 n.12 (1976)).
Pursuant to a 1987 amendment to the CWA, these state-established water quality standards
must include an antidegradation policy, which is “a policy requiring that state standards be sufficient
to maintain existing beneficial uses of navigable waters, preventing their further degradation.” Id.
at 705. Specifically, the CWA permits the revision of certain effluent limitations or water quality
standards “only if such revision is subject to and consistent with the antidegradation policy
established under [the CWA].” 33 U.S.C. § 1313(d)(4)(B). Accordingly, the EPA’s regulations
implementing the CWA require each State to “develop and adopt a statewide antidegradation policy
and identify the methods for implementing such policy.” 40 C.F.R. § 131.12(a) (2008).
The EPA regulations further provide that “[t]he antidegradation policy and implementation
methods shall, at a minimum, be consistent with” certain federal standards provided for in the
regulation. 40 C.F.R. § 131.12(a). These federal standards establish three levels of water quality
protection: Tier I, Tier II, and Tier III.
Tier I protection establishes the minimum water quality standard for all of a State’s waters
and requires that “[e]xisting instream water uses and the level of water quality necessary to protect
the existing uses shall be maintained and protected.” 40 C.F.R. § 131.12(a)(1).
3
The CWA defines “point source” as “any discernible, confined and discrete conveyance, including, but not
limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal
feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.” 33 U.S.C. §
1362(14). The CWA does not define non-point source pollution and does not appear to regulate such pollution. See
Defenders of Wildlife v. EPA, 415 F.3d 1121, 1124 (10th Cir. 2005); American Wildlands v. Browner, 260 F.3d 1192,
1193-1194 (10th Cir. 2001). One court has described non-point source pollution as “nothing more than a pollution
problem not involving a discharge from a point source.” Nat’l Wildlife Fed’n v. Gorsuch, 693 F.2d 156, 166 n.28 (D.C.
Cir. 1982).
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 4
Tier II protection applies when “the quality of the waters exceed levels necessary to support
propagation of fish, shellfish, and wildlife and recreation in and on the water.” 40 C.F.R.
§ 131.12(a)(2). For such waters, the regulation requires that their “quality shall be maintained and
protected unless the State finds, after full satisfaction of the intergovernmental coordination and
public participation provisions of the State’s continuing planning process, that allowing lower water
quality is necessary to accommodate important economic and social development in the area in
which the waters are located.” 40 C.F.R. § 131.12(a)(2). However, “[i]n allowing such degradation4
or lower water quality, the State shall assure water quality adequate to protect existing uses fully.”
40 C.F.R. § 131.12(a)(2).
Finally, Tier III protection provides that “[w]here high quality waters constitute an
outstanding National resource, such as waters of National and State parks and wildlife refuges and
waters of exceptional recreational or ecological significance, that water quality shall be maintained
and protected.” 40 C.F.R. § 131.12(a)(3).
Once a State adopts or revises its water quality standards, including its antidegradation
policy, the CWA requires the State to submit these standards to the EPA for review. 33 U.S.C.
§ 1313(c)(1). If the State’s standards and implementation procedures are consistent with the
minimum federal standards required by the CWA and the EPA’s implementing regulations, then the
EPA must approve the state standards within sixty days. 33 U.S.C. § 1313(c)(3). However, if the
state water quality standards do not satisfy the CWA’s requirements, the EPA must, within ninety
days, “notify the State and specify the changes to meet such requirements. If such changes are not
adopted by the State within ninety days after the date of notification, the [EPA] shall promulgate
such standard[s].” 33 U.S.C. § 1313(c)(3).
B. Factual and Procedural History
Kentucky adopted its original antidegradation policy in 1979.5 In 1995, the Kentucky
Environmental and Public Protection Cabinet (the “Cabinet”) established implementation procedures
for this policy by adopting 401 Ky. Admin. Regs. 5:030.6 On August 11, 1995, the Cabinet
submitted these antidegradation implementation procedures to the EPA for approval. Two years
later, on August 7, 1997, the EPA disapproved a portion of Kentucky’s antidegradation program
because it found that the selection criteria for water bodies that would be given Tier II protection
were not sufficiently inclusive and, therefore, did not meet the requirements of 40 C.F.R. § 131.12.
On December 8, 1999, in response to this disapproval, Kentucky adopted revisions to its
water quality standards, including revisions to 401 Ky. Admin. Regs. 5:030. The Cabinet submitted
4
This Tier II standard may also be described as protecting the water body’s “assimilative capacity” which is
the amount by which the water body exceeds the quality level necessary to support its designated uses. Under the
regulation, a pollution increase that would decrease a water body’s assimilative capacity would need to be justified by
the necessity of the pollution for achieving important economic and social development. However, the regulation
prohibits any pollution increase that would create negative assimilative capacity, regardless of the economic or social
necessity for the pollution.
5
Kentucky’s antidegradation policy, which provides for the type of protection afforded to various qualitative
categories of water bodies, is found in 401 Ky. Admin. Regs. 5:029.
6
While Kentucky’s general antidegradation policy is contained in 401 Ky. Admin. Regs. 5:029, the
implementation procedures specifying which particular water bodies fall within each protection category are contained
in 401 Ky. Admin. Regs. 5:030. Thus, Plaintiffs’ challenge regarding the EPA’s approval of the Cabinet’s revision of
401 Ky. Admin. Regs. 5:030 is not technically a challenge to Kentucky’s antidegradation policy, but rather is a challenge
to Kentucky’s implementation of this policy through its selection of which waters merit Tier II protection and its
categorical exclusion of certain types of discharges from Tier II review.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 5
these revisions to the EPA for approval on December 15, 1999. On August 30, 2000, the EPA
notified the Cabinet that these revised Tier II rules failed to fully address the concerns identified in
the EPA’s 1997 disapproval.
On May 19, 2001, Plaintiffs served notice of their intent to commence a civil action under
the citizen suit provision of the CWA, 33 U.S.C. § 1365, for the alleged failure of the EPA
Administrator to perform his mandatory duty under 33 U.S.C. § 1313(c)(4) to promulgate a federal
standard implementing antidegradation requirements for Kentucky. In November 2002, the EPA
proposed a federal antidegradation implementation procedure for Kentucky to adopt. Plaintiffs,
however, advised the EPA that the proposal was inadequate to ensure compliance with the CWA.
On February 17, 2004, Plaintiffs renewed their 60-day notice, demanding that the EPA
perform its duty to finalize Tier II antidegradation rules for Kentucky that comply with the CWA.
On September 8, 2004, the Cabinet adopted a revised version of its antidegradation implementation
procedure regulation, 401 Ky. Admin. Reg. 5:030, and submitted it to the EPA for approval on
September 23, 2004. However, two days prior to this submission, on September 21, 2004, Plaintiffs
commenced the instant action against the EPA in the United States District Court for the Western
District of Kentucky. Plaintiffs’ initial two-count complaint alleged that: (1) the EPA had failed to
comply with its mandatory duty under the CWA to finalize federal water quality Tier II
antidegradation standards for Kentucky; and (2) this failure to comply with a mandatory CWA duty
was arbitrary, capricious, and contrary to law, in violation of the APA.
On January 29, 2005, Plaintiffs filed a motion for summary judgment requesting that the
district court order the EPA to promulgate antidegradation regulations for Kentucky. However, on
April 12, 2005, prior to the district court’s issuance of a ruling on Plaintiffs’ summary judgment
motion, the EPA approved Kentucky’s revised antidegradation implementation procedures, based
on its extensive evaluation of those procedures. See J.A. at 176-233 (EPA Determination Under
Section 303(c) of the Clean Water Act, Review of Regulation 401 KAR 5:030, Kentucky
Antidegradation Policy Implementation Methodology (Apr. 12, 2005) (hereinafter “EPA Approval
Document”)).
In response to this development, Plaintiffs amended their complaint on May 27, 2005 to
include a third count—that the EPA’s approval of Kentucky’s revised antidegradation
implementation procedures was arbitrary, capricious, and otherwise contrary to law. On June 6,
2005, Plaintiffs moved to dismiss counts I and II of their amended complaint. Thereafter, the
Commonwealth of Kentucky, the Kentucky Coal Association, Associated Industries of Kentucky,
the Kentucky Chamber of Commerce, and the Kentucky League of Cities intervened as defendants.
On June 13, 2005, the district court approved Plaintiffs’ voluntary dismissal of counts I and II of the
amended complaint, leaving only Plaintiffs’ count III claim that the EPA acted arbitrarily and
capriciously in approving Kentucky’s revised antidegradation implementation procedures.
On September 6, 2005, Plaintiffs filed a motion for summary judgment on count III of their
amended complaint. Defendants responded by filing a cross-motion for summary judgment on
October 31, 2005. On March 31, 2006, the district court issued an opinion and order denying
Plaintiffs’ motion for summary judgment and granting Defendants’ motion for summary judgment.
See Kentucky Waterways Alliance v. Johnson, 426 F. Supp. 2d 612, 616 (W.D. Ky. 2006). This
timely appeal followed.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 6
II. STANDARD OF REVIEW
A. Review Under the APA
When a district court upholds on summary judgment an administrative agency’s final
decision under the APA, we review the district court’s summary judgment decision de novo, while
reviewing the agency’s decision under the APA’s arbitrary and capricious standard. City of
Cleveland v. Ohio, 508 F.3d 827, 838 (6th Cir. 2007) (quoting Coalition for Gov’t Procurement v.
Fed. Prison Indus., Inc., 365 F.3d 435, 457 (6th Cir. 2004)). The APA directs that when reviewing
the decision of an administrative agency, a court shall “hold unlawful and set aside the agency
action” if the action is “arbitrary, capricious, an abuse of discretion or otherwise not in accordance
with law.” 5 U.S.C. § 706(2)(A). “A court reviewing an agency’s adjudicative action should accept
the agency’s factual findings if those findings are supported by substantial evidence on the record
as a whole.” Arkansas v. Oklahoma, 503 U.S. at 113 (emphasis altered).
Under this APA standard, the reviewing court “must consider whether the decision was
based on a consideration of the relevant factors and whether there has been a clear error of
judgment.” Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 378 (1989) (quoting Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)). An agency decision is “arbitrary
and capricious” when the agency:
has relied on factors which Congress had not intended it to consider, entirely failed
to consider an important aspect of the problem, offered an explanation for its
decision that runs counter to the evidence before the agency, or is so implausible that
it could not be ascribed to a difference in view or the product of agency expertise.
Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 127 S. Ct. 2518, 2529 (2007) (quoting Motor
Vehicle Mfrs. Ass’n of United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
The reviewing court “may not supply a reasoned basis for the agency’s action that the agency itself
has not given.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. However, “[e]ven when an agency
explains its decision with less than ideal clarity, a reviewing court will not upset the decision on that
account if the agency’s path may be reasonably discerned.” Alaska Dep’t of Env’t Conservation v.
EPA, 540 U.S. 461, 497 (2004).
The Supreme Court has explained that “[r]eview under the arbitrary and capricious standard
is deferential.” Nat’l Ass’n of Home Builders, 127 S. Ct. at 2529. “Nevertheless, merely because
our review must be deferential does not mean that [it] must also be inconsequential.” Moon v. Unum
Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005). “The arbitrary-and-capricious standard . . . does
not require us merely to rubber stamp the [agency’s] decision.” Jones v. Metropolitan Life Ins. Co.,
385 F.3d 654, 661 (6th Cir. 2004). Indeed, “[d]eferential review is not no review, and deference
need not be abject.” McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir.
2003).
B. Deference to Agency Interpretation of Statutes and Regulations
In reviewing a federal agency’s interpretation of a statute that it administers, a reviewing
court must first ask “whether Congress has directly spoken to the precise question at issue.”
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984). “If the intent of
Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect
to the unambiguously expressed intent of Congress.” Id. at 842-43. However, if “Congress has not
directly addressed the precise question at issue” and “the statute is silent or ambiguous with respect
to the specific issue,” then “the question for the court is whether the agency’s answer is based on
a permissible construction of the statute.” Id. at 843. If the agency’s construction is a permissible
one, even if it is not “the reading the court would have reached if the question initially had arisen
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 7
in a judicial proceeding,” then the court must defer to the agency’s interpretation. Id. at 843 n.11.
“In such a case, a court may not substitute its own construction of a statutory provision for a
reasonable interpretation made by the administrator of an agency.” Id. at 843.
When interpreting an agency regulation, a court should also defer to the agency’s
interpretation of the regulation unless it is plainly erroneous or inconsistent with the regulation.
Auer v. Robbins, 519 U.S. 452, 461 (1997). However, “deference is warranted only when the
language of the regulation is ambiguous.” Christensen v. Harris County, 529 U.S. 576, 588 (2000).
If the language of the regulation is clear, then “[t]o defer to the agency’s position would be to permit
the agency, under the guise of interpreting a regulation, to create a de facto new regulation.” Id.
III. DISCUSSION
On appeal, Plaintiffs raise two challenges to the EPA’s approval of Kentucky’s
antidegradation implementation regulation, 401 Ky. Admin. Regs. 5:030. First, Plaintiffs contend
that the EPA’s approval of Kentucky’s classification of certain waters as eligible for Tier I
protection rather than Tier II protection was arbitrary, capricious, and contrary to law. Second,
Plaintiffs argue that the EPA’s approval of Kentucky’s categorical exemption of six types of
pollution discharges from the Tier II review procedure was arbitrary, capricious, and contrary to law.
We consider each of these challenges in turn.
A. EPA’s Approval of Kentucky’s Selection of Waters for Tier II Protection
Plaintiffs first challenge concerns the EPA’s approval of the way in which Kentucky
designates waters for Tier II protection. Kentucky’s antidegradation implementation procedures
divide Kentucky’s water bodies into four categories: (1) outstanding national resource water
(“ONRW”); (2) exceptional water; (3) high quality water; and (4) impaired water. See 401 Ky.
Admin. Regs. 5:030. ONRWs, which consist of about 30 miles of two streams and all of the
underground rivers in Mammoth Cave National Park, are afforded Tier III protection. See 401 Ky.
Admin. Regs. 5:030 § 1(1)(a)-(b). Exceptional water, which consists of water bodies satisfying the
criteria set forth in 401 Ky. Admin. Regs. 5:030 § 1(2)(a), receives Tier II protection. See 401 Ky.
Admin. Regs. 5:030 § 1(2)(b). High quality water, which is defined as all water that is not
designated as ONRW, exceptional water, or impaired water, is also afforded Tier II protection. See
401 Ky. Admin. Regs. 5:030 § 1(3)(a)-(b). Finally, impaired water, which consists of those water
bodies for which one or more designated uses are listed as impaired by Kentucky in its biennial
report required under 33 U.S.C. § 1315, is afforded Tier I protection. See 401 Ky. Admin. Regs.
5:030 § 1(4)(a)-(b).
Plaintiffs contend that the EPA’s approval of Kentucky’s exclusion of impaired waters from
Tier II protection was arbitrary and capricious for three reasons. First, Plaintiffs maintain that
Kentucky’s use of a water body-by-water body approach instead of a parameter-by-parameter
approach for determining which waters merit Tier II protection was inconsistent with the goals of
the CWA and the language of 40 C.F.R. § 131.12(a)(2). Second, Plaintiffs claim that, even if the
regulations permitted Kentucky to use a water body-by-water body approach, Kentucky’s
categorical exclusion of waters listed as “impaired” under 33 U.S.C. § 1315 is arbitrary and
unsupported by the evidence in the record. Third, and finally, Plaintiffs argue that exclusion of
impaired water from Tier II protection results in the exclusion of a substantial number of Kentucky’s
water bodies from Tier II protection. We find none of these arguments to have merit.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 8
1. Water Body-by-Water Body Approach vs. Parameter-by-
Parameter Approach
Plaintiffs first contend that the EPA contradicted the CWA by approving Kentucky’s water
body-by-water body approach to antidegradation policy implementation because both the CWA and
40 C.F.R. § 131.12(a)(2) require States to adopt a parameter-by-parameter approach in designating
which waters receive Tier II protection. The district court rejected a similar argument, see Kentucky
Waterways, 426 F. Supp. 2d at 631-33, and we likewise find the argument unpersuasive.
The EPA’s CWA-implementing regulations require States to ensure that waters whose
quality “exceed[s] levels necessary to support propagation of fish, shellfish, and wildlife and
recreation in and on the water” receive Tier II protection, i.e., their existing high water quality must
be maintained and protected unless it is demonstrated that a lowering of water quality is necessary
to accommodate important economic or social development. 40 C.F.R. § 131.12(a)(2). However,
as the EPA itself has publicly noted in its advance notice of proposed rule-making, “the regulation
does not include specific guidelines for identifying [these] high quality waters.” Water Quality
Standards Regulation, 63 Fed. Reg. 36,742, 36,782 (proposed July 7, 1998) (to be codified at 40
C.F.R. pt. 131).7 Instead, “States and Tribes have developed various ways to identify their [T]ier
[II] waters.” Id.
These “approaches for identifying high quality waters fall into two basic categories:
(1) pollutant-by-pollutant approaches, and (2) water body-by-water body approaches.” Id. Under
the pollutant-by-pollutant approach (which is the same as Plaintiffs’ parameter-by-parameter
approach), “the State makes a classification for each pollutant in a given water body.” Ohio Valley
Environmental Coalition v. Horinko, 279 F. Supp. 2d 732, 747 (S.D. W.Va. 2003). The water body
is then given Tier II protection against those pollutants for which “water quality is better than
applicable criteria.” Water Quality Standards Regulation, 63 Fed. Reg. at 36,782. “[A]vailable
assimilative capacity for any given pollutant is always subject to [Tier II] protection, regardless of
whether the criteria for other pollutants are satisfied.” Id. Thus, under this approach, the same water
body could be classified as Tier II for certain pollutants and Tier I for other pollutants. See Ohio
Valley, 279 F. Supp. 2d at 747.
Under the water body-by-water body approach (also know as the designational approach),
States “weigh a variety of factors to judge a water body segment’s overall quality.” Water Quality
Standards Regulation, 63 Fed. Reg. at 36,782. Tier II classification is then “based on the overall
quality of the water body segment, not on individual pollutants.” Ohio Valley, 279 F. Supp. 2d at
747. “Under this approach, assimilative capacity for a given pollutant may not be subject to [Tier
II] protection if, overall, the segment is not deemed ‘high quality.’” Water Quality Standards
Regulation, 63 Fed. Reg. at 36,782.
The EPA has not found either of these approaches to be compelled by the language of 40
C.F.R. § 131.12(a)(2) or the CWA. See id. On the contrary, the EPA has found that “[t]here are
advantages and disadvantages to each approach.” Id. The pollutant-by-pollutant approach is easier
to implement for some States “because the need for an overall assessment considering various
factors is avoided.” Id. This approach might also have the benefit of generally including more
waters within Tier II protection “because it would cover waters that are clearly not attaining goal
uses (i.e., waters which are not supporting ‘fishable/swimmable’ goal uses but that possess
assimilative capacity for one or more pollutant [sic]).” Id. at 36,782-36,783. “The water body-by-
water body approach, on the other hand, allows for a weighted assessment of chemical, physical,
7
As noted previously, an administrative agency’s interpretation of its own regulation is entitled to great
deference, see Auer, 519 U.S. at 461 (1997), and thus provides useful guidance to this Court in assessing the merits of
Plaintiffs’ argument in this case.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 9
biological, and other information (e.g., unique ecological or scientific attributes).” Id. at 36, 783.
By allowing the high quality water decision to be made in advance of the antidegradation review,
this approach may facilitate implementation. Id. The approach “also allows States and Tribes to
focus limited resources on protecting higher-value State or Tribal waters.” Id. Accordingly, the
EPA has concluded that “neither approach is clearly superior and that either, when properly
implemented, is acceptable.” Id. at 36, 782.
Likewise, the United States District Court for the Southern District of West Virginia, the
only court which has previously considered this issue, has also concluded that the federal statute and
regulations do not require States to choose the pollutant-by-pollutant approach over the water body-
by-water body approach. See Ohio Valley, 279 F. Supp. 2d at 747. On the contrary, in Ohio Valley
Environmental Coalition v. Horinko, that court found that “the EPA’s regulations permit a State to
adopt a water body-by-water body approach to classification, assuming that this approach is
implemented adequately.” Id.
Plaintiffs nevertheless contend that the language of 40 C.F.R. § 131.12(a) requires a
pollutant-by-pollutant approach. They emphasize “the fact that the regulation speaks of protecting
levels of quality rather than protecting ‘high quality waters.’” Pl. Br. at 23. They argue that,
because the regulation protects the quality of waters when that quality “exceeds levels necessary to
support” fish and recreation, a water body with safe levels of one or more pollutant must be
protected from unnecessary new loadings of that pollutant, even if the water body is suffering from
excess loadings of a different pollutant. Id. at 21 (quoting 40 C.F.R. § 131.12(a)(2)). Thus, they
conclude that the regulation requires Tier II protection be determined according to a pollutant-by-
pollutant approach.
We find Plaintiffs’ argument to demonstrate only that a pollutant-by-pollutant approach is
consistent with the regulation, not that it is required by the regulation. Plaintiffs’ focus on the plural
“levels” ignores the rest of the phrase in which that word appears. The regulation requires
protection of water quality when “the quality of the waters exceed levels necessary to support the
propagation of fish, shellfish, and wildlife and recreation in and on the water.” 40 C.F.R.
§ 131.12(a)(2). This language is susceptible to two interpretations. The first is that offered by
Plaintiffs, i.e., that “levels” refers to the levels of various pollutants in the water body. However,
the word “levels” here could also refer to the overall quality levels necessary to support the various
water uses mentioned in the regulation. For any particular water body there could be one quality
level necessary to support the propagation of fish, a different quality level necessary to support the
propagation of wildlife, and finally a third quality level necessary to support recreation. Either
reading seems consistent with the plain language of the regulation and neither reading seems
compelled by the language. Given this ambiguity in the regulation, we defer to the EPA’s
interpretation, see Auer, 519 U.S. at 461, which holds that either approach is permissible. Thus, we
do not find the EPA’s approval of Kentucky’s use of a water body-by-water body approach to be
arbitrary, capricious, or contrary to law.
2. Evidence Supporting the Categorical Exclusion of “Impaired
Waters” From Tier II Protection
Plaintiffs next argue that, even if Kentucky’s use of a water body-by-water body approach
in classifying waters for Tier II protection is permissible, “the Kentucky rules cannot be upheld
because the method for selecting waters to be left unprotected is arbitrary and without support in the
record.” Pl. Br. at 24. Relying on Ohio Valley, Plaintiffs claim that merely listing a water body as
“impaired” is insufficient to justify denial of Tier II protection. They maintain that “[t]he fact that
a water body fails to meet one or more water quality criteria is not determinative of the overall
quality of its water or whether existing ‘quality of the waters exceed[s] levels necessary to support
propagation of fish shellfish, and wildlife and recreation in and on the water.’” Id. at 26 (quoting
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 10
40 C.F.R. § 131.12(a)(2)). Instead of focusing on whether the water is impaired, Plaintiffs argue,
Kentucky “must look at a full range of ‘qualification criteria’ to determine if a water body is of
sufficient quality for Tier II protection.” Id. at 25. Because the Kentucky implementation
procedures fail to classify Tier II waters on this basis, Plaintiffs contend that the EPA erred in
approving them.
Defendants counter that exclusion of Tier II protection from impaired waters is consistent
with 40 C.F.R. § 131.12(a)(2). They argue that, because the regulation requires Tier II protection
only for waters whose quality supports both aquatic life-based uses and recreation-based uses,
Kentucky may reasonably exclude bodies of water from Tier II protection if the water is impaired
for any of those uses.8 We agree with Defendants that Kentucky’s exclusion of “impaired” waters
from Tier II protection is consistent with the requirements of 40 C.F.R. § 131.12(a).
Kentucky’s antidegradation implementation procedures provide Tier II protection to the
State’s “exceptional waters” and its “high quality waters.” 401 Ky. Admin. Regs. 5:030 §§ 1(2)(b)
and (3)(b). In contrast, Kentucky extends only Tier I protection to “surface water categorized as
impaired for applicable designated uses” unless “the surface water is listed as an outstanding state
resource water in 401 KAR 5:026.” 401 Ky. Admin. Regs. 5:030 § 1(4)(a). The Kentucky
regulation clarifies that “a surface water categorized as impaired for applicable designated uses shall
be a water identified pursuant to 33 U.S.C. § 1315.” Id. Section 1315 (§ 305 of the CWA),
however, does not provide a definition of impaired water. Rather, § 1315 requires each State to
submit a biennial report to the EPA (“§ 305 report”) which includes, inter alia:
(A) a description of the water quality of all navigable waters in [the] State during the
preceding year . . . (B) an analysis of the extent to which all navigable waters of [the]
State provide for the protection and propagation of a balanced population of
shellfish, fish, and wildlife, and allow recreational activities in and on the water;
[and] (C) an analysis of the extent to which the elimination of the discharge of
pollutants and a level of water quality which provides for the protection and
propagation of a balanced population of shellfish, fish, and wildlife and allows
recreational activities in and on the water, have been or will be achieved by the
requirements of [the CWA], together with recommendations as to additional action
necessary to achieve such objectives and for what waters such additional action is
necessary.
33 U.S.C. § 1315(b)(1). Section 1315 does not require this report to include an identification of
impaired waters. Instead, the requirement to identify impaired waters in this § 305 report seems to
come from 33 U.S.C. § 1313(d)(1) (§ 303(d) of the CWA) which requires each State to “identify
those waters within its boundaries for which the effluent limitations required by [the CWA] are not
8
Defendant Commonwealth of Kentucky further argues that excluding impaired waters from Tier II protection
is consistent with 33 U.S.C. § 1313(d)(4)(B). The Commonwealth interprets this provision of the CWA as requiring
States to apply antidegradation review only to waters whose applicable water quality standard has been attained. As
impaired waters, by definition, have not attained their applicable water quality standard, the Commonwealth argues that
it is appropriate not to afford them Tier II antidegradation protection.
We find the Commonwealth’s statutory argument to be misguided. A careful reading of 33 U.S.C. § 1313(d)
reveals that the section has nothing to do with identifying which water bodies should receive Tier II protection. Rather,
this section sets out the conditions that must be satisfied prior to modifying NPDES permits to include less stringent
effluent limitations. See 33 U.S.C. § 1313(d). Section 1313(d)(4)(b) provides that, for water bodies whose quality
“equals or exceeds levels necessary to protect [their] designated uses,” any revisions to the effluent limitations placed
on that water body must be “consistent with the antidegradation policy established under this section.” The section does
not address the question of how States must determine which waters receive Tier II antidegradation protection and is thus
not helpful in resolving the parties’ dispute on this point.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 11
stringent enough to implement any water quality standard applicable to such waters.” 33 U.S.C.
§ 1313(d)(1)(A). Kentucky submits its § 303(d) list of such impaired waters as part of its annual
§ 305 report. See, e.g., J.A. at 788 (2004 Kentucky Report to Congress on Water Quality). This list
of impaired waters includes “all waters not supporting one or more designated uses.” Final 2006
Integrated Report to Congress on the Condition of Water Resources in Kentucky, Volume II, p.1
(April 4, 2007). Thus, the Kentucky antidegradation implementation regulation clarifies that
“[s]urface water categorized as impaired shall be assessed by the [C]abinet as not fully supporting
any applicable designated uses.” 401 Ky. Admin. Regs. 5:030 § 1(4)(a).
The EPA approved Kentucky’s exclusion of impaired waters from Tier II protection, finding
it to be “consistent with the federal requirement that high quality waters have water quality that
supports both aquatic life-based uses and recreation-based uses.” J.A. at 184 (EPA Approval
Document). In approving Kentucky’s classification of Tier II waters, the EPA noted that, as
Plaintiffs have argued, Kentucky did not implement a strict water body-by-water body approach:
Kentucky’s combined selection criteria for classification of waters for
antidegradation purposes combines some elements of the designational approach and
some elements of the pollutant-by-pollutant approach. Qualification for the
exceptional waters category [which receive Tier II protection] is based on meeting
certain criteria, which include high levels of biological diversity, recognition of
outstanding values through other statutory provisions, exceptional aesthetic or
ecological values, historical significance, or high levels of water quality. This is
typically considered a designational approach.
However, in adopting the category high quality waters [which are also
afforded Tier II protection], Kentucky has chosen to create a “default” category that
contains all other waters of the Commonwealth, unless the water is an ONRW or has
been show to be impaired for a designated use. This approach is clearly not a
“designational” approach, since no data are required for a water to be placed in the
high quality waters category, and Kentucky does not maintain a listing of high
quality waters that have been classified in that category.
Qualification for the impaired waters category (i.e., the only waters of the
Commonwealth that are not considered for [Tier II] protection, at a minimum) is
based solely on a determination by Kentucky that a water body does not meet the 40
C.F.R. § 131.12(a)(2) requirement for waters that “exceed levels necessary to support
propagation of fish, shellfish, and wildlife and recreation in and on the water.”
(emphasis added). This method of exclusion of waters from consideration as [Tier
II] waters combines some concepts of both approaches, in that chemical and
biological data are evaluated in making an impairment decision, but the final
decision to include waters in this category is based on whether each designated use
for the water body is being attained.
J.A. at 185-86 (EPA Approval Document) (emphasis in original). The EPA found that Kentucky’s
use of this hybrid approach for classifying Tier II waters is consistent with 40 C.F.R. § 131.12(a)(2).
The EPA also noted that “Kentucky’s categorization approach is similar to the approach approved
by EPA Region 4 in Alabama and Tennessee.” J.A. at 186 (EPA Approval Document).
Plaintiffs nevertheless contend that merely listing a water as “impaired” for its designated
uses is insufficient to justify denial of Tier II protection. Plaintiffs rely on Ohio Valley for support.
This reliance, however, is misplaced. In Ohio Valley, the issue faced by the court was whether there
was sufficient evidence in the record to permit the EPA’s approval of West Virginia’s exclusion of
Tier II protection from particular segments of the Monongahela and Kanawha rivers. 279 F. Supp.
2d at 746. The court found the that the administrative record was insufficient to support the EPA’s
decision because the only evidence pertaining to the water quality of those river segments was “the
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 12
fact that both river segments [were] on a list of impaired waters prepared by the WVDEP for
submission to the EPA under section 303(d) of the Clean Water Act.” Id. at 748. The court noted
that other waters on that list had been classified as Tier II and that the EPA had provided no
justification for why the particular impairments to Monongahela and Kanawha river segments
rendered those rivers Tier I “as opposed to other listed waters with similar impairments.” Id. at 749.
In other words, the problem that the court found with the EPA’s evidence was not that it classified
the rivers as Tier I based upon their impairment, but rather that the EPA did not have any evidence
to justify treating some impaired waters as Tier I while classifying others as Tier II. Accordingly,
Ohio Valley cannot properly be read to stand for the proposition that a water’s impairment is not
enough to exclude it from Tier II protection when all impaired waters are treated the same for
antidegradation purposes.
Perhaps recognizing the flimsy support provided by Ohio Valley, Plaintiffs alternatively
argue that excluding impaired waters from Tier II protection is arbitrary because, under such an
approach, a water body’s exclusion from Tier II protection is determined by the designated uses of
the water rather than by the water’s overall quality. However, this argument overlooks the fact that
40 C.F.R. § 131.12(a)(2) links a water body’s relevant quality level to its designated uses. Under
this regulation, Kentucky’s implementation procedures must provide Tier II protection to all of
Kentucky’s waters whose quality “exceed levels necessary to support propagation of fish, shellfish,
and wildlife and recreation in and on the water.” 40 C.F.R. § 131.12(a)(2) (emphasis added). In
other words, Kentucky must provide Tier II protection to waters whose quality is better than the
minimum level of quality needed to support aquatic-life based uses, wildlife uses, and recreational
uses. Impaired waters, which, by definition do not have the quality needed to support their uses and
must “be assessed by the [C]abinet as not fully supporting any designated uses,” 401 Ky. Admin.
Regs. 5:030 § 1(4)(a) (emphasis added), do not fall within this category of Tier II waters. Impaired
waters do not even have the minimum quality level that is necessary to support their designated uses,
let alone a quality that is better than necessary to support aquatic-life based uses, wildlife uses, and
recreational uses. Plaintiffs have failed to convincingly explain how the exclusion of such waters
from Tier II protection is problematic under 40 C.F.R. § 131.12(a)(2). Accordingly, we are not
persuaded that the EPA’s approval of Kentucky’s exclusion of impaired waters from Tier II
protection was arbitrary, capricious, or contrary to law.
3. Percentage of Kentucky Water Bodies Receiving Tier II
Protection
Finally, Plaintiffs argue that the district court’s decision should be reversed because it is
“based on the misunderstanding that the approach [the] EPA approved provided for 90% of
Kentucky’s waters with Tier II protection.” Pl. Br. at 27. Plaintiffs contend that “the record only
shows that 90% of the stream miles that had been studied as of the time of the decision were not
listed as impaired” and that “the 90% stream mile figure does not address the extent to which lakes
would be protected.” Id. at 28. Plaintiffs maintain that “[a]s Kentucky continues to collect data, the
percentage of waters found to be impaired is likely to be much higher.” Id.
We find this final argument to be misguided. While Plaintiffs’ criticisms of the district
court’s calculation of the percentage of Kentucky waters afforded Tier II protection may be well-
founded—the record only indicates that 90% of the stream miles that had been studied at the time
of the EPA’s decision are afforded Tier II protection, see J.A. at 187 (EPA Approval
Document)—Plaintiffs fail to explain how the district court’s factual mischaracterization of the
record is relevant to our de novo evaluation of whether the EPA’s approval of Kentucky’s
antidegradation regulations was arbitrary, capricious, or contrary to law. Kentucky’s criteria for
identifying waters afforded Tier II protection are not to be evaluated based on the percentage of
waters for which they provide Tier II protection, but rather upon their consistency with 40 C.F.R.
§ 131.12(a)(2). Neither the CWA nor its implementing regulations specify that a certain percentage
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 13
of a State’s waters must be afforded Tier II protection. As long as all waters whose quality
“exceed[s] levels necessary to support propagation of fish, shellfish, and wildlife and recreation in
and on the water” are granted Tier II protection, the regulation is satisfied. 40 C.F.R. § 131.12(a)(2).
Plaintiffs’ contention that less than 90% of Kentucky’s waters are afforded Tier II protection does
not, by itself, demonstrate that the EPA’s approval of Kentucky’s antidegradation implementation
procedures was arbitrary, capricious, or contrary to law.
For the foregoing reasons, we AFFIRM the district court’s grant of summary judgment to
Defendants with respect to the EPA’s approval of Kentucky’s method of selecting which waters merit
Tier II protection.
B. EPA’s Approval of Kentucky’s Multiple Exceptions to Tier II Review9
Plaintiffs’ second challenge concerns the EPA’s approval of specific exemptions to the Tier
II review procedure which applies to new discharges into Tier II waters. While Kentucky’s
antidegradation implementation regulation generally affords Tier II protection to “exceptional water”
and “high quality water,” the regulation exempts pollution discharges resulting from specific
categories of activity from Tier II review and allows dischargers in other categories of activity to
avoid Tier II review by accepting specified permit effluent limitations. In particular, the regulation
provides categorical exemptions from the Tier II review process specified in 401 Ky. Admin. Regs.
5:029 for: (1) discharges issued pursuant to storm water general permits;10 (2) coal mining
discharges; (3) domestic sewage discharges from single-family residences; (4) concentrated animal
feeding operation (“CAFO”) discharges;11 and (5) discharges pursuant to KPDES permit renewals
and modifications that result in less than a twenty percent increase in pollutant loading. See 401 Ky.
Admin. Regs. 5:030 §§ 1(2)(b)(1)(a)-(e), (3)(b)(1)(a)-(e). The regulation also allows non-domestic
dischargers (e.g., factories) to opt out of Tier II review for new KPDES permits if they accept permit
limits that are “restricted to no more than one-half (1/2) of the water quality based limitations that
would have been permitted at standard design conditions.” 401 Ky. Admin. Regs. 5:030
9
This portion of the opinion expresses only the views of Judge Clay. For the Court’s holding with respect to
Plaintiffs’ second claim, the reader should refer to Judge Cook’s concurring opinion.
10
The EPA and States often use general permits for classes of dischargers where there is a basis for the agency
to establish the same permit conditions for all dischargers in the class. See, e.g., 40 C.F.R. § 122.28. “With a general
permit, the [agency] issues a permit for specific types of activities and establishes specific rules for complying with the
permit. Then, rather than apply for an individual permit, operators must file a Notice of Intent (“NOI”) stating that they
plan to operate under the general permit, and absent a negative ruling by the [agency], discharges that comply with the
terms of the general permit are automatically authorized.” Texas Indep. Producers & Royalty Owners Assoc. v. EPA,
410 F.3d 964, 968 (7th Cir. 2005). Both the EPA and States have found general permits particularly useful for
discharges of storm water. See id. Kentucky has established general permits for several different categories of storm
water discharges.
11
Under 40 C.F.R. § 122.23(b)(1), an animal feeding operation (“AFO”) is defined as “a lot or facility (other
than an aquatic animal production facility)” in which:
(i) Animals (other than aquatic animals) have been, are, or will be stabled or confined
and fed or maintained for a total of 45 days or more in any 12 month period, and
(ii) Crops, vegetation, forage growth, or post-harvest residues are not sustained in the
normal growing season over any portion of the lot or facility.
The regulation defines a CAFO as a large or medium AFO. 40 C.F.R. § 122.23(b)(2). In other words, “CAFOs are
large-scale industrial operations that raise extraordinary numbers of livestock. For example, a ‘Medium CAFO’ raises
as many as 9,999 sheep, 54,999 turkeys, or 124,999 chickens (other than laying hens). ‘Large CAFOs’ raise even more
staggering numbers of livestock—sometimes, raising literally millions of animals in one location.” Waterkeeper
Alliance, Inc. v. EPA, 399 F.3d 486, 492 (2d Cir. 2005).
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 14
§§ 1(2)(b)(5), (3)(b)(5). The EPA approved most of these exemptions from Tier II review because
it found them to be de minimus.
Plaintiffs argue that the EPA’s approval of Kentucky’s categorical exemption of these six
types of pollution discharges from the Tier II review procedure was arbitrary, capricious and contrary
to law. In particular, Plaintiffs contend that the EPA acted contrary to law by: (1) failing to ensure
that each exemption only allowed individual pollution discharges that would not reduce more than
ten percent of a Tier II water body’s assimilative capacity; (2) failing to provide for a cumulative cap
on the loss of assimilative capacity caused by the combined effect of discharges allowed under these
exemptions; and (3) basing its determination of the effect of these exemptions on non-binding
assurances made by the Cabinet, rather than on the text of the Kentucky regulation itself. Unlike the
majority, I find each of these arguments persuasive.
1. Limit of Ten Percent Destruction of Assimilative Capacity for De
Minimus Discharges
The text of 40 C.F.R. § 131.12(a)(2) does not provide for any exceptions to Tier II review
based on the type or quantity of new sources of pollution, but rather requires that, for waters whose
quality is better than necessary to support the propagation of fish and wildlife as well as recreation,
i.e., Tier II waters, “that quality shall be maintained and protected unless the State finds, after full
satisfaction of the intergovernmental coordination and public participation provisions of the State’s
continuing planning process, that allowing lower water quality is necessary to accommodate
important economic or social development in the area in which the waters are located.” (emphasis
added). Likewise, the CWA does not provide for any exceptions to Tier II antidegradation review
but instead demands that any revision to effluent limitation standards for Tier II waters be “consistent
with the antidegradation policy established under this section.” 33 U.S.C. § 1313(d)(4)(B).
Despite this lack of text-based exceptions to Tier II antidegradation review, the EPA approved
most of Kentucky’s categorical exemptions to Tier II review for certain types of discharges under the
administrative law principle which allows an agency to create unwritten exceptions to a statute or rule
for insignificant or “de minimus” matters. Under this well-established principle, it is “permissible
as an exercise of agency power, inherent in most statutory schemes,” to create categorical exemptions
“to overlook circumstances that in context may fairly be considered de minimus.” Alabama Power
Co. v. Costle, 636 F.2d 323, 360 (D.C. Cir. 1979). This authority to create exemptions “is not an
ability to depart from the statute, but rather a tool to be used in implementing the legislative design.”
Id. In other words, “this exemption authority is narrow in reach and tightly bounded by the need to
show that the situation is genuinely de minimus or one of administrative necessity.” Id. at 361.
Accordingly, an agency only has implied authority to create an exemption “when the burdens of
regulation yield a gain of trivial or no value.” Greenbaum v. EPA, 370 F.3d 527, 534 (6th Cir. 2004)
(quoting Alabama Power, 636 F.2d at 360-61). This “implied authority is not available for a situation
where the regulatory function does provide benefits, in the sense of furthering the regulatory
objectives, but the agency concludes that the acknowledged benefits are exceeded by the costs.”
Alabama Power, 636 F.2d at 361. “Determination of when matters are truly de minimus naturally
will turn on the assessment of particular circumstances, and the agency will bear the burden of
making the required showing.” Greenbaum, 370 F.3d at 534 (quoting Alabama Power, 636 F.2d at
360).
Plaintiffs contend that, in the context of Tier II review, “a narrow reading of the de minimus
doctrine is appropriate given the clear intent of the federal antidegradation requirements to allow for
the lowering of water quality only when necessary to accommodate important economic or social
development in the area.” Pl. Br. at 31 (citing 40 C.F.R. § 131.12(a)(2)). I agree with this
suggestion and would hold that the EPA’s approval of any exemptions from the Tier II review
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 15
process must be based upon a well-founded determination that the pollution discharges permitted
under such exemptions will have a truly de minimus impact upon the water quality of Tier II waters.12
In their primary challenge to the EPA’s approval of Kentucky’s categorical Tier II
exemptions, Plaintiffs contend that the EPA should have ensured that individual discharges allowed
under these exemptions would not cause more than a specified decrease in water quality. In
particular, Plaintiffs argue that an exemption for an individual pollution discharge that would 13
use up
more than ten percent of a water’s remaining assimilative capacity cannot be de minimus. By
approving Kentucky’s categorical exemptions without ensuring that they would only exempt new
discharges that would have an insignificant effect on water quality, Plaintiffs argue, the EPA
exceeded its legal authority under the CWA and 40 C.F.R. § 131.12(a) to allow de minimus
exceptions. I agree.
The EPA has previously indicated that the central purpose of the federal Tier II
antidegradation regulations is to protect a water body’s assimilative capacity, which is “the difference
between the applicable water quality criterion for a pollutant parameter and the ambient water quality
for that parameter when it is better that the criterion.” J.A. at 922 (Memorandum from Ephraim S.
King, Director of EPA Office of Science and Technology, to Water Management Division Directors,
Regions 1-10 (Aug. 10, 2005) (hereinafter “King Memorandum”)); accord J.A. at 208 (EPA
Approval Document). In short, a water body’s assimilative capacity is a measurement of the amount
by which its quality exceeds levels necessary to support fish, wildlife, and recreation. The Tier II
review process ensures that this assimilative capacity is maintained so as to avoid further degradation
of the high quality of Tier II waters. Thus, any exceptions to Tier II review cannot be deemed de
minimus if they permit new discharges which significantly decrease a Tier II water body’s
assimilative capacity. Indeed, the EPA has cautioned States against using “a high threshold of
significance” for creating categorical exemptions, because such an approach could “unduly restrict[]
the number of proposed activities that are subject to a full antidegradation review” and “may not
adequately prevent cumulative water quality degradation on a watershed scale.” Water Quality
Standards Regulation, 63 Fed. Reg at 36,783. The EPA has likewise indicated that, while “the
current regulation does not specify a significance threshold below which antidegradation review
would not be required[, the] EPA’s current thinking is that a clear national norm regarding this
‘significance test’ is necessary and should be developed and established in either the regulation or
national guidance.” Id.
12
As an initial matter, I question whether such de minimus exceptions should even be allowed for Tier II
review. The Tier II review process, required by 40 C.F.R. § 131.12(a)(2), does not create a situation where “the burdens
of regulation yield a gain of trivial or no value.” Greenbaum, 370 F.3d at 534 (6th Cir. 2004) (quoting Alabama Power,
636 F.2d at 360-61). On the contrary, this Tier II review process directly furthers Congress’ regulatory objective “to
restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” 33 U.S.C. § 1251(a)
(emphasis added). This acknowledged benefit of the protection afforded by the Tier II review procedures cannot be
ignored by the EPA simply because Tier II review also imposes some economic costs on certain pollutant dischargers.
Nevertheless, the only court to have considered this issue has not found de minimus exceptions to be
impermissible in this context. See Ohio Valley, 279 F. Supp. 2d at 769 (finding that “nothing in the EPA’s regulation
prohibits a de minimus exception from Tier 2 review when water quality is lowered only a ‘trivial’ amount”). Likewise,
the EPA has permitted States to create categorical exemptions from Tier II review for discharges whose effect on Tier
II waters is deemed trivial. See, e.g., Water Quality Standards Regulation, 63 Fed. Reg. at 36,783. Finally, Plaintiffs
do not directly challenge on appeal the EPA’s authority to permit de minimus exceptions to the requirements of 40 C.F.R.
§ 131.12(a). Given this apparent acceptance of the EPA’s authority to approve de minimus exemptions, I am hesitant
to conclude that the EPA has acted contrary to law simply by allowing Kentucky to provide for some exemptions to Tier
II review. However, I agree with Plaintiffs that the EPA’s authority to approve Kentucky’s exemptions from Tier II
review as de minimus is quite limited.
13
Plaintiffs actually seem to argue for a lower threshold, but insist that, regardless, ten percent is the outer limit
of permissible reduction of assimilative capacity.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 16
Neither the EPA nor any federal court has previously determined the precise threshold
between significant and insignificant decreases in assimilative capacity. Nevertheless, the EPA’s
prior guidance statements indicate that more than a ten percent reduction in assimilative capacity
would be significant, and thus not de minimus. In its Water Quality Guidance for the Great Lakes
System Supplementary Information Document (“Great Lakes SID”), issued in 1995, the EPA
addressed de minimus water degradation in the Great Lakes ecosystem. In particular, the EPA
allowed States to categorize as de minimus any discharge of non-bioaccumulative chemicals (“non-
BCCs”) that caused a loss of less than ten percent of the available assimilative capacity. The EPA
stated:
Although de minimus provisions do involve non-conservative assumptions, the de
minimus provisions included in the proposed Guidance are not likely to seriously
undermine the protection afforded a high quality water body through antidegradation.
De minimus provisions provide a means for States and Tribes to differentiate between
actions that will result in an increased loading of a pollutant to a receiving water that
is likely to have a significant impact on water quality and those that are unlikely to
do so and focus review efforts on actions that will degrade water quality. It is
reasonable to assume that loading increases of non-BCCs that will use less than ten
percent of the remaining assimilative capacity in a water body will have a negligent
effect on ambient water quality.
J.A. at 698 (Great Lakes SID) (emphasis added). More recently, the EPA embraced this ten percent
threshold in the context of Tier II review generally. In a memorandum to the EPA’s Water
Management Division Directors, the Director of the EPA’s Office of Science and Technology stated:
EPA has afforded the states and tribes some discretion in determining what constitutes
a significant lowering of water quality. EPA has accepted a range of approaches to
defining a “significance threshold” over which a full antidegradation review is
required. This issue was considered at length in the process of developing the Water
Quality Guidance for the Great Lakes. Relying on input offered during a four-year
open public process involving environmental groups, industry representatives, and
other experts, with numerous opportunities for public input, the directors of the eight
Great Lakes states and EPA technical experts reached a consensus on a significance
threshold value of ten percent (10%) of the available assimilative capacity, coupled
with a cumulative cap. . . . A ten percent (10%) value is within the range of values for
significance thresholds that EPA has approved in other states as well. EPA considers
this approach to be workable and protective in identifying those significant lowerings
of water quality that should receive a full tier 2 antidegradation review, including
public participation.
J.A. at 923 (King Memorandum) (emphasis added). The only court to have considered this issue has
likewise suggested that a ten percent reduction in assimilative capacity is the outer limit for any de
minimus exception. See Ohio Valley, 279 F. Supp. 2d at 770 (finding that the EPA’s approval of
West Virginia’s exception from Tier II review for individual discharges causing up to a ten percent
loss of available assimilative capacity was reasonable, but failing to indorse the EPA’s approval of
West Virginia’s twenty percent de minimus provision for cumulative discharges).
Based on these authorities’ interpretations of the amount of loss of assimilative capacity that
would be considered significant, I would find that, in order to be considered de minimus (and thus
permissible as an exception to 40 C.F.R. § 131.12(a)(2)’s requirement that all Tier II waters be
afforded Tier II review), a categorical exemption from Tier II review must not permit any individual
discharge that would destroy more than ten percent of a Tier II water’s available assimilative
capacity. While discharges causing less than a ten percent loss of assimilative capacity might also
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 17
be too significant to be considered de minimus, I find this the ten percent outer limit to be clearly
supported by the EPA’s own practice. As the EPA in this case did not even consider whether
Kentucky’s categorical exemptions could allow individual discharges that would cause a significant,
i.e., more than ten percent, loss of assimilative capacity in Tier II waters, I would hold that the EPA
acted contrary to law in approving these exemptions as de minimus. For this reason alone, I find
reversal required and would remand the matter to the EPA, so that it could consider whether
Kentucky’s categorical exemptions would permit individual discharges that would cause more than
a ten percent loss of a Tier II water’s assimilative capacity.
2. Cumulative Cap on De Minimus Discharges
Plaintiffs next argue that “[a] second requirement for any de minimus exemption from Tier
II antidegradation requirements is that such exemption be subject to a cumulative cap, so that
individual discharges allowed to pass as trivial do not end up having a significant combined impact.”
Pl. Br. at 34. Again, I agree that such a cumulative cap is required in order for a discharge exemption
to be permitted as de minimus.
As already noted, in order to qualify as de minimus, any exemption to the strict requirements
of Tier II review must only exempt pollution discharges whose combined effect does not lead to a
significant degradation of a Tier II water body’s quality. While the limit of ten percent destruction
of assimilative capacity for individual exempted discharges helps to ensure that the exemptions have
only a trivial impact on water quality, a cumulative cap is necessary to ensure that the combined
effect of the many discharges allowed under the exemption is truly de minimus. See Shays v. FEC,
414 F.3d 76, 115 (D.C. Cir. 2005) (rejecting the Federal Election Commission’s approval of a de
minimus exemption of $5000 from a campaign finance reform regulation because it was not “an
obviously trivial amount, considering that donors could give that amount to each and every state,
district, and local party organization”); Alabama Power, 636 F.2d at 360 (indicating that an agency’s
power to find categorical exemptions to statutory schemes is designed to “overlook circumstances
that in context may fairly be considered de minimus”). Indeed, if a significant degradation of Tier
II water quality were allowed to occur because of numerous individually exempted de minimus
discharges, then the non-textual de minimus exception would be allowed to swallow the rule set forth
in 40 C.F.R. § 131.12(a)’s plain language that a Tier II water’s quality “shall be maintained and
protected unless” the State determines, after engaging in the Tier II review process, that “allowing
lower water quality is necessary to accommodate important economic or social development in the
area in which the waters are located.” (emphasis added).
Accordingly, the only court to have considered this issue has found that a cumulative cap is
necessary in order for an exemption to be permitted as de minimus. Ohio Valley, 279 F. Supp. 2d at
770. The Ohio Valley court persuasively articulated the rationale for such a cap:
From the perspective of maintaining the water quality of a Tier 2 water body (which
is the focus of § 131.12(a)(2)), the de minimus standard for cumulative discharges is
more important than the de minimus standard for individual discharges; it is the
former that will dictate the total reduction in available assimilative capacity that a
water body may undergo without any Tier 2 review. Without a cumulative cap on de
minimus discharges, individual de minimus discharges could easily consume all of the
available assimilative capacity for a given pollutant parameter, reducing water quality
to the minimum level necessary to support existing uses without ever having
undergone Tier 2 review.
Id. at 770-771. Likewise, the EPA has indicated that in order to qualify as de minimus an exemption
must have a cumulative cap on the reduction of assimilative capacity that may be caused by exempted
discharges. See J.A. at 923 (King Memorandum) (noting that in defining a “sufficiency threshold”
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 18
for discharges into the Great Lakes the “EPA technical experts reached a consensus on a significance
threshold value of ten percent (10%) of the available assimilative capacity, coupled with a cumulative
cap” (emphasis added)).
In light of the foregoing concerns, I would hold that a cumulative cap on the allowable
reduction of assimilative capacity is required in order for a categorical exemption to Tier II review
to be approved as de minimus. Neither party has suggested an appropriate limit for this cumulative
cap. However, given the previous discussion regarding the significant negative impact on water
quality caused by the loss of more than ten percent of a water body’s assimilative capacity, I am
convinced that an exemption that would allow for combined discharges to cause more than a ten
percent loss of assimilative capacity, i.e., a significant loss of Tier II water quality, cannot, under the
EPA’s own scientific standards, be considered de minimus. As the EPA never even considered
whether a cumulative cap is necessary when approving Kentucky’s categorical exemptions, let alone
whether the combined effect of the individual discharges allowed under such exemptions would fall
below the requirements of such a cap, I would find that the EPA acted contrary to law in approving
these exemptions as de minimus. Accordingly, I would reverse the district court’s grant of summary
judgment to Defendants on Plaintiffs’ challenge to Kentucky’s Tier II review exemptions and remand
the matter to the EPA. On remand, in addition to considering whether Kentucky’s categorical
exemptions would permit individual discharges that would cause more than a ten percent loss of a
Tier II water’s assimilative capacity, I would also require the EPA to evaluate the potential
cumulative effect of these individual discharges so as to ensure that they do not cause a combined
loss of more than ten percent of the assimilative capacity of Kentucky’s Tier II waters.
3. EPA’s Reliance on Kentucky’s Commitments Regarding Its
Regulations When Assessing Their Impact as De Minimus
Finally, Plaintiffs argue that in determining whether Kentucky’s exemptions are in fact de
minimus, the EPA was not entitled to rely on Kentucky’s unenforceable commitments regarding these
exemptions, but rather was required to assess the impact of each exemption based solely on the
language of the exemption itself. I agree that this conclusion is compelled by the federal regulations.
The EPA’s CWA implementing regulations require each State to include, as part of its water
quality standards submitted to the EPA for review, “[a]n antidegradation policy consistent with [40
C.F.R.] § 131.12.” 40 C.F.R. § 131.6(d). These federal regulations further require the State to
provide “[c]ertification by the State Attorney General or other appropriate legal authority within the
State that the [submitted] water quality standards were duly adopted pursuant to State law.” 40
C.F.R. § 131.6(e). Thus, in reviewing Kentucky’s antidegradation rules for compliance with 40
C.F.R. § 131.12, the EPA must consider only the Kentucky water quality regulations that “were duly
adopted pursuant to State law.” 40 C.F.R. § 131.6(e).
Commitments by state agencies, such as the Cabinet, regarding the application of Kentucky’s
antidegradation implementation procedures do not have the force of law in Kentucky. See Ky. Rev.
Stat. Ann. § 13A.130(1) (2006) (“An administrative body shall not by internal policy, memorandum,
or other form of action . . . [m]odify . . . [or] [e]xpand upon or limit a statute or administrative
regulation.”); Hagan v. Farris, 807 S.W.2d 488, 490 (Ky. 1991) (“An agency must be bound by the
regulations it promulgates. . . . KRS 13A.130 prohibits an administrative body from modifying an
administrative regulation by internal policy or another form of action.”); Kerr v. Ky. State Bd. of
Registration for Prof’l Eng’rs & Land Surveyors, 797 S.W.2d 714, 717 (Ky. Ct. App. 1990)
(“Regulatory agencies are creatures of statute, and have not powers of their own; [their] internally
adopted policies are null and void, and of no effect whatsoever.”). Accordingly, they may not be
considered by the EPA when evaluating whether Kentucky’s Tier II review exemptions will have a
de minimus impact on the quality of Kentucky’s Tier II waters. See Northwest Envtl. Advocates v.
EPA, 268 F. Supp. 2d 1255, 1268-69 (D. Or. 2003) (finding that the EPA was not entitled to rely on
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 19
unenforceable commitment from the State when approving state-promulgated environmental
standards).
While the Cabinet’s promises or commitments regarding the way in which it will apply
Kentucky’s antidegradation policies should not be considered when assessing the de minimus effects
of the categorical exemptions contained in Kentucky’s antidegradation regulations, the Cabinet’s
interpretations of those regulations may be useful in understanding the effects of their application.
Kentucky’s duly adopted antidegradation rules and implementation policy are found in 401 Ky.
Admin. Regs. 5:029 and 5:030. In interpreting these regulations, the EPA must first look to the plain
language of the regulations themselves. See Baptist Physician Hosp. Org., Inc. v. Humana Military
Healthcare Serv., Inc., 481 F.3d 337, 344 (6th Cir. 2007) (“As with all matters of regulatory
interpretation, we look first to the plain and unambiguous meaning of the regulation, if any.”). If the
EPA reasonably concludes that Kentucky’s regulations are ambiguous, then it may rely on the
Cabinet’s interpretation of these regulations, which, if reasonable in light of the regulations’ plain
language, is entitled to deference. See Auer, 519 U.S. at 462; Defenders of Wildlife v. EPA, 415 F.3d
1121, 1127 (10th Cir. 2005) (finding it permissible for the EPA to rely on a state environmental
agency’s interpretation of the State’s antidegradation provisions when reviewing them for compliance
with 40 C.F.R. § 131.12); Hagan, 807 S.W.2d at 490 (“In most cases, an agency’s interpretation of
its own regulations is entitled to substantial deference.”). However, “the EPA may not [permit the
Cabinet to] effectively rewrite or amend existing state regulations, nor may it ‘escape the notice and
comment requirements . . . by labeling a major substantive addition to a rule a mere interpretation.’”
Defenders of Wildlife, 415 F.3d at 1127 (citing Riverside Cement Co. v. Thomas, 843 F.2d 1246, 1248
(9th Cir. 1988), and quoting Appalachian Power Co. v. EPA, 208 F.3d 1015, 1024 (D.C. Cir. 2000)).
See also Hagan, 807 S.W.2d at 490 (“An agency’s interpretation of a regulation is valid, however,
only if the interpretation complies with the actual language of the regulation.”). Thus, the EPA may
rely on the Cabinet’s reasonable interpretation of Kentucky’s categorical exemptions from Tier II
review to the extent that it finds the regulation ambiguous, but it may not rely on the Cabinet’s
substantive additions to those exemptions when determining their compliance with the requirements
of 40 C.F.R. § 131.12.
In the instant case, the EPA relied upon unenforceable commitments made by the Cabinet in
determining whether the exemptions at issue would have an insignificant effect on the quality of
Kentucky’s Tier II waters. The language of Kentucky’s antidegradation implementation regulation
clearly provides that the Tier II review process specified in the regulation “shall not apply” to certain
specified dischargers. See 401 Ky. Admin. Regs. 5:030 §§ 1(2)(b)(1)(a)-(e), (3)(b)(1)(a)-(e). The
regulation does not, on its face, provide for an exception to these exemptions in cases where the
exempted discharge would cause a significant lowering of water quality. Nevertheless, in approving
these exemptions, the EPA relied on the Cabinet’s commitments that it would not issue discharge
permits under these exemptions for discharges that would cause a significant lowering of water
quality. For example, the EPA approved Kentucky’s exemption for discharges subject to storm water
general permits, in part, because of Kentucky’s indication that “the Commonwealth has determined
that it will . . . assure that such permits only allow discharges that will not cause a significant
lowering of water quality.” J.A. at 191 (EPA Approval Document). Likewise in approving the
exemption for domestic sewage dischargers who accept certain pollutant limits, the EPA noted:
Kentucky has represented that these default [pollutant] limits will prevent any
[significant lowering of water quality]. In those rare instances where these default
limits are not protective of water quality, [the Kentucky Department of Water
(“KDOW”)] has required more stringent options for permit applicants in the form of
more stringent limits or a prohibition on discharge. The effect of this provision and
its implementation by KDOW is to prevent any significant lowering of water quality.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 20
J.A. at 215 (EPA Approval Document). Finally, in approving the exemptions for CAFO discharges
and discharges pursuant to KPDES permit renewals that result in less than a twenty percent pollution
expansion, the EPA explicitly stated that it was relying on the Cabinet’s assurances that it would not
allow such exemptions to cause a significant lowering of water quality without applying Tier II
review. See J.A. at 206 (EPA Approval Document) (“By providing that antidegradation review is
not required for discharges from CAFOs, Kentucky has represented that it will assure that these
KPDES permits (both individual and general permits) will authorize only those new or increased
discharges that will not cause significant lowering of water quality. Based on that understanding,
EPA approves these provisions as revisions to Kentucky’s water quality standards.”); J.A. at 209
(EPA Approval Document) (“EPA’s analysis shows that it is possible that, in limited situations, a
20% expansion could use more than 10% of the available assimilative capacity of the receiving water,
or could leave little assimilative capacity after the expansion. However, Kentucky stated in its April
11, 2005, letter that if such situations arise, the Commonwealth would require an antidegradation
review. In light of EPA’s analyses and Kentucky’s assurances, EPA is approving this provision.”).
These commitments made by the Cabinet cannot reasonably be construed as mere interpretations of
401 Ky. Admin. Regs. 5:030, and the EPA was not entitled to rely upon them in evaluating the de
minimus impact of the regulation on the quality of Kentucky’s Tier II waters.
In my view, the EPA acted contrary to law by relying on these unenforceable commitments.
Accordingly, I would find this last contention by Plaintiffs to be a third reason to reverse the district
court’s grant of summary judgment to Defendants with respect to the EPA’s approval of Kentucky’s
six categorical exemptions from Tier II review and to remand the matter to the EPA. In determining,
on remand, whether Kentucky’s regulatory exemptions to Tier II review only exempt discharges that
have an insignificant effect on Tier II water quality, I would require the EPA to focus primarily on
the language of 401 Ky. Admin. Regs. 5:030. In particular, I would prohibit the EPA from relying
on unenforceable commitments from the Cabinet concerning its methods for implementing that
regulation.
IV. CONCLUSION
For the reasons expressed in parts I, II, and III-A of this opinion as well as for the reasons
expressed in Judge Cook’s concurring opinion below, we AFFIRM in part and REVERSE in part
the opinion and order of the district court. We AFFIRM the district court’s grant of summary
judgment to Defendants on Plaintiffs’ challenge to the EPA’s approval of Kentucky’s selection of
Tier II waters. However, we REVERSE the district court’s grant of summary judgment to
Defendants with respect to Plaintiffs’ challenge to the EPA’s approval of Kentucky’s categorical
exemption of six types of pollution discharges from Tier II review. We thus VACATE that portion
of the EPA’s decision approving Kentucky’s categorical exemption of certain discharges from Tier
II review, and REMAND this matter to the EPA so that it may review this aspect of Kentucky’s
antidegradation implementation procedures in a manner that is consistent with Judge Cook’s
concurring opinion.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 21
_________________
CONCURRENCE
_________________
COOK, Circuit Judge, concurring, joined by SILER, Circuit Judge. While we join parts I,
II, III-A, and IV of Judge Clay’s opinion, we write separately to express the Court’s holding with
respect to Plaintiffs’ second claim—that the EPA erred in approving Kentucky’s six exemptions from
Tier II review. For the reasons that follow, we find that the EPA did err in approving these
exemptions, and thus REVERSE the district court’s grant of summary judgment to the EPA on this
point and REMAND the matter to the EPA for further proceedings consistent with this opinion.
I.
A.
Kentucky’s antidegradation regulations require new or expanded discharges into
“exceptional” or “high quality” waters to pass Tier II review, but exempt five categories of
discharges, designating them as causing insignificant water-quality loss. These discharges are:
1. Any expanded discharge under a renewed or modified KPDES permit, so long as the
expansion does not increase pollutant loading by 20% or more;
2. Industrial discharges if the emitter discharges pollutants at less than half the
concentration authorized by a normal KPDES water permit;
3. Domestic discharges if the emitter limits seven pollutants below certain targets—for
example, residual chlorine to “no greater than 0.010 milligrams per liter”;
4. Discharges under storm water general permits;1 and
5. Discharges from concentrated animal feeding operations (“CAFOs”).2
See 401 Ky. Admin. Reg. 5:030 §§ 1(2)(b)(1)(a),(d),(e); 1(2)(b)(4)-(6); 1(3)(b)(1)(a),(d),(e);
1(3)(b)(2)-(4).
Unless a statute or regulation employs “extraordinarily rigid” language, courts recognize an
administrative law principle that allows agencies to create unwritten exceptions to a statute or rule
for “de minimis” matters. Greenbaum v. EPA, 370 F.3d 527, 534 (6th Cir. 2004); see also Ober v.
Whitman, 243 F.3d 1190, 1193–95 (9th Cir. 2001) (finding that the EPA may “exempt de minimis
sources of [a pollutant] from [Clean Air Act] pollution controls”). Under this principle, it is
1
“With a general permit, the EPA issues a permit for specific types of activities and establishes specific rules
for complying with the permit. Then, rather than apply for an individual permit, operators must file a Notice of Intent
(‘NOI’) stating that they plan to operate under the general permit, and absent a negative ruling by the EPA, discharges
that comply with the terms of the general permit are automatically authorized.” Tex. Indep. Producers & Royalty Owners
Ass’n v. EPA, 410 F.3d 964, 968 (7th Cir. 2005).
2
“CAFOs are large-scale industrial operations that raise extraordinary numbers of livestock. For example, a
‘Medium CAFO’ raises as many as 9,999 sheep, 54,999 turkeys, or 124,999 chickens (other than laying hens). ‘Large
CAFOs’ raise even more staggering numbers of livestock—sometimes, raising literally millions of animals in one
location.” Waterkeeper Alliance, Inc. v. EPA, 399 F.3d 486, 492 (2d Cir. 2005) (footnotes omitted).
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 22
“permissible as an exercise of agency power, inherent in most statutory schemes, to overlook
circumstances that in context may fairly be considered de minimis.” Ala. Power Co. v. Costle, 636
F.2d 323, 360 (D.C. Cir. 1979). This authority “is not an ability to depart from the statute, but rather
a tool to be used in implementing the legislative design.” Id. An agency thus has the implied
authority to exempt “‘when the burdens of regulation yield a gain of trivial or no value.’”
Greenbaum, 370 F.3d at 534 (quoting Ala. Power, 636 F.2d at 360–61). “‘Determination of when
matters are truly de minimis naturally will turn on the assessment of particular circumstances, and
the agency will bear the burden of making the required showing.’” Id. (quoting Ala. Power, 636
F.2d at 360).
Though Plaintiffs accept the EPA’s authority to approve de minimis exemptions to § 131.12,
they challenge the EPA’s conclusion that the five exemptions listed above will result in only
“insignificant” water degradation; Plaintiffs contend that these exemptions eviscerate Kentucky’s
Tier II review process, allowing significant degradations in water quality without demonstrated
necessity.
To assess whether Kentucky’s regulations permit significant degradation, we normally turn
to the EPA’s calculations. See Citizens Coal Council, 447 F.3d at 890 (reiterating that courts must
afford the highest level of deference to the EPA’s technical or scientific evaluations). Because
§ 131.12 protects assimilative capacity, we necessarily focus on how much assimilative capacity
would be lost by utilization of the five Tier II exemptions. See JA 922 (Memorandum from Ephraim
S. King, Director of EPA Office of Science and Technology, to Water Management Division
Directors, Regions 1-10 (Aug. 10, 2005)) (stating proposed regulations “need to be very carefully
evaluated to determine how they translate to reduction in assimilative capacity in order to understand
whether a significant decrease in assimilative capacity will occur”). Relying on the EPA’s
assimilative-capacity-loss estimates, we must determine de novo whether this loss is significant or
merely de minimis.
While the EPA’s decision document in this case offers detailed technical analysis, it fails to
aim its analysis at the legally operative question: will the extent to which various emitters avail
themselves of the exemptions result in significant, rather than de minimis, degradation? The EPA
measured Kentucky’s § 131.12 compliance by assessing whether each individual exemption resulted
in “significant” or “insignificant” degradation, but that approach avoids assessing the exemptions’
cumulative effects on the State’s antidegradation compliance. Because § 131.12 regulates
degradation, not individual sources of degradation, see id. (“The State shall develop and adopt a
statewide antidegradation policy and identify the methods for implementing such policy pursuant to
this subpart.”), the legally relevant inquiry is whether Kentucky’s Tier-II-review exemptions together
permit significant degradation, see Ohio Valley, 279 F. Supp. 2d at 770 n.3 (“From the perspective
of water quality . . . it does not matter whether the number of discharges is one or one hundred; the
relevant question is how much water quality is lowered by any and all discharges into a water body”).
The EPA’s decision document avoids answering this question, and we accordingly lack the
information needed to meaningfully review the EPA’s decision to approve Kentucky’s regulations.
See Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (holding that an agency action is arbitrary and
capricious if the agency has “entirely failed to consider an important aspect of the problem”).
Moreover, though the EPA’s decision document details the tests conducted to measure each
exemption’s impact, the document often fails to include the resulting measurements—i.e., the EPA’s
estimate as to how much assimilative capacity would be lost. Instead, the EPA concludes only that
the tests show “insignificant” degradation will occur. We cannot review this legal conclusion’s
reasonableness without the EPA’s first discussing its assimilative-capacity loss estimates and
explaining why it deems them insignificant. See id. (stating that a reviewing court “may not supply
a reasoned basis for the agency’s action that the agency itself has not given”). We thus find a remand
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 23
to the EPA necessary so that it may address these deficiencies in its consideration of Kentucky’s de
minimis exemptions.
B.
Having determined that the EPA’s approval of five of Kentucky’s six exemptions must be
reconsidered, we turn to the remaining exemption for coal-mining discharges. Unlike the de minimis
exemptions, Kentucky carved this exception out of its general antidegradation provisions believing
that its existing coal-mining regulations satisfy § 131.12’s requirements. JA 192–93. The EPA
evaluated these existing regulations and agreed that they complied with § 131.12, acknowledging the
five steps Kentucky takes before issuing a permit for a coal-mining discharge into Tier II waters.
Taking issue with one discrete aspect of the EPA’s approval, Plaintiffs contend that the EPA
erroneously credited Kentucky’s existing regulations as requiring coal-mining dischargers to
demonstrate economic or social necessity when, in fact, the regulations do not. Indeed, Kentucky’s
“socioeconomic review” is found not in its water-quality regulations, but in an informal commitment
to the EPA. See JA 253. The Plaintiffs insist that the EPA may not rely on such promises, and we
agree.
Kentucky agreed to subject proposed coal-mining discharges to socioeconomic review during
the EPA’s audit of its antidegradation procedures. When the EPA probed Kentucky about how it
determined socioeconomic necessity for coal-mining discharges, the Cabinet replied that Kentucky
“believes that the socioeconomic importance of coal mining is well documented . . . and supported
by sufficient data, so that a demonstration of importance for each coal mining activity is not
required.” JA 298. Finding this explanation unsatisfactory, the EPA pressed for more. See 40 C.F.R.
§ 131.12(a)(2) (requiring a demonstration that degradation in Tier II waters is “necessary to
accommodate important economic or social development in the area in which the waters are located”
(emphasis added)). Through a response letter, the Cabinet assured the EPA that prior to issuing
KPDES coal-mining permits to discharge into Tier II waters, it would “interpret” its existing
regulations governing such permits to require a showing that the “discharge is from an activity of
important social or economic development to the area in which the waters are located.” JA 253.
Relying on this commitment, the EPA approved the coal-mining exemption. JA 194–95.
The Plaintiffs maintain that Kentucky’s response letter “effectively amended” the regulations
outside the State’s procedure for promulgating or modifying administrative rules. See Ky. Rev. Stat.
Ann. § 13A.130(1) (“An administrative body shall not by internal policy, memorandum, or other
form of action . . . [m]odify . . . [or] [e]xpand upon or limit a statute or administrative regulation.”).
The EPA counters that Kentucky’s letter did not amend its regulations but merely furnished the
State’s interpretation.
The EPA may clarify ambiguous state regulations by consulting with the state and relying on
authorized state interpretations, see Defenders of Wildlife v. EPA, 415 F.3d 1121, 1127–28 (10th Cir.
2005) (holding that the EPA could rely on a state’s interpretation of an ambiguous water quality
standard, so long as the EPA did not “effectively rewrite or amend” it), but that is not what happened
here. Kentucky’s Tier II exemption for coal-mining discharges was not ambiguous. The
antidegradation regulations stated, in explicit terms, that Tier II review “shall not apply” to coal-
mining discharges regulated under existing regulations. See 401 Ky. Admin. Reg. 5:030
§§ 1(2)(b)(1)(b), 1(3)(b)(1)(b). Those existing regulations do not require socioeconomic review.
Indeed, when the EPA first queried the State on socioeconomic review for coal-mining discharges,
the State responded that there was no such review. JA 298. Only after further inquiries from the
EPA did Kentucky adopt a starkly different position—that its regulations (it did not cite a particular
one) compelled a socioeconomic review for each proposed discharge. JA 253.
No. 06-5614 Kentucky Waterways, et al. v. Johnson, et al. Page 24
This securing an informal commitment from a state agency rather than requiring the state to
amend its regulations violates the federal approval procedure established by 33 U.S.C.
§ 1313(c)(3)—the EPA either approves or disapproves the regulations proposed by a state. See
Riverside Cement Co. v. Thomas, 843 F.2d 1246, 1248 (9th Cir. 1988); Ohio Valley, 279 F. Supp. 2d
at 756 (finding the EPA’s strained reading of an unambiguous West Virginia regulation to be “an
impermissible attempt to amend the regulation”); Natural Res. Defense Council v. EPA, 16 F.3d
1395, 1399 (4th Cir. 1993) (“EPA sits in a reviewing capacity of the state-implemented standards,
with approval and rejection powers only.”) (citing 33 U.S.C. § 1313(c)). Short-circuiting the normal
promulgation process by addressing deficiencies through agency commitments not only contravenes
§ 1313(c)(3), but also hinders an important objective—public participation in the rule-making
process. See generally Appalachian Power Co. v. EPA, 208 F.3d 1015, 1024 (D.C. Cir. 2000)
(stating the EPA may not “escape the notice and comment requirements . . . by labeling a major
substantive legal addition to a rule a mere interpretation”). Enforceability also argues against the
EPA’s reliance on informal state commitments. See, e.g., Riverside Cement, 843 F.2d at 1247 (an
informal state interpretation at odds with a regulation’s text is the “bureaucratic equivalent of an
illusory contract”); Nw. Envtl. Advocates v. EPA, 268 F. Supp. 2d 1255, 1269 (D. Or. 2003) (finding
the EPA erred by relying on an “unenforceable promise”—the state’s informal commitment to use
a more protective water standard—to approve certain Clean Water Act regulations). Because the
EPA relied on an informal Cabinet commitment to approve Kentucky’s Tier II exemption for coal-
mining discharges, we find that the agency’s approval was “not in accordance with law.” 5 U.S.C.
§ 706(2). Accordingly, we hold that this exemption too requires remand to the EPA for
reconsideration.
II.
For the these reasons, we REVERSE the district court’s grant of summary judgment to the
EPA on Plaintiffs’ challenge to the approval of Kentucky’s six Tier-II-review exemptions and
REMAND this matter for further proceedings consistent with this opinion.