State of Wisconsin v. EPA

• Decision Date: 21 September 2001
• Docket Number: No. 99-2618,DEFENDANTS-APPELLEE,PLAINTIFF-APPELLANT,AND,DEFENDANT-APPELLEE,99-2618
• Citation: 266 F.3d 741
• Parties: (7th Cir. 2001) STATE OF WISCONSIN,, v. ENVIRONMENTAL PROTECTION AGENCY AND CHRISTIE WHITMAN, <A HREF="#fr1-*" name="fn1-*">* SOKAOGON CHIPPEWA COMMUNITY, INTERVENING
• Court: U.S. Court of Appeals — Seventh Circuit

Page 741

266 F.3d 741 (7th Cir. 2001)

STATE OF WISCONSIN, PLAINTIFF-APPELLANT, v. ENVIRONMENTAL PROTECTION AGENCY AND CHRISTIE WHITMAN,^* DEFENDANTS-APPELLEES AND SOKAOGON CHIPPEWA COMMUNITY, INTERVENING DEFENDANT-APPELLEE.

No. 99-2618

U.S. Court of Appeals, Seventh Circuit

Argued November 6, 2000

September 21, 2001

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 96-C-90--Charles N. Clevert, Judge. [Copyrighted Material Omitted] Before Kanne, Diane P. Wood, and Williams, Circuit Judges.

Diane P. Wood, Circuit Judge.

Although the general model of sovereignty suggests that different sovereign states normally occupy different geographic territories, see, e.g., Restatement (3d) of the Foreign Relations Law of the United States, sec. 201 (1986), the existence of federations and confederations shows that overlapping sovereignty is also a common feature of modern political organization. In this case, we confront one of the more complex kinds of overlapping sovereignty that exists in the United States today: that between the States and Indian tribes. The Supreme Court addressed one aspect of that relationship in its 2000 Term in Nevada v. Hicks, 121 S. Ct. 2304 (2001), which held that tribal authorities lacked legislative jurisdiction to regulate the activities of state officials on reservation land when those officials were investigating off-reservation violations of state law. Id. at 2318. A different aspect of the same relationship is before us here: namely, whether the Environmental Protection Agency (EPA), acting through authority delegated to it by statute, was empowered to treat a particular tribe as a "state" for purposes of certain water quality rules. Like the district court, we conclude that the EPA acted properly in doing so, and we thus affirm the district court's judgment rejecting the challenge Wisconsin has brought to the EPA's action.

I.

A. The Clean Water Act

The Clean Water Act (the Act) prohibits the discharge of pollutants into navigable waters unless the discharge is sanctioned by a permit or statute. See 33 U.S.C. sec. 1311(a). Permits are issued by the EPA or by state agencies subject to EPA review. Id. at sec. 1342. The Act also gives states the authority to establish water quality standards for waters within their boundaries (id. at sec. 1313), to certify compliance with those standards (id. at sec. 1341), and to issue and enforce discharge permits (id. at secs. 1342, 1319), all under the watchful eye of the EPA. Like other states, Wisconsin has enacted its own federally approved comprehensive water pollution regulatory system. See Wis. Adm. Code chapters 33, 280, 281, NR 100-91, and NR 102-106.

In 1987, Congress amended the Act to authorize the EPA to treat Indian tribes as states under sec. 518 of the Act. Once a tribe has treatment-as-state (TAS) status, the statute permits it to establish water quality standards for bodies of water within its reservation and to require permits for any action that may create a discharge into those waters. 33 U.S.C. sec. 1377(e). In 1991, after full notice-and-comment rule-making, the EPA issued a final rule implementing this provision and setting forth the requirements Indian tribes would have to meet in order to be granted TAS status:

(1) the tribe must be federally recognized;

(2) the tribe must have a governing body carrying out substantial governmental duties and powers;

(3) the functions to be exercised by the tribe must pertain to the management and protection of water resources which are held by the tribe, held by the United States in trust for the tribe, or otherwise within the borders of the reservation; and

(4) the tribe must be capable of carrying out the functions of the Act.

40 C.F.R. 131.8(a); see also 33 U.S.C. secs. 1377(e)(1)-(3).

Relying heavily on the Supreme Court's decision in Montana v. United States, 450 U.S. 544 (1981), the EPA concluded that this was neither a plenary delegation of inherent authority to tribes to regulate all reservation waters, nor was it a standard that precluded tribal regulation of any non-member or any off-reservation activity. See 56 Fed. Reg. at 64877. Instead, the agency chose a case-by-case approach under which a tribe attempting to satisfy element (3) of the regulation would have to show that it possesses inherent authority over the waters in light of evolving case law. See 56 Fed. Reg. at 64878. There was no question that tribes could regulate the activities of tribal members, undertaken on the reservation, in order to protect the quality of reservation waters. In addition, the EPA concluded that "a tribe may regulate the activities of non-Indians on fee lands within its reservations when those activities threaten or have a direct effect on the political integrity, the economic security, or the health or welfare of the tribe." Id.

The EPA acknowledged that this will usually be an easy showing, based on "generalized findings" that water quality is related to human health and welfare. See id. Although the EPA stated that it would make a case-specific determination with regard to the scope of each tribe's authority, once a tribe has shown that impairment of the waters on the reservation would have a serious and substantial effect on the health and welfare of the tribe, the EPA presumes that there has been an adequate showing of inherent authority. Id. at 64879.

B. The Mole Lake Band and its Application For TAS Status

The waters at issue in this case are lakes and streams adjacent to or surrounded by the reservation of the Sokaogon Chippewa Community, also known as the Mole Lake Band of Lake Superior Chippewa Indians (the Band), located in northeastern Wisconsin. The Mole Lake reservation is unusual in two respects. First, the Band is heavily reliant on the availability of the water resources within the reservation for food, fresh water, medicines, and raw materials. In particular, Rice Lake, the largest body of water on the reservation, is a prime source of wild rice, which serves as a significant dietary and economic resource for the Band. Second, all of the 1,850 acres within the reservation are held in trust by the United States for the tribe. None of the land within the reservation is controlled or owned in fee by non-members of the tribe.

In August 1994, the Band applied for TAS status under the Act. Wisconsin opposed the application, arguing that it was sovereign over all of the navigable waters in the state, including those on the reservation, and that its sovereignty precluded any tribal regulation. Nevertheless, after elaborate administrative proceedings, on September 29, 1995, the EPA approved the Band's application, finding that the tribe had satisfied all of the requirements of 40 C.F.R. sec. 131.8, including the necessary demonstration of its inherent authority over all water resources on the reservation. In keeping with its earlier positions, the EPA noted that the inherent authority question did not turn on who had title to the land underneath the waters.

This grant of TAS status alarmed the State of Wisconsin, which saw it as both an affront to the state's sovereignty and, more pragmatically, as an action with the potential to throw a wrench into the state's planned construction of a huge zinc-copper sulfide mine on the Wolf River, upstream from Rice Lake. Concerned about its loss of authority over certain territory within its outer boundaries and worried that the tribal water standards might limit the activities of the mine by prohibiting some or all of the discharge from the mine, Wisconsin filed this action in district court on January 25, 1996, reiterating its challenge to the EPA's grant of TAS status to the Band. (The United States and the EPA waived immunity under 5 U.S.C. sec. 702.) The state's case raises a fundamental challenge to the TAS grant; the relief it seeks is outright revocation of the grant, rather than mere accommodation for any particular project. We are therefore satisfied that the issue is ripe now and need not await the Band's promulgation of specific water quality standards. If Wisconsin is right, it is entitled to have the EPA's creation of a state-like entity within its borders voided--an action that lies within the power of the court. See Community Trend Service, Inc. v. Commodity Futures Trading Comm'n, 233 F.3d 981 (7th Cir. 2000). Similarly, it is one in which a failure to review the issue now would cause hardship to the parties. Id.

In April 1999, the district court upheld the TAS grant, finding that the EPA's determination that a tribe could regulate all water within the reservation, regardless of ownership, was a reasonable interpretation of the relevant statutes and regulations. Wisconsin now appeals.

II.

We review a grant of summary judgment de novo, Doe v. Howe Military Sch., 227 F.3d 981, 990 (7th Cir. 2000), applying the same standards as the district court: we will set aside an agency determination only if it is "procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute." See United States v. Mead Corp., 121 S.Ct. 2164, 2171 (2001); see also the Administrative Procedure Act, 5 U.S.C. sec. 706(2)(A) (set aside agency decision if arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law). We should uphold the agency's determination as long as it considered relevant data under the correct legal standards and offered a satisfactory explanation for its actions. See Howard Young Med. Ctr., Inc. v. Shalala, 207 F.3d 437, 441 (7th Cir. 2000). Moreover, the EPA here has interpreted the statute by promulgating formal regulations, using plenary notice-and-comment procedures, and then implementing its rule with respect to the Band through a formal process in which the state was entitled to be heard. Its regulations and subsequent decision are therefore entitled to deference under Mead, 121 S. Ct. at 2171, and Chevron U.S.A....