American Forest and Paper Ass'n v. U.S. E.P.A.

• Decision Date: 30 March 1998
• Docket Number: No. 96-60874,96-60874
• Citation: 137 F.3d 291
• Parties: , 28 Envtl. L. Rep. 21,122 AMERICAN FOREST AND PAPER ASSOCIATION, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 291

137 F.3d 291

46 ERC 1385, 28 Envtl. L. Rep. 21,122

AMERICAN FOREST AND PAPER ASSOCIATION, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 96-60874.

United States Court of Appeals Fifth Circuit.

March 30, 1998.

Russell Scott Frye, Erin Buckley Bradley, Chadbourne & Parke, Washington, DC, for Petitioner.

Steven Edward Rusak, U.S. Dept. of Justice, Washington, DC, Carol Browner, EPA, Washington, DC, for Respondent.

Scott M. DuBoff, John Heiderscheit, Wright & Talisman, Washington, DC, for Amer.Petro. Inst., Chamber of Commerce of U.S., Michigan Manufacturer, Nat'l Ass'n of Manu., Nat'l Ass'n of Home Builders and State Chamber of Oklahoma's Ass'n of Business and Industry, Amicus Curiae.

Elizabeth Ellen Teel, New Orleans, LA, for Legal Environmental Assistance Foundation, Inc., Louisiana Environmental Action Network, Louisiana Wildlife Federation, Maryland Conservation Council, St. Charles Environmental Coalition and St. John Citizens for Environmental Justice, Amicus Curiae.

Petition for Review of an Order of the Environmental Protection Agency.

Before JONES and SMITH, Circuit Judges, and FITZWATER, ¹ District Judge.

JERRY E. SMITH, Circuit Judge:

Pursuant to the Clean Water Act ("CWA"), 33 U.S.C. § 1251 et seq., the Environmental Protection Agency ("EPA") delegated to Louisiana the responsibility for administering the Louisiana Pollutant Discharge Elimination System ("LPDES"). In exchange for its approval, EPA required Louisiana to consult with the Fish and Wildlife Service ("FWS") and the National Marine Fisheries Service ("NMFS") before issuing permits. If FWS or NMFS determines that the proposed permit threatens endangered species--and if Louisiana refuses to modify the permit--EPA will veto the permit under its continuing oversight authority. American Forest and Paper Association ("AF & PA") challenges this rule as exceeding EPA's authority under the CWA. Because we agree that EPA lacked statutory authority, we grant the petition for review and vacate and remand the portion of the rule that imposes the consultation requirement and declares that EPA will veto any permit to which FWS or NMFS objects.

I.

Under the CWA, one needs a permit to discharge a pollutant. At least as an initial matter, permitting authority is vested in EPA through the National Pollutant Discharge Elimination System ("NPDES"). EPA may, however, delegate permitting authority to a state if the state demonstrates that it will comply with a list of enumerated requirements and that it will monitor and enforce the terms of the permits. See CWA § 402(b)(1)-(9), 33 U.S.C. § 1342(b)(1)-(9). EPA does not enjoy wide latitude in deciding whether to approve or reject a state's proposed permit program. "Unless the Administrator of EPA determines that the proposed state program does not meet [the specified] requirements, he must approve the proposal." Save the Bay, Inc. v. EPA, 556 F.2d 1282, 1285 (5th Cir.1977).

EPA retains oversight authority even when it delegates permitting authority to a state. Should the agency determine that a state is not complying with the CWA, it may withdraw its approval of the state program. EPA also retains oversight authority over individual permits issued under approved state programs. States are required to submit permit applications and proposed permits to EPA; the agency may veto a proposed permit if it concludes that the permit violates the CWA. See CWA § 402(d), 33 U.S.C. § 1342(d).

Until recently, EPA administered the permitting program in Louisiana through the NPDES. Before issuing a permit, EPA chose to consult with FWS and NMFS to ensure that endangered species would not be threatened by the discharges contemplated in the permit. When EPA announced plans to delegate the permitting program to Louisiana, environmental groups cried foul, pointing out that because the Endangered Species Act ("ESA") does not apply to the states, nothing would prevent the issuance of permits that might harm endangered species.

EPA then devised the following scheme: In exchange for approving Louisiana's program, EPA directed the Louisiana Department of Environmental Quality ("LDEQ") to submit proposed permits to FWS and NMFS for review. If the federal agencies agree that the proposed permit does not threaten endangered species, the permit may be issued. But if the federal agencies conclude that the permit does threaten endangered species--and if LDEQ refuses to modify the permit to the agencies' satisfaction--EPA will exercise its veto power and formally object to the permit. Louisiana consented to this arrangement, and EPA issued its final rule. See Approval of Application by Louisiana To Administer the National Pollutant Discharge Elimination System Program, 61 Fed.Reg. 47,932 (1996).

EPA invoked CWA § 304(i), 33 U.S.C. § 1314(i), as authority for attaching this condition to its approval of Louisiana's program. That section allows EPA to promulgate guidelines "establishing the minimum procedural and other elements" for state permitting programs. The agency also pointed to ESA § 7(a)(2) as justifying its action. That section provides:

Each Federal agency shall, in consultation with and with the assistance of the Secretary [of the Interior, Commerce, or Agriculture], insure that any action authorized, funded, or carried out by such agency ... is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species....

16 U.S.C. § 1536(a)(2). The spirit of this general mandate is echoed in the statement of congressional purpose underlying the ESA, 16 U.S.C. § 1531(c)(1), which declares it "the policy of Congress that all Federal departments and agencies shall seek to conserve endangered species and threatened species and shall utilize their authorities in furtherance of the purposes of this chapter."

II.

AF & PA did not participate in the agency proceedings below--a silence that EPA says precludes AF & PA from raising its objection in this court. The CWA grants the federal courts of appeals original jurisdiction over challenges to determinations regarding state permitting programs under § 402(b). Although any "interested person" may seek review of EPA's permitting decisions, see CWA § 509(b)(1), 33 U.S.C. § 1369(b)(1), EPA argues that a party that fails to participate during the public comment period waives its claims. The agency points to its extensive newspaper advertising as evidence that AF & PA was on notice of EPA's intent to approve Louisiana's program.

EPA has failed to identify any provision in the CWA that suggests a party's failure to comment waives its right to seek judicial review. The statute allows "any interested person" that promptly files an objection to seek review in this court. Other statutes allowing judicial review of agency decisions sweep far less broadly, requiring the petitioner to have been a party. See, e.g., 28 U.S.C. § 2344 (limiting right of review to "aggrieved parties"). We see nothing in the text of the statute that warrants the narrow reading EPA urges.

Moreover, we have never held that failure to raise an objection during the public notice and comment period estops a petitioner from raising it on appeal. EPA presented the same argument to us long ago, but we rejected it, observing that "EPA has cited no authority for the proposition that an argument not raised during the comment period may not be raised on review." City of Seabrook, Tex. v. EPA, 659 F.2d 1349, 1360 n. 17 (Former 5th Cir. Oct. 1981). In that case, EPA--as it does again here--relied on United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952), involving a challenge to an Interstate Commerce Commission action by a party that participated in a hearing and could have appealed the hearing officer's decision to the Commission. We characterized EPA's reliance on L.A. Tucker as "badly misplaced." City of Seabrook, 659 F.2d at 1360 n. 17.

We conclude that AF & PA's failure to participate during the public comment period does not rob this court of jurisdiction. Our decision in City of Seabrook remains valid:

The rule urged by EPA would require everyone who wishes to protect himself from arbitrary agency action not only to become a faithful reader of the notices of proposed rulemaking published each day in the Federal Register, but a psychic able to predict the possible changes that could be made in the proposal when the rule is finally promulgated. This is a fate this court will impose on no one.

Id. at 1360-61 (internal footnotes omitted). Estopping AF & PA from pursuing its claims would be especially unfair in that EPA modified its rule. The version initially proposed did not contain the consultation requirement; that provision was added only after environmental groups demanded additional protection for endangered species. AF & PA's failure to monitor the rule's evolution throughout the public comment period does not constitute waiver.

Finally, we note that the concerns underlying the exhaustion doctrine are not implicated here. That doctrine restrains courts from ruling on objections not considered by the agency by requiring a party to exhaust its administrative remedies before pursuing judicial review. See Unemployment Compensation Comm'n v. Aragon, 329 U.S. 143, 155, 67 S.Ct. 245, 251, 91 L.Ed. 136 (1946). During the public comment period, EPA was presented with detailed objections concerning the scope of endangered species protection under Louisiana's proposed program. ² (To be sure, these objections came from environmental groups seeking expanded protections, so it is ironic that AF & PA now seeks to preserve its claim on the basis of its opponents' complaints.) In any event, because the public comments regarding the ESA were sufficiently specific to prompt EPA to adopt the provision contested here, the agency cannot reasonably...