Commonwealth Of Va. v. Blue Ridge Envtl. Def. League Inc

• Citation: 56 Va.App. 469,694 S.E.2d 290
• Decision Date: 29 June 2010
• Docket Number: Record No. 2221-09-2,02 September 2222
• Parties: COMMONWEALTH of Virginia, ex rel. VIRGINIA STATE WATER CONTROL BOARD and David K. Paylor, Director, Department of Environmental Qualityv.BLUE RIDGE ENVIRONMENTAL DEFENSE LEAGUE, INC., People's Alliance For Clean Energy, Barbara J. Crawford, Gary Muller and Arden “Tersh” Norton.Virginia Electric and Power Company, d/b/a Dominion Virginia Powerv.Blue Ridge Environmental Defense League, Inc., People's Alliance For Clean Energy, Barbara J. Crawford, Gary Muller and Arden “Tersh” Norton.
• Court: Court of Appeals of Virginia

56 Va.App. 469

694 S.E.2d 290

COMMONWEALTH of Virginia, ex rel. VIRGINIA STATE WATER CONTROL BOARD and David K. Paylor, Director, Department of Environmental Quality

v.BLUE RIDGE ENVIRONMENTAL DEFENSE LEAGUE, INC., People's Alliance For Clean Energy, Barbara J. Crawford, Gary Muller and Arden “Tersh” Norton.

Virginia Electric and Power Company, d/b/a Dominion Virginia Power

v.Blue Ridge Environmental Defense League, Inc., People's Alliance For Clean Energy, Barbara J. Crawford, Gary Muller and Arden “Tersh” Norton.

Record Nos. 2221-09-2, 2222-09-2.

Court of Appeals of Virginia,

Richmond.

June 29, 2010.

COPYRIGHT MATERIAL OMITTED

E. Duncan Getchell, Jr., State Solicitor General (William C. Mims, Attorney General; Robert L. Chaffe, Senior Assistant Attorney General; David C. Grandis, Assistant Attorney General, on briefs), for appellants Commonwealth of Virginia, ex rel. Virginia State Water Control Board and David K. Paylor, Director of the Department of Environmental Quality.

J. Tracy Walker (David E. Evans, Richmond; E. Duncan Getchell, Jr.; Darin K. Waylett, Richmond; Kristy A. Niehaus Bulleit; McGuireWoods LLP, Richmond; Hunton & Williams LLP, McLean, on briefs), for appellant Virginia Electric and Power Company, d/b/a Dominion Virginia Power.

James B. Dougherty (Robert L. Wise, Richmond; Law Office of J.B. Dougherty; Bowman and Brooke LLP, Richmond, on brief), for appellees.

Present: FELTON, C.J., HUMPHREYS, J., and CLEMENTS, S.J HUMPHREYS, Judge.

The Commonwealth and Virginia Electric and Power Company (“appellants”) appeal from an order of the Circuit Court of the City of Richmond (“circuit court”) setting aside a portion of the reissuance of a five-year water discharge permit for Dominion Virginia Power's North Anna Nuclear Power Station (“NANPS”). Specifically, appellants contend that the circuit court erred in (1) reversing the Virginia State Water Control Board (“SWCB”) and holding that the SWCB had not followed federal law as required by a state regulation where the SWCB had reasonably deferred to the Environmental Protection Agency's (“EPA”) interpretation of federal law and its own regulations; (2) reversing the SWCB based upon the circuit court's own independent reading of EPA regulations contrary to the EPA comment letter construing its own regulations and the EPA's consistent past practice which appellants contend were entitled to, but not given, great deference by the circuit court; and (3) finding de novo that the waste heat treatment facility (“WHTF”) is a “cooling lake” or “cooling pond” within the meaning of the former federal regulations rather than remanding for further factual determinations by the SWCB. For the following reasons, we agree with appellants and reverse the circuit court.

I. BACKGROUND

The record in this case is voluminous and complex, but the facts relevant to the issues before us on appeal are relatively straightforward and are essentially as follows. In 1971, Lake Anna ¹ was formed by the creation of a dam across the main stem of the North Anna River in Louisa and Spotsylvania counties to provide cooling water to NANPS, a nuclear power station that produces electricity by steam turbine generators. NANPS went into operation in 1978. The impounded water is divided into two sections. Lake Anna contains a large 9,600 acre reservoir that was filled by December 1972. The WHTF is comprised of 3,400 acres subdivided further by dams into three “lagoons.” The purpose of the WHTF is to allow the heated water condensed from the steam turbines from NANPS to cool to ambient temperature by flowing from one “lagoon” to the next prior to its discharge into Lake Anna.

Since 1977, Dominion has obtained a series of five-year Virginia Pollutant Discharge Elimination System (“VPDES”) permits from the SWCB to discharge water from the WHTF into Lake Anna. The SWCB has consistently taken the position in the permit that a separate permit was not required for the discharge of heated water from NANPS into the WHTF because it classified the WHTF as a “waste treatment system” falling under an exception in the federal Clean Water Act, EPA regulations, and state regulations for waste treatment systems.²

On June 28, 2005, Dominion applied for the reissuance of the VPDES permit with the Virginia Department of Environmental Quality's (“DEQ”) SWCB staff. In 2007, several non-profit organizations and individuals (“appellees”) living near Lake Anna and the WHTF challenged the SWCB's regulation of NANPS's thermal discharges in the permit, and specifically challenged the reissuance of the permit on the grounds that the discharges from NANPS into the WHTF required a separate permit.³

The DEQ requested an official advisory opinion from the Attorney General of Virginia on this issue in compliance with Code § 2.2-505. ⁴ The Attorney General's opinion, which he released on November 30, 2006, stated that the SWCB did not have “legal authorization to impose limitations on thermal effluent involved in discharges by [NANPS]” into the WHTF because the waste treatment system exception in 9 VAC 25-31-10 excludes the WHTF from the discharge permit regulations. In addition, he noted that the SWCB had historically declined to regulate the WHTF; and further, if there was any requirement for interpretation of the regulation, the agency's interpretation was entitled to “great deference” unless it was arbitrary and capricious. The Attorney General also noted that the federal waste treatment system exception specifically excluded “cooling ponds” unlike the state waste treatment system exception, but that the EPA had approved the SWCB regulations, which did not contain this exclusion.⁵

On September 20, 2007, the EPA's Region III Director of the Water Protection Division submitted a comment to the proposed VPDES permit by letter (“EPA Letter”) to the DEQ. In the EPA Letter, the director specifically stated “[f]ollowing this review, and in the exercise of EPA's discretion in NPDES permit oversight matters, EPA does not object to [ ]DEQ's issuance of the North Anna VPDES permit.” The director also noted the DEQ's determination that the WHTF is a “waste heat treatment facility” subject to the waste treatment system exception, the Attorney General's confirmation of the DEQ's determination that the WHTF was subject to the exception, and the history of the federal regulation and exception. The EPA director then concluded that the “EPA is not objecting to [ ]DEQ's determination on the regulatory status of the [WHTF].” (Emphasis added).

On October 25, 2007, the SWCB reissued the NANPS permit without regulating the discharge of heated water from NANPS into the WHTF. Appellees then pursued an appeal of right under the Virginia Administrative Process Act to the circuit court. On February 20, 2009, the circuit court determined that Virginia law required regulation of the discharges from the power plant into the WHTF because the waste treatment system exception contained in the EPA regulations did not apply to the WHTF. The circuit court specifically held that the exception is inapplicable because the WHTF is a “cooling lake,” which is included in the definition of “waters of the United States.” ⁶

On February 27, 2009, appellants filed a joint motion for reconsideration of the February 20, 2009 ruling in light of Ohio Valley Environmental Coalition v. Aracoma Coal Co., 556 F.3d 177 (4th Cir.2009) petition for cert. filed, 78 U.S.L.W. 3099 (U.S. Aug. 26, 2009) (No. 09-247), a decision by the United States Court of Appeals for the Fourth Circuit which upheld the application of the federal waste treatment system exception to systems created in waters of the United States for salt mining purposes. However, the circuit court disagreed, and in its June 8, 2009 order held that the factual differences between this case and Ohio Valley warranted a different conclusion. Specifically, the circuit court reasoned that the SWCB's application of the waste treatment system exception in this case was inconsistent with federal regulations, and not entitled to deference because a state agency's discretion “cannot be exercised in a manner ‘inconsistent with the regulation.’ ”

On September 14, 2009, the circuit court entered the final order holding that Virginia law required state regulation of the WHTF consistent with the circuit court's interpretation of federal EPA regulations. Specifically, the circuit court held that the SWCB was required to regulate the discharge of heated water from NANPS into the WHTF due to the fact that the WHTF is a “water [ ] of the United States” as defined by federal regulation; and because the circuit court classified the WHTF as a “cooling lake,” it held that the WHTF does not fall under the “waste treatment systems” exemption.⁷ Thus, the circuit court held the SWCB erred as a matter of law in declining regulatory jurisdiction over the WHTF. In declining to regulate the WHTF, the circuit court held that the SWCB, when it reissued the NANPS permit, violated Virginia State Water Control Law VPDES regulations, and relevant portions of the Clean Water Act. More specifically, the circuit court held that “to the extent the state is protecting less than what is protected by the C[lean] W[ater] A[ct], the state is violating state law.” The circuit court then remanded the permit back to the SWCB for further proceedings consistent with its holding.

This appeal followed.

II. ANALYSIS

Appellants argue that the circuit court erred in (1) finding the SWCB erred by failing to conduct an independent assessment of compliance with federal law and in deferring to the EPA Letter; (2) failing to defer to the EPA's interpretation of federal law by reaching the merits of the meaning of federal law and misapprehending that law; (3) failing to accord the appropriate deference to the EPA's interpretation of federal regulations by concluding that the federal exception does not apply; and (4) remanding and directing the SWCB to issue the permit...