In re Stormwater Npdes Petition, 04-515.

• Decision Date: 25 August 2006
• Docket Number: No. 04-515.,04-515.
• Citation: 2006 VT 91,910 A.2d 824
• Parties: In re STORMWATER NPDES PETITION.
• Court: Vermont Supreme Court

910 A.2d 824

2006 VT 91

In re STORMWATER NPDES PETITION.

No. 04-515.

Supreme Court of Vermont.

August 25, 2006.

COPYRIGHT MATERIAL OMITTED

John F. Nicholls, Chair.

William H. Sorrell, Attorney General, and S. Mark Sciarrotta and Kevin O. Leske, Assistant Attorneys General, Montpelier, for Appellant.

R. Bradford Fawley, William J. Dodge, and Daniel P. Smith of Downs Rachlin Martin PLLC, Burlington, for Appellants/Intervenors.

Christopher M. Kilian, Conservation Law Foundation, and Mark E. Naud and Jamey Fidel, Vermont Natural Resources Council, Montpelier, for Appellees.

James W. Barlow, Montpelier, for Amicus Curiae Vermont League of Cities and Towns.

Bernard D. Lambek of Zalinger Cameron & Lambek, P.C., Montpelier, Richard S. Davis and Karen M. Hansen of Beveridge & Diamond, P.C. and Thomas Ward, National Association of Home Builders, Washington, D.C., for Amici Curiae National Association of Home Builders and Home Builders and Remodelers Association of Vermont.

Thomas F. Heilmann of Heilmann, Ekman & Associates, Burlington, for Amicus Curiae Vermont Association of Realtors.

James Murphy, Montpelier, and Patrick A. Parenteau and Julia LeMense Huff, Environmental and Natural Resources Law Clinic, South Royalton, for Amici Curiae Honorable Philip Henderson Hoff, Honorable George E. Little, Jr. and National Wildlife Federation.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

REIBER, C.J.

¶ 1. This appeal arises from a determination by the Vermont Water Resources Board that existing stormwater discharges into five brooks located within Chittenden County contribute to violations of Vermont Water Quality Standards, and therefore require federal discharge permits under the Clean Water Act, 33 U.S.C. §§ 1251-1387 (2000). Two separate appeals, one by a group of business organizations and the other by the Agency of Natural Resources, raise a variety of procedural issues relating to the Board's decision, as well as a direct challenge to its substantive ruling requiring the federal permits. We reject the procedural claims, but conclude that the Board erroneously encroached on the Agency's authority in assuming that the discharges contribute to violations of water quality standards, and therefore reverse the judgment and remand for additional proceedings before the Agency of Natural Resources.

¶ 2. To understand the facts and issues raised by this appeal, a summary of the regulatory backdrop is useful. Congress enacted the Clean Water Act (CWA or Act), to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a). In furtherance of this goal, the CWA prohibits the discharge of any pollutants into navigable waters unless the discharge complies with other provisions of the Act, including § 402. Id. § 1342. Section 402 authorizes the issuance of National Pollutant Discharge Elimination System (NPDES) permits for the discharge of pollutants notwithstanding the general prohibition. Congress empowered the Environmental Protection Agency (EPA), or a state agency duly certified by EPA, to enforce the NPDES permit system. Id. § 1342(a), (b). In Vermont, that agency is the Agency of Natural Resources (Agency or ANR).

¶ 3. In 1987, Congress amended the CWA by enacting the Water Quality Act. That law added § 402(p), which codified a two-phase regulatory approach to the discharge of pollutants specifically contained in stormwater runoff. Under this section, in Phase I, Congress prohibited EPA or state agencies from requiring NPDES permits for "discharges composed entirely of stormwater" until October 1994, with four exceptions: (1) discharges subject to an existing permit; (2) discharges associated with industrial activity; (3) discharges from an MS4 — a "municipal storm sewer system" — serving a population of 250,000 or more; and (4) discharges from an MS4 for a municipality with a population greater than 100,000 but less than 250,000. 33 U.S.C. § 1342(p)(2)(A)-(D). Section 402(p)(2) also vested EPA or the duly authorized state agency with "residual authority" to designate any other discharge as requiring a NPDES permit if it "contributes to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States." Id. § 1342(p)(2)(E).

¶ 4. Under the Water Quality Act, Congress required discharge permits for all so-called Phase I discharges, established a timetable for EPA to promulgate implementing regulations, and required EPA to study those discharges not identified as requiring a permit in Phase I and to issue new regulations based on the results of that study. Id. § 1342(p)(3)-(6). In 1990, EPA promulgated the so-called Phase I Rules. National Pollutant Discharge Elimination System Permit Application Regulation for Storm Water Discharges, 55 Fed.Reg. 47, 990 (Nov. 16, 1990) (codified at 40 C.F.R. pts. 122-24). In December 1999, after completing the required study, EPA issued the so-called Phase II Rules. National Pollutant Discharge Elimination System: Regulations for Revision of the Water Pollution Control Program Addressing Storm Water Discharges, 64 Fed.Reg. 68,722 (Dec. 8, 1999) (codified at 40 C.F.R. pts. 9, 122, 123 & 124). In addition to those discharges previously identified in Phase I, the Phase II Rules required NPDES permits for stormwater discharges from small municipal sewer systems and from construction activity disturbing between one and five acres. 40 C.F.R. § 122.26(a)(9)(i)(A)-(B) (2005).

¶ 5. Notably, the Phase II Rules also retained the residual designation authority of EPA and certified state agencies to require NPDES permits for any additional sources of stormwater pollution if they contribute to a violation of a water quality standard. Id. § 122.26(a)(9)(i)(D); see also 33 U.S.C. § 1342(p)(2)(E) (authorizing a NDPES permitting authority to designate for regulation "[a] discharge for which the Administrator or the State, as the case may be, determines that the stormwater discharge contributes to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States."). Indeed, the Phase II Rules not only preserved, but expanded the scope of the residual designation authority to include a "category of discharges within a geographic area" that contributes to the violation of a water quality standard or is a significant contributor of pollutants. 40 C.F.R. § 122.26(a)(9)(i)(D).

¶ 6. This case arose in June 2003, when the Conservation Law Foundation, later joined by the Vermont Natural Resources Council (hereafter jointly CLF), filed a petition with ANR seeking a determination that existing stormwater discharges into Potash, Englesby, Morehouse, Centennial, and Bartlett Brooks contribute to violations of the Vermont Water Quality Standards and therefore require NPDES permits under the CWA. The petition was filed pursuant to a provision of the federal stormwater regulations authorizing "[a]ny person [to] petition the Director to require a NPDES permit for a discharge which is composed entirely of storm water which contributes to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States." 40 C.F.R. § 122.26(f)(2). The petition was premised on findings by the Board in two earlier decisions involving state discharge permits that the five brooks in question did not meet Vermont Water Quality Standards; that the brooks were therefore listed on the federally mandated schedule of "impaired waters," known as the 303(d) list, 33 U.S.C. § 1313(d); and that existing discharges within the five watersheds contribute to the impairments.

¶ 7. In response to the petition, ANR sought guidance from EPA on the nature and scope of its residual designation authority. EPA, in response, advised that stormwater discharges, categorical or otherwise, must be evaluated on a "case-by-case basis" and that a permit "must be denied if the discharge would cause or contribute to a violation of water quality standards," but that otherwise "an agency should act reasonably in its exercise of discretion to designate (or not) sources based on available information and relevant considerations." EPA noted further that it had "not defined a threshold level of pollutant contribution" that would require a NPDES permit, but observed that discharges which contribute more than "de minimis" levels of pollutants would be a "reasonable" standard.

¶ 8. In September 2003, the Agency sent a letter to CLF — together with a copy of EPA's responsive memorandum — categorically denying the petition. The Agency indicated that it rejected CLF's claim that all existing stormwater discharges to impaired waters "irrespective of their size or character, or existing stormwater management practices require an NPDES permit solely because they contribute a measurable or detect[a]ble quantity of the pollutant causing the impairment." CLF appealed the Agency's denial to the Board under 10 V.S.A. § 1269 ("Any person or party ... aggrieved by an act or decision of [ANR] . . . may appeal to the board within thirty days."). Pomerleau Properties, Inc., Martin's Foods of South Burlington, Inc., and Greater Burlington Industrial Corp. (herafter "appellants"), together with ANR, were granted party status in the proceeding.¹

¶ 9. In April 2004, the Board issued an initial memorandum of decision resolving a variety of preliminary issues, including appellants' claim that the petition constituted a request for rulemaking over which the Board lacked jurisdiction. The Board rejected this and other procedural objections to its authority, and outlined the remaining issues to be resolved on appeal. These included the core issue of "whether all stormwater discharges into stormwater-impaired waters require NPDES permits, ipso facto, as [CLF] contend[s]" or whether, as ANR claimed, the decision "may involve other factors, such as the authority of...