S. Cal. Alliance of Publicly Owned Treatment Works v. U.S. Envtl. Prot. Agency

• Decision Date: 05 August 2021
• Docket Number: No. 19-15535,19-15535
• Citation: 8 F.4th 831
• Parties: SOUTHERN CALIFORNIA ALLIANCE OF PUBLICLY OWNED TREATMENT WORKS; Central Valley Clean Water Association ; Bay Area Clean Water Agencies, Plaintiffs-Appellants, v. U.S. ENVIRONMENTAL PROTECTION AGENCY ; Deborah Jordan, Acting Regional Administrator, United States Environmental Protection Agency, Region IX, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

8 F.4th 831

SOUTHERN CALIFORNIA ALLIANCE OF PUBLICLY OWNED TREATMENT WORKS; Central Valley Clean Water Association ; Bay Area Clean Water Agencies, Plaintiffs-Appellants,

v.U.S. ENVIRONMENTAL PROTECTION AGENCY ; Deborah Jordan, Acting Regional Administrator, United States Environmental Protection Agency, Region IX, Defendants-Appellees.

No. 19-15535

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 8, 2020 San Francisco, California

Filed August 5, 2021

Melissa A. Thorme (argued) and Patrick F. Veasy, Downey Brand LLP, Sacramento, California, for Plaintiffs-Appellants.

John D. Gunter II (argued), Michael C. Gray, and Leslie M. Hill, Attorneys; Eric Grant, Deputy Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; for Defendants-Appellees.

Before: Eric D. Miller and Danielle J. Forrest,^* Circuit Judges, and Patrick J. Schiltz,^** District Judge.

MILLER, Circuit Judge:

This case involves a challenge to nonbinding guidance that the Environmental Protection Agency issued to recommend a statistical method for assessing water toxicity. The Administrative Procedure Act allows a plaintiff to challenge only final agency action, and an agency's action is final only if it imposes legal consequences. Because the guidance at issue imposes no such consequences, we conclude that the APA does not permit this challenge, and we affirm the district court's judgment in favor of the agency.

The Clean Water Act prohibits "the discharge of any pollutant by any person" into the waters of the United States without a permit. 33 U.S.C. § 1311(a). Although the EPA may issue discharge permits, the Act also allows it to delegate permitting responsibility to the States. Id . § 1342(b). "If [permitting] authority is transferred, then state officials—not the federal EPA—have the primary responsibility for reviewing and approving ... discharge permits, albeit with continuing EPA oversight." National Ass'n of Home Builders v. Defenders of Wildlife , 551 U.S. 644, 650, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007). State permitting programs must meet minimum requirements set by EPA regulations. 40 C.F.R. §§ 122.44, 123.25(a)(15). The EPA has transferred permitting authority to 47 States, including California. NPDES State Program Authority , EPA, https://www.epa.gov/npdes/npdes-state-program-authority (last visited July 28, 2021).

The EPA takes several measures to ensure that any discharge into public waters is safe and nontoxic. Its regulations entirely ban permitholders from discharging certain pollutants and severely limit discharging others. See, e.g. , 40 C.F.R. §§ 129.100 – 129.105. And the regulations require States to establish similar limitations on the amounts of specific pollutants that permitholders can discharge. Id. § 131.11. But even if a discharge complies with the limits on individual pollutants, it might still be toxic because it contains a combination of pollutants, or because it contains substances that federal or state regulators have not yet found to be toxic. To address those possibilities, the EPA also requires certain permitholders to pass a test called a "whole effluent toxicity" (WET) test. Id. § 122.44(d)(1)(iv). A WET test measures the aggregate effect of a discharge on aquatic organisms such as minnows by exposing a test population of organisms to a discharge and counting how many die or become immobilized. See 60 Fed. Reg. 53,529, 53,532 (Oct. 16, 1995).

Because a WET test does not measure specific levels of pollutants but instead measures toxicity based on the response of aquatic organisms, the regulations must define what is considered toxic in a way that accounts for variations in how different populations of organisms may respond to identical samples. The 1995 regulations incorporated three manuals on WET testing—which in turn included several recommended statistical methods—and noted that any "changes" to the manuals "will be published in the Federal Register prior to their effective date for regulatory purposes." 60 Fed. Reg. at 53,532, 53,540. In 2002, the EPA updated the manuals but declined to "include[ ] ... alternative statistical methods"; it noted, however, that the recommended statistical methods "are not the only possible methods of statistical analysis." 67 Fed. Reg. 69,952, 69,964 (Nov. 19, 2002).

The initial WET test regulations aimed to limit false positive results—results that incorrectly state that a sample is toxic—to no more than 5 percent. See 67 Fed. Reg. at 69,968. In June 2010, the EPA issued the guidance at issue here, explaining how to use a new statistical method called the Test of Significant Toxicity (TST). Among other things, the TST aims to limit false negative results—results that incorrectly state that a sample is nontoxic—by adopting a null hypothesis that a sample is toxic. In other words, the TST presumes that a sample is toxic absent statistically significant evidence to the contrary. The EPA explained that it believed adopting that null hypothesis increases the statistical power of the TST—the likelihood that it will correctly classify samples as toxic or nontoxic—compared to the methods authorized by the 1995 and 2002 regulations, which did not control for false negatives. The EPA has amended the relevant regulations governing WET tests several times since issuing the 2010 guidance, but it has never promulgated the TST as a formal rule. See 77 Fed. Reg. 29,758 (May 18, 2012) ; 80 Fed. Reg. 8,956 (Feb. 19, 2015) ; 82 Fed. Reg. 40,836 (Aug. 28, 2017).

Plaintiffs are trade associations whose members are California municipal agencies that operate wastewater treatment plants. In 2014, plaintiffs brought an action in the Eastern District of California to challenge the EPA's use of the TST. Plaintiffs alleged that the agency violated the APA and the Clean Water Act when it approved California's application to use the TST as an "alternative test procedure" for permits under 33 U.S.C. § 1314(h) and 40 C.F.R. §§ 136.3(a), 136.5. After the complaint was filed, the EPA withdrew its approval of California's alternative test procedure, and the district court dismissed the case as moot.

After unsuccessfully seeking reconsideration of the dismissal, plaintiffs sought to reopen the case to amend their complaint. Although most of the original complaint had focused on the alternative test procedure, some allegations related directly to the EPA's use of the TST and its issuance of the 2010 guidance, and plaintiffs sought to expand on those allegations in the amended complaint. In October 2016, the district court denied the motion, concluding that "[i]t makes no sense ... to clumsily tack such a new claim to [plaintiffs’] original [alternative-test-procedure] challenge via a motion for reconsideration of a prior motion for reconsideration."

In December 2016, plaintiffs brought the action that is now before us. Plaintiffs alleged that the EPA had violated the APA by issuing the TST guidance without following notice-and-comment rulemaking procedures, and that the EPA had violated its own regulations by requiring and using the TST in discharge permits. The district court dismissed the complaint, in relevant part, on the ground that it was barred by the APA's six-year statute of limitations. See 28 U.S.C. § 2401(a). The court reasoned that plaintiffs "fundamentally take procedural issue with the EPA's failure to formally promulgate the 2010 TST Guidance pursuant to notice-and-comment requirements," so the limitations period expired in June 2016, six years after the guidance was adopted. The court stated that because it had determined that plaintiffs’ challenge was untimely, it did not need to "address whether the 2010 TST Guidance ... constitutes a final agency action."

Plaintiffs amended their complaint to allege that the EPA's actions were ultra vires and in violation of the Clean Water Act. The district court determined that "[a]dding this label ... does nothing to change the substance of [p]laintiffs’ allegations," so it again dismissed the complaint, this time with prejudice, in a three-page order that "incorporated" its prior order "in its entirety." Plaintiffs timely appealed from that order.

As a threshold matter, the EPA suggests that we should ignore plaintiffs’ challenges to the district court's first dismissal order because plaintiffs named only the second dismissal order in their notice of appeal. The first dismissal order was not an appealable final judgment because the district court had allowed leave to amend; only the second order was a final judgment. See Disabled Rts. Action Comm. v. Las Vegas Events, Inc. , 375 F.3d 861, 870 (9th Cir. 2004). But we have held that "[a]n appeal from a final judgment draws in question all earlier, non-final orders and rulings which produced the judgment." Litchfield v. Spielberg , 736 F.2d 1352, 1355 (9th Cir. 1984). And here, the district court expressly stated that its second dismissal order "incorporated" the first order "in its entirety." We may therefore consider plaintiffs’ arguments relating to both orders.

Although plaintiffs advance a variety of different legal theories, all of them challenge what plaintiffs describe as the EPA's "requirement, use, allowance, and promotion" of the 2010 guidance, which "created and recommended use of statistical and other toxicity testing procedures." That guidance, plaintiffs assert, "is ultra vires and exceeds [the EPA's] statutory authority because the guidance document was not promulgated ... as a formal rule under the APA." As we have explained, the district court determined that plaintiffs’ challenge was untimely. We review the district court's dismissal de novo and "may affirm on any ground supported by the record." Karasek v. Regents of Univ. of Cal. , 956 F.3d 1093, 1104 (9th Cir. 2020). We find it unnecessary to consider the timeliness of the complaint because we affirm the dismissal on the alternative ground that the...