In a cooperative federalism model, federal and state governments work together to achieve a common goal. The Clean Water Act employs this model to accomplish many of its objectives, including that of restoring the nation’s polluted waters. Commentators have observed that cooperative federalism can be “messy.” Perhaps no one knows that better these days than U.S. District Judge Sylvia H. Rambo of the Middle District of Pennsylvania, who spent the better part of a year wading through the mire in an industry challenge to the Chesapeake Bay Total Maximum Daily Load for Nitrogen, Phosphorus and Sediment, promulgated December 29, 2010, by the U.S. Environmental Protection Agency. Last month, Rambo emerged from the swamp and issued a long-awaited decision in the case. When the mud had settled, the Chesapeake Bay TMDL was still standing.

In American Farm Bureau Federation v. EPA, Civil No. 1:11-CV-0067 (M.D. Pa.), several agricultural interests and others filed a complaint seeking a declaratory judgment and asking the court to vacate the Chesapeake Bay TMDL. A TMDL is a key component in the cooperative federalism framework that the Clean Water Act employs to restore impaired waters. Under that framework, states first establish, subject to EPA review, water quality standards, including the criteria that they deem necessary to protect various water uses. Next, states identify waters that fail to meet those standards and record them on lists (commonly referred to as 303(d) lists), which they submit to the EPA every two years for approval. Finally, for each of the impaired waters on the 303(d) lists, states must establish total maximum daily loads, or TMDLs. A TMDL is the total maximum daily load of a pollutant that is presently impairing a water body that the water body can assimilate from all sources of pollution within the watershed and still meet water quality standards. Just as a doctor might prescribe a target weight to improve the health of an overweight patient, states establish a target pollutant load to restore the ecological health of a water body that has been impaired by that pollutant.

In its regulations, the EPA defines a TMDL as the sum of the maximum amount of a pollutant that a body of water can receive from point sources (waste load allocations, or WLAs), nonpoint sources (load allocations, or LAs) and natural background. As this equation suggests, there are two ways that a state can reduce pollutant loads to a water body to meet the limit in a TMDL: It can reduce WLAs by ratcheting down effluent limitations in permits issued to point sources regulated through the National Pollutant Discharge Elimination System (NPDES) permit program, and/or it can reduce LAs by, for example, directing available federal funding to projects within the watershed designed to decrease pollution from nonpoint sources not regulated through the NPDES permit program. How a state decides to reduce pollutant load will inform how a state budgets a TMDL among WLAs and LAs (e.g., a state that wants to avoid imposing stringent limits on point source dischargers will assign more of the TMDL to WLAs than to LAs, thereby requiring significant reductions from nonpoint sources). As with water quality standards and 303(d) lists, states submit TMDLs to the EPA for review. Before the EPA approves a TMDL, it conducts what is known as a “reasonable assurance” analysis to ensure that the TMDL does not contain overly generous assumptions regarding the amount of nonpoint source pollution reduction that will occur. The Chesapeake Bay is the largest estuary in the United States, draining a 64,000-square-mile watershed covering large sections of six states (Virginia, Maryland, Pennsylvania, New York, Delaware and West Virginia) and the District of Columbia (collectively, the bay states). Although the Chesapeake Bay has been described as “one of the most biologically productive ecosystems in the world,” changes in land use over time have impaired its ecological health. A number of sources located throughout the watershed, including agricultural operations, urban and suburban stormwater runoff, and wastewater facilities, have been contributing excess nitrogen, phosphorus and sediment to the bay. These pollutants have caused algae blooms that deplete the oxygen that fish and shellfish need to survive and that obstruct the sunlight that sustains important underwater vegetation, resulting in dead zones unable to support aquatic life. After more than 30 years of agreements, amendments, schedules, goals, programs and strategies, all of which have proven unsuccessful in restoring the water quality of the Chesapeake Bay, the bay states and the EPA agreed that the EPA would establish a Chesapeake Bay TMDL with a target date of 2025 for when all pollution-control measures necessary to meet applicable water quality standards must be in place.

The EPA and the bay states developed target loads for nitrogen, phosphorus and sediment, which the bay states used to develop draft watershed implementation plans. These roadmaps for achieving target loads consisted of schedules for accomplishing reductions and identified programs and actions to achieve those reductions. The EPA conducted a “reasonable assurance” analysis on these draft plans following their submission. Where EPA found “reasonable assurance” lacking, it made adjustments, which were referred to as “backstop” allocations. The EPA then used the draft plans and backstop allocations to develop a draft Chesapeake Bay TMDL, which it published for a 45-day public comment period. During that time, the EPA continued to work with the bay states to strengthen their plans, effectively reducing to three the number of backstop allocations the EPA used to develop the final Chesapeake Bay TMDL. The largest and most complex TMDL ever promulgated, the Chesapeake Bay TMDL established allocations of 185.9 million pounds per year of nitrogen (a 25 percent reduction from current levels), 12.5 million pounds per year of phosphorus (a 24 percent reduction), and 6.45 billion pounds per year of sediment (a 20 percent reduction) among the bay states.

The gravamen of the plaintiffs’ complaint in the American Farm Bureau Federation case was that the Chesapeake Bay TMDL was an unlawful federal implementation plan that impeded on states’ rights. In her decision on cross-motions for summary judgment, Rambo agreed with the plaintiffs that TMDL implementation primarily rests with the states and that the Clean Water Act does not authorize the EPA to establish or otherwise take over TMDL implementation in the same way that it allows the EPA to issue its own water quality standards, 303(d) lists, or TMDLs in the absence of state submissions or when it finds state submissions to be inadequate. Nevertheless, Rambo rejected that states have exclusive authority over the implementation of TMDL allocations or that the Chesapeake Bay TMDL represents an unlawful implementation plan.

The plaintiffs advanced several arguments in support of their claim that the EPA unlawfully intruded on the bay states’ implementation authority. After finding that the plaintiffs possessed the requisite standing to pursue their claims despite failing to submit supporting evidence in their opening brief, Rambo systematically shot down all of these arguments, as summarized below.

Definition of TMDL. Although the EPA’s regulatory definition of TMDL as the sum of WLAs and LAs (plus natural background) has been in effect for more than 25 years and has been used to develop more than 25,000 TMDLs, the plaintiffs in this case were the first to challenge it, arguing that the Clean Water Act only authorizes the EPA to establish a total maximum daily load (i.e., one number). Applying traditional Chevron analysis, the court found that in defining a concept as complex and technical as a TMDL, the Clean Water Act left plenty of room for interpretation and that the EPA’s regulatory definition was reasonable and entitled to deference.

Detailed allocations. The plaintiffs argued that the EPA unlawfully micromanaged TMDL implementation by allocating pollutant loads among various sectors and by establishing WLAs for individual permitted facilities. The court found that assigning allocations during TMDL development, when agencies are working together in a coordinated fashion to evaluate the health of an entire water body, is reasonable, and that delegating such allocations to individual permit writers would be unworkable, particularly in a watershed extending across political boundaries. The court also rejected the contention that the EPA was solely responsible for the allocations in the TMDL, finding that the process of developing the TMDL was more representative of cooperative federalism than unlawful coercion, notwithstanding a handful of documents in the record that plaintiffs cited to argue the contrary.

Reasonable assurance and backstop allocations. The plaintiffs argued that the EPA’s reasonable-assurance requirement represented an unlawful attempt by the agency to insert itself into TMDL implementation, but the court found that reasonable assurance was little more than a standard upon which the EPA evaluated proposed allocations. The plaintiffs argued that the three backstop allocations imposed by the EPA where it found reasonable assurance lacking unlawfully overrode state decisions on TMDL implementation, but the court found ample support for the EPA’s backstop authority in several provisions of the Clean Water Act.

Insufficient flexibility. The plaintiffs argued that the TMDL created unlawfully binding allocations “by locking [detailed] allocations in, establishing a federal timeline for implementation, and reserving exclusive authority to revise them.” The court disagreed. While the EPA regulations require that NPDES permits contain effluent limitations for point sources that are “consistent with the assumptions and requirements of any available” WLA in a TMDL, the court observed (as did the TMDL itself) that EPA regulations do not require that effluent limitations be identical to the WLAs in a TMDL. States are also able to submit proposed modifications to the EPA for approval, and the TMDL contains a number of provisions offering additional flexibility, like those supporting water quality trading programs. The court rejected the plaintiffs’ argument that the federal grant program coerces state action, finding that states remain free to choose both if and how to implement the TMDL. Finally, the court noted that the 2025 implementation target established by the TMDL was the result of a consensus reached by the EPA and the bay states and not a unilateral directive from the EPA.

Watershed approach. The plaintiffs argued that the EPA only has the authority to issue allocations to tidal states and not to upstream, headwater states. The court found that while nothing in the Clean Water Act expressly authorizes the EPA to take a holistic, watershed approach to TMDL development, nothing in the act prohibits such an approach either, and the court found the approach to be consistent with the act and otherwise supported by EPA regulations. In endorsing the approach, the court was persuaded by Supreme Court precedent sustaining the EPA’s authority to regulate upstream pollution sources in order to achieve downstream water quality standards.

After concluding that the EPA did not exceed its authority under the Clean Water Act, the court turned to the plaintiffs’ other claims. The court first rejected the plaintiffs’ argument that EPA’s 45-day public comment period was unreasonable, finding that it exceeded the statutory minimum, that the TMDL drafting process had effectively been ongoing for more than a decade, and that the plaintiffs were unable to demonstrate prejudice. This inability to demonstrate prejudice was also fatal to the plaintiffs’ claims that they were deprived of key modeling information during the public comment period, as the court declined to be guided by a footnote in a U.S. Court of Appeals for the Third Circuit opinion suggesting that a regulated party automatically suffers prejudice when members of the public are denied access to the complete public record. Finally, the court found a rational relationship between allegedly flawed models and data that the EPA used to develop the TMDL and the reality that those models and data sought to represent. As such, the court rejected that their use was arbitrary and capricious.

Assuming the decision in the American Farm Bureau Federation case can survive the appeal filed earlier this week, the approach that the EPA took in developing the Chesapeake Bay TMDL is likely to become a national model that the agency employs to restore other impaired waters that overlap state boundaries, particularly where nonpoint sources are the prevailing sources of the impairment. That this approach can withstand legal challenge has now been established. As for whether it can succeed in restoring impaired waters like the Chesapeake Bay? On that matter, the jury is still out.

Brian G. Glass is a partner at Warren Glass, an environmental and water resources law practice. He draws on more than a decade of varied environmental law experience to help his clients design solutions to environmental problems that achieve multiple business objectives. He can be reached at bglass@warrenglasslaw.com.