Amer Forest & Paper v. EPA

REVISED, April 23, 1998

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
_______________

No. 96-60874
_______________

AMERICAN FOREST AND PAPER ASSOCIATION,

Petitioner,

VERSUS

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

_________________________

Petition for Review of an Order of
the Environmental Protection Agency
_________________________
March 30, 1998

Before JONES and SMITH, Circuit Judges, and FITZWATER,* 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

*
District Judge of the Northern District of Texas, sitting by designation.
the proposed permit threatens endangered speciesSSand if Louisiana

refuses to modify the permitSSEPA 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

2
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 speciesSSand if LDEQ refuses to

modify the permit to the agencies' satisfactionSSEPA 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

3
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 belowSSa

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

4
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, EPASSas it does again hereSSrelied

on United States v. L.A. Tucker Truck Lines, Inc.,

344 U.S. 33 (1952), involving a challenge to an Interstate Commerce

Commission action by a party that participated in a hearing and

5
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 (1946). During the public comment period, EPA

was presented with detailed objections concerning the scope of

6
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 claim that it has been

denied the opportunity to consider the issue.

III.

Before we can reach the merits of its claim, AF&PA must

demonstrate that it has standing to sue. It must first show that

it has suffered an “injury in fact”SSthat is, an actual and

imminent injury, not one that is merely conjectural or

hypothetical. It also must show a causal connection between its

injury and the complained-of conduct. Finally, it must establish

that its injury is likely to be redressed by a favorable decision.

Bennett v. Spear, 117 S. Ct. 1154, 1163 (1997). EPA claims that

AF&PA cannot meet any of these requirements.

A.

AF&PA's members include permit holders in Louisiana. Although

AF&PA has not alleged that any of its members has applied for a new

permit or sought to modify an existing one, it argues that injury

2
For example, an environmental group from Tulane Law School specifically
charged that “the Endangered Species Act will become unavailable to citizens if
[the Louisiana] DEQ becomes the administrator of the NPDES program.”

7
is imminent, in the form of costs of compliance with EPA's new

rule, including delays in permitting and the added risk that an

application will be denied. EPA says AF&PA's alleged injury is

purely hypothetical, because it rests on a chain of speculation.

In EPA's view, this chain is linked by a series of dubious

assumptions about the circumstances under which EPA might exercise

its veto power.

We do not find the permit holders' injuries speculative. As

an initial matter, permits are not eternal: They must be renewed

every five years. Modifications to existing permits must also be

cleared with FWS and NMFS. Moreover, EPA has already identified

the circumstances under which it will veto a proposed permit. See

61 Fed. Reg. at 47,934 (“EPA will formally object to the issuance

of the draft permit if FWS determines that the action is likely to

jeopardize the continued existence of a listed or proposed species

or destroy designated critical habitat.”) (emphasis added). Permit

holders' imminent need to comply, coupled with EPA's frank

announcement of its intentions, belies the agency's claim that any

injury is speculative.3

B.

EPA next launches a redressability challenge, contending that

Louisiana's voluntary commitment to cooperate with the federal

agencies would withstand a court decision striking down the rule's

3
EPA's claim that AF&PA has not shown causationSSa link between the
agency's decision and the permit holders' injury-in-factSSis also premised on the
allegedly speculative nature of the injury. It fails for the same reason.

8
consultation requirement. EPA correctly points out that Louisiana

is free to consult with FWS and NMFS in making permitting

decisions. But this argument misses the real question: whether EPA

may promulgate a rule requiring Louisiana to obtain the federal

government's blessing before issuing a permit. In this instance,

a permissible end does not validate impermissible means. EPA's

redressability challenge, accordingly, is meritless.

IV.

The final threshold issue is ripeness. In determining whether

an issue is ripe for review, we must balance the fitness of the

issues for judicial decision with the hardship to the parties of

withholding review. Chevron U.S.A., Inc. v. Traillour Oil Co.,

987 F.2d 1138, 1153-54 (5th Cir. 1993) (“[T]he ripeness inquiry

focuses on whether an injury that has not yet occurred is

sufficiently likely to happen to justify judicial intervention.”).

Ordinarily we wait until a rule has been applied before granting

review; this prudential concern loses force, however, when the

question presented is purely legal. New Orleans Pub. Serv., Inc.

v. Council of City of New Orleans, 833 F.2d 583, 587 (5th Cir.

1987).

The instant case concerns a purely legal issue: whether EPA

enjoys the statutory authority to require Louisiana, before it may

issue a discharge permit, to consult with federal agencies

regarding the impact on endangered species. Contrary to EPA's

assertion, there are no facts awaiting development that would aid

9
our decision; to the extent any factual questions even exist, they

are overshadowed by the legal question that towers over this case.

Because deferring review will impose an immediate, significant

burden on the petitionerSSand because we are confronted with a pure

question of lawSSthis dispute is ripe for review.

V.

EPA contends that its rule is authorized by CWA § 304(i),

33 U.S.C. § 1314(i), which directs EPA to promulgate guidelines

governing state permitting programs under CWA § 402(b), 33 U.S.C.

§ 1342(b). EPA also suggests that its decision is not only

authorized but compelled by ESA § 7(a)(2), 16 U.S.C. § 1536(a)(2).

That section directs federal agencies to consult with FWS and NMFS

before undertaking any “agency action,” to ensure that the action

will not threaten an endangered species.

A.

We review EPA's interpretation of the CWA in two steps.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S.

867 (1984). We first ask whether Congress has directly spoken to

the precise question at issue. If so, we must defer to the clearly

expressed congressional intent. If notSSif the statute is silent

or ambiguousSSwe ask whether the agency's interpretation is based

on a permissible construction of the statute. Id. at 842-43. We

do not, however, accord Chevron deference to EPA's interpretation

of the ESA, because the ESA is not a statute that EPA is charged

10
with administering. See Adams Fruit Co. v. Barrett, 494 U.S. 638,

649-50 (1990).

B.

Specifically, CWA § 402(b), 33 U.S.C. § 1342(b), provides that

the EPA Administrator “shall approve” proposed state permitting

programs that meet nine specified requirements. The key question

is whether EPA may deny a state's proposed program based on a

criterionSSthe protection of endangered speciesSSthat is not

enumerated in § 402(b).

EPA calls our attention to CWA § 304(i), 33 U.S.C. § 1314(i),

construing that section as authorizing the agency to regard the

nine requirements § 402(b) as minimum, not exhaustive, criteria.4

EPA further contends that because nothing in § 402(b) prohibits EPA

from adding additional criteria, its interpretation of the statute

is reasonable and worthy of deference under Chevron.

We cannot agree. The language of § 402(b) is firm: It

provides that EPA “shall” approve submitted programs unless they

fail to meet one of the nine listed requirements. We interpreted

this language as non-discretionary in Save the Bay, Inc. v. EPA,

556 F.2d 1282 (5th Cir. 1977), noting that “[t]he Amendments [to

the CWA] set out the full list of requirements a state program must

meet . . . . Unless the Administrator of EPA determines that the

4
Section 304(i) provides: “The Administrator shall . . . promulgate
guidelines establishing the minimum procedural and other elements of any State
program under Section 1342 of this title which shall include . . . monitoring
requirements . . . reporting requirements . . . enforcement provisions; and . . .
funding, personnel qualifications, and manpower requirements . . . .”

11
proposed state program does not meet these requirements, he must

approve the proposal.” Id. at 1285 & n.3. See also Natural

Resources Defense Council v. EPA, 859 F.2d 156, 174 (D.C. Cir.

1988); Citizens for a Better Env't v. EPA, 596 F.2d 720, 722 (7th

Cir. 1979).

EPA's claim is further weakened by CWA § 402(b)(6), 33 U.S.C.

§ 1342(b)(6), which grants EPA veto power over a proposed permit if

the Secretary of the Army concludes that the discharges

contemplated by the permit would substantially impair anchorage and

navigation. Congress could have, but did not, grant EPA an

analogous veto power to protect endangered species.

Nothing in § 304(i) undermines this conclusion. That

subsection simply directs EPA to issue regulations governing the

approval process for state programs. There is no hint that

Congress intended to grant EPA authority to erect additional

hurdles to the permitting process beyond those expressly noted in

§ 402(b). Moreover, neither section even mentions endangered

species or the ESA.5 The statute's plain language directs EPA to

approve proposed state programs that meet the enumerated criteria;

particularly in light of the command “shall approve,” § 304(i)

cannot be construed to allow EPA to expand the list of permitting

requirements. Applying Chevron, we conclude that Congress has

spoken directly to the precise question at issue: EPA's discretion

lies not in modifying the list of enumerated criteria, but simply

5
EPA's own regulations identifying the grounds on which the agency might
object to state permits are similarly silent: They make no mention of protection
of endangered species. See 40 C.F.R. § 123.44(c).

12
in ensuring that those criteria are met.

C.

In American Iron & Steel Inst. v. EPA, 115 F.3d 979 (D.C. Cir.

1997) (“AISI”), the court concluded that EPA may require states to

include provisions in certain permitting programs to ensure the

protection of endangered species. EPA argues that AISI's logic is

applicable to the instant case.

AISI is distinguishable, however, in that the case arose under

a different provision of the CWASS§ 118(c)(2), 33 U.S.C.

§ 1268(c)(2). That section directs EPA to promulgate “water

quality guidance” for the Great Lakes. But § 118(c)(2) is

structured quite differently from § 402: The former grants EPA

authority to specify pollutant limits for the Great Lakes and

develop “guidances” to which state programs must conform; the

section does not direct the agency to approve state programs that

meet certain requirements.

In addition to this far broader grant of authority,

§ 118(c)(2) specifically mentions that EPA's development of

pollutant limits should aim to protect aquatic life and wildlife in

the Great Lakes. The AISI court relied on this language in

concluding that EPA did not exceed its statutory authority under

§ 118(c):

We uphold this portion of the Guidance, but not because
of the ESA. Section 118(c)(2) provides that the Guidance
“shall specify numerical limits on pollutants in ambient
Great Lakes waters to protect human health, aquatic life,
and wildlife, and shall provide guidance to the Great
Lakes States on minimum water quality standards . . . .”

13
 (emphasis added) This is all the authority the EPA
needed to promulgate regulations designed to protect
endangered, threatened and other species in the Great
Lakes System.

115 F.3d at 1003. AISI's reasoning, insofar as it concerns a

section of the CWA that materially differs in language and purpose,

is inapplicable here.

D.

Finally, EPA argues that ESA § 7(a)(2), when construed

alongside the Court's broad reading of the statute in Tennessee

Valley Auth. v. Hill, 437 U.S. 153, 173 (1978), compels EPA to do

everything reasonably within its power to protect endangered

species. The flaw in this argument is that if EPA lacks the power

to add additional criteria to CWA § 402(b), nothing in the ESA

grants the agency the authority to do so. Section 7 of the ESA

merely requires EPA to consult with FWS or NMFS before undertaking

agency action; it confers no substantive powers.6

The District of Columbia Circuit construed ESA § 7(a)(2) in

Platte River Whooping Crane Trust v. Federal Energy Regulatory

Comm'n, 962 F.2d 27 (D.C. Cir. 1992), holding that the statute

“does not expand the powers conferred on an agency by its enabling

act,” but rather directs the agencies to “utilize” their existing

powers to protect endangered species. Id. at 34. In that case,

6
Whether EPA's approval of Louisiana's permitting program constitutes
“agency action” for ESA purposes is largely beside the point. Even if EPA were
required to consult with the agencies before approving Louisiana's program, EPA
lacks authority to modify the plain language of the CWA by adding to the list of
enumerated requirements.

14
the petitioner, Whooping Crane Trust, pressed virtually the same

argument EPA advances here. The court observed:

The Trust reads section 7 essentially to oblige the
[Federal Energy Regulatory Commission] to do “whatever it
takes” to protect the threatened and endangered species
that inhabit the Platte River basin; any limitations on
FERC's authority contained in the [Federal Power Act] are
implicitly superseded by this general command. . . . We
think the Trust's interpretation of the ESA is far-
fetched.

Id. We agree that the ESA serves not as a font of new authority,

but as something far more modest: a directive to agencies to

channel their existing authority in a particular direction. The

upshot is that EPA cannot invoke the ESA as a means of creating and

imposing requirements that are not authorized by the CWA.

Accordingly, we GRANT the petition for review and VACATE the

portion of the rule that imposes the consultation requirement and

declares that EPA will reject any proposed permit to which FWS or

NMFS objects. This matter is REMANDED to the EPA for further

appropriate proceedings.7

7
The Motion of Amici Curiae for Clarification or Partial Reconsideration
is denied as moot.

15