Spencer Fane LLP Logo

Wastewater Mixing Zones, Blending Rules and the “Tyranny of Small Decisions”

On March 25, 2013, the U.S. Court of Appeals for the Eighth Circuit sent a clear message to the EPA and other federal agencies: guidance documents and interpretive memoranda do not qualify as APA-compliant rulemaking. Iowa League of Cities v. EPA, slip op. No. 11-3412 (8th Cir. March 25, 2013).

The decision’s immediate impact allows municipal wastewater treatment plants to use mixing zones or blended wastewater streams to satisfy their NPDES permit conditions during peak wet weather events. The Court’s broader warning at page 34 is, however, potentially more significant.

“As agencies expand on the often broad language of their enabling statutes by issuing layer upon layer of guidance documents and interpretive memoranda, formerly flexible strata may ossify into rule-like rigidity. An agency potentially can avoid judicial review through the tyranny of small decisions. Notice and comment procedures secure the values of government transparency and public participation, compelling us to agree with the suggestion that the APA’s notice and comment exemptions must be narrowly construed.” (Internal quotes and citation omitted, emphasis added.)

In other words, EPA cannot rely on guidance and memos to expand (or enforce) the nation’s environmental laws, but instead must go through the APA’s notice-and-comment rulemaking if it wishes to create binding regulations.

In this case, the members of the Iowa League of Cities (League) own and operate municipal wastewater treatment plants. Many of them hold Clean Water Act (CWA, 33 U.S.C. § 1251 et seq.) discharge permits issued by the State of Iowa which allow them to divert part of their incoming wastewater stream during peak wet weather events around a biological secondary treatment process and into a non-biological ballasted flocculation and sedimentation process called ACTIFLO before recombining the post-treatment wastewater streams prior to discharge. Some of the members also discharge their effluent into state-identified primary contact recreational waters within a permitted mixing zone.

The League asked EPA for confirmation that these treatment and discharge practices were allowed. EPA mostly said no, claiming that use of a bacterial mixing zone in primary contact recreational waters was prohibited under a 2008 headquarters memorandum to the EPA regions. EPA also said that using ACTIFLO would constitute blending and would be a prohibited bypass of normal secondary biological treatment unless there were “no feasible alternatives.”

After a first run at the Eighth Circuit in 2010 seeking direct jurisdiction review was dismissed at EPA’s request, the League asked Senator Charles Grassley (R. Iowa) for help. EPA sent the Senator explanatory letters in June and September of 2011 confirming that EPA would not allow the members to use bacterial mixing zones or post-treatment, pre-discharge blending. The League sued again, and this time the Eight Circuit kept the case.

The Court began with several jurisdictional findings: 1) EPA’s positions on blending and mixing zones were indeed final and binding agency promulgations in violation of the rulemaking notice and comment procedures established by the Administrative Procedure Act (APA, 5 U.S.C. § 500 et seq.); 2) these new “rules” established effluent limitations under the CWA and gave rise to direct jurisdiction in the Eighth Circuit; and 3) EPA was not entitled to an agency-deference standard of review because “whether and when an agency must follow the law is not an area uniquely falling within its own expertise. . .” Slip op. at 32.

The Court then resolved the merits of the substantive claims in favor of the League, finding that EPA’s new bacterial mixing zone rule “eviscerates state discretion” (slip op. at 35) and must be vacated, although EPA can reissue the rule using proper APA notice and comment procedures.

As for EPA’s new blending rule (also vacated by the Court), no such re-promulgation is possible. The Court determined that this rule clearly exceeds EPA’s statutory authority under the CWA by purporting to regulate effluent quality within a wastewater treatment plant’s internal process units and not at the ultimate end-of-pipe discharge point. “The EPA would like to apply effluent limitations to the discharge of flows from one internal treatment unit to another. We cannot reasonably conclude that it has the statutory authority to do so.” Slip op. at 41.

So what are the takeaway points of Iowa League of Cities? First, guidance is not rulemaking! If a regulator is relying on guidance, memos or letters to impose new requirements instead of to explain old ones, the regulated party can and should ask questions. Second, agencies must follow the notice and comment procedures of the APA if they want to issue binding and final rules. But third, if they do so, the time limits to challenge such are very tight (120 days from issuance of a final rule) and require legal evaluation and expertise.

If you find yourself in a situation similar to that of the League, Spencer Fane’s Environmental Practice Group members would be happy to help.