Supreme Court Declines Review of Second Circuit Decision Reinstating EPA Water Transfers Rule

The Supreme Court has declined to review the U.S. Court of Appeals for the Second Circuit’s January 2017 decision in Catskill Mountains Chapter of Trout Unlimited, Inc. et al. v. U.S. EPA reinstating the U.S. Environmental Protection Agency’s (the “EPA”) Water Transfers Rule, meaning the Second Circuit’s decision reinstating the Rule will stand. The Water Transfer Rule, issued by EPA in 2008, formalized EPA’s historic practice of excluding water transfers between water basins from the Clean Water Act’s (“CWA”) National Pollutant Discharge Elimination System (“NPDES”) permitting requirements after years of legal battles over EPA’s informal policies regarding interbasin transfers.

The Second Circuit, in a 2-1 split, reinstated the Water Transfers Rule relying on Chevron deference, overturning a decision by the U.S. District Court for the Southern District of New York. The case involved the transfer of water from the Schoharie Reservoir through the Shandaken Tunnel into the Esopus Creek in New York. The Second Circuit found that there was no clear meaning of “waters” for purposes of the Water Transfers Rule in the CWA, and applying Chevron deference, held that EPA’s interpretation of the CWA was reasonable, well-justified by EPA, and neither arbitrary nor capricious. The court acknowledged that requiring NPDES permits for water transfers would be burdensome and costly for permittees, and could disrupt existing water transfer systems. Interbasin transfers are common for drinking water supplies, irrigation, power generation and flood control.

A coalition of states led by New York filed a petition seeking Supreme Court review of the Second Circuit’s decision. Other participants included Connecticut, Delaware, Illinois, Maine, Michigan, Washington, and Canada’s Manitoba Province. An additional petition was also filed by environmental groups including Riverkeeper Inc., Theodore Gordon Flyfishers, and the Waterkeeper Alliance.