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Sixth Circuit Remands Portions of Kentucky's Water Quality Standards to EPA for Reconsideration

On September 3, 2008, the Sixth Circuit Court of Appeals issued a 24-page opinion vacating and remanding EPA's approval of certain antidegradation implementation provisions contained in Kentucky's water quality standards.

While holding that EPA properly approved the designation of Kentucky's impaired waterways as Tier I protected waters and the waterbody by waterbody approach to classification of waters, the court held that EPA's approval of six regulatory "exemptions" from the more stringent antidegradation review applicable to designated Tier II waters (the default designation for all Kentucky waters) was not supported by the record. The court's long awaited decision was issued in the case styled Kentucky Waterways Alliance et al. v. Johnson, Case No. 06-5614 after more than three years of litigation and, depending on the regulatory response by EPA and the Kentucky Energy and Environment Cabinet, may have widespread impact on future water discharge permitting in Kentucky.

Background: The Clean Water Act requires states to establish EPA-approved water quality standards, including an antidegradation policy and associated implementation rules assuring that the existing beneficial uses of a state's waterways are maintained and protected from further degradation. After a long history of repeated disapprovals from EPA beginning in 1997, Kentucky finally received full approval of its antidegradation policy and implementation regulation, set forth at 401 KAR 5:029 and 401 KAR 5:030, in 2005. Antidegradation review applies to new and expanded discharges of pollutants to waterways subject to the Clean Water Act, including municipal and industrial wastewater discharges, regulated storm water discharges, and discharges from coal mining operations.

Court upholds Kentucky's tiered approach to designating waters for antidegradation review . In their first claim, plaintiffs challenged EPA's approval of Kentucky's tiered approach to designating waters for purposes of antidegradation review. The court rejected the plaintiffs' claims on this issue, holding that it was proper for Kentucky to exclude impaired waters from the more stringent Tier II protection review procedures. In so holding, the court specifically found that Kentucky's practice of reviewing the quality of waterbodies on a holistic, rather than on a pollutant-by-pollutant basis, to determine the tier of protection to afford a waterbody was proper. The court further found that the record supported the exclusion of impaired waters from Tier II protection and that the resulting percentage of waterways that may receive protection under the chosen approach was not relevant to the criteria for approval of Kentucky's antidegradation regulation.

Court vacates and remands EPA's approval of de minimis Tier II review exclusions. Plaintiffs also challenged five provisions set forth at 401 KAR 5:030 Section 1(2) and (3) identifying certain discharges that Kentucky had exempted from more stringent Tier II antidegradation review requirements on the basis that they constituted de minimis or insignificant discharges. Although holding it proper for a state to exempt de minimis discharges from Tier II antidegradation review, the court, in a two-judge concurring opinion, vacated and remanded EPA's approval of Kentucky's de minimis exemptions on the grounds that the record failed support EPA's decision that the discharges at issue were in fact de minimis. Specifically ,the court held that EPA failed to analyze the cumulative effects of the exemptions and also failed to document calculations or estimates of the assimilative capacity of a waterbody that would be expected to be lost under the exemptions. Although not binding, in a separate opinion, Judge Clay opined that the upper limit of such cumulative assimilative capacity loss should be 10% in order to qualify as de minimis . The five categories of exempted discharges vacated by the court's ruling on this issue are: (1) storm water discharges subject to a general KPDES permit; (2) KPDES permit renewals and modifications that result in less than a 20% increase in pollutant loading; (3) domestic wastewater discharges where tertiary limits have been accepted; (4) industrial wastewater discharges where limits less than one half the water quality based limits have been accepted; and (5) discharges from concentrated animal feeding operations.

Court vacates and remands EPA's approval of Kentucky's coal mining discharge Tier II review exclusion. The court also addressed the plaintiffs' challenge to a Kentucky regulatory provision exempting all coal mining discharges from Tier II antidegradation review requirements on the basis that such requirements were satisfied by existing coal mining permit review regulations. The court ruled in favor of the plaintiffs on this claim, vacating the exemption on the basis that representations concerning Kentucky's implementation of antidegradation review for such sources were contained only in an informal letter to EPA and not within the regulation itself.

Next Steps. If the parties to the case decline to seek en banc review or to petition the U.S. Supreme Court for review of the decision, the Sixth Circuit's ruling will become final and the regulatory provisions vacated by the decision will be remanded to EPA for further review consistent with the court's opinion. At this time, it is not known how the Kentucky Division of Water and EPA will proceed.

If you have any questions regarding this or any other environmental legal issue, please feel free to contact a member of Greenebaum's Environmental and Natural Resources Team.

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