14‐1823 (L) Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2015 4 (Argued: December 1, 2015 Decided: January 18, 2017) 5 Docket Nos. 14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003

6 7 Catskill Mountains Chapter of Trout Unlimited, Inc., Theodore Gordon 8 Flyfishers, Inc., Catskill‐Delaware Natural Water Alliance, Inc., Federated 9 Sportsmenʹs Clubs of Ulster County, Inc., Riverkeeper, Inc., Waterkeeper 10 Alliance, Inc., Trout Unlimited, Inc., National Wildlife Federation, Environment 11 America, Environment New Hampshire, Environment Rhode Island, 12 Environment Florida, State of New York, Connecticut, Delaware, Illinois, Maine, 13 Michigan, Minnesota, Missouri, Washington, 14 Plaintiffs‐Appellees, 15 16 Government of the Province of Manitoba, Canada, 17 Consolidated Plaintiff‐Appellee, 18 19 Miccosukee Tribe of Indians of Florida, Friends of the Everglades, Florida 20 Wildlife Federation, Sierra Club, 21 Intervenor Plaintiffs‐Appellees,

22 v.

23 United States Environmental Protection Agency, Gina McCarthy, in her official 24 capacity as Administrator of the United States Environmental Protection Agency, 25 Defendants‐Appellants‐Cross Appellees, 26 27 State of Colorado, State of New Mexico, State of Alaska, Arizona Department of 28 Water Resources, State of Idaho, State of Nebraska, State of North Dakota, State 29 of Nevada, State of Texas, State of Utah, State of Wyoming, Central Arizona 30 Water Conservation District, Central Utah Water Conservancy District, City and 31 County of Denver, by and through its Board of Water Commissioners, City and 14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 County of San Francisco Public Utilities Commission, City of Boulder [Colorado], 2 City of Aurora [Colorado], El Dorado Irrigation District, Idaho Water Users 3 Association, Imperial Irrigation District, Kane County [Utah] Water Conservancy 4 District, Las Vegas Valley Water District, Lower Arkansas Valley Water 5 Conservancy District, Metropolitan Water District of Southern California, 6 National Water Resources Association, Salt Lake & Sandy [Utah] Metropolitan 7 Water District, Salt River Project, San Diego County Water Authority, 8 Southeastern Colorado Water Conservancy District, The City of Colorado 9 Springs, acting by and through its enterprise Colorado Springs Utilities, 10 Washington County [Utah] Water District, Western Urban Water Coalition, 11 [California] State Water Contractors, City of New York, 12 Intervenor Defendants‐Appellants‐Cross Appellees, 13 14 Northern Colorado Water Conservancy District, 15 Intervenor Defendant,

16 v.

17 South Florida Water Management District, 18 Intervenor Defendant‐Appellant‐Cross Appellant. 19 20 21 Before: SACK, CHIN, and CARNEY, Circuit Judges. 22 In 2008, the United States Environmental Protection Agency promulgated

23 the ʺWater Transfers Rule,ʺ which formalized the Agencyʹs longstanding position

24 that water transfers are not subject to regulation under the National Pollutant

25 Discharge Elimination System permitting program established decades ago by

26 the Clean Water Act. Shortly thereafter, the plaintiffs, a consortium of

27 environmental conservation and sporting organizations and several state,

28 provincial, and tribal governments, challenged the Water Transfers Rule by

2

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 bringing suit in the United States District Court for the Southern District of New

2 York against the Agency and its Administrator. After a variety of persons and

3 entities on both sides of the issue intervened, the district court (Kenneth M.

4 Karas, Judge) granted summary judgment for the plaintiffs on the ground that the

5 Water Transfers Rule, although entitled to deferential review under the two‐step

6 framework established by Chevron, U.S.A., Inc. v. Natural Resources Defense

7 Council, Inc.,

(1984), could not survive judicial scrutiny because it was

8 based on an unreasonable interpretation of the Clean Water Act. The district

9 court accordingly vacated the Water Transfers Rule and remanded it to the

10 Agency for further assessment. We conclude that the Water Transfers Rule is

11 based on a reasonable interpretation of the Clean Water Act and therefore

12 entitled to Chevron deference. Accordingly, the judgment of the district court is

13 REVERSED.

14 Judge Chin dissents in a separate opinion.

15 BARBARA D. UNDERWOOD, Solicitor 16 General (Steven C. Wu, Deputy Solicitor 17 General; Judith N. Vale, Assistant Solicitor 18 General; Lemuel Srolovic, Bureau Chief; 19 Philip Bein, Watershed Inspector General; 20 Meredith Lee‐Clark, Assistant Attorney 21 General, Environmental Protection Bureau,

3

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 on the brief), for Eric T. Schneiderman, 2 Attorney General of the State of New York, 3 New York, New York, for Plaintiffs‐Appellees 4 the States of New York, Connecticut, Delaware, 5 Illinois, Maine, Michigan, Minnesota, 6 Missouri, and Washington, and the Province of 7 Manitoba. 8 Daniel E. Estrin, Karl S. Coplan, Pace 9 Environmental Litigation Clinic, Inc., White 10 Plains, New York, (on the brief), for Plaintiffs‐ 11 Appellees Catskill Mountains Chapter of Trout 12 Unlimited, Inc., Theodore Gordon Flyfishers, 13 Inc., Catskill‐Delaware Natural Water 14 Alliance, Inc., Federated Sportsmenʹs Clubs of 15 Ulster County, Inc., Riverkeeper, Inc., 16 Waterkeeper Alliance, Inc., Trout Unlimited, 17 Inc., National Wildlife Federation, 18 Environment America, Environment New 19 Hampshire, Environment Rhode Island, and 20 Environment Florida. 21 Yinet Pino, Miccosukee Tribe of Indians of 22 Florida, Miami, Florida; David G. Guest, 23 Earthjustice, Tallahassee, Florida, (on the 24 brief), for Intervenor Plaintiffs‐Appellees 25 Miccosukee Tribe of Indians of Florida, Friends 26 of the Everglades, Florida Wildlife Federation, 27 and Sierra Club. 28 ROBERT WILLIAM YALEN (Benjamin H. 29 Torrance, on the briefs), for Preet Bharara, 30 United States Attorney for the Southern 31 District of New York, for Defendants‐ 32 Appellants United States Environmental 33 Protection Agency and Gina McCarthy. 34 PETER D. NICHOLS, Berg Hill Greenleaf & 35 Ruscitti LLP, Boulder, Colorado (Don Baur

4

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 & Paul Smyth, Perkins Coie LLP, 2 Washington, District of Columbia, on the 3 brief), for Intervenor Defendants‐Appellants‐ 4 Cross Appellees Central Arizona Water 5 Conservation District, Central Utah Water 6 Conservancy District, City and County of 7 Denver, by and through its Board of Water 8 Commissioners, City and County of San 9 Francisco Public Utilities Commission, City of 10 Boulder [Colorado], City of Aurora [Colorado], 11 El Dorado Irrigation District, Idaho Water 12 Users Association, Imperial Irrigation District, 13 Kane County [Utah] Water Conservancy 14 District, Las Vegas Valley Water District, 15 Lower Arkansas Valley Water Conservancy 16 District, The Metropolitan Water District of 17 Southern California, National Water Resources 18 Association, Salt Lake & Sandy [Utah] 19 Metropolitan Water District, Salt River 20 Project, San Diego County Water Authority, 21 Southeastern Colorado Water Conservancy 22 District, The City of Colorado Springs, Acting 23 by and through its Enterprise Colorado Springs 24 Utilities, Washington County [Utah] Water 25 District, Western Urban Water Coalition, and 26 [California] State Water Contractors.1 27 JULIE STEINER (Larry Sonnenshein & 28 Hilary Meltzer, on the briefs), for Zachary W. 29 Carter, Corporation Counsel of the City of 30 New York, New York, New York, for 31 Intervenor Defendant‐Appellant‐Cross 32 Appellee City of New York.

Peter D. Nichols also appeared at oral argument on behalf of Intervenor‐Defendants‐ 1

Appellants‐Cross Appellees States of Colorado, New Mexico, Alaska, Arizona (Department of Water Resources), Idaho, Nebraska, Nevada, North Dakota, Texas, Utah, and Wyoming. 5

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 JAMES EDWARD NUTT, South Florida 2 Water Management District, West Palm 3 Beach, Florida, for Intervenor Defendant‐ 4 Appellant‐Cross‐Appellant South Florida 5 Water Management District. 6 Annette M. Quill, Senior Assistant 7 Attorney General, State of Colorado, 8 Denver, Colorado, (on the briefs), for 9 Intervenor‐Defendants‐Appellants‐Cross 10 Appellees States of Colorado, New Mexico, 11 Alaska, Arizona (Department of Water 12 Resources), Idaho, Nebraska, Nevada, North 13 Dakota, Texas, Utah, and Wyoming. 14 Ellen B. Steen, Danielle Hallcom Quist, 15 American Farm Bureau Federation, 16 Washington, District of Columbia; Staci 17 Braswell, Florida Farm Bureau Federation, 18 Gainesville, Florida; Timothy S. Bishop, 19 Michael B. Kimberly, Mayer Brown LLP, 20 Washington, District of Columbia, (on the 21 brief), for Amici Curiae—American Farm 22 Bureau Federation and Florida Farm Bureau 23 Federation. 24 Laura Murphy & Patrick Parenteau, 25 Environmental & Natural Resources Law 26 Clinic, Vermont Law School, South 27 Royalton, Vermont, (on the brief), for Amici 28 Curiae—Leon G. Billings, Tom Jorling, Jeffrey 29 G. Miller, Robert W. Adler, William Andreen, 30 Harrison C. Dunning, Mark Squillace, and 31 Sandra B. Zellmer. 32 Kamala D. Harris, Attorney General; 33 Robert W. Byrne, Senior Assistant Attorney 34 General; Gavin G. McCabe, Supervising 35 Deputy Attorney General; William Jenkins,

6

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Deputy Attorney General; State of 2 California Department of Justice, Office of 3 the Attorney General, San Francisco, 4 California, (on the brief), for Amicus Curiae— 5 State of California by and through the 6 California Department of Water Resources. 7 Michael A. Swiger, Charles R. Sensiba, 8 Sharon L. White, Van Ness Feldman, LLP, 9 Washington, District of Columbia, (on the 10 brief), for Amici Curiae—National Hydropower 11 Association, Northwest Hydroelectric 12 Association, American Public Power 13 Association, Sabine River Authority of Texas, 14 Sabine River Authority State of Louisiana, and 15 Oglethorpe Power Corporation. 16 SACK, Circuit Judge: 17 18 ʺWater, water, everywhere / Nor any drop to drink.ʺ2

19 Because New York City cannot tap the rivers, bays, and ocean that inhabit,

20 surround, or, on occasion, inundate it to slake the thirst of its many millions of

21 residents, it must instead draw water primarily from remote areas north of the

22 City, mainly the Catskill Mountain/Delaware River watershed west of the

23 Hudson River, and the Croton Watershed east of the Hudson River and closer to

Samuel Taylor Coleridge, The Rime of the Ancient Mariner pt. II, st. 9 (1798) (as many 2

high school students likely already know).

7

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 New York City.3 Water is drawn from the Schoharie Reservoir4 through the

2 eighteen‐mile‐long Shandaken Tunnel into the Esopus Creek. The Creekʹs water,

3 in turn, flows into another reservoir, then through an aqueduct, and then

4 through several more reservoirs and tunnels alongside the Hudson River, having

5 crossed the River to its Eastern shore some 50 miles north of New York City.

6 Eventually, it arrives at its final destination: the many taps, faucets, and the like

7 within the Cityʹs five boroughs.

8 The movement of water from the Schoharie Reservoir through the

9 Shandaken Tunnel into the Esopus Creek is what is known as a ʺwater transfer,ʺ

10 an activity that conveys or connects waters of the United States without

11 subjecting those waters to any intervening industrial, municipal, or commercial

12 use. Water transfers are an integral part of Americaʹs water‐supply

13 infrastructure, of which the Schoharie Reservoir system is but a very small part.

For a New York State Department of Environmental Conservation map of the 3

system, see New York Cityʹs Water Supply System, N.Y.C. Depʹt of Envtl. Prot., http://www.dec.ny.gov/docs/water_pdf/nycsystem.pdf (last visited July 18, 2016), archived at https://perma.cc/JG4J‐FP3E.

4 The reservoir is ʺroughly 110 miles from New York City. . . . [It] is one of two

reservoirs in the Cityʹs Catskill system, and the northernmost reservoir in the entire [New York City] Water Supply System.ʺ Schoharie, N.Y.C. Depʹt of Envtl. Prot., http://www.nyc.gov/html/dep/html/watershed_protection/schoharie.shtml (last visited July 18, 2016), archived at https://perma.cc/ZPV4‐EPCZ. 8

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Each year, thousands of water transfers are employed in the course of bringing

2 water to homes, farms, and factories not only in the occasionally rain‐soaked

3 Eastern, Southern, and Middle‐ and North‐Western portions of the country, but

4 also in the arid West (including large portions of the Southwest). Usable bodies

5 of water in the West tend to be scarce, and most precipitation there falls as snow,

6 often in sparsely populated areas at considerable distance from their water

7 authoritiesʹ urban and agricultural clientele.

8 Historically, the United States Environmental Protection Agency (the

9 ʺEPAʺ) has taken a hands‐off approach to water transfers, choosing not to subject

10 them to the requirements of the National Pollutant Discharge Elimination System

11 (ʺNPDESʺ) permitting program established by the Clean Water Act in 1972.

12 Some have criticized the EPA for this approach. They argue that like ballast

13 water in ships,5 water transfers can move harmful pollutants from one body of

14 water to another, potentially putting local ecosystems, economies, and public

15 health at risk. While acknowledging these concerns, the EPA has held fast to its

16 position. Indeed, following many lawsuits seeking to establish whether NPDES

17 permits are required for water transfers, the EPA formalized its stance in 2008—

5 See generally Nat. Res. Def. Council v. EPA,

, 561‐62 (2d Cir. 2015). 9

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 more than three decades after the passage of the Clean Water Act—in a rule

2 known as the ʺWater Transfers Rule.ʺ

3 Shortly thereafter, several environmentalist organizations and state,

4 provincial, and tribal governments challenged the Rule by bringing suit against

5 the EPA and its Administrator in the United States District Court for the

6 Southern District of New York. After many entities—governmental, tribal, and

7 private—intervened on either side of the case, the district court (Kenneth M.

8 Karas, Judge) granted summary judgment for the plaintiffs, vacating the Rule and

9 remanding the matter to the EPA. In a thorough, closely reasoned, and detailed

10 opinion, the district court concluded that although Chevron deference is

11 applicable and requires the courts to defer to the EPA and uphold the Rule if it is

12 reasonable, the Rule represented an unreasonable interpretation of the Clean

13 Water Act, and was therefore invalid under the deferential two‐step framework

14 for judicial review established in Chevron, U.S.A., Inc. v. Natural Resources Defense

15 Council, Inc.,

(1984). The court held that the Rule was contrary to the

16 requirements established by the Act.

17 The Federal Government and the intervenor‐defendants timely appealed.

18 Despite the district courtʹs herculean efforts and its careful and exhaustive

10

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 explanation for the result it reached, we now reverse for the reasons set forth

2 below.

3 At step one of the Chevron analysis, we conclude—as did the district

4 court—that the Clean Water Act does not speak directly to the precise question

5 of whether NPDES permits are required for water transfers, and that it is

6 therefore necessary to proceed to Chevronʹs second step. At step two of the

7 Chevron analysis, we conclude—contrary to the district court—that the Water

8 Transfers Ruleʹs interpretation of the Clean Water Act is reasonable. We view

9 the EPAʹs promulgation of the Water Transfers Rule here as precisely the sort of

10 policymaking decision that the Supreme Court designed the Chevron framework

11 to insulate from judicial second‐ (or third‐) guessing. It may well be that, as the

12 plaintiffs argue, the Water Transfers Ruleʹs interpretation of the Clean Water Act

13 is not the interpretation best designed to achieve the Actʹs overall goal of

14 restoring and protecting the quality of the nationʹs waters. But it is nonetheless

15 an interpretation supported by valid considerations: The Act does not require

16 that water quality be improved whatever the cost or means, and the Rule

17 preserves state authority over many aspects of water regulation, gives regulators

18 flexibility to balance the need to improve water quality with the potentially high

11

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 costs of compliance with an NPDES permitting program, and allows for several

2 alternative means for regulating water transfers. While we might prefer an

3 interpretation more consistent with what appear to us to be the most prominent

4 goals of the Clean Water Act, Chevron tells us that so long as the agencyʹs

5 statutory interpretation is reasonable, what we might prefer is irrelevant.

12

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 BACKGROUND6 2 The Clean Water Act and the National Pollutant Discharge Elimination 3 System (ʺNPDESʺ) Permitting Program 4 In 1972, following several events such as the 1969 ʺburningʺ of the

5 Cuyahoga River in Cleveland, Ohio7 that increased national concern about

The parties and amici (we use the abbreviations here that we adopt for the remainder 6

of this opinion) have filed sixteen briefs taking opposing positions on the validity of the Water Transfers Rule, as follows:

 Anti‐Water Transfers Rule:  The States of New York, Connecticut, Delaware, Illinois, Maine, Michigan, Minnesota, Missouri, and Washington, and the Province of Manitoba (collectively, the ʺAnti‐Rule Statesʺ).  Leon G. Billings et al.  The Miccosukee Tribe of Indians of Florida et al.  Catskill Mountains Chapter of Trout Unlimited, Inc. et al. (collectively, the ʺSportsmen and Environmental Organization Plaintiffsʺ).  Pro‐Water Transfers Rule:  The State of California.  The United States Environmental Protection Agency and Gina McCarthy (collectively, the ʺEPAʺ).  The American Farm Bureau Federation and Florida Farm Bureau Federation (collectively, the ʺFarmer Amiciʺ).  National Hydropower Association et al. (collectively, the ʺHydropower Amiciʺ).  The City of New York (ʺNYCʺ).  South Florida Water Management District.  Central Arizona Water Conservation District et al. (the ʺWater Districtsʺ).  The States of Colorado, New Mexico, Alaska, Arizona (Department of Water Resources), Idaho, Nebraska, Nevada, North Dakota, Texas, Utah, and Wyoming (the ʺWestern States,ʺ and, together with the Water Districts, the ʺWestern Partiesʺ).

13

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 pollution of our nationʹs waters, Congress enacted the Federal Water Pollution

2 Control Act (ʺFWPCAʺ) Amendments of 1972,

, as amended, 33 U.S.C.

3 § 1251 et seq., commonly known as the Clean Water Act (sometimes hereinafter

4 the ʺActʺ or the ʺCWAʺ). Congressʹs principal objective in passing the Act was

5 ʺto restore and maintain the chemical, physical, and biological integrity of the

6 Nationʹs waters.ʺ

(a). Congress also envisioned that the Actʹs

7 passage would enable ʺthe discharge of pollutants into the navigable waters [to]

8 be eliminated by 1985.ʺ

§ 1251(a)(1). Although time has proven this

9 projection to have been over‐optimistic at best, it is our understanding that the

10 Act has succeeded to a significant degree in cleaning up our nationʹs waters.

11 The Act ʺprohibits ʹthe discharge of any pollutant by any personʹ unless

12 done in compliance with some provision of the Act.ʺ S. Fla. Water Mgmt. Dist. v.

13 Miccosukee Tribe,

(ʺMiccosukeeʺ) (quoting

(a)). The

14 statute defines the discharge of a pollutant as ʺany addition of any pollutant to

15 navigable waters from any point source,ʺ8

(12)(A), where

See, e.g., Michael Rotman, Cuyahoga River Fire, Cleveland Historical, 7

http://clevelandhistorical.org/items/show/63#.V0XS7eRcjRs (last visited July 18, 2016), archived at https://perma.cc/5VVP‐TTAY. 8 A ʺpoint sourceʺ is ʺany discernible, confined and discrete conveyance, including but

not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, 14

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 ʺnavigable watersʺ means ʺthe waters of the United States, including the

2 territorial seas,ʺ

§ 1362(7). The principal provision under which such a

3 discharge may be allowed is Section 402, which establishes the ʺNational

4 Pollutant Discharge Elimination Systemʺ (ʺNPDESʺ) permitting program. 33

. With narrow exceptions not relevant here, a party must acquire an

6 NPDES permit in order to discharge a specified amount of a specified pollutant.

7 See id.; Miccosukee,

. Thus, without an NPDES permit, it is

8 unlawful for a party to discharge a pollutant into the nationʹs navigable waters.

9 ʺ[B]y setting forth technology‐based effluent limitations and, in certain

10 cases, additional water quality based effluent limitations[, ]the NPDES permit

11 ʹdefines, and facilitates compliance with, and enforcement of, a preponderance of

12 a dischargerʹs obligations under the [Act].ʹʺ Waterkeeper Alliance, Inc. v. EPA, 399

(2d Cir. 2005) (third brackets in original) (quoting EPA v. California

14 ex rel. State Water Res. Control Bd.,

(1976)). Noncompliance with

15 an NPDES permitʹs conditions is a violation of the Clean Water Act. 33 U.S.C.

16 § 1342(h). Once an NPDES permit has been issued, the EPA, states, and citizens

17 can bring suit in federal court to enforce it. See id. §§ 1319(a)(3), 1365(a).

from which pollutants are or may be discharged,ʺ other than in the case of ʺagricultural stormwater discharges and return flows from irrigated agriculture.ʺ

(14). 15

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 The Act envisions ʺcooperative federalismʺ in the management of the

2 nationʹs water resources. See, e.g., New York v. United States,

, 167

3 (1992) (referring to the Act as an example of ʺcooperative federalismʺ); Arkansas

4 v. Oklahoma,

(1992) (the Act ʺanticipates a partnership between

5 the States and the Federal Governmentʺ). Reflecting that approach, states

6 typically control the NPDES permitting programs as they apply to waters within

7 their borders, subject to EPA approval. See

(i)(2), 1342(b)‐(c).9

8 The Act also preserves statesʹ ʺprimary responsibilities and rightsʺ to abate

9 pollution,

§ 1251(b), including their traditional prerogatives to ʺplan the

10 development and use (including restoration, preservation, and enhancement)

11 of . . . water resources,ʺ id., and to ʺallocate quantities of water within [their]

12 jurisdiction,ʺ id. § 1251(g),10 subject to the federal floor on environmental

The EPA has authorized forty‐six states and the U.S. Virgin Islands to implement the 9

NPDES program. NPDES State Program Information, EPA, https://www.epa.gov/npdes/npdes‐state‐program‐information (last updated Feb. 19, 2016; last visited July 18, 2016), archived at https://perma.cc/7M4V‐469F.

10 The Actʹs statement regarding the preservation of statesʹ water‐allocation authority

was added by the Clean Water Act of 1977, also known as the ʺ1977 Amendmentsʺ to the Act. See Pub L. No. 95‐217, § 5(a),

, 1567 (codified as amended at

(g)).

16

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 protection set by the Act and regulations promulgated thereunder by the EPA,

2 see Nat. Res. Def. Council v. EPA,

(2d Cir. 2015).

3 Water Transfers and the Water Transfers Rule11 4 According to EPA regulations, a ʺwater transferʺ is ʺan activity that

5 conveys or connects waters of the United States without subjecting the

6 transferred water to intervening industrial, municipal, or commercial use.ʺ

7

(i). Water transfers take a variety of forms. A transfer may be

8 accomplished, for example, through artificial tunnels and channels, or natural

9 streams and water bodies; and through active pumping or passive direction.

10 There are thousands of water transfers currently in place in the United States,

11 including at least sixteen major diversion projects west of the Mississippi River.

12 Many of the largest U.S. cities draw on water transfers to bring drinkable water

13 to their residents. The City of New Yorkʹs ʺwater supply system . . . relies on

14 transfers of water among its [nineteen] collecting reservoirs. The City provides

15 approximately 1.2 billion gallons of . . . water a day to nine million people—

16 nearly half of the population of New York State.ʺ Letter Dated August 7, 2006,

In this section, we refer to the contents of various documents supplied by the parties 11

and amici. This information was not admitted into evidence in any judicial proceeding. We think, though, that it is at least plausible, and that even when treated as part of the argument, it supplies a general picture of the factual background of this appeal against which our legal conclusions may better be understood. 17

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 from Mark D. Hoffer, General Counsel, City of New York Department of

2 Environmental Protection to EPA, at 1, J.A. at 331.

3 The parties and amici tell us that water transfers are of special significance

4 in the Western United States. Because much precipitation in the West falls as

5 snow, water authorities there must capture water when and where the snow falls

6 and melts, typically in remote and sparsely populated areas, and then transport

7 it to agricultural and urban sites where it is most needed. See Western States Br.

8 1‐2; see also State of California Amicus Br. 16 n.5. Colorado, for example, engages

9 in over forty interbasin diversions in order to serve the Stateʹs water needs. See

10 Letter Dated July 17, 2006, from Brian N. Nazarenus, Chair, Colorado Water

11 Quality Control Commission, to Water Docket, EPA, at 1, J.A. at 320. California

12 uses the ʺCalifornia State Water Project,ʺ a complex water delivery system based

13 on interbasin transfers from Northern California to Southern California, to serve

14 the water needs of 25 million of its 37 million residents. See State of California

15 Amicus Br. 3‐10. Water transfers are also obviously crucial to agriculture,

16 conveying water to enormously important farming regions such as the Central

17 and Imperial Valleys of California, Weld and Larimer Counties in Colorado, the

18

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Snake River Valley of Idaho, and the Yakima Valley of Washington. See Water

2 Districts Br. 16‐19.

3 At the same time, though, water transfers, like ballast water in ships, see

4 generally Nat. Res. Def. Council, 808 F.3d at 561‐62, can move pollutants from one

5 body of water to another, potentially endangering ecosystems, portions of the

6 economy, and public health near the receiving water body—and possibly

7 beyond. Despite these risks, for many years the EPA has taken a passive

8 approach to regulating water transfers, effectively exempting them from the

9 NPDES permitting system. The States have also generally adopted a hands‐off

10 policy.12

11 During the 1990s and 2000s, prior to its codification in the Water Transfers

12 Rule, the EPAʹs position was challenged by, among others, environmentalist

13 groups, which filed several successful lawsuits asserting that NPDES permits

14 were required for some specified water transfers. See, e.g., Catskill Mountains

15 Chapter of Trout Unlimited, Inc. v. City of New York,

(2d Cir. 2006)

16 (ʺCatskill IIʺ), cert. denied,

(2007); N. Plains Res. Council v. Fid. Expl. &

17 Dev. Co.,

(9th Cir.), cert. denied,

(2003); Catskill

Pennsylvania is the only NPDES permitting authority that regularly issues NPDES 12

permits for water transfers. See Water Transfers Rule, 73 Fed. Reg. at 33,699 pt. II. 19

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Mountains Chapter of Trout Unlimited, Inc. v. City of New York,

(2d Cir.

2 2001) (ʺCatskill Iʺ); see also Dubois v. U.S. Depʹt of Agric.,

(1st Cir.

3 1996), cert. denied sub nom. Loon Mountain Recreation Corp. v. Dubois,

(1997). None of these decisions classified the EPAʹs views on the regulation of

5 water transfers as sufficiently formal to warrant Chevron deference. See, e.g.,

6 Catskill II,

(declining to apply Chevron deference framework);

7 Catskill I,

(same).

8 In response, the EPA took steps to formalize its position. In August 2005,

9 the EPAʹs Office of General Counsel and Office of Water issued a legal

10 memorandum written by then‐EPA General Counsel Ann R. Klee (the ʺKlee

11 Memorandumʺ) that argued that Congress did not intend for water transfers to

12 be subject to the NPDES permitting program. The EPA proposed a formal rule

13 incorporating this interpretation on June 7, 2006,

, and then,

14 following notice‐and‐comment rulemaking proceedings, on June 13, 2008,

15 adopted a final rule entitled ʺNational Pollutant Discharge Elimination System

16 (NPDES) Water Transfers Ruleʺ (the ʺWater Transfers Ruleʺ),

,697‐

17 708 (June 13, 2008) (codified at

(i)).

18 The Water Transfers Ruleʹs summary states:

20

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 EPA is issuing a regulation to clarify that water transfers are not 2 subject to regulation under the National Pollutant Discharge 3 Elimination System (NPDES) permitting program. This rule defines 4 water transfers as an activity that conveys or connects waters of the 5 United States without subjecting the transferred water to 6 intervening industrial, municipal, or commercial use. This rule 7 focuses exclusively on water transfers and does not affect any other 8 activity that may be subject to NPDES permitting requirements.

9 Id. at 33,697.

10 The Rule states that water transfers ʺdo not require NPDES permits

11 because they do not result in the ʹadditionʹ of a pollutant.ʺ13 Id. at 33,699. No

12 NPDES permit is required if ʺthe water being conveyed [is] a water of the U.S.

13 prior to being discharged to the receiving waterbodyʺ and the water is

14 transferred ʺfrom one water of the U.S. to another water of the U.S.ʺ14 Id.

The Rule added a new subsection to

, which lists the pollutant 13

discharges that are exempted from NPDES permitting. The new subsection provides:

Discharges from a water transfer. Water transfer means an activity that conveys or connects waters of the United States without subjecting the transferred water to intervening industrial, municipal, or commercial use. This exclusion does not apply to pollutants introduced by the water transfer activity itself to the water being transferred.

(i).

14 ʺWaters of the U.S.ʺ are defined for purposes of the NPDES program in

, but without addressing what precisely is within the scope of the term, Water Transfers Rule, 73 Fed. Reg. at 33,699 n.2. In 2015, the EPA and the U.S. Army Corps of Engineers adopted a new rule modifying the definition of ʺwaters of the United States.ʺ Clean Water Rule: Definition of ʺWaters of the United States,ʺ

, 21

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 (footnote omitted). Thus, even if a water transfer conveys waters in which

2 pollutants are present, it does not result in an ʺadditionʺ to ʺthe waters of the

3 United States,ʺ because the pollutant is already present in ʺthe waters of the

4 United States.ʺ Under the EPAʹs view, an ʺadditionʺ of a pollutant under the Act

5 occurs only ʺwhen pollutants are introduced from outside the waters being

6 transferred.ʺ Id. at 33,701. On appeal—but not in the Water Transfers Rule

7 itself—the EPA characterizes this interpretation of Section 402 of the Clean Water

8 Act as embracing what is often referred to as the ʺunitary‐watersʺ reading of the

9 statutory language, see EPA Br. 15‐16, 54, which we will discuss further below.

10 In the Water Transfers Rule, the EPA justified its interpretation of the Act

11 in an explanation spanning nearly four pages of the Federal Register, touching

12 on the text of Section 402, the structure of the Act, and pertinent legislative

13 history. See Water Transfers Rule, 73 Fed. Reg. at 33,700‐03. The EPA explained

14 that its ʺholistic approach to the textʺ of the statute was ʺneeded here in

15 particular because the heart of this matter is the balance Congress created

37,055‐37,056 (June 29, 2015). ʺThat rule is currently stayed nationwide, pending resolution of claims that the rule is arbitrary, capricious, and contrary to law.ʺ U.S. Army Corps of Engʹrs v. Hawkes Co.,

, 1812 n.1 (2016) (citing In re EPA,

, 807‐09 (6th Cir. 2015)). Regardless of how expansively the term is interpreted, we would still be faced with the question of whether the EPA could permissibly exempt from NPDES permitting the transfer of water from one ʺwater of the U.S.ʺ to another ʺwater of the U.S.ʺ 22

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 between federal and State oversight of activities affecting the nationʹs waters.ʺ

2 Id. at 33,701. The agency also responded to a wide variety of public comments on

3 the proposed Rule. See id. at 33,703‐06.

4 District Court Proceedings 5 On June 20, 2008, a group of environmental conservation and sporting

6 organizations filed a complaint against the EPA and its Administrator (then

7 Stephen L. Johnson, now Gina McCarthy) in the United States District Court for

8 the Southern District of New York. The States of New York, Connecticut,

9 Delaware, Illinois, Maine, Michigan, Minnesota, Missouri, and Washington, and

10 the Province of Manitoba, Canada (collectively, the ʺAnti‐Rule Statesʺ) did the

11 same on October 2, 2008. In their complaints, the plaintiffs requested that the

12 district court hold unlawful and set aside the Water Transfers Rule pursuant to

13 Section 706(2) of the Administrative Procedure Act (the ʺAPAʺ),

706(2).15 In October 2008, the district court consolidated the two cases and

15 granted a motion by the City of New York to intervene in support of the

16 defendants.

The Anti‐Rule States also sought a declaratory judgment pursuant to the Declaratory 15

Judgment Act,

(a). 23

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 At about the same time these actions were filed, five parallel petitions for

2 review of the Water Transfers Rule were filed in the First, Second, and Eleventh

3 Circuits. On July 22, 2008, the United States Judicial Panel on Multidistrict

4 Litigation consolidated these petitions and randomly assigned them to the

5 Eleventh Circuit. The Eleventh Circuit then consolidated a sixth petition for

6 review, and stayed all of these petitions pending its disposition of Friends of the

7 Everglades v. South Florida Water Management District, No. 07‐13829‐HH (11th Cir.)

8 (ʺFriends Iʺ), a separate but conceptually related case. The district court in the

9 case now before us granted the EPAʹs motion to stay the proceedings pending

10 the Eleventh Circuitʹs resolution of Friends I and the six consolidated petitions.

11 See Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA,

,

12 307 (S.D.N.Y. 2009). In June 2009, the Eleventh Circuit issued a decision in

13 Friends I,

(11th Cir. 2009), rehʹg en banc denied,

(2010),

14 cert. denied,

, and cert. denied sub nom. Miccosukee Tribe v. S. Fla. Water

15 Mgmt. Dist.,

(2010), according Chevron deference to, and upholding,

16 the Water Transfers Rule.

at 1227‐28. Then, on October 26, 2012, the Circuit

17 issued a decision dismissing the six consolidated petitions for lack of subject‐

18 matter jurisdiction under

(b)(1). Friends of the Everglades v. EPA,

24

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1

(11th Cir. 2012) (ʺFriends IIʺ), cert. denied,

,

2 and cert. denied sub nom. U.S. Sugar Corp. v. Friends of the Everglades,

,

3 and cert. denied sub nom. S. Fla. Water Mgmt. Dist. v. Friends of the Everglades, 134 S.

4 Ct. 422 (2013). The district court in the case at bar lifted the stay on December 17,

5 2012, the date the Eleventh Circuitʹs mandate in Friends II was issued.

6 On January 30, 2013, the district court granted multiple applications on

7 consent to intervene as plaintiffs and defendants under Federal Rule of Civil

8 Procedure 24. This added as intervenor‐plaintiffs the Miccosukee Tribe of

9 Indians of Florida, Friends of the Everglades, the Florida Wildlife Federation,

10 and the Sierra Club, and as intervenor‐defendants the States of Alaska, Arizona

11 (Department of Water Resources), Colorado, Idaho, Nebraska, Nevada, New

12 Mexico, North Dakota, Texas, Utah, and Wyoming, and various municipal water

13 providers from Western states. The parties filed multiple motions and cross‐

14 motions for summary judgment.

15 On March 28, 2014, the district court granted the plaintiffsʹ motions for

16 summary judgment and denied the defendantsʹ cross‐motions. Catskill

17 Mountains Chapter of Trout Unlimited, Inc. v. EPA,

(S.D.N.Y.

18 2014). At the first step of the Chevron analysis, the district court decided that the

25

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Clean Water Act is ambiguous as to whether Congress intended the NPDES

2 program to apply to water transfers.

at 518‐32. The district court then

3 proceeded to the second step of the Chevron analysis, at which it struck down the

4 Water Transfers Rule as an unreasonable interpretation of the Act.

at 532‐67.

5 The defendants and intervenor‐defendants other than the Northern

6 Colorado Water Conservancy District (hereinafter ʺthe defendantsʺ) timely

7 appealed.

8 DISCUSSION 9 ʺOn appeal from a grant of summary judgment in a challenge to agency

10 action under the APA, we review the administrative record and the district

11 courtʹs decision de novo.ʺ Bellevue Hosp. Ctr. v. Leavitt,

, 173‐74 (2d

12 Cir. 2006). We conclude that the Water Transfers Rule is a reasonable

13 interpretation of the Clean Water Act and is therefore entitled to Chevron

14 deference. Accordingly, we reverse the judgment of the district court.

15 We evaluate challenges to an agencyʹs interpretation of a statute that it

16 administers within the two‐step Chevron deference framework. Lawrence + Memʹl

17 Hosp. v. Burwell,

(2d Cir. 2016). At Chevron Step One, we ask

18 ʺwhether Congress has directly spoken to the precise question at issue. If the

26

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 intent of Congress is clear, that is the end of the matter; for the court, as well as

2 the agency, must give effect to the unambiguously expressed intent of Congress.ʺ

3 Chevron, 467 U.S. at 842‐43. If the statutory language is ʺsilent or ambiguous,ʺ

4 however, we proceed to Chevron Step Two, where ʺthe question for the court is

5 whether the agencyʹs answer is based on a permissible construction of the

6 statuteʺ at issue. Id. at 843. If it is—i.e., if it is not ʺarbitrary, capricious, or

7 manifestly contrary to the statute,ʺ id. at 844—we will accord deference to the

8 agencyʹs interpretation of the statute so long as it is supported by a reasoned

9 explanation, and ʺso long as the construction is ʹa reasonable policy choice for the

10 agency to make,ʹʺ Natʹl Cable & Telecomms. Assʹn v. Brand X Internet Servs., 545

, 986 (2005) (ʺBrand Xʺ) (quoting Chevron,

).

12 This framework has been fashioned as a means for the proper resolution of

13 administrative‐law disputes that involve all three branches of the Federal

14 Government, seriatim.

15 First, the Legislative Branch, Congress, passes a bill that reflects its

16 judgment on the issue—in the case before us, the Clean Water Act. After the

17 head of the Executive Branch, the President, signs that bill, it becomes the law of

18 the land.

27

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Second, the Executive Branch, if given the authority to do so by legislation,

2 may address the issue through its authorized administrative agency or agencies,

3 typically although not necessarily by regulation—in this case the EPA through its

4 Water Transfer Rule. In doing so, the executive agency must defer to the

5 Legislative Branch by following the law or laws that it has enacted and that cover

6 the matter.

7 Only last, in case of a challenge to the Legislative Branchʹs authority to

8 pass the law, or to the Executive Branchʹs authority to administer it in the

9 manner that it has chosen to adopt, may we in the Judicial Branch become

10 involved in the process. When we do so, though, we are not only last, we are

11 least: We must defer both to the Legislative Branch by refraining from reviewing

12 Congressʹs legislative work beyond determining what the statute at issue means

13 and whether it is constitutional, and to the Executive Branch by using the various

14 principles of deference, including Chevron deference, which we conclude is

15 applicable in the case at bar. For us to decide for ourselves what in fact is the

16 preferable route for addressing the substantive problem at hand would be

17 directly contrary to this constitutional scheme. What we may think to be the best

28

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 or wisest resolution of problems of water transfers and pollution emphatically

2 does not matter.

3 Abiding by this constitutional scheme, we begin at Chevron Step One. We

4 conclude, as did the district court, that Congress did not in the Clean Water Act

5 clearly and unambiguously speak to the precise question of whether NPDES

6 permits are required for water transfers. It is therefore necessary to proceed to

7 Chevron Step Two, under which we conclude that the EPAʹs interpretation of the

8 Act in the Water Transfers Rule represents a reasonable policy choice to which

9 we must defer. The question is whether the Clean Water Act can support the

10 EPAʹs interpretation, taking into account the full panoply of interpretive

11 considerations advanced by the parties. Ultimately, we conclude that the Water

12 Transfers Rule satisfies Chevronʹs deferential standard of review because it is

13 supported by a reasoned explanation that sets forth a reasonable interpretation of

14 the Act.

15 I. Chevron Step One 16 At Chevron Step One, ʺthe [reviewing] court must determine ʹwhether

17 Congress has directly spoken to the precise question at issue. If the intent of

18 Congress is clear, that is the end of the matter; for the court, as well as the

29

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 agency, must give effect to the unambiguously expressed intent of Congress.ʹʺ

2 City of Arlington v. FCC,

(2014) (quoting Chevron,

842‐43). To determine whether a statute is ambiguous, we employ ʺtraditional

4 tools of statutory constructionʺ to ascertain if ʺCongress had an intention on the

5 precise question at issueʺ that ʺmust be given effect.ʺ Chevron,

n.9.

6 The issue before us at this point, then, is whether the Act plainly requires a

7 party to acquire an NPDES permit in order to make a water transfer. We agree

8 with the district court that the Clean Water Act does not clearly and

9 unambiguously speak to that question. We will begin, however, by addressing

10 the plaintiffsʹ argument that we previously held otherwise in Catskill I,

(2d Cir. 2001), and Catskill II,

(2d Cir. 2006).

12 A. Catskill I and Catskill II

13 The plaintiffs argue that this case can be resolved at Chevron Step One

14 because we held in Catskill I and Catskill II that the Clean Water Act

15 unambiguously requires NPDES permits for water transfers. We disagree with

16 the plaintiffsʹ reading of those decisions because our application there of the

17 deference standard set forth in Skidmore v. Swift & Co.,

(1944), and

18 United States v. Mead Corp.,

(2001)—so‐called ʺSkidmoreʺ or

30

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 ʺSkidmore/Meadʺ deference—and the reasoning underlying the decisions make

2 clear that we have not previously held that the statutory language at issue here is

3 unambiguous, such that we cannot defer under Chevron to the EPAʹs

4 interpretation of the Clean Water Act in the Water Transfers Rule.

5 In Catskill I, we held that that the City of New York16 violated the Clean

6 Water Act by transferring turbid water17 from the Schoharie Reservoir through

7 the Shandaken Tunnel into the Esopus Creek without an NPDES permit, because

8 the transfer of turbid water into the Esopus Creek was an ʺadditionʺ of a

9 pollutant. 273 F.3d at 489‐94. Following our remand in Catskill I, the district

10 court assessed a $5,749,000 civil penalty against New York City and ordered the

11 City to obtain a permit for the operation of the Shandaken Tunnel. The Cityʹs

12 appeal from that ruling was resolved in Catskill II, in which we reaffirmed the

13 holding of Catskill I. Catskill II, 451 F.3d at 79.

14 In both Catskill I and Catskill II, we applied the Skidmore deference standard

15 to informal policy statements by the EPA that interpreted the same provision of

In addition to the City of New York, the New York City Department of 16

Environmental Protection and its Commissioner at the time, Joel A. Miele, Sr., were also defendants in Catskill I. 17 Turbid water is water carrying high levels of solids in suspension. Catskill I, 273 F.3d

at 488. 31

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 the Act at issue here not to require NPDES permits for water transfers. See id. at

2 83‐84 & n.5 (noting that under Skidmore ʺ[w]e . . . defer to the agency

3 interpretation according to its ʹpower to persuadeʹʺ and ʺdeclin[ing] to defer to

4 the EPA[ʹs]ʺ informal interpretation of the CWA as expressed in the Klee

5 Memorandum (quoting Mead,

)); Catskill I, 273 F.3d at 490‐91

6 (applying Skidmore to the EPAʹs position as expressed in informal policy

7 statements and litigation positions, and concluding that ʺwe do not find the

8 EPAʹs position to be persuasiveʺ). Skidmore instructs that ʺthe rulings,

9 interpretations and opinionsʺ of an agency may constitute ʺa body of experience

10 and informed judgment to which courts and litigants may properly resort for

11 guidance.ʺ Skidmore,

. The appropriate level of deference

12 accorded to an agencyʹs interpretation of a statute under the Skidmore standard

13 depends on the interpretationʹs ʺpower to persuade,ʺ which in turn depends on,

14 inter alia, ʺthe thoroughness evident in its consideration, the validity of its

15 reasoning, [and] its consistency with earlier and later pronouncements.ʺ

This

16 ʺapproach has produced a spectrum of judicial responses, from great respect at

17 one end, to near indifference at the other.ʺ Mead,

(internal

18 citations omitted).18

18 The Supreme Courtʹs 2001 decision in Mead breathed new life into Skidmore, which as 32

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Although the Chevron and Skidmore deference standards differ in

2 application, they are similar in one respect: As with Chevron deference, we will

3 defer to the agencyʹs interpretation under the Skidmore standard only when the

4 statutory language at issue is ambiguous. See, e.g., Riegel v. Medtronic, Inc., 552

, 326 (2008) (suggesting that it is ʺunnecessaryʺ to engage in Skidmore

6 analysis if ʺthe statute itself speaks clearly to the point at issueʺ); Exxon Mobil

7 Corp. & Affiliated Cos. v. Commʹr of Internal Revenue,

, 200 n.13 (2d Cir.

8 2012) (explaining that Skidmore analysis applies to ʺan agencyʹs interpretation of

9 an ambiguous statuteʺ); Wong v. Doar,

(2d Cir. 2009)

10 (concluding that ʺCongress did not speak directly to the issueʺ before proceeding

11 to apply Skidmore deference); see also Gen. Dynamics Land Sys., Inc. v. Cline, 540

, 600 (2004) (ʺ[D]eference to [an agencyʹs] statutory interpretation is

13 called for only when the devices of judicial construction have been tried and

14 found to yield no clear sense of congressional intent.ʺ); High Sierra Hikers Assʹn v.

one court recently put it, ʺhas had a rough go of it ever since the birth of Chevron. Like the figurative older child neglected in the wake of a new siblingʹs arrival, in 1984 Skidmore was relegated to the status of an administrative law sideshow while the courts fawned over Chevron.ʺ Angiotech Pharmaceuticals Inc. v. Lee, ‐‐‐ F. Supp.3d ‐‐‐, No. 1:15‐ cv‐1673,

,

(E.D. Va. June 8, 2016) (Ellis, J.). Remarkably, ʺby the age of just three and a half years, courts had cited Chevron over six hundred times, and by the time Chevron turned sixteen,ʺ a year before Mead, ʺsome were ready to declare Skidmore dead altogether.ʺ

(collecting cases and secondary sources). 33

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Blackwell,

(9th Cir. 2004) (ʺIf the statute is clear and

2 unambiguous, no deference is required and the plain meaning of Congress will

3 be enforced.ʺ). As commentators have noted, although the Supreme Court has

4 not explicitly stated ʺthat Skidmore necessarily includes a ʹstep oneʹ inquiry along

5 the lines of Chevron [S]tep [O]ne[,] . . . in practice, Skidmore generally does include

6 a ʹstep one,ʹʺ in which a court ʺfirst review[s] the statute for a plain meaning [to]

7 determin[e] [whether] the statute [is] ambiguous.ʺ Kristin E. Hickman &

8 Matthew D. Krueger, In Search of the Modern Skidmore Standard, 107 COLUM. L.

9 REV. 1235, 1280 (2007) (collecting cases).

10 But as the dissent correctly notes, see Dissent at 21‐22, it does not follow

11 that a particular application of the Skidmore framework implies a threshold

12 conclusion that the relevant statutory language is ambiguous. Although a court

13 could first conclude that the text is unambiguous—and therefore that Skidmore

14 deference is inappropriate or unnecessary19—it could instead engage in Skidmore

15 analysis without answering this threshold question by considering the statutory

16 text as one of several factors relevant to determining whether the agency

Skidmore deference would be inappropriate with respect to an agency interpretation 19

that is inconsistent with unambiguous statutory text. But with respect to an agency interpretation consistent with the unambiguous text, Skidmore deference would simply be unnecessary. 34

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 interpretation has the ʺpower to persuade.ʺ Skidmore,

. Yet even

2 under this approach, courts will not rely on agency interpretations that are

3 inconsistent with unambiguous statutory language. See, e.g., EEOC v. Arabian

4 American Oil,

(1991) (declining to rely on an agency

5 interpretation that ʺlack[ed] support in the plain language of the statuteʺ after

6 considering the statutory language as one of several factors relevant to Skidmore

7 analysis).20 Thus, regardless of whether or not a court makes a threshold

8 ambiguity determination, ʺthe Skidmore standard implicitly replicates Chevronʹs

9 first step.ʺ Hickman & Krueger, supra, at 1247.

10 Our application of the Skidmore deference standard in Catskill I and

11 Catskill II makes clear that we did not decide and have not decided that the

12 statutory language at issue in this case—ʺaddition . . . to navigable watersʺ—is

13 unambiguous. Although we did not explicitly conclude in those cases that the

14 statutory text was ambiguous, we made clear that we did not intend to foreclose

The dissent stresses that Skidmore analysis is flexible and that the clarity of statutory 20

language is one factor among many in assessing an agency interpretationʹs power to persuade. See Dissent at 24. Skidmore is not, however, so flexible that a court could accord Skidmore deference to an agency interpretation inconsistent with unambiguous statutory text. Any interpretation inconsistent with unambiguous statutory language necessarily lacks persuasive power. See Whirlpool Corp. v. Marshall,

(1980) (explaining that ʺ[a] regulation is [not] entitled to deferenceʺ under Skidmore if ʺit can be said not to be a reasoned and supportable interpretation of the [statute]ʺ). 35

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 the EPA from adopting a unitary‐waters reading of the Act (i.e., waters of the

2 United States means all of those waters rather than each of them) in a formal

3 rule; indeed, we stated in Catskill I that ʺ[i]f the EPAʹs position had been adopted

4 in a rulemaking or other formal proceeding, [Chevron] deference . . . might be

5 appropriate.ʺ Catskill I, 273 F.3d at 490‐91 & n.2. This statement implies that we

6 thought the relevant statutory text was at least possibly ambiguous.

7 The few references to ʺplain meaningʺ in Catskill I and Catskill II do not

8 compel a different conclusion. The crucial interpretive question framed by

9 Catskill I—which we identified as the ʺcruxʺ of the appeal—was ʺthe meaning of

10 ʹaddition,ʹ which the Act does not define.ʺ Id. at 486. As the dissent points out,

11 see Dissent at 25‐27, we concluded in Catskill I that, based on the ʺplain meaningʺ

12 of that term, the transfer of turbid water resulted in ʺan ʹadditionʹ of a ʹpollutantʹ

13 from a ʹpoint sourceʹ[21] . . . to a ʹnavigable water.ʹʺ Catskill I, 273 F.3d at 492.22 We

See supra note 8 for the definition of ʺpoint sourceʺ contained it

(14). 21

In Catskill I, we also discussed the so‐called ʺdams cases,ʺ National Wildlife Federation 22

v. Gorsuch,

(D.C. Cir. 1982), and National Wildlife Federation v. Consumers Power Co.,

(6th Cir. 1988). In these opinions, the District of Columbia and Sixth Circuits deferred to the EPAʹs position that water released back into the same surrounding water from which it was taken is not an ʺadditionʺ to navigable waters under the CWA, even though the water so released contained material that either was or could be considered a pollutant. Gorsuch, 693 F.2d at 174‐75, 183; Consumers Power, 862 F.2d at 584‐87, 589. We noted that our definition of ʺadditionʺ was consistent with the holdings in the dams cases, because ʺ[i]f one takes a ladle of soup from a pot, lifts it 36

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 do not, however, think that by referring to the ʺplain meaningʺ of ʺadditionʺ in

2 Catskill I we were holding that the broader statutory phrase ʺaddition . . . to

3 navigable watersʺ unambiguously referred to a collection of individual ʺnavigable

4 watersʺ—such that the term ʺto navigable watersʺ could possibly mean only ʺto a

5 navigable waterʺ or ʺto any navigable water,ʺ and not to ʺnavigable watersʺ in the

6 collective singular (i.e., ʺall the qualifying navigable waters viewed as a single,

7 ʹunitaryʹ entityʺ). Nowhere in Catskill I did we state that ʺnavigable watersʺ or

8 the broader phrase ʺaddition . . . to navigable watersʺ could bear only one

9 meaning based on the unambiguous language contained in the statute. Such a

10 statement would have been inconsistent with our acknowledgment that Chevron

11 deference might be owed to a more formal agency interpretation.

12 Nor did we make any such statement in Catskill II. There, we began by

13 succinctly summarizing Catskill I as ʺconcluding that the discharge of water

above the pot, and pours it back into the pot, one has not ʹaddedʹ soup or anything else to the pot.ʺ Catskill I, 273 F.3d at 492. We explained that Catskill I was factually distinguishable from those cases because it involved the discharge of water from one distinct body of water (the Schoharie Reservoir) into another (the Esopus Creek). Id. at 491‐92. Gorsuch and Consumers Power have no bearing on the meaning of the term ʺnavigable watersʺ because the discharges at issue in those cases would not constitute ʺaddition[s] . . . to navigable watersʺ either under a unitary‐waters theory (because the potential pollutants in the dams cases were already within the navigable waters) or a non‐unitary‐waters theory (because those potential pollutants were not transferred from one navigable water body to another). These two cases therefore have no bearing on the outcome of this appeal. 37

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 containing pollutants from one distinct water body into another is an ʹaddition of

2 [a] pollutantʹ under the CWA.ʺ Catskill II, 451 F.3d at 80 (brackets in original)

3 (citing Catskill I, 273 F.3d at 491‐93). We then again rejected the Cityʹs arguments

4 in favor of reconsidering Catskill I, including its argument in favor of the

5 ʺunitary‐water theory of navigable waters,ʺ essentially for the reasons stated in

6 Catskill I—most importantly, that these arguments ʺsimply overlook[ed]ʺ the

7 ʺplain languageʺ and ʺordinary meaningʺ of the term ʺaddition.ʺ Id. at 81‐84. We

8 also noted that in the then‐recent Miccosukee decision, the Supreme Court noted

9 the existence of the unitary‐waters theory and raised possible arguments against

10 it, providing further support for our rejection of the theory in Catskill I. Catskill

11 II, 451 F.3d at 83 (citing Miccosukee, 541 U.S. at 105‐09). Nowhere did we state

12 that the phrase ʺaddition . . . to navigable watersʺ was unambiguous such that it

13 would preclude Chevron deference in the event that the EPA adopted a formal

14 rule. We held only that the EPAʹs position, as expressed in an informal

15 interpretation, was unpersuasive under the Skidmore framework. Id. at 83 & n.5

16 (noting that under Skidmore ʺ[w]e . . . defer to the agency interpretation according

17 to its ʹpower to persuadeʹʺ and ʺdeclin[ing] to defer to the EPAʺ under that

18 standard (quoting Mead,

)).

38

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 The best interpretation of Catskill I and Catskill II, we think, is that those

2 decisions set forth what those panels saw as the most persuasive reading of the

3 phrase ʺaddition . . . to navigable watersʺ in light of how the word ʺadditionʺ is

4 plainly and ordinarily understood. Catskill I and Catskill II did not hold that

5 ʺaddition . . . to navigable watersʺ could bear only one meaning, such that the

6 EPA could not interpret the phrase differently in an interpretive rule. Therefore,

7 as the district court concluded, neither Catskill I nor Catskill II requires us to

8 resolve this appeal at Chevron Step One.

9 B. Statutory Text, Structure, and Purpose

10 Having determined that the meaning of the relevant provision of the Clean

11 Water Act has not been resolved by prior case law, we turn to the overall statute

12 and its context. In evaluating whether Congress has directly spoken to whether

13 NPDES permits are required for water transfers, we employ the ʺtraditional tools

14 of statutory construction.ʺ Li v. Renaud,

(2d Cir. 2011) (quoting

15 Chevron,

n.9). We examine the statutory text, structure, and

16 purpose as reflected in its legislative history. See

If the statutory text is

17 ambiguous, we also examine canons of statutory construction. See Lawrence +

18 Memʹl Hosp.,

; see also Am. Farm Bureau Fedʹn v. EPA,

,

39

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 301 (3d Cir. 2015), cert. denied,

(2016); Heino v. Shinseki,

1372, 1378 (Fed. Cir. 2012); EEOC v. Seafarers Intʹl Union,

, 203 (4th

3 Cir. 2005).

4 1. Statutory text and structure. 5 ʺAs with any question of statutory interpretation, we begin with the text of

6 the statute to determine whether the language at issue has a plain and

7 unambiguous meaning.ʺ Louis Vuitton Malletier S.A. v. LY USA, Inc.,

,

8 108 (2d Cir. 2012). The statutory language at issue is found in Sections 301, 402,

9 and 502 of the Clean Water Act. Section 301(a) states that ʺ[e]xcept as in

10 compliance with [the Act], the discharge of any pollutant by any person shall be

11 unlawful.ʺ

(a). Section 402(a)(1) states that the EPA may issue an

12 NPDES permit allowing the ʺdischarge of any pollutant, or combination of

13 pollutants, notwithstanding [Section 301(a)],ʺ so long as the discharge meets

14 certain requirements specified by the Clean Water Act and the permit. See

15 § 1342(a)(1). Section 502 defines the term ʺdischarge of a pollutant,ʺ in relevant

16 part, as ʺany addition of any pollutant to navigable waters from any point

17 source.ʺ Id. § 1362(12). Section 502 also defines the term ʺnavigable watersʺ as

18 ʺthe waters of the United States, including the territorial seas.ʺ Id. § 1362(7). But

40

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 nowhere do these provisions speak directly to the question of whether an

2 NPDES permit may be required for a water transfer.

3 Nor is the meaning of the relevant statutory text plain. The question, as

4 we have indicated above, is whether ʺaddition of any pollutant to navigable

5 watersʺ—or, ʺaddition of any pollutant to the waters of the United Statesʺ—refers

6 to all navigable waters, meaning all of the waters of the United States viewed as a

7 singular whole, or to individual navigable waters, meaning one of the waters of the

8 United States. The term ʺwatersʺ may be used in either sense: As the Eleventh

9 Circuit observed, ʺ[i]n ordinary usage ʹwatersʹ can collectively refer to several

10 different bodies of water such as ʹthe waters of the Gulf coast,ʹ or can refer to any

11 one body of water such as ʹthe waters of Mobile Bay.ʹʺ Friends I,

.

12 The Supreme Court too has noted that the phrase ʺ[w]aters of the United States,ʺ

13 as used in Section 502, is ʺin some respects ambiguous.ʺ Rapanos v. United States,

14

(2006) (internal quotation marks omitted) (emphasis removed).

15 The statutory text yields no clear answer to the question before us; it could

41

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 support either of the interpretations proposed by the parties.23 Thus, based on

2 the text alone, we remain at sea.

3 Unfortunately, placing this statutory language in the broader context of the

4 Act as a whole does not help either. A statutory provisionʹs plain meaning may

5 be ʺunderstood by looking to the statutory scheme as a whole and placing the

6 particular provision within the context of that statute.ʺ Louis Vuitton,

108 (quoting Saks v. Franklin Covey Co.,

(2d Cir. 2003)). ʺIt is a

8 fundamental canon of statutory construction that the words of a statute must be

9 read in their context and with a view to their place in the overall statutory

10 scheme.ʺ Sturgeon v. Frost,

(2016) (internal quotation marks

11 omitted) (quoting Roberts v. Sea‐Land Servs., Inc.,

(2012)).

12 Examination of the other uses of the terms ʺnavigable watersʺ and ʺwatersʺ

13 elsewhere in the Clean Water Act does not establish that these terms can bear

14 only one meaning. The Clean Water Act sometimes regulates individual water

15 bodies and other times entire water systems.

We find the dissentʹs arguments relating to the ordinary meaning of the term 23

ʺadditionʺ to be unpersuasive. See Dissent at 9‐10. We agree that the ordinary meaning of that term refers to an increase or an augmentation. But that dictionary definition does not answer the question at issue here: whether such an increase or augmentation occurs when a pollutant is moved from one body of water to another. In addressing that question, we must consider the entire statutory phrase, ʺaddition . . . to navigable waters,ʺ not simply the definition of the term ʺaddition.ʺ 42

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 As the plaintiffs and the dissent point out, several other provisions in the

2 Clean Water Act suggest that ʺnavigable watersʺ refers to any of several

3 individual water bodies, specifically the Actʹs references to:

4  ʺthe navigable waters involved,ʺ

(c)(2)(A), 5 (c)(4); 6  ʺthose waters or parts thereof,ʺ

§ 1313(d)(1)(B); 7  ʺall navigable waters,ʺ id. § 1314(a)(2); 8  ʺany navigable waters,ʺ id. § 1314(f)(2)(F); 9  ʺthose waters within the Stateʺ and ʺall navigable waters in 10 such State,ʺ id. § 1314(l)(1)(A)‐(B); 11  ʺall navigable waters in such Stateʺ and ʺall navigable waters 12 of such State,ʺ id. § 1315(b)(1)(A)‐(B); and 13  ʺthe navigable waters within the jurisdiction of such State,ʺ 14 ʺnavigable waters within [the Stateʹs] jurisdiction,ʺ and ʺany of 15 the navigable waters,ʺ id. § 1342.

16 But this pattern of usage does not establish that ʺnavigable watersʺ cannot ever

17 refer to all waters as a singular whole because it also suggests that when

18 Congress wants to make clear that it is using ʺnavigable watersʺ in a particular

19 sense, it can and sometimes does provide additional language as a beacon to

20 guide interpretation. Cf. Rapanos, 547 U.S. at 732‐33 (holding that ʺ[t]he use of the

21 definite article (ʹtheʹ) and the plural number (ʹwatersʹ)ʺ made clear that § 1362(7)

22 is limited to ʺfixed bodies of water,ʺ such as ʺstreams, . . . oceans, rivers, [and]

23 lakes,ʺ and does not extend to ʺordinarily dry channels through which water

43

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 occasionally or intermittently flowsʺ).24 If Congress had thought about the

2 question and meant for Section 502(12) of the Clean Water Act to refer to

3 individual water bodies, it could have referred to something like ʺany addition of

4 any pollutant to a navigable water from any point source,ʺ or ʺany addition of any

5 pollutant to any navigable water from any point source.ʺ As the plaintiffs and the

6 dissent would have it, the phrases ʺaddition to navigable waters,ʺ ʺaddition to a

7 navigable water,ʺ and ʺaddition to any navigable waterʺ necessarily mean the

8 same thing, at least in the context of the Act. We do not disagree that the phrases

9 could be interpreted to have the same meaning, but we disagree that this

10 interpretation is clearly and unambiguously mandated in light of how the terms

11 ʺnavigable watersʺ and ʺwatersʺ are used in other sections of the Act.

12 We thus see nothing in the language or structure of the Act that indicates

13 that Congress clearly spoke to the precise question at issue: whether Congress

14 intended to require NPDES permits for water transfers.

Contrary to the dissentʹs suggestion, the Supreme Courtʹs holding in Rapanos does 24

not compel the conclusion that the statutory phrase ʺnavigable watersʺ is unambiguous because that phrase, unlike the phrase addressed in Rapanos, is not limited by a definite article. See Dissent at 6‐9. 44

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (

. Statutory purpose and legislative history 2 Inasmuch as the statutory text, context, and structure have yielded no

3 definitive answer to the question before us, we conclude the first step of our

4 Chevron analysis by looking to whether Congressʹs purpose in enacting the Clean

5 Water Act establishes that the phrase ʺaddition . . . to navigable watersʺ can

6 reasonably bear only one meaning. See Gen. Dynamics, 540 U.S. at 600 (using

7 both statutory purpose and history at Chevron Step One). Beginning with the

8 name of the statute, it seems clear enough that the predominant goal of the Clean

9 Water Act is to ensure that our nationʹs waters are ʺclean,ʺ at least in the sense of

10 being reasonably free of pollutants. The Act itself states that its main objective is

11 ʺto restore and maintain the chemical, physical, and biological integrity of the

12 Nationʹs waters.ʺ

(a). The plaintiffs and the dissent argue that

13 exempting water transfers from the NPDES permitting program could frustrate

14 the achievement of this goal by allowing unmonitored transfers of polluted

15 water from one water body to another. Cf. Catskill II, 451 F.3d at 81 (observing

16 that a unitary‐waters interpretation of navigable waters would allow for ʺthe

17 transfer of water from a heavily polluted, even toxic, water body to one that was

18 pristineʺ).

45

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 As the Supreme Court has noted, however, ʺno law pursues its purpose at

2 all costs.ʺ Rapanos,

. We see no reason to think that the Clean

3 Water Act is an exception. To the contrary, the Clean Water Act is ʺamong the

4 most complexʺ of federal statutes, and it ʺbalances a welter of consistent and

5 inconsistent goals,ʺ Catskill I, 273 F.3d at 494, establishing a complicated scheme

6 of federal regulation employing both federal and state implementation and

7 supplemental state regulation, see, e.g.,

(g) (federal agencies must

8 cooperate with state and local governments to develop ʺcomprehensive

9 solutionsʺ for pollution ʺin concert with . . . managing water resourcesʺ). In this

10 regard, the Act largely preserves statesʹ traditional authority over water

11 allocation and use, while according the EPA a degree of policymaking discretion

12 and flexibility with respect to water quality standards—both of which might well

13 counsel against requiring NPDES permits for water transfers and instead in favor

14 of letting the States determine what administrative regimen, if any, applies to

15 water transfers. Accordingly, Congressʹs broad purposes and goals in passing

16 the Act do not alone establish that the Act unambiguously requires that water

17 transfers be subject to NPDES permitting.

46

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Even careful analysis of the Clean Water Actʹs legislative history does not

2 help us answer the interpretive question before us. Although we are generally

3 ʺreluctant to employ legislative history at step one of Chevron analysis,ʺ

4 legislative history is at times helpful in resolving ambiguity; for example, when

5 the ʺʹinterpretive clues [speak] almost unanimously,ʹ making Congressʹs intent

6 clear ʹbeyond reasonable doubt.ʹʺ Mizrahi v. Gonzales,

(2d Cir.

7 2007) (quoting Gen. Dynamics, 540 U.S. at 586, 590). But here Congress has not

8 left us a trace of a clue as to its intent. The more than 3,000‐page legislative

9 history of the Clean Water Act appears to be silent, or very nearly so, as to the

10 applicability of the NPDES permitting program to water transfers. See generally

11 Comm. on Envʹt. & Pub. Works, 95th Cong., 2d Sess., A Legislative History of the

12 Clean Water Act of 1977 & A Continuation of the Legislative History of the

13 Federal Water Pollution Control Act (1978); Comm. on Pub. Works, 93rd Cong.,

14 1st Sess., A Legislative History of the Water Pollution Control Act Amendments

15 of 1972 (1973). As we noted in Catskill I, the legislative history does not speak to

16 the meaning of the term ʺadditionʺ standing alone, 273 F.3d at 493, suggesting

17 that the history is similarly silent as to the meaning of the broader phrase that

18 includes this term, ʺaddition . . . to navigable waters.ʺ

47

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Finally and tellingly, neither the parties nor amici have pointed us to any

2 legislative history that clearly addresses the applicability of the NPDES

3 permitting program to water transfers. What few examples from the legislative

4 history they have cited—such as the strengthening of the permit requirements in

5 Section 301(b)(1)(C) to include water quality‐based limits in addition to

6 technology‐based limitations, see William L. Andreen, The Evolution of Water

7 Pollution Control in the United States—State, Local, and Federal Efforts, 1789‐1972:

8 Part II,

, 270, 275‐77 (2003), and broad aspirational

9 statements about the elimination of water pollution and the need to regulate

10 every point source by the report of the Senateʹs Environment and Public Works

11 Committee, S. Rep. No. 92‐414, at 3738, 3758 (1971), provide at most keyhole‐

12 view insights into Congressʹs intent. They do not speak to the issue before us

13 with the ʺhigh level of clarityʺ necessary to resolve the textual ambiguity before

14 us at Chevron Step One. Cohen v. JP Morgan Chase & Co.,

(2d Cir.

15 2007). The question is whether Congress has ʺdirectly spoken,ʺ Chevron,

, to whether NPDES permits are required for water transfers—not whether

17 it has made a stray or oblique reference to that issue here and there.

48

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (

. Canons of statutory construction 2 The traditional canons of statutory construction also provide no clear

3 answer to the question whether Congress intended that the NPDES permitting

4 system apply to water transfers.

5 First, the dissent asserts that the Water Transfers Rule violates the

6 principle that ʺʹ[w]here Congress explicitly enumerates certain exceptions to a

7 general prohibition, additional exceptions are not to be implied, in the absence of

8 evidence of contrary legislative intent,ʹʺ Hillman v. Maretta,

, 1953

9 (2013) (quoting Andrus v. Glover Constr. Co.,

, 616‐17 (1980)). See

10 Dissent at 12‐14. Contrary to the dissentʹs assertion, however, that canon of

11 construction is not applicable where, as here, the issue is not whether to create an

12 implied exception to a general prohibition, but the scope of the general

13 prohibition itself.25

The dissentʹs argument proceeds as follows: (1) the Act imposes a general ban on 25

ʺthe discharge of any pollutant,ʺ defined by Section 502 as ʺany addition . . . to navigable watersʺ; (2) the Act specifies certain exemptions to the general ban; and (3) the Water Transfers Rule must be rejected because it effectively creates an implied exemption to the general ban on the discharge of pollutants. See Dissent at 12‐14. This strikes us as decidedly circular: It presupposes that the scope of the general ban on the discharge of pollutants, as defined by Section 502, extends to water transfers in order to conclude that the Water Transfers Rule is an exemption from that general ban. This argument, therefore, is unhelpful because it sidesteps the question at issue here— whether ʺany addition . . . to navigable watersʺ is ambiguous. 49

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Second, the plaintiffs invoke the canon of construction that a ʺstatute

2 should be interpreted in a way that avoids absurd results.ʺ SEC v. Rosenthal, 650

(2d Cir. 2011) (quoting United States v. Venturella,

, 126

4 (2d Cir. 2004)). They again underscore their arguments concerning statutory

5 purpose in arguing that by allowing for the unpermitted transfer of polluted

6 water from one water body to another, the Water Transfers Rule is contrary to

7 the Actʹs principal stated objective: ʺto restore and maintain the chemical,

8 physical, and biological integrity of the Nationʹs waters.ʺ

(a).

9 Additionally, the plaintiffs argue that the Water Transfers Rule may undermine

10 the ability of downstream states to protect themselves from the pollution

11 generated by upstream states.

12 The simplicity of the plaintiffsʹ approach helps cloak their arguments with

13 considerable force. But we are ultimately not persuaded that they establish that

14 the Clean Water Act unambiguously forecloses the EPAʹs interpretation in the

15 Water Transfers Rule. Indeed, it is unclear to us how one can argue persuasively

16 that the Water Transfers Rule leads to a result so absurd that the result could not

17 possibly have been intended by Congress, while asserting at the same time that it

18 codifies the EPAʹs practice of not issuing NPDES permits that has prevailed for

50

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 decades without Congressional course‐correction of any kind. In light of the

2 immense importance of water transfers, it seems more likely that Congress has

3 contemplated the very result that the plaintiffs argue is foreclosed by the Act,

4 and acquiesced in that result.

5 Furthermore, as the plaintiffs would have it, the EPA and the States could

6 not, consistent with the Clean Water Act, select any policy that does not improve

7 water quality as much as is possible. But the Clean Water Act is more flexible

8 than that. Far from establishing a maximalist scheme under which water quality

9 must be pursued at all costs, the Act leaves a considerable amount of

10 policymaking discretion in the hands of both the EPA and the States—entirely

11 understandably in light of its ʺwelter of consistent and inconsistent goals.ʺ

12 Catskill I, 273 F.3d at 494. We cannot say that the Act could not reasonably be

13 read to permit water transfers to be exempt from the NPDES permitting

14 program, in light of the possibility that other measures will do. Although the

15 tension between the Ruleʹs reading of the Act and the statuteʹs overall goal of

16 improving water quality casts some doubt on the reasonableness of the Rule, it

17 may nevertheless be understandable and permissible if it furthers other

18 objectives of the statute.

51

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 We think that the legislative compromises embodied in the Act counsel

2 against the application of the absurdity canon here. We generally apply that

3 canon only ʺwhere the result of applying the plain language would be, in a

4 genuine sense, absurd, i.e., where it is quite impossible that Congress could have

5 intended the result and where the alleged absurdity is so clear as to be obvious to

6 most anyone.ʺ Pub. Citizen v. U.S. Depʹt of Justice,

, 470‐71 (1989)

7 (Kennedy, J., concurring in the judgment) (citation omitted). Exempting water

8 transfers from the NPDES program does not, we conclude, lead directly to a

9 result so absurd it could not possibly have been contemplated by Congress.

10 As to the effect of the Rule on downstream states, even in the absence of

11 NPDES permitting for water transfers, the States can seek to protect themselves

12 against polluted water transfers through other means—for example, through

13 filing a common‐law nuisance or trespass lawsuit in the polluting stateʹs courts,

14 see, e.g., Intʹl Paper Co. v. Ouellette,

, 497‐98 (1987)—even if the

15 protections provided by such lawsuits are less robust than those that would be

16 available through the NPDES permitting programʹs application to transfers.26

17 The inconsistency of the Water Transfers Rule with the Clean Water Actʹs

Although common‐law nuisance and trespass lawsuits may take a long time to work 26

through the court system, preliminary injunctions may be available in urgent cases. 52

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 primary objective may be a strike against its reasonableness, but only one strike,

2 which is not enough for the EPAʹs position to be ʺout.ʺ

3 Third, arguing to the contrary, the defendants and amicus curiae State of

4 California argue that we should reject the plaintiffsʹ preferred interpretation of

5 Section 402 of the Clean Water Act (i.e., that permits are required for water

6 transfers) based on a clear‐statement rule and principles of federalism derived

7 from the Supreme Courtʹs decisions in Solid Waste Agency of Northern Cook County

8 v. United States Army Corps of Engineers,

(2001) (ʺSWANCCʺ), and

9 Rapanos, as well as the Tenth Amendment. If that were so, it would make our

10 task much easier. But we think it is incorrect. To the extent that SWANCC and

11 Rapanos establish a clear‐statement rule, it does not apply here.

12 In SWANCC, the Supreme Court addressed the ʺMigratory Bird Ruleʺ

13 issued by the U.S. Army Corps of Engineers (the ʺCorpsʺ) under which the Corps

14 asserted jurisdiction pursuant to Section 404(a) of the Clean Water Act to require

15 permits for the discharge of dredged or fill material into intrastate waters used as

16 habitat by migratory birds. SWANCC, 531 U.S. at 163‐64. The Rule applied even

17 to small, isolated ponds located entirely within a single state, such as those

18 located in the abandoned sand and gravel pit there at issue. See

at 163‐65. The

53

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Court reasoned that, ʺ[w]here an administrative interpretation of a statute

2 invokes the outer limits of Congressʹ power, [it] expect[s] a clear indication that

3 Congress intended that result,ʺ and that ʺ[t]his concern is heightened where the

4 administrative interpretation alters the federal‐state framework by permitting

5 federal encroachment upon a traditional state power.ʺ

at 172‐73. Thus,

6 ʺwhere an otherwise acceptable construction of a statute would raise serious

7 constitutional problems, the Court will construe the statute to avoid such

8 problems unless such construction is plainly contrary to the intent of Congress.ʺ

9

at 173 (quoting Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr.

10 Trades Council,

(1988)). The Supreme Court rejected the Corpsʹ

11 interpretation because (1) the Migratory Bird Rule ʺraise[d] significant

12 constitutional questionsʺ with respect to Congressʹs authority under the

13 Commerce Clause; (2) Congress had not clearly stated ʺthat it intended § 404(a)

14 to reach an abandoned sand and gravel pitʺ; and (3) the Corpsʹ interpretation of

15 Section 404(a) ʺwould result in a significant impingement of the Statesʹ

16 traditional and primary power over land and water use.ʺ Id. at 173‐74.

17 In Rapanos, a plurality of the Supreme Court rejected the EPAʹs

18 interpretation of the Clean Water Act as providing authority to regulate isolated

54

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 wetlands lying near ditches or artificial drains that eventually empty into

2 ʺnavigable watersʺ because the wetlands are adjacent to ʺwaters of the United

3 States.ʺ Rapanos, 547 U.S. at 723‐24, 729, 739. The plurality rejected the

4 interpretation because it ʺwould authorize the Corps to function as a de facto

5 regulator of immense stretches of intrastate land,ʺ which was impermissible

6 because a ʺʹclear and manifestʹ statement from Congressʺ is required ʺto

7 authorize an unprecedented intrusionʺ into an area of ʺtraditional state

8 authorityʺ such as the regulation of land use. Id. at 738 (citation omitted). Citing

9 SWANCC, the Court also noted that ʺthe Corpsʹ interpretation stretches the outer

10 limits of Congressʹs commerce power and raises difficult questions about the

11 ultimate scope of that power,ʺ which further counseled in favor of requiring a

12 clear statement from Congress in order to authorize such jurisdiction. Id. (citing

13 SWANCC,

).

14 The clear‐statement rule articulated in SWANCC and Rapanos does not

15 apply here. The case at bar presents no question regarding Congressʹs authority

16 under the Commerce Clause, inasmuch as it is undisputed that Congress has the

17 power to regulate navigable waters and to delegate its authority to do so.

18 SWANCC and Rapanos both involved attempts by the Army Corps of Engineers

55

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 to extend the scope of the phrase ʺnavigable watersʺ to include areas not

2 traditionally understood to be such. They were therefore treated as attempts by

3 the Corps to stretch the limits of its delegated authority vis‐à‐vis the States.

4 Here, the EPA is not seeking to expand the universe of waters deemed to be

5 ʺnavigable.ʺ The question before us is not whether the EPA has the authority to

6 regulate water transfers; it is whether the EPA is using (or not using) that

7 authority in a permissible manner.

8 The Clean Water Act was designed to alter the federal‐state balance with

9 respect to the regulation of water quality. Congress passed the Act precisely

10 because it found inconsistent state‐by‐state regulation not up to the task of

11 restoring and maintaining the integrity of the nationʹs waters. See S. Rep. No. 95‐

12 370, at 1 (1977) (the Act is intended to be a ʺcomprehensive revision of national

13 water quality policyʺ). True, as the defendants point out, water allocation is an

14 area of traditional state authority. But again, we are concerned here not with

15 water allocation, but with water quality. We know of no authority or accepted

16 principle that would require a ʺclear statementʺ by Congress before the EPA

17 could adopt the plaintiffsʹ preferred interpretation of the Act.

56

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Fourth, and finally, several of the defendants raise the related argument

2 that requiring permits for water transfers under the plaintiffsʹ preferred

3 interpretation would pose a serious Tenth Amendment27 problem because it

4 would upset the traditional balance of federal and state power with respect to

5 water regulation. This, in turn, would violate the canon of constitutional

6 avoidance, which provides that if one of two competing statutory interpretations

7 ʺwould raise a multitude of constitutional problems, the other should prevail.ʺ

8 Clark v. Martinez,

, 380‐81 (2005); see also FCC v. Fox Television Stations,

9 Inc.,

(2009) (ʺThe so‐called canon of constitutional avoidance is

10 an interpretive tool, counseling that ambiguous statutory language be construed

11 to avoid serious constitutional doubts.ʺ). These defendants argue that the EPAʹs

12 interpretation must prevail because it avoids this constitutional problem.

13 But the plaintiffsʹ proposed interpretation raises no Tenth Amendment

14 concerns that we can discern because it would not result in federal overreach into

15 statesʹ traditional authority to allocate water quantities. The Clean Water Actʹs

16 preservation of statesʹ water‐allocation authority ʺdo[es] not limit the scope of

17 water pollution controls that may be imposed on users who have obtained,

ʺThe powers not delegated to the United States by the Constitution, nor prohibited 27

by it to the States, are reserved to the States respectively, or to the people.ʺ U.S. Const. amend. X. 57

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 pursuant to state law, a water allocation.ʺ PUD No. 1 of Jefferson Cty. v. Wash.

2 Depʹt of Ecology,

(1994). As we noted in Catskill II, the ʺflexibility

3 built into the [Act] and the NPDES permit scheme,ʺ which includes variances,

4 general permits, and the consideration of costs in setting effluent limitations,

5 ʺallow[s] federal authority over quality regulation and state authority over

6 quantity allocation to coexist without materially impairing either.ʺ28 451 F.3d at

7 85‐86. The resolution of this appeal is not dictated by a clear‐statement rule or

8 the Tenth Amendment, but rather by straightforward considerations of statutory

9 interpretation.

10 We conclude, then, that Congress did not in the Clean Water Act speak

11 directly to the question of whether NPDES permits are required for water

12 transfers.29 The Act is therefore silent or ambiguous as to this question, which

There is no reason to think that applying the NPDES program to water transfers 28

would turn the prior appropriation doctrine (ʺfirst in time, first in rightʺ) on its head, as some of the defendants insist. See Western States Br. 31‐32. NPDES permits merely put restrictions on water discharges, without changing priority or ownership rights. 29 The dissent asserts that in reaching this conclusion we are effectively construing

ʺnavigable watersʺ to mean all the navigable waters of the United States, collectively. See Dissent at 6. Not so: By concluding that the phrase ʺaddition . . . to navigable watersʺ is ambiguous for purposes of Chevron Step One, we are emphatically declining to adopt any construction of the statute in the first instance. We are instead acknowledging that Congress has left the task of resolving that ambiguity to the EPA by delegating to that agency the authority ʺto make rules carrying the force of lawʺ to which we must defer so long as they are reasonable. Mead, 533 U.S. at 226‐27. 58

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 means that this case cannot be resolved by the Step One analysis under Chevron.

2 See also Friends I,

(similarly concluding at Chevron Step One that

3 the statutory phrase ʺaddition . . . to navigable watersʺ is ambiguous).

4 Accordingly, we proceed to Step Two. See New York v. FERC,

, 954

5 (2d Cir. 2015).

6 II. Chevron Step Two 7 At last, we reach the application of the second step of Chevron analysis,

8 upon which our decision to reverse the district courtʹs judgment turns. We

9 conclude that the EPAʹs interpretation of the Clean Water Act is reasonable and

10 neither arbitrary nor capricious. Although the Rule may or may not be the best

11 or most faithful interpretation of the Act in light of its paramount goal of

12 restoring and protecting the quality of U.S. waters, it is supported by several

13 valid arguments—interpretive, theoretical, and practical. And the EPAʹs

14 interpretation of the Act as reflected in the Rule seems to us to be precisely the

15 kind of policymaking decision that Chevron is designed to protect from overly

16 intrusive judicial review. As we have already pointed out, although we might

17 prefer a different rule more clearly guaranteed to reach the environmental

18 concerns underlying the Act, Chevron analysis requires us to recognize that our

19 preference does not matter. We conclude that the Water Transfers Rule satisfies

59

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Chevronʹs deferential standard of review, and, accordingly, we reverse the

2 judgment of the district court.

3 A. Legal Standard

4 The question for the reviewing court at Chevron Step Two is ʺwhether the

5 agencyʹs answer [to the interpretive question] is based on a permissible

6 construction of the statute.ʺ Mayo Found. for Med. Educ. & Research v. United

7 States,

, 54 (2011) (quoting Chevron,

). We will not

8 disturb an agency rule at Chevron Step Two unless it is ʺarbitrary or capricious in

9 substance, or manifestly contrary to the statute.ʺ

at 53 (quoting Household

10 Credit Servs., Inc. v. Pfennig,

(2004)); see also Lawrence + Memʹl

11 Hosp.,

. Generally, an agency interpretation is not ʺarbitrary,

12 capricious, or manifestly contrary to the statuteʺ if it is ʺreasonable.ʺ See Encino

13 Motorcars, LLC v. Navarro,

(2016) (ʺ[A]t [Chevronʹs] second

14 step the court must defer to the agencyʹs interpretation if it is ʹreasonable.ʹʺ

15 (quoting Chevron,

)); Mayo,

(ʺ[T]he second step of

16 Chevron . . . asks whether the [agencyʹs] rule is a ʹreasonable interpretationʹ of the

17 enacted text.ʺ (quoting Chevron,

)); Lee v. Holder,

, 937

18 (2d Cir. 2012); Adams v. Holder,

(2d Cir. 2012). The agencyʹs view

19 need not be ʺthe only possible interpretation, nor even the interpretation deemed

60

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 most reasonable by the courts.ʺ Entergy Corp. v. Riverkeeper, Inc.,

, 218

2 (2009) (emphasis in original). This approach ʺis premised on the theory that a

3 statuteʹs ambiguity constitutes an implicit delegation from Congress to the

4 agency to fill in the statutory gaps.ʺ FDA v. Brown & Williamson Tobacco Corp.,

5

(2000). When interpreting ambiguous statutory language

6 ʺinvolves difficult policy choices,ʺ deference is especially appropriate because

7 ʺagencies are better equipped to make [these choices] than courts.ʺ Brand X, 545

8 U.S. at 980.

9 ʺEven under this deferential standard, however, agencies must operate

10 within the bounds of reasonable interpretation,ʺ Michigan v. EPA,

,

11 2707 (2015) (internal quotation marks omitted), and we therefore will not defer to

12 an agency interpretation if it is not supported by a reasoned explanation, see Vill.

13 of Barrington, Ill. v. Surface Transp. Bd.,

(D.C. Cir. 2011). An

14 agency interpretation would surely be ʺarbitraryʺ or ʺcapriciousʺ if it were picked

15 out of a hat, or arrived at with no explanation, even if it might otherwise be

16 deemed reasonable on some unstated ground.

17 In the course of its Chevron Step Two analysis, the district court

18 incorporated the standard for evaluating agency action under APA § 706(2)(A)

61

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 set forth in Motor Vehicle Manufacturers Association v. State Farm Mutual

2 Automobile Insurance Company,

(1983) (ʺState Farmʺ), a much stricter

3 and more exacting review of the agencyʹs rationale and decisionmaking process

4 than the Chevron Step Two standard. Under that section, a reviewing court may

5 set aside an agency action if it is ʺarbitrary, capricious, an abuse of discretion, or

6 otherwise not in accordance with law.ʺ

(2)(A). In State Farm, the

7 Supreme Court explained that under Section 706(2)(A),

8 an agency rule would be arbitrary and capricious if the agency has relied 9 on factors which Congress has not intended it to consider, entirely failed 10 to consider an important aspect of the problem, offered an explanation for 11 its decision that runs counter to the evidence before the agency, or is so 12 implausible that it could not be ascribed to a difference in view or the 13 product of agency expertise.

14

. On appeal, the plaintiffs urge us to incorporate the State Farm

15 standard into our Chevron Step Two analysis, and to affirm the district courtʹs

16 vacatur of the Rule for essentially the same reasons stated by the court. While

17 we have great respect for the district courtʹs careful and searching analysis of the

18 EPAʹs rationale for the Water Transfers Rule, we conclude that it erred by

19 incorporating the State Farm standard into its Chevron Step Two analysis and

20 thereby applying too strict a standard of review. An agencyʹs initial

21 interpretation of a statutory provision should be evaluated only under the

62

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Chevron framework, which does not incorporate the State Farm standard. State

2 Farm review may be appropriate in a case involving a non‐interpretive rule or a

3 rule setting forth a changed interpretation of a statute; but that is not so in the

4 case before us.

5 As the Supreme Court, our Circuit, and other Courts of Appeals have

6 made reasonably clear, State Farm and Chevron provide for related but distinct

7 standards for reviewing rules promulgated by administrative agencies. See, e.g.,

8 Encino, 136 S. Ct. at 2125‐26; Judulang v. Holder,

, 483 n.7 (2011); Nat.

9 Res. Def. Council,

; New York v. FERC,

; Pub. Citizen,

10 Inc. v. Mineta,

, 53 (2d Cir. 2003); N.Y. Pub. Interest Research Grp. v.

11 Whitman,

, 324 (2d Cir. 2003); see also, e.g., Shays v. FEC,

,

12 96‐97 (D.C. Cir. 2005); Arent v. Shalala,

(D.C. Cir. 1995) (Wald, J.,

13 concurring). State Farm is used to evaluate whether a rule is procedurally

14 defective as a result of flaws in the agencyʹs decisionmaking process. See Encino,

15 136 S. Ct. at 2125; FERC v. Elec. Power Supply Assʹn,

(2016).

16 Chevron, by contrast, is generally used to evaluate whether the conclusion

17 reached as a result of that process—an agencyʹs interpretation of a statutory

18 provision it administers—is reasonable. See Encino,

; Entergy,

63

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 556 U.S. at 217‐18. A litigant challenging a rule may challenge it under State

2 Farm, Chevron, or both. As Judge Wald explained,

3 there are certainly situations where a challenge to an agencyʹs regulation 4 will fall squarely within one rubric, rather than the other. For example, 5 we might invalidate an agencyʹs decision under Chevron as inconsistent 6 with its statutory mandate, even though we do not believe the decision 7 reflects an arbitrary policy choice. Such a result might occur when we 8 believe the agencyʹs course of action to be the most appropriate and 9 effective means of achieving a goal, but determine that Congress has 10 selected a different—albeit, in our eyes, less propitious—path. 11 Conversely, we might determine that although not barred by statute, an 12 agencyʹs action is arbitrary and capricious because the agency has not 13 considered certain relevant factors or articulated any rationale for its 14 choice. Or, along similar lines, we might find a regulation arbitrary and 15 capricious, while deciding that Chevron is inapplicable because Congressʹ 16 delegation to the agency is so broad as to be virtually unreviewable.

17 18 Arent,

(Wald, J., concurring) (citation and footnotes omitted).

19 Much confusion about the relationship between State Farm and Chevron

20 seems to arise because both standards purport to provide a method by which to

21 evaluate whether an agency action is ʺarbitraryʺ or ʺcapricious,ʺ and Chevron Step

22 Two analysis and State Farm analysis often, though not always, take the same

23 factors into consideration and therefore overlap. See Judulang,

24 n.7 (stating, in a case governed by the State Farm standard, that had the Supreme

25 Court applied Chevron, the ʺanalysis would be the same, because under Chevron

26 step two, we ask whether an agency interpretation is arbitrary or capricious in

64

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 substanceʺ (internal quotation marks omitted)); Pharm. Research & Mfrs. of Am. v.

2 FTC,

(D.C. Cir. 2015) (noting that it is ʺoften the caseʺ that an

3 agencyʹs ʺinterpretation of its authority under Chevron Step Two overlaps with

4 our arbitrary and capricious review under

(2)(A)ʺ); Am. Petroleum

5 Inst. v. EPA,

(D.C. Cir. 2000) (ʺThe second step of Chevron analysis

6 and State Farm arbitrary and capricious review overlap, but are not identical.ʺ).

7 We read the case law to stand for the proposition that where a litigant brings

8 both a State Farm challenge and a Chevron challenge to a rule, and the State Farm

9 challenge is successful, there is no need for the reviewing court to engage in

10 Chevron analysis. As the Supreme Court has explained, ʺwhere a proper

11 challenge is raised to the agency procedures, and those procedures are defective,

12 a court should not accord Chevron deference to the agency interpretation.ʺ

13 Encino,

.30 In other words, if an interpretive rule was

14 promulgated in a procedurally defective manner, it will be set aside regardless of

In Encino, which was decided after the briefing in this appeal had been completed, 30

the Supreme Court declined to defer under Chevron to a Department of Labor regulation that departed from a longstanding earlier position due to a ʺlack of reasoned explication,ʺ inasmuch as the agency gave ʺalmost no reasons at allʺ for the change in policy, and instead issued only vague blanket statements. 136 S. Ct. at 2127. Thus, the plaintiffsʹ indisputably proper procedural challenge was successful, and therefore the regulation was not entitled to Chevron deference, rendering an analysis under the two‐ step Chevron framework unnecessary. See id. at 2125‐26. 65

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 whether its interpretation of the statute is reasonable. If the rule is not defective

2 under State Farm, though, that conclusion does not avoid the need for a Chevron

3 analysis, which does not incorporate the State Farm standard of review. In fact,

4 in many recent cases, we have applied Chevron Step Two without applying State

5 Farm or conducting an exacting review of the agencyʹs decisionmaking and

6 rationale. See, e.g., Stryker v. SEC,

(2d Cir. 2015); Florez v. Holder,

7

, 211‐12 (2d Cir. 2015); Lee,

; Adams,

;

8 WPIX, Inc. v. ivi, Inc.,

(2d Cir. 2012).

9 Several other considerations also counsel against employing the searching

10 State Farm standard of review of the agencyʹs decisionmaking and rationale at

11 Chevron Step Two. The Supreme Court has decided that agencies are not

12 obligated to conduct detailed fact‐finding or cost‐benefit analyses when

13 interpreting a statute—which suggests that the full‐fledged State Farm standard

14 may not apply to rules that set forth for the first time an agencyʹs interpretation

15 of a particular statutory provision. See, e.g., Pension Benefit Guar. Corp. v. LTV

16 Corp.,

, 651‐52 (1990) (an agency may interpret an ambiguous

17 statutory provision by making ʺjudgments about the way the real world worksʺ

18 without making formal factual findings); Entergy,

(absent

66

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 statutory language to the contrary, an agency is not required to conduct cost‐

2 benefit analysis under Chevron); Am. Textile Mfrs. Inst., Inc. v. Donovan,

(1981) (ʺWhen Congress has intended that an agency engage in cost‐

4 benefit analysis, it has clearly indicated such intent on the face of the statute.ʺ).

5 These decisions seem to establish that while an agency may support its statutory

6 interpretation with factual materials or cost‐benefit analyses, an agency need not

7 do so in order for its interpretation to be regarded as reasonable.

8 Further, the Supreme Court has cautioned that State Farm is ʺinapposite to

9 the extent that it may be read as prescribing more searching judicial reviewʺ in a

10 case involving an agencyʹs ʺfirst interpretation of a new statute.ʺ Verizon

11 Commcʹns Inc. v. FCC,

, 502 n.20 (2002); see also Judulang,

483 n.7 (stating that ʺstandard arbitrary or capricious review under the APAʺ

13 was appropriate because the agency action at issue was ʺnot an interpretation of

14 any statutory languageʺ (internal quotation marks and brackets omitted)).

15 Dovetailing with this point, the Supreme Court held in Brand X and Fox Television

16 Stations that when an agency changes its interpretation of a particular statutory

17 provision, this change is reviewable under APA § 706(2)(A), and will be set aside

18 if the agency has failed to provide a ʺreasoned explanation . . . for disregarding

67

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 facts and circumstances that underlay or were engendered by the prior policy.ʺ

2 Fox Television,

; Brand X, 545 U.S. at 981 (explaining that

3 ʺ[u]nexplained inconsistencyʺ is ʺa reason for holding an [agency] interpretation

4 to be an arbitrary and capricious change from agency practice under the [APA]ʺ).

5 Of course, if all interpretive rules were reviewable under APA § 706(2)(A) and

6 the State Farm standard, these pronouncements in Brand X and Fox Television

7 Stations would have been unnecessary. We also note that applying a

8 reasonableness standard to the agencyʹs decisionmaking and rationale at Chevron

9 Step Two instead of a heightened State Farm‐type standard promotes respect for

10 agenciesʹ policymaking discretion and promotes policymaking flexibility.

11 For these reasons, the plaintiffsʹ challenge to the Water Transfers Rule is

12 properly analyzed under the Chevron framework, which does not incorporate the

13 State Farm standard.31 We will therefore address only whether the EPA provided

14 a reasoned rationale for the Water Transfers Rule, and whether the Ruleʹs

15 interpretation of the Clean Water Act is reasonable. As to the former, the

None of the plaintiffs argue that the Rule was procedurally defective under APA 31

§ 706(2)(A), except for the Sportsmen and Environmental Organization Plaintiffs, who do so only in the context of a Chevron Step Two argument. See Sportsmen and Environmental Organization Pls.ʹ Br. at 36‐54, 58. In any event, as we have explained above, the interpretive Rule here is properly reviewed only under the Chevron standard, which does not incorporate the State Farm standard. 68

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 question is not whether the EPAʹs reasoning was flawless, impervious to

2 counterarguments, or complete—the EPA only must have provided a reasoned

3 explanation for its action.

4 B. Reasoned Rationale for the EPAʹs Interpretation

5 We conclude that the EPA provided a reasoned explanation for its decision

6 in the Water Transfers Rule to interpret the Clean Water Act as not requiring

7 NPDES permits for water transfers. We can see from the EPAʹs rationale how

8 and why it arrived at the interpretation of the Clean Water Act set forth in the

9 Water Transfers Rule. It is clear that the EPA based the Rule on a holistic

10 interpretation of the Clean Water Act that took into account the statutory

11 language, the broader statutory scheme, the statuteʹs legislative history, the

12 EPAʹs longstanding position that water transfers are not subject to NPDES

13 permitting, congressional concerns that the statute not unnecessarily burden

14 water quantity management activities, and the importance of water transfers to

15 U.S. infrastructure. See Water Transfers Rule, 73 Fed. Reg. at 33,699‐33,703.

16 In the Water Transfers Rule, the EPA analyzed the text of the statute,

17 explaining how its interpretation was justified by its understanding of the phrase

18 ʺthe waters of the United States,ʺ id. at 33,701, as well as by the broader statutory

69

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 scheme, noting that the Clean Water Act provides for several programs and

2 regulatory initiatives other than the NPDES permitting program that could be

3 used to mitigate pollution caused by water transfers, id. at 33,701‐33,702. The

4 EPA also justified the Rule by reference to statutory purpose, noting its view that

5 ʺCongress intended to leave primary oversight of water transfers to state

6 authorities in cooperation with Federal authorities,ʺ and that Congress intended

7 to create a ʺbalance . . . between federal and State oversight of activities affecting

8 the nation’s waters.ʺ Id. at 33,701. The EPA also stated that subjecting water

9 transfers to NPDES permitting could affect statesʹ ability to effectively allocate

10 water and water rights, id. at 33,702, and explained how its interpretation was

11 justified in light of the Actʹs legislative history, see id. at 33,703. The EPA

12 concluded by addressing several public comments on the Rule, and explaining in

13 a reasoned manner why it rejected proposed alternative readings of the Clean

14 Water Act. See id. at 33,703‐33,706.

15 This rationale, while not immune to criticism or counterargument, was

16 sufficiently reasoned to clear Chevronʹs rather minimal requirement that the

17 agency give a reasoned explanation for its interpretation. We see nothing

70

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 illogical in the EPAʹs rationale.32 The agency provided a sufficiently reasoned

2 explanation for its interpretation of the Clean Water Act in the Water Transfers

3 Rule. The Ruleʹs interpretation of the Clean Water Act was therefore not adopted

4 in an ʺarbitraryʺ or ʺcapriciousʺ manner. Accordingly, we must address whether

5 the Ruleʹs interpretation of the Clean Water Act was, ultimately, reasonable.

6 C. Reasonableness of the EPAʹs Interpretation

7 Having concluded that the EPA offered a sufficient explanation for

8 adopting the Rule, we next examine whether the Rule reasonably interprets the

9 Clean Water Act. We conclude that it does. The EPAʹs interpretation of the

10 Clean Water Act as reflected in the Rule is supported by several valid

11 arguments—interpretive, theoretical, and practical. The permissibility of the

12 Rule is reinforced by longstanding practice and acquiescence by Congress, recent

The district court criticized the EPAʹs rationale for the Water Transfers Rule on the 32

grounds that it was illogical for EPA to reason that: (1) Congress did not intend to subject water transfers to NPDES permitting; (2) therefore, water transfers do not constitute an addition to navigable waters; (3) because water transfers are not an ʺaddition,ʺ they do not constitute a ʺdischarge of a pollutantʺ under § 301(a), and therefore do not require an NPDES permit. Catskill III,

. According to the district court, because the NPDES program is only one of many provisions that regulate discharges made unlawful under § 301(a), step (1) could not possibly lead to steps (2) and (3)—that is, Congressional intent not to regulate water transfers under the NPDES program does not imply Congressional intent not to regulate water transfers under the other programs for regulating discharges of pollutants. Id. at 544. But the Water Transfers Rule did not exempt water transfers from any of the other programs for regulating discharges of pollutants—it applies only to the NPDES program. 71

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 case law, practical concerns regarding compliance costs, and the existence of

2 alternative means for regulating pollution resulting from water transfers.

3 First, as far as we have been able to determine, in the nearly forty years

4 since the passage of the Clean Water Act, water transfers have never been subject

5 to a general NPDES permitting requirement. Congress thus appears to have,

6 however silently, acquiesced in this state of affairs. This may well reflect an

7 intent not to require NPDES permitting to be imposed in every situation in

8 which it might be required, including as a means for regulating water transfers.

9 This in turn suggests that the EPAʹs unitary‐waters interpretation of Section 402

10 of the Act in the Water Transfers Rule is reasonable.

11 Second, the Supreme Courtʹs decision in Miccosukee and the Eleventh

12 Circuitʹs decision in Friends I support this conclusion. Miccosukee was decided

13 before the EPA issued the Water Transfers Rule and, absent the interpretation of

14 an agency rule, did not involve the application of Chevron. It was a citizen suit

15 against the South Florida Water Management District (the ʺDistrictʺ), which is

16 also an intervenor‐defendant in the instant proceedings. The Miccosukee

17 plaintiffs argued that the District was impermissibly operating a pumping

18 facility without an NPDES permit. 541 U.S. at 98‐99. The district court granted

72

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 summary judgment to the plaintiffs; the Eleventh Circuit affirmed. Id. at 99. The

2 Supreme Court vacated the judgment and remanded the case on the ground that

3 granting summary judgment was inappropriate because further factual findings

4 as to whether the two water bodies at issue were meaningfully distinct were

5 necessary. Id. In its decision, the Supreme Court addressed three key questions.

6 First, it asked whether the definition of ʺdischarge of a pollutantʺ in Section 502

7 of the Clean Water Act (

(12)) reaches point sources that do not

8 themselves generate pollutants. The Court held that it does. Miccosukee,

at 105.

10 Second, the Court addressed whether ʺall the water bodies that fall within

11 the Actʹs definition of ʹnavigable watersʹ (that is, all ʹthe waters of the United

12 States, including the territorial seas,ʹ § 1362(7)) should be viewed unitarily for

13 purposes of NPDES permitting requirements.ʺ Id. at 105‐06. The Court declined

14 to defer to the EPAʹs ʺlongstandingʺ view to that effect because ʺthe Government

15 d[id] not identify any administrative documents in which [the] EPA ha[d]

16 espoused that positionʺ; in point of fact, ʺthe agency once reached the opposite

17 conclusion.ʺ Id. at 107. As the dissent points out, the Supreme Court suggested

18 that it took a dim view of the unitary‐waters reading of the CWA, stating that:

73

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 ʺseveral NPDES provisions might be read to suggest a view contrary to the

2 unitary‐waters approachʺ; ʺ[t]he ʹunitary watersʹ approach could also conflict

3 with current NPDES regulationsʺ; and ʺ[t]he NPDES program . . . appears to

4 address the movement of pollutants among water bodies, at least at times.ʺ Id. at

5 107‐08. But the Court also seemed to acknowledge that the statute could be

6 interpreted in different ways:

7 It may be that construing the NPDES program to cover such transfers 8 would therefore raise the costs of water distribution prohibitively, and 9 violate Congressʹ specific instruction that ʺthe authority of each State to 10 allocate quantities of water within its jurisdiction shall not be superseded, 11 abrogated or otherwise impairedʺ by the Act. § 1251(g). On the other 12 hand, it may be that such permitting authority is necessary to protect 13 water quality, and that the States or EPA could control regulatory costs by 14 issuing general permits to point sources associated with water distribution 15 programs. See

, 123.25 (2003).

16 17 Id. at 108. Ultimately, the Court declined to rule on the unitary‐waters theory

18 because the parties did not raise the argument before the Eleventh Circuit or in

19 their briefs supporting and opposing the Courtʹs grant of certiorari. Instead, the

20 Court did no more than note that unitary‐waters arguments would be open to

21 the parties on remand. Id. at 109.

22 Third, the Supreme Court addressed whether a triable issue of fact existed

23 as to whether the water transfer at issue was between ʺmeaningfully distinctʺ

74

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 water bodies, and thus required an NPDES permit. The Court held that such a

2 triable issue did exist, and vacated and remanded for further fact‐finding. Id. at

3 109‐12. The Court stated that if after reviewing the full record, the district court

4 concluded that the water transfer was not between two meaningfully distinct

5 bodies of water, then the District would not need to obtain an NPDES permit in

6 order to operate the pumping facility. Id. at 112. Thus, it seems as though the

7 purpose of the remand was (a) to address the partiesʹ unitary‐waters arguments

8 as a preliminary legal matter, and (b) to engage in fact‐finding necessary to

9 resolve the case if the argument as to unitary‐waters did not prevail.

10 With respect to the unitary‐waters interpretation of Section 402, then,

11 Miccosukee suggested that a unitary‐waters interpretation of the statute was

12 unlikely to prevail because it was not the best reading of the statute, but did not

13 conclude that it was an unreasonable reading of the statute. By acknowledging

14 the arguments against requiring NPDES permits for water transfers, and noting

15 that unitary‐waters arguments would be open to the parties on remand, the

16 Court can be read to have suggested that such arguments are reasonable, even if

17 not, in the Courtʹs view, preferable.

75

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 This interpretation of Miccosukee is reflected in subsequent case law

2 interpreting that decision. In Catskill II, we expressed our view that ʺMiccosukee

3 did no more than note the existence of the [unitary‐waters] theory and raise

4 possible arguments against it.ʺ 451 F.3d at 83. And in Friends I, the Eleventh

5 Circuit concluded, despite its discussion of Miccosukee, that the Water Transfers

6 Ruleʹs interpretation of the CWA is entitled to Chevron deference. See Friends I,

7 570 F.3d at 1217‐18, 1225, 1228.

8 Friends I provides further support for the reasonableness of the Ruleʹs

9 interpretation. Like Miccosukee, the decision addressed whether the District was

10 required to obtain NPDES permits to conduct certain specified water transfers.

11 See Friends I,

. This time, however, the issue was addressed after

12 the EPA had issued the Water Transfers Rule, and the deferential framework of

13 Chevron therefore applied. In Friends I, the parties did not contest that the donor

14 water bodies (canals from which water was pumped into Lake Okeechobee) and

15 the receiving water body (the lake) were ʺnavigable waters.ʺ

. Because

16 under Miccosukee the NPDES ʺpermitting requirement does not apply unless the

17 bodies of water are meaningfully distinct,ʺ the question was therefore ʺwhether

18 moving an existing pollutant from one navigable water body to another is an

76

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 ʹaddition . . . to navigable watersʹ of that pollutant.ʺ

at 1216 & n.4 (quoting 33

(12)). The District argued, based on the ʺunitary waters theory,ʺ

3 that ʺit is not an ʹaddition . . . to navigable watersʹ to move existing pollutants

4 from one navigable water to another.ʺ Id. at 1217. ʺAn addition occurs, under

5 this theory, only when pollutants first enter navigable waters from a point

6 source, not when they are moved between navigable waters.ʺ Id.

7 The Eleventh Circuit agreed. It began its analysis by surveying relevant

8 prior decisions, noting that ʺ[t]he unitary waters theory has a low batting

9 average. In fact, it has struck out in every court of appeals where it has come up

10 to the plate.ʺ Id. (collecting cases). In the time since those decisions were issued,

11 however, there ʺha[d] been a change. An important one. Under its regulatory

12 authority, the EPA ha[d then‐]recently issued a regulation adopting a final rule

13 specifically addressing this very question. Because that regulation was not

14 available at the time of the earlier decisions,ʺ including Catskill I, Catskill II, and

15 Miccosukee, ʺthey [we]re not precedent against it.ʺ Id. at 1218. Therefore, the

16 question before the Court was whether to give Chevron deference to the Rule.

17 ʺAll that matters is whether the regulation is a reasonable construction of an

18 ambiguous statute.ʺ Id. at 1219. The cases on which the plaintiffs relied—which

77

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 included Catskill I, Catskill II, and Miccosukee—were therefore unhelpful because

2 there was then no formal rule to which to apply the Chevron framework.

3 ʺDeciding how best to construe statutory language is not the same thing as

4 deciding whether a particular construction is within the ballpark of

5 reasonableness.ʺ Id. at 1221.

6 The court then engaged in a Chevron analysis strikingly similar to the one

7 we are tasked with conducting here. As to the plain meaning of the statutory

8 language, the Eleventh Circuit determined that the key question was whether ʺʹto

9 navigable watersʹ means to all navigable waters as a singular whole.ʺ Id. at 1223

10 (emphasis in original). This question could not be resolved by looking to the

11 common meaning of the word ʺwaters,ʺ which could be used to refer to several

12 different bodies of water collectively (e.g., ʺthe waters of the Gulf coastʺ) or to a

13 single body of water (e.g., ʺthe waters of Mobile Bayʺ). Id. After examining the

14 statutory language in the context of the Clean Water Act as a whole, the court

15 then noted that Congress knew how to use the term ʺany navigable watersʺ in

16 other statutory provisions when it wanted to protect individual water bodies

17 (even though it at times used the unmodified term ʺnavigable watersʺ for the

18 same meaning), and determined that the Actʹs goals were so broad as to be

78

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 unhelpful in answering this difficult, specific question. See id. at 1224‐27. The

2 court therefore concluded that the statutory language was ambiguous, and that

3 the EPAʹs unitary‐waters reading of Section 402 was reasonable. Id. at 1227‐28.

4 The Court of Appeals explained, using an analogy we think is applicable to in

5 the case before us:

6 Sometimes it is helpful to strip a legal question of the contentious policy 7 interests attached to it and think about it in the abstract using a 8 hypothetical. Consider the issue this way: Two buckets sit side by side, 9 one with four marbles in it and the other with none. There is a rule 10 prohibiting ʺany addition of any marbles to buckets by any person.ʺ A 11 person comes along, picks up two marbles from the first bucket, and 12 drops them into the second bucket. Has the marble‐mover ʺadd[ed] any 13 marbles to bucketsʺ? On one hand, as the [plaintiffs] might argue, there 14 are now two marbles in a bucket where there were none before, so an 15 addition of marbles has occurred. On the other hand, as the [District] 16 might argue and as the EPA would decide, there were four marbles in 17 buckets before, and there are still four marbles in buckets, so no addition 18 of marbles has occurred. Whatever position we might take if we had to 19 pick one side or the other we cannot say that either side is unreasonable.

20 Id. at 1228 (first brackets in original).

21 Following Friends I, the Eleventh Circuit in Friends II dismissed several

22 petitions for direct appellate review of the Water Transfers Rule on the grounds

23 that the Court lacked subject‐matter jurisdiction under the Act (specifically, 33

(b)(1)(E), (F)) and could not exercise hypothetical jurisdiction.

25 Friends II, 699 F.3d at 1286‐89. In the course of doing so, the Eleventh Circuit

79

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 clarified its holding in Friends I that ʺthe water‐transfer rule was a reasonable

2 interpretation of an ambiguous provision of the Clean Water Act,ʺ and therefore

3 passed muster under Chevronʹs deferential standard of review. Id. at 1285. We

4 are in general agreement with the Friends I approach, and in complete agreement

5 with its conclusion that we must give Chevron deference to the EPAʹs

6 interpretation of Section 402 of the Act in the Water Transfers Rule.33

The Supreme Courtʹs more recent decision in Los Angeles County Flood Control 33

District v. Natural Resources Defense Council, Inc.,

(2013), on which some of the plaintiffs and the dissent rely, does not suggest that the Water Transfers Ruleʹs interpretation of the Clean Water Act is or is not reasonable. In Los Angeles County, the Supreme Court held that ʺthe flow of water from an improved portion of a navigable waterway into an unimproved portion of the very same waterway does not qualify as a discharge of pollutants under the CWA,ʺ reasoning that, ʺ[u]nder a common understanding of the meaning of the word ʹadd,ʹ no pollutants are ʹaddedʹ to a water body when water is merely transferred between different portions of that water body.ʺ

. This conclusion is consistent with both a unitary‐waters reading of the CWA (under which a discharge of a pollutant occurs only when the pollutant is first introduced to any of the navigable waters), and with a non‐unitary‐waters reading (under which a discharge of a pollutant occurs only when a pollutant is first introduced from a particular navigable water to another, and not when it moves around within the same navigable water). The Supreme Courtʹs opinion in Los Angeles County does not discuss the definition of ʺnavigable waters,ʺ nor does it imply a definition of that term. True, the Supreme Court characterized Miccosukee as holding that a ʺwater transfer would count as a discharge of pollutants under the CWA only if the canal and the reservoir were ʹmeaningfully distinct water bodies.ʹʺ

(quoting Miccosukee,

). But this cannot change what the Miccosukee majority opinion actually said, and, as we discussed above, Miccosukee indicates that a unitary‐waters reading may be ʺwithin the ballpark of reasonableness.ʺ See Friends I,

. Ultimately, Los Angeles County does not provide support for either side of the debate over the unitary‐waters theory encapsulated in the Water Transfers Rule. 80

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Another factor favoring the reasonableness of the Water Transfers Ruleʹs

2 interpretation of the Clean Water Act is that compliance with an NPDES

3 permitting scheme for water transfers is likely to be burdensome and costly for

4 permittees, and may disrupt existing water transfer systems. For instance,

5 several intervenor‐defendant water districts assert that it could cost an estimated

6 $4.2 billion to treat just the most significant water transfers in the Western United

7 States, and that obtaining an NPDES permit and complying with its conditions

8 could cost a single water provider hundreds of millions of dollars. See Water

9 Districts Br. 21. Similarly, intervenor‐defendant New York City submits that if it

10 is not granted the permanent variances it has requested in its most recent permit

11 application, it will be forced to construct an expensive water‐treatment plant, see

12 NYC Br. 22‐23, 28‐30, 35‐37, 55‐56, and amicus curiae the State of California argues

13 that requiring NPDES permits would put a significant financial and logistical

14 strain on the California State Water Project, see State of California Amicus Br. 16.

15 Further, amici curiae the American Farm Bureau Federation and Florida Farm

16 Bureau Federation argue that the invalidation of the Water Transfers Rule would

17 (i) throw the status of agricultural water‐flow plans into doubt, and (ii) require

18 state water agencies to increase revenues to pay for permits for levies and dams,

81

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 which they would likely accomplish by raising agricultural and property taxes,

2 and which in turn would raise farmersʹ costs and hurt their international

3 economic competitiveness. See Farmer Amici Br. 2‐3. The potential for such

4 disruptive results, if accurate, would provide further support for the EPAʹs

5 decision to interpret the statutory ambiguity at issue so as not to require NPDES

6 permits for water transfers.34

7 Yet another consideration supporting the reasonableness of the Water

8 Transfers Rule is that several alternatives could regulate pollution in water

9 transfers even in the absence of an NPDES permitting scheme, including:

10 nonpoint source programs;35 other federal statutes and regulations (like the Safe

11 Drinking Water Act, 42 U.S.C. § 300f et seq., and the Surface Water Treatment

12 Rule,

et seq.); the Federal Energy Regulatory Commissionʹs

13 regulatory scheme for non‐federal hydropower dams; state permitting programs

14 that have more stringent requirements than the NPDES program, see 33 U.S.C.

The district court made no findings of fact in the course of answering the purely 34

legal question before it, and we express no view as to the likelihood that requiring NPDES permits for water transfers would lead to the results identified above. We note only that concerns that such results might arise are plausible and could support the EPAʹs interpretation of the Clean Water Act in the Water Transfers Rule. 35 Examples of nonpoint source programs are state water quality management plans

and total maximum daily loads (commonly called ʺTMDLsʺ). See EPA Br. 30; EPA Reply Br. 19‐20; NYC Br. 51‐53; Western States Br. 37‐38; Western Parties J. Reply 25‐28. 82

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 § 1370(1); other state authorities and laws; interstate compacts; and international

2 treaties.36 The availability of these regulatory alternatives further points towards

3 the reasonableness of the EPAʹs interpretation of the Act in the Water Transfers

4 Rule.

5 With respect to other state authorities and laws, the Act ʺrecognizes that

6 states retain the primary role in planning the development and use of land and

7 water resources, allocating quantities of water within their jurisdictions, and

8 regulating water pollution, as long as those state regulations are not less

9 stringent than the requirements set by the CWA.ʺ Catskill II, 451 F.3d at 79

10 (citations omitted). To these ends, states can rely on statutory authorities at their

11 disposal for regulating the potentially negative water quality impacts of water

12 transfers.37 States can also enforce water quality standards through their

One example of such a treaty is the Boundary Waters Treaty of 1909, Treaty Between 36

the United States and Great Britain Relating to Boundary Waters, and Questions Arising Between the United States and Canada, Intʹl Joint Commʹn, art. IV (May 13, 1910), available at http://www.ijc.org/en_/BWT (last visited July 18, 2016), archived at https://perma.cc/M3F3‐NWLT. See Western States Br. 46‐47. 37 For instance, the States and their agencies generally have broad authority to prevent

the pollution of the Statesʹ waters. Coloradoʹs Water Quality Control Commission is authorized to promulgate regulations providing for mandatory or prohibitory precautionary measures concerning any activity that could cause the quality of any state waters to be in violation of any water quality standard. See, e.g., Colo. Rev. Stat. §§ 25‐8‐205(1)(c), 25‐8‐503(5). In addition, New Mexicoʹs State Engineer is authorized to deny a water transfer permit if he or she finds that the transfer will be detrimental to the 83

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 certification authority under Section 401 of the Clean Water Act, which requires

2 that applicants for federal licenses or permits obtain a state certification that any

3 discharge of pollutants will comply with the water‐quality standards applicable

4 to the receiving water body. See

; S.D. Warren Co. v. Me. Bd. of

5 Envtl. Prot.,

(2006); PUD No. 1,

.

6 States have still more regulatory tools at their disposal. State agencies may

7 be granted specific authority to address particular pollution or threats of

8 pollution. For example, in New York, the NYSDEC is authorized and directed to

9 promulgate rules to protect the recreational uses—such as trout fishing and

Stateʹs public welfare (for example, by jeopardizing water quality). See N.M. Stat. Ann. § 72‐5‐23; Stokes v. Morgan,

(N.M. 1984) (suggesting that the State Engineer could deny a permit to change the point of diversion and place of use of groundwater rights where ʺintrusion of poor quality water could result in impairment of existing rightsʺ). In California, interbasin transfers are already subject to water quality regulation separate from the federal NPDES permitting authority by Californiaʹs State Water Resources Control Board and the Stateʹs regional water quality control boards. See Cal. Water Code §§ 1257‐58, 13263; Lake Madrone Water Dist. v. State Water Res. Control Bd.,

,

(1989) (noting that California ʺmay enact more stringent controls on discharges than are required by the [Clean Water Act]ʺ); United States v. State Water Res. Control Bd.,

, 127‐30, 149‐52,

, 185‐87, 200‐02 (1986) (Californiaʹs State Water Resources Control Board can reexamine previously issued water‐rights permits to address newly discovered water‐quality matters). And the State of New Yorkʹs Department of Environmental Conservation (the ʺNYSDECʺ) enforces its own water quality standards outside of the NPDES permitting program. See, e.g., N.Y. Envtl. Conserv. Law §§ 15‐0313(2) (the NYSDEC is authorized to modify water quality standards and to reclassify the Stateʹs waters), 17‐0301 (the NYSDEC has authority to classify waters and apply different standards of quality and purity to waters in different classes), 17‐0501 (general prohibition on water pollution). 84

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 canoeing—of waters affected by certain large reservoirs such as the Schoharie

2 Reservoir. See N.Y. Envtl. Conserv. Law §§ 15‐0801, 15‐0805 (McKinney 2008).

3 And as discussed above, states likely can also bring common‐law nuisance suits

4 to enjoin and abate pollution. See Intʹl Paper Co. v. Ouellette,

, 487

5 (1987) (the common law of the state in which the point source is located can

6 provide a basis for a legal challenge to an interstate discharge or transfer).

7 Lastly, although water transfers apparently do not often have interstate or

8 international effects, the States and the Federal Government can address any

9 such effects through interstate compacts or treaties,38 as well as Section 310 of the

10 Clean Water Act, which authorizes an EPA‐initiated procedure for abating

11 international pollution,

. The existence of these available

12 regulatory alternatives suggests that exempting water transfers from the NPDES

13 permitting program would not necessarily defeat the fundamental water‐quality

14 aims of the Clean Water Act, which further counsels in favor of the

15 reasonableness of the Water Transfers Rule. We need not now evaluate the

16 effectiveness of such alternatives; we note only that their existence suggests that

17 the Rule is reasonable.

38 See supra note 36. 85

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 The plaintiffs advance several other arguments against the reasonableness

2 of the Water Transfers Ruleʹs interpretation of the Clean Water Act. Ultimately,

3 none persuades us that the Rule is an unreasonable interpretation of the Clean

4 Water Act.

5 The plaintiffs first argue, as we have noted, that the Water Transfers Rule

6 arises out of an unreasonable reading of the Act because it subverts the main

7 objective of the Clean Water Act, ʺto restore and maintain the chemical, physical,

8 and biological integrity of the Nationʹs waters,ʺ

(a), by allowing

9 ʺthe transfer of water from a heavily polluted, even toxic, water body to one that

10 was pristine,ʺ Catskill II, 451 F.3d at 81. While this is a powerful argument

11 against the EPAʹs position, we are not convinced that it establishes that the Water

12 Transfers Rule is an unreasonable interpretation of the Clean Water Act, which is

13 ʺamong the most complexʺ of federal statutes and ʺbalances a welter of consistent

14 and inconsistent goals.ʺ Catskill I, 273 F.3d at 494. Congressʹs overarching goal in

15 passing the Act does not imply that the EPA could not accommodate some of the

16 compromises and other policy concerns embedded in the statute in

17 promulgating the Water Transfers Rule.

86

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Some plaintiffs also argue that the EPAʹs interpretation of Section 402

2 contained in the Water Transfers Rule is unreasonable in light of the EPAʹs

3 interpretation of Section 404. They point out that the EPA has interpreted the

4 phrase ʺdischarge of dredged . . . material into the navigable watersʺ from

5 Section 404 to require a permit when dredged material is moved from one

6 location to another within the same water body, regardless of whether the

7 dredged material is ever removed from the water. See

(a); 40

. They argue that if moving dredged material from one part of a

9 water body to another part of that same water body is an ʺaddition . . . into . . .

10 the waters of the United States,ʺ see

, then it is unreasonable to

11 say that the movement of heavily polluted water from one water body into a

12 pristine water body is not also an ʺadditionʺ to ʺwatersʺ that would require an

13 NPDES permit.

14 But Section 404 contains different language that suggests that a different

15 interpretation of the term ʺadditionʺ is appropriate in analyzing that section.

16 Section 404 concerns ʺdredged material,ʺ which, as the EPA pointed out in the

17 Water Transfers Rule, ʺby its very nature comes from a waterbody.ʺ

at 33,703. As the Fifth Circuit has observed, in the context of Section 404, one

87

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 cannot reasonably interpret the phrase ʺaddition . . . into . . . the waters of the

2 United Statesʺ to refer only to the addition of dredged material from the ʺoutside

3 worldʺ —that is, from outside the ʺwaters of the United Statesʺ—because the

4 dredged material comes from within the waters of the United States itself. See

5 Avoyelles Sportsmenʹs League, Inc. v. Marsh,

, 924 n.43 (5th Cir. 1983).

6 Interpreting Section 404 so as not to require permits for dredged material already

7 present in ʺthe waters of the United Statesʺ would effectively mean that dredged

8 material would never be subject to Section 404 permitting, eviscerating Congressʹs

9 intent to establish a dredge‐and‐fill permitting system. By contrast, Section 402

10 concerns a much broader class of pollutants than Section 404, and the Water

11 Transfers Ruleʹs interpretation of Section 402 would not require the dismantling

12 of existing NPDES permitting programs. The EPA can therefore reasonably

13 interpret what constitutes an ʺadditionʺ into ʺthe waters of the United Statesʺ

14 differently under each provision.39

In any event, there is no requirement that the same term used in different provisions 39

of the same statute be interpreted identically. Envtl. Def. v. Duke Energy Corp.,

, 574‐76 (2007). Indeed, ʺ[i]t is not impermissible under Chevron for an agency to interpret [the same] imprecise term differently in two separate sections of a statute which have different purposes.ʺ Abbott Labs. v. Young,

(D.C. Cir. 1990), cert. denied sub nom. Abbott Labs. v. Kessler,

(1991); see also Aquarius Marine Co. v. Peña,

(2d Cir. 1995) (an agency has ʺdiscretion to undertake independent interpretations of the same term in different statutesʺ). 88

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 Finally, we think that the plaintiffsʹ reliance on Clark v. Martinez,

371, 386‐87 (2005), and Sorenson v. Secʹy of the Treasury of U.S.,

, 860

3 (1986), is misplaced. In Clark, the Supreme Court cautioned against ʺthe

4 dangerous principle that judges can give the same statutory text different

5 meanings in different cases.ʺ Clark,

. But that cautionary

6 statement referred to an interpretation of a specific subsection of the Immigration

7 and Nationality Act that would give a phrase one meaning when applied to the

8 first of three categories of aliens, and another meaning when applied to the

9 second of those categories. See

at 377‐78, 386. It does not follow that an

10 agency cannot interpret similar, ambiguous statutory language in one section of

11 a statute differently than similar language contained in another, entirely distinct

12 section. In Sorenson, the Supreme Court noted in dicta that there is a presumption

13 that ʺidentical words used in different parts of the same act are intended to have

14 the same meaning,ʺ

(quoting Helvering v. Stockholms Enskilda Bank,

15

(1934)). But this is no more than a presumption. It can be

16 rebutted by evidence that Congress intended the words to be interpreted

17 differently in each section, or to leave a gap for the agency to fill. See Duke, 549

18 U.S. at 575‐76 (ʺThere is, then, no effectively irrebuttable presumption that the

89

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 same defined term in different provisions of the same statute must be interpreted

2 identically.ʺ (internal quotation marks omitted)). Here, there is evidence that

3 Congress gave the EPA the discretion to interpret the terms ʺadditionʺ and the

4 broader phrases ʺaddition . . . to navigable watersʺ (Section 402) and ʺaddition . . .

5 into . . . the waters of the United Statesʺ (

, defining ʺdischarge of

6 dredged materialʺ in Section 404) differently.

7 * * *

8 In sum, the Water Transfers Ruleʹs interpretation of the Clean Water Act—

9 which exempts water transfers from the NPDES permitting program—is

10 supported by several reasonable arguments. The EPAʹs interpretation need not

11 be the ʺonly possible interpretation,ʺ nor need it be ʺthe interpretation deemed

12 most reasonable.ʺ Entergy,

(emphasis in original). And even

13 though, as we note yet again, we might conclude that it is not the interpretation

14 that would most effectively further the Clean Water Actʹs principal focus on

15 water quality, it is reasonable nonetheless. Indeed, in light of the potentially

16 serious and disruptive practical consequences of requiring NPDES permits for

17 water transfers, the EPAʹs interpretation here involves the kind of ʺdifficult

18 policy choices that agencies are better equipped to make than courts.ʺ Brand X,

90

14‐1823, 14‐1909, 14‐1991, 14‐1997, 14‐2003 Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA (Catskill III)

1 545 U.S. at 980. Because the Water Transfers Rule is a reasonable construction of

2 the Clean Water Act supported by a reasoned explanation, it survives deferential

3 review under Chevron, and the district courtʹs decision must therefore be

4 reversed.

5 CONCLUSION 6 For the foregoing reasons, we defer under Chevron to the EPAʹs

7 interpretation of the Clean Water Act in the Water Transfers Rule. Accordingly,

8 we reverse the judgment of the district court and reinstate the challenged rule.

91

CHIN, Circuit Judge, dissenting:

I respectfully dissent.

The Clean Water Act (the ʺActʺ) prohibits the ʺdischarge of any

pollutant by any personʺ from ʺany point sourceʺ to ʺnavigable watersʺ of the

United States, without a permit.

(a), 1362(12)(A). The question

presented is whether a transfer of water containing pollutants from one body of

water to another ‐‐ say, in upstate New York, from the more‐polluted Schoharie

Reservoir through the Shandaken Tunnel to the less‐polluted Esopus Creek ‐‐ is

subject to these provisions.

The United States Environmental Protection Agency (ʺEPAʺ) takes

the position that such a transfer is not covered, on what has been called the

ʺunitary watersʺ theory ‐‐ all water bodies in the United States, that is, all lakes,

rivers, streams, etc., constitute a single unit, and therefore the transfer of water

from a pollutant‐laden water body to a pristine one is not an ʺadditionʺ of

pollutants to the ʺnavigable watersʺ of the United States because the pollutants

are already present in the overall single unit. Consequently, in a rule adopted in

2008 (the ʺWater Transfers Ruleʺ), EPA determined that water transfers from one

water body to another, without intervening industrial, municipal, or commercial

activity, were excluded from the permitting requirements of the National

Pollutant Discharge Elimination System (ʺNPDESʺ), even if dirty water was

transferred from a polluted water body to a clean one. The majority holds that

the Water Transfers Rule is a reasonable interpretation of the Act. I disagree.

As the majority notes, we evaluate EPAʹs interpretation of the Act

under the two‐step framework of Chevron, U.S.A., Inc. v. NRDC,

(1984). At step one, we consider whether Congress has ʺunambiguously

expressedʺ its intent. Riverkeeper Inc. v. EPA,

, 184 (2d Cir. 2004). If

so, we ʺmust give effect to the unambiguously expressed intent of Congress.ʺ

Chevron, 467 U.S. at 842‐43. If the statute is ʺsilent or ambiguous,ʺ however, we

turn to step two and determine ʺʹwhether the agencyʹs answer is based on a

permissible construction of the statute,ʹ which is to say, one that is ʹreasonable,ʹ

not ʹarbitrary, capricious, or manifestly contrary to the statute.ʹʺ Riverkeeper, 358

F.3d at 184 (quoting Chevron, 467 U.S. at 843‐44).

I would affirm the district courtʹs decision to vacate the Water

Transfers Rule. First, I would hold at Chevron step one that the plain language

and structure of the Act is unambiguous and clearly expresses Congressʹs intent

to prohibit the transfer of polluted water from one water body to another distinct

2

water body without a permit. In my view, Congress did not intend to give a pass

to interbasin transfers of dirty water, and excluding such transfers from

permitting requirements is incompatible with the goal of the Act to protect our

waters.1 Second, prior decisions of this Court and the Supreme Court make clear

that the unitary waters theory is inconsistent with the plain and ordinary

meaning of the text of the Act and its purpose. Third, even assuming there is any

ambiguity, I would hold at Chevron step two that the Water Transfers Rule is an

unreasonable, arbitrary, and capricious interpretation of the Act. Accordingly, I

dissent.

I

I begin with the language of the Act, its structure, and its purpose.

A. The Statutory Language

The Act provides that ʺthe discharge of any pollutant by any person

shall be unlawful,ʺ

(a), except to the extent allowed by other

1 The term ʺinterbasin transferʺ refers to an artificial or man‐made conveyance of water between two distinct water bodies that would not otherwise be connected. See Catskill Mountains Chapter of Trout Unlimited, Inc. v. City of N.Y.,

, 489‐93 (2d Cir. 2001) (ʺCatskill Iʺ); see also

(i) (ʺwater transferʺ is ʺan activity that conveys or connects waters of the United States without subjecting the transferred water to intervening industrial, municipal, or commercial useʺ).

3

provisions, including, for example, those provisions establishing the NPDES

permit program,

.

The Act defines ʺdischarge of a pollutantʺ to include ʺany addition of

any pollutant to navigable waters from any point source.ʺ

(12)(A) (emphasis added). It defines ʺpollutantʺ to include solid, industrial,

agricultural, and biological waste.

§ 1362(6) (emphasis added). It defines

ʺnavigable watersʺ as ʺthe waters of the United States, including the territorial

seas.ʺ Id. § 1362(7) (emphasis added). And it defines a ʺpoint sourceʺ as ʺany

discernible, confined and discrete conveyance, including but not limited to any

pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling

stock, concentrated animal feeding operation, or vessel or other floating craft,

from which pollutants are or may be discharged.ʺ Id. § 1362(14) (emphasis

added). The Act does not define the word ʺaddition.ʺ

In my view, the plain language of the Act makes clear that the

permitting requirements apply to water transfers from one distinct body of water

through a conveyance to another. As noted, the Act prohibits ʺany addition of

any pollutant to navigable waters from any point source.ʺ Id. § 1362(12)(A). The

transfer of contaminated water from a more‐polluted water body through a

4

conveyance, such as a tunnel, to a distinct, less‐polluted water body is the

ʺadditionʺ of a pollutant (contained in the contaminated water) to ʺnavigable

watersʺ (the less‐polluted water body) from a ʺpoint sourceʺ (the conveyance). In

the context of this case, as we held in Catskill I:

Here, water is artificially diverted from its natural course and travels several miles from the [Schoharie] Reservoir through Shandaken Tunnel to Esopus Creek, a body of water utterly unrelated in any relevant sense to the Schoharie Reservoir and its watershed. No one can reasonably argue that the water in the Reservoir and the Esopus are in any sense the ʺsame,ʺ such that ʺadditionʺ of one to the other is a logical impossibility. When the water and the suspended sentiment therein passes from the Tunnel into the Creek, an ʺadditionʺ of a ʺpollutantʺ from a ʺpoint sourceʺ has been made to a ʺnavigable water,ʺ and the terms of the statute are satisfied.

273 F.3d at 492.

EPA contends that such a transfer of contaminated water, from a

polluted body of water to a distinct and pristine one, is not an ʺadditionʺ because

all the waters of the United States are to be ʺconsidered collectively,ʺ EPA Br. at

2, that is, because the polluted and pristine bodies of water are both part of the

waters of the United States and all the waters of the United States are considered

to be one unit, the transfer of pollutants from one part of the unit to another part

is not an ʺaddition.ʺ I do not believe the words of the Act can be so interpreted. 5

The critical words for our purposes are ʺadditionʺ and ʺnavigable waters.ʺ I take

them in reverse order.

1. ʺNavigable Watersʺ

EPAʹs position ‐‐ accepted by the majority ‐‐ requires us to add

words to the Act, as we must construe ʺnavigable watersʺ to mean ʺall the

navigable waters of the United States, considered collectively.ʺ Contra Dean v.

United States,

(2009) (courts must ʺordinarily resist reading

words or elements into a statute that do not appear on its faceʺ) (quoting Bates v.

United States,

(1997)).

EPA also argues that if Congress had intended the NPDES

permitting requirements to apply to individual water bodies, it would have

inserted the word ʺanyʺ before ʺnavigable waters.ʺ See

(12)(A)

(ʺany addition of any pollutant to navigable waters from any point sourceʺ). This

interpretation is flawed, for the use of the plural ʺwatersʺ obviates the need for

the word ʺany.ʺ The use of the plural ʺwatersʺ indicates that Congress was

referring to individual water bodies, not one collective water body. The

Supreme Court addressed this precise issue in its discussion of ʺthe waters of the

United Statesʺ in Rapanos v. United States. There the Court considered the issue of

6

whether § 1362(7)ʹs definition of ʺnavigable watersʺ meant ʺwaters of the United

States,ʺ and the Court squarely held that ʺwatersʺ referred to ʺindividual bodies,ʺ

not one collective body:

But ʺthe waters of the United Statesʺ is something else. The use of the definite article (ʺtheʺ) and the plural number (ʺwatersʺ) shows plainly that § 1362(7) does not refer to water in general. In this form, ʺthe watersʺ refers more narrowly to water ʺ[a]s found in streams and bodies forming geographical features such as oceans, rivers, [and] lakes,ʺ or the flowing or moving masses, as of waves or floods, making up such streams or bodies.ʺ Websterʹs New International Dictionary 2882.

(2006) (alterations in original) (emphases added). Hence, the

Supreme Court concluded the plural form ʺwatersʺ does not refer to ʺwater in

general,ʺ but to water bodies such as streams, lakes and ponds.2

2 The majority writes that the Supreme Courtʹs holding in Rapanos ʺdoes not compel the conclusion that the statutory phrase ʹnavigable watersʹ is unambiguous because that phrase, unlike the phrase in Rapanos, is not limited by a definite article.ʺ Op. at 44, n.24. While Rapanos may not ʺcompelʺ that conclusion, it certainly supports it. In Rapanos, the Supreme Court was interpreting the same definition of ʺnavigable watersʺ in operation here, § 1362(7), which defines ʺnavigable watersʺ as ʺthe waters of the United States.ʺ The lack of the word ʺtheʺ before ʺnavigable watersʺ in § 1362(12)(A) hardly negates the Supreme Courtʹs holding that the definition of ʺnavigable watersʺ as found in § 1362(7) does not refer to water in general, but water bodies. Moreover, the existence or non‐existence of a definite article before a noun, on its own, has no bearing on the plural or singular nature of a noun. ʺTheʺ can be used to refer to a particular person or thing or a group. See Bryan A. Garner, Garnerʹs Modern American Usage: The Authority on Grammar, Usage and Style, 883 (3rd Ed. 2009) (ʺThe definite article can be

7

As the majority acknowledges, the Act contains multiple provisions

suggesting that the term ʺnavigable watersʺ refers to multiple water bodies, not

one national collective water body. Op. at 43 (citing

(c)(2)(A),

(c)(4), 1313(d)(1)(B), 1314(2), 1314(f)(2)(F), 1314(l)(1)(A)‐(B), 1342)).3 Likewise,

EPAʹs own regulations suggest that ʺnavigable watersʺ refers to individual water

bodies. For example,

(g)(4) regulates intake credits. As the

Supreme Court has observed, this regulation is incompatible with the ʺunitary

watersʺ theory:

The ʺunitary watersʺ approach could also conflict with current NPDES regulations. For example,

(g)(4)(2003) allows an industrial water user to obtain ʺintake creditʺ for pollutants present in the water that it withdraws from navigable waters. When the permit holder discharges the water after use, it does not have to remove pollutants that were in the water before

used to refer to a group <the basketball team> or, in some circumstances, a plural <The ideas just keep on flowing>.ʺ). 3 There are additional sections in which the term ʺnavigable watersʺ clearly refers to individual water bodies. See, e.g.,

(requiring any applicant for federal license or permit ʺto conduct any activity, including but not limited to, the construction or operation of facilities which may result in any discharge in the navigable watersʺ to obtain a state certification that any discharge of pollutants will comply with the receiving water bodyʹs water‐quality standard), 1344(a) (requiring permits for ʺ[d]ischarge into navigable waters at specified disposal sitesʺ by establishing a separate permit program for discharges of ʺdredged or fill material,ʺ which by definition come from water bodies); see also

(a), (d)(1)(A), 1313(e)(4), 1314(l)(1), (b)(1), (d)(2)(D), (h)(9), (h)(11)(B).

8

it was withdrawn. There is a caveat, however: EPA extends such credit ʺonly if the discharger demonstrates that the intake water is drawn from the same body of water into which the discharge is made.ʺ The NPDES program thus appears to address the movement of pollutants among water bodies, at least at times.

S. Fla. Water Mgmt. Dist. v. Miccosukee Tribe,

, 107‐08 (2004). In all of

these instances, the phrase ʺnavigable watersʺ refers to individual water bodies

and not one collective national water body. Indeed, neither the majority nor the

parties have identified a single provision in the Act where ʺnavigable watersʺ

refers to the waters of the United States as a unitary whole.

2. ʺAdditionʺ

EPAʹs interpretation also requires us to twist the meaning of the

word ʺaddition.ʺ Because the word ʺadditionʺ is not defined in the Act, we

consider its common meaning. See S.D. Warren Co. v. Me. Bd. of Environ. Prot.,

(2006) (in considering the definition of ʺdischargeʺ in

(12), noting that where a word is ʺneither defined in the statute nor a term

of art, we are left to construe it ʹin accordance with its ordinary or natural

meaningʹʺ (citing FDIC v. Meyer,

(1994))); see also Perrin v. United

States,

(1979) (words should be interpreted according to their

ʺordinary, contemporary, common meaningʺ).

9

The ordinary meaning of ʺadditionʺ is ʺthe result of adding:

anything added: increase, augmentation.ʺ Websterʹs Third New International

Dictionary of the English Language Unabridged 24 (1968); see also Websterʹs New

World Dictionary of the American Language 16 (2d College ed. 1970 and 1972) (ʺa

joining of a thing to another thingʺ). Transferring water containing pollutants

from a polluted water body to a clean water body is ʺaddingʺ something to the

latter; there is an ʺadditionʺ ‐‐ an increase in the number of pollutants in the

second water body. In this context, ʺadditionʺ means adding a pollutant to

ʺnavigable watersʺ when that pollutant would not otherwise have been in those

ʺnavigable waters.ʺ Words should be given their ʺcontextually appropriate

ordinary meaning,ʺ Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 70 (2012), and the context here is a statute intended to

eliminate water pollution discharges. See Catskill I, 273 F.3d at 486. That context

makes clear that the word ʺadditionʺ encompasses an increase in pollution

caused by an interbasin transfer of water.

The plain words of the statute thus make clear that Congress did not

intend to except water transfers from §§ 1311 and 1362 of the Act.

10

B. The Structure of the Act

Congressʹs intent to require a permit for interbasin water transfers is

even clearer when we consider the statutory language in light of the Actʹs

structure. In determining whether Congress has spoken to the precise question

at issue, we consider the words of the statute in ʺtheir context and with a view to

their place in the overall statutory scheme,ʺ FDA v. Brown & Williamson Tobacco

Corp.,

(2000), because ʺthe meaning ‐‐ or ambiguity ‐‐ of certain

words or phrases may only become evident when placed in context,ʺ King v.

Burwell,

(2015) (citing Brown & Williamson,

);

see also Util. Air Regulatory Grp. v. EPA,

(2014) (ʺreasonable

statutory interpretation must account for both ʹthe specific context in which . . .

language is usedʹ and ʹthe broader context of the statute as a wholeʹʺ (citations

omitted)); Davis v. Mich. Depʹt of Treasury,

(1989) (a

ʺfundamental canon of statutory constructionʺ is ʺthat the words of a statute

must be read in their context and with a view to their place in the overall

statutory schemeʺ).

Here, EPAʹs ʺunitary watersʺ theory, when considered in the context

of other provisions of the Act, contravenes Congressʹs unambiguous intent to

11

subject interbasin transfers to permitting requirements and is therefore

unreasonable. See King,

(a ʺprovision that may seem ambiguous

in isolation is often clarified by the remainder of the statutory scheme . . . because

only one of the permissible meanings produces a substantive effect that is

compatible with the rest of the lawʺ (citing United Sav. Assʹn of Tex. v. Timbers of

Inwood Forest Assocs., Ltd.,

(1988))).

First, the Water Transfers Rule creates an exemption to permitting

requirements, in violation of the canon expressio unius est exclusio alterius, which

cautions against finding implied exceptions where Congress has created explicit

ones. Section 1311(a) of the Act prohibits ʺ[t]he discharge of any pollutant by any

person.ʺ

(a). The Supreme Court has held that ʺevery point

source dischargeʺ is covered by the Act:

Congressʹ intent in enacting the [1972] Amendments [to the Federal Water Pollution Control Act] was clearly to establish an all‐encompassing program of water pollution regulation. Every point source discharge is prohibited unless covered by a permit, which directly subjects the discharger to the administrative apparatus established by Congress to achieve its goals. The ʺmajor purposeʺ of the Amendments was clearly to ʺestablish a comprehensive long‐range policy for the elimination of water pollution.ʺ S. Rep. No. 92‐414, at 95, 2 Leg. Hist. 1511 (emphasis supplied). No Congressmanʹs remarks

12

on the legislation were complete without reference to the ʺcomprehensiveʺ nature of the Amendments.

See City of Milwaukee v. Illinois,

(1981).

Congress created specific exceptions to the prohibition on the

discharge of pollutants, as § 1311(a) bans such discharges ʺ[e]xcept as in

compliance with this section and sections 1312, 1316, 1317, 1328, 1342, and 1344.ʺ

(a). These include specific exemptions to the NPDES permitting

requirements for, e.g., return flows from irrigated agriculture,

(l)(1), stormwater runoff,

(l)(2), and discharging dredged

or fill material into navigable waters,

(a). Congress did not create

an exception for interbasin water transfers.

It is well‐settled that when exceptions are explicitly enumerated,

courts should not infer additional exceptions. See Hillman v. Maretta,

(2013) (ʺWhere Congress explicitly enumerates certain exceptions to a

general prohibition, additional exceptions are not to be implied, in the absence of

evidence of contrary legislative intent.ʺ (citing Andrus v. Glover Constr., Co.,

, 616‐617 (1980))). This prohibition against implying exceptions has been

applied to the Actʹs permitting requirements. See NRDC v. Costle,

,

1377 (D.C. Cir. 1977) (ʺThe wording of the statute, legislative history and

13

precedents are clear: the EPA Administrator does not have authority to except

categories of point sources from the permit requirements of § [1342]ʺ); Nw. Envir.

Advocates v. EPA,

, 1021‐22 (9th Cir. 2008) (EPA may not ʺexempt

certain categories of discharge from the permitting requirementʺ); N. Plains Res.

Council v. Fidelity Exploration & Dev. Co.,

(9th Cir. 2003) (ʺOnly

Congress may amend the CWA to create exemptions from regulation.ʺ).

Defendantsʹ position that all water transfers between water bodies are exempt

from § 1342 permitting requirements is a substantial exemption that Congress

did not create.

Second, the Act also sets forth a specific plan for individual water

bodies. The Act requires States to establish water‐quality standards for each

distinct water body within its borders. See

(c)(1), (2)(A). To

establish water‐quality standards, a State must designate a use for every

waterway and establish criteria for ʺthe amounts of pollutants that may be

present in [those] water bodies without impairingʺ their uses. Upper Blackstone

Water Pollution Abatement Dist. v. EPA,

(1st Cir. 2012) (citing

(c)(2)(A)). The NPDES permit program is ʺthe primary meansʺ by

which the Act seeks to achieve its water‐protection goals. Arkansas v. Oklahoma,

14

, 101‐02 (1992). The NPDES program covers all ʺpoint sources,ʺ

including ʺany pipe, ditch, channel, [or] tunnel,ʺ

(14), and a

broad range of pollutants, including chemicals, biological materials, rock, and

sand,

§ 1362(6).

This carefully designed plan to fight water pollution would be

severely undermined by an EPA‐created exception for water transfers. A Stateʹs

efforts to control water‐quality standards in its individual lakes, rivers, and

streams would be disrupted if contaminated water could be transferred from a

polluted water body to a pristine one without a NPDES permit. It is hard to

imagine that Congress could have intended such a broad and potentially

devastating exception. Indeed, exempting water transfers from the NPDES

program would undermine the ability of downstream States to protect

themselves from the pollution generated by upstream States. The NPDES

program provides a procedure for resolving disputes between States over

discharges. See Upper Blackstone Water Pollution Abatement Dist.,

(citing City of Milwaukee, 451 U.S. at 325‐26). When a State applies for a permit

that may affect the water quality of a downstream State, EPA must notify the

applying State and the downstream State. If the downstream State determines

15

that the discharge ʺwill violate its water quality standards, it may submit its

objections and request a public hearing.ʺ

If water transfers are exempt from

NPDES requirements, the ability of downstream States to protect themselves

from upstream states sending their pollution across the border will be severely

curtailed.4

The City and certain of the States argue that subjecting water

transfers to permitting requirements will be extremely burdensome. As we have

repeatedly recognized, however, there is ample flexibility in the NPDES

permitting process to address dischargersʹ concerns. See Catskill Mountains v.

EPA,

, 85‐86 (2d Cir. 2006) (ʺCatskill IIʺ); see also Nw. Envtl.,

(ʺObtaining a permit under the CWA need not be an onerous process.ʺ).

4 Downstream states would have to resort to common law nuisance suits in the courts of the polluting state, instead of addressing permit violations with EPA. As the district court points out, ʺEPA never explains how states, post Water Transfers Rule, can address interstate pollution effects ʹthrough their WQS [water quality standards] and TMDL [total maximum daily loads] programsʹ or ʹpursuant to state authorities preserved by section 510,ʹ given that states do not have authority to require other states to adhere to effluent limitations or state‐based regulations. See Intʹl Paper Co. v. Ouellette,

(1987).ʺ Catskill Mountains Chapter of Trout Unlimited v. U.S. E.P.A.,

(2014). Indeed, at oral argument before the district court, counsel for the State of Colorado conceded that a downstream Stateʹs only remedy for interstate pollution of this sort is a common‐law nuisance suit and ʺdrink[ing] dirty water until this case makes its way up to the courts.ʺ

. This cannot be what Congress intended.

16

The draft permit issued in this case allows for variable turbidity level restrictions

by season and exemptions from the limitations in times of drought to remedy

emergency threats or threats to public health or safety. Catskill II, 451 F.3d at 86.

Point source operators can also seek a variance from limits. See

(b).

In addition, much of the concern over water transfers involved

agricultural use, but water diversions from a ʺnavigable waterʺ for agricultural

use direct water away from a ʺnavigable water,ʺ and thus do not trigger the need

for a § 402 permit. Waters returning to a ʺnavigable waterʺ which are

ʺagricultural stormwater dischargesʺ and ʺreturn flows from irrigated

agricultureʺ are specifically exempted from the statutory definition of ʺpoint

source.ʺ

(14); see also

(l) (exempting ʺdischarges

composed entirely of return flows from irrigated agricultureʺ from permitting

requirements). Thus, the catastrophic results of applying NPDES permits to

water transfers bemoaned by appellants are exaggerated.5

5 In addition, general permits can be issued to ʺan entire class of hypothetical dischargers in a given geographic region,ʺ and thus covered discharges can commence automatically without an individualized application process. Nw. Envtl.,

(citations omitted); see

.

17

Third, as discussed above, Congress used the phrase ʺnavigable

watersʺ to refer to individual water bodies in numerous provisions of the Act.

Another well‐settled rule of statutory interpretation holds that the same words in

a statute bear the same meaning. See Sullivan v. Stroop,

(1990)

(ʺthe ʹnormal rule of statutory construction [is] that identical words used in

different parts of the same act are intended to have the same meaning.ʹʺ (internal

citations omitted)); Prus v. Holder,

(2d Cir. 2011) (ʺthe normal

rule of statutory construction [is] that identical words used in different parts of

the same act are intended to have the same meaningʺ). When the Act is read as a

whole, it is clear that Congress did not intend the phrase ʺnavigable watersʺ to be

interpreted as a single water body because that interpretation is ʺinconsisten[t]

with the design and structure of the statute as a whole.ʺ Utility Air,

; see also Scalia & Garner, Reading Law 63 (ʺA textually permissible

interpretation that furthers rather than obstructs the documentʹs purpose should

be favored.ʺ).

Accordingly, in my opinion, the structure and context of the Act

show clearly that Congress did not intend to exempt water transfers from the

permitting requirements.

18

C. The Purpose of the Act

The Act was passed in 1972 to address environmental harms caused

by the discharge of pollutants into water bodies. As the Act itself explains, its

purpose was to ʺrestore and maintain the chemical, physical, and biological

integrity of the Nationʹs waters.ʺ

(a); accord Miccosukee,

; Waterkeeper All., Inc. v. EPA,

, 490‐91 (2d Cir. 2005); see also

Catskill I, 273 F.3d at 486 (ʺ[T]he Act contains the lofty goal of eliminating water

pollution discharges altogether.ʺ).

The Water Transfers Rule is simply inconsistent with the purpose of

the Act and undermines the NPDES permit program. It creates a broad

exemption that will manifestly interfere with Congressʹs desire to eliminate

water pollution discharges. As the majority acknowledges, water transfers are a

real concern. Artificial transfers of contaminated water present substantial risks

to water quality, the environment, the economy, and public health. If interbasin

transfers are not regulated, there is a substantial risk that industrial waste, toxic

algae, invasive species, and human and animal contaminants will flow from one

water body to another. Accepting the argument that water transfers are not

covered by the Act on the theory that pollutants are not being added but merely

19

moved around surely undermines Congressʹs intent to restore and maintain the

integrity of our waters. See Robert A. Katzmann, Judging Statutes 31 (2014) (ʺThe

task of the judge is to make sense of legislation in a way that is faithful to

Congressʹs purposes.ʺ).

In sum, based on the plain words of §§ 1311 and 1362, the structure

and design of the Act, and its overall purpose, I would hold that Congress has

ʺunambiguously expressedʺ its intent to subject water transfers to the Actʹs

permitting requirements.

II

As the majority notes, our Court has twice interpreted these precise

provisions of the Act as applied to these very facts. See Catskill I, 273 F.3d 484‐85;

Catskill II, 451 F.3d at 79‐80. The decisions are not controlling, however, because

EPA had not yet adopted the Water Transfers Rule and we conducted our review

under a different deference standard. See Catskill I, 273 F.3d at 490 (ʺIf the EPAʹs

position had been adopted in a rulemaking or other formal proceeding, [Chevron]

deference might be appropriate.ʺ (emphasis added)); Catskill II, 451 F.3d at 82

(ʺThe City concedes that this EPA interpretation is not entitled to Chevron

deference.ʺ). Nonetheless, the two decisions are particularly helpful to the

20

analysis at hand. Similarly, Supreme Court decisions have also suggested that

EPAʹs unitary waters theory is inconsistent with the plain wording of the Act.

A. Catskill I and II

In Catskill I and II, we conducted our inquiry under Skidmore v. Swift

& Co.,

(1944), and United States v. Mead Corp.,

(2001). See

Catskill I, 273 F.3d at 491; Catskill II, 451 F.3d at 83 n.5.6 Our application of the

Skidmore/Mead framework does not imply that we found the Act to be

ambiguous. Rather, to the contrary, we concluded in Catskill I and II that the

meaning of the Act was plain and unambiguous.

6 While we discussed Mead and Skidmore in Catskill I and II, we rejected EPAʹs position as unpersuasive. In Catskill I we held:

[C]ourts do not face a choice between Chevron deference and no deference at all. Administrative decisions not subject to Chevron deference may be entitled to a lesser degree of deference: the agency position should be followed to the extent persuasive. See Mead, 121 S. Ct. at 2175‐76 (citing Skidmore v. Swift & Co.,

(1944)). For the reasons that follow, however, we do not find the EPAʹs position to be persuasive.

273 F.3d at 491. In Catskill II, we observed that because EPAʹs position was not the product of a formal rulemaking, the most EPA could hope for was to persuade the court of the reasonableness of its position under Skidmore, a position we did not accept. Catskill II, 451 F.3d at 83 n.5 (ʺ[W]e do not find the [ʹholisticʹ] argument persuasive and therefore decline to defer to the EPA.ʺ).

21

1. Skidmore

Under Skidmore, the court applies a lower level of deference to

certain agency interpretations and considers ʺthe agencyʹs expertise, the care it

took in reaching its conclusions, the formality with which it promulgates its

interpretations, the consistency of its views over time, and the ultimate

persuasiveness of its arguments.ʺ Community Health Ctr. v. Wilson‐Coker,

, 138 (2d Cir. 2002); accord In re New Times Sec. Servs., Inc.,

, 83 (2d

Cir. 2004); see Skidmore,

. The appropriate level of deference

afforded an agencyʹs interpretation of a statute depends on its ʺpower to

persuade.ʺ Christensen v. Harris County,

(2000). Unlike Chevron,

however, Skidmore does not require a court to make a threshold finding that the

statute is ambiguous before considering the persuasiveness of the agencyʹs

interpretation. Instead, Skidmore merely supplies the appropriate framework for

reviewing agency interpretations that ʺlack the force of law.ʺ

As the majority notes, the Supreme Court has never explicitly held

that courts must find ambiguity before applying the Skidmore framework. While

there is some scholarly authority for the proposition that ʺʹthe Skidmore standard

implicitly replicates Chevronʹs first step,ʹʺ Op. at 34 (quoting Kristin E. Hickman

22

& Matthew D. Krueger, In Search of the Modern Skidmore Standard,

, 1247 (2007)), the Supreme Court has decided numerous cases under

Skidmore without finding that a statuteʹs language was ambiguous, see, e.g., EEOC

v. Arabian American Oil,

(1991) (applying Skidmore without

finding ambiguity in statute and noting that agencyʹs interpretation ʺlacks

support in the plain language of the statuteʺ); Whirlpool Corp. v. Marshall,

(1980) (applying Skidmore without finding ambiguity in statute and holding

that regulation was permissible after considering statuteʹs ʺlanguage, structure

and legislative historyʺ); see generally Richard J. Pierce, Jr., I Admin. L. Treatise

§ 6.4 (5th ed. 2010).

Of course, the Supreme Court did not hold, in either Skidmore or

Mead, that ambiguity was a threshold requirement to applying the framework.

See Mead,

(An agency ruling is entitled to ʺrespect proportional to

its ʹpower to persuade,ʹ . . . . Such a ruling may surely claim the merit of its

writerʹs thoroughness, logic, and expertness, and any other sources of weight.ʺ

(citations omitted)); Skidmore,

(ʺThe weight of [an agencyʹs]

judgment in a particular case will depend upon the thoroughness evident in its

consideration, the validity of its reasoning, its consistency with earlier and later

23

pronouncements, and all those factors which give it power to persuade, if lacking

power to control.ʺ). Rather, the Skidmore/Mead framework adopts a less rigid,

more flexible approach, see U.S. Freightways Corp. v. Commʹr,

(7th Cir. 2001) (referring to ʺthe flexible approach Mead described, relying on . . .

Skidmoreʺ), as it presents ʺa more nuanced, context‐sensitive rubricʺ for

determining the level of deference a court will give to an agency interpretation,

Thomas W. Merrill and Kristin E. Hickman, Chevronʹs Domain,

,

836 (2001); see also Pierce, supra, § 6.4, at 444 (ʺThe Court has referred to a variety

of factors that can give an agency statement ʹpower to persuade.ʹ . . . [N]o single

factor is dispositive . . . .ʺ).

Ambiguity in a statute, of course, can be a factor, and in the sliding‐

scale analysis of the Skidmore/Mead framework, the ʺpower to persuadeʺ of an

agency determination can be affected by the clarity ‐‐ or lack thereof ‐‐ of the

statute it is interpreting. Indeed, upon applying the Skidmore/Mead framework, a

court may uphold ‐‐ or reject ‐‐ an agency interpretation because the

interpretation is consistent with ‐‐ or contradicts ‐‐ a statute whose meaning is

clear. See Pierce, supra, § 6.4, at 443. Here, we did not defer to the agencyʹs

24

interpretation of the Act in Catskill I and II, precisely because the Water Transfers

Rule contravened the plain meaning of the Act.

2. The Plain Meaning of the Act

The majority dismisses the notion that we ruled on the plain

meaning of the Act in Catskill I and II, asserting that there were only a ʺfew

references to ʹplain meaningʹʺ in our decisions. Op. at 36. To the contrary,

through both our words and our reasoning, we made clear repeatedly in Catskill I

and II that the agencyʹs unitary waters theory was inconsistent with the

unambiguous plain meaning of the Act.

In Catskill I, we held that defendantsʹ interpretation was

ʺinconsistent with the ordinary meaning of the word ʹaddition.ʹʺ 273 F.3d at 493

(emphasis added). Specifically, we held that there is an ʺadditionʺ of a pollutant

into navigable water from the ʺoutside worldʺ ‐‐ thus triggering the permitting

requirement ‐‐ any time such an ʺadditionʺ is from ʺany place outside the

particular water body to which pollutants are introduced.ʺ Id. at 491 (emphasis

added). We reasoned that:

Given the ordinary meaning of the [Act]ʹs text and our holding in Dague, we cannot accept the Gorsuch and Consumers Power courtsʹ understanding of ʺaddition,ʺ at least insofar as it implies acceptance of what the Dubois

25

court called a ʺsingular entityʺ theory of navigable waters, in which an addition to one water body is deemed an addition to all of the waters of the United States. . . . We properly rejected that approach in Dague. Such a theory would mean that movement of water from one discrete water body to another would not be an addition even if it involved a transfer of water from a water body contaminated with myriad pollutants to a pristine water body containing few or no pollutants. Such an interpretation is inconsistent with the ordinary meaning of the word ʺaddition.ʺ

Id. at 493 (emphases added).7 As a result, we held that ʺthe transfer of water

containing pollutants from one body of water to another, distinct body of water

is plainly an addition and thus a ʹdischargeʹ that demands an NPDES permit.ʺ Id.

at 491 (emphasis added). Accordingly, we clearly were relying on the plain

meaning of the Act in reaching our conclusion.

We also noted that ʺ[e]ven if we were to conclude that the proper

application of the statutory text to the present facts was sufficiently ambiguous

to justify reliance on the legislative history of the statute, . . . that source of

7 In Dague v. City of Burlington,

(2d Cir. 1991), the City of Burlington argued that ʺpollutants would be ʹaddedʹ only when they are introduced into navigable waters for the first time,ʺ

, an argument mirroring those raised by defendants here. We rejected the contention, in light of ʺthe intended broad reach of § 1311(a),ʺ noting ʺthat the definition of ʹdischarge of a pollutantʹ refers to ʹany point sourceʹ without limitation.ʺ Id. at 1355 (quoting

(12)). We rejected the assertion that water flowing from a pond to a marsh was not an ʺaddition.ʺ See Catskill I, 273 F.3d at 492.

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legislative intent would not help the City.ʺ 273 F.3d at 493. That language

certainly makes clear we concluded the statutory text was not ambiguous.

Finally, in the penultimate paragraph of Catskill I, we made

absolutely clear that our holding was based on the plain meaning of the statutory

text. We held:

In any event, none of the statuteʹs broad purposes sways us from what we find to be the plain meaning of its text. . . . Where a statute seeks to balance competing policies, congressional intent is not served by elevating one policy above the others, particularly where the balance struck in the text is sufficiently clear to point to an answer. We find that the textual requirements of the discharge prohibition in § 1331(a) and the definition of ʺdischarge of a pollutantʺ in § 1362(12) are met here.

Id. at 494 (emphases added). 8

Our analysis in Catskill II was similar, as we dismissed defendantsʹ

arguments as merely ʺwarmed‐upʺ versions of those rejected in Catskill I, made

no more compelling by EPAʹs new ʺholisticʺ interpretation of the statute. 451

8 At least one commentator has agreed that we found in Catskill I that ʺthe statuteʹs plain meaning was clear.ʺ Jeffrey G. Miller, Plain Meaning, Precedent and Metaphysics, Interpreting the ʺAdditionʺ Element of the Clean Water Act Offense, 44 Envtl. L. Rep. News & Analysis 10770, 10792 (2014) (ʺAlthough the Second Circuit did not explicitly employ the two‐step Chevron deference test to EPAʹs water transfer rule, it left no doubt as to how it would have decided the case under Chevron. With regard to the first step, whether the statute is ambiguous, the court in Catskill I held that the statuteʹs plain meaning was clear.ʺ).

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F.3d at 82. We rejected New York Cityʹs ʺʹholistic arguments about the allocation

of state and federal rights, said to be rooted in the structure of the statute,ʺ

because, we concluded, they ʺsimply overlook its plain language.ʺ Id. at 84.

(emphasis added). We noted our dismissal of the unitary waters theory in

Catskill I based on the ordinary meaning of the word ʺadditionʺ:

We also rejected the Cityʹs ʺunitary waterʺ theory of navigable waters, which posits that all of the navigable waters of the United States constitute a single water body, such that the transfer of water from any body of water that is part of the navigable waters to any other could never be an addition. We pointed out that this theory would lead to the absurd result that the transfer of water from a heavily polluted, even toxic, water body to one that was pristine via a point source would not constitute an ʺadditionʺ of pollutants and would not be subject to the [Act]ʹs NPDES permit requirements. Catskills I rejected the ʺunitary waterʺ theory as inconsistent with the ordinary meaning of the word ʺaddition.ʺ

Id. at 81 (emphasis added) (internal citations omitted). Again, we considered the

very interpretation of ʺnavigable watersʺ proffered in the current appeal and

rejected it based on ʺthe plain meaningʺ of the Actʹs text. Id. at 82.9

9 The majority suggests that we ruled on the meaning of ʺadditionʺ based on the plain meaning of the statute without reaching the meaning of ʺaddition . . . to navigable waters.ʺ Op. at 36‐37 (emphasis added) (ʺWe do not . . . think that by referring to the ʹplain meaningʹ of ʹadditionʹ in Catskill I we were holding that the broader statutory

28

I do not suggest that we are bound by our prior decisions. But in

both decisions, we carefully considered the statutory language, and in both

decisions, based on the plain wording of the text, we rejected an interpretation of

§§ 1311 and 1362 that construes ʺnavigable watersʺ and ʺthe waters of the United

Statesʺ to mean a single water body. Hence, we have twice rejected the theory

based on the plain language of the Act. That plain language has not changed,

and neither should our conclusion as to its meaning.

B. The Supreme Court Precedents

Finally, although the Supreme Court has not explicitly ruled on the

validity of EPAʹs ʺunitary watersʺ theory, it has expressed serious reservations.

In South Florida Water Management District v. Miccosukee Tribe of Indians,

(2004), the Court strongly suggested that the theory is not reasonable. First,

the Court remanded for fact‐finding on whether the two water bodies at issue

phrase ʹaddition . . . to navigable watersʹ unambiguously referred to a collection of individual ʹnavigable waters.ʹʺ (internal citations and quotations omitted)). It is not possible, however, to define ʺadditionʺ without defining the object to which the addition is made, as the concepts are inexorably linked. It is clear from our reasoning in Catskill I and II, that we considered the entire phrase in reaching our conclusion. Thus, when we stated ʺthat the discharge of water containing pollutants from one distinct water body to another is an ʹaddition of [a] pollutantʹ under the CWA,ʺ we could only have meant that the discharge of water containing pollutants constitutes ʺan ʹadditionʹ of [a] pollutantʺ to navigable waters. Catskill II, 451 F.3d at 80.

29

were ʺmeaningfully distinct water bodies.ʺ 541 U.S. at 112. That disposition

follows from Judge Walkerʹs soup ladle analogy in Catskill I: ʺIf one takes a ladle

of soup from a pot, lifts it above the pot, and pours it back into the pot, one has

not ʹaddedʹ soup or anything else to the pot (beyond, perhaps, a de minimis

quantity of airborne dust that fell into the ladle).ʺ 273 F.3d at 492. In Catskill II,

we noted that such a transfer would be an intrabasin transfer, from one water

body back into the same water body, and we then applied the analogy to the

facts of this case: ʺThe Tunnelʹs discharge . . . was like scooping soup from one

pot and depositing it in another pot, thereby adding soup to the second pot, an

interbasin transfer.ʺ 451 F.3d at 81. In Miccosukee, the Supreme Court cited the

ʺsoup ladleʺ analogy with approval, and remanded the case to the district court

to determine whether the water bodies in question were ʺtwo pots of soup, not

one.ʺ 541 U.S. at 109‐10; see also id. at 112. If the ʺunitary watersʺ theory were

valid, however, there would have been no need to resolve this factual question.

If all the navigable waters of the United States were deemed one collective

national body, there would be no need to consider whether individual water

bodies were distinct ‐‐ there would be no need to determine whether there were

two pots of soup or one.

30

Second, as previously discussed, the Court observed that ʺseveral

NPDES provisions might be read to suggest a view contrary to the unitary

waters approach.ʺ Id. at 107. The Court noted that under the Act, states ʺmay set

individualized ambient water quality standards by taking into consideration ʹthe

designated uses of the navigable waters involved,ʺ thereby affecting local

NPDES permits. Id. (quoting

(c)(2)(A)). ʺThis approach,ʺ the

Court wrote, ʺsuggests that the Act protects individual water bodies as well as

the ʹwaters of the United Statesʹ as a whole.ʺ Id.10

Subsequent Supreme Court decisions support this reading of

Miccosukee. In Los Angeles County Flood Control District v. Natural Resources

Defense Council, Inc., the Supreme Court held that a water transfer between one

portion of a river through a concrete channel to a lower portion of the same river

did not trigger a NPDES permit requirement.

(2013). The Court

observed that ʺ[w]e held [in Miccosukee] that th[e] water transfer would count as

a discharge of pollutants under the CWA only if the canal and the reservoir were

ʹmeaningfully distinct water bodies.ʹʺ

(emphasis added) (citations

omitted). In holding that ʺthe flow of water from an improved portion of a

10 In Catskill II, we concluded that ʺ[o]ur rejection of [the unitary waters] theory in Catskill I . . . is supported by Miccosukee, not undermined by it.ʺ 451 F.3d at 83.

31

navigable waterway into an unimproved portion of the very same waterway

does not qualify as a discharge of pollutants under the CWA,ʺ id., the Court

again suggested that it would be a discharge of pollutants if the transfer were

between two different water bodies.

In Miccosukee, the Supreme Court acknowledged the concerns that

have been raised about the burdens of permitting, but also observed that ʺit may

be that such permitting authority is necessary to protect water quality, and that the

States or EPA could control regulatory costs by issuing general permits to point

sources associated with water distribution programs.ʺ 541 U.S. at 108 (emphasis

added). Indeed, recognizing the importance of safeguarding drinking water,

Congress created an extensive system to protect this precious resource, a system

that would be undermined by exempting interbasin water transfers.

Hence, the Supreme Courtʹs decisions in Miccosukee and Los Angeles

County support the conclusion that water transfers between two distinct water

bodies are not exempt from the Act.

III

In my view, then, Congress has ʺunambiguously expressedʺ its

intent to subject interbasin water transfers to the requirements of §§ 1311 and

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1362 of the Act. Accordingly, I would affirm the judgment of the district court

based on step one of Chevron. Even assuming, however, that the statutory text is

ambiguous, I agree with the district court that the Water Transfers Rule also fails

at Chevron step two because it is an unreasonable and manifestly contrary

interpretation of the Act, largely for the reasons set forth in the district courtʹs

thorough and carefully‐reasoned decision. I add the following:

First, Chevron deference has its limits. ʺDeference does not mean

acquiescence,ʺ Presley v. Etowah County Commʹn,

(1992), and

ʺcourts retain a role, and an important one, in ensuring that agencies have

engaged in reasoned decisionmaking,ʺ Judulang v. Holder,

, 484‐85

(2011).

Second, an agencyʹs interpretation of an ambiguous statute is not

entitled to deference where the interpretation is ʺat oddsʺ with the statuteʹs

ʺmanifest purpose,ʺ Whitman v. Am. Trucking Assʹns,

(2001), or

the agencyʹs actions ʺʹdeviate from or ignore the ascertainable legislative intent,ʹʺ

Chem. Mfrs. Assʹn v. EPA,

, 867 (D.C. Cir. 2000) (quoting Small Refiner

Lead Phase‐Down Task Force v. EPA,

, 520 (D.C. Cir. 1983)). See

Katzmann, Judging Statutes 31 (ʺThe task of the judge is to make sense of

33

legislation in a way that is faithful to Congressʹs purposes. When the text is

ambiguous, a court is to provide the meaning that the legislature intended. In

that circumstance, the judge gleans the purpose and policy underlying the

legislation and deduces the outcome most consistent with those purposes.ʺ). As

discussed above, in my view the Water Transfers Rule is manifestly at odds with

Congressʹs clear intent in passing the Act.

Third, the Water Transfers Rule is not entitled to deference because

it will lead to absurd results. See Michigan v. EPA,

(2015)

(ʺNo regulation is ʹappropriateʹ if it does significantly more harm than good.ʹʺ);

see also Scalia & Garner, Reading Law 234 (ʺA provision may be either disregarded

or judicially corrected as an error (when the correction is textually simple) if

failing to do so would result in a disposition that no reasonable person could

approve.ʺ). Indeed, this Court has already held ‐‐ twice ‐‐ that the ʺunitary

watersʺ theory would lead to absurd results. In Catskill I, we concluded that

ʺ[n]o one can reasonably argue that the water in the Reservoir and the Esopus are

in any sense the ʹsame,ʹ such that ʹadditionʹ of one to the other is a logical

impossibility.ʺ 273 F.3d at 492 (emphasis added). In Catskill II, we rejected the

ʺunitary waterʺ theory for a second time, observing that it ʺwould lead to the

34

absurd result that the transfer of water from a heavily polluted, even toxic, water

body to one that was pristine via a point source would not constitute an

ʹadditionʹ of pollutants.ʺ 451 F.3d at 81 (emphasis added). It would be an absurd

result indeed for the Act to be read to allow the unlimited transfer of polluted

water to clean water. Clean drinking water is a precious resource, and Congress

painstakingly created an elaborate permitting system to protect it. Deference has

its limits; I would not defer to an agency interpretation that threatens to

undermine that entire system.

* * *

I would affirm the judgment of the district court, and, accordingly, I

dissent.

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