Does the Environmental Protection Agency have the statutory authority to require an upstream state's discharge permit to comply with downstream state water quality standards under the Clean Water Act?

In 1985, Fayetteville, Arkansas applied to the EPA for a permit under the National Pollution Discharge Elimination System (NPDES) for its new sewage treatment plant. The EPA issued a permit allowing the plant to discharge up to 6.1 million gallons per day into an unnamed stream that flows through Arkansas creeks and enters the Illinois River 22 miles upstream from the Arkansas-Oklahoma border. Oklahoma's water quality standards require "no degradation" in the upper Illinois River, including the portion immediately downstream from the state line, which is designated as a "scenic river." Oklahoma challenged the permit, arguing that the discharge would violate its water quality standards. The EPA's Administrative Law Judge found that while the discharge would reach Oklahoma waters, it would not have a detectable impact on water quality. The EPA's Chief Judicial Officer established that Oklahoma's standards would only be violated if the discharge caused an "actually detectable or measurable" change in water quality. After detailed findings, the ALJ concluded the Fayetteville discharge would not produce a detectable violation of any component of Oklahoma's water quality standards.

Oklahoma and other respondents challenged the EPA permit before the Agency, alleging violations of Oklahoma water quality standards. Following a hearing, the Administrative Law Judge concluded the discharge would not have an undue impact on Oklahoma's waters and affirmed the permit. On petition for review, the EPA's Chief Judicial Officer established a standard requiring no "actually detectable or measurable" violation of downstream state standards. On remand, the ALJ made detailed factual findings and concluded the discharge met this standard. The Chief Judicial Officer sustained the permit issuance. Both Arkansas and Oklahoma sought judicial review in federal court. Arkansas argued the Clean Water Act did not require compliance with downstream state standards, while Oklahoma challenged the EPA's determination that the discharge would not detectably violate its standards. The Court of Appeals for the Tenth Circuit agreed the statute required compliance with Oklahoma's standards and did not disagree with the Agency's factual determination, but reversed the permit issuance based on a novel theory that any discharge contributing to already-degraded waters should be prohibited.

(Stevens, J.)

Yes. The EPA has statutory authority to require upstream discharges to comply with downstream state water quality standards, and the Agency's interpretation and application of Oklahoma's standards was reasonable and entitled to deference. The Clean Water Act grants the EPA broad discretion to establish conditions for NPDES permits. Section 402(a)(2) provides that the Administrator shall prescribe conditions "to assure compliance with the requirements of [§ 402(a)(1)] and such other requirements as he deems appropriate." Since 1973, EPA regulations have provided that NPDES permits shall not be issued when conditions cannot ensure compliance with applicable water quality requirements of all affected states. These regulations constitute a reasonable exercise of the Agency's statutory authority and are consistent with the Act's broad purpose to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters." Section 301(b)(1)(C) expressly identifies achievement of state water quality standards as one of the Act's central objectives. The Agency's regulations are well-tailored to achieve this goal. The EPA's interpretation of Oklahoma's "no degradation" standard as requiring only "actually detectable or measurable" changes in water quality is reasonable and consistent with the Act's purposes. This interpretation prevents downstream states from wielding an effective veto over upstream discharges based on merely theoretical impacts. The ALJ's factual findings regarding eutrophication, aesthetics, dissolved oxygen, and metals were supported by substantial evidence and demonstrated no detectable violation of Oklahoma's standards. The Court of Appeals committed three fundamental errors: failing to defer to the EPA's reasonable interpretation of its own regulations, disregarding established standards for reviewing agency factual findings by making its own findings, and incorrectly concluding the EPA's decision was arbitrary and capricious based on the court's own novel interpretation of the law. The Clean Water Act does not establish a categorical ban on discharges into waters that fail to meet quality standards, as the Court of Appeals suggested.