ELR Citation: ELR 21227
No(s). 87-1091 (4th Cir. Apr 4, 1988)

The court holds that the Environmental Protection Agency (EPA) has authority to require that sewage treatment system construction funds under the Federal Water Pollution Control Act (FWPCA) be used only to provide service to developments in existence at the time of the grant, and no service at all in wetlands areas. The court first holds that the developer that had applied for a wastewater discharge permit for a new development has standing to challenge the grant conditions. The developer's need to hook up to the wastewater system is arguably within the zone of interests EPA must consider, and its lost revenue if it cannot obtain sewer service is sufficient injury-in-fact. The causal connection between the injury and EPA's action is sufficient since the local sewer authority would not have restricted access to the wastewater system had it not been for EPA's insistence.

The court next holds that EPA has statutory authority to impose these conditions on its funding of sewage facilities. EPA's interpretation of the FWPCA is entitled to considerable deference from the courts and will ordinarily be upheld if it has a reasonable basis in law. While EPA's conditions are intended in part to control nonpoint source pollution in the area, and the FWPCA contains no direct mechanism for federal regulation of nonpoint source pollution, this was due not to Congress' concern for state autonomy, but rather to a recognition that the control of nonpoint source pollution was dependent on site-specific factors. Moreover, Congress anticipated in FWPCA §208 that EPA would use financial assistance incentives to control nonpoint source pollution. Nothing in the FWPCA language or legislative history indicates a congressional intent to preclude EPA from imposing nonpoint source pollution conditions on sewage system construction grants. Rather, EPA's mandate is to improve water quality, particularly in light of the FWPCA §511(c)(1) reference to the National Environmental Policy Act, which requires federal agencies to use all practicable means to administer federal programs in a way that does not harm the environment.

EPA's conditions do not conflict with the Coastal Zone Management Act (CZMA) or the National Flood Insurance Act (NFIA). The CZMA makes clear that states are the principal authority for land use decisions in coastal areas, but EPA's conditions are not land use regulations. They are merely restrictions on the use of federal funds. Moreover, EPA's grant conditions have been approved by the appropriate state officials as consistent with the state's coastal zone management plan. CZMA §307 makes clear that the CZMA is intended to complement, rather than preempt, environmental protection in the FWPCA. Similarly, there is nothing in the NFIA or its legislative history to indicate that Congress intended it to prevent EPA from acting in a floodplain region. Finally, the court holds that EPA's actions were not arbitrary and capricious. The conditions are approved under the state's coastal zone management plan, and they are directly related to improving water quality.

Counsel for Plaintiff-Appellant
Raymond Stevens Smethurst Jr.
Adkins, Potts & Smethurst
Suite 600, One Plaza East, P.O. Box 4247, Salisbury MD 21801
(301) 749-0161

Counsel for Defendants-Appellees
Laura Emily Frossard
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2767

Counsel for Amici Curiae
Timothy J. Lindon
Arnold & Porter
1200 New Hampshire Ave. NW, Washington DC 20036
(202) 872-6700

Before WINTER, Chief Judge, and PHILLIPS and MURNAGHAN, Circuit Judges.