On July 6, the Third U.S. Circuit Court of Appeals issued its ruling in the case ofAmerican Farm Bureau Federation v. EPA (No. 13-4079). The ruling, which affirmed an earlier district decision upholding the U.S. Environmental Protection Agency’s (EPA’s) Chesapeake Bay Total Maximum Daily Load (TMDL), was a complete victory for EPA. The Chesapeake Bay TMDL was developed over the course of a decade through negotiations, sometimes tense, between the Chesapeake Bay watershed states (and Washington, D.C.) and EPA. The American Farm Bureau Federation challenged the TMDL shortly after it was adopted in 2010. Its suit claimed, among other things, that EPA’s setting of the TMDL exceeded EPA’s authority by allocating waste loads, inserting timelines for compliance, and requiring that states provide “reasonable assurances” that they could meet the goals of their watershed implementation plans, which were a key part of meeting the TMDL goals.

The Third Circuit unanimously upheld the Chesapeake Bay TMDL and EPA’s authority to develop a detailed TMDL under the Clean Water Act (CWA). According to the court, EPA’s interpretation of what could constitute a TMDL under the CWA was subject to deference under the standards set forth in Chevron v. NRDC 476 U.S. 837 (1984). Chevron created a two-part test to determine the validity of a regulatory action. First, a court must determine if Congress directly addressed the question at issue. If Congress directly addressed the question, then a court must defer to the statute. However, if Congress did not address the question in the statute, then a court must determine if the agency has based its action on a permissible interpretation of the statute. If the agency’s interpretation is permissible, a court must defer to the agency. In this case, the court concluded that there was not express language in the CWA defining what “total” in the TMDL should be, but the court felt confident that it did not mean that EPA was forced to determine only one number for the entire Chesapeake Bay. Thus, as nothing in the CWA prohibited EPA from developing a detailed TMDL and EPA’s interpretation of what could rightfully be in a TMDL was not arbitrary and capricious, then EPA’s interpretation merited Chevron deference.

Moreover, in this case, the court underscored the very “cooperative federalism” framework – the partnership – between EPA and the bay watershed states, and that Congress’ declared national goals in the CWA suggests that the TMDL definition “is broad enough to include allocations, target dates, and reasonable assurance” provisions. In the case of the bay, the watershed states deferred to the EPA to establish the TMDL, opting to respond with state-specific cleanup plans to meet the nutrient-reduction goals, subject to EPA’s approval. The court acknowledged that, in keeping with the cooperative federalism partnership, there has been give and take between the EPA and the states in development and approval of individual states’ cleanup plans.

The opinion acknowledged that the Chesapeake Bay issues were complex and would require a great deal of cooperation between the states and the EPA to allocate the benefits and burdens of reducing pollution in the bay. Industry groups like the National Association of Clean Water Agencies (NACWA) intervened in the litigation to support the TMDL and applauded the decision.Under the new TMDL, agriculture, real estate developers and other non-point sources may see a larger federal role and more emphasis on regulation of land use in the process of achieving a TMDL.