On January 18, the U.S. Court of Appeals for the Second Circuit reversed the lower court and held that EPA’s 2008 promulgation of the “Water Transfers Rule” (Rule) published in the Federal Register at 73 FR 33697 on June 13, 2008, was entitled to Chevron deference, and reinstated the rule. The regulation is codified at 40 C.F.R. § 122.3(i), and provides that water transfers, as defined in the rule, do not require National Pollutant Discharge Elimination System (NPDES) permits because they do not result in the addition of a pollutant. The case is Catskill Mountains Chapter of Trout Unlimited, Inc., et al, v. EPA.

In this case, water is moved or transferred from the Schoharie Reservoir to New York City, and provides drinking water to the residents of the city’s five boroughs. Requiring this movement of water to be permitted in accordance with the Clean Water Act’s (CWA) NPDES permitting system would impose substantial regulatory costs on New York City and other municipalities that depend on water transfers. Here, unlike the approach taken by the court in earlier cases, the Second Circuit held that this rule was entitled to Chevron deference. This was a 2 to 1 decision, with Judge Chin filing a long dissent. The majority reasoned that

Although the Rule may or may not be the best or most faithful interpretation of the Act in light of its paramount goal of restoring and protecting the quality of U.S. waters, it is supported by several valid arguments — interpretive, theoretical, and practical. And the EPAʹs interpretation of the [CWA] as reflected in the Rule seems to us to be precisely the kind of policymaking decision that Chevron is designed to protect from overly intrusive judicial review.

Ultimately, it concluded that the Rule satisfies Chevron‘s deferential standard of review and, accordingly, it reversed the District Court’s judgment.