GM 16-033

Environmental Protection Agency Publishes Final Interpretive Rule on Tribal Eligibility for "Treatment as a State" under the Clean Water Act

On May 16, 2016, the U.S. Environmental Protection Agency (EPA) published a final interpretive rule in the FEDERAL REGISTER to streamline how tribes can apply for “Treatment as a State” (TAS) for the water quality standards (WQS) program and other Clean Water Act regulatory programs. 81 Fed. Reg. 30183 (copy attached). This interpretative rule finds that Section 518 of the Clean Water Act (CWA) is an express delegation of authority by Congress, and eliminates the requirement that tribes show inherent authority over nonmembers on fee lands under the so-called Montana test, a requirement which has been a major impediment to tribes attaining TAS status and adopting WQS. The interpretive rule explains EPA’s revised interpretation of the statutory requirements in the CWA and does not make any changes in the existing regulatory language relating to applications for TAS. As we reported in General Memorandum 15-059 (August 12, 2015), EPA invited comments on this rule even though, as an interpretive rule, it is not subject to notice and comment rulemaking under the Administrative Procedure Act. The final rule includes EPA’s responses to comments received.

In this final rule, EPA reinterprets Section 518 of the CWA as a delegation of authority by Congress to eligible tribes to administer CWA regulatory programs over their entire reservations. Tribes and tribal organizations have been seeking this proposed reinterpretation for many years. This reinterpretation is a very significant shift away from the approach EPA adopted in 1991 when it promulgated final regulations for the WQS program, which required each applicant tribe to include a statement describing the basis for its assertion of authority. EPA’s interpretation of this regulatory requirement, as explained in the preamble of the 1991 rulemaking document, required that a tribe seeking TAS to administer the WQS on lands owned by nonmembers of the tribe demonstrate inherent authority to regulate non-tribal members under principles of federal Indian common law, especially Montana v. United States, 450 U.S. 544 (1981). In Montana, the Supreme Court had announced a proposition that, absent a delegation of federal authority, tribes generally lack inherent sovereignty over nonmembers on fee lands, but the Court also formulated two exceptions in which tribes may retain inherent civil jurisdiction over nonmembers. The second exception, which EPA considered relevant for tribal authority for CWA regulatory programs, provides that tribes may retain inherent civil authority where nonmember “conduct threatens or has some direct effect on the political integrity, the economic security, or the health and welfare of the tribe.”

In the final interpretive rule, EPA recognizes that the requirement for “the demonstration of inherent authority over nonmember activities on the reservation under the so-called Montana test has created the most significant and widespread burden” to tribes attaining TAS status for the WQS program. Only 53 of the more than 300 tribes with reservations have been approved for TAS to adopt WQS.

In explaining its reinterpretation, EPA recalls that, in the 1991 rulemaking, it had considered the question of whether CWA Section 518 was a delegation of authority to tribes. After noting that an opinion by four Supreme Court justices cited Section 518 as an example of delegation and that some legislative history supported a finding of such congressional intent, EPA had found that the support for delegation was not sufficiently definitive. EPA wrote that it considered the question “not resolved” and that EPA would be willing to revisit the issue if further congressional or judicial guidance indicates that Section 518 is properly interpreted as an express congressional delegation of authority.

EPA’s approvals of TAS for CWA regulatory programs have been challenged several times, and in each case the reviewing court upheld EPA’s determination. In its reinterpretation, EPA notes that the first federal court to rule on a challenge to a CWA TAS determination analyzed CWA Section 518 and concluded that it does provide tribes with delegated regulatory authority over their entire reservations, although that question was not an issue to be decided in the case. EPA also cites the TAS provisions in Section 301(d) of the Clean Air Act (CAA) as additional relevant insight into congressional intent, with language that was enacted in 1990, only three years after Congress enacted CWA Section 518. When EPA finalized its TAS regulations implementing CAA Section 301(d) in 1998, it concluded that Congress had intended to delegate regulatory authority to eligible tribes “over all air resources within the exterior boundaries of a reservation.” That interpretation rendered the Montana test inapplicable. When EPA’s TAS rule under the CAA was challenged, the D.C. Circuit Court of Appeals found that EPA’s interpretation was consistent with congressional intent. In its reinterpretation, EPA notes that (similar to the CAA) CWA Section 518 provides eligibility for tribal programs covering water resources “within the borders of an Indian reservation” and cites the definition of “federal Indian reservation” in Section 518(h) of the CWA as including all land within the limits of a reservation.

In light of the legal developments since 1991 and the experience to date in which the Treatment as a State application process has become much more burdensome than EPA anticipated in 1991, EPA has now finalized its reinterpretation of Clean Water Act Section 518.

Please let us know if we may provide additional information regarding this very important U.S. Environmental Protection Agency interpretive rule.