FOR IMMEDIATE RELEASE
September 26, 2024

SAN FRANCISCO — San Francisco City Attorney David Chiu filed the City’s final brief yesterday in its case before the United States Supreme Court, asking the Court to instruct the Environmental Protection Agency (EPA) to follow the Clean Water Act and issue clear water discharge permits that prevent water pollution before it occurs. The lawsuit, City and County of San Francisco v. Environmental Protection Agency, has high stakes for San Francisco utility ratepayers as the City could be forced to make at least $10 billion in capital expenditures that would cause water and sewer bills to skyrocket to nearly $9,000 annually per ratepayer over the next 15 years if the terms San Francisco is challenging are held lawful. Oral argument in the case will be held before the U.S. Supreme Court on October 16.

“To be clear, this case does not challenge or seek any change to the Clean Water Act,” said City Attorney David Chiu. “It asks the Court to ensure EPA follows the Clean Water Act and gives permitholders clear standards that actually prevent water pollution before it happens. San Francisco is not threatening EPA’s ability to enforce environmental protections. San Francisco is asking EPA to do its job to protect the environment. This case is about three abstract sentences in a 150-page permit, but those three sentences inject significant uncertainty into all of our City’s permits and could force the City into at least $10 billion worth of capital expenditures that would have a negligible impact on improving water quality but would result on average $9,000 annual utility bills for ratepayers. I have a duty to protect San Franciscans from utility rates that would drive many of them into poverty, as well as make sure San Francisco complies with our obligations to protect the environment. ”

“Right now, San Francisco and other clean water agencies across the country face a Catch-22,” said Dennis Herrera, General Manager of the San Francisco Public Utilities Commission, the City’s water, power and sewer utility. “The EPA is basically saying, ‘You can’t pollute too much, but we won’t tell you what too much is until after you’ve already done it.’ That’s untenable. The financial hit to our customers could be so severe that it would drive more than 8,000 San Franciscans into poverty. San Francisco remains fully committed to complying with the Clean Water Act. We are simply asking the EPA to tell us what the requirements are. Tell us the requirements, and we’ll meet those requirements. Clean Water Act permits should say what they mean and mean what they say.”

San Francisco’s combined sewer system
Every jurisdiction with a sewer system, including San Francisco, must discharge treated wastewater into an adjacent body of water. While these discharges always include some low level of pollutants, they are safe and are permitted by the Environmental Protection Agency and authorized state agencies via the National Pollutant Discharge Elimination System (NPDES).

San Francisco’s combined sewer and stormwater system collects and treats both wastewater and stormwater in a single system. The San Francisco Public Utilities Commission (SFPUC) manages two treatment plants that operate 365 days a year, as well as a third wet-weather facility that operates during rain events. This combined sewer system gives San Francisco significant environmental advantage over other jurisdictions with separate pipe systems because it allows the City to treat wastewater and almost all stormwater before discharging it into to the Pacific Ocean or Bay, providing stormwater the same high treatments standards as wastewater. Other municipalities throughout the Bay Area and California do not treat their stormwater, allowing pollutants – bacteria, metals, and other contaminants – to flow into the Pacific Ocean or Bay.

San Francisco has invested more than $2 billion in upgrading its wastewater collection and treatment system to ensure the City remains an environmental leader and continues to do its part to protect the Pacific Ocean and Bay. Additionally, San Francisco plans to invest another $2.36 billion over the next 15 years to implement eight different projects that will continue to protect water quality in San Francisco Bay.

The Clean Water Act
Before the passage of the Clean Water Act (CWA) in 1972, the federal government used post-pollution enforcement to regulate individual wastewater dischargers. Rather than regulate the specific pollutant levels that an entity could discharge, federal law allowed pollution to happen first, followed by enforcement. This regulatory system had numerous problems because it did not prevent water pollution before it occurred, was difficult to enforce in practice, and did not give adequate notice to dischargers about how to prevent water quality violations.

The Clean Water Act changed that system by requiring dischargers to proactively obtain permits issued by EPA or authorized state agencies that set effluent limitations, which are specific pollution limits to which a permitholder’s discharges must conform before releasing that wastewater. The Clean Water Act was designed to give permitholders, like San Francisco, clear, operational requirements and discharge limitations to control pollution at the source before discharge. EPA originally followed this approach required by the Clean Water Act.

Under the Clean Water Act, EPA and the San Francisco Regional Water Quality Control Board are required to issue San Francisco NPDES permits specifying the quantities, rates, and concentrations of pollutants San Francisco may discharge into the Pacific Ocean or Bay to ensure that water quality standards are met. These permits are extremely detailed, 150-page documents that include extensive numeric and narrative limitations and operational requirements.

When the City’s Bayside Permit was up for renewal in 2013, contrary to Congress’ intent in the Clean Water Act, two “generic prohibitions” were included in the permit, returning to the pre-Clean Water Act system of post-pollution enforcement. These generic prohibitions hold San Francisco responsible for the quality of the receiving water in the Bay, rather than holding the City responsible for what it can control, which is the pollutant levels it is discharging. San Francisco, of course, cannot control the overall water quality in Pacific Ocean or Bay. Other agencies discharge into the Pacific Ocean or Bay, and there are many other factors that impact water quality and pollution in those water bodies. Consequently, the City could spend billions more than it has already invested in its combined sewer and stormwater system and still not know whether it will face enforcement actions for allegedly “violating” unspecified, unknown, and unknowable “requirements” based on receiving water conditions that San Francisco cannot solely control.

History of the case
When the City’s Oceanside permit was up for renewal in 2019, EPA and Regional Water Board included the two generic prohibitions in that permit as well, and later that year, President Donald Trump and the EPA within his Administration threatened enforcement of those terms against San Francisco. This time, San Francisco maintained an objection to the inclusion of the generic prohibitions. The City followed the appropriate process and filed a petition for review of the generic prohibitions in the Oceanside permit with EPA’s Environmental Appeals Board (EAB). In 2020, under the Trump Administration, the EAB denied San Francisco’s petition.

San Francisco sought review of that decision at the Ninth Circuit U.S. Court of Appeals, challenging the generic prohibitions. Before oral argument at the Ninth Circuit, San Francisco diligently attempted to resolve the matter outside of litigation, but EPA refused.

In 2023, a divided Ninth Circuit panel denied San Francisco’s petition, with the dissent finding the generic prohibitions “invalid” because they are “inconsistent with the text of the CWA,” and that the EPA “fundamentally abdicated the regulatory task assigned to it under the CWA” by conditioning San Francisco’s ability to comply with its permit on receiving water quality

Increased ratepayer costs
The generic prohibitions hold San Francisco and other permitholders to unknowable standards and expose the City to a never-ending cycle of enforcement actions from EPA and private parties – including in other significant ongoing litigation with the EPA stemming from these same provisions in both the City’s Bayside and Oceanside permits. These enforcement actions can be hugely expensive and appear designed to force the City into making costly capital upgrades on top of existing, planned improvements to the City’s sewer system.

The SFPUC, in a good faith effort to comply with these uncertain requirements, worked with its consultants to identify the lowest-cost projects that were conceptually feasible if EPA uses their generic prohibitions to demand capital improvements on the Bayside. The cost of that package of projects was estimated to be $10.6 billion in 2024 dollars. This expenditure would mean significant increases in water and sewer bills, with individual ratepayers expected to pay nearly $9,000 annually in 2039, a ten-fold increase compared to today’s average yearly bills of $851. According to an analysis commissioned by SFPUC, this would cause widespread social and economic impacts. Thousands of San Franciscans would no longer be able to cover their basic needs and be plunged into poverty. Between 8,100 and 10,600 more people would no longer earn enough to cover their basic needs and would be forced into poverty.

At the same time, this package of capital projects would have a negligible impact on improving water quality because the discharges at issue already occur infrequently—on average City wide, 10 times per year or less and only during unusually intense rain storms. Further, there is no guarantee these projects would satisfy EPA or quell the clamor of third parties looking to sue the City for violations of the generic prohibitions, who might interpret the generic language to require different projects.

After the Ninth Circuit’s decision, San Francisco was facing the prospect of at least $10 billion of capital expenditures just from the generic prohibitions remaining in the City’s Bayside permit, expected annual utility rates of nearly $9,000 per ratepayer, and perpetual enforcement actions by EPA and third parties. The City chose to seek review by the U.S. Supreme Court to protect the City and the ratepayers from these lawsuits and devastating costs. On May 28, the U.S. Supreme Court granted San Francisco’s petition for writ of certiorari, agreeing to hear the case.

Question before the Court is narrow
The question presented to the U.S Supreme Court is narrow, reading: “Whether the Clean Water Act allows EPA (or an authorized state) to impose generic prohibitions in NPDES permits that subject permitholders to enforcement for exceedances of water quality standards without identifying specific limits to which their discharges must conform.”

San Francisco’s lawsuit does not challenge the Clean Water Act, or any other federal law, regulation, or agency guidance. San Francisco is not seeking any change to the Clean Water Act, but it asks the Court to ensure EPA follows the Clean Water Act in the manner Congress intended and gives permitholders specific limits that actually prevent pollution before it happens. San Francisco is not seeking to strip EPA of the ability to enforce environmental protections or eliminate the agency’s ability to enforce its permits. In fact, EPA’s own regulations and guidance require it to do exactly what San Francisco is asking, and the City is not challenging the bulk of the NPDES permit. The City is challenging the two unlawful, generic prohibitions – a total of three sentences in a 150-page permit.

If the U.S. Supreme Court decides in San Francisco’s favor and requires EPA to follow the CWA and establish clear permit requirements, permitholders would then be able to protect the environment and prevent pollution by managing their discharges before they reach receiving waters. Such a decision would provide necessary clarity, be in accordance with the Clean Water Act and EPA’s own regulations and guidance, eliminate the perpetual threat of enforcement, and provide some stability for San Francisco ratepayers.

San Francisco’s challenge is not novel. In 2015, environmental organizations, led by the Natural Resources Defense Council, brought a lawsuit against EPA in the Second Circuit U.S. Court of Appeals, challenging generic prohibitions. As described in San Francisco’s reply brief, the Second Circuit found permit terms like the generic prohibitions fail to protect the environment, because they “add nothing” to instruct permitholders how to prevent pollution, instead only imposing liability after water quality violations have occurred.

Cities across U.S. join San Francisco
Large cities and jurisdictions across the country like Boston, New York, and Washington D.C. share San Francisco’s concerns and submitted amicus briefs supporting the City’s position. The City has been joined by more than 60 amici, including the 400 cities represented by the California League of Cities, the 2,800 members of the National League of Cities, the over 2,300 members of the National Association of Counties, and the National Association of Clean Water Agencies.

As stated in one amicus brief advocating for San Francisco’s position: “If left to stand, the Ninth Circuit’s decision will not lead to improved water quality, but will cause untenable amounts of permitting uncertainty… This regulatory limbo threatens not only the billions of dollars in clean water infrastructure investment being made by local communities across the country, but also the pocketbooks of all their ratepayers—including those in disadvantaged communities—who will be left footing the bill.”

Deputy City Attorney Tara Steeley will be arguing San Francisco’s case before the U.S. Supreme Court on October 16.

San Francisco’s opening brief can be found here, and the reply brief filed yesterday can found here. The case is City and County of San Francisco v. Environmental Protection Agency, United States Supreme Court, Case No. 23-753.