Editor's note: This article has been revised to include statements from San Francisco's city attorney and the general manager of the Public Utilities Commission, reacting to the Supreme Court decision.
The U.S. Supreme Court has sided with the city of San Francisco and other major U.S. cities in a court fight with federal regulators over the reach of federal water quality regulations, saying the law doesn't allow the EPA to hammer cities and others with potentially billions of dollars for the condition of the waters into which their treated products may flow.
Instead, the court said, federal environmental law only grants EPA the authority to set regulations governing quality at sewage treatment plants and other points of discharge themselves and to only impose penalties if those individual standards are violated.
So long as regulated entities, like the city of San Francisco, comply with the requirements in the permits granted by the Environmental Protection Agency, they should be protected from potentially financially ruinous financial penalties by a so-called "permit shield" contained within federal environmental laws.
"But the benefit of this provision would be eviscerated if the EPA could impose a permit provision making the permittee responsible for any drop in water quality below the accepted standard," Justice Samuel J. Alito wrote in the 5-4 majority opinion.
"A permittee could do everything required by all the other permit terms. It could devise a careful plan for protecting water quality, and it could diligently implement that plan. But if, in the end, the quality of the water in its receiving waters dropped below the applicable water quality levels, it would face dire potential consequences."
The dispute landed in court last year, when the EPA sued the city of San Francisco for allegedly violating the federal Clean Water Act by allegedly allowing too much untreated wastewater to flow into the San Francisco Bay.
Like other major cities, San Francisco operates wastewater treatment plants which treat both sewage flowing from homes and businesses in the city and stormwater run-off - essentially, rain that falls in the city, but cannot be absorbed in the ground before it would quickly run off into the Bay.
The stormwater is treated to help reduce the amount of pollutants from city streets and other human-made surfaces in the city that may flow into San Francisco Bay.
However, during times of heavy rains, the treatment plants can be overwhelmed, resulting in untreated wastewater being discharged directly into the Bay, reducing water quality.
Like every other wastewater treatment plant in the U.S., San Francisco's plants operate under permits issued by the EPA under its National Pollutant Discharge Elimination System (NPDES).
Organizations regulated under NPDES can face significant financial penalties and even criminal prosecution for violating the discharge limits imposed under their permits.
Violations of EPA NPDES standards could also expose such regulated entities to private lawsuits, as well.
However, in 2019, the EPA imposed new standards on NPDES permits, effectively requiring San Francisco to take responsibility for the overall water quality standards within the San Francisco Bay, legally referred to as the "receiving waters" for the discharges from the city's wastewater treatment plants.
San Francisco balked at the changes, noting it would expose the city to penalties of $66,000 per day, amounting to potentially billions of dollars in fines total.
The city argued the EPA exceeded their authority under federal law by attempting to hold individual permittees responsible for the "end results" of overall emissions into the "receiving waters."
The city appealed to the U.S. Ninth Circuit Court of Appeals. But a divided federal appeals panel ruled the EPA acted within its lawful authority, as a two-justice majority determined the EPA had the authority to slap on "any" limits or penalties it determines are needed to ensure water quality standards are met.
San Francisco appealed that decision to the U.S. Supreme Court, saying that interpretation of federal law doesn't hold up.
The city argued the new "end results" standards make it all but impossible for regulated wastewater treatment organizations to comply and avoid punishments, when they may not even be responsible for the dip in water quality.
In its brief submitted to the U.S. Supreme Court, San Francisco wrote: "EPA alleges that the City's discharges have caused violations of receiving water conditions since 2013, but nowhere specifies how, if at all, the nature or contents of the City's discharges did so. Based on threadbare allegations, EPA seeks hundreds of millions of dollars in civil penalties and even more in injunctive relief, all without affording San Francisco notice of precisely how the City could have reasonably avoided the alleged violations, let alone correct them now."
They were backed in the case by a collection of other U.S. cities, including New York, Boston and others, and advocates for U.S. business and industry, who all said the "end results" rules would expose regulated cities and companies unfairly to staggering and ruinous liability.
They argued the EPA should be limited under federal law to so-called "backward-looking" regulatory actions, in which federal regulators must seek to determine who is actually responsible for causing water to have violated established water quality standards, and not simply impose punishments on a permit holder that discharges into a specific body of "receiving waters" when those waters fall short of federal standards.
At the Supreme Court, a conservative majority agreed.
Alito was joined in the opinion by Chief Justice John Roberts and Justices Clarence Thomas, Neil Gorsuch and Brett Kavanaugh.
Justice Amy Coney Barrett authored a dissent. She was joined by the court's left-wing bloc, including Justices Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson.
In the majority opinion, justices agreed the law limits the ability of the EPA to hold federal NPDES permittees responsible for the "end results" from the collective discharges into the "receiving waters."
They noted Congress in the 1970s specifically removed a provision allowing that kind of enforcement from the Clean Water Act, instead including provisions creating the so-called "permit shield," which limits permittees' liability for the ultimate quality of the water, so long as they can show they have met their permit requirements.
In dissent, Barrett and the liberals in the minority said they believed the majority decision too narrowly restricts the power of the EPA to regulate water quality.
In this case, they noted San Francisco "has consistently failed to update" plans required "for managing combined sewer overflows." And they noted San Francisco's wastewater plants are the only source discharging into the Bay at that location.
Barrett said the "end results" regulations give the EPA the ability "to issue a permit to San Francisco while complying with the Clean Water Act."
Further, they noted, permittees who believe the EPA's rules or penalties are too severe or impossible can challenge such determinations in court.
"After today, the alternative for entities seeking a general permit is not for EPA to issue the permit without the (statutory) limitation," Barrett wrote. "Instead, the alternative is for the permit to be delayed or even denied.
"... EPA is required to issue the limitations necessary to ensure that the water quality standards are met. So taking a tool away from EPA may make it harder for the Agency to issue the permits that municipalities and businesses need in order for their discharges to be lawful."
Following the ruling, San Francisco officials said they were pleased by the decision.
San Francisco City Attorney David Chiu and San Francisco Public Utilities Commission General Manager Dennis Herrera issued a joint statement, saying:
“We are very pleased the Court issued the narrow decision San Francisco sought. This decision upholds the Clean Water Act’s critical role in protecting water quality and simply requires the EPA to fulfill its obligations under the Clean Water Act, as intended by Congress. This ruling makes clear that permitholders like San Francisco are responsible for what they discharge, and the EPA has the tools at its disposal to ensure water quality.
"But it’s not lawful to punish permitholders for things outside of their control, such as the end-result water quality of a shared body of water, where many other factors affect water quality. This is a good government decision that assures certainty in water quality permitting and that every permittee has predictable, knowable standards to protect water quality.”
The Public Utilities Commission general manager is appointed by the Commission. The Commission's members are selected by the mayor of San Francisco and confirmed by the Board of Supervisors. Herrera was selected under former Mayor London Breed.
Spokespeople for current San Francisco Mayor Daniel Lurie did not respond to a request for comment.