TITLE:  Application for Permit to Dredge in National Forest State of Michigan, B-286951, January 10, 2002
BNUMBER:  B-286951
DATE:  January 10, 2002
**********************************************************************
Application for Permit to Dredge in National Forest State of Michigan, B-286951,
January 10, 2002

   Decision
    
    
Matter of:   Application for Permit to Dredge in National Forest State of
Michigan
    
File:            B-286951
    
Date:           January 10, 2002
    
DIGEST
    
Section 404(t) of the Clean Water Act, 33 U.S.C. S: 1344(t), requires
federal agencies to comply with state substantive and procedural
requirements governing discharge of dredged material in navigable waters,
including payment of fees charged for processing an application for a
permit to conduct dredge and fill activities in Hiawatha National Forest. 
Thus, we do not object to the Forest Service's use of its appropriated
funds to pay the permit-processing fee imposed by Michigan.
    
DECISION
    
The Director for Financial Management, Forest Service Eastern Region,
Milwaukee, Wisconsin, has requested an advance decision addressing the
following issue: may the Forest Service pay a fee to the Michigan
Department of Environmental Quality (DEQ) for the processing of a permit
required by the Michigan Natural Resources and Environmental Protection
Act, P.A. 1994, as amended.  The DEQ asserts that section 404(t) of the
Federal Water Pollution Control Act (commonly known as the Clean Water
Act), 33 U.S.C. S: 1344(t) (1994), authorizes it to charge permit
application fees to federal agencies engaged in dredging and fill
activities impacting lakes and streams, Great Lakes bottomlands, wetlands,
floodplains, and dam construction within Michigan.  For the reasons set
forth below, we conclude that section 404(t) requires federal agencies to
pay applicable fees for obtaining state permits for dredging and fill
activities.  Accordingly, we do not object to the Forest Service's use of
appropriated funds to pay Michigan's permit processing fee.
    
    
    
    
    
    
    
    
Background
    
The Forest Service, United States Department of Agriculture, manages
national forests and grasslands.[1]  The Service has jurisdiction over
four national forests in the state of Michigan and engages in projects
involving the discharge of dredged material as defined in 33 C.F.R.
S: 323.2 (2001) and 40 C.F.R. S: 227.13 (2001).  These projects include
fish habitat maintenance activities, stream culvert maintenance or
installation, sediment basin dredging, and impoundment reconstruction,
among others.
    
The Clean Water Act, 33 U.S.C. S: 1251, governs the discharge of dredged
material. Responsibility for the control of dredge and fill operations
rests, generally, with the Corps of Engineers, subject to review by the
Environmental Protection Agency (EPA).  Section 404 of the Act, 33 U.S.C.
S: 1344, provides for the Corps to review applications for the discharge
of dredge and fill material into navigable waters.  Section 404(g) allows
states to assume this authority; section 404(h) sets out criteria a state
must satisfy in order to win approval to regulate.  To date, only two
states, Michigan and New Jersey, have obtained authority to regulate such
discharges.  40 C.F.R. S: 233.70 (1998).  More importantly for this
discussion, however, is that section 404(t) subjects the activities of
federal agencies to state control of discharge of dredged materials: 
*[E]ach such agency shall comply with such State or interstate
requirements both substantive and procedural to control the discharge of
dredged and fill material to the same extent that any person is subject to
such requirements.*  33 U.S.C. S: 1344(t).
    
In 1993, Michigan enacted legislation requiring a permit for dredge and
fill activities, Mich. Comp. Laws S: 324.30304, and imposing fees for
obtaining permits, Mich. Comp. Laws S: 324.30306.  Since 1993, the Forest
Service and Michigan have disagreed over whether Michigan can require the
Forest Service to pay the fees.  See USDA/OGC Memorandum for Regional
Forester, USDA, Forest Service Eastern Region, May 18, 1994.  The Forest
Service, referring to the *substantive and procedural* language of section
404(t), accepts Michigan's requirement to obtain a dredging permit.  It
asserts, however, that because section 404(t) does not make specific
reference to *fees,* the statute does not clearly and unambiguously
subject federal agencies to a requirement to pay a permit‑processing
fee.
    
On January 26, 2000, the Service requested that the DEQ review and comment
on a project for excavation of material from Valley Spur Pond, and the
removal of sand and placement of spoil on an existing upland hiking/ski
trail within the Hiawatha National Forest.  Expressing its desire to
maintain a *cooperative working
relationship with Michigan DEQ in preventing and controlling water
pollution, and protecting our natural resources,* and declaring its intent
to continue sharing information on its wetland and water‑related
projects within the state, the Service enclosed a *service‑fee
payment* of $50 for processing a permit application.
On August 21 of that year, the DEQ responded with a request for a further
$450 as a permit filing fee, as well as for additional information
required for processing a permit application, including a project site
plan, a cross section of the sediment trap, and details of the volume of
material used, and dimensions of the area.  The applications correction
request cited Part 301, Inland Lakes and Streams, Part 303, Wetland
Protection, Part 325, Great Lakes Submerged Lands Act, 451, P.A. 1994, as
amended.  Mich. Comp. Laws S:S: 324.30101, 324.30301, 324.32501.
    
By letter dated September 1, 2000, the Service reiterated its request for
review and comment on the project but declined to pay the additional fee
based on its assertion of sovereign immunity as an agency of the federal
government.  The DEQ responded in a September 27 letter, asserting that
section 404(t) of the Clean Water Act obligated the Forest Service to
apply for a permit for its activities and to pay required fees.  The
Service subsequently requested an advance decision from our Office on
whether it may pay the requested fee.
    
Analysis
    
At issue here is whether the *substantive and procedural* language of
section 404(t) is sufficiently clear and unambiguous to constitute a
waiver of the Supremacy Clause of the Constitution and subject federal
agencies to state permit and fee requirements for dredge and fill
activities.  The Supremacy Clause provides that *This Constitution, and
the Laws of the United States which shall be made in Pursuance thereof . .
. shall be the supreme Law of the Land . . . any thing in the Constitution
or Laws of any State to the Contrary notwithstanding.*  U.S. Const.,
art. VI, cl. 2.  From the earliest days of our Republic, the U.S. Supreme
Court has recognized that state constitutions and laws cannot control or
otherwise regulate federal functions without the consent of the Congress. 
McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819).  *Because of the
fundamental importance of the principles shielding federal installations
and activities from regulation by the States, an authorization of state
regulation is found only when and to the extent there is a 'clear
congressional mandate,' 'specific congressional action' that makes this
authorization of state regulation 'clear and unambiguous.'*  Hancock v.
Train, 426 U.S. 167, 179 (1976).   Thus, where "Congress does not
affirmatively declare its instrumentalities or property subject to
regulation," "the federal function must be left free" of regulation.  Id.
at 179;  see also Mayo v. United States, 319 U.S. 441, 447 (1943). 
    
Congress added section 404(t) to the Clean Water Act in 1977 at the same
time it amended other provisions of the Clean Water Act, as well as the
Clean Air Act and the Safe Drinking Water Act, in response to the Supreme
Court's decisions in Hancock v. Train, 426 U.S. 167 (1976) and EPA v.
California, 426 U.S. 200 (1976).   In these decisions the Supreme Court
held that the Clean Air Act and the Federal Water Pollution Control Act
commonly known as the Clear Water Act did not clearly and unambiguously
demonstrate congressional intent to subject federal facilities to state
permit requirements.  Section 313 of the Clean Water Act, for example, had
provided that federal installations *shall comply with federal, state,
interstate and local requirements respecting control and abatement of
pollution to the same extent that any person is subject to such
requirements.*  Pub. L. No. 92-500, 86 Stat. 875 (1972).  Distinguishing
substantive requirements of state law respecting control and abatement of
pollution from procedural requirements employed to enforce those
substantive requirements, the Court said:  *[T]he 'requirements' language
of section 313 refers simply and solely to substantive standards, to
effluent limitations and standards and schedules of compliance.*  EPA v.
California, 426 U.S. at 215.
    
In reaction to the Supreme Court's restrictive interpretations of the term
*requirements* and its holdings in Hancock and EPA that states were
powerless to enforce their pollution laws against federal facilities,
Congress rewrote the three pollution control statutes.  See H.R. Rep. No.
95-294, at 12 (1977).  The 1977 amendments to those laws share similar
wording.  In each statute Congress emphasized that federal facilities must
comply with all requirements regarding pollution control.   For example,
Congress clarified section 313 of the Clean Water Act, the provision at
issue in the Supreme Court's EPA decision, stating that federal facilities
*shall be subject to, and comply with all federal, state, interstate, and
local requirements* (emphasis added), *whether substantive or procedural
(including . . . any other requirement, whatsoever).*  33 U.S.C. S:
1323(a).  In addition, the 1977 amendment to section 313 expressly
subjects federal facilities not only to state administrative authority but
also to *any* state or local process and state or local sanctions.  In the
amended version of section 313, Congress specified that no claim of any
immunity, including sovereign immunity, should interfere with the
application of pollution laws to federal facilities.  33 U.S.C. S: 1323(a)
(*This subsection shall apply notwithstanding any immunity of such
agencies, officers, agents, or employees under any law or rule of law*). 
The legislative history is illuminating:  *The act has been amended to
indicate unequivocally that all federal facilities and activities are
subject to all of the provisions of state and local pollution laws. 
Though this was the intent of the Congress in passing the 1972 Federal
Water Pollution Control Act Amendments, the Supreme Court, encouraged by
federal agencies, has misconstrued the original intent.*  S. Rep. No.
95-370, at 67 (1977).
    
In 1977, the Congress also amended the Clean Air Act to clarify the
provision that was at issue in the Supreme Court's Hancock decision,
namely, section 118 of the Act.  As pertinent here, Congress amended
section 118 to subject federal facilities to *any requirement whether
substantive or procedural (including any recordkeeping or reporting
requirement, any requirement respecting permits and any other requirement
whatsoever).*  Pub. L. No. 95-95, Title I, S: 116(a), 91 Stat. 711 (1977),
codified at 42 U.S.C. S: 7418(a).  The legislative history of the
amendment in no uncertain terms states that the intent of the 1970 Clean
Air Act was that federal facilities must comply with all substantive and
procedural air pollution requirements of federal, state, interstate, or
local law to the same extent as any person subject to such requirements. 
See, e.g., H.R. Rep. No. 95-294, at 12 (1977).  The conference report
explained:
    
The purposes of this provision are several:  (1) to clarify that section
118 of the existing Clean Air Act constitutes a waiver of sovereign
immunity, such that federal facilities and persons operating them must
comply with all state and local air pollution control requirements; (2) to
clarify that the federal facilities must comply with 'procedural' as well
as 'substantive' requirements; (3) to authorize enforcement against such
facilities and persons by the same means, process, sanctions, and
jurisdiction as for any non-federal source; and (4) to permit states to
enforce national hazardous emission standards and new source performance
standards against federal facilities.  This provision is intended
fundamentally to overrule the Supreme Court's ruling in Hancock v. Train,
which was decided after the committee adopted last year's bill.
    
H.R. Rep. No. 95-564, at 136-37 (1977) (Conference Report).
    
The House Report went into more detail:
    
In 1970, Congress enacted section 118 of the Clean Air Act. That provision
declared the clear and unequivocal policy of the United States that the
facilities, real and personal property, owned by the U.S. Government were
to comply with all substantive and procedural requirements of federal,
state, interstate or local law intended to control air pollution . . . 
Adoption of section 118 of the act was intended to remove all legal
barriers to full federal compliance . . .  The historic defense of
sovereign immunity was waived by Congress.
    
In the committee's view, the language of existing law should have been
sufficient to insure federal compliance in all of the aforementioned
situations.  Unfortunately, however, the U.S. Supreme Court construed
section 118 narrowly in Hancock v. Train . . .  The new section 113 of the
bill is intended to overturn the Hancock case and to express, with
sufficient clarity, the committee's desire to subject federal facilities
to all federal, state, and local requirements*procedural, substantive, or
otherwise*process, and sanctions . . .
    
By using the words 'procedural' and 'substantive' in the amendment, the
committee intends to make clear the duty of all federal agencies to comply
with inspection, recordkeeping, monitoring, reporting, and other
requirements, not merely to obtain permits or to meet emission limits and
schedules of compliance.
    
H.R. Rep. No. 95-294, at 197-200 (1977).
    
Section 8(a) of the Safe Drinking Water Amendment of 1977, also, subjected
federal agencies to all state and local requirements whether substantive
or procedural.  Pub. L. No. 95-190, 91 Stat. 1393 (1977), codified at 42
U.S.C. S: 300j-6(a).
    
At the same time Congress revised these three laws in response to the
Court's decisions, the Congress added section 404(t) to the Clean Water
Act to specifically address federal discharges of dredged material. 
Friends of the Earth v. U.S. Navy, 841 F.2d 927 (9th Cir. 1988)(Navy
required to obtain a dredging permit for dredging activities under the
immunity waiver of  section 404(t) and *water pollution* under the
immunity waiver of  section 313).  Section 404(t) requires federal
agencies to comply with state requirements *both substantive and
procedural* and *to the same extent that any person is subject to such
requirements.*  Not only does this language use some of the same wording
Congress utilized to amend the other pollution statutes in response to the
Court's decisions, the congressional intent underlying the enactment of
404(t) was the same as the intent underlying the amendment of section
313.  S. Rep. No. 95-370, at 67-69 (1977).
    
It is a generally recognized rule of statutory construction that similar
statutes should be read in pari materia.  The reading of statutes in pari
materia is of particular application when the word or phrase being
interpreted has acquired special, non-literal significance as a legal term
of art.  Morissette v. United States, 342 U.S. 246, 263-65 (1952); Boca
Ciega Hotel, Inc. v. Bouchard Transportation Company, Inc.,
51 F.3d 235 (11th Cir.  1995).   Application of this rule of construction
is relevant here because several federal courts have determined that,
where possible, similar language in the Clean Air and Clean Water Acts
should be given a similar construction.  United States v. Anthony
Dell'Aquilla, Enterprises and Subsidiaries, 150 F.3d 329, 338, n. 9 (3rd
Cir. 1998); United States v. Stauffer Chemical Co., 684 F.2d 1174 (6th
Cir. 1982), aff'd, 464 U.S. 165 (1984).  In the context of these laws, the
phrase *substantive and procedural* has evolved into a precise legal term
of art. 
    
We think that section 404(t)'s waiver of immunity with respect to state
requirements *both substantive and procedural* includes the payment of
permit fees.  Congress clearly was on notice that the Supreme Court in EPA
had concluded that *requirements,* as used in section 313 of the Clean
Water Act and in the particular facts presented in EPA, did not include
federal payment of state permit fees.[2]  Equally clear is that Congress
adopted the *both substantive and procedural* requirements language in
section 404(t) in reaction to the Supreme Court's holdings in Hancock and
EPA.  Certainly the use of the phrase *substantive and procedural* to
capture the totality of legal *requirements* is a familiar one.  It
communicates quite naturally the notion that not only do substantive
environmental standards apply but also the procedural means for
implementing those standards, for example, permits among others.  If this
much is recognized, it is a short step, given the statutory language and
legislative history noted above, to conclude that *state . . .
requirements both substantive and procedural* includes non-discriminatory
(*to the same extent that any person is subject to such requirements*)
permit fees.  See United States v. South Coast Air Quality Management
District, 748 F. Supp. 732 (1990) (section of Clean Air Act requiring
federal entities to comply with state and local requirements respecting
control and abatement of air pollution in the same manner as any
nongovernmental entity unambiguously waives immunity with respect to
federal facilities' obligation to pay air pollution regulatory fees).
    
We have implicitly viewed section 404(t) as authorizing the payment of
permit fees for over 20 years.  In a 1979 decision, we interpreted
section 404(t) to require federal agencies to comply with state permit
requirements:  *Federal facilities are unconditionally required by
section 404(t) to obtain state permits, if the state has a requirement to
control discharge of dredged or filled material.*  58 Comp. Gen. 193, 196
(1979).  The Forest Service had asked whether section 404(t) required it
to pay a Wisconsin state fee for a state permit covering Forest Service
plans to create new wetlands.  Because the Wisconsin permit regulated the
construction and operation of dams, not the discharge of dredged material,
we said that section 404(t) was not applicable and that the Forest Service
could not pay the Wisconsin fee.  The implication of our 1979 decision,
however, is that had the Wisconsin permit covered the discharge of dredged
material, section 404(t) would have required payment of the
permit‑processing fee.  See also 58 Comp. Gen. 244 (1979) (amendment
to section 118 of the Clean Air Act requires federal facilities to abide
by state and local laws regarding abatement and control of pollution
including obtaining permits and paying associated fees); B‑193862,
Apr. 30, 1979 (under the Safe Drinking Water
Amendments of 1977, the National Park Service, and its federal water
treatment facilities, are subject to state requirements, *whether
substantive or procedural,* and may pay permit fees).
    
For the foregoing reasons, we think that section 404(t) subjects an agency
not just to a state permit requirement but also to any nondiscriminatory
state permit‑processing fees.   As recognized in our two 1979
decisions, a processing fee is necessarily a part of the procedural
requirement for a permit.  Section 404(t), by its own terms, clearly
expects federal agencies to comply with state procedural requirements *to
the same extent that any person is subject to such requirements.*  See
also S. Rep. No. 95‑370 at 67‑68 (Federal agencies *should be
bound by the same requirements [substantive or procedural] as any other
discharger into public waters*).  Federal agencies, then, should pay any
fees the state imposes on other permit applicants.
    
The Forest Service argues that the omission of any reference to *fees* in
section 404(t) is a clear indication that the Congress did not intend for
federal agencies to pay such fees.  The Forest Service, in this regard,
contrasts section 404(t) with the Clean Water Act's other immunity waiver
provision, section 313, discussed above, which subjects federal activities
resulting in the discharge of pollutants to comply with all state
requirements including, among others, *the payment of reasonable service
charges.*  33 U.S.C. S: 1323(a).  According to the Forest Service, *[t]he
fact that Section 404(t) did not waive the federal government's immunity
in regard to the payment of reasonable service charges becomes even more
evident when Section 404(t) is compared to the Section 313 waiver.* 
USDA/OGC Memorandum, July 6, 2000.
    
We do not, however, find the contrast to section 313 meaningful.  First,
the 1977 amendments to section 313 did not add a reference to service
charges.  As we have explained, the Court in EPA rejected the argument
that *the payment of reasonable service charges* covers permit processing
fees.  EPA v. California, 426 U.S. at 216-217.  We note that, but for the
enactment of section 404(t) in 1977, the requirement to pay Michigan's
permit processing fees would be governed by the blanket immunity waiver in
section 313(a) as revised in 1977.  See generally John Michael
Chamberlain, Note, State Regulation of Federal Dredging Projects:
Sovereign Immunity and the Issues of Reasonable Fees, Hastings
West-Northwest J. Env't L. & Pol, Fall,  165, 169-170 (1995); Cf. Friends
of the Earth v. U.S. Navy, 841 F.2d 927 (1988)(federal government's
immunity waived by both sections 404(t) and 313; Navy required to obtain a
permit for dredging under section 404(t) and water pollution activities
under section 313).
    
Second, Congress has consistently and unambiguously stated its intention
that, with regard to the reduction and control of pollution of all kinds,
federal facilities are to be placed on an equal footing and be subject to
the same processes and sanctions as
private companies.  See, e.g., H.R. Conf. Rep. No. 102-886, at 17-18
(1992); H.R. Rep. No. 102-111, at 5 (1992) (Federal Facilities Compliance
Act of 1992 reaffirming intent of the Resource Conservation and Recovery
Act)[3]. 
    
Third, where the Congress is convinced that there are circumstances that
would justify the retention of immunity, it has provided unambiguous
language exempting federal facilities or allowing the President to exempt
federal facilities.  For example, section 404(r) of the Clean Water Act
contains a specific exemption for certain federal projects:
    
The discharge of dredged or fill material as part of the construction of a
Federal project specifically authorized by Congress, whether prior to or
on or after December 27, 1977, is not prohibited by or otherwise subject
to regulation under this section, or a State program approved under this
section, or section 1311(a) or 1342 of this title (except for effluent
standards or prohibitions under section 1317 of this title), if
information on the effects of such discharge, including consideration of
the guidelines developed under subsection (b)(1) of this section, is
included in an environmental impact statement for such project pursuant to
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and
such environmental impact statement has been submitted to Congress before
the actual discharge of dredged or fill material in connection with the
construction of such project and prior to either authorization of such
project or an appropriation of funds for such construction.
    
33 U.S.C. S: 1344(r); see also 33 U.S.C. S: 1323(a) (President may exempt
uniquely military property from the immunity waiver of  section 313 if he
determines it to be in the paramount interest of the United States to do
so).
    
In sum, we do not interpret the Supremacy Clause, and the Supreme Court
case law applying it, as requiring the level of specificity that the
Forest Service expects.  In our view, the reference in section 404(t) to
procedural requirements establishes the obligation of federal agencies to
comply with state regulatory processes for dredging activities, including
the payment of permit fees.  The inclusion of *substantive and procedural*
in section 404(t), particularly when read in pari materia with other
contemporaneous environmental statutes controlling similar activities,
subjects the Forest Service to Michigan's permit processing fee.
    
In conclusion, we find that section 404(t) requires the Forest Service to
pay the permit-processing fee imposed by the state of Michigan in order to
obtain a permit for dredging activities.  Accordingly, we would not raise
an objection to the Forest Service's use of its appropriated funds for
this purpose.
    
Anthony H. Gamboa
General Counsel
    

   ------------------------

   [1] Congress established the Service in 1905 to provide quality water and
timber for the Nation's benefit.  Over the years the role of the Service
has expanded to include forestry research, technical and financial
assistance to state and private forestry agencies, and the management of
the national forests for multiple uses and benefits and for the sustained
yield of renewable resources while ensuring the productivity of the land
and protecting the quality of the environment.  See
http://www.fs.fed.us/intro/meetfs.shtml.
[2]  In EPA, California argued that section 313 authorized states to
require federal dischargers to obtain state permits.  426 U.S. at 210. 
California further argued that the language in section 313 which required
federal agencies to comply with all requirements *including the payment of
reasonable service charges* must refer to charges incident to a state
permit program.  Id. at 215.  Thus, California asserted, such charges were
a *requirement* that federal agencies were obligated to pay.  The Court,
however, rejected California's argument stating that:
    
[I]t is not immediately clear from the face of section 313 that the phrase
does refer to application and service charges associated with [a] . . .
permit program.  Indeed, the term 'service charges' might as well be taken
to refer to recurring charges for performing a service such as treating
sewage, as to fees for accepting and processing a permit application.  The
EPA so reads the statute and it is not an unreasonable construction.
    
Id. at 216-17.  The Court held that the requirements language of section
313 refers *simply and solely to substantive standards,* not to procedural
requirements including permit fees.  Id. at 215.
    
[3] The Federal Facilities Compliance Act of 1992 amended section 6001 of
the Solid Waste Disposal Act to read that *reasonable service charges*
include, but are not limited to, *fees or charges assessed in connection
with the processing and issuance of permits*.  The House Report states
that the change *reaffirms and clarifies existing language which requires
that federal agencies pay those fees and charges which other persons are
subject to under federal, state, interstate and local solid or hazardous
waste regulatory programs.*  H.R. Rep. No. 102-111, at 6 (1992).