WASHINGTON -- The Supreme Court is expected to rule next year on whether Oklahoma can impose tougher clean water standards than the federal government.

If the high court allows the state to implement more stringent regulations, construction of pollution control facilities could come to a standstill across the nation.

At issue in the dispute, Arkansas v. Oklahoma, is a 1990 ruling by the U.S. Court of Appeals for the 10th Circuit, which held that the federal clean water law requires pollution sources in upstream states to comply with any federally approved water-quality standards in downstream states. An upstream state is one located closest to a river's source.

As an example of what could happen should the 10th Circuit's ruling stand, officials in St. Louis would not be allowed to build a waste treatment facility that dumped pollution into the Mississippi River if the federal government approved clean water standards in Louisiana that forbade any new pollution of rivers flowing through the state. The Mississippi begins in Minnesota and flows past Wisconsin, Iowa, Illinois, Missouri, Kentucky, Tennessee, Arkansas, Mississippi, and then through Louisiana.

"Most commentators are concerned that if the Supreme Court sustains the ruling, it would substantially impede [construction of] a lot of waste treatment facilities," said Philip A. Lacovara, managing director and general counsel of Morgan Stanley & Co.

Under 1972 amendments to the Federal Water Pollution Control Act, more commonly known as the Clean Water Act, all states were required to adopt standards for waters within their borders. Those standards were subsequently approved by the Environmental Protection Agency, which is supposed to serve as a federal umpire to balance state requirements.

The agency serves its role by issuing discharge permits, which under the clean water law are required before facilities may be built. When issuing permits, the EPA primarily looks to ensure the plants utilize the latest available technology to reduce pollutants and to make sure the plant's proposed discharges would not violate the water standards of the state in which the facility is located. It also considers the impact on downstream states, which are allowed to raise objections to upstream facilities.

The case arose when Fayetteville, Ark., officials tried to improve the city's sewage treatment operations with a new facility. The officials proposed dumping half the discharge from the facility into White River and the other half into tributaries of the Illinois River, which originates in Arkansas and flows through Oklahoma.

The city applied to the EPA for the necessary discharge permit, which was granted in November 1985.

But Oklahoma officials were concerned about the potential impact on the Illinois River. The state, which is downstream, had designated the river "scenic," and with EPA approval had set a tough water quality standard forbidding any new pollution of the river.

After unsuccessfully appealing the permit approval through administrative proceedings with the federal environmental agency, Oklahoma officials filed suit and prevailed in the 10th circuit appeals court. That ruling prompted Arkansas officials to appeal to the U.S. Supreme Court, which heard arguments in the case earlier this month.

While the case appears to hinge on balancing the conflicting interests of upstream states that need to dispose of wastes and downstream states that want to protect their waters, the justices' ultimate disposition of the matter is likely to depend on their interpreation of the Clean Water Act.

"I think that the philosophical attitudes of the justices don't give very much guidance on environmental issues, because they turn almost exclusively on statutory construction, where philosophy or jurisprudence is not very important," Mr. Lacovara said.

In general, permits can be issued to facilities that demonstrate they can meet discharge limitations established by the EPA as well as comply with the water quality standards of the state in which the facility is located.

Under the 10th Circuit's rationale, however, facilities also must comply with the water quality standards of all downstream states.

Arkansas officials in legal briefs before the high court argue that the appeals court's ruling "grants downstream states an unfettered veto power over permits in upstream states, regardless of how extreme or unfair the application of the downstream standards might be."

Although handicapping how Supreme Court justices will vote in any case is highly speculative, the justices do tend to divide into several general categories.

Justice Antonin Scalia, for example, generally adheres to a strict reading of laws without reference to ancillary materials such as legislative histories. Such an approach could lead Justice Scalia to vote to overturn the lower court ruling because the Clean Water Act does not specifically require upstream facilities to abide by downstream standards.

Likewise, Justice Byron R. White and Chief Justice William H. Rehnquist tend to defer to federal agency interpretations of statutes, a line of thought that also could lead the justices to vote to overturn the lower court ruling.

But how those or other justices will read the facts in the case remains unclear. What is clear are the consequences of the Supreme Court's action.

If the high court upholds the appeals court's ruling, upstream states may find their development stymied because of downstream water standards and may find it difficult to get rid of their wastes. If it strikes down the ruling, however, upstream states could prevent downstream states from achieving their water quality goals.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.