[Federal Register Volume 68, Number 222 (Tuesday, November 18, 2003)]
[Notices]
[Pages 65052-65070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28653]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-7587-4]


State Program Requirements; Approval of Application by Maine To 
Administer the National Pollutant Discharge Elimination System (NPDES) 
Program; Maine

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice; final approval of the Maine Pollutant Discharge 
Elimination System under CWA.

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SUMMARY: On October 31, 2003 the Regional Administrator for the 
Environmental Protection Agency, Region I, approved the application by 
the State of Maine to administer and enforce the Maine Pollutant 
Discharge Elimination System (MEPDES) Program for the territories of 
the Penobscot Nation and the Passamaquoddy Tribe, with the exception of 
facilities with discharges that qualify as internal tribal matters. The 
authority to approve state programs is provided to EPA in section 
402(b) of the Clean Water Act (CWA). The state will administer the 
approved program through its Department of Environmental Protection 
(DEP), subject to continuing EPA oversight and enforcement authority, 
in place of the National Pollutant Discharge Elimination System (NPDES) 
program previously administered by EPA in these territories. The 
program is a partial program to the extent described in the section of 
this Notice entitled ``Scope of the MEPDES Program.'' In making its 
decision, EPA considered and addressed all comments and issues raised 
during the public comment period relating to jurisdiction over the 
territories of the Penobscot Nation and Passamaquoddy Tribe and related 
issues.

DATES: Pursuant to 40 CFR 123.61(c), the MEPDES program was approved 
and became effective on October 31, 2003.

ADDRESSES: Questions or requests for additional information may be 
submitted to: Stephen Silva, USEPA Maine State Office, 1 Congress 
Street--Suite 1100 (CME), Boston, MA 02114-2023; or Dennis Merrill, 
MEDEP, Statehouse Station 17, Augusta, ME 04333-0017.
    Copies of documents Maine has submitted in support of its program 
approval and copies of the comments received on this request may be 
reviewed during normal business hours, Monday through Friday, excluding 
holidays, at: EPA Region I, 11th Floor Library, 1 Congress Street--
Suite 1100, Boston, MA 02114-2023, 617-918-1990 or 1-888-372-5427; and 
MEDEP, Ray Building, Hospital Street, Augusta, ME.

FOR FURTHER INFORMATION CONTACT: Stephen Silva at the address listed 
above or by calling (617) 918-1561 or Dennis Merrill at the address 
listed above or by calling (207) 287-7788. Part of the state's program 
submission and supporting documentation is available electronically at 
the following Internet address: http://www.maine.gov/dep/blwq/delegation/index.htm.

SUPPLEMENTARY INFORMATION: On January 12, 2001, EPA approved Maine to 
implement the MEPDES program in all the areas of the state outside 
Indian country. 66 FR 12791 (February 28, 2001). In that approval, EPA 
took no action on the state's program application as it applied to the 
territories and lands of the four federally recognized Indian tribes in 
Maine, including disputed territories. Id. at 12792-93. In our approval 
on October 31, 2003, EPA authorized the state to implement the MEPDES 
program as it applies to the territories of the Penobscot Nation and 
the Passamaquoddy Tribe, with the

[[Page 65053]]

exception of facilities with discharges that qualify as internal tribal 
matters.\1\
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    \1\ In this notice, EPA uses the terminology of the Maine Indian 
Claims Settlement Act in referring to the Passamaquoddy Tribe and 
Penobscot Nation. See 25 U.S.C. 1722(h) and (k). Although the Bureau 
of Indian Affairs refers to the Penobscot Nation as the ``Penobscot 
Tribe of Maine'' in its list of federally recognized tribes, 67 FR 
46328, 46330 (July 12, 2002), the tribal government and MICSA 
identify the tribe as the ``Penobscot Nation.'' EPA also notes that 
the Passamaquoddy Tribe has two tribal governments in Maine, the 
Passamaquoddy Tribe of Indians Indian Township Reservation and the 
Passamaquoddy Tribe of Indians Pleasant Point Reservation. Our 
reference to the Passamaquoddy Tribe includes both these governments 
and their territories.
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A. Scope of the MEPDES Program

    Maine's MEPDES program is essentially unchanged since EPA approved 
it in January 12, 2001. For the territories of the Penobscot Nation and 
Passamaquoddy Tribe, EPA is approving Maine to administer both the 
NPDES permit program covering point source dischargers and the 
pretreatment program covering industrial sources discharging to 
publicly owned treatment works in these territories, except as to 
facilities with discharges that qualify as internal tribal matters. 
Maine is not being approved at this time to regulate cooling water 
intake structures under CWA section 316(b). Thus the state is being 
approved to operate a partial permit program, pursuant to CWA section 
402(n)(4). The state program will cover all NPDES permitting 
responsibilities other than under CWA section 316(b). Sources with 
cooling water intake structures subject to CWA section 316(b) will need 
to obtain permits from the state regulating their discharges (including 
thermal discharges regulated under CWA section 316(a)), but also will 
need to obtain supplemental permits from the EPA regulating their 
cooling water intake structures pursuant to CWA section 316(b).\2\
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    \2\ The state has adopted statutory authority for DEP to 
regulate cooling water intake structures. 38 M.R.S.A. section 414-
A(6), c. 231, section 11 (Public Law of 2001). Once DEP develops 
implementing regulations and submits a program to address CWA 
section 316(b), EPA will invite comment separately on this program 
element.
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    The state is not applying for authorization for the municipal 
sewage sludge program at this time. EPA will continue to regulate 
sewage sludge in these territories in accordance with CWA section 405 
and 40 CFR part 503.
    Pursuant to CWA section 402(d), EPA retains the right to object to 
MEPDES permits proposed by MEDEP, and if the objections are not 
resolved, to issue the permits itself. EPA also will retain 
jurisdiction over all NPDES permits it has issued in these territories 
until MEDEP reissues them as MEPDES permits. As part of operating the 
approved program, the Maine DEP generally will have responsibility for 
enforcement, except as to facilities whose operations qualify as 
internal tribal matters. However, EPA will retain its full statutory 
enforcement authorities under CWA sections 308, 309, 402(i) and 504. 
Thus, EPA may continue to bring federal enforcement action under the 
CWA in response to any violation of the CWA in these territories. In 
particular, if the EPA determines that the state has not taken timely 
enforcement action against a violator and/or that its action has not 
been appropriate, the EPA may take its own enforcement action in Maine.

B. Responsiveness Summary

    With no substantial changes to Maine's approved program, the only 
question remaining in this action involves the state's assertion of 
jurisdiction in these tribes' territories and issues related to the 
state, tribal, and federal authority in these areas. EPA received a 
large number of comments on these issues. In the section below entitled 
``Overview of EPA's Rationale,'' EPA generally addresses the major 
comments we received. A detailed response to comments document, which 
more specifically addresses all the relevant comments we received, is 
part of the record supporting this approval. The EPA Regional 
Administrator hereby concurs with and adopts the responses to comments 
set forth in that document. That response to comments document together 
with this Federal Register notice constitute EPA's Responsiveness 
Summary. 40 CFR 123.61(b). A copy of the response to comments document 
is available upon request.

C. Overview of EPA's Rationale

1. Introduction

a. Maine's Application
    On December 17, 1999, EPA determined that the State of Maine had 
submitted a complete application for approval to administer the MEPDES 
permitting program pursuant to CWA section 402(b), 33 U.S.C. 1342(b). 
64 FR 73552, 73553 (December 30, 1999). In its application, the state 
asserted that it has authority to administer the program throughout the 
state, including in the territories of the federally recognized Maine 
Indian tribes. See 40 CFR 123.23(b) and Maine's application in the 
administrative record supporting this decision, Ad. Rec. section 1d-1 
at 33-38. Maine argued that Congress granted the state jurisdiction 
over the territories of the federally recognized Maine Indian tribes in 
the Maine Indian Claims Settlement Act of 1980 (MICSA), 25 U.S.C. 1721, 
et seq., which, among other things, ratified the Maine Implementing Act 
(MIA), 30 M.R.S.A. section 6201, et seq. The state argues that the 
combination of the federal and state statutes grants the state 
authority to regulate discharges to water adequate to support Maine's 
administration of the MEPDES program in the Indian Territories.\3\
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    \3\ EPA used the term ``Indian country,'' 18 U.S.C. 1151, to 
refer to the areas the Agency retained from its partial approval of 
Maine's program on January 12, 2001 (see 66 FR at 12792-12793) 
because the tribal lands involved in this dispute appear to come 
within the statutory definition of Indian country. Several parties 
have questioned the use of the term ``Indian country'' in Maine. EPA 
has decided that it is appropriate to adopt the term ``Indian 
Territory,'' 25 U.S.C. 1722(g) and (j), that MICSA uses to describe 
the lands of the Penobscot Nation and Passamaquoddy Tribe because it 
is MICSA that defines the jurisdictional status of those lands.
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    EPA has thoroughly analyzed MICSA and MIA, the case law, and an 
administrative opinion interpreting MICSA to determine the scope of the 
regulatory authority Congress granted to the state in the southern 
tribes' Indian Territories. Based on that analysis, EPA finds that 
MICSA grants the state adequate authority to implement its MEPDES 
program in the Indian Territories of the Penobscot Nation and 
Passamaquoddy Tribe, with the exception of any permits for facilities 
with discharges which would qualify as an internal tribal matter. EPA 
has determined that there are currently two tribal facilities with 
discharges that the state cannot regulate, and EPA will retain the 
authority for the NPDES permits for those facilities.
b. Federally-Recognized Indian Tribes in Maine
    There are four federally recognized Indian tribes in Maine: the 
Penobscot Nation, the Passamaquoddy Tribe, the Houlton Band of Maliseet 
Indians, and the Aroostook Band of Micmac Indians. For the purposes of 
this notice, EPA will refer to the Penobscot Nation and Passamaquoddy 
Tribe collectively as the ``southern tribes.'' MICSA sets up the same 
jurisdictional arrangement for both southern tribes, and their Indian 
Territories generally lie to the south of the ``northern tribes,'' the 
Houlton Band of Maliseet Indians and the Aroostook Band of Micmac 
Indians.
    As described more fully below, the configuration of the southern 
tribes' Indian Territories raises the most pressing questions about how 
Maine's MEPDES program applies under MICSA to facilities in and around 
those

[[Page 65054]]

territories. In addition, certain provisions in MICSA apply solely to 
the southern tribes, and EPA's administrative record very thoroughly 
presents the legal arguments on all sides concerning the southern 
tribes. Therefore, EPA is acting now on Maine's application solely as 
it applies to the Indian Territories of the southern tribes, and does 
not address Maine's application with regard to the northern tribes' 
lands.
c. EPA's Process
    The question of whether Maine possesses adequate authority to 
administer the MEPDES program in the Indian Territories has been 
particularly controversial, and EPA has gone to great lengths to 
understand all the relevant arguments from the tribes, the state, 
members of the public, and other governmental bodies.
i. Public Comment
    EPA provided two public comment periods on this application. The 
first, starting December 30, 1999, invited comment on the entirety of 
Maine's application to administer the MEPDES program, including the 
state's assertion of authority in the Indian Territories. 64 FR 73552. 
EPA received extensive comment on the question of the state's authority 
in the Indian Territories, and that topic was the focus of most of the 
comments presented at the public hearing EPA held in Augusta, Maine on 
February 16, 2000. On May 16, 2000, EPA received a legal opinion it had 
requested in October 1999 from the Department of the Interior (DOI) 
addressing the state's application to administer the program in the 
Indian Territories of the southern tribes. In light of the importance 
of DOI's analysis, on June 28, 2000 EPA extended the public comment 
period to invite further comment on the question of the state's 
authority in the southern tribes' Indian Territories. 65 FR 39899. 
After one further extension, the comment period finally closed on 
August 21, 2000. 65 FR 47989 (August 4, 2000). In addition, EPA has 
held numerous informal meetings with members of the public concerned 
about jurisdiction in the southern tribes' Indian Territories.
ii. Consultation With Maine Tribes
    EPA anticipated that the state would apply to administer its MEPDES 
program within the tribes' lands and territories and that this 
application would obviously have a significant impact on the Maine 
tribes in particular. Therefore, as described in our original notice 
inviting comment on Maine's application, EPA initiated consultations 
with the Maine tribes even prior to the state's submission of its 
application. See 64 FR 73552, 73554 (December 30, 1999). The Agency met 
numerous times with the tribes and their representatives concerning 
Maine's application. These sessions include a series of meetings during 
the winter of 2000 concerning the state's authority in the southern 
tribes' Indian Territories and northern tribes' lands, a conference 
call with EPA's Administrator, a series of discussions surrounding 
efforts between the state and the southern tribes to negotiate a 
settlement of the dispute, and two sets of meetings between the tribal 
representatives of the southern tribes, including Chiefs, Governors, 
and tribal council members, and each of the successive EPA Regional 
Administrators delegated to make this decision during the pendency of 
this action. See generally Ad. Rec. section 2.
iii. Consultation With DOI
    EPA solicited the views of DOI on the interpretation of MICSA. On 
May 16, 2000, DOI provided EPA with a legal opinion (DOI Op.) finding 
that Maine did not have adequate authority under MICSA to administer 
the NPDES program in the Indian Territories of the southern tribes. DOI 
Op. at 18-19.
d. EPA's Approval Outside of the Tribes' Indian Territories and Lands
    On January 12, 2001 EPA approved Maine to administer the MEPDES 
program in areas of the state outside of Indian country. EPA deferred 
action on the balance of Maine's application and retained 
responsibility to administer the NPDES program in the Indian 
Territories and lands. 66 FR 12791 (February 28, 2001). Disputes over 
the boundaries of the southern tribes' Indian Territories raised 
questions about the reach of the area EPA retained. To preserve the 
status quo pending a final determination on Maine's application, EPA 
deferred action on all the disputed areas. As a result, EPA retained 
responsibility for twenty-two NPDES permits for existing point source 
discharges, including two tribal facilities, nineteen non-member 
facilities, and one facility jointly owned by a tribe and town (id. at 
12795, App. 1) pending a final decision. Pursuant to CWA section 
402(c)(1), however, EPA's authority to issue permits remained suspended 
in the areas where it deferred action on the state's application. Id. 
at 12793.
e. Discharges to Indian Territory Waters
    EPA currently retains 19 NPDES permits for non-member discharges 
and 2 permits for tribal discharges to waters that are arguably within 
the southern tribes' Indian Territories. The tribes and the state 
disagree both as to whether these discharges are to waters within the 
Indian Territories and as to whether the state has adequate authority 
to regulate any discharges in the Indian Territories. In addition, EPA 
retained the permit for a facility that the Passamaquoddy Tribe's 
government at Pleasant Point owns jointly with the neighboring town of 
Eastport.\4\
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    \4\ In our partial program approval on January 12, 2001, EPA 
temporarily retained three facilities operated entirely or in part 
by the southern tribes. See 66 FR 12791, 12795 App.1 (February 28, 
2001). Today, EPA is retaining the two of those facilities that are 
entirely contained within the southern tribes' Indian Territories 
and serve only tribal members: Penobscot Indian Nation Indian Island 
(NPDES Permit No. ME0101311) and Passamaquoddy Tribal Council (NPDES 
Permit No. ME0100773). The third facility, Passamaquoddy Water 
District (NPDES Permit No. ME0102211), is connected to a water 
system that serves not only the Passamaquoddy Pleasant Point 
reservation, but also the adjacent town of Eastport. In addition, 
while the drinking water distribution pipes reach into the Pleasant 
Point reservation, the facility and its outfall do not lie in an 
Indian Territory, disputed or otherwise. Therefore, EPA is including 
this permit in the state's approved MEPDES program.
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    In the state's view, none of the non-member discharges are to 
waters within the Indian Territories. Solely for purposes of this 
decision, however, EPA has assumed that all of the 19 non-member 
discharges and the two tribal discharges are to Indian Territory waters 
and are therefore subject to MICSA's special jurisdictional 
arrangements. Even the most expansive interpretation of the boundaries 
of the Indian Territories advanced by the southern tribes, however, 
would only include the discharge points themselves, not the rest of the 
non-member facilities and their operations.
f. Framework for EPA's Analysis of State Authority
    Consistent with their distinctive history, the status of the 
southern tribes under MICSA is unique in federal law. See Passamaquoddy 
Tribe v. State of Maine, 75 F.3d 784, 787 (1st Cir. 1996). As a result, 
EPA's analysis of the state's application to administer the MEPDES 
program within the tribes' Indian Territories must rely on a different 
analysis than that which would control other tribes' Indian country 
areas in other states. While this decision is based primarily on EPA's 
analysis of whether MICSA grants the state jurisdiction over discharges 
into navigable waters within the southern tribes' Indian Territories, 
the Agency must also consider relevant federal Indian law, the CWA, and 
EPA's implementing regulations.

[[Page 65055]]

i. NPDES Program Approvals Under the CWA
    Before EPA may approve a state's application to administer the 
NPDES program, CWA section 402(b) and its implementing regulations 
require that the state must show that it has adequate authority to 
carry out the NPDES program. 33 U.S.C. 1342(b); 40 CFR 123.21-123.30. 
In addition, a state that ``seeks authority over activities on Indian 
lands'' must provide an attorney general's statement containing ``an 
appropriate analysis of the State's authority.'' 40 CFR 123.23(b). 
Section 402(b) of the CWA provides that ``[t]he Administrator shall 
approve each such submitted program unless he determines that adequate 
authority does not exist'' for the state to implement the program 
consistent with the Act's requirements. EPA's state program approval 
regulations provide that ``the Administrator shall approve or 
disapprove the program based on the requirements of (40 CFR part 123) 
and of the CWA and taking into consideration all comments received.'' 
40 CFR 123.61(b).
ii. States Generally Lack Jurisdiction in Indian Country
    The most significant unresolved issue regarding Maine's application 
to administer the NPDES program is whether the state has authority to 
regulate discharges to waters of the Indian Territories. The well-
established principle under federal Indian law is that states generally 
lack authority in Indian country. California v. Cabazon Band of Mission 
Indians, 480 U.S. 202, 214-15 (1987). Thus, if a state does not 
demonstrate specific authority in Indian country, EPA will not approve 
a state application to administer an EPA program in Indian country. 
``EPA regulations allow for the possibility that a State may be 
authorized to issue NPDES permits on a Federal Indian reservation after 
adequate demonstration by the State of regulatory authority, although 
EPA recognizes that the threshold demonstration is high and that EPA 
has not expressly authorized a State to do so.'' 58 FR 67966, 67978 
(1993). ``Under 40 CFR 123.23(b) * * *, a State seeking to carry out * 
* * the NPDES program[] * * * on Indian lands must provide a specific 
analysis of its authority to do so.'' Id. at 67973.
    EPA's actions can neither change the congressionally determined 
status of that land, nor deprive the federal government of its duty and 
prerogative to protect tribal governance of Indian lands. HRI, Inc. v. 
EPA, 198 F.3d 1224, 1242 (2000). It is Congress which has plenary power 
over Indian affairs based on the Indian commerce clause of the 
Constitution and the trust responsibility of the federal government to 
the tribes. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 56 (1978). As 
a result, only Congress may change the jurisdictional relationships in 
Indian country by expanding or contracting state, tribal and federal 
jurisdiction. The sole limitation is that those changes bear some 
rational relationship to the best interests of the Indian tribes. 
Morton v. Mancari, 417 U.S. 535 (1974).
iii. Trust Responsibility and Interpreting MICSA
    The federal government and each of its agencies, including EPA, 
have a trust relationship with federally-recognized Indian tribes. 
Penobscot Nation v. Fellencer, 164 F.3d 706, 709 (1st Cir. 1999). 
Indeed, that trust relationship was part of the basis supporting the 
land claims suit that ultimately led to Congress passing MICSA. 
Passamaquoddy Tribe v. Morton, 528 F.2d 370, 379 (1st Cir. 1975). As 
discussed below in section III, EPA is not persuaded by the arguments 
that MICSA generally precludes operation of the trust responsibility in 
Maine. In any case, the United States Court of Appeals for the First 
Circuit has confirmed that the canons of construction favoring tribes 
still operate in Maine. Penobscot Nation v. Fellencer, 164 F.3d 706, 
709 (1st Cir. 1999). In Fellencer, the court found that these special 
interpretive rules obliged the court to construe statutes that diminish 
``the sovereign rights of Indian tribes * * * strictly,'' and 
``ambiguous provisions * * * to the [Indians'] benefit,'' which is 
``rooted in the unique trust relationship between the United States and 
the Indians.'' 164 F.3d 706, 709 (1st Cir. 1999) (quoting Rhode Island 
v. Narragansett Indian Tribe, 19 F.3d 685, 702 (1st Cir. 1994); County 
of Oneida v. Oneida Indian Nation of New York, 470 U.S. 226, 247 
(1985)) (insertion in original); see also, HRI, 198 F.3d at 1247.
iv. Framework for Decision
    The State of Maine must have adequate authority in the southern 
tribes' Indian Territories in order for EPA to approve the state's 
application for those areas, and federal Indian law would generally bar 
state authority in Indian country. Thus, EPA must determine whether 
MICSA granted adequate authority to the state in the Indian 
Territories. Because of the canon of construction requiring that 
statutory ambiguities be construed in favor of tribes, such a grant of 
authority to the state would have to be unambiguous.

2. Approval of Maine's Application To Administer the MEPDES Program in 
the Indian Territories of the Penobscot Nation and Passamaquoddy Tribe

    After analyzing the state's application through our framework for 
decision, EPA has determined that MICSA unambiguously granted the state 
adequate authority to administer the MEPDES program in the Indian 
Territories of the southern tribes. EPA also has found that MICSA did 
not grant adequate authority to administer permits for facilities with 
discharges that qualify as internal tribal matters, which includes two 
existing tribal facilities' discharges. Pursuant to the provisions of 
CWA section 402(b), therefore, EPA is approving Maine's application to 
administer the MEPDES program for discharges to Indian Territory 
waters, except for permits that EPA determines are internal tribal 
matters, subject to the requirements imposed by the CWA on all state-
run NPDES programs.
    EPA emphasizes that we base this conclusion on the unique 
provisions of MICSA and MIA. Congress was very clear that the 
combination of these statutes creates a jurisdictional arrangement for 
the southern tribes' Indian Territories unlike any other in the nation. 
S. Rep. 96-957 at 29 (1980)(S. Rep.)(``The treatment of the 
Passamaquoddy Tribe and Penobscot Nation in the Maine Implementing Act 
is original.''); Akins v. Penobscot Nation, 130 F.3d 482, 484 (1st Cir. 
1997). Because MICSA is unique, EPA's decision here does not have any 
bearing on the question of state and tribal jurisdiction in Indian 
country outside of Maine. In addition, EPA has not yet decided what 
action to take on Maine's application as it relates to the lands of the 
northern tribes, and this discussion does not necessarily bear on that 
part of Maine's application.
a. Penobscot and Passamaquoddy Indian Territories
    This analysis relates to the Indian Territories of the southern 
tribes, which include both the tribes' pre-MICSA reservations and their 
trust lands acquired post-MICSA. 25 U.S.C. 1722(g) and (j); 30 M.R.S.A. 
section 6205(1) and (2). MICSA confirmed the southern tribes' 
reservations as those reservations were defined in the MIA. 25 U.S.C. 
1722(f) and (i). The MIA, in turn, included definitions of the southern 
tribes' reservations, and those definitions referred to treaties 
concluded between the southern tribes and the States of Maine and 
Massachusetts in the eighteenth and

[[Page 65056]]

nineteenth centuries. 30 M.R.S.A. section 6203(5) and (8). MICSA 
provides for the southern tribes to acquire lands outside the original 
reservations and to have the United States take up to 150,000 acres 
acquired by each southern tribe into trust ``for the benefit of the 
respective tribe or nation.'' 25 U.S.C. 1724(d).
    The geography of the pre-MICSA reservations, which are still the 
center of the Indian Territories, demonstrates the importance of water 
quality to the southern tribes. Portions of the Passamaquoddy Pleasant 
Point Reservation lie along the St. Croix River and the tribe's 
community at its Indian Township Reservation is housed in immediate 
proximity to areas flooded by the Grand Falls Dam impoundment. 
Notwithstanding the dispute discussed below, all parties appear to 
agree that the Penobscot Nation's reservation includes at least the 
islands in the main stem of the Penobscot River, which were not sold 
prior to 1980, starting with Indian Island, and proceeding north 
approximately 45 miles up to the fork in the river where west and east 
branches of the river converge. There also appears to be no dispute 
that the reservation does not include the upland on either side of the 
Penobscot River's banks. The Penobscot community is housed on Indian 
Island, completely surrounded by the river. The river also flows 
through and around the rest of the original reservation. Clearly, the 
physical setting of the southern tribes in such close proximity to 
important rivers and waters makes surface water quality very important 
to them and their riverine culture.
    The lands taken into trust for the southern tribes pursuant to 
MICSA are generally large unfragmented parcels spread across central 
Maine that are clearly described in modern conveyances recorded with 
the relevant registry of deeds and the Bureau of Indian Affairs. The 
boundaries of the original reservations are much less clear, however. 
There are serious disputes about the precise geographic reach of the 
southern tribes' reservations under MICSA, some of them arising out of 
interpretations of the treaties referred to in MIA. EPA specifically 
invited comment on those disputes when we first extended the comment 
period on Maine's application. See 66 FR 12791, 12793 (February 28, 
2001).
    The dispute that most directly impacts existing permitted 
discharges involves how far the Penobscot Reservation in the Penobscot 
River extends upriver and whether it includes the bed and banks of the 
river. DOI has concluded that the Penobscot reservation includes the 
bed and banks of the Penobscot River. Letter from Edward B. Cohen to 
John P. DeVillars, September 2, 1997 at 6 (Ad. Rec. section 4-25). 
According to DOI, the Penobscot River bank separates the reservation--
the river and islands--from the non-Indian land on either side. 
Pursuant to DOI's position, facilities located near the bank of the 
river where the Nation's reservation lies, with discharge pipes into 
the river, are crossing a boundary into the Nation's reservation. The 
Penobscot Nation also asserts that its reservation includes not only 
the main stem of the Penobscot River north of Indian Island, but also 
the east and west branches up to the headwaters and tributaries. The 
state maintains that the reservation only includes the islands in the 
main stem. DOI has not announced a position on this dispute over the 
branches and tributaries.
    The NPDES program applies at the point of discharge, and it is the 
location of the discharge outfall that generally determines which NPDES 
permitting authority has jurisdiction to issue permits for discharges 
from a facility that straddles a jurisdictional boundary, such as the 
border between two states or between Indian country and non-Indian 
country areas. All nineteen of the non-member facilities EPA retained 
are situated with the bulk of their facilities and operations on non-
tribal land and outfall pipes in the Penobscot River, its branches, or 
tributaries north of Indian Island. According to DOI's announced 
position on the boundaries of the Penobscot's reservation, at least 
seven nonmember facilities located outside of the reservation discharge 
into its waters of the main stem.
    EPA acknowledges that the state and other interested parties 
vigorously dispute DOI's conclusion about these boundaries. EPA 
emphasizes that we are taking no action to determine the boundaries of 
the southern tribes' Indian Territories. Today, EPA is approving the 
state to administer the MEPDES program both inside and outside of the 
southern tribes' Indian Territories, except permits for facilities with 
discharges that EPA determines are internal tribal matters. Therefore, 
EPA need not determine the exact location of those boundaries in this 
action.
b. Authority To Regulate Discharges to Indian Territory Waters Under 
MICSA
    EPA has concluded that MICSA unambiguously grants Maine adequate 
regulatory authority to administer the MEPDES permitting program for 
most of the discharges in the southern tribes' Indian Territories. EPA 
does not agree with the DOI opinion that the southern tribes' area of 
exclusive jurisdiction over internal tribal matters reaches so far as 
to preclude the state from regulating any discharges to water in the 
southern tribes' Indian Territories. Rather, the Agency has concluded 
that the permitting of two existing tribal facilities are internal 
tribal matters and beyond the reach of Maine's program.
    When interpreting the meaning of federal statutes, EPA's first duty 
is to determine whether Congress has spoken to the issue at hand. 
Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999). In the 
Chevron case, the Court used three methods to determine Congress' 
intent: the plain meaning of the statutory text; reasonable inferences 
from the structure of the statute; and the legislative history. Chevron 
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 
859-864 (1984); see also, Passamaquoddy Tribe v. Maine, 75 F.3d 784, 
793 (1st Cir. 1996). As EPA applies these methods, we remain mindful 
that Congressional intent to intrude on tribal sovereignty must be 
unmistakably clear. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59 
(1978); Penobscot Nation v. Fellencer, 164 F.3d 706, 709 (1st Cir. 
1999).
i. Statutory Text of MICSA and MIA
    The key provision in MICSA addressing the jurisdictional 
relationship between the southern tribes and the state defines that 
relationship by referring to MIA.

    The Passamaquoddy Tribe, the Penobscot Nation, and their 
members, and the land and natural resources owned by, or held in 
trust for the benefit of the tribe, nation, or their members, shall 
be subject to the jurisdiction of the State of Maine to the extent 
and in the manner provided in the Maine Implementing Act and that 
Act is hereby approved, ratified, and confirmed.

25 U.S.C. 1725(b)(1). In addition, one of the purposes of MICSA is ``to 
ratify the Maine Implementing Act, which defines the relationship 
between the State of Maine and the Passamaquoddy Tribe, and the 
Penobscot Nation.'' 25 U.S.C. 1721(b)(3). The ultimate source of MIA's 
authority to affect Indian jurisdiction is MICSA, and where the MIA and 
MICSA conflict, the federal act controls. 25 U.S.C. 1735(a). The two 
statutes are closely intertwined, and under the U.S. Constitution, only 
Congress may alter a tribe's jurisdiction; therefore, federal courts 
have concluded that MIA's interpretation is a matter of federal law. 
Akins, 130 F.3d at 485; Penobscot Nation v. Fellencer, 164 F.3d 706, 
708 (1st Cir. 1999), cert. denied 527 U.S. 1022 (1999).
    Section 6206(1) of the MIA sets out the core of the jurisdictional

[[Page 65057]]

relationship between the state and the southern tribes.

    [T]he Passamaquoddy Tribe and the Penobscot Nation, within their 
respective Indian territories, shall have, exercise and enjoy all 
the rights, privileges, powers and immunities, including, but 
without limitation, the power to enact ordinances and collect taxes, 
and shall be subject to all the duties, obligations, liabilities and 
limitations of a municipality of and subject to the laws of the 
State, provided, however, that internal tribal matters, including 
membership in the respective tribe or nation, the right to reside 
within the respective Indian territories, tribal organization, 
tribal government, tribal elections and the use or disposition of 
settlement fund income shall not be subject to regulation by the 
State.

30 M.R.S.A. section 6206(1). MIA in turn defines ``laws of the State'' 
to include ``the Constitution and all statutes, rules or regulations 
and the common law of the State * * *.'' 30 M.R.S.A. section 6203(4). 
Therefore, the combination of MICSA and MIA makes state regulatory 
authority applicable to the southern tribes and their Indian 
Territories, with the very important exception of ``internal tribal 
matters.''
    MICSA and MIA make that state regulatory authority applicable to 
the water and water rights in the southern tribes' Indian Territories. 
MICSA provides that the jurisdictional formula in MIA applies to the 
southern tribes ``and the land and natural resources owned by, or held 
in trust for the benefit of the tribes, nation, or their members.'' 25 
U.S.C. 1725(b)(1). MICSA specifically defines ``land or natural 
resources'' to include ``water and water rights.'' Id. at section 
1722(b). MIA section 6204 generally makes state law applicable to ``any 
lands or other natural resources'' owned by Indian tribes or held in 
trust for them. MIA also defines ``land or other natural resources'' to 
include ``water and water rights.'' 30 M.R.S.A. section 6203(3). When 
MIA section 6206(1) addresses the southern tribes in particular, it 
does not refer specifically to the ``land or other natural resources'' 
of the tribes when it applies state law to the tribes. But MIA section 
6204 appears to operate in parallel with the language in MIA section 
6206(1) providing that the southern tribes are ``subject to the laws of 
the State'' in their quasi-municipal status. And section 6204 makes it 
clear that under MIA this grant of jurisdiction was designed to cover 
``natural resources'' defined to include ``water and water rights.'' 
\5\ Moreover, when Congress ratified MIA's jurisdictional arrangement 
as to the southern tribes, including section 6206(1), it used a 
parallel construction in MICSA, making that jurisdictional arrangement 
applicable to ``natural resources,'' defined to include ``water and 
water rights.'' 25 U.S.C. 1725(b)(1) and 1722(b). Therefore, MICSA and 
MIA clearly combine to apply state regulatory authority to the waters 
of the southern tribes' Indian Territories.
---------------------------------------------------------------------------

    \5\ EPA here takes no position on the effect of MIA section 6204 
on the northern tribes, other than to note that it is without effect 
on them absent some corresponding Congressional action in MICSA or 
another federal statute.
---------------------------------------------------------------------------

ii. Statutory Structure of MICSA
    MICSA includes a specific reference to state environmental laws, a 
provision that prevents the application of generally applicable federal 
Indian laws and regulations that would otherwise ``affect or preempt 
the * * * jurisdiction of the State of Maine including, without 
limitation, laws of the State relating to land use or environmental 
matters, * * *.'' 25 U.S.C. 1725(h)(emphasis added).\6\ This provision 
operates together with section 1735(b), which prevents subsequently 
enacted federal Indian statutes from inadvertently affecting or 
preempting state jurisdiction after the effective date of MICSA. 25 
U.S.C. 1735(b).\7\
---------------------------------------------------------------------------

    \6\ In its entirety, section 1725(h) reads:
    Except as other wise [sic] provided in this subchapter, the laws 
and regulations of the United States which are generally applicable 
to Indians, Indian nations, or tribes or bands of Indians or to 
lands owned by or held in trust for [them] shall be applicable in 
the State of Maine, except that no law or regulation of the United 
States (1) which accords or relates to a special status or right of 
or to any Indian, Indian nation, tribe or band of Indians, Indian 
lands, Indian reservations, Indian country, Indian territory or land 
held in trust for Indians, and also (2) which affects or preempts 
the civil, criminal, or regulatory jurisdiction of the State of 
Maine, including, without limitation, laws of the State relating to 
land use or environmental matters, shall apply within the State.
    \7\ In its entirety, section 1735(b) reads:
    The provisions of any Federal law enacted after October 10, 
1980, for the benefit of Indians, Indian nations, or tribes or bands 
of Indians, which would affect or preempt the application of the 
laws of the State of Maine, including application of the laws of the 
State to lands owned by or held in trust for Indians, or Indian 
nations, tribes, or bands of Indians, as provided in this subchapter 
and the Maine Implementing Act, shall not apply within the State of 
Maine, unless such provision of such subsequently enacted Federal 
law is specifically made applicable within the State of Maine.
---------------------------------------------------------------------------

    The combination of these two subsections, or ``savings clause[s']'' 
as the First Circuit has labeled them (Passmaquoddy Tribe, 75 F.3d at 
789), prevents the general body of federal Indian law from 
unintentionally affecting or displacing MICSA's grant of jurisdiction 
to the state. The two were the subject of considerable attention and 
deliberation during the legislative process. S. Rep. at 30-31 and 35; 
H.R. Rep. 96-1353 at 19-20 and 29 (1980), reprinted in 1980 
U.S.C.C.A.N. 3786 (H.R. Rep). And in Passamaquoddy Tribe v. Maine, 75 
F.3d 784 (1st Cir. 1996) the court upheld the operation of section 
1735(b) when it found that the subsequently-enacted Indian Gaming 
Regulatory Act does not apply in Maine because Congress did not make it 
specifically applicable to the state. The court found that ``section 
16(b) of the Settlement Act [25 U.S.C. 1735(b)] gave the State a 
measure of security against future federal incursions upon [its] hard-
won gains in settling the tribes' land claims and gaining jurisdiction 
over the tribes and their lands. 75 F.3d at 787.
    EPA agrees with DOI that these provisions, including section 
1725(h), do not directly answer the question before us. DOI Op. at 2 n. 
2. A provision that shields state authority from generic intrusions by 
federal law does not control the question of what authority Congress 
gave the state in the first place. Nevertheless, it is notable that one 
area of state authority Congress specifically called out in the savings 
clauses is the ``laws of the State relating to * * * environmental 
matters.'' This provision supports the conclusion that the original 
grant of jurisdiction to the state was designed to include some measure 
of environmental regulation. Otherwise, why would Congress have 
bothered to protect that area of state authority under section 1725(h)?
iii. Legislative History of MICSA
    MICSA's legislative history also demonstrates that Congress 
understood state environmental law would apply in the southern tribes' 
Indian Territories. Indeed, the only passages in the Senate and House 
Committee reports EPA could find that specifically address 
environmental regulation under MICSA and MIA show quite explicitly that 
Congress understood it was making state environmental regulation 
applicable to the southern tribes' Indian Territories.\8\
---------------------------------------------------------------------------

    \8\ All sides refer EPA to extensive and conflicting remarks 
made in the debate of both MICSA and MIA during the federal and 
state legislative processes. We address those comments in our 
response to comments document. The focus of our inquiry, however, is 
not the statements of individual partisans in the debate, but the 
considered remarks made by the two congressional committees in 
reports designed to present the collective views of each committee. 
EPA relies especially on the Senate Report, which the House Report 
``accepts as its own'' in part. H.R. Rep. at 20. Akins v. Penobscot 
Nation, 130 F.3d 482, 489 (``We look to the Committee Report of the 
Senate Select Committee on Indian Affairs concerning the Settlement 
Act.'')(citing Garcia v. United States, 469 U.S. 70, 76 (1984)).
---------------------------------------------------------------------------

    The Senate Report discusses the application of state environmental 
law under section 1725(b)(1), the provision in MICSA that ratified MIA 
and its

[[Page 65058]]

---------------------------------------------------------------------------
jurisdictional provisions for the southern tribes:

    State law, including but not limited to laws regulating land use 
or management, conservation and environmental protection, are fully 
applicable as provided in this Section and Section 6204 of the Maine 
Implementing Act. That the regulation of land or natural resources 
may diminish or restrict maximization of income or value is not 
considered a financial encumbrance and is not barred from 
application under this Act.

S. Rep. at 27.
    In addition, when explaining the operation of the savings clauses, 
25 U.S.C. 1725(h) and 1735(b), discussed in the previous section, the 
Senate Report provides a specific example of a federal environmental 
law that would be excluded from operating in Maine Indian Territories 
to avoid interfering with state environmental law. Although the example 
in this passage focuses on the provision in the Clean Air Act that 
allows Indian tribes to reclassify their lands under the prevention of 
significant deterioration air permitting program, the passage ends by 
emphasizing that this exclusion would also operate more generally to 
protect state environmental regulations.

    It is also the intent of this subsection, however, to provide 
that federal laws according special status or rights to Indian [sic] 
or Indian Tribes would not apply within Maine if they conflict with 
the general civil, criminal, or regulatory laws or regulations of 
the State. Thus, for example, although the federal Clean Air Act, 42 
U.S.C. 7474, accords special rights to Indian tribes and Indian 
lands, such rights will not apply in Maine because otherwise they 
would interfere with State air quality laws which will be applicable 
to the lands held by or for the benefit of the Maine Tribes. This 
would also be true of police power laws on such matters as safety, 
public health, environmental regulations or land use.

    S. Rep. at 31; see also H.R. Rep. at 29. In addition, this passage 
makes clear that Congress was not limiting the application of federal 
Indian law in Maine solely to avoid any interference with state 
environmental regulation as it applies to lands outside the Indian 
Territories. The report specifically discusses Congress's intent to 
protect the application of state air quality laws which will be 
applicable to land held ``for the benefit of the Maine Tribes.'' Again, 
this discussion would be pointless if Congress did not specifically 
intend to make state environmental regulation applicable in the 
southern tribes' Indian Territories.
iv. Concurrent Jurisdiction
    Several tribal commenters have argued that the southern tribes have 
concurrent jurisdiction with the state under MICSA, and this concurrent 
jurisdiction prevents the state from exercising adequate authority to 
implement its NPDES program in the Indian Territories. In our 
consultations, those commenters specifically asked EPA to address the 
question of concurrent jurisdiction. Indeed, the First Circuit has held 
that simply because Congress has made state law applicable in Indian 
country does not mean that Congress has necessarily limited an Indian 
tribe's inherent sovereignty. In State of R.I. v. Narragansett Indian 
Tribe, 19 F.3d 685 (1st Cir. 1994), cert. denied 513 U.S. 919 (1994), 
the court reviewed the effect of the Rhode Island Indian Claims 
Settlement Act (25 U.S.C. 1701-1716) and the Indian Gaming Regulatory 
Act on the Narragansett Tribe. In language very similar to MICSA 
section 1725(b) and MIA section 6204, the Rhode Island settlement act 
provides that the tribe's ``settlement lands shall be subject to the 
civil and criminal laws and jurisdiction of the State of Rhode 
Island.'' 25 U.S.C. 1708. In analyzing the effect of this language, the 
court concluded:

    [T]he mere fact that the [Rhode Island] Settlement Act cedes 
power to the state does not necessarily mean, as Rhode Island 
suggests, that the Tribe lacks similar power and, thus, lacks 
``jurisdiction'' over the settlement lands. Although the grant of 
jurisdictional power to the state in the Settlement Act is valid and 
rather broad, . . . we do not believe that it is exclusive. To the 
contrary, we rule that the Tribe retains concurrent jurisdiction 
over the settlement lands and that such concurrent jurisdiction is 
sufficient to satisfy the corresponding precondition to 
applicability of the Gaming Act.

Narragansett, 19 F.3d at 701. In a subsequent dispute over the law 
applicable to construction of a tribal housing complex, the District 
Court sorted through the overlapping authorities of state and tribal 
concurrent jurisdiction using a preemption analysis, generally finding 
that state law was preempted, with the one exception of the state's 
coastal resources management plan. Narragansett Ind. Tribe of RI v. 
Narragansett Elec., 878 F.Supp. 349, 361-66 (D.R.I. 1995), rev'd on 
other grounds 89 F.3d 908 (1996). The District Court specifically found 
the state regulations to implement the CWA were preempted. 878 F.Supp. 
at 362; see also Narragansett, 19 F.3d at 703. Therefore, it is 
important to assess whether MICSA allows the southern tribes to assert 
concurrent jurisdiction that might preempt the laws of the state.
    Notably, the First Circuit in the Narragansett case briefly 
compared the Rhode Island settlement act with MICSA. The court intended 
to highlight the extent to which Congress had not impaired the 
Narragansetts' sovereignty in Rhode Island:

    Comparative analysis is also instructive. We think it is 
sensible to compare the jurisdictional grant embedded in the [Rhode 
Island] Settlement Act with the jurisdictional grants encased in two 
other Indian claims settlement acts that were to some extent modeled 
after the Settlement Act. Both of the latter pieces of legislation--
one involving Massachusetts, one involving Maine--contain grants of 
jurisdiction parallel to section 1708, expressed in similar 
language. See . . . 25 U.S.C. 1725 (1988). Yet both acts also 
contain corresponding limits on Indian jurisdiction, conspicuously 
absent from the Settlement Act. See . . . 25 U.S.C. 1725(f). By 
placing state limits on the retained jurisdiction of the affected 
tribes, these newer acts imply that the unadorned grant of 
jurisdiction to a state . . . does not in and of itself imply 
exclusivity.

Id. at 702. The cross reference to MICSA is to a section specifically 
addressing the southern tribes' concurrent jurisdiction:

    The Passamaquoddy Tribe and the Penobscot Nation are hereby 
authorized to exercise jurisdiction, separate and distinct from the 
civil and criminal jurisdiction of the State of Maine, to the extent 
authorized by the Maine Implementing Act, and any subsequent 
amendments thereto.

25 U.S.C. 1725(f) (emphasis added). While MICSA specifically reserves 
the southern tribes's exclusive jurisdiction over Indian child custody 
proceedings (25 U.S.C. 1727(a)), Congress provided in section 1725(f) 
that MIA generally defines the extent of the southern tribes' 
jurisdiction. Section 6206(1) of MIA defines the scope of the general 
powers of the southern tribes as generally the same as those of 
municipalities in Maine. In matters where MIA accords the southern 
tribes a status similar to Maine municipalities, they enjoy 
considerable homerule authority. See International Paper Co. v. Town of 
Jay, 665 A.2d 998 (Me. 1995); Central Maine Power v. Town of Lebanon, 
571 A.2d 1189 (Me. 1990). But that authority is ultimately subject to 
definition and preemption by the state. Midcoast Disposal v. Town of 
Union, 537 A.2d 1149 (Me. 1988). In the case of Maine's MEPDES program, 
the state has not delegated to municipalities the authority to issue 
permits that would implement the NPDES program under the CWA. 
Therefore, EPA sees no basis under MIA for finding that the southern 
tribes' concurrent jurisdiction could exclude or preempt state 
regulation of

[[Page 65059]]

discharges to waters in the Indian Territories.\9\
---------------------------------------------------------------------------

    \9\ Several sections of MIA reserve specific matters for 
exclusive tribal jurisdiction. See 30 M.R.S.A. sections 6206(3) 
(exclusive tribal jurisdiction over violations of tribal ordinances 
by tribal members within Indian Territory), 6207(1) (exclusive 
tribal authority to regulate hunting, trapping or other taking of 
wildlife, and taking of fish on ponds under ten acres within Indian 
Territory), 6209-A(1) and 6209-B(1) (exclusive tribal court 
jurisdiction over certain misdemeanors and small claims by and 
against tribal members, Indian child custody proceedings, and 
domestic relations matters between tribal members residing on the 
reservation), and 6210(1) (exclusive authority of tribal law 
enforcement officers to enforce laws within the exclusive regulatory 
or adjudicatory jurisdiction of the tribes). None of these specific 
categories of the southern tribes' exclusive jurisdiction would 
preempt sufficient state authority to prevent Maine's MEPDES program 
from operating in the southern tribes' Indian Territories. In 
addition to giving the southern tribes the powers and limitations of 
municipalities under Maine law, section 6206(1) also carves out the 
broadest exception to state authority, ``internal tribal matters,'' 
that is discussed in the next section of this notice.
---------------------------------------------------------------------------

v. Conclusion
    In sum, the text, structure, and legislative history of MICSA each 
indicate that Congress clearly granted the state authority to regulate 
the environment in the Indian Territories of the southern tribes, and 
read in combination they make this conclusion unambiguous. Where there 
is no ambiguity in Congress' intent, EPA may not apply the interpretive 
canon favoring Indian tribes. See Passamaquoddy, 75 F.3d at 793 (``If 
ambiguity does not loom, the occasion for preferential interpretation 
never arises.'') This grant of authority is adequate to support the 
state's application to administer the MEPDES program in the Indian 
Territories of the southern tribes. As discussed below, EPA must also 
consider that MICSA limited that grant by reserving exclusive 
jurisdiction over internal tribal matters to the southern tribes, but 
we have determined that this exception to the state's authority 
currently only excludes two tribal facilities from the Maine's MEPDES 
program.
c. The Scope of the Tribes' Authority Over Internal Tribal Matters
    The DOI opinion that EPA requested and the parallel comments from 
the southern tribes make persuasive arguments about the importance of 
the internal tribal matters exception and about Congress's purpose to 
preserve the southern tribes' culture and protect them as sovereign 
entities. EPA agrees with DOI and the tribes about the importance to 
the tribes of the internal tribal matters exception, and that we must 
analyze the scope of MICSA's internal tribal matters exception to fully 
understand the extent of the broad grant of authority to the state. To 
that extent, EPA is essentially adopting DOI's legal analysis of the 
basic structure of MICSA.
    EPA does not agree, however, with DOI's assessment of the scope of 
the matters reserved to exclusive tribal jurisdiction under the 
internal tribal matters exception. DOI and the tribes concluded that 
the exclusion of internal tribal matters from state regulation prevents 
Maine from regulating the environment, at least for the purposes of 
implementing its MEPDES permitting program in the southern tribes' 
Indian Territories. When EPA takes DOI's legal analysis of the 
structure of MICSA and applies it to the facts we have in Maine, we 
believe that DOI has misunderstood what Congress intended in MICSA and 
the practical impacts of implementing an NPDES program. EPA does not 
disagree with DOI lightly, because the Department is the federal 
government's expert agency on Indian law and is charged with 
administering MICSA. The Supreme Court has made it clear that an 
advisory legal opinion such as DOI's May 16, 2000 letter is owed 
respect to the extent it is persuasive. United States v. Mead Corp., 
533 U.S. 218, 121 S.Ct. 2164, 2175-76 (2001); Christensen v. Harris 
County, 529 U.S. 576, 587 (2000); and AIAM v. Mass. DEP, 208 F.3d 1, 6 
(1st Cir. 2000).
    Nevertheless, this matter requires us to analyze how MICSA's 
jurisdictional formulation applies to implementing the NPDES program. 
As the agency Congress has delegated to implement the CWA and the NPDES 
program nationwide, EPA has particular expertise in administering NPDES 
programs. The Agency takes issue with some points in DOI's opinion that 
are purely legal in nature. On these points, EPA has had the benefit of 
reviewing a fully developed administrative record presenting the legal 
arguments and relevant information submitted from all sides of this 
dispute. In addition, part of our disagreement with the Department's 
analysis turns on our understanding of the effects of NPDES permitting 
in these areas. Our experience in assessing the impacts of NPDES 
permitting on the regulated community and the public particularly 
qualifies EPA to apply DOI's legal principles to these difficult facts.
    The factual scenario we confront directly implicates the conduct of 
non-members and the core of the southern tribes interest in protecting 
their environment. Assuming DOI is correct that the Penobscot 
reservation reaches bank to bank in the Penobscot River, any facility 
located near the bank of that river that needs to discharge into the 
river crosses a boundary into Indian Territory. The land-based portion 
of the facility's operations would not be in the Nation's reservation 
and would clearly be subject to state jurisdiction. But this part of 
Maine is not extensively served by sewage systems that could allow a 
facility to avoid direct discharges into the Penobscot River. So in the 
event a facility needs to discharge into the Penobscot River above 
Indian Island, its discharge would be into the Penobscot Nation's 
reservation as defined by DOI. These facts present a clear tension 
between the interest of the Nation in the environmental quality of its 
Indian Territory and the interest of the state in applying its 
discharge permitting program statewide. We believe the Agency's 
understanding of the CWA in general and the NPDES program in particular 
makes an important contribution when weighing these interests, and that 
we are in a position to refine DOI's analysis.
i. MICSA and Strengthening the Sovereignty of the Maine Tribes
    Early in their analyses, the tribes and DOI examine the theme in 
MICSA's legislative history that Congress was strengthening the 
sovereignty of the Maine tribes by passing MICSA and ratifying MIA. For 
example the Senate Report concludes that ``rather than destroying the 
sovereignty of the tribes, by recognizing their power to control their 
internal affairs * * * the settlement strengthens the sovereignty of 
the Maine Tribes.'' DOI Op. at 6-7, quoting S. Rep at 14 (DOI's 
emphasis). DOI's opinion then looks to the legal status of the southern 
tribes immediately prior to passage of MICSA. The opinion argues that 
in Bottomly v. Passamaquoddy Tribe, 599 F.2d 1061, 1065-66, the First 
Circuit held in 1979 that the southern tribes were in essentially the 
same position as Indian tribes across the nation, with ``inherent 
powers of a limited sovereignty'' to regulate their own affairs. DOI 
Op. at 7; see also Joint Tribal Council of the Passamaquoddy Tribe v. 
Morton, 528 F.2d 370, 378-80 (1st Cir. 1975). Accordingly, DOI infers 
that if Congress were indeed strengthening the sovereignty of the Maine 
tribes in comparison with their legal status immediately prior to 1980, 
MICSA must accord the southern tribes at least as much authority to 
regulate their own environment as Indian tribes outside Maine enjoy.
    EPA agrees that the southern tribes had won important victories in 
court, and their legal status prior to MICSA as a matter of federal 
Indian law may well

[[Page 65060]]

have been essentially that of other tribes nationwide, but that 
conclusion was far from settled law. The Bottomly court found that 
Congress had never acted to deprive the Passamaquoddy Tribe of its 
sovereign immunity. 599 F.2d 1061. The Supreme Judicial Court of Maine 
in State of Maine v. Dana found that the trial court had erred in not 
conducting fact-finding to determine if the site of a crime had 
retained its aboriginal character and was therefore under the exclusive 
criminal jurisdiction of the federal government. 404 A.2d 551 (1979). 
While both courts found that the Passamaquoddy Tribe retained a limited 
sovereignty and the Dana court strongly intimated that the area where 
the crime took place qualified as Indian country, 404 A.2d at 563, 
neither court ruled on the subject of the state's and tribes' 
respective jurisdictions over the reservation, and neither case 
involved the Penobscot Nation. It thus makes sense that Congress viewed 
MICSA as a settlement of the parties' positions in litigation that were 
not yet finally resolved.
    Both of the congressional committee reports for MICSA make it clear 
that Congress understood it was acting against the backdrop of Maine's 
position that the southern tribes were essentially wards of the state. 
Based on this assertion, the state claimed the authority to regulate 
virtually all aspects of the southern tribes' existence, with little to 
distinguish the tribes from any other voluntary association of state 
citizens. ``Prior to the settlement, the State passed laws governing 
the internal affairs of the Passamaquoddy Tribe and the Penobscot 
Nation, and claimed the power to change these laws or even terminate 
these tribes.'' S. Rep. at 14; see also H.R. Rep. at 14. When Congress 
preserved a subset of the southern tribes' inherent sovereignty from 
state regulation by carving out ``internal tribal matters'' from the 
grant of state jurisdiction, it was strengthening the southern tribes 
sovereignty in comparison with the federal government's nearly complete 
abandonment of the tribes' inherent sovereignty up to that point. See 
Joint Tribal Council, 528 F.2d at 375 (in which the U.S. Secretary of 
the Interior argued that the United States had no trust relationship 
with the Passamaquoddy Tribe). The language that surrounds DOI's 
quotation from the Senate Report confirms this conclusion:

    While the settlement represents a compromise in which state 
authority is extended over Indian territory to the extent provided 
in the Maine Implementing Act, in keeping with these decisions 
[recognizing the federal status of Maine tribes] the settlement 
provides that henceforth the tribes will be free from state 
interference in the exercise of their internal affairs. Thus, rather 
than destroying the sovereignty of the tribes, by recognizing their 
power to control their internal affairs and by withdrawing the power 
which Maine previously claimed to interfere in such matters, the 
settlement strengthens the sovereignty of the Maine Tribes.

S. Rep. at 14; H.R. Rep. at 15.
    Therefore, EPA does not believe that the reference to strengthening 
tribal sovereignty in the legislative history indicates that Congress 
meant ``internal tribal matters'' to act as a codification of either 
the full scope of inherent sovereignty retained by most Indian tribes 
or the core governmental powers of other tribes. Rather, Congress 
clearly intended internal tribal matters to be a more narrow 
reservation of a subset of tribal authority that was unique in scope 
from those powers retained by other tribes.
ii. Statutory Analysis and Internal Tribal Matters
    The southern tribes and DOI are clearly correct that Maine is 
prevented from regulating internal tribal matters. This term is not 
exhaustively defined in either MIA, where it appears, or in MICSA, 
which simply ratifies its appearance in MIA. 30 M.R.S.A. section 
6206(1); 25 U.S.C. 1725(b)(1). Rather, MIA simply provides a list of 
examples illustrating internal tribal matters, and the First Circuit 
has twice held that this list is not exclusive. Akins, 130 F.3d at 486; 
Fellencer, 164 F.3d at 709. But EPA is unable to conclude that this 
exception extends generally to reserve regulation of discharges to 
Indian Territory waters from the grant of state authority under MICSA.
    DOI's statutory analysis focuses on two of the examples of internal 
tribal matters in MIA: ``the right to reside within the respective 
Indian territories'' and ``tribal government.'' The tribes and DOI 
assess how federal courts and EPA have interpreted similar attributes 
of tribal sovereignty as they operate generally under federal Indian 
law outside the context of MICSA. Under DOI's interpretation, the 
internal tribal matters exception would swallow the rule. The greatest 
weakness of DOI's argument that internal tribal matters includes 
``regulation of water quality including point-source discharges,'' DOI 
Op. at 18, is that it largely fails to reconcile that conclusion with 
the grant of authority to the state to regulate the environment in the 
southern tribes' Indian Territories, as reflected in text, structure, 
and legislative history of MICSA and MIA outlined in the previous 
section.
    DOI's interpretation of these statutory examples renders the 
concept of internal tribal matters virtually indistinguishable from the 
``inherent powers of a limited sovereign'' that tribes generally have 
outside of Maine. But as the Akins court concluded, one cannot equate 
internal tribal matters under MICSA with customary concepts of internal 
matters or internal affairs under federal Indian law:

    While defining what constitutes an internal matter controlled by 
Indian tribes is hardly novel in Native American law, it is novel in 
this context. The relations between Maine and the Penobscot Nation 
are not governed by all of the usual laws governing such 
relationships, but by two unique laws, one Maine and one federal, 
approving a settlement.

130 F.3d at 483. Therefore, EPA concludes that the simple reference to 
the general federal Indian law defining the traditional concepts of 
tribal government and tribal control over access to their lands cannot 
provide the complete answer to this question that DOI finds. DOI Op. at 
12.\10\
---------------------------------------------------------------------------

    \10\ That is not to say that the internal tribal matters 
examples of tribal government and the right to reside are rendered 
meaningless. EPA notes that the tribes may decide who may live in 
their Indian Territories and how to conduct the affairs of their 
governments without the ability to regulate non-member discharges to 
waters of Indian Territory by facilities located outside of Indian 
Territory. See e.g. Great Northern Paper, Inc. v. Penobscot Nation, 
770 A.2d 574, 590-91 (Me. 2001)(southern tribes control access to 
the internal deliberations of their tribal governments).
---------------------------------------------------------------------------

    Although the examples of internal tribal matters in MIA do not 
completely describe the scope of the exceptions to the state's 
regulatory authority, it might well be possible for an environmental 
regulatory program, or elements of it, to operate in a manner that its 
effects on non-members are limited enough or that the tribal interest 
is so great that it qualifies as an internal tribal matter. Indeed, for 
two existing tribal facilities in the southern tribes' Indian 
Territories, EPA has determined that regulating their water discharges 
is an internal tribal matter, as described below. But EPA concludes 
that regulating discharges that would have substantial effects on non-
members is not so confined that it qualifies as an internal tribal 
matter.
iii. Judicial Guidance on Internal Tribal Matters: The Akins and 
Fellencer Cases
    Independent of DOI, EPA has reviewed the two federal Court of 
Appeals decisions that depended on the scope of internal tribal 
matters, Akins v. Penobscot Nation, 130 F.3d 482 (1st Cir.

[[Page 65061]]

1997), and Penobscot Nation v. Fellencer, 164 F.3d 706 (1st Cir. 1999). 
Those opinions presented factors the court used to assess whether an 
activity is an internal tribal matter. Although the Penobscot Nation 
won both of these cases when the court found that the activity involved 
was an internal tribal matter, EPA believes that the analysis in these 
opinions actually confirms the Agency's finding that regulating the 
discharges to Indian Territory waters by non-member facilities is not 
an internal tribal matter.
    Akins is the most relevant case, because it involved a dispute over 
natural resources management, specifically the Nation's right to 
license the cutting of timber on its Indian Territory. Indeed, it is 
notable that Akins involves ``timber and timber rights,'' which is 
listed as a subject matter of state regulation in Indian Territory 
under MIA's definition of natural resources. 30 M.R.S.A. section 
6203(3). The Nation had adopted a requirement that only tribal members 
who were also residents of Maine could receive permits to cut the 
Nation's timber, or ``stumpage permits.'' Akins had recently moved to 
Alabama, and he was the only tribal member deprived of a license by the 
new residency requirement. Akins made claims for deprivation of rights 
under Maine law and under section 1983 of the Civil Rights Act, which 
requires that the alleged misconduct have taken place ``under color of 
state law.'' Akins, 130 F.3d at 483-84. If the dispute over the 
stumpage permit was an internal tribal matter, then it would not arise 
under state law, and the tribal courts would have exclusive 
jurisdiction over Akins's claims. Id. at 485.
    Superficially, Akins may appear to stand for the principle that a 
tribe using permits to manage its natural resources is an internal 
tribal matter, but the facts of the case and the court's analysis are 
considerably more narrow. There was no allegation before the court that 
the Nation's timber licensing program was at any variance with 
otherwise applicable state environmental or land use regulations: ''* * 
* the Implementing Act, section 6204, makes state laws regulating land 
use or management, conservation and environmental protection applicable 
to tribal lands. The absence of an assertion that any such laws are 
involved here is telling.'' Id. at 488. Moreover, the court was at 
pains to point out that the dispute did not implicate state law or any 
interest other than a dispute between tribal members:

    This is not a dispute between Maine and the Nation over the 
attempted enforcement of Maine's laws. * * * This is not an instance 
of the potential conflict or coincidence of Maine law and federal 
statutory law. This is not even a situation of substantive rights 
regarding stumpage permits granted to persons by statute, state or 
federal. This is instead a question of allocation of jurisdiction 
among different fora and allocation of substantive law to a dispute 
between tribal members where neither the Congress nor the Maine 
Legislature has expressed a particular interest.

    Akins, 130 F.3d at 487-88. When EPA applies the court's discussion 
of its analytical factors to the facts that confront us in this 
situation, we conclude that the analysis in Akins strongly confirms our 
finding that regulation of the non-member discharges to Indian 
Territory waters is not an internal tribal matter.
    The facts of the Fellencer case do not bear as directly on water 
quality regulation, but the court's analysis further illustrates its 
approach to defining internal tribal matters. The Penobscot Nation 
fired Fellencer, a non-Indian community nurse who worked for the 
Nation. After discharging her, Fellencer alleged that the Nation posted 
an opening for a community nurse with an express preference for Indian 
applicants. Fellencer sought to enforce state law prohibiting 
employment discrimination based on race or national origin. Fellencer, 
164 F.3d at 707. If the Nation's decision to terminate Fellencer's 
employment was an internal tribal matter, she had no claim under state 
law. As discussed below, applying the Fellencer court's analysis of its 
factors to the facts in this case supports EPA's view that regulation 
of the non-member discharges to Indian Territory waters is not an 
internal tribal matter.
    EPA has carefully analyzed the court's factor test as it applies to 
the MEPDES program generally as follows:
    Effects on tribal members and non-members: ``First, and foremost'' 
in the Akins court's analysis, the stumpage ``policy purports to 
regulate only members of the tribe, as only tribal members may even 
apply for permits. The interests of non-members are not at issue.'' 
Akins, 130 F.3d at 486. The court added:

    Of great significance is that this is an intra-tribal dispute. 
It involves only members of the tribe, and not actions by the Nation 
addressed to non-members. The tribe's treatment of its members, 
particularly as to commercial interests, is not of central concern 
to either Maine or federal law. * * *

Id. at 488.
    By contrast, there are currently seven facilities owned and 
operated by non-members, whose operations are located on non-Indian 
lands, with discharges into the main stem of the Penobscot River above 
Indian Island. Of these seven facilities, three are publicly owned 
treatment works (POTWs) for municipalities, and one is among the 
region's largest employers. 66 FR at 12795, App.1. Decisions about the 
terms under which these facilities can discharge into the Penobscot 
River implicate the interests of the citizens of these towns and 
employees of these facilities, easily thousands of people, most of whom 
are non-members.\11\ If the Penobscot Nation is correct about the 
boundaries of its reservation, the number of non-tribal facilities 
discharging into the Nation's reservation with operations outside the 
reservation rises to 19, including at least one other major employer. 
Ibid. If the Akins court's ``foremost'' concern was impacts on non-
members, the potential for impacts on a substantial number of non-
members weighs heavily against finding the regulation of the discharges 
from these facilities to be an internal tribal matter.
---------------------------------------------------------------------------

    \11\ It is difficult to assess the exact number of non-members 
affected, but relatively easy to gauge the order of magnitude. The 
populations of the three towns with POTWs discharging into the main 
stem, Lincoln, Mattawamkeag, and Howland, were 5,587, 830, and 
1,435, respectively, in 1994, the most recent census estimate 
available when Maine submitted its application. The most recent 2000 
census figures indicate the towns' populations were 5,221, 825, and 
1,362, respectively. Not all these residents are necessarily tied 
into the POTW, and not all POTW hook-ups correspond directly to use 
by one or more members of the public. But the ``user'' records for 
these POTW facilities provide some sense of scale. The Lincoln POTW 
had approximately 4,200 users, Mattawamkeag had approximately 295, 
and Howland had approximately 623 as of 2000.
---------------------------------------------------------------------------

    Fellencer did involve one non-member. DOI's opinion notes how the 
court weighed her interests against those of the Nation, ultimately 
favoring the Nation's need to control its own employment policies. The 
court contrasted the limited impact on one non-member with the facts in 
the Stilphen case, where the Maine Supreme Judicial Court found that 
the regulation of ``beano'' games was not an internal tribal matter. 
Penobscot Nation v. Stilphen, 461 A.2d 478 (Me. 1983). In Stilphen 
``[t]he ``beano'' games * * * were designed to ``draw many hundreds of 
players to the Penobscot reservation from all over Maine and beyond.' 
'' Fellencer, 164 F.3d at 710, quoting Stilphen, 461 A.2d at 480. Thus, 
in the Fellencer court's analysis, the suggestion appears to be that 
impacting one non-member can be an internal tribal matter, but 
impacting hundreds may not be. EPA believes that the regulation of 
water discharges, where

[[Page 65062]]

thousands of non-members might be potentially affected, falls well 
beyond the scope of the Fellencer court's delineation of internal 
tribal matters. Even if EPA only considers the direct effects, the 
group of non-member facilities is much larger than the single person 
affected by the tribal decision in Fellencer.
    Moreover, the Fellencer court simplified its analysis of this 
factor by discounting the interests of the one non-member affected. In 
a telling footnote to its conclusion that the Nation's ``employment 
decision has its immediate effect on only one non-tribal member,'' the 
court makes a cross reference to another of its analytical factors--the 
``interest of the State of Maine.'' Id. at 710 n. 1. As we discuss in 
more detail below, the state specifically declined to assert an 
interest in applying its nondiscrimination laws to protect Ms. 
Fellencer, which appears to have made it easier for the court to find 
that the Nation's interests outweighed hers. Where the state adamantly 
asserts its interest in regulating these dischargers, however, EPA 
cannot discount the interests of the non-members in the same way.
    Use of tribal lands and natural resources: The Akins court next 
found that the stumpage dispute involved ``the commercial use of lands 
acquired by the Nation with the federal funds it received for this 
purpose as part of the settlement agreement.'' 130 F.3d at 486. While 
MICSA in section 1725(b)(1) subjects the southern tribes' ``natural 
resources,'' including ``timber and timber rights,'' 25 U.S.C. 1722(b), 
to state jurisdiction ``to the extent and in the manner provided in 
[MIA],'' the court emphasized that the Act in section 1724(h) also 
provides that ``natural resources'' shall be managed in accordance with 
a self-determination contract with the Secretary of the Interior. 
Therefore, the court concluded that timber rights ``involve[] the 
regulation and conservation of natural resources belonging to the 
tribe.'' Id. at 488.
    EPA does not agree with DOI that this factor weighs ``completely in 
favor of finding this activity to be an internal tribal matter.'' DOI 
Op. at 13 (emphasis added). The Penobscot and St. Croix Rivers are the 
waters that have been the focus of the dispute over the state's 
asserted authority to regulate discharges to Indian Territory waters. 
Depending on how one defines the boundaries of the Nation's 
reservation, these rivers originate in, or flow over, around, or 
through the southern tribes' Indian Territories, or possibly all four, 
but they also flow through the state. This stands in contrast to Akins 
that concerned trees, which are stationary and clearly the property of 
the Penobscot Nation.
    EPA recognizes that regulation of discharges into these rivers is 
vitally important to the southern tribes, but unlike the court's 
assessment of the timber interests at stake in Akins, water quality in 
these rivers is also vitally important to the state and its non-tribal 
member citizens. Along the stretch of the Penobscot River's main stem 
that appears to be at the heart of the Nation's reservation as 
determined by DOI, the river is a critical environmental resource for 
both the Nation, many of whose members live on Indian Island surrounded 
by the river, and the non-members who live or work on either side of 
the river's banks. Unlike the trees in Akins, these rivers are a shared 
resource for tribal members and non-members alike. The fourth factor in 
the Akins test, discussed further below, requires EPA to acknowledge 
the state's interest in a natural resource in the southern tribes' 
Indian Territories, at least in this case where the use and enjoyment 
of that natural resource has such obvious impacts outside the tribes' 
Indian Territories.
    Tribal control over their natural resources: The Akins court's 
third factor appears to be an outgrowth of the second factor discussed 
above: ``The control of the [stumpage] permitting process operates as a 
control over the growth, health, and reaping of that resource.'' 130 
F.3d at 487. It is notable that the court introduced its detailed 
discussion of this factor with the following caveat: ``Third, the 
subject matter, involving tribal lands, appears to have no impact on 
Maine's environmental or other interests.'' Id. at 488. And, as quoted 
above, the court goes on to observe that MIA section 6204 makes state 
laws regulating environmental protection applicable to tribal lands. 
Again, EPA agrees with DOI that the southern tribes have pressing 
environmental concerns over water quality within their Indian 
Territories. But the weight of those concerns is not sufficient basis 
to oust the state from the grant of authority Congress made in MICSA.
    Interest of the State of Maine: The fourth Akins factor is whether 
the state has an interest in regulating the subject matter. Although 
the State of Maine and its municipalities regulate forestry, the Akins 
court made short work of this factor: ``The [stumpage] policy, at least 
on its face, does not implicate or impair any interest of the state of 
Maine.'' Id. at 487. Maine was not a party to the Akins case, nor the 
Fellencer case. In Fellencer, the court assessed the state's interest 
at greater length, noting that ``Maine has a strong interest in 
protecting all employees against discrimination. * * *'' Fellencer, 164 
F. 3d at 710. The court went on to summarize its understanding of how 
this factor applied in both cases:

    In this case, however, the State is not attempting to apply its 
laws to the Nation's employment decision. To the contrary, the Maine 
Attorney General ruled long before this case that ``the employment 
decisions of the Penobscot Nation, when acting in its capacity as a 
tribal governmental employer, are not subject to regulation by the 
state[.]'' * * * Maine did not intervene to argue the contrary. In 
Akins we found this posture significant. Even though Akins alleged 
violations of Maine law, we noted that there was ``not a dispute 
between Maine and the Nation over the attempted enforcement of 
Maine's laws.'' * * * The state disavows the very ``state interest'' 
that Fellencer seeks to invoke in support of her private cause of 
action.

Id. at 710-11 (emphasis in original). And as noted above, the absence 
of state interest in protecting Fellencer appears to have played a role 
in the court's assessment of the limited impact its holding had on non-
members.
    The state's expression of interest in this case is different in 
degree and kind from the facts in either Akins or Fellencer. Water 
quality regulation plays a critical role in how the state promotes the 
interests of environmental quality and economic development when 
deciding how to use and protect these major rivers. By its very 
application to EPA to administer the program, the state is asserting 
its interest in issuing discharge permits for these waters. EPA has on 
its record vigorous assertions of the state's interest from virtually 
every level of state government, including municipal officials, the 
Commissioner of the Department of Environmental Protection, the Maine 
Attorney General, and the Governor. In addition, each member of Maine's 
congressional delegation and several groups and businesses representing 
the interests of dischargers in the affected area submitted comments 
supporting the state's application. Further, the Maine legislature has 
retained direct control over many specific discharge permit 
requirements, implementing them through statute, rather than delegating 
most or all of the detailed decisions to the state's Department of 
Environmental Protection, as is the practice in most other states.\12\ 
Finally, Maine has statutes that specifically address surface water 
quality classifications for stretches of rivers that may lie in the

[[Page 65063]]

Indian Territories. See e.g., 38 M.R.S.A. section 467(7). EPA cannot 
deny the strong interest that the state has shown in regulation of 
discharges to Indian Territory waters.
---------------------------------------------------------------------------

    \12\ See e.g., 38 M.R.S.A. sections 414-A, B, and C, 417, 419, 
419-A, and 420.
---------------------------------------------------------------------------

    Given the state's strong interest in regulating discharges to 
waters in Maine, the fact that all but three of the discharges to 
Indian Territory waters are by non-member facilities and all but two 
have their operations located outside of the Indian Territories by any 
interpretation of Indian Territory boundaries takes on great 
significance. Because the facilities are located outside of the Indian 
Territories, the factor relating to the diminishment of the state's 
interest and authorities within Indian Territory does not apply. 
Because they are not tribal or tribal member facilities and are located 
outside of the Indian Territories, the tribal interest in regulating 
them is diminished and the state interest increased. The state would 
have its full inherent authority to regulate the facilities themselves. 
If EPA found that the state lacked adequate authority to regulate the 
discharges for purposes of the NPDES program because the discharge 
points for these facilities were in the Indian Territories, however, it 
would have a grave effect on the state's very strong interest in 
regulating the discharges to water by facilities which it otherwise may 
regulate.
    DOI's opinion notes that only a small percentage of the discharges 
covered by the state's program application are in the southern tribes' 
Indian Territories. DOI Op. at 15 n. 22. The suggestion appears to be 
that denying the state's application for these discharges will not 
substantially impair the state's overall interest in regulating 
discharges to waters throughout the state. EPA does not agree that this 
approach adequately characterizes the state's interest in the waters at 
issue here.
    First, this jurisdictional dispute is about the state's authority 
in the Indian Territories. Therefore, the more relevant analysis is the 
apportionment of discharges into waters that may lie in those Indian 
Territories, not the whole state. From this perspective, 19 of the 21 
dischargers are non-tribal facilities, and two are tribal.
    Even if we look at the entire state, however, the state's interest 
in these waters is considerable, though the number of permits may be 
small. The Penobscot River is the state's largest river and its largest 
watershed; it is literally an artery for the state's economy and a 
major resource for much of central Maine. Withholding the permitting 
authority for the discharges along this stretch of the Penobscot River 
from the state's water quality permitting program would deprive the 
state of the ability to implement its MEPDES program in a significant 
portion of a critical waterway. EPA believes that doing so would have a 
significant effect on the state's interest in this application.
    Prior legal understandings: While noting that MICSA creates a 
unique framework distinct from federal Indian law, the Akins court 
looked to ``[g]eneral federal Indian caselaw'' for support of its 
conclusion that stumpage permits are an internal tribal matter, because 
it had ``long presumed that Congress acts against the background of 
prior law.'' 130 F.3d at 489 (citing Kolster v. INS, 101 F.3d 785, 787-
88 (1st Cir. 1996)); see also Fellencer, 164 F.3d at 712 (``a court 
must take into account the tacit assumptions that underlie a 
legislative enactment, including not only general policies but also 
preexisting statutory provisions.'') (quoting Passamaquoddy Tribe, 75 
F.3d at 789). The Akins court cited with approval both a case holding 
that state taxation of non-Indian activities on tribal lands was 
preempted, Akins, 130 F.3d at 490 (citing White Mountain Apache Tribe 
v. Bracker, 448 U.S. 136, 144 (1980)), and a case holding that a tribe 
had the inherent authority to tax non-Indian activities on tribal land 
as part of its powers of self-government. Id. (citing Merrion v. 
Jicarilla Apache Tribe, 455 U.S. 130 (1982)). DOI's opinion and the 
southern tribes' comments summarize the federal Indian case law, which 
has uniformly upheld inherent tribal authority to regulate water 
quality under the CWA, including non-member pollution sources. DOI Op. 
at 16 (citing, inter alia, Montana v. EPA, 137 F.3d 1135 (9th Cir. 
1998)).
    The Akins court noted that ``[the White Mountain Apache and 
Merrion] cases uniformly recognize the importance of the factors we 
have stressed: that the issue involves matters between tribe members 
and matters of the economic use of natural resources inherent in the 
tribal lands.'' 130 F.3d at 489-90. The court contrasted White Mountain 
Apache and Merrion, which permitted tribal taxation of non-member 
timber harvesting and mineral extraction that took place on tribal 
lands, with Montana and Strate, which denied tribal jurisdiction over 
hunting and fishing and torts on non-member lands. Id. The court 
referred to those cases to throw into sharp relief the fact that Akins 
concerned tribal member timber harvesting from tribal lands. Although 
the court noted that ``tribes retain considerable control over 
nonmember conduct on tribal land,'' it limited the holding of the case 
by noting that ``only tribal conduct [was] at issue'' in Akins. Id. 
(quoting Strate v. A-1 Contractors, 520 U.S. 438, 445 (1997)). The 
First Circuit focused on its conclusion that tribal control over the 
conduct of tribal members' use of tribal natural resources was clearly 
within the scope of inherent tribal authority under general federal 
Indian law, and was therefore consistent with prior legal 
understandings. It drew no larger conclusions under MICSA about the 
regulation of non-members.
    The Fellencer court did not examine how federal Indian law treats 
members versus non-members, having disposed of the impact on the non-
member Fellencer in its discussion of the previous factors. The 
Fellencer court found ``particularly important'' the prior legal 
understandings that Title VII of the Civil Rights Act of 1964 
(employment discrimination) exempted tribes from its coverage, and that 
the Indian Civil Rights Act of 1968 granted exclusive jurisdiction to 
the tribal courts ``because they inform the intent of Congress in the 
adoption of the Settlement Act.'' Fellencer, 164 F.3d at 712. The 
court's analysis of this factor merges into the following discussion of 
statutory origins, where the court also examined the support in federal 
Indian law for tribes preferring Indians in employment decisions.
    The tribal regulation of even non-member discharges to Indian 
Territory waters is consistent with the prior legal understandings 
against which MICSA was enacted. EPA finds that this factor is 
outweighed by the other factors. Furthermore, Congress clearly intended 
to depart from prior legal understandings concerning environmental 
regulatory authority in these Indian Territories.
    Statutory origins of the subject matter: The Fellencer court noted 
an additional factor beyond those addressed in Akins: do the statutory 
origins of the subject matter suggest that tribal control is 
appropriate? In Fellencer the community nurse position was funded under 
a program where Congress specifically provided for ``an employment 
preference for Indians in the legislation.'' Id. at 713. DOI and the 
tribes point out that MICSA itself, 25 U.S.C. 1724(h), provides for the 
southern tribes to manage their ``land or natural resources'' pursuant 
to agreements with DOI under the Indian Self-Determination Act, which 
promotes tribal self-government by transferring federal programs to the 
tribal governments. But MICSA also uses exactly the same term, ``land 
or natural resources,'' in section 1725(b)(1) to

[[Page 65064]]

describe the areas over which it is giving the state jurisdiction by 
ratifying MIA. If Congress's use of the Indian Self-Determination Act 
in MICSA section 1724(h) were meant to be an indication that resource 
management was internal to the southern tribes and not subject to state 
regulation, section 1725(b)(1) would be left without much content when 
it refers to ``land and natural resources.'' On the other hand, it is 
relatively easy to give both these provisions meaning by concluding 
that any management agreements for the southern tribes' land and 
natural resources must also comply with relevant state land use and 
environmental laws, at least to the extent there are impacts on the 
state's interests outside the tribes' Indian Territories.
    As another argument that the statutory origins weigh in favor of 
finding discharges to waters to be internal tribal matters, DOI notes 
that the NPDES program is part of the CWA, and EPA has long interpreted 
the CWA to embody a preference for tribal regulation of surface water 
quality on Indian reservations.\13\ DOI Op. at 17-18. EPA continues to 
strongly agree that Congress expressed a preference for tribal programs 
under the CWA within Indian reservations. But we find that this 
preference is not analogous to the statutory origins of the nursing 
position that the Fellencer court reviewed. In Fellencer, the matter 
subject to regulation was the employment of a community health nurse. 
The nurse's position was created under and funded by a federal program 
designed to promote tribal self-determination through, among other 
things, Indian employment preferences. Fellencer, 164 F.3d at 713. The 
nursing position at issue owed its very existence to a federal program 
designed to prefer Indian employment; therefore, it was reasonable to 
shield that position from state laws that would undo any such 
preference.
---------------------------------------------------------------------------

    \13\ The clearest statement of Congress's preference for tribal 
regulation of surface water quality is section 518, which, among 
other measures, provides for EPA to authorize Indian tribes to 
administer programs under the CWA, including NPDES programs. 33 
U.S.C. 1377(e). The state and some commenters have vigorously argued 
that the savings clauses in MICSA prevent CWA section 518(e) from 
applying in Maine. EPA is not acting today on an application from 
any Maine tribe to implement the NPDES program, therefore, the 
question of whether section 518(e) operates in Maine is not directly 
relevant to our decision.
---------------------------------------------------------------------------

    Here, the matters subject to regulation are the discharges to the 
waters of the Indian Territories by private persons and municipalities. 
The first goal enumerated in the CWA is to control and eventually 
eliminate such discharges, not to create them. See 33 U.S.C. 
1251(a)(1). Although the non-tribal wastewater treatment plants may 
have received federal funding, the funding was of a general nature 
aimed at reducing discharge of pollutants to navigable waters, not at 
promoting tribal self-determination. Unlike the nursing position in 
Fellencer, these discharges exist regardless of the federal 
government's preference for tribal self-determination, and the federal 
statutory framework regulating these discharges would not be defeated 
if an approvable state program is used to control them.
iv. The Great Northern and Georgia-Pacific Cases
    The Maine Supreme Judicial Court and the United States Court of 
Appeals for the First Circuit issued their decisions in the Great 
Northern and Georgia-Pacific cases following DOI's issuance of its 
opinion and the major comments submitted by all the parties. Great 
Northern Paper, Inc. v. Penobscot Nation, 770 A.2d 574 (Me. 2001), 
cert. denied 534 U.S. 1019 (2001); Penobscot Nation v. Georgia-Pacific, 
254 F.3d 317 (1st Cir. 2001), cert. denied 534 U.S. 1127 (2002). The 
parties hotly dispute the significance of these cases. These cases 
sprang out of a disagreement between the southern tribes and the paper 
companies as to whether the state's Freedom of Access Act (FOAA), 1 
M.R.S.A. sections 401-410, Maine's counterpart to the federal Freedom 
of Information Act, applied to the tribes.
    In state court, three paper companies sought to require the 
southern tribes to provide access to tribal governmental documents 
relating to environmental and water quality regulation. See Great 
Northern Paper, 770 A.2d at 577-80. The companies argued that the 
southern tribes' status as municipalities under MICSA and MIA requires 
them to comply with FOAA, just like other political subdivisions of the 
state. Shortly before the paper companies filed their case in state 
court, the southern tribes unsuccessfully sought an injunction in 
federal court to bar the paper companies from interfering with an 
internal tribal matter in violation of MICSA. The paper companies won 
access to certain tribal documents in the state courts, and the federal 
appeals court upheld the federal district court's decision not to 
enjoin the state court action. See Georgia-Pacific, 254 F.3d 317.
    The Maine Supreme Judicial Court found that the internal 
deliberations of the tribes are internal tribal matters, but held that 
communications with other governments were not: ``the Freedom of Access 
Act does not apply to the Tribes in the internal conduct of their 
governments, but does apply when the Tribes communicate and interact 
with other governments.'' Great Northern Paper, Inc., 770 A.2d at 591. 
The court decided that the decisions taken within a tribe to petition 
the federal or state government and the documents generated in the 
process were internal tribal matters excluded from state regulation. 
Id. at 589. When the tribes acted on that decision by communicating 
their desire, among other things, to have EPA retain the NPDES program 
in the Indian Territories, the documents generated in the process of 
that communication were subject to the FOAA because the communications 
sought to limit the authority of the state in the Indian Territories 
and could affect the relationships among the state, the tribes, and the 
federal agencies. Id. at 590. The state asserts that this holding 
indicates surface water quality regulation cannot be an internal tribal 
matter.
    Opponents of the state point to the limits of these decisions. The 
state court's decision does not address the underlying question of 
environmental regulation in the tribes' Indian Territories; it is a 
decision about access to documents. Moreover, a state court decision is 
not generally binding on EPA when assessing the scope of internal 
tribal matters, which the First Circuit has twice held is a question of 
federal law. Finally, the First Circuit's decision to decline 
jurisdiction over the dispute is simply a narrow application of the 
``well [i.e., properly] pleaded complaint'' rule designed to prevent 
litigants from transforming defenses under state law into federal 
causes of action. Georgia-Pacific, 254 F.3d at 321-22.
    EPA agrees that neither of these cases dictate the outcome of our 
decision on Maine's application in the southern tribes' Indian 
Territories. The decision of the Maine Supreme Judicial Court did not 
find that the internal tribal matters exception is limited to those 
matters that do not affect non-members. 770 A.2d 574, 590 n. 19. The 
court also found, however, that because the communications between the 
tribes and the federal and state governments might have a meaningful 
effect on the public through EPA's action on the NPDES application, the 
documents were subject to the FOAA.

[T]he relationship between the state and the Tribes regarding the 
regulation of water quality within the state is a matter of 
legitimate interest of the citizens of this state. * * * In sum, 
because the decisions reached by the Tribes have resulted in actions 
of a

[[Page 65065]]

governmental nature that may have a meaningful effect on members of 
the public who are not members of the Tribes, the provisions of the 
Freedom of Access Act apply to those actions.

Id. at 590. In its decision, the First Circuit made no findings 
whatsoever with regard to the scope of internal tribal matters 
exception to state authority. The federal court refused on grounds of 
issue preclusion to disturb the decision of the Maine court, stating 
``[c]ertainly, nothing in this state decision is so implausible as to 
suggest the need for independent federal reexamination.'' 254 F.3d at 
324 (emphasis in original).
v. Existing Tribal Facilities as Internal Tribal Matters
    Although EPA cannot embrace the ultimate conclusion of DOI's 
internal tribal matters analysis, the Agency believes it is important 
to assess with great particularity how this reservation of the southern 
tribes' sovereignty applies. As both the Supreme Court and the First 
Circuit have noted, generalizations on the subject of Indian 
jurisdiction are ``treacherous.'' White Mountain Apache Tribe v. 
Bracker, 448 U.S. 136, 141 (1980); Akins, 130 F.3d at 487 (``We tread 
cautiously and write narrowly, for the problems and conflicting 
interests presented by this case will not be the same as the problems 
and interests presented by the next case.'') EPA has concluded that 
regulating the non-member discharges to water with substantial effects 
on non-members is not an internal tribal matter, but our conclusion is 
quite different when we analyze the regulation of two existing tribal 
facilities located within the southern tribes' Indian Territories.
    We note at the outset that this analysis is limited to these two 
existing facilities only. As is common in matters involving tribal 
jurisdiction, EPA must undertake a careful case-by-case assessment. 
Based on the facts we have available on this record, we conclude that 
the Akins court's internal tribal matters factor analysis weighs in 
favor of excluding these two existing tribal discharges from Maine's 
MEPDES program.
    EPA reiterates that it is finding that Maine has adequate authority 
to implement its MEPDES program in the Indian Territories, including 
the existing discharges we are assuming lie within those Territories 
from non-member facilities which do not. Therefore, EPA does not 
believe it is necessary to delve into the boundary disputes that 
surround these Indian Territories. Maine's authority within the 
southern tribes' Indian Territories is limited, however, and cannot 
reach permits for facilities with discharges that qualify as an 
internal tribal matter.
    While we are not announcing immutable rules for future permitting 
scenarios, we nevertheless believe that it is possible to suggest some 
general guidelines that the Agency will employ when assessing whether 
individual facilities with discharges to waters within the southern 
tribes' Indian Territories fall within the internal tribal matters 
exclusion and therefore outside of Maine's approved MEPDES program. EPA 
expects that permitting facilities owned and operated by non-members, 
when those facilities have their operations located outside of the 
southern tribes' Indian Territories, will not be internal tribal 
matters even where the discharge is to Indian Territory waters. For 
example, the state has inquired about the status of its general permit 
program for storm water discharges on lands surrounding the southern 
tribes' Indian Territories. EPA believes that non-member activities 
around the southern tribes' Indian Territories would be included in the 
state's program, both for discharges to non-Indian Territory waters and 
any discharges of storm water run-off that may reach the southern 
tribes' Indian Territories.
    EPA is not aware of any non-member facilities located entirely 
within the Indian Territories. EPA expects any possible future non-
member activity in the southern tribes' Indian Territories will be 
subject to negotiated consensual arrangements between the parties for 
access to the tribes' lands. Therefore, EPA will not present any 
presumption that might affect such negotiations.
    As to tribal or tribal-member facilities located in the Indian 
Territories that discharge to what may be Indian Territory waters, EPA 
will carefully assess their impact on non-members and their importance 
to the tribe involved, as illustrated in the following discussion of 
the Akins factors. For example, if EPA were to conclude that a proposed 
construction project within a southern tribe's Indian Territory has 
impacts that are internal to the tribe, EPA would issue the storm water 
permit for that activity. In any case, EPA believes it can undertake 
this assessment without defining the boundaries of the southern tribes' 
Indian Territories, at least with respect to existing dischargers and 
any likely future activity in or around the tribes' Indian 
Territories.\14\ Our analysis of the effects of the tribal discharges 
focuses on their environmental impacts on the waters surrounding that 
discharge regardless of any territorial claim to that water. Here we 
find the impact so minimal that it matters little whether the tribal 
outfall lies within or just outside of the tribes' Indian Territories.
---------------------------------------------------------------------------

    \14\ The dispute over the ``length'' of the Penobscot 
reservation includes a disagreement over the status of certain 
islands upstream from Indian Island. The Nation has submitted 
arguments and documentation asserting that islands in the west 
branch of the Penobscot River and in the Piscataquis River, a 
tributary north of Indian Island, remain in the reservation. Ad. 
Rec. 5c-30 at 27-30 and Section 10, Ex. 1-6. Theoretically, a future 
facility located on those islands could lie within the Penobscot 
reservation. The current prospects for this possibility appear so 
remote that EPA does not believe it would be appropriate to force a 
decision about these boundaries to resolve a hypothetical dispute.
---------------------------------------------------------------------------

    EPA has carefully analyzed the First Circuit's factor test as it 
applies to these two tribal facilities as follows:
    Effects on tribal members and non-members: The impacts on non-
members from the permitting of these two facilities' discharges are 
minimal. The two discharges come from waste water treatment facilities 
serving the Penobscot Nation on Indian Island and the Passamaquoddy 
Tribe at their Pleasant Point reservation. They are owned by the 
Penobscot and Passamaquoddy tribal governments, and they exclusively 
serve the members of each tribe. Therefore, to the extent the 
conditions EPA places on the discharge affect the users and operators 
of these facilities, those effects are borne entirely by each of the 
tribal governments and the tribal members.
    To the extent that the conditions EPA places on the discharge 
affect in-stream water quality downstream of the discharge, including 
water quality around and downstream from the southern tribes' Indian 
Territories, EPA acknowledges there is the potential for an impact on 
non-members outside the Indian Territories. The Agency finds, however, 
that the discharges from these facilities are quite small, especially 
in relation to the total volume of the major water ways that receive 
the discharges.\15\ There is one tribal discharge permitted on each of 
two different reservations, so there is no cumulative effect from a 
cluster of tribal point sources. Therefore, the likely impact on 
downstream water quality is extremely limited. In any case, EPA must 
assure that the discharge permits for these facilities meet the 
requirements of the CWA, and any downstream impacts will be bounded by 
those requirements. In the future, if EPA is confronted with a proposed 
new

[[Page 65066]]

tribal discharge that may have substantial effects on water quality 
beyond the southern tribes' Indian Territories, EPA will assess at that 
time whether the potential impacts of the new discharge would be 
sufficiently confined to remain an internal tribal matter.
---------------------------------------------------------------------------

    \15\ See Memorandum from Phil Colarusso re: Review of Discharge 
Permits for the Passamaquoddy Tribe and Penobscot Indian Nation 
(Jan. 28, 2003) Ad. Rec. section 4.
---------------------------------------------------------------------------

    Use of tribal lands and natural resources and tribal control over 
their natural resources: The operations of these facilities are 
entirely contained within the lands of the tribes. The small discharges 
from these facilities have their most immediate effect on the waters 
either within or directly adjacent to the southern tribes' 
reservations. Therefore, managing the impact of those discharges on 
their Indian Territories is of most immediate concern to the tribes.
    Interest of the State of Maine: While Maine has applied to 
administer the MEPDES program for all the discharges in and around the 
southern tribes' Indian Territories, Akins and Fellencer require us to 
weigh the state's interest in these two permits against the tribes' 
interests. The practical effect on the state of EPA withholding 
authority for these permits from the state program is negligible 
because the environmental impact of these facilities discharges is 
comparatively immaterial. We have approved the state to issue nearly 
all of the existing NPDES permits that discharge in or around the 
southern tribes' Indian Territories. But far more important than the 
simple number of permits, we have approved the state to issue the 
permits with the largest discharges that account for the overwhelming 
bulk of the water quality impacts from point sources in these waters. 
So we believe the state's remaining interest in securing the issuance 
of these last two minor discharge permits is relatively slight.
    In contrast, the southern tribes' interest in regulating these 
tribal facilities that provide governmental services to tribal members 
is enormous. Congress made it clear under MICSA that it was preserving 
the sovereignty of the southern tribes to a certain extent:

    The treatment of the Passamaquoddy Tribe and the Penobscot 
Nation in the Maine Implementing Act is original. It is an 
innovative blend of customary state law respecting units of local 
government coupled with a recognition of the independent source of 
tribal authority, that is, the inherent authority of a tribe to be 
self-governing.

S. Rep. at 29. The facilities attendant to these two remaining 
discharge permits function as part of the governmental infra-structure 
on which the southern tribes rely to support the very existence of 
their communities as independent cultures. It impairs the state's 
interest in water quality regulation very little to respect the tribes' 
vital interest maintaining their direct relationship with the federal 
government in regulating these two operations.
    Prior legal understandings: Finding that the regulation of the 
tribal facilities located in the Indian Territories that discharge to 
what may be Indian Territory waters is an internal tribal matter is 
strongly supported by the Akins court's presentation of federal Indian 
law. The court found that general federal Indian law stood for the 
proposition that the state would generally be preempted from regulating 
on tribal lands because of the strong federal interest in tribal self-
determination. 130 F.3d at 490. These two facilities are owned and 
operated by the tribal governments and non-members are not involved, so 
the federal interest in promoting tribal self-determination is very 
high and is not tempered by any substantial impacts on non-members.
    Ambiguity and assessing environmental impacts: EPA concluded that 
Congress's decision to authorize the state to regulate the environment 
in the southern tribes' Indian Territories was unambiguous, and that 
the reservation of internal tribal matters does not reach discharge 
permits with substantial effects on non-members. But in assessing the 
status of these two tribal facilities and their discharges, we have 
concluded that their impacts outside the southern tribes' Indian 
Territories are so immaterial that the permits fit within the internal 
tribal matters exception. While there might be some debate over the 
scope of that impact, in this situation, EPA believes it is appropriate 
to invoke the doctrine directing us to resolve ambiguities in the 
meaning of a statute relating to Indian sovereignty in favor of Indian 
tribes.
    Moreover, EPA believes that the Agency's judgment about the scope 
of the environmental impacts from these facilities is important. While 
EPA is not assigned the role of implementing MICSA, we are the agency 
delegated to implement the CWA and, therefore, serve as the federal 
government's expert on surface water quality regulation and discharge 
permitting. Thus, EPA believes it falls to us to weigh the 
environmental effects of these two minor discharges as we sort through 
the factors the First Circuit has developed to apply the concept of 
internal tribal matters under MICSA.
    Based on a thorough review of MICSA and MIA, their legislative 
histories, relevant judicial precedent, and the many comments EPA 
received from all sides of this issue, the Agency concludes that MICSA 
unambiguously grants the State of Maine adequate authority over 
discharges to tribal waters to support administration of the MEPDES 
program in the Indian Territories of the Penobscot Nation and 
Passamaquoddy Tribe, with the exception of any permits for facilities 
with discharges that EPA determines are internal tribal matters. EPA 
has determined that there are currently two tribal facilities that the 
state cannot adequately regulate, and EPA will retain the NPDES permits 
for discharges from those facilities.\16\
---------------------------------------------------------------------------

    \16\ EPA will determine whether future point source discharges 
in the Indian Territories of the southern tribes, including the 
disputed territories, qualify as internal tribal matters using a 
case-by-case review of individual permit applications or proposed 
state permits. This approach will allow the Agency to base its 
decision on a fully developed administrative record with 
particularized attention to the facts surrounding each permit 
application.
---------------------------------------------------------------------------

3. Federal Indian Trust Responsibility in Maine

    EPA has received almost as many comments about the nature of our 
trust responsibility to the Maine tribes as about jurisdiction under 
MICSA. Again, EPA responds in detail to all those comments in our 
response to comments document. But we offer here an overview of our 
analysis because we believe it is an important complement to our 
conclusion that Maine has adequate authority to administer the MEPDES 
program in the southern tribes' Indian Territories.
a. Dispute Over the Applicability of the Trust in Maine
    The state and some commenters argue that MICSA's savings clauses 
prevent the trust from applying in Maine. The trust is a doctrine 
developed under federal common law, and the Maine Supreme Judicial 
Court has held that the federal law which the savings clauses exclude 
from Maine includes federal common law. Stilphen, 461 A.2d at 488; but 
see, Penobscot Nation v. Fellencer, 164 F.3d 706, 709 (1st Cir. 1999) 
(finding that the trust responsibility compels the application of the 
canons of Indian treaty construction to MICSA). According to this 
argument, to the extent the trust doctrine operates for the benefit of 
Indians, it would violate the savings clauses and cannot apply in 
Maine.
    On the other hand, many parties argue that the trust doctrine 
requires EPA to protect the Maine tribes and their natural resources. 
This responsibility cannot be delegated to the state, but is an 
obligation the federal government must carry out on a government-to-
government basis directly with the

[[Page 65067]]

affected tribes. According to this argument, it would be inconsistent 
with the trust doctrine for EPA to authorize the state to assume the 
NPDES program.
b. Continued Operation of the Trust in Maine
    EPA believes that neither set of arguments is completely correct, 
and the answer lies somewhere in between. As a threshold matter, the 
argument that the trust doctrine finds no application in Maine defies 
the terms of MICSA. The statute specifically provides for the federal 
government to hold land, natural resources, and settlement funds in 
trust for the southern tribes. See generally 25 U.S.C. 1724. Congress 
specifically recognized the tribal governments of the Passamaquoddy 
Tribe and the Penobscot Nation in MICSA. 25 U.S.C. 1721(a) (3) and (4), 
1722(h) and (k), and 1726. Therefore, MICSA itself establishes trust 
resources for which the federal government is responsible and 
identifies tribal governments with which agencies such as EPA should 
work on a government-to-government basis consistent with that trust 
responsibility. This analysis, for example, provides the basis for 
EPA's extensive consultations with the southern tribes concerning 
Maine's application. Meeting this general element of our trust 
responsibility to the Maine tribes in no way affects or preempts the 
state's jurisdiction under MICSA, and therefore, does not run afoul of 
any limits in the savings clauses. See Nance v. EPA, 645 F.2d 701, 710-
11 (9th Cir.), cert. denied 454 U.S. 1081 (1981).
    Finding that the federal government has a trust responsibility to 
the southern tribes under MICSA, however, does not compel the 
conclusion that EPA must withhold the NPDES program approval from Maine 
pursuant to that responsibility. Indeed, if EPA were to rely on the 
trust responsibility as a basis for denying Maine's application in the 
southern tribes' Indian Territories, the state may well be correct that 
MICSA's savings clauses would prohibit the application of the trust 
doctrine in such a manner. Under that interpretation, the trust would 
act as a federal law that ``affects or preempts'' the jurisdiction we 
believe Congress granted the state under MICSA, precisely the class of 
federal Indian law the savings clauses are designed to block. When 
deciphering the more specific content of the trust responsibility in 
Maine, EPA must apply the trust consistent with applicable federal law, 
which includes MICSA and its grant to the state of authority in the 
southern tribes' Indian Territories. See Shoshone-Bannock Tribes v. 
Reno, 56 F.3d 1482 (D.C. Cir. 1995); State of California v. Watt, 668 
F.3d 1290, 1324 (D.C. Cir. 1981).
c. The Trust, MICSA, and CWA
    Thus, EPA is left to reconcile how to protect the southern tribes' 
natural resources consistent with the jurisdictional relationship which 
Congress established in MICSA among the southern tribes, the state, and 
the federal government. Those natural resources include water and water 
rights, and this decision involves the NPDES program under the CWA. 
Therefore, EPA will focus on the interplay between MICSA and the CWA to 
sort through how the trust applies to those resources.
    Although EPA does not agree with DOI's ultimate conclusion about 
the state's jurisdiction under MICSA, DOI's opinion and the parallel 
comments from the Maine tribes make an important contribution to our 
analysis. As DOI points out, MICSA's legislative record is abundantly 
clear that Congress was not terminating the southern tribes or 
completely abrogating their sovereignty. Indeed, both committee reports 
devote entire identical chapters to a discussion of how MICSA is 
designed to preserve the tribes' culture and to avoid their 
assimilation into the general population. S. Rep. at 14-17; H.R. Rep. 
at 14-17.
    It is also clear from the terms of MICSA and MIA that the southern 
tribes' riverine cultures and the natural resources on which they rely 
are part of the cultural heritage Congress intended to preserve. S. 
Rep. at 11. MIA specifically reserves the southern tribes' right to 
take fish within their reservations for their individual sustenance, 
consistent with that cultural practice. 30 M.R.S.A. section 6207(4). 
MIA generally leaves it to the southern tribes to regulate their own 
fishing practices, and establishes a carefully balanced regulatory 
framework for joint state and tribal regulation of fish and wildlife on 
the southern tribes' Indian Territories and in certain waters where 
there are off-reservation impacts. 30 M.R.S.A. sections 6207(3) and 
(6), and 6212. Moreover, as to ponds under ten acres in surface area 
and entirely within their Indian Territories, the southern tribes have 
exclusive jurisdiction to regulate fishing. 30 M.R.S.A. section 
6207(1).
    Therefore, EPA concludes that both MICSA and MIA reserve to the 
southern tribes uses of natural resources consistent with the 
preservation of their culture. In the context of surface water quality 
regulation, it is especially notable that the statutes specifically 
protect the tribes' fishing practices. Some commenters, including the 
state, have suggested that the tribes' right to take fish is 
essentially unrelated to the water quality on which that fishing 
resource depends. Ad. Rec. 5a-75, ex. B at 1-6. This argument maintains 
that the tribes are freed from creel or bag limits when exercising 
their statutory right, but that right has no implications for the 
regulation of the natural resources, including the water, which 
determine the quality of whatever fish an Indian might catch. EPA 
cannot accept this suggestion for obvious reasons; the right to take 
fish must mean more than ``the right to dip one's net into the water * 
* * and bring it out empty.'' United States v. Washington-Phase II, 506 
F.Supp. 187, 203 (W.D. Wa. 1980), aff'd in part and rev'd in part on 
other grounds 759 F.2d 1353 (9th Cir. 1985), cert. denied 474 U.S. 994 
(1985). Correspondingly, the right to take fish for individual 
sustenance must mean more than the right to reel in fish that expose 
the tribe to unreasonable health risks. MICSA and MIA make this fishing 
right a matter of federal law that must be addressed by any authority, 
be it EPA or the state, charged with regulating the natural resources 
on which that right depends. United States v. Adair, 723 F.2d 1394, 
1408-11 (9th Cir. 1983), cert. denied 467 U.S. 1252.
    The question that remains is what tools are left to EPA under MICSA 
and the CWA to protect that right? The CWA reserves substantial 
authority to EPA in states authorized to administer the NPDES program 
so that the Agency can oversee the state program and ensure its 
consistency with the CWA. The most obvious authority EPA retains is the 
ability to object to proposed state NPDES permits that EPA determines 
violate the CWA. Following an EPA objection, the state must either 
address EPA's concerns or EPA ultimately takes over issuance of the 
permit. 33 U.S.C. 1342(d)(2). Where states have authority to promulgate 
water quality standards, EPA is also charged with reviewing those 
standards and can object to any standards that do not meet the 
requirements of the CWA. Again, if the state does not address EPA's 
objection, EPA ultimately has authority to take over promulgation of 
such standards. 33 U.S.C. 1313(c)(3). These oversight mechanisms attach 
to any state program implementing the CWA. They are not unique to 
programs in Indian country, and EPA's exercise of these oversight 
mechanisms in no way affects or preempts the jurisdiction or authority 
Maine has under MICSA and the CWA. No state can claim to have 
jurisdiction under the CWA to issue NPDES permits

[[Page 65068]]

that are inconsistent with the CWA or that are free from potential EPA 
oversight.
    Therefore, EPA concludes that MICSA and the CWA combine to charge 
EPA with the responsibility to ensure that permits issued by Maine 
address the southern tribes' uses of waters within the state, 
consistent with the requirements of the CWA. Fortunately, the state has 
recently taken actions that suggest Maine is beginning to consider the 
southern tribes' use of waters in the state and its bearing on how the 
state should regulate water quality. For example, the state Board of 
Environmental Protection has recently approved a recommendation for the 
Maine legislature to reclassify key segments of the Penobscot River and 
include language specifically requiring that the waters be 
``sufficiently free from pollutants so as to protect human health 
related to subsistence fishing.''\17\ Although the Legislature has not 
made any final decisions on this issue, the proposal is consistent with 
MICSA's purpose to preserve tribal uses and is an important 
acknowledgment of those uses and their bearing on state water quality 
regulation.
---------------------------------------------------------------------------

    \17\ Letter from R Wardwell, Chair, Maine Board of Environmental 
Protection to the Co-Chairs of the Maine Legislature's Joint 
Standing Committee on Natural Resources re: Reclassification of 
Waters of the State (December 6, 2002) forwarding ``An Act to 
Reclassify Certain Waters of the State,'' sections 13 and 29.
---------------------------------------------------------------------------

    But in the event Maine's approach to the tribes' uses shifts, EPA 
is in a position, consistent with MICSA, CWA, and our trust 
responsibility, to require the state to address the tribes' uses 
consistent with the requirements of the CWA. As with any state 
implementing the CWA for EPA, the state's authority to do so remains 
contingent on the state program meeting all the Act's requirements. EPA 
cannot now predict with any particularity how the CWA's requirements 
will govern particular permitting or implementation issues as they 
arise under the MEPDES program. Those issues will be ripe for decision 
when they are presented in the future, with a completely developed 
factual and administrative record to consider.
    This approach to EPA's oversight role does not mean that the tribes 
will necessarily be completely satisfied with the conclusions EPA 
reaches about how the CWA applies to particular tribal uses. But it is 
the Agency's hope and expectation that in consultation with the 
southern tribes, and working collaboratively with them and the state, 
the parties over time can sort through the critical question of how 
best to protect these waters consistent with the CWA and the tribes' 
right to use them under MICSA and MIA. In every meeting EPA had with 
the southern tribes or the state, all parties agreed that protecting 
these great rivers is the common goal we all share. EPA commits to both 
the southern tribes and the state that it will do what it can to 
promote that goal.

4. Remainder of Maine's Application to Administer Its MEPDES Program in 
the Trust Lands of the Micmac and Maliseet

    EPA is not acting today on Maine's MEPDES program application as it 
applies to the trust lands of the Houlton Band of Maliseet Indians and 
the Aroostook Band of Micmacs. Therefore, EPA still retains the NPDES 
permitting program for these areas. As discussed in our prior action on 
Maine's application, our authority to issue or modify NPDES permits for 
discharges into waters in the northern tribes' trust lands remains 
suspended pursuant to CWA section 402(c)(1). See 66 FR at 12793. This 
suspension will remain in effect until the Agency takes final action in 
these areas or the state agrees to extend the Agency's deadline for 
action. Unlike the boundaries for the southern tribes' Indian 
Territories, there is no dispute of which EPA is aware concerning the 
exact boundaries of the northern tribes' trust lands. These lands were 
all acquired pursuant to either MICSA for the Maliseet or the Aroostook 
Band of Micmac Settlement Act for the Micmac. 25 U.S.C. 1724(d)(4); 
Public Law 102-171, 105 Stat. 1143, 25 U.S.C. 1721 note, section 5. 
Therefore, the boundaries of these trust lands are clearly delineated 
in recent conveyances noting the meets and bounds and recorded with the 
Bureau of Indian Affairs and in the appropriate registries of deeds. 
There are currently no sources holding NPDES permits for outfalls 
discharging into the northern tribes' trust lands, nor is EPA aware of 
any proposed facilities requiring such a permit in the near future.

D. Other Federal Statutes

National Historic Preservation Act

    Section 106 of the National Historic Preservation Act (NHPA), 16 
U.S.C. 470(f), requires Federal agencies to take into account the 
effects of their undertakings on historic properties and to provide the 
Advisory Council on Historic Preservation (ACHP) an opportunity to 
comment on such undertakings. Under the ACHP's regulations (36 CFR part 
800), an agency must consult with the appropriate State Historic 
Preservation Officer (SHPO) and/or Tribal Historic Preservation Officer 
(THPO) (or Tribe if there is no THPO) on federal undertakings that have 
the potential to affect historic properties listed or eligible for 
listing in the National Register of Historic Places. On January 12, 
2001, EPA approved Maine to administer the NPDES program in areas of 
the state where the Maine tribes did not dispute state jurisdiction. 
Prior to that approval, EPA engaged in discussions with the Maine SHPO 
and sought public comment regarding EPA's determination that approval 
of the state permitting program would have no effect on historic 
properties. EPA also held discussions with Indian tribes in Maine 
regarding approval of the state's NPDES program and historic properties 
of interest to the tribes.
    On July 7, 1999, EPA sought the Maine SHPO's concurrence with its 
determination that the Agency's approval of Maine's application would 
have no effect on historic properties in Maine. The Maine SHPO provided 
EPA with a determination that there would be ``No Historic Properties 
Affected'' or ``No Adverse Effect'' to historic properties in Maine 
from EPA's approval, on the condition that DEP provides relevant notice 
and information regarding draft permits to the SHPO and coordinates 
with the SHPO. On November 26, 2000, the SHPO and DEP entered into a 
Memorandum of Understanding (MOU) assuring the SHPO that it would 
receive the requested notices. This MOU further provides for 
coordination between DEP and the SHPO to resolve any identified issues 
to ensure that MEPDES permits will comply with Maine water quality 
standards and Maine laws protecting historic properties. For those 
permits with the potential to adversely affect historic properties, DEP 
and the SHPO agreed to seek ways to avoid, minimize, or mitigate any 
adverse effects to historic properties stemming from the proposed 
permit.
    During EPA's review of Maine's NPDES application with respect to 
Indian Territories of the southern tribes, EPA engaged in additional 
discussions with the southern tribes concerning EPA's view that this 
approval will have no effect on historic properties of interest to the 
tribes. During those discussions, and as set forth in a draft 
Memorandum of Agreement Regarding Tribal Historic Properties in Maine 
(MOA), EPA committed to use its CWA authorities to help ensure that 
these tribes will have an opportunity to participate in the 
consideration of historic properties during administration of the NPDES 
program by Maine. Subsequent to EPA's prior

[[Page 65069]]

approval on January 12, 2001 of Maine's program outside the disputed 
areas, DEP has consistently provided to the tribes copies of proposed 
permits that may be of interest to them; if needed, EPA will exercise 
appropriate oversight authority to help ensure that DEP continues this 
practice. Where a tribe raises concerns to EPA regarding the potential 
effects of a proposed permit on historic properties, EPA will follow 
the procedures described in the draft MOA, or any subsequently 
negotiated MOA that is acceptable to both EPA and the tribes, to 
consider potential effects. A copy of this draft MOA is included in the 
record. As described in the draft MOA, EPA will exercise its CWA 
authorities to object to proposed permits, or take other appropriate 
action, in order to address tribal concerns regarding effects on 
historic properties where EPA finds (taking into account all available 
information, including any analysis conducted by the tribe) that a 
proposed permit is inconsistent with the CWA, including water quality 
standards designed to protect tribal uses. Where EPA objects to a 
permit, the Agency will follow the permit objection procedures outlined 
in 40 CFR 123.44 and will coordinate with the appropriate tribe in 
seeking to have DEP revise the permit. DEP cannot issue a final MEPDES 
permit over an outstanding EPA objection. If EPA assumes permit issuing 
authority for a specific permit, it will further consult with the tribe 
prior to issuing any permit.
    EPA has determined that the approval of Maine's application will 
have no effect on historic properties in Maine. EPA believes that the 
agreement between DEP and the SHPO as well as the Agency's commitment 
to follow the procedures in the draft MOA are consistent with and 
support EPA's determination. In accordance with the ACHP's regulations 
at 36 CFR 800.5, EPA proposed a No Adverse Effect finding to the 
southern tribes on July 25, 2003. In a September 3, 2003 letter to EPA, 
the Penobscot Nation disagreed with EPA's proposed finding. As a result 
of this disagreement, EPA met with the ACHP to discuss the No Adverse 
Effect finding, and, on October 8, 2003, transmitted this finding to 
the ACHP. EPA's October 8, 2003 submission to the ACHP included 
documents relied upon by the Agency in making its No Adverse Effect 
finding and responded to the comments made by the Penobscot Nation in 
its September 3, 2003 letter to EPA. A copy of the October 8, 2003 
submission to the ACHP is included in the record. Pursuant to the 
ACHP's regulations, the ACHP had 15 days from receipt of EPA's finding 
to review and comment upon the Agency's finding. On October 24, 2003, 
the ACHP provided comments to EPA. The ACHP's comments express certain 
disagreements with EPA's approach to analyzing the effects of this 
action and note that, in addition to considering the effects of the 
administrative act of approval and transfer of the NPDES program to 
DEP, EPA should also consider the potential effects flowing from 
implementation of the approved program itself. The ACHP notes its view 
that EPA should negotiate a programmatic agreement under the ACHP 
regulations as an appropriate resolution. A copy of the ACHP's October 
24, 2003 comment letter is included in the record.
    EPA has carefully considered the ACHP's comments in reaching its 
decision to approve the state's application as described in this 
notice. Notwithstanding any difference in EPA's and the ACHP's views 
regarding the effect of this approval on historic properties, EPA notes 
that the Agency has, in consultation with the tribes, considered any 
potential that the administration of the program by DEP might have 
impacts on such properties. As detailed above, EPA has proposed, and is 
committed to following, the procedures of the draft MOA which include 
commitments by EPA to utilize the full extent of its CWA oversight 
authorities to help ensure appropriate consideration of historic 
properties, including tribal views, during implementation of the 
program by DEP. EPA does not believe that resolution of this matter 
calls for execution of a programmatic agreement. Programmatic 
agreements are not required under the ACHP's regulations but may be 
used in certain circumstances described therein. In this case, EPA 
believes that the procedures and commitments of the draft MOA provide 
the best means of addressing any concerns regarding the consideration 
of historic properties during implementation of the program by DEP 
within the confines of EPA's CWA authority and that a programmatic 
agreement, which would not provide EPA with any additional oversight 
authority to act with respect to any particular state permit beyond 
what is already described in the draft MOA, is unnecessary. In 
addition, EPA notes that pursuant to the decision of the D.C. Circuit 
in National Mining Association v. Fowler, 324 F.3d 752 (D.C. Cir. 
2003), individual permitting actions by DEP under the approved program 
would not trigger NHPA section 106 responsibilities. Having considered 
the potential impacts of this action on historic properties, consulted 
with the tribes, provided the ACHP an opportunity to comment and 
considered those comments, EPA has fulfilled its obligations under the 
NHPA and the ACHP regulations.
    Today's program approval does not include Maine's application as it 
relates to facilities discharging into the lands of the northern 
tribes. EPA will address the NHPA in the context of making a final 
decision on Maine's application as it relates to facilities discharging 
into the lands of the northern tribes.

Regulatory Flexibility Act

    Based on General Counsel Opinion 78-7 (April 18, 1978), EPA has 
long considered a determination to approve or deny a state NPDES 
program submission to constitute an adjudication because an 
``approval,'' within the meaning of the APA, constitutes a ``license,'' 
which, in turn, is the product of an ``adjudication.'' For this reason, 
the statutes and Executive Orders that apply to rulemaking action are 
not applicable here. Among these are provisions of the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601 et seq. Under the RFA, whenever a 
federal agency proposes or promulgates a rule under section 553 of the 
Administrative Procedure Act (APA), after being required by that 
section or any other law to publish a general notice of proposed 
rulemaking, the Agency must prepare a regulatory flexibility analysis 
for the rule, unless the Agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
If the Agency does not certify the rule, the regulatory flexibility 
analysis must describe and assess the impact of a rule on small 
entities affected by the rule.
    Even if the NPDES program approval were a rule subject to the RFA, 
the Agency would certify that approval of the state's proposed MEPDES 
program would not have a significant economic impact on a substantial 
number of small entities. EPA's action to approve an NPDES program 
merely recognizes that the necessary elements of an NPDES program have 
already been enacted as a matter of state law; it would, therefore, 
impose no additional obligations upon those subject to the state's 
program. Accordingly, the Regional Administrator would certify that 
this program, even if a rule, would not have a significant economic 
impact on a substantial number of small entities.

[[Page 65070]]

E. Notice of Decision

    EPA hereby provides public notice that the Agency has taken final 
action authorizing Maine to administer the MEPDES program in the 
territories of the Penobscot Nation and Passamaquoddy Tribe, with the 
exception of facilities with discharges that qualify as internal tribal 
matters, and review of the issues related to this action is available 
as provided in CWA section 509(b)(1)(D). EPA has not taken final action 
Maine's application with respect to the issues related to the state's 
jurisdiction and the applicability of state law in the lands of the 
Houlton Band of Maliseet Indians and the Aroostook Band of Micmacs, and 
review of those issues is not available until EPA takes final action on 
Maine's program as it applies in those areas.

    Authority: This action is taken under the authority of section 
402 of the Clean Water Act as amended, 42 U.S.C. 1342.

    Dated: October 31, 2003.
Robert W. Varney,
Regional Administrator, Region I.
[FR Doc. 03-28653 Filed 11-17-03; 8:45 am]
BILLING CODE 6560-50-P