In the case of Crown Simpson Pulp Co. et al. v. Costle, Administrator, Environmental Protection Agency (1979), the Supreme Court ruled that a decision by the EPA to veto a state-issued permit under Section 402(d) of the Federal Water Pollution Control Act Amendments was functionally equivalent to issuing an order denying a permit and therefore subject to judicial review. The dispute arose when Crown Simpson Pulp Company sought permits from California's State Water Resources Control Board for discharging waste into navigable waters from five logging operations in Humboldt County, which were approved but later vetoed by EPA due to concerns about potential harm on aquatic life in nearby rivers and bays. The company argued that this action was arbitrary and capricious while EPA contended it wasn't final agency action hence not reviewable by courts until they issued or denied their own permit after further proceedings.

In the dissenting opinion for Crown Simpson Pulp Co. v. Costle, Justice Rehnquist disagreed with the majority's decision that a denial of a permit by state authorities could be considered an "effective veto" and therefore subject to review by federal courts under section 509(b)(1) of the Federal Water Pollution Control Act Amendments (FWPCA). He argued that this interpretation was inconsistent with both the language and intent of Congress when it enacted FWPCA. According to him, only actions taken directly by Environmental Protection Agency (EPA) should be subjected to judicial review under section 509(b)(1), not those made indirectly through state agencies acting on EPA’s behalf or guidance. He also expressed concern about potential overreach in federal jurisdiction if every action taken at state level related to environmental regulation were open for federal court scrutiny.