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Natural Resources Defense Council v. EPA

Citation: 19 ELR 20016
No. Nos. 80-1607 et al., 859 F.2d 156/28 ERC 1401/(D.C. Cir., 09/20/1988, 11/01/2088) Remaining issues decided

The court rules on the remaining issues in the consolidated challenges to the Environmental Protection Agency's (EPA's) national pollutant discharge elimination system (NPDES) permit program regulations under the Federal Water Pollution Control Act (FWPCA). The court first addresses challenges to EPA's regulations concerning the interaction of the FWPCA and the National Environmental Policy Act (NEPA). The court holds that industry's challenge to EPA's imposition, pursuant to NEPA, of permit conditions unrelated to water quality is ripe for review. However, any challenge to when EPA may impose such conditions is unripe. The court holds that EPA's imposition of non-water quality permit conditions is not authorized under the FWPCA or NEPA. Although NEPA authorizes EPA to make decisions based on factors not expressly identified in the underlying statute, NEPA does not expand an agency's substantive powers. Having considered under NEPA all environmental effects of the discharge of pollutants by potential permittees, EPA can only take those actions authorized by the FWPCA — allowing, prohibiting, or conditioning the discharge. The FWPCA does not authorize EPA to regulate point sources themselves, and EPA cannot turn its NEPA responsibilities into a mandate to regulate the facilities. FWPCA § 306(b)(1)(B) instructs EPA to consider non-water quality impacts in connection with the establishment of national new source standards, not in the issuance of individual permits. The court holds that challenges to EPA's regulation renouncing any authority under NEPA to impose effluent-related permit conditions are not ripe. The impact of EPA's position depends entirely on its interpretation of the FWPCA, which requires EPA to supplement its technology-based effluent limitations with more stringent water quality limits, and EPA has stated that it will consider NEPA-generated information when deciding whether to impose these more stringent limits. The court also holds unripe a challenge to the general framework established by the regulations for excluding evidence that was or could have been considered in a previous permit hearing under specific statutes.

The court next addresses challenges to the rules for transfer of authority over the NPDES permitting program to the states and supervision of the state programs. The court holds that a challenge to the state program requirements for public participation and penalties is ripe. The court holds that the regulations specifying the minimum level of public participation that states must provide are within EPA's discretion under the FWPCA. There is no indication in the Act or its legislative history that citizen suits must be provided at the state level. Further, the regulations provide meaningful opportunity for public participation. EPA has interpreted the first public participation option, intervention as of right, as requiring state intervention rights similar to federal rights. Further, EPA has stated that the second option, to the extent that it is based on a state's agreement not to oppose permissive intervention, will not be available in states that do not provide some means of intervention. Otherwise, the public would be left with only the state's agreement to respond to citizen complaints and the right to comment on proposed settlements. The court holds that the regulations establishing minimum civil and criminal penalties are valid even though they do not compel the states to provide authority to impose the maximum penalties assessable under the federal program. FWPCA § 309(d)(2), which grants EPA discretion in establishing minimum state civil penalties, confirms EPA's broad authority in crafting state program requirements. The FWPCA's failure to specifically address state criminal penalties cannot be interpreted as a mandate for the adoption of maximum federal criminal penalties, since criminal penalties are traditionally under state control. The court holds that challenges to the regulations defining EPA's veto authority over state permits are ripe for review. The court upholds the provision authorizing an EPA veto if, in the absence of formally promulgated effluent limitations, the proposed state permit fails to comply with the Act or its regulations. Although the statute and legislative history envision that states will play a primary role in the administration of the Act they do not expressly limit the scope of EPA's veto authority. EPA's interpretation is in keeping with the FWPCA's structure, strikes a reasonable balance between federal and state interests, and retains a check on state permitting authority that the national effluent limitations guidelines were meant to serve. This interpretation, that Congress would have intended EPA to review state permits in the absence of formally promulgated effluent guidelines, is supported by FWPCA § 402(a), which allows EPA to approve permits in the absence of federal guidelines based on its best professional judgment. The court also upholds the provision authorizing an EPA veto if the state permit's recordkeeping, reporting, and monitoring requirements are inadequate to assure compliance with the Act or regulations. The court holds that EPA did not violate the Administrative Procedure Act (APA) by failing to respond to objections raised by industry during the comment period on the proposed rules, since any agency response would have been a restatement of what it already stated in the preamble to the proposed rules.

The court holds that a challenge to EPA's statutory authority to frame effluent limits in terms of toxicity to marine life is ripe for review. The court holds that EPA has such authority. The fact that toxicity is not a pollutant does not preclude EPA from using it as a measure to regulate effluents that are pollutants. The court holds unripe industry claims concerning the technical feasibility of using toxicity as a technologically-based limitation and the alleged intrusion on state authority by a federal permit writer's use of toxicity to set water quality-based limitations to meet narrative state water quality standards. The court holds ripe industry claims that EPA should have subjected its 1984 policy statement on the development of water quality-based permit limitations for toxic pollutants and its technical support document to notice and comment under the APA and that EPA violated the APA by failing to adequately respond to industry attacks on the regulation. The court holds that EPA did not violate the APA, since the two documents were not rules under the APA. The court holds unripe challenges concerning a permit writer's reliance on these technical documents.

The court holds that the non-adversary panel procedures permitted by the regulations do not, on their face, infringe permit applicants' procedural rights. The court holds ripe a challenge to the regulations' denial of an absolute right to present oral testimony at hearings on initial permit grants and variances. The court holds, however, that neither the APA nor the FWPCA require EPA to grant applicants such an absolute right. Similarly, the regulations' provisions allowing cross-examination of witnesses at the presiding officer's discretion do not violate the APA. The court holds that the provisions authorizing non-EPA employees to sit on the panel do not violate the APA, since the deciding officer will be an EPA administrative law judge unless all parties consent otherwise and the participation of non-EPA employees will not inevitably taint hearings with extra-record evidence. The court holds that EPA's promulgation of a final rule giving the Regional Administrators discretion to use the non-adversary panel procedures did not violate a 1982 settlement agreement in which EPA agreed to propose regulations under which the consent of all parties would be required to use these procedures. EPA's elimination of the consent requirement in the final rule is not evidence of bad faith and EPA adequately explained its final decision.

The court holds unripe a challenge to EPA's authority to prohibit permittees from backsliding when EPA withdraws a new source performance standard (NSPS), since EPA asserts that it will never withdraw an NSPS. The court holds ripe two industry challenges to the regulations' prohibition on anti-backsliding from best professional judgment (BPJ) permit limits after effluent guidelines have been issued. The court holds that these regulations were authorized under the pre-1987 FWPCA. Although the language and legislative history of the FWPCA are not clear, EPA's interpretation is reasonable. Nothing in FWPCA § 402(a)(1), which authorizes EPA to establish BPJ limitations in the absence of national effluent limitations guidelines, limits the duration of BPJ permits. Further, EPA considers the same statutory factors used to establish national effluent guidelines in establishing BPJ limits and EPA's interpretation results in the discharge of fewer pollutants. EPA's policy of applying BPJ limits when less stringent effluent guidelines are issued while replacing BPJ limits when more stringent guidelines are issued is reasonable in light of the FWPCA's goal of eliminating discharges. The court holds that EPA's decision to retain the BPJ anti-backsliding rule after having proposed its elimination was fully supported by the record. The court holds unripe an industry claim that the new anti-backsliding rules under the 1987 FWPCA amendments must be applied only prospectively, since EPA has yet to adopt regulations under the amendments.

The court holds unripe a challenge to EPA's decision to define permit limits in gross terms and giving credit for pollutants in intake water only in certain limited circumstances.

The court holds that an industry challenge to EPA's failure to extend the upset defense to noncompliance with water quality-based limits is ripe for review. The regulations provide an affirmative defense to an action for noncompliance with technology-based permit limitations where the source shows that the noncompliance was due to an "upset," which EPA defines as a temporary and unintentional noncompliance because of factors beyond the reasonable control of the permittee. The court holds that the FWPCA does not require EPA to provide for an upset defense to water quality-based permit limitations violations. EPA's interpretation is supported by legislative history indicating that Congress did not intend to tie compliance with water quality-based limitations to the capabilities of any given level of technology. The court holds, however, that EPA arbitrarily eliminated the upset defense from its final regulations solely on the ground that it would be virtually impossible for dischargers to establish.

The court holds ripe challenges to the regulations providing for continuances of out-of-date permits pending EPA renewal. The court holds that the regulations are consistent with the scheme of the FWPCA and with the APA.

[Previous decisions in this litigation are published at 11 ELR 20011, 12 ELR 20302, and 17 ELR 21043.]

Counsel for Petitioner-Intervenor
Ronald J. Wilson
Wilson & Cotter
1531 P St. NW, Washington DC 20036
(202) 232-3601

Theodore L. Garrett
Covington & Burling
1201 Pennsylvania Ave. NW, Washington DC 20006
(202) 662-6000

Counsel for Respondents
Margaret N. Strand, Stephen L. Samuels, Larry Liebesman
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2000

Pamela Savage
U.S. Environmental Protection Agency
401 M St. SW, Washington DC 20460
(202) 382-2090

Before: ROBINSON, STARR and WILLIAMS,* Circuit Judges.