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Chemical Mfrs. Ass'n v. EPA

Citation: 19 ELR 20989
No. Nos. 87-4849 et al., 870 F.2d 177/29 ERC 1273/(5th Cir., 03/30/1989)

The court generally upholds the Environmental Protection Agency's (EPA's) effluent limitations under the Federal Water Pollution Control Act (FWPCA) for the organic chemicals, plastics, and synthetic fibers (OCPSF) industries against challenges by industry and an environmental group. Turning first to two procedural matters, the court holds that EPA did not violate the notice and comment requirements of the Administrative Procedure Act (APA) by relying on an updated data base that was never released for public comment to supplement its economic impact study. EPA's use of the updated data base was a logical development based on industry criticism of the original data base. Further, industry petitioners failed to show that they were prejudiced by EPA's use of the new data. The court also holds that EPA did not violate the APA's notice and comment requirements by failing to provide for public comment for two appendices to the regulations that establish limits for the discharge of toxic metals. Prior EPA notices informed the industry that EPA was considering establishing limitations for toxic metals, and the changes in the final rule responded to industry comments.

The court next addresses the best practicable technology (BPT) issues. The court holds that the FWPCA does not require EPA to apply a "knee-of-the-curve" cost-effectiveness test, under which expenditures are not required past the point at which costs escalate rapidly in relation to benefits, in establishing BPT limitations. The relevant inquiry for BPT is whether the costs are wholly disproportionate to the benefits. EPA satisfied the FWPCA by considering the total costs of the BPT limitations in relation to the pounds of pollutants removed. The Act does not require EPA to compare the rate at which the cost per pound increases to the percent of pollutant removed. The court holds that the cost-effectiveness test in the best conventional technology (BCT) rules does not govern the BPT rules. EPA's authority to issue BPT regulations is not limited by the fact that NPDES permits were issued prior to promulgation of industry-wide BPT regulations. EPA reasonably concluded that Congress intended the more stringent BCT requirements to supplement rather than displace BPT. The court holds that EPA's conclusion that the costs of the BPT limitations were justified was not arbitrary or capricious, even though they will almost double industry's costs for the removal of conventional pollutants. The court holds that EPA did not select an unreasonably broad group of best performers from which to calculate the BPT limits, which are based on the average of the best performers in the industry. The FWPCA allows EPA to select a group of best performers from an industry category, but does not require EPA to average the best performers that use a particular technology within an industry. The court holds that EPA's rejection of polishing ponds and multimedia filtration as the BPT model technology was not arbitrary and capricious. EPA reasonably concluded that polishing ponds are not a sufficiently effective technology on which to base BPT limits, given the high cost of acquiring the large amounts of land needed for this process. EPA also reasonably determined that the effectiveness of multimedia filtration has not been demonstrated. The court holds that EPA's decision not to create a special subcategory of the OCPSF industry for plants using biological treatment systems in colder climates is supported by the record. EPA's large and diverse data base representing plants from all climates ensures that BPT limitations can generally be achieved regardless of climate. Further, technological modifications are available to the limited number of plants for which cold weather may affect treatment performance. The court holds that EPA's partial reliance on standard industrial classification (SIC) codes in determining BPT subcategories was reasonable. SIC codes tend to be organized around the products produced by various industry segments. EPA reasonably assumed that plants producing similar products have similar wastestreams. The court holds that EPA gave adequate public notice of its intent to limit the applicability of the regulations to certain SIC codes. Addressing the use of waste stabilization ponds for treatment of wastewater, the court holds that EPA's determination that pond algae are conventional pollutants subject to BPT limitations for biological oxygen-demanding substances (BODS) and total suspended solids (TSS) was rational. The FWPCA includes BODS and TSS in the definition of conventional pollutants, and EPA reasonably concluded that algae can present significant water quality problems. The court holds that EPA's decision not to create a subcategory for plants using waste stabilization ponds was reasonable. EPA need not create separate subcategories for industry members that install less effective technology that the biological treatment system most commonly used by good performers in the industry. The court holds that EPA adequately considered compliance costs that will be incurred by plants using pond technology. The court holds that EPA's proposal in the final rule that copper sulfate could be used to control algae at plants using pond technology did not require further notice and comment under the APA because it was a logical outgrowth of the industrial petitioners' comments. The court holds that the cost of the BPT limitations is not wholly disproportionate to the limitations' benefits. The court next considers several plant-specific challenges to the BPT limitations and the availability of fundamentally different factor (FDF) variances, which allowadjustment of the general BPT limitations for plants with individual characteristics that prevent them from complying with the limits for their industrial category. The court notes that Congress codified the FDF variance procedure in the FWPCA to ensure that the categorical BPT limitations would not be overturned on the grounds that EPA failed to consider unique plants. The court holds that EPA reasonably concluded that the BPT limitations were achievable at several individual plants. The FWPCA does not require EPA to consider allegedly fundamentally different factors of individual plants in issuing BPT limitations for an industry. These factors must be considered in a collateral FDF variance proceeding. The court lacks jurisdiction under FWPCA § 509(b)(1) to review petitioners' claim that EPA has failed to consider their FDF variance applications in a timely manner.

The court addresses the best available technology (BAT) issues. The court holds that EPA did not abuse its discretion by using weighted averaging to determine long-term averages. EPA is entitled to considerable discretion in selecting its statistical methods. The court holds that EPA also did not abuse its discretion by averaging the variability factors from different plants in deriving effluent limits. The court holds that EPA reasonably excluded extremely high discharges from its calculation of variability factors, and the upset defense in EPA's regulations is a sufficient remedy for unavoidable exceedances. The court next discusses challenges to EPA's analytical methodology in arriving at BAT limits. The court holds that industry petitioners have failed to show that EPA did not adequately account for analytical variability in its derivation of the BAT limitations. The court defers to EPA's determination that the presence of multiple pollutants in many plants' wastestreams does not preclude accurate measurements. The court holds that EPA reasonably borrowed data for similar pollutants or for all pollutants subject to BAT when calculating variability factors for pollutants for which data was insufficient. The court holds that EPA accounted for any error in determining minimum analytical values with conservative methodology that ensured that the limitations are achievable. The court holds that industry petitioners were not prejudiced by EPA's changes in the analytical methods, since the regulations allow industry members to choose between the old and new methods. The court holds that industry petitioners' claim that EPA should consider a non-detect reading as zero for enforcement purposes is not ripe for review. The court holds that EPA based the effluent limits on accurate sampling. The court next discusses challenges to EPA's toxic limitations. The court holds that EPA did not abuse its discretion by requiring all OCPSF dischargers to monitor their discharges for all toxics, since EPA reasonably concluded that OCPSF plants engage in such diverse production processes that they cannot guarantee against the existence of toxics in their wastestreams. The court holds that EPA provided adequate public notice of its intent to subject all dischargers to the limitations for all toxics. The court holds that EPA's toxic pollutant limitations do not violate the terms of a consent decree that provides that EPA "may" exclude pollutants found in trace amounts from regulation. The court holds that EPA violated the APA's notice and comment requirements by failing to publish for public comment its decision to divide the BAT limitations into two subcategories prior to issuance of the final rule. The court holds that a company's assertion that one of its plants will not be able to comply with the BAT limitations because of the plant's uniquely complex wastestreams is not a basis for invalidating the limitations. The company can raise this issue in an FDF variance proceeding. The court holds that the BAT limitations for phenol are achievable for plants with wastestreams containing high concentrations of phenol. The court holds that an industry petitioner has failed to show that EPA's cost estimates for the phenol limitations were not a reasonable approximation. It is irrelevant that one plant's compliance costs may be greater than EPA's projected costs; EPA is required to determine costs only for a category of plants. The court then discusses the category two BAT limitations for volatile pollutants based on stream-stripper model technology. The court holds that industry petitioners have failed to show that these BAT limitations are not achievable. Given EPA's interpretation that it can determine the best plant on a pollutant-by-pollutant basis, an exceedance by one of the data-base plants is irrelevant if another data-base plant is able to meet the limitations. The court holds that EPA did not abuse its discretion by failing to establish subcategories of its limitations for volatile pollutants to reflect the different wastestream characteristics of different plants. EPA reasonably determined that properly designed steam-stripper technology would make the limitations achievable for all OCPSF plants. The court holds that EPA's decision to exclude the high discharge readings associated with routine steam-stripper maintenance was not arbitrary or capricious. The court holds that a company's claims that three of its plants cannot meet the limitations for volatile pollutants is irrelevant, since the limitations are achievable by other plants. The court next addresses the category two BAT limitations for priority pollutants based on in-plant biological treatment model technology. The court holds that industry petitioners have failed to show that these limitations are not achievable. EPA's reliance on end-of-the-pipe biological treatment in deriving the limitations was not arbitrary or capricious. The court holds that EPA's cost estimates for in-plant biological treatment are reasonable, and that EPA considered the land costs necessary for this treatment. The court holds that EPA's enforcement policy for noncompliance resulting from the Agency's delay in issuing effluent limitations provides an adequate time extension for industry members that will not have enough time to install technology to meet the limitations. The court holds that EPA is not required to consider an individual plant's lead time in installing BAT technology in determining whether technology is "available" under the FWPCA.

The court turns to issues concerning pretreatment standards for existing sources (PSES). The court holds that EPA properly selected the pollutants that "pass through" publicly owned treatment works (POTWs) and thus must be subject to pretreatment standards for indirect dischargers. EPA's BAT comparison approach to identifying these pollutants is reasonable. The court holds that EPA's methodology of defining "pass through" based on the average amount of toxics removed by a POTW, rather than actual reported removal, does not violate FWPCA § 307(b)(1). The court holds that EPA's determination that chromium, copper, and nickel do not pass through POTWs, even though they allegedly contaminate sludge that is not treated by wastewater technology, was not arbitrary or capricious, since sludge pollutants will be the subject of future regulations. The court holds that EPA's decision not to establish PSES for six volatile organic pollutants was not arbitrary or capricious. Three of the pollutants are sufficiently treated by in-plant controls for structurally similar compounds, and EPA did not have sufficient POTW removal data for the other pollutants. The court also upholds EPA's decision not to regulate certain volatile pollutants based on alleged danger to POTW worker safety. The court holds that EPA's decision not to exempt small indirect dischargers from PSES and not to establish a different standard for these dischargers was reasonable. Although the PSES will have a serious economic impact on small indirect dischargers, the record supports EPA's conclusion that this impact is not so disproportionate to the impact on the industry as a whole as to warrant a separate subcategory. The court holds that EPA's reliance on package biological treatment as a model technology did not render the pretreatment standards arbitrary. The court holds that EPA reasonably rejected an industry proposal to regulate only small plants producing large discharges. The court holds that EPA's data base to establish PSES for combined paint/resin plant was adequate. EPA's reliance on data from resin plants was reasonable, since EPA found that the wastestreams of resin plants and combined paint/resin plants were equally treatable. The court holds that EPA's determination that the PSES are economically achievable for paint/resin facilities was not arbitrary and capricious. EPA identified a cost-effective method of segregating the resin stream from these plants, thus making separate regulation of the resin stream possible. The court holds that EPA's regulation of combined paint/resin plants did not violate a consent decree that exempts paint manufacturers from regulation. The court holds that EPA's decision not to create a special subcategory for these facilities was reasonable, and the scope of the regulations is clear. The court holds that EPA was not required to create a subcategory based on individual POTW removal credits. The FWPCA prohibits the award of removal credits pending EPA's final promulgation of sludge regulations. The court thus declines to address the sufficiency of the data submitted by individual POTW users to support their claims for removal credits or subcategorization. The court holds that a POTW operator is bound by a consent decree that requires it to enforce the PSES.

The court holds that EPA's costing methods for issuing new source performance standards (NSPS) did not violate the FWPCA. The court holds, however, that EPA's failure to consider wastestream recycling as a model technology in promulgating NSPS was arbitrary. Recycling is a sufficiently "demonstrated" technology under FWPCA § 306, since 36 plants use recycling and some achieve zero discharge. The court holds that EPA's failure to consider the economic impact of the Montreal Protocol on Substances That Deplete the Ozone Layer in its analysis of the chlorofluorocarbon industry was not arbitrary or capricious, since the impact of the Protocol was entirely speculative at the time of the rulemaking. Turning finally to issues concerning the scope of the OCPSF regulations, the court holds that it lacks jurisdiction over a challenge to EPA's reservation of nonconventional pollutants and eight priority pollutants for future rulemaking, since suits to compel EPA to issue regulations are within the exclusive jurisdiction of the district court. The court holds that EPA reasonably concluded that the limitations apply to research as well as manufacturing discharges.

Counsel for Petitioners
Theodore L. Garrett, Corinne A. Goldstein, Jay L. Smith
Covington & Burling
1201 Pennsylvania Ave. NW, P.O. Box 7566, Washington DC 20044
(202) 662-6000

Counsel for Respondent
Beth S. Ginsberg, Ass't Attorney General; Margaret N. Stand, Chief, Environmental Defense Section
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2689

Dov Weitman, Francis S. Blake
Office of General Counsel
U.S. Environmental Protection Agency
401 M St. SW, Washington DC 20460
(202) 475-8040

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

Before RUBIN, GARZA and KING, Circuit Judges.