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Natural Resources Defense Council v. EPA

ELR Citation: 16 ELR 20693
Nos. Nos. 84-3530, 85-3012, 790 F.2d 289/24 ERC 1313/(3d Cir., 04/30/1986)

The court holds that the Environmental Protection Agency's (EPA's) regulations allowing indirect dischargers to receive "removal credits" for toxic pollutants removed by publicly owned treatment works (POTWs) fail to meet the statutory requirements of §307(b)(1) of the Federal Water Pollution Control Act (FWPCA) and are arbitrary and capricious. After establishing the appropriate standard of review and observing that an agency's interpretation of a statute is entitled to less deference where the agency has reversed an established practice, the court first holds that EPA's method of calculating waste removal by POTWs violates the requirement of §307(b)(1) that indirect dischargers be subject to the equivalent of the best achievable technology (BAT) standard to which direct dischargers are held. The removal credit regulation allows POTWs to grant removal credits to indirect dischargers so that the indirect discharger may increase its discharge of a pollutant by the amount that the POTW removes. Although §307(b)(1) requires that the credits be equal to the amount of toxics "consistently" removed by the POTW, EPA has, over the several permutations of the removal credit rule, changed the definition of consistent removal from removal that occurs 95 percent of the time in the first rule, to removal that occurs 75 percent of the time in the revised rule, and now to removal that occurs 50 percent of the time. Although EPA's current method will give a more reliable estimate of the actual removal achieved on average, it is conceded even by EPA that the variability in removal estimates for POTWs can be quite large; the result is that the POTW and indirect discharger are not consistently being held to the same monthly and daily limits as direct dischargers. Moreover, EPA admitted it had no evidence when it changed the consistency requirement from 95 percent to 75 percent for its contention that a POTW operating under the 75 percent requirement would only rarely exceed the BAT limits direct dischargers must meet; yet now, even with substantial evidence to the contrary, EPA contends that an average consistency removal requirement will not lead to violations.

The court nest holds that the agency's enactment of the regulations was arbitrary and capricious. Even when EPA reduced the consistency requirement from 95 to 75 percent, it had expressed doubt as to the ability of POTWs to maintain the required stability in removal; the available evidence now indicates that consistency will rarely be achieved with EPA's new rule. The agency has ignored Congress' intent that pollutants be eliminated from the nation's water, neglected the evidence in the record, and failed to give an adequate explanation for a radical change.

The court holds that EPA's decision to ignore sewer overflow events at POTWs in the latest version of the removal rule in calculating the amount of credit an indirect discharger can receive also violates §307(b)(1). The 1981 rule reduced the removal credit by the percentage of time during a year that overflows occurred. The court, which upheld the 1981 overflow provision, notes that it is inconsistent with a strict interpretation of the statute because it did not address the fact that sudden sewer overflows cause significant increases in pollutant discharges into navigable waters. EPA's deletion of the provision in the revised rule was based on the argument that the adjustment makes virtually no difference in the final removal credit. The court holds that EPA may not base removal credits on a purported average figure for the frequency of sewer events, since this ignores the great variability among POTWs in the number and duration of such events. The court also holds that EPA's decision violates the requirement of parity of treatment by indirect dischargers and POTWs on the one hand and direct dischargers on the other. The decision not only allows the former to discharge a greater total amount of pollutants, but also to discharge waste that is largely untreated. The court holds that EPA's decision was also arbitrary and capricious. The agency has not provided any plausible reason for the deletion, nor has it provided any data beyond what it had available when it promulgated the earlier rule.

The court holds that EPA's revised test for determining when a removal credit has to be modified or withdrawn violates the FWPCA. Under the rule, EPA will withdraw a credit before the expiration of a POTW's five-year permit only if the POTW's removal rate drops "consistently and substantially" below the rate claimed in its permit application. This relaxes both the amount and the consistency of removal required by POTWs and indirect dischargers. Even removal that is grossly inconsistent or substantially below the required amount will not be cause for withdrawal of a credit; both of these violations are now required. Moreover, since the discharger may have up to three years to install the required treatment systems, a violation could continue for up to eight years before EPA acts.

The court holds that EPA may not promulgate a relaxed removal credit rule because sludge regulations that are a prerequisite to the issuance of credits have not yet been issued. The court first rejects EPA's claim that the environmental petitioner's challenge to the sludge-disposal requirements of the removal credit rule is time barred. The court then holds that EPA may not authorize the issuance of removal credits in the absence of sludge regulations mandated under §405(d) of the FWPCA. Regulations relating to sludge disposal issued under other environmental statutes do not satisfy the comprehensive requirements Congress established in §405(d). In addition, letters from then-Administrator Ruckelshaus recognize EPA's failure to promulgate regulations under §405.

Turning to the petition of indirect discharger and municipal plaintiffs, the court initially rejects EPA's claim that the petition is time barred for the same reasons it rejected EPA's claim concerning the environmental petitioner. The court holds that EPA's response by letter to petitioners' claim was sufficient, at the agency is not required to address every comment in a public forum. The court holds that the method used by petitioners as a basis for their claim that the indirect discharger's wastes are adequately treated by the POTW has been expressly rejected by Congress. Finally, the court holds premature petitioners' claim that since the current treatment will be augmented in a year by additional treatment from a second POTW, EPA is required to consider the joint operation of the two POTWs in calculating the applicable removal credit.

[The opinion includes an appendix consisting of §§307(b)(1) and 405(d) of the FWPCA and the text of the 1984 removal credit rule, 40 C.F.R. §403.7.]

Counsel for Petitioner
Frances Dubrowski
Natural Resources Defense Council, Inc.
1350 New York Ave. NW, Ste. 300, Washington DC 20005
(202) 783-7800

Richard J. Kissel, M. Therese Yasdik, Daniel F. O'Connell
Martin, Craig, Chester & Sonnenschein
115S. LaSalle St., Chicago IL 60603
(312) 368-9700

Harold G. Baker Jr.
56 S. 65th St., Belleville IL 62223
(618) 397-6444

Counsel for Respondents
Dov Weitman
Office of General Counsel
U.S. Environmental Protection Agency
401 M St. SW, Washington DC 20460
(202) 382-2090

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

John M. Cannon, Susan W. Wanat, Anne Plunkett Sheldon
Mid-America Legal Foundation
20 N. Wacker Dr., Ste. 842, Chicago IL 60606

Before Hunter and Higginbotham, JJ.