Industry Effluent Limitations Program in Disarray as Congress Prepares for Debate on Water Act Amendments

P. D. Reed

Effluent limitations for industrial facilities which discharge pollution directly to surface waters are one of the cornerstones of the national clean water program established by the 1972 Amendments to the Federal Water Pollution Control Act (FWPCA).¹ They embody Congress's decision to scrap an ineffective regulatory system based on water quality in favor of a more workable, technology-based system of effluent regulation. The pre-1972 FWPCA tied the pollution control requirements imposed on individual plants to their impact on the quality of the waterways into which they drained their wastewater.² The system did not work.³ The 1972 Amendments authorized the Environmental Protection Agency (EPA) to set nationally uniform standards, based on the pollution control technologies available, specifying the amounts of pollution which may legally be discharged by any "point source"⁴ in each industry category. In conjunction with effluent limitations for municipal sewage treatment works,⁵ federal grants to help finance the construction of such facilities,⁶ and water quality management plans for non-point sources of water pollution,⁷ the other cornerstones of the Act, the industrial effluent limitations are designed to achieve the FWPCA's goals of making all surface waters in the United States "fishable and swimmable" by 1983 and eliminating all pollutant discharges by 1985.⁸

The heart of the complicated system of effluent limitations for industrial sources established by the FWPCA is the technology-based standards for existing sources prescribed by §§ 301 and 304. Existing sources, those under construction before proposal of a new source performance standard for their industry category, are covered by effluent limitations mandated by § 301 and defined by § 304.⁹ New sources must comply with performance standards under § 306 which are closely linked to the existing source standards.¹⁰ "New" and "existing" facilities which avoid point source regulation by discharging to publicly owned treatment works are indirectly regulated because the treatment works themselves are point sources subject to § 301 effluent limitations parallel to those for industrial facilities. Such facilities must also meet § 307 pretreatment standards designed to protect the treatment works should their discharges threaten its proper operation, a program which has been controversial and only partially implemented.¹¹ The Act also authorizes EPA to set effluent standards for toxic pollutants based on their harmful potential rather than the availability of treatment technology, but the agency has made no use of that authority.¹² Finally, where the otherwise applicable limitations will not clean up a body of water sufficiently to attain state water quality standards, the Act requires that stricter "water quality related effluent limitations" be imposed.¹³

The 1972 Amendments directed EPA to set two levels of effluent limitations for existing industrial facilities. The first level, to be achieved by 1977, was to be based on the "best practicable control technology currently available,"¹⁴ or BPT. The second level, to be achieved by 1983, was to be based on the "best available technology economically achievable,"¹⁵ or BAT. The limitations, particularly BAT, were said to be technology-forcing, because they required all companies in an industry to adopt pollution control technology equivalent to the most advanced in use. The BPT and BAT effluent limitations applied across the board, unless a § 302 water quality related effluent limitation was needed, a § 307 toxic effluent standard applied, or where BAT posed severe economic consequences for an individual facility, in which case a § 301(c) variance could be granted.¹⁶

As amended in 1977,¹⁷ the FWPCA preserves the 1972 Act's two stage approach to limiting effluents from existing [12 ELR 10034] industrial sources, but adds greater variety to the second stage. Section 301 still requires compliance with BPT limitations by 1977. However, the second stage now requires compliance with either the "best conventional pollutant control technology" (BCT) for nontoxic "conventional pollutants" or BAT for nonconventional or toxic pollutants. The deadlines for achieving these standards were also modified and in most cases fall between 1984 and 1987.¹⁸ The 1977 changes in the second level of control strengthened regulation of toxic pollutants and relaxed control requirements for nontoxic pollutants to better match the expense of compliance with its environmental benefits.

Once promulgated by EPA, effluent limitations are made binding on individual sources through the national pollutant discharge elimination system (NPDES) permit program.¹⁹ The Act forbids any discharge from a point source without a permit.²⁰ Each permit, issued in a decentralized process by EPA regional offices or states, must include the applicable federal effluent limitations,²¹ as well as monitoring and reporting requirements. Thus, the effluent limitation system centralized the process of deciding how much each source of pollution could discharge, simplifying dramatically the decentralized permit writing process.

The industrial effluent limitation program is a mammoth undertaking which has proved very difficult to carry out.²² EPA has made great progress in promulgating and enforcing BPT limitations, but the job is still not complete five years after the deadline for compliance with the standards. The BCT and BAT programs are similarly behind schedule. EPA has substantially completed the analytical work needed to implement the second stage standards, but setbacks in the courts, inherent difficulties in regulating toxic chemicals, and a change in administration regulatory policy have virtually halted the development of both programs. As Congress begins debate this year on the reauthorization of the regulatory programs of the FWPCA, proponents of less stringent requirements are supporting a move away from uniform, technology-based standards and back toward a water quality-based system. How far they really want to go, and how far Congress can be persuaded to take them will be matters of central interest on Capitol Hill in the coming months.

The Status of BPT

The BPT program is substantially implemented. Although EPA is still working on BPT limitations for a few industry subcategories in the aftermath of agency withdrawals or court remands,²³ most sources affected have complied with interim standards requiring substantial pollution reductions. While the substance of some BPT standards is still in dispute, the major issue concerning the program in recent years has been the availability and scope of variances from the effluent limitations. Variances play an important role in the effluent limitation system. In promulgating effluent limitations guidelines, EPA separates each industry into relatively small subcategories, but still cannot give attention to all the variation among individual facilities. Variances serve as safety valves ensuring that the uniform standards are not applied unreasonably to individual sources. However, the safety valves can deflate the entire program if variances are available on the basis of criteria inconsistent with those prescribed by the statute for setting the effluent limitations, or if variance proceedings enable companies to reopen control technology or cost issues resolved earlier in the regulatory process.

The criteria by which BPT limitations are to be calculated are set out in § 304. Section 304(b)(1)(B)²⁴ directs the Administrator to establish BPT standards considering "the total cost of application of technology in relation to the effluent reduction benefits to be achieved from such application," and taking into account a variety of factors relating to production and effluent control technologies, non-water quality environmental impacts, and other factors deemed appropriate by EPA.

In carrying out this mandate, EPA first determined for each industry category or subcategory the level of control associated with the average of the best pollution control performance by exemplary plants of varying ages, sizes, and production processes. Next it judged whether for the [12 ELR 10035] category as a whole, the costs and economic impacts imposed were warranted by the effluent reductions achieved.²⁵ This balancing test was not a formal cost/benefit analysis. The Agency merely ascertained whether the limitations would produce substantial progress toward the Act's goal of elimination of pollutant discharges and whether the costs would constitute a significant share of total industry costs without causing substantial economic disruption.²⁶

The FWPCA is silent on the question of variances from the BPT standards. However, EPA decided to allow them for existing sources. In 1977 the Supreme Court held that EPA's practice was not only acceptable, but necessary. In E.I. DuPont de Nemours & Co. v. Train²⁷ the Court concluded that since the uniform, category-wide effluent limitations are to be applied to each individual source, there must be a procedure by which the limits can be adjusted for plants that are "fundamentally different" from the industry norm.²⁸ The Court referred to the specific variance provision in the EPA regulations at issue in that case, but declined to rule on its adequacy.²⁹ EPA continues to use a variance provision essentially similar to the one described by the Court in DuPont. It allows individual dischargers or others to petition the agency to adjust a category-specific limitation either up or down where the petitioner demonstrates that the industrial process, control technology, costs, or energy considerations applicable to a specific plant are "fundamentally different" from those used in setting the uniform limitations.³⁰

The EPA approach to BPT variances has withstood two lines of industry challenge. The first concerns the agency's failure to allow variances for individual facilities on the basis of their economic inability to meet the BPT limitations. The circuit courts split on the issue of whether the FWPCA required such variances.³¹ But in Environmental Protection Agency v. National Crushed Stone Association³² the Supreme Court upheld EPA's approach. The Court rejected industry petitioners' argument that the BPT variance should be triggered by economic inability to comply because the variance established by § 301(c)³³ for the more stringent BAT standards explicitly requires consideration of economic impact. The Court held that the statute requires consideration of whether the costs of BPT are reasonable for the industry category as a whole, but contemplates, as the legislative history clearly indicates, that the uniform standards would apply to all plants in the category, regardless of their economic effect on individual plants.³⁴ The BPT variance is properly limited to cases where an individual plant so differs from others in the category, in terms of the technology and cost considerations, that it would be irrational to apply the category-wide standards to that plant.

The second line of challenges to EPA's BPT variance provision concerns the need to consider the impact on receiving water quality. In the last year, two circuit courts erased any doubt about whether water quality impact is relevant in BPT variance proceedings. It is not. In Crown Simpson Pulp Co. v. Costle³⁵ the Ninth Circuit affirmed EPA's veto of a state-issued NPDES permit which granted a variance from the applicable BPT effluent limitations because the untreated discharge had no measurable effect on water quality. The court found that such a variance could not be justified under any of the factors listed in § 304(b)(1)(B), and that the language of the statute, the legislative history and EPA's authoritative interpretation all supported the conclusion that the Act bars relaxation of effluent limitations based on water quality considerations. It noted that

if we were to permit companies to seek variances from these guidlines on the basis of water quality at particular sites, we would be returning water pollution control to its ineffective pre-1972 status in defiance of Congress's desire "to restore and maintain the chemical, physical, and biological integrity of the nation's waters."³⁶

The Fourth Circuit recently reached the same conclusion.In Appalachian Power Co. v. Environmental Protection Agency³⁷ (Appalachian Power III), the third in a series of cases addressing the BPT variance for coalfired power plants,³⁸ the court denied several companies' petitions to invalidate EPA's variance provision because [12 ELR 10036] it precludes consideration of a discharge's effect on receiving water quality. Though in Appalachian Power II the court had suggested that water quality might be an appropriate factor to be considered by EPA in determining whether to allow a BPT variance, in Appalachian Power III it rejected this argument. Its earlier view had been conditioned on its conclusion that BPT variances should incorporate the factors listed in § 301(c) for BAT variances, which had been soundly refuted by the Supreme Court's intervening decision in National Crushed Stone and its own intervening decision in Consolidation Coal Co. v. Costle,³⁹ which held that the § 304(b)(1)(B) BPT criteria should serve as the basis for BPT variances.

In effect, then, the BPT variance is simply a means of creating a separate industry category (with its own BPT limitations) for unique individual facilities, not a means of relaxing the general limitations to avoid hardship. In this light, it becomes clear that the BPT effluent limitations are the absolute minimum required of industrial point source dischargers under the FWPCA. A firm cannot have the limitations relaxed even though compliance would put it out of business and would fail to improve water quality, unless it can show that its facility is fundamentally different from the rest of the indstry category or subcategory in terms of what pollution control technology is relevant and what it costs to apply that technology.

The Status of BCT

Implementation of the BCT program established by the 1977 Amendments proceeded apace until April of 1981, when the program suffered a serious setback in court. The 1977 Amendments to the FWPCA directed EPA to establish effluent limitations for "conventional" pollutants.⁴⁰ Section 304(b)(4)(B) of the Act spells out the criteria to be used, including the following cost considerations:

Factors relating to the assessment of best conventional pollutant control technology … shall include consideration of the reasonableness of the relationship between the costs of attaining a reduction in effluents and the effluent reduction benefits derived, and the comparison of the cost and level of reduction of such pollutants from the discharge from publicly owned treatment works to the cost and level of reduction of such pollutants from a class or category of industrial sources ….⁴¹

In mid-1979 EPA promulgated a BCT methodology which reduced the § 304(b)(4)(B) cost reasonableness analysis to a single test — a comparison of the marginal cost of going from BPT to BCT with the marginal cost for going from "secondary treatment" to "advanced secondary treatment" at a publicly owned treatment works (the POTW comparison test).⁴² EPA analyzed POTW costs and established a figure of $1.15 per pound as the appropriate marginal cost of advanced secondary treatment at a POTW.⁴³ It then screened existing BAT rules for 41 industry subcategories to determine which ones passed the POTW comparison test and would thus become BCT, and which would have to be replaced with new BCT limitations.⁴⁴ All BAT limitations for 22 subcategories and limitations for some pollutants for six additional subcategories passed this cost reasonableness test and were made BCT. The portions of the standards for the six subcategories which failed the test, along with the BAT limitations for the remaining 13 subcategories, which failed the test in their entirety, were withdrawn by EPA pending further analysis to develop BCT standards from scratch.⁴⁵

Industry groups challenged the new standards in a series of actions consolidated under the name American Paper Institute v. Environmental Protection Agency.⁴⁶ They argued first that § 304(b)(4)(B) calls for a two-part cost—reasonableness test — an industry cost-effectiveness test and a POTW comparison test. By using only the latter, EPA's methodology was in clear conflict with the statute. Further, they alleged the agency's POTW comparison test was both inconsistent with the FWPCA's legislative history and arbitrary and capricious.⁴⁷

The court agreed that the statute on its face sets up a two-past cost-reasonableness test and that the legislative history cited by EPA was of "minimum probative value because of the numerous conflicts contained therein."⁴⁸ On the other hand, the court upheld the EPA POTW comparison methodology. It held that the agency's decisions to use a marginal cost test and advanced secondary treatment as the incremental technology were not arbitrary or capricious, since the statute's directive to develop a POTW test did not explain how to structure the test and EPA had considered the pertinent alternatives and showed [12 ELR 10037] a rational basis for its choice.⁴⁹ The court vacated the regulations establishing the single test BCT methodology and BCT limits promulgating industry subcategories and remanded the rules to the Agency to devise and apply a cost-effectiveness test.⁵⁰

The Fourth Circuit's interpretation of the BCT cost-reasonableness test will make EPA's job in developing BCT standards more difficult. The court did not explain how the Agency was to devise the cost-effectiveness portion of the test and the alternatives available all seem to rely more heavily on the Agency's subjective judgment than does the POTW comparison test.⁵¹ The added complexity of the two-part test seems certain to slow the development of BCT standards.

In sum, the BCT program is in disarray. EPA must virtually start all over in developing the methodology for setting the standards. The Agency, responding to the court's order, withdrew the BCT regulations in February 1982.⁵² It is now developing a new methodology, but given that the court set no deadline and the lack of clear direction for an acceptable set of cost-reasonableness criteria, it may be some time before the regulations are reissued. Meanwhile, EPA regional offices and those states administering the NPDES permit program are writing short term second-round NPDES permits with BPT effluent limitations in lieu of BCT.⁵³ The BCT program has lost its momentum and may not regain it until after debate on amendments to the Act is well under way and the original 1984 deadline for compliance is reached.

The Status of BAT

The BAT program, now focused entirely on toxic pollutants, has evolved through a long and difficult process which is by no means complete. The 1972 Amendments prescribed a special regime for toxic water pollutants — effluent standards based not on the availability of control technologies, but on the toxicity, persistence, and degradability of the pollutants. EPA initially made little progress in carrying out this mandate.⁵⁴ In 1973 environmental groups brought the first of a series of suits to force development of § 307(a) standards and three years later the parties signed a consent decree revising the basis for toxics regulation under the Act.⁵⁵ The "NRDC Decree" called for EPA to develop technology-based BAT standards for 21 industry categories (the "primary" industries),⁵⁶ covering 65 toxic or potentially toxic pollutants (the "priority" pollutants).⁵⁷ In order to ensure that the potential health and environmental threats from discharges of toxics allowed by the BAT limitations were not ignored, the decree also required EPA to establish water quality criteria indicating safe levels of the priority pollutants. Furthermore, it committed the agency to identify segments of rivers and lakes where the water quality criteria would not be achieved after industry dischargers attained BAT, and to develop even tighter effluent limitations for discharges to those bodies of water. While EPA retained authority to regulate toxics under the authority of § 307, the consent decree drastically changed the basic thrust of EPA's toxic water pollution control program. Congress enacted the basic components of the decree in the 1977 Amendments to the FWPCA.⁵⁸

Although the rationale for shifting to technology-based standards for toxic pollutants was to simplify the regulatory process, the BAT toxics program has not been easy to implement. As then-EPA Administrator Costle [12 ELR 10038] reported to the Subcommittee on Oversight and Review of the House Public Works and Transportation Committee in 1980:

As we had initially anticipated, development of technology based limitations for toxics has proven to be a complex process. For many industrial categories which had no previous regulatory base, we did not have either the technical or economic history from which to develop a standard. Where such background data were available, we lacked analytical techniques of sufficient sophistication to quantify levels of toxics in discharges; this prevented evaluation of the removal capabilities of a given technology. Most importantly we had no long term performance data available to establish defensible limits.⁵⁹

Similar problems plagued efforts to set water quality criteria for many toxics.⁶⁰

In spite of the difficulties, the Agency made significant progress in establishing the new regulatory program. In late 1980 it published water quality criteria for 64 of the priority pollutants.⁶¹ It proposed BAT rules for 13 industry categories and promulgated one final rule.⁶² In addition, it identified 12 priority pollutants which are so pervasive as to require special attention and targeted a number of heavily polluted urban stream segments ("hot spots") for study concerning the need for water quality based effluent limitations to protect public health and aquatic life.⁶³

In the last year, however, EPA has sought to be relieved of the obligation to carry out substantial pieces of the program.In August 1981, citing resource constraints and unanticipated obstacles from other pollution control programs, the Agency asked the district court with continuing jurisdiction over the NRDC consent decree for more time to develop the required effluent limitations, authority to delete industries or pollutants from the lists of those to be regulated, and the elimination of its obligation to develop special effluent limitations for the pervasive toxics and heavily polluted streams identified earlier.⁶⁴ Whether or not EPA's recent effort to modify the NRDC decree is successful, it is highly unlikely that the Agency can keep the ambitious regulatory program on schedule in a period of substantial budget cuts.⁶⁵

Despite unsuccessful industry efforts since the 1977 Amendments to end judicial oversight of the toxics program, the decree has continued to provide environmental groups with extra leverage to force EPA to meet its legal obligations. In 1978 they filed an action requesting an order to show cause why the EPA Administrator should not be held in contempt for failure to fulfill court-ordered and statutory obligations. In response, the settlement was modified in 1979, over the objection of industry intervenors, to, among other things, (1) extend the BAT deadline to July 1, 1984, (2) grant EPA more discretion to cull from the list of priority pollutants those with minimal potential for harm, and (3) expand EPA authority and responsibility for acting under the new § 307.⁶⁶ Industry intervenors appealed the order modifying the decree to the D.C. Circuit. The court affirmed the district court's decision, but remanded the matter for consideration of intervenors' claim that the continuation of the consent decree "impermissibly infringed" on EPA's discretion to implement the 1977 Amendments to the FWPCA.⁶⁷ the district court recently decided that the consent decree does not infringe the agency's discretion to an impermissible degree,⁶⁸ indicating that, barring reversal by the court of appeals or Congress, it intends to maintain its involvement in implementation of the BAT toxics program.

The Reauthorization Debate

The industry effluent limitations guidelines program will be a central topic in the impending congressional debate over reauthorization of the regulatory portions of the FWPCA.⁶⁹ Of particular interest will be the toxics program and the question whether states should be allowed to relax the national effluent limitations for individual sources where less stringent controls would suffice to attain water quality standards. The major interest groups have begun to circulate position papers which outline the initial parameters of the debate.

The Chemical Manufacturers Association (CMA), one of the first industry groups to issue its FWPCA position paper, argues for substantial revision of the BAT-toxics program as well as "clarification" of the BCT program in light of the American Paper Institute decision.⁷⁰ CMA [12 ELR 10039] calls for abandonment of the toxics consent degree, which, it asserts, has outlived its usefulness. It would also slow down and scale back the BAT program by (1) reexamining the list of priority pollutants to ensure that there is an adequate scientific basis for the inclusion of each and deleting those without the requisite support, (2) studying the efficacy of BPT in removing toxics and limiting BAT regulations to those industries where significant toxics problems persist after application of BPT, (3) extending the BAT compliance deadline to 1987 to allow a reasonable time for promulgating and complying with the new standards, and (4) allowing waivers of BAT limitations where economic or water quality considerations warrant. Finally, with regard to the BCT program, the CMA recommends that EPA be required to use both the cost-effectiveness and POTW tests in calculating BCT limitations, rejecting any technology that fails either test. While the CMA position on the effluent limtiation program is not fully representative of industry at large, it does illustrate the types of amendments which industry will seek in the reauthorization debate.

State water pollution control officials, on whose shoulders much of the responsibility for carrying out the programs of the FWPCA rests, are calling for changes in the second round of effluent limitations to make them more flexible and responsive to water quality considerations. In August 1981 the Association of State and Interstate Water Pollution Control Administrators published its assessment of the FWPCA programs.⁷¹ The Association recommends continuation of BPT as the required minimum level of treatment for all industrial point sources. However, it calls for changes in the BCT program to give the states flexibility to exempt sources from BCT requirements where they are not necessary to achieve water quality standards. The Association supports the use of BAT standards for toxics, but asks for changes in implementation of the program. It recommends that BAT compliance deadlines be tied to promulgation of the national effluent limitations guidelines, thus saving states from the allegedly impossible task of writing BAT permits based on "best engineering judgment." Facilities whose BPT permits have expired would be issued new BPT permits with "reopener clauses" requiring that the effluent limitations be upgraded to BAT when EPA promulgates the guidelines. Finally, the Association recommends that states be authorized to issue variances from BAT standards for up to five years where compliance with BAT is not needed to achieve water quality standards.

The Administration position on the FWPCA Amendments has yet to be issued formally, but several draft EPA bills have received substantial attention in the press. The most recent EPA draft, currently undergoing review by the Office of Management and Budget, calls for relatively modest modification of the effluent limitations program.It would move back the deadline for promulgation of BCT and BAT limitations from July 1, 1980 to July 1, 1984 and would extend the dates for compliance with those limitations by up to four years to July 1, 1988.⁷² The draft bill differs from earlier versions in that it does not allow water quality-based waivers of BAT or BCT limitations.⁷³ However, this feature of the draft bill is reportedly the target of intense industry opposition⁷⁴ and may be changed in the final version.

The draft EPA bill was no sooner reported in the press than a number of its provisions were attacked by environmental groups. Among the criticisms levied by the groups was that the "rollback" of BAT deadlines would undermine court oversight of the regulatory process under the consent decree, giving EPA and industry several years more than necessary to implement the BAT toxics program and allowing the discharges of thousands of tons of toxic chemicals that otherwise would be controlled.⁷⁵ While the debate on this issue is likely to be intense, it appears that if the EPA draft becomes the Administration bill, the reauthorization debate on the industry effluent limitations will be quite limited in scope.

1. 33 U.S.C. § 1251 et seq., ELR STAT. & REG. 42101.

2. The Act required states to submit water quality standards and plans for implementing them to the Secretary of the Interior for approval, a system similar to that adopted by Congress for air pollution control in the 1970 Clean Air Act Amendments. However, the Act did not specify how an agency was to translate water quality data into enforceable effluent standards for the diverse facilities discharging into polluted waterways. See R. Zener, Water Pollution Control, in FEDERAL ENVIRONMENTAL LAW (T. Guilbert and E. Dolgin, eds.) at 715 (1974) for a brief description of this system.

3. Id.

4. Section 502(14) of the FWPCA, 33 U.S.C. § 1362(14), ELR STAT. & REG. 42146, defines "point sources" as discharges to surface waters through "discrete conveyances" such as pipes or ditches.

5. FWPCA § 301(b)(1)(B) & (2)(B), 33 U.S.C. § 1311(b)(1)(B) & (2)(B), ELR STAT. & REG. 42123.

6. FWPCA § 201 et seq., 33 U.S.C. § 1281 et seq., ELR STAT. & REG. 42113-22.

7. FWPCA § 208, 33 U.S.C. § 1288, ELR STAT. & REG. 42118-21.

8. FWPCA § 101(a)(1) & (2), 33 U.S.C. § 1251(a)(1) & (2), ELR STAT. & REG. 42105.

9. FWPCA §§ 301, 304, 33 U.S.C. §§ 1311, 1314, ELR STAT. & REG. 42123, 42126.

10. The FWPCA new source standards are to reflect "the greatest degree of effluent reduction which the Administrator determines to be achievable through application of the best available demonstrated control technology, processes, operating methods, or other alternatives, including, where practicable, a standard permitting no discharge of pollutants." FWPCA § 306(a)(1), 33 U.S.C. § 1316(a)(1), ELR STAT. & REG. 42128.

The new source standards are set in the same process, often using the same data base, as the existing source standards. See Hooker Chemicals & Plastics Corp. v. Train, 537 F.2d 639, 6 ELR 20478 (2d Cir. 1976).

11. FWPCA § 307(b), 33 U.S.C. § 1317(b), ELR STAT. & REG. 42130.

12. FWPCA § 307(a), 33 U.S.C. § 1317(a), ELR STAT. & REG. 42129.

13. FWPCA § 302, 33 U.S.C. § 1312, ELR STAT. & REG. 42124.

14. FWPCA § 301(b)(1)(A), 33 U.S.C. § 1311(b)(1)(A), ELR STAT. & REG. 42123.

15. FWPCA § 301(b)(2)(A), 33 U.S.C. § 1311(b)(2)(A), ELR STAT. & REG. 42123.

16. FWPCA § 301(c), 33 U.S.C. § 1311(c), ELR STAT. & REG. 42123.

17. The Clean Water Act of 1977, Pub. L. No. 95-217.

18. The Act sets a July 1, 1984 deadline for achievement of BCT limitations, § 301(b)(2)(E), 33 U.S.C. § 1311(b)(2)(E), ELR STAT. & REG. 42123, and for BAT limitations for certain toxic pollutants, § 301(b)(2)(C), 33 U.S.C. § 1311(b)(2)(C), ELR STAT. & REG. 42123. For other toxic pollutants, compliance is required no later than three years after promulgation of the relevant limitations, with no cut-off date, § 301(b)(2)(D), 33 U.S.C. § 1311(b)(2)(D), ELR STAT. & REG. 42123. For the remainder, the nonconventional pollutants, the Act allows until July 1, 1984 or a later date up to July 1, 1987 if it is within three years of promulgation of the limitations, § 301(b)(2)(F), 33 U.S.C. § 1311(b)(2)(F), ELR STAT. & REG. 42123.

19. FWPCA § 402, 33 U.S.C. § 1342, ELR STAT. & REG. 42141-42.

20. FWPCA §§ 301(a), 402(a)(1), 402(k), 33 U.S.C. §§ 1311(a), 1342(a)(1), 1342(k), ELR STAT. & REG. 42123, 42141, 42142.

21. The Act separately discusses effluent limitations, § 301, and guidelines, § 304. Arguably, it called for EPA first to develop the guidelines based on the required analysis of technology and costs, and then to use them in developing the legally binding limitations. EPA promulgated one set of standards for each industry category, which it labelled "effluent limitations guidelines." For several years it was not clear whether the hybrid standards were guidance to permit writers or binding on them. The Supreme Court resolved the uncertainty in 1977 in E.I. DuPont de Nemours & Co. v. Train, 430 U.S. 112, 7 ELR 20191 (1977) when it unequivocally held that the effluent limitations guidelines promulgated by EPA were to go into every NPDES permit, unless the permittee qualified for a variance.

22. The job was difficult for several reasons. First, EPA's mandate was ambigious. See E.I. DuPont de Nemours & Co. v. Train, 430 U.S. 112, 7 ELR 20190 (1977). More fundamentally, EPA had to learn a great deal about the technology and costs of pollution control alternatives as well as their economic impacts upon numerous diverse industry categories and subcategories. The third major problem facing EPA was the tight deadlines established by Congress and the courts. Section 304 required promulgation of guidelines within one year of the effective date of the 1972 Amendments.

23. According to a preliminary EPA tabulation of the current status of BPT regulations, final standards are in place for 387 industry subcategories. Standards for 12 subcategories and parts of the standards for an additional 50 have been withdrawn by EPA or are undergoing post-remand revision in the Agency. Telephone conversation with James Gallup, Quality Review Branch Chief, Effluent Guidelines Division, Office of Water Regulations and Standards, EPA, March 12, 1982.

24. 33 U.S.C. § 1314(b)(1)(B), ELR STAT. & REG. 42127.

25. As noted by the Supreme Court, "every BPT limitation represents a conclusion by the Administrator that the costs imposed on the industry are worth the benefits in pollution reduction." EPA v. National Crushed Stone Ass'n, 449 U.S. 64 at 76, 10 ELR 20924 at 20927 (1980).

26. See, e.g., EPA, Final Development Document for Effluent Limitations Guidelines and New Source Performance Standards for the Phosphorus Derived Chemical Segment of the Phosphate Manufacturing Point Source Category § VIII (Jan. 1974).

27. 430 U.S. 112, 7 ELR 20191 (1977).

28. 430 U.S. at 128, 7 ELR at 20194.

29. 430 U.S. at 128 n.19, 7 ELR at 20194 n.19.

30. See, e.g., 40 C.F.R. §§ 434.22, 434.32, 436.22. While the variance provision seems to contemplate that groups outside the regulated industry may petition to have BPT limitations made more stringent than the category-specific standards where the peculiarities of an individual facility make pollution control easier than for the industry as a whole, there appear to have been few, if any, cases in which such efforts were successful.

31. See Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 9 ELR 20284 (D.C. Cir. 1978) (BPT variances based on economic inability to comply are inconsistent with the basic purposes of the FWPCA). Contra, Appalachian Power Co. v. Train, 545 F.2d 1351, 6 ELR 20732 (4th Cir. 1976).

32. 449 U.S. 64, 10 ELR 20924 (1980). For a more detailed discussion, see Comment, National Crushed Stone: EPA Not Required To Grant "Economic Hardship" Variances From 1977 Effluent Limitations, 10 ELR 10215 (1980).

33. 33 U.S.C. § 1311(c), ELR STAT. & REG. 42123.

34. "As we see it, Congress anticipated that the 1977 regulations would cause economic hardship and plant closings." 449 U.S. at 83, 10 ELR at 20929.

35. 642 F.2d 323, 11 ELR 20450 (9th Cir. 1981), cert. denied, 50 U.S.L.W. 3402 (Nov. 17, 1981).

36. 642 F.2d at 328, 11 ELR at 20453.

37. No. 80-1663, 12 ELR 20278 (4th Cir. Feb. 8, 1982).

38. In Appalachian Power Co. v. Train (Appalachian Power I), 545 F.2d 1351, 6 ELR 20732 (4th Cir. 1976), the court held that an EPA variance provision limited solely to technical and engineering factors was too narrow. In Appalachian Power Co. v. Train (Appalachian Power II), 620 F.2d 1040, 10 ELR 20319 (4th Cir. 1980), it upheld the amended EPA variance provision, which required consideration of costs and the economic impact factors specified in § 301(c).

39. 604 F.2d 239, 9 ELR 20511 (4th Cir. 1979) (FWPCA bars issuance of BPT variances solely on grounds of receiving water quality), rev'd in part sub nom. EPA v. National Crushed Stone Ass'n, 449 U.S. 64, 10 ELR 20924 (1980).

40. EPA has designated five conventional pollutants: biological oxygen demand (BOD), total suspended solids (TSS), fecal coliform, pH, and oil and grease. 43 Fed. Reg. 32857 (July 28, 1978), 44 Fed. Reg. 44501 (July 30, 1979).

41. § 304(b)(4)(B), 33 U.S.C. § 1314(b)(4)(B), ELR STAT. & REG. 42127.

42. 44 Fed. Reg. 50755 (Aug. 29, 1979).

43. The POTW benchmark was calculated by dividing the increase in total annual costs required to upgrade a POTW from secondary treatment to advanced secondary treatment by the increase in pounds of BOD and TSS removed per year. 44 Fed. Reg. 50755 (Aug. 29, 1979).

44. EPA focused initially on 93 subcategories not included in the list of "primary" industries for which the agency must prepare BAT toxic standards. After screening this group, it determined that for 52 subcategories the BAT limitations were not suitable for cost reasonableness review because they were being revised in response to court remands, settlement negotiations or for other reasons.

45. See 44 Fed. Reg. 50734 (Aug. 29, 1979).

46. __ F.2d __, 11 ELR 20865 (4th Cir. 1981).

47. In essence, industry petitioners argued that by using marginal cost instead of average cost, and by using advanced secondary treatment as the marginal control technology increment instead of alternative technologies requiring a smaller change from secondary treatment, EPA had arbitrarily elevated the benchmark. The higher the POTW benchmark cost, the fewer BAT standards the Agency would have to relax. Industry petitioners also argued that they had been denied an opportunity to comment on key studies relied on by EPA late in the regulatory process and that the cost data used in setting the POTW bench-mark were erroneous, 11 ELR at 20868.

48. 11 ELR at 20867.Interestingly, the dissent found the statutory language ambiguous and the legislative history sufficiently balanced to call for deferral to EPA's interpretation of § 304(b)(4)(B). 11 ELR at 20869-70.

49. The court also found that the procedures used by EPA had not deprived petitioners of an opportunity to comment on the late cost data, because the reports were widely circulated and discussed earlier in the regulatory process, thus giving industry constructive notice that the agency might rely on them.

50. In addition, the court found EPA's POTW cost data erroneous and remanded the POTW comparison test for recalculation using more appropriate data.

51. Section 304(b)(4)(B) states that the two key variables are the costs of attaining the effluent limitations and the effluent reduction benefits derived therefrom. The term "effluent reduction benefits," assuming that it is to be interpreted as it has been in the context of BPT, refers simply to the amount of effluent eliminated rather than the environmental impacts that are avoided. The meaning of the term "costs" is self-evident. EPA's challenge is to select a standard that produces a "reasonable" quotient between these two variables. The only indication of what would be reasonable to the Fourth Circuit is its reference to the "knee of the marginal cost curve," 11 ELR 20869. This is a reference to the fact that as one charts the marginal cost of increasing levels of pollution control for an industry, at some point, usually at a relatively high level of control, the costs of each additional unit of control increase very rapidly. In other words, the effluent reduction benefits of each additional dollar expended are small compared to the benefits of those already expended. However, to find the knee of the cost curve for each of the hundreds of industry subcategories would be an enormous analytic undertaking. EPA may be driven to measure the cost-effectiveness of BCT by comparing its marginal cost to that of BPT (e.g., BCT is cost-effective if its marginal cost is no greater than 1.5 times that of BPT). While no one ratio to BPT costs would produce the most cost-effective level of BCT control for every industry, EPA may be able to identify one which will keep BCT costs below the break in the cost curve for the vast majority of them. Such a least common denominator approach might, however, make the cost-effectiveness test so stringent that the POTW comparison test would not be applied at all.

52. 47 Fed. Reg. 6835 (Feb. 17, 1982).

53. EPA's consolidated permit regulations require that NPDES permits written after June 30, 1981 contain effluent limitations based on BCT for conventional pollutants. (40 C.F.R. § 122.62(c)(2), ELR STAT. & REG. 46444. EPA has since proposed to amend those regulations to allow, until December 31, 1982, short-term NPDES permits with BPT limitations for sources whose earlier five-year BPT permits expire. 46 Fed. Reg. 36719 (July 15, 1981).

54. Section 307(a)(1) directed the Administrator to publish, within 90 days of enactment, a list of toxic pollutants for which special effluent standards were planned. 33 U.S.C. § 1317(a)(1) (repealed 1977). Within 180 days of listing a pollutant, the Administrator was to propose an effluent standard. As of mid—1973, EPA had listed nine pollutants, but had not promulgated a single effluent standard. See Natural Resources Defense Council, Inc. v. Train, 519 F.2d 287, 5 ELR 20578 (D.C. Cir. 1975).

55. Natural Resources Defense Council, Inc. v. Train, 6 ELR 20588 (D.D.C. 1976).

56. The 21 industries are listed in Appendix B to the consent decree, 6 ELR at 20594-96. The list was subsequently expanded to 34 categories, Natural Resources Defense Council, Inc. v. Train, 9 ELR 20176 at 20181 (D.D.C. 1979).

57. The priority pollutants are listed in Appendix A to the consent decree, 6 ELR at 20593-94.

58. See FWPCA §§ 301(b)(2)(A), (C), & (D), 304(b)(2), and 307(a), 33 U.S.C. §§ 1311(b)(2)(A), (C) & (D), 1314(b)(2), and 1317(a), ELR STAT. & REG. 42123, 42127, 42129, 42130.

59. Implementation of the Federal Water Pollution Control Act: Hearings before the Subcomm. on Oversight and Review of the House Comm. on Public Works and Transportation, 96th Cong., 2d Sess. 906, 907 (1980) (statement of Douglas M. Costle) [hereinafter cited as Costle Statement]

60. Id. at 919.

61. 45 Fed. Reg. 79318 (Nov. 18, 1980).

62. See, e.g., 46 Fed. Reg. 1430 (Jan. 6, 1981) (pulp, paper and paperboard industry); 46 Fed. Reg. 1858 (Jan. 7, 1981) (steel); 46 Fed. Reg. 3136 (Jan. 13, 1981) (coal mining and preparation) for examples of proposed rules. See also 46 Fed. Reg. 8260 (Jan. 26, 1981) (timber products, final rule).

63. Costle Statement, supra note 59, at 928.

64. Natural Resources Defense Council, Inc. v. Gorsuch, Defendants' Cross-Motion to Modify the Consent Decree and Defendants' Memorandum in Opposition To Intervenors' Joint Motion to Vacate or, Alternatively, to Revise the Decree and In Support of Defendants' Cross-Motion to Modify the Decree (filed July 31, 1981). (ELR PEND. LIT. 65717-18); Affidavit of Steven Schatzow (filed July 31, 1981) (ELR PEND. LIT. 65718).

65. However, EPA reportedly has adopted a new policy of streamlining the development of BAT effluent limitations guidelines in order to comply with the consent decree deadlines. (See Inside E.P.A., Mar. 5, 1982, at 6, 7).

66. Natural Resources Defense Council, Inc. v. Train, 9 ELR 20176 (D.D.C. 1979).

67. Environmental Defense Fund, Inc. v. Costle, 636 F.2d 1229, 10 ELR 20803 (D.C. Cir. 1980).

68. Natural Resources Defense Council, Inc. v. Gorsuch, 12 ELR 20371 (D.D.C. Feb. 5, 1982).The court held that the decree did not impermissibly infringe on EPA's statutory discretion because (1) the court had the authority originally to fashion the decree, (2) the decree dictated a process, not a substantive result, (3) the parties had ample opportunity to participate in shaping the decree, and (4) the decree was flexible enough to adapt to changing circumstances. In addition, the court found added support for continuing the decree in the legislative history of the 1977 Amendments.

69. The construction grants program, the primary nonregulatory component of the Act,was reauthorized in late 1981.See Comment, Congress in 1981: Clean Air Act and Budget Skirmishes Set Stage for Action-Packed 1982 Session, 12 ELR 10001 (Jan. 1982).

70. Chemical Manufacturers Association, Chemical Manufacturers Association Policy Paper on the Clean Water Act (Oct. 1, 1981).

71. Association of State and Interstate Water Pollution Control Administrators, Assessment of the National Water Quality Management Program, vol. 3 (Aug. 1981).

72. See Inside E.P.A., Special Supplement, Apr. 9, 1982.

73. Id. Other changes in the draft which after the industry effluent limitations program include moving back the effective date of new source performance standards from the date of proposal to the date of promulgation, broadening the § 301(k) innovative technology waivers to include BCT standards as well as BAT, and allowing municipalities to issue variances from categorical pretreatment standards to individual industrial facilities discharging to them where such variances will not lead to violations of the POTW's NPDES permit or degradation of receiving water quality.

74. Inside E.P.A., Mar. 26, 1982, at 1.

75. NRDC et al., Analysis of EPA Proposals for Amending the Clean Water Act, Apr. 8, 1982. The environmental groups also opposed the bill's pretreatment provisions, dubbing them a "retreat" which would "eliminate longstanding federal leadership in this area, and place enormous financial and political burdens on the cities." Id. at Summary, 1. They also took issue with the change in the effective date for the NSPS, arguing that it would, without good cause, allow numerous new sources to be built without complying with the new source standards.