Steel Industry Effluent Limitations: Success At the Negotiating Table

Alan S. Miller

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— The Editors

Mr. Miller, an attorney in the Natural Resources Defense Council's Washington, D.C. office, was the lead NRCD lawyer in the steel negotiation.

[13 ELR 10094]

In the midst of the chaos prevailing at the Environmental Protection Agency (EPA), one major environmental accomplishment received too little notice. On March 3, 1983, the Natural Resources Defense Council (NRDC), the American Iron and Steel Institute, and EPA filed a settlement agreement¹ with the U.S. Court of Appeals for the Third Circuit resolving all legal challenges to water pollution effluent guidelines for the steel industry. As a result, protracted, resource-intensive litigation was avoided, and Federal Water Pollution Control Act (FWPCA or the Act) permits for iron and steel dischargers will be written without the uncertainty created by pending judicial review. The settlement assures significant progress toward curtailing toxic discharges and improving water quality, but it is less clear whether the agreement furnishes hope for greater reliance on negotiation or represents an aberration from the usual tug of war between industry and environmentalists.

Background

The regulations modified by the settlement were issued by EPA on May 27, 1982. They provided requirements for the use of "best available technology economically achievable" (BAT) by direct dischargers and pretreatment standards of discharges into municipal treatment works. The steel industry was the first important industrial category for which BAT regulations were issued under the 1977 FWPCA amendments.

The Settlement

The settlement is a major accomplishment for several reasons. First, industry's promise to comply with the requirements of the regulations without further challenges assures that significant reductions will be made in the discharge of toxic and other pollutants from iron and steel facilities. Iron and steel production is a very large source of water pollution; an average of 40,000 gallons of water is used in the production of a ton of steel, and the resultant effluent includes more than forty different toxic pollutants. The technology required by the regulations will remove more than 99 percent of the raw waste load discharged directly from steel plants into water bodies, more than 53,000 tons of pollution.

The industry argued that several portions of the original regulations were not supported by adequate data. EPA agreed to revisions for five categories in the interest of achieving a settlement and finality in permit terms. However, none of the changes will significantly increase the total amount of effluents being discharged.

The settlement also includes important changes in the so-called "bubble" policy. As promulgated last May, the regulations would have allowed dischargers to trade a reduction in the discharge permitted from one outfall for an increase in the limits on the same pollutant discharged from another outfall. For example, a discharger could increase the limits on discharging lead from a sintering operation by reducing discharges of lead from ironmaking or steelmaking by the same amount.

All three parties entered negotiations with strongly held views concerning the bubble policy. NRDC argued that the bubble is inconsistent with the Act because the economic savings that result are not considered when [13 ELR 10095] EPA selects the best technologies that are economically achievable. Industry, on the other hand, very much wanted the bubble because the flexibility it provided made the prospect of compliance with significant effluent reduction requirements far more tolerable. Similarly, EPA viewed the bubble provision as an essential regulatory reform designed to reduce the costs of environmental regulation.

After several months of meetings, the parties agreed to a compromise which requires that all trades must include a net reduction if it can be achieved without significant additional expenditures. The settlement also requires a minimum net reduction of approximately 15 percent in the case of total suspended solids and oil and grease, and approximately 10 percent in the case of all other pollutants. The difference in these minimum requirements reflects the much larger quantities generally involved in discharges of conventional pollutants, and the correspondingly greater opportunity for further reductions. The compromise was accepted by all sides in order to obtain a settlement, and while EPA has not included a bubble policy in regulations for any other industry, the debate undoubtedly will recur if the policy surfaces again.

Settlements often leave the parties with a feeling of satisfaction and accomplishment, and this one was no exception. Protracted litigation is never anyone's first choice for resolving differences; efforts to promote negotiation always merit applause. In the afterglow, it is tempting to ask — as the Washington Post did in a March 7th editorial — "How did they do it?" and "Why must [such settlements] be so unusual?"

The answers to the questions asked by the Post are important and, unfortunately, sobering, for they suggest that negotiation can be successful only in special circumstances. The first requirement is arms length negotiation with all sides legally and technically well represented. In this case, each party had something to lose through lengthy court proceedings, and a compromise was possible that enabled each party to obtain much of what it most wanted.

More frequently, either the bargaining process is one-sided or one party has nothing to gain from negotiation. When former EPA Administrator Anne Burford negotiated modifications to lead standards for the benefit of an oil refinery, no environmentalists were involved and an adversarial response was assured. In the dance of environmental negotiation, it takes three to tango.

Equally important, there has to be something over which to negotiate. For the most part, EPA's steel regulations were basically sound and well supported; modifications were in order, not a major overhaul. Unfortunately, EPA actions under this Administration have too often been so one-sided that there is little room for compromise. For example, NRDC also sued EPA over BAT regulations for petroleum refineries. These rules require nothing beyond treatment systems already in place, despite the availability of better technology, already used by a third of the industry, that would remove up to a third of remaining toxic pollutants, and that can be utilized without causing any measurable economic impact. This kind of regulation leaves little room for negotiation.

1. 13 ELR 20366.