Third Circuit Clears Way for National Pretreatment Program

Barry S. Neuman

Editor's Summary: On September 20, 1983, in National Association of Metal Finishers v. Environmental Protection Agency, 13 ELR 21042, the Third Circuit upheld the basic program established by EPA to control the discharge of wastewater from 60,000 industrial facilities to municipal sewage treatment systems under the FWPCA. The EPA program, which requires "pretreatment" of such waste discharges so that they will neither "interfere with" nor "pass through" the publicly owned treatment works (POTWs), had taken much longer to develop than the system of permits and effluent limitations for factories discharging their wastes directly to the nation's rivers and streams. The regulations, promulgated in 1978 and amended in 1981, were attacked in court by industry plaintiffs as well as environmentalists. The litigation was diverted over a challenge to EPA's indefinite postponement of the rules' effective date, an action overturned by the Third Circuit, 12 ELR 20833. The regulations at issue in Metal Finishers included general pretreatment rules establishing the procedures and methodologies EPA would use to set standards for industrial categories as well as the categorical standards for the metal finishing industry. The court upheld the EPA rules for the most part, with the Agency's biggest loss coming with the invalidation of the "fundamentally different factors" (FDF) variance that EPA had made available to individual plants for which the standards for industry categories were not appropriate.

In this article Mr. Neuman, who was the chief government counsel in the case, explains the court's ruling on the general pretreatment rules and assesses its implications for the EPA pretreatment program. Mr. Neuman does not discuss the FDF variance issue, since a petition for certiorari has been filed on it. A companion article, 14 ELR 10047, analyzes the variance challenge.

Mr. Neuman is a trial attorney, Department of Justice, Land and Natural Resources Division. He was lead counsel for the government in National Ass'n of Metal Finishers v. EPA.The views expressed in this article are solely those of the author and do not necessarily reflect the views of the federal government.

[14 ELR 10039]

On September 20, 1983, the United States Court of Appeals for the Third Circuit issued two opinions that resolved numerous challenges to the Environmental Protection Agency's (EPA's) pretreatment program.¹ The pretreatment program was first mandated by Congress more than 10 years ago as part of the Federal Water Pollution Control Act² (commonly referred to as the Clean Water Act), to control the discharge of industrial pollutants to publicly owned treatment works (POTWs).³ The pretreatment program is central to achievement of the Clean Water Act's goals, but has been controversial, in part because of industry's belief that it could impose redundant and unnecessarily complex requirements.The Agency is still in the process of developing pretreatment requirements for specific industrial categories, a process that is not scheduled to be completed until February 1985.

The Third Circuit's opinions, although remanding three provisions of EPA's regulations, on balance, upheld the essential nuts and bolts of the pretreatment program developed to date by the Agency. At the same time the Third Circuit either left unresolved, or raised on its own, a number of important issues with which EPA and [14 ELR 10040] the interested public undoubtedly will wrestle in the near future. In fact, while the EPA Administrator recently affirmed his support for the Agency's general approach to pretreatment, he concurrently announced that a task force will be created to examine ways to improve national implementation of the program.⁴ Some of the issues raised by the Third Circuit may be explored in that context.

Statutory and Regulatory Background

The Federal Water Pollution Control Act recognizes that the regulation of "direct" dischargers — facilities that discharge wastewater directly to navigable waters — would not be sufficient to achieve the Act's goal to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters."⁵ This is because many industrial facilities discharge large amounts of pollutants "indirectly" through POTWs, where their wastes are commingled with wastewater from other industrial users, domestic wastes from private residences, and municipal runoff prior to treatment by the POTW and discharge to navigable waters. Since POTWs generally are not designed to treat most of these industry-generated pollutants, particularly heavy metals and other toxic pollutants, their introduction to POTWs can cause severe problems. They may interfere with or inhibit the POTW's operation; pass through the POTW with little or no treatment; or settle in and contaminate the POTW's sludge, thereby causing sludge disposal problems.⁶

The potential importance of a program to control these indirect discharges is indicated by the fact that there are at least 60,000 existing industrial users of POTWs in the thirty-four industrial categories identified by EPA for potential regulation.⁷ Most of these facilities discharge to about 2,500 of the nation's 14,000-plus POTWs. Although they contribute a relatively small portion of the total flow to POTWs, they account for a substantial portion of the total toxic pollutant load entering POTWs. For example, EPA has estimated that indirect dischargers are responsible for up to 60 percent of the total toxic metals entering POTWs and contribute 89 percent of the cyanide, 85 percent of the cadmium, and 83 percent of the chromium entering POTWs.⁸

To deal with these problems, § 307(b) of the Act directs EPA's Administrator to promulgate

pretreatment standards for introduction of pollutants into [POTWs] … to prevent the discharge of any pollutant through [POTWs] which pollutant interferes with, passes through, or otherwise is incompatible with [the POTW].⁹

EPA has developed a two-pronged regulatory approach to implement this mandate. First, EPA promulgated General Pretreatment Regulations for Existing and New Sources.¹⁰ These regulations established the general administrative framework for applying pretreatment requirements to all industrial categories. In brief, they establish: (1) procedures for applying categorical pretreatment standards to industrial sources; (2) general prohibitions against discharges to POTWs that would create fire or explosion hazards or otherwise interfere with or pass through the POTW; and (3) requirements for local POTWs and states to develop local compliance programs to implement categorical pretreatment standards.

Second, in separate rulemaking proceedings, EPA has been developing numerical pretreatment standards applicable to individual industry categories. The categorical standards limit the types and amounts of pollutants which individual facilities may discharge to POTWs. Under a consent decree (the NRDC Consent Decree) entered into with the Natural Resources Defense Council (NRDC) in 1976 and amended several times since,¹¹ EPA has been developing standards for each category under the technology-based criteria required for direct dischargers under §§ 301, 304 and 306 of the Act. Under paragraph 13 of the NRDC Consent Decree, EPA promulgated pretreatment standards for existing sources in seven categories based on technology analogous to the "best practicable control technology currently available" (BPT), which direct dischargers were required to achieve by 1977 under §§ 301(b)(1)(A) and 304(b)(1).¹² In addition, under paragraph 7 of the NRDC Consent Decree, EPA has been developing pretreatment standards for existing sources in up to 34 industrial categories under the potentially more stringent criteria of "best available technology economically achievable" (BAT), which direct dischargers must achieve for toxic pollutants by 1984 under §§ 301(b)(2)(A) and 304(b)(2).¹³ To date, EPA has [14 ELR 10041] promulgated BAT-level controls for 15 categories, and is scheduled under paragraph 7 of the NRDC Consent Decree to promulgate standards for the remaining categories by February 1985.¹⁴

Overview of the Litigation

At issue in the Third Circuit litigation were challenges by NRDC and more than a dozen major trade associations and companies¹⁵ to several controversial and key aspects of the pretreatment program. With respect to the General Pretreatment Regulations, industry challenged (1) the definitions of "interference" and "pass-through;"¹⁶ (2) the combined wastestream formula,¹⁷ which calculates an end-of-pipe standard for facilities that combine more than one process wastestream for treatment in a single system; and (3) the "removal credits" provisions — setting conditions on a POTW's authority to relax the pretreatment standards otherwise applicable to an industrial user where the POTW's treatment system removes all or part of the pollutant of concern.¹⁸ In addition, NRDC challenged the "fundamentally different factors" variance provision,¹⁹ contending that the statute prohibits EPA from granting variances from categorical pretreatment standards. NRDC also challenged the EPA definition of "new source,"²⁰ contending that it improperly excluded certain dischargers. Finally, Ford, General Motors, the National Association of Metal Finishers (NAMF) and others challenged aspects of the BPT-equivalent categorical pretreatment standards for the electroplating category promulgated pursuant to paragraph 13 of the NRDC Consent Decree.²¹

This article will discuss industry challenges to the General Pretreatment Regulations and NRDC's challenges to the "new source" definition. NRDC's challenge to the "fundamentally different factors" variance is analyzed in a separate article appearing in this issue. As to the categorical electroplating standards, it should be briefly noted here that the Third Circuit rejected all industry challenges. This aspect of the case was a substantial victory for EPA and is of fundamental importance to a successful national pretreatment effort; there are as many as 10,000 existing industrial facilities conducting operations covered by the electroplating standards and they discharge a significant proportion of the total toxic pollutant load entering POTWs.

Definitions of Interference and Pass-Through

Interference

Section 307(b)(1) of the Act directs the Administrator to establish pretreatment standards "to prevent the discharge of any pollutant through [POTWs] which pollutant interferes with … such works." As originally promulgated in 1978, the General Pretreatment Regulations implemented this provision by prohibiting any source from introducing pollutants to a POTW which caused interference.²² The 1978 regulation also defined the term "interference" as an "inhibition or disruption of a POTW … which contributes to a violation of any requirement of its NPDES [national pollutant discharge elimination system] permit."²³

In settlement of several lawsuits brought against the 1978 regulation, EPA proposed to narrow the definition of "interference" to cover only those inhibitions or disruptions that cause or significantly contribute to a POTW's NPDES permit violations.²⁴ The proposal also contained a "safe harbor" provision that would have exempted industrial users who were in compliance with "specific prohibitions or standards developed by Federal, State or local governments."²⁵ In addition, the proposal would have limited interference to those pollutants which a discharger "knows or has reason to know will cause interference to the POTW."²⁶

Many of those commenting argued that it was unclear when an industrial user's discharge would be deemed to "significantly contribute" to a violation of the POTW's permit. In response, EPA promulgated a definition of interference that also defined "significantly contributes." The revised 1981 regulation defined interference as:

an inhibition or disruption of the POTW … which is a cause of or significantly contributes to either a violation of [its] NPDES permit or to the prevention of sewage sludge use or disposal by the POTW in accordance with [specified requirements].²⁷

The regulation then provided that an industrial user "significantly contributes" to a permit violation or the prevention of proper sludge disposal whenever the user:

(1) Discharges a daily pollutant loading in excess of that allowed by contract with the POTW or by Federal, State or local law;

(2) Discharges wastewater which substantially differs in nature or constituents from the User's average Discharge; or

(3) Knows or has reason to know that its Discharge, alone or in conjunction with Discharges from other sources, would result in a POTW permit violation or prevent sewage sludge use or disposal ….²⁸

The Third Circuit held this regulation invalid because the definition of "significantly contributes" effectively reads causation out of the regulation.²⁹ In the court's [14 ELR 10042] view, "an indirect discharger cannot be liable under the prohibited discharge standard unless it is a cause of the POTW's permit violation or sludge problem."³⁰ The court concluded: "If the definition of 'interference' required that an individual discharger be both 'the cause of' and 'significantly contributes to' the POTW's permit violation, it would be consistent with that causation requirement."³¹

The requirement that there be some causal nexus with respect to interference makes sense and comports with notions of fairness. The crux of the problem, however, is what "causation" means in a multiple discharger context. If, for example, a POTW violates its permit due solely to a modest increase in the amount of copper entering the plant, and there are 25 electroplating operations discharging copper to the POTW, it may well be that no one electroplater caused the POTW's permit violations, although several electroplaters' aggregate discharges may have caused it. To let all such electroplaters off the hook in this situation would seem patently inconsistent with the statute's proscription against interference.

It would appear, however, that EPA may not be hamstrung in this fashion by the Third Circuit ruling. To begin with, there is the separate statement of Judge Gibbons:

The interference must be caused by a pollutant. If it is established that the interference is caused by a pollutant, and a user of the POTW is a source of such pollutant, the three [tests of "significantly contributes"] satisfy both the Clean Water Act and due process.³²

Thus, Judge Gibbons' formulation would clearly allow the Agency needed flexibility to implement § 307(b) in multi-discharger situations.

It is not clear whether, and to what extent, the main decision is consistent with Judge Gibbons' views. The opinion begins by noting that "sections 307(b) and (c) require that pretreatment standards 'prevent the discharge of any pollutant … , which pollutant interferes with [POTWs]' … (emphasis added)."³³ This emphasis on the pollutant, rather than a particular user, is consistent with Judge Gibbons' approach. On the other hand, the court then notes that § 307(c), which deals with "new source" indirect discharges, provides that standards must insure that any new source "'will not cause a [POTW permit] violation …' (emphasis added)" — the court's emphasis being placed on the notion of cause.³⁴

The court also referred to the legislative history indicating that pretreatment requirements were not intended as a substitute for adequate treatment by the POTW.³⁵ In the court's view, this intent would be contravened if an industrial user could be held liable for interference simply because it failed "to substitute its own pretreatment" for inadequate treatment by the POTW. This concern, that industrial users not be required to compensate for inadequate treatment by the POTW, is unrelated to the multiple-discharger problem discussed above, where the POTW is operated properly but several industrial users combine to cause the POTW to violate its permit. Therefore, if this concern represents the crux of the problem for Judges Hunter and Becker, then presumably they would not take issue with Judge Gibbons' formulation, at least in the multiple discharger setting.

EPA probably retains other, although perhaps less convenient, means to deal with multiple discharger problems. For example, if the three criteria set forth in 40 C.F.R. § 403(i)³⁶ were deemed rebuttable presumptions rather than conclusive proof of interference, then EPA's burden of proving "causation" would be less onerous. Similarly, a regulatory scheme which imposed joint and several liability in such situations would also ease EPA's enforcement burden. These approaches would seem fully permissible under any reading of the Third Circuit's opinion and are consistent with the Act.

In any event, it appears that the practical effect of the court's remand of the interference definition will be minimal. First, the Court specifically declined industry's request to remand the regulatory prohibition against interference along with the definition.³⁷ Therefore, the regulatory prohibition against interference stands, and EPA can continue to enforce this prohibition, particularly in cases where causation is clear.

In addition, irrespective of the General Pretreatment Regulations, EPA has been making substantial headway in promulgating numerical, technology-based pretreatment standards for industry categories. These standards apply to those pollutants, discharged by each category, which may interfere with or pass through POTWs. As development, implementation, and enforcement of these categorical standards proceed, the blanket prohibition against "interference" set forth in the General Pretreatment Regulations may be used less as an enforcement tool.

This is not to say, however, that the general prohibition against interference may not be necessary in some situations. The categorical pretreatment standards are intended to apply nationwide to all sources within a category, and are technology-based. They therefore are developed with a broad brush; they cannot possibly remedy all of the problems which may give rise to "interference" at individual POTWs, and they are not intended to do so. Therefore, even if an industrial user is in compliance with its categorical standards, it may still cause interference in a given situation. It should be noted, however, that at oral argument the Third Circuit expressed some concern with the notion of holding a user liable when it is in compliance with its categorical pretreatment standard, although the court declined to decide whether this would be permissible.³⁸ This question has been left for another day.

[14 ELR 10043]

Pass-Through

Section 307(b) also requires pretreatment for pollutants which "pass through" a POTW to navigable waters without adequate treatment. The 1981 amendments to the General Pretreatment Regulations contained a definition of pass-through which was similar to the definition of interference.³⁹ Prior to its promulgation, EPA had not proposed the definition for public comment. At the time of promulgation, the Agency stated that a formal proposal was not necessary because a definition of interference had been proposed, and the two definitions as finally promulgated were almost identical.⁴⁰ However, in the Third Circuit EPA conceded that the definition of pass-through was not promulgated in accordance with the public notice-and-comment requirements of the Administrative Procedure Act,⁴¹ and therefore consented to a voluntary remand of the pass-through definition.⁴²

Definition of "New Source"

Section 307(c) of the Act requires EPA to promulgate pretreatment standards for any source which would be a "new source" under § 306 if it were a direct discharger. Section 306(a)(2), in turn, defines a "new source" as one which commences construction after publication of proposed regulations applicable to that source "if such standard is thereafter promulgated in accordance with this section."⁴³ EPA has consistently viewed the quoted clause to mean that, if the Agency does not "thereafter promulgate" a final standard "in accordance with" the time frames set out in § 306(b)(1)(B), then EPA has the discretion to define a new source as one that commences construction after the date of promulgation of standards, rather than after proposal.

The Agency's ratonale has been that if it takes more than 120 days after proposal to promulgate a final new source categorical standard, then plants covered by that category which commence construction shortly after proposal should not be kept in the dark for such a lengthy period as to the requirements that will apply to them. This interpretation has been adopted in the Agency's generic NPDES regulations for direct dischargers.⁴⁴ It also was included in the Agency's General Pretreatment Regulations for indirect discharges.⁴⁵

However, the Third Circuit previously had held EPA's construction of § 306(a)(2) to be invalid. In Pennsylvania Department of Environmental Resources v. EPA,⁴⁶ the court held that a new source generally must be defined in relation to the date of proposal of standards rather than the date of promulgation, regardless of whether EPA promulgates final standards within 120 days after proposal.⁴⁷

NRDC challenged the new source definition in the pretreatment rules. EPA conceded that the definition was invalid under the court's prior holding, and moved for permission to rescind the definition. The court, expressing concern that the Agency would adhere to and apply the challenged definition, denied EPA's motion and held the provision invalid.⁴⁸

The effect of the court's remand of this provision will be more limited than might be expected. Since EPA is establishing pretreatment standards on the basis of the technology applicable to direct dischargers in each category, classifying a facility as a new source subjects it to "best available demonstrated technology" ("BADT") under § 306. The classification as a new or existing source, then, will be important only to the extent that BADT requirements are more stringent than best practicable technology currently available (BPT) or BAT. While for some industries new source requirements are more stringent, this is not universally the case.⁴⁹

It should be noted that the same definition of new source is now before the D.C. Circuit in NRDC's pending challenge to EPA's NPDES regulations.⁵⁰ That case has been stayed pending settlement discussions. Finally, it should be noted that EPA reportedly will ask Congress to consider an amendment to § 306 of the Clean Water Act which would legislatively reverse the Third Circuit's opinions in Pennsylvania DER v. EPA and Metal Finishers.⁵¹

Removal Credits

In 1977, Congress amended § 307(b)(1) of the Act to authorize POTWs to adjust pretreatment standards for industrial users to reflect the level of removal of regulated pollutants that a POTW achieves.⁵² This amendment reflected [14 ELR 10044] Congress' awareness that POTWs, although not designed to do so, may achieve some incidental removal of toxic pollutants. It also reflected Congress' intent to avoid imposing redundant treatment requirements on industrial users.⁵³ On the other hand, Congress was aware that POTWs generally do not remove toxic pollutants as efficiently as industrial treatment systems can, and the § 307 amendment therefore sharply limited the authority of POTWs to issue "removal credits." First, Congress did not require POTWs to grant credits, but merely authorized them to do so. Second, the POTW must ensure that the level of treatment achieved by the POTW and the industrial user combined is equivalent to the removal that the industrial user would have achieved using the applicable technology, BPT or BAT, had it been a direct discharger. Third, removal credits may not be granted if they would interfere with the POTW's sludge disposal requirements. Further, the legislative history manifests Congress' clear intention that only those POTWs having approved local pretreatment programs under § 402(b)(8)⁵⁴ may grant credits.⁵⁵ All of these conditions are in keeping with the overriding goal of the Act, and particularly the 1977 amendments, to minimize the discharge of toxic pollutants into the Nation's waters.⁵⁶

The General Pretreatment Regulations contain a series of detailed provisions governing a POTW's authority to grant removal credits. A POTW must have an approved pretreatment program that meets specified criteria,⁵⁷ except that POTWs may obtain conditional authority to grant removal credits upon submitting such a program to EPA for approval.⁵⁸ The application for removal credit authority must list each pollutant for which authority to grant credits is sought and document the removal of each pollutant by the POTW-applicant.⁵⁹

The Third Circuit rejected the numerous industry challenges to the removal credit regulations.⁶⁰ Petitioners argued that EPA lacked authority to condition the grant of removal credits on the development of a local pretreatment program. Petitioners contended that, since such a requirement was not explicitly set forth in § 307(b)(1) of the Act, it could not be imposed by regulation. The court agreed with EPA, however, that Congress clearly intended that the granting of credits should be tied to the development of adequate local pretreatment programs under § 402(b)(8). As Senator Muskie, the Act's Senate sponsor, put it, "Tying local [removal] credits to the compliance programs not only provides incentive for local participation, but more importantly, it provides assurance that the removal levels which justified the local credits will be maintained by a [POTW] committed to a sound pretreatment program."⁶¹

Second, the court rejected the contention of the Chicago Association of Commerce and Industry and the Mid-America Legal Foundation that EPA lacked authority to imposed any preconditions on the POTW's authority to grant credits. The court held that § 501(a),⁶² which authorizes the Administrator "to prescribe such regulations as are necessary to carry out his functions under this chapter," provides authority to issue such regulations.

Third, the court rejected industry's claims that the removal credits requirements were so "unworkable" as to vitiate Congress' intent that credits be granted in appropriate cases. Industry had claimed that the regulations as a whole were so complex as to be unworkable, and had challenged a few specific provisions on this ground. As to petitioners' generalized claims of unworkability, the court reaffirmed its own prior holdings and those of other courts⁶³ that such claims are "necessarily less persuasive than a claim detailing the alleged errors made by the Administrator," and found that petitioners had "failed to document their general assertions so as to overcome the presumption of regularity in the Administrator's conduct."⁶⁴ This aspect of the court's holding reaffirms an important principle of administrative law with respect to judicial review of agency rulemaking actions that are subject to the arbitrary and capricious standard. If petitioners seek to overcome the presumption of regularity to which agency action is entitled, they must demonstrate — both in the comment period and in subsequent judicial proceedings — how, in some specific way, the agency has erred. Generalized claims of "unworkability" or "arbitrariness," no matter how loudly or persistently trumpeted, will not suffice to overturn agency action.

Industry did cite three specific provisions in support of its unworkability claim. The court, however, found that each provision reasonably implemented the statute. First,industry argued that tying removal credits to the development of local pretreatment programs was unworkable, in view of the detailed criteria for obtaining local pretreatment programs. As noted above, the court found this condition to be consistent with legislative intent. In addition, [14 ELR 10045] limiting removal credit authority to towns with approved pretreatment programs is a diminishing obstacle, as hundreds of POTWs continue to apply for and obtain approval of their pretreatment programs.⁶⁵

Second, the regulation requires POTWs to adjust removal credits to account for the number of hours each year that the POTW experiences overflows.⁶⁶ The Third Circuit rejected petitioners' assertions that this requirement was unworkable, and stated that it "simply implements the statutory requirement that removal credits be granted only for pollutants actually removed by the POTW."⁶⁷

The third specific provision challenged by industry requires POTWs to review their removal efficiencies every six months and revise removal credits if these data reveal that the POTW's removal efficiency has decreased.⁶⁸ Petitioners claimed that this periodic review subjected industrial users to an improper "moving target" because they would be unable to rely on a constant removal credit and thus could be forced to install just as much control technology as if no removal credit were allowed. The court rejected this challenge, stating that "such withdrawn or modified discharge limits, though unfortunate, are merely the recognition of the POTW's failure to remove the pollutant … Such a requirement is consistent with the mandate of Section 307(b)(1) that any revision 'reflect the removal of such toxic pollutant by such works.'"⁶⁹

The fact that the reviewing court upheld the legality of the removal credits provisions does not answer the question of whether, in practice, they are so cumbersome as to discourage POTWs from granting removal credits to deserving industrial users. It has been an article of faith — or, at least, a consistent incantation — of industry that the complexity and burdens of these regulations have been a significant disincentive, and indeed few POTWs have actually applied for removal credit authority.⁷⁰ But there are good reasons to believe that EPA's present regulations should not shoulder the lion's share of blame for this state of affairs. To begin with, removal credits inure to the benefit of the industrial user, not the POTW.As the General Accounting Office has recognized, POTWs therefore may be predisposed to view any removal credits program as simply another administrative burden, with few countervailing benefits.⁷¹ While the EPA regulations arguably increase the administrative burden, the absence of direct benefits to the POTW might stifle removal credits programs even with more lenient EPA rules.

Moreover, other considerations may prohibit POTW's from granting credits in many cases. Section 307(b)(1) provides that credits can be granted only if they will not prevent the POTW from meeting sludge requirements of § 405.⁷² EPA has thus far promulgated only a few sludge standards under § 405. Many municipalities have told EPA that, even if they are in compliance with present sludge criteria, their concern over future criteria for other pollutants has caused them not to seek removal credits authority now, for fear that the credits will have to be revoked or revised as additional sludge criteria are promulgated.

If all else were equal, one could expect that the Third Circuit's ruling would put an end to the debate about removal credits, since POTWs that might have been banking on a remand now know that EPA's removal credits regulations are the only game in town. However, on September 28, 1982, while the Third Circuit litigation was pending, EPA formally proposed substantial revisions to the removal credits regulations.⁷³ The proposal would allow any POTW that is in compliance with secondary treatment requirements, or is within one year of meeting those requirements, to grant removal credits based on "national removal rates" developed by EPA, rather than plant-specific data on removal rates that the present regulations require.⁷⁴ The proposal would also add flexibility to the sampling requirements for POTWs that do not qualify for national removal rates.⁷⁵

In addition, the proposal would eliminate or substantially revise two requirements that were targets in the Third Circuit litigation. First, the proposal would delete the requirement that removal credits account for overflows at the POTW, based upon EPA's proposed finding that "the overflow adjustment makes a negligible difference in the final removal credit."⁷⁶ Second, the proposal would partially delete the "moving target" which requires POTWs periodically to review their removal efficiencies and revise removal credits. Instead, POTWs qualifying for national removal rates would only be subject to such reviews "whenever the POTW's permit is revised" — once every five years.⁷⁷

The comment period on these proposals closed on November 29, 1982, and they have engendered substantial discussion. A final rule may be promulgated by the spring of 1984. One question, therefore, is how the Third Circuit's decision will bear on these proposals. NRDC argued strenuously in the litigation that the existing regulations, particularly the "moving target" and the overflow provision, are not merely consistent with the statute, but are required to ensure that removal credits "reflect the removal of such toxic pollutants by [14 ELR 10046] such works."⁷⁸ But the Third Circuit declined NRDC's invitation to issue such a sweeping ruling, and held only that the existing regulations are consistent with the Act, without precluding future amendments based on adequate supporting data and reasons.

Combined Wastestream Formula

The General Pretreatment Regulations establish a formula to adjust the discharge limit in a categorical pretreatment standard where the industrial user combines the wastestreams regulated by that standard for treatment with other wastewater.⁷⁹ The purpose of the formula is to allow such "integrated," or combined treatment facilities, appropriate leeway to continue to treat different process waste streams in one central treatment plant, while insuring that these plants do not use central treatment as a means to simply dilute pollutants of concern, thus avoiding adequate treatment of the regulated waste stream.⁸⁰ The court rejected all challenges to this combined wastestream formula.

First, and most important, the court rejected the notion that either the Clean Water Act or NRDC Consent Decree requires EPA to regulate whole plants, not process categories. The court held that, "[a]bsent some indication that this was Congress' intent, we will defer to the Administrator's interpretation."⁸¹ The court thus recognized that, given the wide diversity of industrial processes at American plants, it would be virtually impossible for EPA to regulate all integrated facilities under one category. As the Agency argued, this approach would effectively prescibe case-by-case regulation of thousands of facilities — and thus would directly contravene Congress' directive to establish standards for categories of dischargers.

Second, the court rejected petitioners' claim that the combined wastestream formula improperly subjects them to a "moving target" because the end-of-pipe limit for a combined treatment system may change under the formula each time an additional waste stream becomes regulated by a categorical pretreatment standard. The court held that:

The process-by-process or "building block" approach may make up in relative simplicity and uniformity what it lacks in predictability. We cannot say that that approach, or the formula that implements it, lacks a rational basis.⁸²

Finally, the court rejected as not ripe for review industry's claim that the formula will subject them to technically infeasible or unduly costly requirements. The court agreed with EPA that the proper place — in fact, the only possible place — for EPA to adequately consider costs, achievability, and the other statutory factors is in the categorical rulemaking proceedings. If the categorical standards are predicated on combined treatment, and EPA fails adequately to consider the statutory factors for combined treatment technology in that categorical rulemaking, then industry's remedy is to obtain a remand of the categorical standards, but not the formula.⁸³

On the other hand, it is important to note that the formula may be irrelevant to the validity of a particular categorical standard, because EPA may base such standards on the costs and feasibility of segregating process waste streams for treatment at multi-process facilities. If EPA adequately justifies the standards on the basis of segregating waste streams for treatment, then there is no obligation to determine, in addition, the costs and feasibility of combined treatment.⁸⁴

Conclusion

The Third Circuit decision clears the way for implementation of a comprehensive national pretreatment program to begin at long last. The decision resolved a number of legal issues which have surrounded the pretreatment program for years and provided some guidance on other issues. The time for filing petitions for certiorari has passed and none of the rulings discussed in this article have been challenged.⁸⁵ The book is not yet closed, however. Congress will continue to hear criticisms of the program, and the Agency will continue to seek to improve the regulations challenged in the Third Circuit litigation.

1. National Ass'n of Metal Finishers v. EPA, 719 F.2d 624, 13 ELR 21042 (3d Cir. 1983); Ford Motor Co. v. EPA, 718 F.2d 55, 13 ELR 21038 (3d Cir. 1983).

2. 33 U.S.C. §§ 1251 et seq., ELR STAT. 42101 et seq.

3. 33 U.S.C. § 1317(b)-(d), ELR STAT. 42130.

4. Hearings to Receive Testimony on Possible Amendments to the Federal Water Pollution Control Act Before the Subcomm. on Water Resources of the House Comm. on Public Works, 98th Cong., 1st Sess. (Nov. 15, 1983) (testimony of William D. Ruckelshaus).

5. FWPCA § 101(a), 33 U.S.C. § 1251(a), ELR STAT. 42105.

6. For example, sludge that is contaminated with heavy metals may be unusable as a soil conditioner because of danger to crops and drinking water. See 46 Fed. Reg. 9406 and 9411 (Jan. 28, 1981). Thirty percent of all municipal sludge is applied to land. 44 Fed. Reg. 52597 (Sept. 7, 1979).

7. 46 Fed. Reg. 9405 (Jan. 28, 1981).

8. 46 Fed. Reg. 9406 (Jan. 28, 1981).

9. 33 U.S.C. § 1317(b), ELR STAT. 42130. In addition, § 307(c), 33 U.S.C. § 1317(c), ELR STAT. 42130, requires EPA to promulgate pretreatment standards for new sources as defined in § 306 of the Act, 33 U.S.C. § 1316(a)(2), ELR STAT. 42129. Finally, § 307(d), 33 U.S.C. § 1317(d), ELR STAT. 42130, makes it unlawful for any indirect discharger to violate applicable pretreatment standards or other discharge requirements applicable to that source.

10. 43 Fed. Reg. 27736 (June 26, 1978), amended, 46 Fed. Reg. 9404 (Jan. 28, 1981) (codified at 40 C.F.R. pt. 403).

11. NRDC v. Train, 6 ELR 20588 (D.D.C. 1976); motion to vacate settlement denied sub nom. NRDC v. Costle, 9 ELR 20176 (D.D.C. 1979); denial of motion to vacate settlement aff's sub nom. EDF v. Costle, 636 F.2d 1229, 10 ELR 20803 (D.C. Cir. 1980); settlement upheld sub nom. NRDC v. Gorsuch, 12 ELR 20371 (D.D.C. 1982); motion to modify settlement denied sub nom. NRDC v. Gorsuch, 12 ELR 20570 (D.D.C. 1982); modified to extend deadlines sub nom. NRDC v. Gorsuch (D.D.C. Oct. 26, 1982), modified to extend deadlines sub nom. NRDC v. Ruckelshaus, Nos. 2153-73 et al. (D.D.C. Aug. 2, 1983).

12. 33 U.S.C. §§ 1311(b)(1)(A) & 1314(b)(1), ELR STAT. 42123 & 42127.

13. 33 U.S.C. §§ 1311(b)(2)(A) & 1314(b)(2), ELR STAT. 42123 & 42127. Under P7 of the decree, 6 ELR at 20592, EPA has also been developing new source standards for direct and indirect dischargers according to "Best Available Demonstrated Technology" ("BADT") prescribed by § 306 of the Act, 33 U.S.C. § 1316, ELR STAT. 42128.

14. The number of industry categories for which EPA must promulgate BAT toxics standards has changed over the years as a result of a series of modifications to the NRDC Consent Decree. In NRDC v. Gorsuch, 12 ELR 20570, 20571 (D.D.C. 1982), Judge Flannery, ruling on an EPA request to modify the decree, listed 24 categories. In January 1984, BAT standards were still lacking for nine categories. NRDC v. Ruckelshaus, 14 ELR 20185 (D.D.C. Jan. 6, 1984).

15. Petitioners included the National Association of Metal Finishers (NAMF), Ford Motor Co., General Motors Corp., Chemical Manufacturers Association, Interlake Steel Corp., Association of Metropolitan Sewerage Agencies, United States Brewers Association, Chicago Association of Commerce and Industry and others.

16. 40 C.F.R. § 403.3(i) & (n).

17. Id. § 403.6(e).

18. Id. § 403.7.

19. Id. § 403.13.

20. Id. § 403.3(k).

21. See supra note 11.

22. 40 C.F.R. § 403.5(a) (1978).

23. 40 C.F.R. § 403.3(h) (1978).

24. 44 Fed. Reg. 62265 (Oct. 29, 1979).

25. Id.

26. Id. at 62266.

27. 40 C.F.R. § 403.3(i) (1982).

28. Id.

29. To take an example raised by the court at oral argument, if on a given day the POTW's engineer had a hangover and therefore caused a permit violation, an industrial user could nonetheless be guilty of interference if on the same day its discharge to the POTW "substantially differ[ed] in nature or constituents" from its average discharge.

30. 719 F.2d at 641, 13 ELR at 21048.

31. Id., 13 ELR at 21048.

32. Id., at 667, 13 ELR at 21063.

33. Id. at 640, 13 ELR at 21048.

34. Id., 13 ELR at 21048.

35. Id. at 640-41, 13 ELR at 21048.

36. See infra text accompanying note 28.

37. Id. at 641 n.17, 13 ELR 21048 n.17.

38. Id. at 641 n.14, 13 ELR 21048 n.14. The final 1981 regulation did not include the "safe harbor" provision proposed in 1979. See supra text accompanying note 16.

39. 40 C.F.R. § 403.3(n).

40. 46 Fed. Reg. 9416 (Jan. 38, 1981).

41. 5 U.S.C. § 553, ELR STAT. 41002.

42. At the same time, however, EPA urged the court to pass on the merits of the definition in remanding it to the Agency, so as to aid EPA and the public during the course of future rulemaking (citing Duquesne Light Co. v. EPA, 522 F.2d 1186, 1196, 5 ELR 20539, 20543 (3d Cir. 1975) and Rodway v. U.S. Dep't of Agriculture, 514 F.2d 809, 818 (D.C. Cir. 1975)). The Third Circuit declined this invitation, 719 F.2d at 641, 13 ELR 21048.

43. 33 U.S.C. § 1316(a)(2), ELR STAT. 42129.

44. 40 C.F.R. § 122.2.

45. 40 C.F.R. § 403.3(k).

46. 618 F.2d 991, 10 ELR 20152 (3d Cir. 1980).

47. The court left open the possibility that EPA might have the authority to define a new source as one that commences construction after final promulgation of a new source standard if (1) promulgation occurred substantially more than 120 days after proposal and (2) the final regulation substantially differed from the proposal, 618 F.2d at 1000 n.1, 10 ELR at 20156 n.1.

48. 719 F.2d at 642 n.19, 13 ELR 21049 n.19.

49. Compare effluent limitations guidelines for the Fatty Acid manufacturing by Fat Splitting Subcategory of the Soap and Detergent Manufacturing Category, for which the standards of performance for new sources, 40 C.F.R. § 417.25, are identical to BAT, 40 C.F.R. § 417.23; and those for the Ammonia Subcategory of the Fertilizer Manufacturing Category, for which new source standards, 40 C.F.R. § 418.25, are less stringent than BAT, 40 C.F.R. § 418.23; with the Hot Forming Subcategory of the Iron and Steel Manufacturing Category, in which the new source standards for primary mills with scarfing, 40 C.F.R. § 420.74(a)(2), are more stringent than the tightest standards for existing facilities (BPT in this case), 40 C.F.R. § 420.72(a)(2). In the direct discharger context, classification as a new source has an additional effect in that the issuance of NPDES permits to new — but not existing — sources is subject to the requirements of the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321-4361, ELR STAT. 41009. See FWPCA § 511(c), 33 U.S.C. § 1371(c), ELR STAT. 42149. In the indirect discharger context, however, NEPA does not apply. Id.

50. NRDC v. EPA, Nos. 80-1607 et al. (D.C. Cir., filed June 1, 1980).

51. Ward, 404, Pretreatment Decisions Likely to Draw Congress' Attention, ENVTL. FORUM, Jan. 1984, at 7.

52. If, in the case of any toxic pollutant … introduced by a source into a [POTW], the treatment by such works removes all or any part of such toxic pollutant and the discharge from such works does not violate that effluent limitation or standard that would be applicable to such toxic pollutant if it were discharged by such source other than through a [POTW], and does not prevent sludge use or disposal by such works in accordance with section 1345 of this title then the pretreatment requirements for the sources actually discharging such toxic polutant into such [POTW] may be revised by the [POTW] to reflect the removal of such toxic pollutant by such works.

33 U.S.C. § 1317(b)(1), ELR STAT. 42130.

53. See, e.g., S. CONF. REP. NO. 1236, 92nd Cong., 2d Sess. 130, reprinted in 1972 U.S. CODE & AD. NEWS 3776, 3807; H.R. REP. NO. 911, 92d Cong., 2d Sess. 113, reprinted in SENATE COMM. ON PUBLIC WORKS, 93d Cong., 1st Sess., LEGISLATIVE HISTORY OF THE WATER POLLUTION CONTROL ACT AMENDMENTS OF 1972, at 753, 800; SENATE COMM. ON ENVIRONMENT AND PUBLIC WORKS, 95th Cong., 2d Sess., LEGISLATIVE HISTORY OF THE CLEAN WATER ACT OF 1977, at 343. (1977 LEGIS. HIST.).

54. 33 U.S.C. § 1342(b)(8), ELR STAT. 42141.

55. 1977 LEGIS. HIST. at 461 (remarks of Senator Muskie).

56. FWPCA § 101(a)(3), 33 U.S.C. § 1251(a)(3), ELR STAT. 42105.

57. 40 C.F.R. §§ 403.7(b)(2) & 403.8.

58. Id. § 403.7(b)(2).

59. Id. § 403.7(d)(1) & (2). The regulations prescribe the sampling methods and analytical procedures for collecting such data. Id. § 403.7(d)(2). These procedures are not a straitjacket, however. Upon approval by the state or EPA, alternative methods may be used. Id. § 403.7(d)(2)(vi).

60. 719 F.2d at 646-50, 13 ELR at 21051-53.

61. 1977 LEGIS. HIST. at 461.

62. 33 U.S.C. § 1361(a), ELR STAT. 42146.

63. E.g., American Iron and Steel Institute v. EPA, 526 F.2d 1027, 1049 & 1046, 6 ELR 20068, 20076 & 20084 (3d Cir. 1975); United States Steel Corp. v. Train, 556 F.2d 822, 836-39, 7 ELR 20419, 20424-25 (7th Cir. 1977).

64. 719 F.2d at 649-50, 13 ELR at 21053.

65. By the end of 1983, approximately 400 POTWs had approved local pretreatment programs in place, including major cities like Seattle and Philadelphia.

66. 40 C.F.R. § 403.7(b)(3).

67. 719 F.2d at 649, 13 ELR at 21053.

68. 40 C.F.R. § 403.7(f)(5).

69. Id. This challenge came as somewhat of a surprise to EPA, because during the rulemaking all commenters, including several petitioners, had strongly urged EPA to adopt this provision. The 1978 regulation had provided that if a POTW's removal efficiency decreased, then removal credits would have to be revoked entirely. In subsequent rulemaking, the public comments urged EPA to make this provision more flexible by allowing removal credits to be revised, rather than rescinded. Thus, what petitioners labeled an illegal "moving target" in the litigation had been previously supported as adding appropriate flexibility to the regulatory scheme.

70. As of the end of December 1983, only one POTW had formally applied for authority to grant removal credits. Approximately 50 other POTWs were in the process of developing removal credit proposals.

71. GENERAL ACCOUNTING OFFICE, REPORT TO THE ENVIRONMENTAL PROTECTION AGENCY; A NEW APPROACH IS NEEDED FOR THE FEDERAL INDUSTRIAL WASTEWATER PRETREATMENT PROGRAM 10 (Feb. 19, 1982).

72. 33 U.S.C. § 1345, ELR STAT. 42145.

73. 47 Fed. Reg. 42698 (Sept. 28, 1982).

74. Id. at 42704.

75. Id. at 42705.

76. Id. at 42701.

77. Id. at 42702 and 42706.

78. 33 U.S.C. § 1713(b), ELR STAT. 42130.

79. 40 C.F.R. § 403.6(e).

80. Congress clearly indicated its intention that dilution should not be used to substitute for pretreatment. See, e.g., S. CONF. REP. NO. 1236, 92d Cong., 2d Sess. 101, reprinted in 1972 U.S. CODE CONG. & AD. NEWS 3776, 3778.

81. 719 F.2d at 652-53, 13 ELR at 21055.

82. Id. at 653, 13 ELR at 21055.

83. Id. at 653-56, 13 ELR at 21055-57.

84. Id. at 655 n.47 and accompanying text, 13 ELR at 21056 n.47 and accompanying text.