Federal Water Pollution Control Act Enforcement from the Discharger's Perspective: The Uses and Abuses of Discretion

by Norton F. Tennille Jr.

A central issue in the evaluation of federal and state environmental regulatory mechanisms is the degree of discretion which should be vested in the regulatory authorities to set and enforce environmental standards. The Standing Committee on Environmental Law of the American Bar Association has chosen as its theme for the current year "Enforceability of Laws Designed to Protect the Environment." This article is designed to stimulate further consideration of the issue of administrative discretion in environmental regulation by presenting one perspective on that issue as it arises under the Federal Water Pollution Control Act.

— Ed.

Mr. Tennille is a partner at Arnold & Porter, Washington, D.C. A.B. 1961, University of North Carolina; M.A. 1963, Harvard University and 1970, Oxford University; J.D. 1968, Harvard University.

This article originated as a speech delivered at the ALI-ABA Course of Study on Water and Air Pollution, cosponsored by the Environmental Law Institute, October 6, 1977.

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The most important single characteristic of regulation under the Federal Water Pollution Control Act (FWPCA),¹ from the discharger's perspective, is the broad discretion vested in the Environmental Protection Agency (EPA) and the states to regulate pollutant discharges. How to affect the exercise of that discretion so as to produce regulatory results which are equitable, reasonable, and economically viable is the most challenging task which the industrial discharger confronts.

Enforcement under the FWPCA represents only the final stage in a long series of exercises in regulatory discretion. Whether enforcement actions are fair and reasonable will depend in large part on howthat discretion was exercised in the standard-setting and permit-writing processes. To borrow an analogy from the technical side of the business, enforcement is only the "end of the pipe." The quality of the regulatory result depends in large part on what happens in the process which culminates in the formulation of plant-specific effluent limitations.

From the discharger's point of view, the discretion-based regulatory system is burdensome, costly, often frustrating, and sometimes unjust and oppressive. It consumes much executive time; often requires the involvement of private consultants, or outside counsel, or both; necessitates the generation of masses of economic and scientific data; and is always dynamic. The process never comes to an end. There is always a moving target.

Yet the present system has worked far better than many of its early critics predicted,² and the alternatives (some of which are examined below) do not appear attractive from the discharger's perspective. Until industry has completed the conversion to "best practicable control technology," and the Congress and EPA have concluded their "mid-course" review of "best available technology," it cannot safely be predicted whether a discretion-based regulatory system is the best system for the long haul. It is the author's view, however, that the present system can work to produce reasonable results, and that the burdens and uncertainties which are often characteristic of this system can be minimized.

This article examines three aspects of the FWPCA's discretion-based regulatory system: (1) the nature of the discretion exercised by the regulators under FWPCA, (2) enforcement issues which arise in a discretion-based system, and (3) alternatives to the present system. It concludes by considering what is required of the discharger in such a system, and what the discharger may legitimately ask of the regulators in order to make the system a workable one from his perspective.

I. The Many Faces of Discretion

Although the FWPCA might appear upon superficial examination to provide a detailed and specific regulatory scheme, a closer review reveals that this is not the case. Discretion is the key characteristic of all stages of the regulatory process. The Administrator of EPA has received only the most general guidance for setting standards, writing permits, and enforcing those permits.

Given the broad discretion provided by the statute, it is perhaps not surprising that the courts have typically deferred to the Administrator when his actions under FWPCA have been challenged. If the Constitution means what the Supreme Court says it means, then the FWPCA, in most cases, means what the Administrator of EPA says it means. In a leading case decided under FWPCA, E.I. DuPont de Nemours & Co. v. Train,³ the Court quoted with approval the following language upholding the validity of EPA regulations under the Clean Air Act:

We therefore conclude that the Agency's interpretation … was "correct" to the extent that it can be said with complete assurance that any particular interpretation of a complex statute such as this is the "correct" one. Given this conclusion, as well as the facts that the Agency is charged with administration of the Act, and that there has undoubtedly been reliance upon its interpretation by the States and other parties affected by the Act, we have no doubt whatever that its construction was sufficiently reasonable to preclude the Court of Appeals from substituting its judgment for that of the Agency. Train v. [7 ELR 50092] Natural Resources Defence Council, 421 U.S. 60, 87, [5 ELR 20264, 20270] (1975).⁴

Whether this degree of deference to the Administrator of EPA is appropriate, and the broader question of the proper standards for judicial review of environmental decision making, are issues beyond the scope of this article.⁵ Suffice it to say that a high degree of judicial deference to EPA is presently a fact of life with which the discharger must contend.

A. Discretion in the Standard-Setting Process

The first and most important exercise of discretion comes in the establishment of effluent limitations guidelines and new source performance standards by EPA. The Agency has been given only three general guideposts for this task: (1) statutory deadlines, (2) technology-based objectives such as "best practicable control technology currently available"⁶ (BPT) and "best available technology economically achievable"⁷ (BAT), and (3) certain criteria to be applied in interpreting these terms, such as "total cost of application of technology in relation to the effluent reduction benefits to be achieved from such application."⁸ On the basis of such general guidance, the Administrator is required, ultimately, to tell the discharger how many pounds (if any) of biochemical oxygen demand (BOD) or other pollutant he may discharge per day, measured by what type and frequency of sampling, achieved by what date, whether net or gross, and so on.

EPA has exercised considerable discretion in deciding how effluent limitations guidelines should be formulated and was upheld in this exercise of discretion in E.I. DuPont de Nemours & Co. v. Train.⁹ EPA's discretion in choosing industrial categories and sub-categories, identifying appropriate technologies, and setting the guidelines numbers has similarly been broad. Anyone who has participated with EPA in the standard-setting process knows that the Agency, especially in the earliest days of the Act, was operating in areas of considerable technological and economic uncertainty. In many instances, there were no reliable technological or economic data upon which to make informed decisions. Vast sums of money were spent by EPA and by industry to hire consultants to develop such data. Much of the technology was untried, or at least untransferred from industries in which it had been developed to industries for which it was to be required, and the economic impact of various regulatory alternatives was difficult to predict.

From the perspective of private industry, the numbers ultimately used in setting standards were often wildly off base. Yet, EPA always had to come down somewhere and, where EPA has come down, the courts have more often than not upheld the Agency.¹⁰ Even a casual student of the judicial decisions reviewing effluent limitations guidelines will recognize that the reviewing courts have generally given EPA the benefit of the doubt, and have often given credence to EPA conclusions which were based upon state or highly speculative data.¹¹

Thus, reasonably or unreasonably, fairly or unfairly, what a discharger has to live with is, in most instances, what the Effluent Guidelines Division of EPA says it must live with. EPA's discretion in this area has been largely unfettered. And this early, often shaky exercise of discretion in setting standards forms the ultimate basis for all subsequent enforcement action. To the extent that enforcement action subsequently produces unfair or unreasonable results, the fault will often lie in ill-advised agency action in the formulation of these fundamental ground rules.¹²

Finally, it should be noted that the states exercise considerable discretion in setting substantive effluent standards which will be enforced against the discharger. These standards may be based on water quality standards, or they may be technology-forcing. State standards are integrated with the federal standards at the [7 ELR 50093] permit-writing stage, discussed immediately below.

B. Discretion in the Permit-Writing Process

The National Pollutant Discharge Elimination System (NPDES) permit-issuing process¹³ opens up another vast field for the exercise of regulatory discretion, and unfortunately the players confronting the discharger on this field are different from those it faced in the standard-setting process. Whereas federal effluent limitations guidelines and new source performance standards are developed by the EPA Effluent Guidelines Division in Washington, NPDES permits are issued on the regional or state level. Even where EPA regional offices have provided input in the standard-setting process, the regulatory approach taken at the regional level may be very different from that intended or foreseen by EPA's Effluent Guidelines Division.

Regional permit personnel may feel that the guidelines are too stringent and thus be inclined to give full benefit of the guidelines to the discharger in issuing individual permits. On the other hand, they may feel that the guidelines are too liberal and seek to limit dischargers even more strictly than the Effluent Guidelines Division was willing in the first instance to do. This can be done by imposing in the permits lower numerical limitations than those provided by the guidelines or by accelerating the compliance period for attaining the limitations to a date earlier than that provided in the statute.¹⁴

This creates a situation in which two different EPA regional offices issuing permits to virtually identical factories, owned by the same company and operating under identical conditions, may impose different numerical limitations, different monitoring requirements, different compliance schedules, different rules as to whether net or gross values should be used, and even may regulate different pollutants. Such a situation is not merely a speculative possibility, but has on occasion been observed by the author.

Moreover, at the permit-issuing stage, not only does EPA field a new team of players, the state also fields a team. A discharger may think he has fought EPA to a standstill; then the whistle blows and a fresh team comes onto the field. There is also a new set of rules, often more stringent (never less stringent)¹⁵ than the first. In addition to federal effluent limitations guidelines,¹⁶ the permit writers must take into account such other factors as state water quality standards and state technology-based effluent limitations.¹⁷

In the non-NPDES states, EPA continues to write the permits with input from the state. In states with NPDES permit authority, the permits are typically written by the states, subject to EPA oversight. Even in states administering the NPDES permit program, however, EPA sometimes continues to do the work with rubber-stamp approval from the state permitting agency. One can never be certain who is making the ultimate decisions, but the "looming omnipresence" of EPA must always be suspected. Anyone who has dealt with water pollution control officials in an NPDES state has probably left at least one meeting with those officials feeling, like father Isaac, that "the voice is Jacob's voice, but the hands are the hands of Esau."¹⁸

Finally, still another opportunity for the exercise of discretion is offered at the permit-writing stage. EPA may, on the basis of certain factual showings, adopt individual "variances" for permits based upon BPT,¹⁹ and may modify the requirements of BAT for individual dischargers pursuant to the special provisions of § 301(c) of FWPCA.²⁰ Such provisions are, of course, highly [7 ELR 50094] desirable from the discharger's point of view in that they provide additional opportunities to influence the exercise of regulatory discretion.

C. Discretion in Enforcement

The final stage in the exercise of discretion is the enforcement process. To continue, and perhaps exhaust, the sports analogy, yet another team of players (the enforcement team) takes the field to confront an already battered and weary industrial team.²¹ Sometimes it may even appear to the discharger that he is now playing against the referees.

Congress has given EPA a number of options for enforcing NPDES permits. The primary options are: (1) the administrative compliance order, (2) the civil suit for injunctive relief and/or civil penalties, and (3) the criminal action.²² Fortunately, from the discharger's perspective, it has recently been held — in one of those rare judicial decisions in which a court reads the word "shall" to mean "may" — that EPA has yet another option: to take no formal enforcement action at all.²³ In most instances, the discretionary decision to be made by EPA is whether to do nothing, to take informal administrative action (in the nature of phone calls, meetings with the discharger, etc.), to issue a formal compliance order, or to file a civil action in the federal district court.²⁴

Another layer of complication is added, however, where the state has assumed responsibility for the NPDES permit program. States have their own enforcement statutes, regulations, and policies. They also have their own enforcement personnel. These personnel may be lodged in the state attorney general's office, or in the state environmental agency, or both. The enforcement philosophy of the state enforcement attorneys may be quite different from that contemplated by the standard setters, or the EPA permit writers. And the state enforcement attorneys will often have little or no background in the industry and its technology, or the history of the guidelines and the permits. Thus, one can have a situation where a lawyer from the state attorney general's office is enforcing a permit written by EPA's regional office on the basis of guidelines issued by the Effluent Guidelines Division (perhaps as modified by a court of appeals) on the basis of data which may have been highly questionable to begin with.²⁵ This situation may present the worst case in terms of the probabilities of reaching a result which is reasonable from the discharger's point of view, but it may not be unusual.

Finally, it should be noted that EPA does not always agree with state enforcement decisions, and, under § 309(a)(1) of FWPCA, EPA can intervene to assure that "appropriate" enforcement action is taken.²⁶ Thus a discharger deals with one of the enforcement agencies alone at his peril.

II. Enforcement Issues in the Discretion-Based System

Such a system would be a burdensome (and risky) one for the discharger even if a multi-layered state-federal partnership were not involved. The regulatory process would require considerable input from the discharger even if the same agency personnel developed the guidelines, wrotethe permits, and were charged with their enforcement. How much more effort is in fact required of the discharger in the present system can be understood by examining two specific problem situations.

A. Enforcement Actions Directed Toward Occasional Violations Where Permit Limitations Are Generally Being Met

One type of problem can arise in the case of isolated, infrequent violations of a permit whose terms are generally being met. A key issue faced in the typical standard-setting and permit-writing process is the appropriate numerical values for the permit's daily maximum limitations. It is probably not atypical, especially in the case of conventional pollutants such as BOD, for guidelines to be issued and permits to be written very stringently, on the assumption that minor, infrequent violations will not be vigorously prosecuted. Such violations can be caused by human error or by [7 ELR 50095] mechanical failure even in the best-operated industrial plant.

Let us consider, through use of a hypothetical, what can happen where such a violation takes place. Let us suppose that both the authors of the effluent limitations guidelines and the writers of an NPDES permit for Industrial Widget Corp. contemplated that the Agency would adopt a liberal enforcement policy for minor violations. Let us assume further that the permit writers even assured the discharger, informally and off-the-record, that he had no cause to be unduly concerned about the stringent nature of the permit limitations, since it was EPA policy not to seek civil penalties for such violations.²⁷ After the permit was issued, however, the state assumes responsibility for the NPDES permit program, and the players change. (Or personnel changes take place within EPA itself.) The state enforcement attorney (or the new EPA attorney) has no knowledge of the development of the guidelines or the permits and merely looks at the monitoring data and at the permit limitations and compares the numbers. The one is larger than the other, so enforcement action seeking civil penalties is instituted.

The discharger, who has made a good-faith effort to achieve compliance, who does in fact comply with the permit limitations except on infrequent occasions, and who has been led to believe that he will not be penalized for de minimis violations, may be stunned by this action. It can cause considerable embarrassment for the environmental officers of the company, who have worked hard to sell top management on a program of compliance and cooperation with EPA. Top management may now ask whether the company would not have been well-advised to litigate strenuously for more liberal guidelines or to seek an "excursion" provision either in the effluent guidelines or in the individual permits.²⁸ Time-consuming efforts may then be launched by the company to secure an "excursion" provision, which EPA is likely to resist on the grounds that de minimis violations should not be prosecuted and that an "excursion" provision is thus not necessary.

What does the discharger do? First, he must undertake, perhaps for the second or third time, the process of education necessary in order to render the ultimate enforcement decision an informed one. Beyond that, however, he must somehow persuade the enforcement agencies to reconcile their own differences. He is caught between two conflicting enforcement philosophies, either of which could be acceptable and fair to him. He can live with low permit numbers, provided there is an informed exercise of prosecutorial discretion; or he can live with a mechanical or "bright-line" enforcement policy, provided there are higher permit limitations or an "excursion" provision in the permit.²⁹ What he cannot accept is low permit numbers enforced without any opportunity for the exercise of prosecutorial discretion.

Enforcement attorneys may disagree among themselves as to which is the better system to achieve the same result. From the discharger's perspective, the important thing is know which rules are going to govern and to have a rational and consistent enforcement philosophy applied. Statements of enforcement policy by enforcement officials are generally quite helpful in this regard.³⁰

B. Enforcement for Failure to Meet a Compliance Schedule

A problem of much greater significance to the discharger, and to the public, can arise when a discharger fails to meet a schedule requiring compliance with permit limitations by a date certain. The public health or environmental consequences of noncompliance can be substantial, the economic and employment costs of compliance significant, and the reasons for noncompliance varied and complex. Those reasons may be beyond the discharger's control, or may be due to good-faith mistake or miscalculation, or to bad faith and intransigence.

How does the discretion-based regulatory system work under these circumstances? Perhaps not very smoothly from anyone's perspective. Tremendous strains can be [7 ELR 50096] placed on the enforcement staff. The risks to the discharger can be substantial. Yet the problem lies in the fact that substantial social, economic, and environmental trade-offs may be necessary. Can we or should we seek to avoid the burdens and complexities of case-by-case regulation where the stakes are so high? Do we not need some administrative flexibility in such circumstances? Do we really want Congress to decide all these cases prospectively with a single legislative formula? Or could it really do so if it tried? And, if it did, would the courts not create "safety valves" to permit the exercise of regulatory discretion even where Congress did not provide for it?

Courts have recently opened some "safety valves" in one area in which it was assumed that no discretion had been allowed by the Congress — that of the statutory deadlines for Phase I of the FWPCA clean-up. EPA had been held, until quite recently, to have no authority to extend compliance schedules beyond the July 1, 1977 deadline for either (1) secondary treatment as required of publicly owned treatment works by FWPCA § 301(b)(1)(B),³¹ or (2) BPT for industrial dischargers as required by FWPCA § 301(b)(1)(A).³² However, in the recent case of Republic Steel Corp. v. Train,³³ the Sixth Circuit held that where EPA had not met its statutory deadlines for publication of effluent limitation guidelines, the July 1, 1977 date was not binding upon the Agency in establishing compliance schedules. Thus, EPA has been given a narrow opportunity for the exercise of discretion where it sought none.

EPA has in fact recognized the need to exercise considerable discretion in enforcing the FWPCA against dischargers who are not in compliance with the July 1, 1977 deadline.In a detailed memorandum to regional administrators issued earlier this year, then Assistant Administrator Stanley W. Legro set forth in some detail the factors relevant to the exercise of that discretion.³⁴ For compliance schedule violations, the memorandum lists the following factors, in order of importance, to be taken into account in initiating enforcement action: harm to human health, bad faith, the impact of existing discharges, and the length of time required to obtain compliance.³⁵ For violations of final effluent limitations, the magnitude of the violation and the inadequacy of treatment facilities or treatment facility operation may also be considered. This memorandum is of particular interest in that it both documents the need for enforcement discretion and suggests what factors are likely to influence the exercise of that discretion by EPA.

As in the case of the isolated, infrequent violation discussed in the preceding section, considerable effort may be required of the discharger in the case of the failure to achieve a compliance schedule. Where discretion is to be exercised, the discharger must make his input into the decision-making process. A totally discretion-free system addressing problems of this magnitude and complexity is, in the author's view, an illusion. We may, perhaps, limit discretion more than it is presently limited, but it cannot and should not be legislated away entirely. A discretion-based system is burdensome, but, given the alternatives, the burdens are well worth bearing.

III. Alternatives to the Discretion-Based System

A number of alternatives to the present discretionary system of enforcement have been proposed or adopted. Most of these alternatives attempt to substitute some degree of certainty for discretion in the enforcement process. Each of these alternatives presents problems which the discharger may not be happy to trade for the problems encountered under the present system.

A. Published Enforcement Policies

In an attempt to introduce some degree of predictability into the enforcement process, the Colorado Water Quality Control Commission has published Guidelines for the Assessments of Civil Penalties for Violation of Permits.³⁶ These guidelines provide, among other things, as follows:

In assessing a civil penalty, the Commission will give consideration to factors such as (1) severity of the violation; (2) previous record of the discharger; (3) aggravating circumstances; (4) economic position of the discharger; and (5) mitigating circumstances, if any.

Offenses are classified according to these factors, and suggested penalties for various classes of offense are established for small, medium, and large municipalities or industries. This introduces a degree of certainty into the enforcement picture, but the proposed penalties are very severe, and too much certainty (from the discharger's perspective) is introduced by an additional statement of policy to the effect that:

It is the ultimate intention of the Commission to create a stronger deterrent against violations by making a civil penalty a near certainty. (Emphasis supplied.)

Written, published enforcement guidelines are in principle a useful thing, but excessively harsh penalties and elimination of all discretion may be a bad thing for the discharger and, ultimately, for the system. The goal of cleaning up the nation's waters requires a substantial commitment from industry; too much rigidity in the enforcement process, especially as it affects dischargers who are generally in compliance, can be counterproductive to that effort.

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EPA has recently made public an internal enforcement memorandum, dated June 3, 1977, which considers appropriate levels of monetary penalties to be sought in settlement of enforcement cases.³⁷ Although somewhat less specific than the Colorado guidelines, it does give a good indication of the factors which will be considered by EPA in the exercise of prosecutorial discretion in enforcement actions.³⁸

B. Proposed Amendments to the Federal Water Pollution Control Act

The alternative to administrative discretion is legislative certainty. Congress is currently considering the addition of one "automatic" weapon to the FWPCA enforcement arsenal. The Senate's version of the FWPCA Amendments of 1977 contains a "noncompliance fee" provision which would provide, in relevant part, as follows:

A noncompliance fee established pursuant to this section shall be imposed automatically and payable to the Administrator or a State with an approved program under section 403, as appropriate, either quarterly or monthly, for any point source (other than a publicly owned treatment works) which is not in compliance on or after (1) July 1, 1979, with any effluent limitation or standard under section 301(b)(1), 306, 307, or 316 of this Act, or (2) January 1, 1984, with any effluent limitation or standard under section 301(b)(2), 302, or 307 of this Act. Any permit issued under section 402of this Act for such source shall be amended to incorporate such fee requirements. (Emphasis supplied.)

Proposed FWPCA § 319(a), to be added by § 48 of S. 1952, 95th Cong., 1st Sess. (1976), which passed the Senate August 4, 1977, as an amendment in the form of a substitute for H.R. 3199, 95th Cong., 1st Sess. (1977), 123 CONG. REC. S13619, S13626 (daily ed. Aug. 4, 1977).

… a monthly or quarterly payment in an amount no less than the monthly or quarterly equivalent of the economic value of noncompliance, including, but not limited to, planning costs, design costs, supply costs, capital costs and costs of capital over a normal amortization period not to exceed ten years, start-up costs, operation and maintenance costs, and such other factors deemed appropriate by the Administrator relating to the economic value which delay in compliance beyond July 1, 1977, or January 1, 1984, as the case may be, or such other date required for compliance, or any other noncompliance, may have for the owner or operator of such source.

Proposed FWPCA § 319(c)(2)(B), to be added by § 48 of H.R. 3199, formerly S. 1952, as passed by the Senate, 123 CONG. REC. S13626 (daily ed. Aug. 4, 1977).

While a discharger who is in compliance might like to see his competitor who is not in compliance cease to profit from his tardiness, the author seriously questions whether an automatic fee of this sort is desirable. Perhaps an additional enforcement option is necessary, but Congress should provide that it may be assessed, not that it must be.

Other enforcement options designed to provide EPA with some flexibility in the treatment of violators of the 1977 industrial guidelines are also provided in S. 1952.³⁹ Significantly, these provisions would provide legislative support for EPA's current enforcement policy⁴⁰ and thus move in the direction of greater enforcement discretion, rather than less.

C. Noncompliance Penalties in the Clean Air Act Amendments of 1977

The proposed "noncompliance fee" of the Senate's FWPCA amendments is similar in major respects to the "noncompliance penalty" provisions of the Clean Air Act Amendments of 1977 (P.L. 95-95), which became law on August 7, 1977. This legislation added § 120 to the Clean Air Act to provide for "noncompliance penalties"⁴¹ to be assessed against certain air contaminant [7 ELR 50098] sources which are not in compliance with various emission limitations, emission standards, standards of performance, or compliance schedules imposed by EPA or the states under the Clean Air Act. Like the noncompliance fee proposed in the Senate's FWPCA amendments, the purpose of this amendment (which likewise supplements, but does not supersede, other enforcement options available to the EPA Administrator) is to deprive a recalcitrant polluter of the benefits of his recalcitrance.

Section 120(a)(2)(B) of the amended Clean Air Act provides certain "exceptions" to the penalty requirement of a rather strictly limited character. Although somewhat less explicit than the Senate's proposed FWPCA amendments, the intent of § 120 appears to be to make the penalty assessment nondiscretionary. It remains to be seen, however, whether EPA will invoke this remedy automatically, or whether the courts will attribute a degree of discretion to the Administrator in this respect as the Fifth Circuit did in another context in Sierra Club v. Train.⁴²

D. System of Taxation or Effluent Changes

Various proposals have been made, which will not be described or discussed here in detail,⁴³ for the imposition of a charge or tax on pollutants in lieu of the present regulatory system. While this economically oriented approach may have a superficial appeal and clearly requires more public discussion and analysis, the author seriously doubts that it has much to commend it in the context of water pollution control enforcement. It appears unrealistic to assume that any such system would eliminate the need for a bureaucracy or the need for someone to exercise some degree of discretion. For example, it seems unlikely that a system could be devised which would not have to take into account facts such as: (1) the desirability of recognizing a minimum amount of pollution which would have no perceptible effect upon the environment and which ought not to be subject to any tax; or (2) the situations in which, because of different geographical, economic, or other conditions, one level of tax might be appropriate for one river basin or other hydrologic unit, and another for another. And there would remain the need for regulations governing metering, reporting, etc.

One almost shudders to contemplate the prospect of Congress seeking to legislate a uniform tax on discharges of ammonia (whether from beet sugar factories discharging into agricultural-use streams in the West, or iron and steel facilities discharging into major river basins in the East), or multiple regional taxes on such discharges. The most significant difference between such a system and the present one might well turn out to be that the beneficiaries would be tax lawyers and lobbyists rather than (or, worse still, in addition to) environmental lawyers. And the author questions whether it would make any sense, pending completion of the "shake down" of the present regulatory system, to wipe the slate clean and require industry to come to grips with an entirely new federal scheme for water pollution control when it is just beginning to have a feel for the present one.⁴⁴

IV. Conclusion

Burdensome though the present system may be, the discharger is at least beginning to work his way through it, and (in most cases) to learn to live with it. In many cases, he will have been through the standard-setting process once, the permit-writing process twice, and perhaps one or more enforcement proceedings. In many instances, enforcement discretion is being exercised along generally reasonable and fairly predictable lines.

The requirements of Phase I (BPT) have been satisfied by most major industrial dischargers, and schedules are being established for compliance by the rest. The need for, and the means of achieving the requirements of Phase II (BAT), which are likely to be even more burdensome than Phase I for many dischargers, are now being reconsidered by both the Congress and EPA. Some relaxation in the technology-based limitations now scheduled to be achieved by July 1, 1983 may be provided administratively or legislatively.

It may be necessary and appropriate for additional enforcement options to be provided to EPA by the Congress, or for Congress to define with greater specificity the factors to be considered by EPA in administering and enforcing the FWPCA. It does not, however, appear warranted at present for administrative discretion to be eliminated by legislative fiat either in the form of "automatic" enforcement mechanisms or in the form of a system of effluent taxes or changes. It remains, then, only to ask two practical questions:

A. What must the discharger do to make the discretion-based regulatory system work from his point of view?

First, he must be willing to devote considerable time, effort, and resources to provide facts, history, and economic, technological and scientific data at every stage of the regulatory process. This is burdensome, but the present system provides no alternative.

Second, he must maintain credibility with the regulatory authorities. Nothing is in the long run more important than developing a relationship of mutual trust with agency personnel at all levels which persuades those personnel that the data presented by the discharger can be relied upon, that the discharger is in fact making a good faith effort to comply with the requirements of law, and that when the discharger says he cannot do something, he really means it and probably cannot do it.

Third, the discharger must be sensitive to those aspects of his operation which may pose a public health problem or a problem with highly visible environmental impacts. He must accept that some violations will be treated more seriously than others.

Fourth, he must be prepared to live with some degree of risk and uncertainty, and he must be prepared for some wrong-headed decisions by the enforcement agencies.

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Finally, the discharger must know when to resist agency enforcement action. It may only be in the adversary context that the issues of most critical concern — to the discharger and to the public — can be resolved, either by settlement or by adjudication. It is equally important to know when not to resist. Compromise and concession are always key elements in a discretion-based regulatory system.

B. What may the discharger legitimately ask of the regulatory agencies charged with administering a discretion-based regulatory system?

First, the regulatory agencies must keep talking to the discharger, and keep listening to him. It may take time, but it will save time in the end.

Second, they must keep talking to each other: (1) the enforcement people must talk with the permit people; (2) the permit people must talk with the guidelines people; (3) the state people must talk with the federal people; (4) the EPA regions must talk with EPA Washington; and (5) the EPA regions must talk with each other.

In short, the regulatory agencies must combine their act into a single effort — federal, state, and local — so that the discharger has only one team to play. The discharger must be able to sit down at one time with all the relevant players, so that a decision reached with one will be a decision reached with all.

Third, they must learn to recognize and reward responsible corporate behavior by exercising good judgment in enforcing the FWPCA against those companies which have made and are continuing to make a good faith effort to comply with the applicable legal requirements.

Finally, they must develop a consistent but flexible enforcement policy, and let the discharger know in advance what it is.

1. Federal Water Pollution Control Act, as amended, 33 U.S.C. §§ 1251-1376 (Supp. V 1975), ELR STAT. & REG. 41101.

2. EPA estimates that approximately 86 percent of the major industrial dischargers achieved the "best practicable control technology" goal by July 1, 1977. Statement of Thomas C. Jorling, Assistant Administrator for Water and Hazardous Materials, Environmental Protection Agency, before the Senate Subcommittee on Environmental Pollution, June 30, 1977.

3. 430 U.S. 112, 134-35, 7 ELR 20191, 20196 (1977).

4. See also EPA v. California ex rel. State Water Resources Control Board, 426 U.S. 200, 227, 6 ELR 20563, 20570 (1976):

[The] construction by the agency charged with enforcement of the Amendments is reasonable and in the absence of any cogent argument that it is contrary to congressional intentions we sustain EPA's understanding….

5. For two recent judicial views of appellate review of environmental decision making, see Oakes, Substantive Review in Environmental Law, 7 ELR 50029 (Oct. 1977), and Bazelon, Coping with Technology Through the Legal Process, 62 CORNELL L. REV. 817 (1977).

6. FWPCA § 301(b)(1)(A)(i), 33 U.S.C. § 1311(b)(1)(A)(i).

7. FWPCA § 301(b)(2)(A)(i), 33 U.S.C. § 1311(b)(2)(A)(i).

8. FWPCA § 304(b)(1)(B), 33 U.S.C. § 1314(b)(1)(B). This section enumerates the factors to be considered in determining "best practicable control technology" as follows:

the total cost of application of technology in relation to the effluent reductions to be achieved from such application, and … the age of equipment and facilities involved, the process employed, the engineering aspects of the application of various types of control techniques, process changes, non-water quality environmental impact (including energy requirements), and such other factors as the Administrator deems appropriate.

A similar, but not identical, list of factors is provided for defining "best available technology" in FWPCA § 304(b)(2)(B), 33 U.S.C. § 1314(b)(2)(B).

9. 430 U.S. 112, 7 ELR 20191 (1977).

10. A comprehensive study remains to be done of appellate decisions reviewing EPA's effluent limitations guidelines and new source performance standards.

11. See, e.g., California & Hawaiian Sugar Co. v. EPA, 553 F.2d 280, 289-90, 7 ELR 20383, 20388 (2d Cir. 1977) where use of 1971 cost data by EPA was upheld. Although EPA is occasionally reversed on particular aspects of its regulations, most provisions of the guidelines and standards promulgated by EPA either do not receive judicial scrutiny or are able to withstand such scrutiny.

12. EPA's early judgments on appropriate guidelines and standards, even where upheld by a reviewing court, are not necessarily irreversible. The FWPCA provides for annual review of effluent limitation guidelines and for formal review and revision of BAT limitations every five years. FWPCA §§ 304(b), 301(d), 33 U.S.C. §§ 1314(b), 1311(d), respectively. Thus, there is at least the theoretical possibility that early mistakes in the exercise of this discretion may be rectified administratively. The likelihood of this happening may in fact be relatively limited, however, since commitment to an "antidegradation" policy may foreclose liberalization of existing guidelines, and other more pressing agency priorities may limit in practice the time and resources available for these periodic reviews.

13. FWPCA § 402, 33 U.S.C. § 1342.

14. The federal effluent limitations guidelines provide only a ceiling on the amount of pollutants which may lawfully be discharged. The numerical limitations are typically expressed as the "maximum permissible discharge." Since the statute provides for effluent limitations to be achieved "not later than" July 1, 1977, and July 1, 1983 for "BPT" and "BAT," respectively, the Agency deems itself to have discretion to require a discharger to meet those limitations earlier than those dates where feasible. FWPCA §§ 301(b)(1)(A), (b)(2)(A), 33 U.S.C. §§ 1311(b)(1)(A), (b)(2)(A).

15. See FWPCA § 510, 33 U.S.C. § 1370.

16. It has been generally assumed that EPA must require NPDES permits to be consistent in all respects with the federal effluent guidelines, as is apparently contemplated by FWPCA § 402(a)(1), 33 U.S.C. § 1342(a)(1). However, in Save the Bay, Inc. v. Administrator, 556 F.2d 1282, 1294-95, 7 ELR 20674, 20680 (5th Cir. 1977), the court concluded that a state may be allowed to issue NPDES permits which do not comply in all respects with the federal guidelines. The court found that "Congress intended to allow the Administrator to consider the significance of any guideline violation [contained in a state-issued NPDES permit] in terms of the overall goals of the Amendments …," expressly conceding to EPA "discretion to weigh the substantiality of any violation of the guidelines and requirements of the [FWPCA] Amendments." 556 F.2d at 1294-95, 7 ELR at 20680 (emphasis supplied).

17. As the Seventh Circuit recently held in United States Steel Corp. v. Train, 556 F.2d 822, 830, 7 ELR 20419, 20420 (7th Cir. 1977):

the states are allowed to impose more stringent limitations, including water quality standards, treatment standards, or schedules of compliance. Sections 301(b)(1)(c) and 510. [Citations omitted.] Congress has thus chosen not to preempt state regulation when the state has decided to force its industry to create new and more effective pollution-control technology.

This case illustrates well the perils of the dual regulatory system for the industrial discharger, and should be studied carefully by one seeking to understand the complexities, both substantive and procedural, of the present regulatory system.

18. Genesis 27:22 (King James).

19. Most, but not all, effluent limitations guidelines contain such a "variance" provision. Such variances are not likely to be granted often, however, since they must be based on a showing that factors relating to the applicant for the variance are "fundamentally different from the factors considered in the establishment of the guidelines." See, e.g., 40 C.F.R. § 410.42. The BPT variance provision was upheld in Natural Resources Defense Council v. EPA, 537 F.2d 642, 7 ELR 20004 (2d Cir. 1976). However, the Supreme Court saw no statutory basis for such a variance in connection with new source performance standards in E.I. DuPont de Nemours & Co. v. Train, 430 U.S. 112, 138-39, 7 ELR 20191, 20197 (1977).

20. FWPCA § 301(c), 33 U.S.C. § 1311(c):

The Administrator may modify the requirements of subsection (b)(2)(A) of this section with respect to any point source for which a permit application is filed after July 1, 1977, upon a showing by the owner or operator of such point source satisfactory to the Administrator that such modified requirements (1) will represent the maximum use of technology within the economic capability of the owner or operator; and (2) will result in reasonable further progress toward the elimination of the discharge of pollutants.

21. The author readily concedes that, from the regulator's perspective, his is the "battered and weary" team which must constantly take the field to play what appears as a fresh team of managers, scientists, economists, and lawyers representing yet another discharger.

22. See generally FWPCA § 309, 33 U.S.C. § 1319. Another enforcement option is the option of "blacklisting" the violating facility pursuant to FWPCA § 508, 33 U.S.C. § 1368; moreover, the NPDES permit provides for termination as an enforcement option of last resort as required by FWPCA § 402(a)(3), 33 U.S.C. § 1342.

23. Section 309(a)(3) would appear to suggest that if a violation of the statute or a permit term occurs, the Administrator must ("shall") either issue a compliance order or file a civil suit. In Sierra Club v. Train, 557 F.2d 485, 489, 7 ELR 20670, 20671 (5th Cir. 1977), however, the court held as follows:

The EPA, as the agency charged with enforcement of the FWPCAA, construes this statute as imposing a discretionary duty, and in absence of any cogent argument that the agency's construction is contrary to congressional intent, the agency's construction will be sustained. EPA v. State Water Resources Control Board, 426 U.S. 200, 227 … (1976). (Emphasis supplied in part.)

24. The need for EPA to be represented in federal court by the Department of Justice introduces yet another potential set of players with whom the discharger must contend. The judgment of the EPA attorneys as to how a matter should be handled or resolved will not always coincide with that of the Department of Justice attorney assigned to prosecute an enforcement action.

25. The possible combinations and permutations of these factors are, of course, numerous. The four most typical situations involve EPA guidelines and the following permit enforcement combinations: EPA enforcing EPA-issued permits; a state enforcing EPA-issued permits; a state enforcing state-issued permits; and EPA, through exercise of its supervisory responsibility, enforcing state-issued permits.

26. 33 U.S.C. § 1319(a)(1). This has recently been done by EPA in the case of enforcement action taken by the Michigan Department of Natural Resources against Detroit Edison. See 8 ENVIR. REP. (BNA) Curr. Dev. 660 (Aug. 26, 1977).

27. EPA did in fact adopt a liberal policy toward "infrequent or isolated violations" of effluent limitations in its Guidelines for Water Pollution Enforcement, issued by the Acting Assistant Administrator for Enforcement and General Counsel on July 23, 1973. These Guidelines recognized (p.8) that:

A phone call to the discharger will often be sufficient. An administrative order issued pursuant to section 309(a)(4) which sets forth the necessary remedial actions the discharger must take and restates the effluent requirements contained in the permit is the most appropriate tool in this situation.

28. See, e.g., FMC Corp. v. Train, 539 F.2d 973, 986, 6 ELR 20382, 20387 (4th Cir. 1976), in which the Fourth Circuit required EPA to include "excursion" provisions in the effluent guidelines for the plastics and synthetics industry, and Decision of the EPA General Counsel No. 57, which recognizes the authority of EPA to include in an NPDES permit excursion-type provisions allowing discharge limitations to be exceeded during malfunctions, breakdowns, upsets, and during maintenance periods ("upset and bypass conditions").

29. A third alternative might be to have a permit which contains low numbers reflect, in its preamble or "summary of rationale," something of the underlying enforcement philosophy of the issuing agency. This would provide some guidance for enforcement attorneys in the future and would provide the discharger with some "legislative history" in future enforcement proceedings.

30. For example, the Justice Department has recently announced a new policy on the showing of "proof of harm" in enforcement actions under the FWPCA and the Clean Air Act. Because the Department has concluded that harm need not be shown and because of the practical difficulties of showing harm, proof of harm will not be offered in such cases, and the government's proof will be confined to specific violations of emission standards or limitations or of specific permit requirements. The exceptions to this policy are (1) the filing of "emergency episode" suits under the acts, (2) actions seeking civil penalties for daily violations under § 113(b) of the Clean Air Act, 42 U.S.C. § 7413(b), ELR STAT. & REG. 42201, (3) cases where it is in the public interest to present evidence of harm to support a request for a large penalty, and (4) cases where the effects of a particular discharge or emission of pollutants are relevant to the settlement of enforcement cases for civil penalties. This policy was announced by James W. Moorman, Assistant Attorney General, Land and Natural Resources Division, at the ALI-ABA Course of Study onWater and Air Pollution, cosponsored by the Environmental Law Institute in Washington, D.C., on October 6, 1977.

31. 33 U.S.C. § 1311(b)(1)(B). State Water Control Board v. Train, 559 F.2d 921, 7 ELR 20571 (4th Cir. 1977).

32. 33 U.S.C. § 1311(b)(1)(A). Bethlehem Steel Corp. v. Train, 544 F.2d 657, 7 ELR 20019 (3d Cir. 1976), cert. denied, 430 U.S. 975 (1977); United States Steel Corp. v. Train, 556 F.2d 822, 853-55, 7 ELR 20419, 20433-34 (7th Cir. 1977).

33. 557 F.2d 91, 7 ELR 20509 (6th Cir. 1977).

34. Legro, Setting Priorities for Enforcement Actions Concerning July 1, 1977 Violations (EPA Memorandum, June 3, 1977). See 8 ENVIR. REP. (BNA), Curr. Dev. 247 (June 10, 1977).

35. EPA has developed the device of the "enforcement compliance schedule letter" (ECSL) to communicate to the discharger a decision not to take enforcement action for certain violations resulting from failure to achieve compliance by July 1, 1977. Thus EPA has created its own "safety valve" to deal with the situation in which it deems enforcement action inappropriate, but is unable to issue or approve a permit which extends compliance beyond the July 1, 1977 statutory deadline.

36. Colo. Dept. of Health, Water Quality Control Commission, Guidelines, Assessment of Civil Penalties for Violations of Permits (May 24, 1976).

37. Legro, Settlement of Section 309(d) Enforcement Cases for Monetary Amounts (EPA Memorandum, June 3, 1977). See 8 ENVIR. REP. (BNA), Curr. Dev. 249 (June 10, 1977).

38. It is interesting to note that criteria for the courts to apply in enforcement proceedings under § 113 of the Clean Air Act have recently been provided by § 111 of the Clean Air Act Amendments of 1977:

In determining the amount of any civil penalty to be assessed … the court shall take into consideration (in addition to other factors) the size of the business, the economic impact of the penalty on the business, and the seriousness of the violation.

42 U.S.C. § 7413(b)(1977).

Compare § 16(a)(1)(B) of the Toxic Substances Control Act, 15 U.S.C. § 2615(a)(1)(B), ELR STAT. & REG. 41335, which provides:

In determining the amount of a civil penalty, the Administrator shall take into account the nature, circumstances, extent, and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, and history of prior such violations, the degree of culpability, and such other matters as justice may require.

39. See, e.g., § 41 of H.R. 3199, formerly S. 1952, as amended and passed by the Senate, 123 CONG. REC. S13625 (daily ed. Aug. 4, 1977) which would provide for the granting of an extension of the July 1, 1977 deadline to January 1, 1979 in certain circumstances. [The conference agreement would allow extension of the deadline for industrial dischargers until April 1, 1979. — Ed.]

40. See text at n.34, supra.

41. The amount of the penalty to be assessed and collected is an amount:

which is no less than the quarterly equivalent of the capital costs of compliance and debt-service over a normal amortization period, not to exceed ten years, operation and maintenance costs foregone as a result of non-compliance, and any additional economic value which a delay in compliance beyond July 1, 1979, may have for the owner or operator of such source minus [expenditures actually made during that quarter in order to come into compliance]. Clean Air Act § 120(d)(2)(A), as amended, 42 U.S.C. § 7420(d)(2)(A).

42. 557 F.2d 485, 7 ELR 20670 (5th Cir. 1977).

43. See, e.g., F. ANDERSON, A. KNEESE, P. REED, R. STEVENSON & S. TAYLOR, ENVIRONMENTAL IMPROVEMENT THROUGH ECONOMIC INCENTIVES (Resources for the Future, to be published in 1978); ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, POLLUTION CHARGES: AN ASSESSMENT (1976); A. KNEESE & C. SCHULTZE, POLLUTION, PRICES AND PUBLIC POLICY (The Brookings Institution, 1975).

44. Less desirable still are the proposals to superimpose a system of effluent charges upon the present regulatory system.