Eleventh Hour Amendment to FWPCA Resuscitates EPA's Hazardous Substance Discharge Program

In a classic legislative "quick fix," the 95th Congress on the next to last day of its second session rushed through to passage an amendment to § 311 of the Federal Water Pollution Control Act (FWPCA)¹ that breathes new life into the federal program for the regulation of hazardous substances spills into the nation's waters. The program had been plunged into a state of suspended animation by a recent federal district court decision in Manufacturing Chemists Association v. Costle² which invalidated as inconsistent with the explicit requirements of § 311 the Environmental Protection Agency's (EPA's) regulations governing spills or discharges of hazardous chemicals. The last-minute congressional removal of this judicial roadblock saved the Agency from the unpleasant choice between an uncertain and time-consuming appeal and the lengthy process of demonstrating the harmfulness of particular discharge amounts in various receiving waters.

By dramatically reducing the maximum civil penalty that can be levied against violators, these changes to § 311 diluted the strength of the provision as a deterrent to hazardous substances discharges. More importantly, however, the amendments finally clear the way for implementation of this long-delayed but environmentally crucial program. From a broad perspective, the episode also illustrates the difficulties inherent in attempting to administer a statutory formulation that requires a determination of actual ecological harm prior to regulation or prohibition.

The Preexisting Statutory Provisions

Section 311 of the FWPCA prohibits the discharge of oil or designated hazardous substances from vessels and both onshore and offshore facilities into the navigable waters of the United States, onto adjoining shorelines, or into waters of the contiguous zone.³ This prohibition is enforced through a self-reporting requirement and the imposition of civil penalties and cleanup costs. Prior to the recent amendment, the statute limited this prohibition to "harmful quantities" and required the Administrator of the Environmental Protection Agency to determine for each substance designated as hazardous under the section "those quantities … the discharge of which, at such times, locations, circumstances, and conditions, will be harmful…."⁴ Spills in such quantities had to be reported to EPA and were subject to automatic assessment of a civil penalty of up to $5,000 by the Coast Guard.⁵ The EPA Administrator was also directed to determine whether each hazardous substance designated could "actually be removed" once it had been spilled or discharged.⁶ Perpetrators of nonremovable discharges were subject to the imposition of additional penalties by EPA of from $500 to $5,000 based on the "toxicity, degradability and dispersal characteristics" of the substance involved.⁷ Alternatively, EPA could calculate this additional penalty by multiplying the number of units discharged times the fine established for each unit.⁸ In the latter event the upper limits on the penalty were $5,000,000 for releases from vessels and $500,000 for releases from onshore or offshore facilities.⁹

After six years of effort, EPA finally promulgated regulations implementing these provisions on March 13, 1978.¹⁰ The Agency designated 271 chemicals as hazardous substances under § 311 and identified all but 10 of those as nonremovable. EPA established a five-category classification scheme, adopting one pound as the "harmful [8 ELR 10230] quantity" for substances in the most toxic category and setting ascending multiples of one pound as the harmful quantities for chemicals in the other categories. In so doing, the Agency rejected as excessively complex and difficult an alternative scheme which had been recommended by an outside consultant. That system would have based the harmful quantities determination on "critical concentrations" which would vary according to the toxicity of the substance discharged and the volume and character of the receiving waters. EPA rejected this proposal, viewing its "one pound" system as clear, easily comprehensible, and much simpler to administer. Analogizing this device to the judicially approved "sheen test" used to determine when harmful quantities of oil have been spilled,¹¹ the Agency thus determined that a more particularized analysis of harmful quantities was not required.

The regulations also provided that holders of national pollutant discharge elimination system (NPDES) permits, issued under § 402 of the Act,¹² who discharge hazardous substances not covered by those permits must apply for amended permits which take these discharges into account.Hazardous substances releases in excess of the levels specified in the revised permits would then subject the discharger to penalties under both § 311 and § 402.

Manufacturing Chemists Association v. Costle

Shortly after the regulations were issued, a chemical industry trade association, joined by a number of other industrial parties, filed suit in the Federal District Court for the Western District of Louisiana challenging the regulations as inconsistent with the requirements of § 311. On June 8, 1978, Judge Earl Veron issued a preliminary injunction against implementation of the regulations after finding that the plaintiffs were likely to prevail on their claim that EPA had failed to comply with § 311 because the rules did not provide for the consideration of the "times, locations, circumstances and conditions" of discharges in determining harmful quantities.¹³

Within two months, this injunctive order was followed by an adverse ruling on the merits in which the court granted plaintiffs' motion for summary judgment and held certain sections of the regulations void and unenforceable.¹⁴ Judge Veron reiterated his conclusion that EPA's methodology of determining "harmful quantities" of particular substances solely on the basis of their toxicity ignored the fact that the harmfulness of a specific discharge inevitably depends on the characteristics of the receiving waters. The Agency's five-category classification scheme, in which harmful quantities were assigned as fixed multiples of the one-pound unit, had the virtue of simplicity yet lacked a sound technical basis and was thus ruled arbitrary. In addition, the court held that the approach chosen by the Agency failed to fulfill the statutory directive to identify the "times, locations, circumstances and conditions" under which specific discharges would be harmful.

The court also differed with EPA's determination that 261 of the 271 designated hazardous substances were not removable once discharged and thus were subject to the more severe civil penalties established as deterrents under the Act for such discharges. The Agency had based its determinations solely on physical removability, focusing on § 311's stated concern for whether a substance "can actually be removed."¹⁵ The court, however, noted that "removal" was defined in § 311(a)(8) as "removal … from the water and shorelines or the taking of such other acts as may be necessary to minimize or mitigate the damage to the public health or welfare…."¹⁶ Judge Veron ruled that in determining removability EPA had thus improperly disregarded the prospect of mitigating the harm of a discharge through the neutralization of a hazardous substance after it has become mixed with the receiving waters. The Agency's failure to consider the possibility of mitigation in determining removability, the court held, was both arbitrary and contrary to the mandate of § 311.

The third illegality which the court found was the provision in the regulations applying the penalties provided in § 311 to discharges of hazardous substances in violation of NPDES permits issued under § 402. The court determined that EPA could require NPDES permit holders to apply for amended permits that cover chronic discharges of designated hazardous substances not mentioned in their present permits. But the application of the penalty provisions of § 311 in addition to enforcement sanctions generally applicable to § 402 violations where the hazardous substances discharge exceeds the level set in an amended permit, would in the court's view be redundant and unreasonable. Having determined the regulations to be legally deficient on three grounds, the court declared the affected sections to be void and entereda permanent injunction against their enforcement.

Effect of the Decision

Judge Veron emphasized that his decision should be viewed not as a victory for water polluters nor a defeat for efforts to protect the environment but as an attempt to ensure that EPA's regulations comply strictly with the relevant legislative policies and directives. The practical result of the ruling, however, was to throw the federal hazardous substances spills program, to which EPA had devoted almost six years in bringing to the point of implementation, into limbo. The Agency recognized after a candid assessment of the situation that the possibility of convincing the Fifth Circuit on appeal that Judge Veron had erred on the merits was remote.¹⁷ EPA also realized [8 ELR 10231] that modifying the regulations to comport with the district court's ruling would entail complex and laborious empirical investigation of both actual harmfulness of discharges in various receiving water situations and the mitigability of nonremovable substances in similar circumstances.¹⁸ Moreover, and perhaps most importantly, the Agency understood only too well that both these courses of action would involve further lengthy delays of up to several years before the program could begin, during which time hazardous substances discharges would remain virtually free from systematic regulation.¹⁹

As a last desperate alternative to this prospect of extended delay, EPA sought an accommodation with the plaintiffs in Manufacturing Chemists and with their support approached the Senate Environment and Public Works Committee and the House Public Works and Transportation Committee in late September seekng amendment to § 311 that would essentially undo the district court's decision.²⁰ The Agency made this request without any real hope that Congress, which was already caught up in the end-of-session crush of legislative business, would be able to enact such provisions this year. EPA was thus pleased beyond all but its most daring expectations when first the Senate and then the House passed the requested amendments as a rider to the EPA research authorization bill on October 14, 1978, one day before adjournment.²¹

Scope and Effect of § 311 Amendments

EPA's approach in drawing up the amendments, which was dictated by both the need to maintain the support of the plaintiffs in Manufacturing Chemists and the desire to build upon the six years of effort already expended in developing the regulations, was to seek limited ad hoc changes to § 311 instead of a full-fledged revision of that section and related statutory provisions. The measure as passed by the Congress thus makes a number of surgical but important changes in § 311.

First, the statutory prohibition against discharges in "harmful quantities" was changed to "quantities which may be harmful,"²² and the requirement for considering the "times, locations, conditions and circumstances" of the discharge in determining what constitutes such quantities has been dropped. These modifications dispense with the necessity for a determination of actual harm in each case, and instead assign the Agency the easier task of assessing risks. Second, the requirement of a determination of whether a substance "can actually be removed" once discharged has been deleted altogether. Third, the amendments reduce the maximum civil penalties for illegal discharges from $5 million for vessels and $500,000 for onshore and offshore facilities to $50,000 for both, although a higher fine of up to $250,000 will still be allowed for discharges resulting from willful negligence or willful misconduct.²³ In addition, the Administrator must commence a civil action in federal court to recover such penalties rather than impose them administratively.²⁴ Factors to be considered in setting fines now include the size of the offending business, the effect on its ability to continue in business, the gravity of the violation, and the nature, extent, and success of efforts by the discharger to mitigate the harm caused by the spill.²⁵ Fourth, § 311 as amended specifically excludes discharges regulated under § 402 NPDES permits from coverage under § 311²⁶ and prohibits the imposition of civil penalties under both §§ 309 and 311 for the same discharge. ²⁷ The amendments also explicitly limit the application of § 311 beyond the 12-mile contiguous zone, in the absence of international agreements providing for broader coverage, to United States citizens or vessels registered in the United States.²⁸ Finally, § 311 now makes clear that costs incurred by the government in mitigating the effects of a discharge are to be deemed cleanup costs recoverable from the discharger.²⁹

Conclusion

With indispensable help from friends in Congress, EPA miraculously succeeded in turning the apparent debacle of Manufacturing Chemists to its advantage by using Judge Veron's ruling as the catalyst to spur legislative rectification of regulatory difficulties presented by § 311. In this respect, the negative connotations sometimes associated with the term "quick fix" seem inappropriate here. The net effect of these statutory changes is to authorize a much simpler regulatory scheme from EPA's perspective than that previously mandated. The amendments make possible start-up of the hazardous substances spills reporting and enforcement program as soon as revised regulations can be put in place, possibly within the next several months. The now-firm prospect that the long overdue federal hazardous substances program can finally swing into action in the foreseeable future is in fact the most significant result of this whole episode.

1. 33 U.S.C. § 1321, ELR STAT. & REG. 42132.

2. 455 F. Supp. 968, 8 ELR 20667 (W.D. La. Aug. 4, 1978).

3. 33 U.S.C. § 1321(b)(3), ELR STAT. & REG. 42133. The prohibition extends beyond the contiguous zone to reach discharges of oil or hazardous substances in connection with activities under the Outer Continental Shelf Lands Act, 43 U.S.C. §§ 1331-1343, ELR STAT. & REG. 41435, and the Deepwater Port Act of 1974, 33 U.S.C. §§ 1501-1524, ELR STAT. & REG. 41705, or which may affect fishery resources under the exclusive management authority of the United States pursuant to the Fishery Conservation and Management Act of 1976, 90 Stat. 331 (codified in scattered sections of 16 and 22 U.S.C.).

For the purposes of regulation under § 311, hazardous substances are "those elements and compounds which, when discharged in any quantity … present an imminent and substantial danger to the public health or welfare, including, butnot limited to, fish, shellfish, wildlife, shorelines, and beaches." 33 U.S.C. § 1321(b)(2)(A), ELR STAT. & REG. 42132.

4. FWPCA, § 311(b)(4), 86 Stat. 862 (1972).

5. FWPCA, § 311(b)(6), 86 Stat. 862 (1972).

6. FWPCA, § 311(b)(2)(B)(i), 86 Stat. 862 (1972).

7. FWPCA, § 311(b)(2)(B)(ii), (iii)(aa), 86 Stat. 862 (1972).

8. FWPCA, § 311(b)(2)(B)(iii)(bb), 86 Stat. 862 (1972).

9. Id.

10. 43 Fed. Reg. 10474 (Mar. 13, 1978).

11. Under the sheen test, any spill which leaves a visible sheen on the surface of the water is conclusively presumed to involve a harmful quantity of oil. 40 C.F.R. § 110.3.See United States v. Kennecott Copper Corp., 523 F.2d 821, 5 ELR 20707 (9th Cir. 1975); United States v. Ashland Oil & Transportation Co., 504 F.2d 1317, 4 ELR 20784 (6th Cir. 1974); United States v. Boyd, 491 F.2d 1163, 1172, 3 ELR 20434, 20437 (9th Cir. 1973); United States v. Beatty, Inc., 401 F. Supp. 1040, 6 ELR 20119 (W.D. Ky. 1975); United States v. Eureka Pipeline Co., 401 F. Supp. 934, 6 ELR 20088 (N.D.W.Va. 1975).

12. 33 U.S.C. § 1342, ELR STAT. & REG. 42141.

13. Manufacturing Chemists Ass'n v. Costle, 8 ELR 20589 (W.D. La. June 8, 1978).

14. Manufacturing Chemists Ass'n v. Costle, 455 F. Supp. 968, 8 ELR 20667 (W.D. La. 1978).

15. FWPCA, § 311(b)(2)(B)(i), 86 Stat. 862 (1972).

16. 33 U.S.C. § 1321(a)(8), ELR STAT. & REG. 42132.

17. Letter from Thomas C. Jorling, Ass't Administrator, to Honorable Harold T. Johnson, Chairman, House Committee on Public Works and Transportation, Sept. 25, 1978, reprinted at 124 CONG. REC. H13600 (daily ed. Oct. 14, 1978, part IV).

18. Id.

19. Id.

20. Id.

21. Pub. L. 95-576, 92 Stat. 2467 (Nov. 2, 1978).

22. 33 U.S.C. § 1321(b)(4), ELR STAT. & REG. 42133.

23. 33 U.S.C. § 1321(b)(6)(B), ELR STAT. & REG. 41233.

24. Id.

25. Id.

26. 33 U.S.C. § 1321(a)(2), ELR STAT. & REG. 42132.

27. 33 U.S.C. § 1321(b)(6)(E), ELR STAT. & REG. 41233.

28. 33 U.S.C. § 1321(a)(17), ELR STAT. & REG. 42132.

29. 33 U.S.C. § 1321(b)(6)(D), ELR STAT. & REG. 41233.