556 F.2d 822 (7th Cir. 1977), 76-1425, United States Steel Corp. v. Train

Docket Nº:76-1425, 76-1616.
Citation:556 F.2d 822
Party Name:UNITED STATES STEEL CORPORATION, Plaintiff-Appellant, v. Russell E. TRAIN, Administrator, United States Environmental Protection Agency; Francis T. Mayo, Regional Administrator, Region V, United States Environmental Protection Agency; James O. McDonald, Director of Enforcement, Region V, United States Environmental Protection Agency; and Marvin E.
Case Date:May 13, 1977
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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556 F.2d 822 (7th Cir. 1977)



Russell E. TRAIN, Administrator, United States Environmental

Protection Agency; Francis T. Mayo, Regional Administrator,

Region V, United States Environmental Protection Agency;

James O. McDonald, Director of Enforcement, Region V, United

States Environmental Protection Agency; and Marvin E. Jones,

Administrative Law Judge, United States Environmental

Protection Agency, Defendants-Appellees.




Nos. 76-1425, 76-1616.

United States Court of Appeals, Seventh Circuit

May 13, 1977

Argued Jan. 7, 1977.

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Michael D. Freeborn, Dixie L. Laswell, James T. Harrington, Henry L. Pitts, Chicago, Ill., for petitioner.

Peter R. Taft, Asst. Atty. Gen., Raymond W. Mushal, Atty. Dept. of Justice, G. William Frick, E.P.A., Washington, D. C., David A. Ullrich, Atty., U.S. E.P.A., Chicago, Ill., Barry L. Malter, U. S. E.P.A., Christopher J. Dunsky, Washington, D. C., Samuel K. Skinner, U. S. Atty., Chicago, Ill., for respondent.

Joseph V. Karaganis, Chicago, Ill., Rollin E. Thompson, Deputy Atty. Gen., Indiana Stream Pollution Control Bd., Indianapolis, Ind., William R. Quinlan, Corp. Counsel, Chicago, Ill., for amicus curiae.

Alexander Polikoff, Douglass W. Cassel, Jr., Thomas D. Eisele, James D. Griffith, Chicago, Ill., for intervenors.

Before CUMMINGS and TONE, Circuit Judges, and CAMPBELL, Senior District Judge. [*]

TONE, Circuit Judge.

These consolidated cases bring before us an Environmental Protection Agency (EPA) order granting a discharge permit under the Federal Water Pollution Control Act Amendments of 1972 and a related District Court judgment. In No. 76-1616, United States Steel Corporation's petition for review of EPA's order granting a National Pollutant Discharge Elimination System (NPDES) permit for the company's Gary Works pursuant to § 402 of the Act, 33 U.S.C. § 1342, 86 Stat. 880, 1 the company challenges the conditions imposed by the permit. No. 76-1425 is an appeal from a District Court's dismissal of a complaint which the company filed while the administrative permit proceeding was still in progress, seeking review of the administrative law judge's refusal to consider certain issues in that proceeding.


The Statute 2

The cornerstone of the Act's scheme for cleaning up the nation's waters is § 301(a)'s prohibition against "the discharge of any pollutant by any person" except as specifically permitted by administrative action taken pursuant to specified sections of the Act. An existing source such as the Gary Works may obtain permission to discharge pollutants by applying for an NPDES permit

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under § 402. 3 EPA 4 administers the permit program in each state unless and until the state takes over that function, which Indiana did not do in time to process the Gary Works application. A permit, which is issued upon application and after opportunity for a public hearing, states the pollutants and amounts thereof that may be discharged at each of the plant's outfalls, and imposes conditions upon those discharges. A permit thus transforms "generally applicable effluent limitations and other standards including those based on water quality into obligations (including a timetable for compliance) of the individual discharger." EPA v. California ex rel. State Water Resources Control Board, 426 U.S. 200, 205, 96 S.Ct. 2022, 2025, 48 L.Ed.2d 578 (1976).

The Act provides for two kinds of restrictions on the discharge of pollutants. First, federal, technology-based effluent limitations are to be established in two stages, one set to be met by July 1, 1977, and to be based upon "the best practicable control technology currently available" (which we sometimes refer to as "1977 technology" or "BPT"), and the other to be met by July 1, 1983, and to be based on "the best available technology economically achievable." Section 301(b). Second, 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. See also EPA v. California ex rel. State Water Resources Control Board, supra, 426 U.S. at 219, 96 S.Ct. 2022. Congress thus has chosen not to preempt state regulation when the state has decided to force its industry to create new and more effective pollution-control technology. 5 These state limitations must also be met by July 1, 1977, § 301(b)(1)(C), and, like the federal limitations, are implemented by conditions which are included in NPDES permits.

In reviewing the U.S. Steel permit we are primarily concerned with the 1977 state and federal limitations. Except with respect to a final limitation on blast-furnace discharges, the additional federal limitations that become effective July 1, 1983 are not involved in this proceeding.


The Facts and Prior Proceedings

The Plant

U.S. Steel's Gary Works occupies 3700 acres on the southern shore of Lake Michigan. An integrated steel mill, Gary Works produces coke, iron, steel, and primary and finished steel shapes. The plant draws water from Lake Michigan and each day discharges up to 775 million gallons of polluted water into the lake and into the Grand Calumet River, which flows into the lake. The discharges are made through five outfalls into the lake and 14 into the river. 6 Each day the 500 million gallons

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discharged into the river include an average of 180 pounds of phosphorus, 325 pounds of phenol, 3100 pounds of cyanide, 3400 pounds of flourides, 5100 pounds of ammonia, 82,000 pounds of chlorides, and 180,000 pounds of sulphates. These pollutants eventually flow into lower Lake Michigan.

The EPA Permit Proceeding

U.S. Steel's initial application for a discharge permit for its Gary Works was made in 1971, before the adoption of the Federal Water Pollution Control Act Amendments of 1972. That application was submitted to the Army Corps of Engineers, which was charged with the responsibility of issuing permits under the Refuse Act. 7 The FWPCA transferred permit authority from the Corps of Engineers to the Administrator of EPA. As provided in § 402(a)(5) of that Act, U.S. Steel's application was treated as an NPDES permit application.

EPA initially issued a permit for the Gary Works in October 1974, after having published notice of its proposed action. The permit contained effluent limitations, monitoring requirements, and additional conditions, together with a compliance schedule. U.S. Steel did not accept the permit but requested an administrative hearing pursuant to EPA regulations, 40 C.F.R. § 125.36. In its request, the company proposed permit conditions which it contended satisfied the Act, some of which would have allowed it to increase the amount of pollutants in its discharges.

After the hearing and a limited remand ordered by EPA, the Regional Administrator substantially approved the conditions contained in the permit, which had been formulated by the Regional Enforcement Division. U.S. Steel appealed, pursuant to 40 C.F.R. § 125.36(n)(1), to the Administrator, who denied review. The permit was reissued by EPA on June 25, 1976, with a modified compliance schedule. U.S. Steel then filed its petition for review in this court.

The Permit

The permit imposes technology-based limitations governing pH, total suspended solids (TSS), and oil and grease at each individual outfall. 8 These limitations are designed to reflect the level of pollutant discharges remaining despite installation of 1977, or best practicable, technology. Throughout the course of the permit proceeding, the parties have agreed that BPT is currently being used by U.S. Steel at all but one outfall. Therefore, the only dispute as to the technology-based limitations on those outfalls is whether the effluent limits established by EPA properly reflect BPT operations.

The one outfall that the parties do not agree on is the iron-making blast-furnace outfall, # 017, which is U.S. Steel's major process-water outfall and the largest single source of pollution at the plant. The permit limitations on TSS at that outfall can

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be met only by installing a blast-furnace recycling system, which EPA asserts, and U.S. Steel denies, is BPT.

Other permit limitations, imposed because they are required by Indiana regulations, govern six chemicals, viz., ammonia, cyanide, phenol, chloride, sulphate, and fluoride. These limitations apply to the plant's river outfalls as a group and not to individual outfalls. There are also thermal limitations based on state water quality standards.

For all but the blast-furnace outfall, there are only "initial" limitations, which are effective until June 30, 1977, and "final" limitations, which apply from July 1, 1977 until the expiration of the permit on October 31, 1979. The initial limitations govern only pH, TSS, and oil and grease, except that at two outfalls, # 007 and # 017, ammonia, cyanide, and phenol are also covered. The final limitations govern temperature, pH, TSS, and oil and grease for all 19 outfalls and ammonia and other chemicals for the 14 river outfalls, including the blast-furnace outfall. For that outfall the permit also contains an intermediate step, "interim" limitations on total suspended solids, which are effective between July 1, 1977 and June 30, 1979, with the final limitations on TSS becoming effective July 1, 1979. Schedules of compliance are established to enforce these deadlines, and U.S. Steel is required to monitor its discharges in order to present proof...

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