Armco, Inc. v. U.S. E.P.A.

• Decision Date: 15 March 1989
• Docket Number: No. 88-3070,88-3070
• Citation: 869 F.2d 975
• Parties: , 57 USLW 2579, 19 Envtl. L. Rep. 20,769 ARMCO, INC., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, Natural Resources Defense Council, Inc., Intervenor.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 975

869 F.2d 975

29 ERC 1250, 57 USLW 2579, 19 Envtl.

L. Rep. 20,769

ARMCO, INC., Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, Natural Resources Defense Council, Inc., Intervenor.

No. 88-3070.

United States Court of Appeals, Sixth Circuit.

Argued Nov. 15, 1988.

Decided March 15, 1989.

Christopher R. Schraff (argued), Porter, Wright, Morris & Arthur, Columbus, Ohio, for petitioner.

Lee M. Thomas, Adm. U.S. EPA Office of the Gen. Counsel, Washington, D.C., Valdas V. Adamkus, Adm. EPA, U.S. E.P.A., Chicago, Ill., David J. Kaplan (argued), Office of the U.S. Department of Justice, Environmental Defense Section, Land & Natural Resources Div., Washington, D.C., Craig Jakubowics, Office of U.S. E.P.A. Permits Div., Washington, D.C., for respondent.

Robert W. Adler, Natural Resources Defense Council, Washington, D.C., for intervenor.

Before ENGEL, Chief Judge, and WELLFORD, Circuit Judge; and THOMAS ^*, Senior District Judge.

WELLFORD, Circuit Judge.

Petitioner Armco, Inc. petitions this court to declare as untimely or arbitrary and capricious an October 30, 1987 letter from United States Environmental Protection Agency (USEPA) objecting to Ohio EPA's approval of removal credits for the benefit of the City of Middletown, Ohio, and Armco, the industry discharging phenol and ammonia into the waterway at Middletown. EPA and the intervenor, Natural Resources Defense Council, Inc. (NRDC), an environmental entity, contend that the only appropriate relief for Armco is to file a suit in district court compelling USEPA to promulgate regulations, which could result in setting aside the present ban on removal credits for sludge being discharged by Armco and the Middletown POTW. USEPA contends that such an action can be brought only in district court.

The Supreme Court denied certiorari review of the Third Circuit's decision of Natural Resources Defense Council (NRDC) v. EPA, 790 F.2d 289 (3d Cir.1986), cert. denied, 479 U.S. 1084, 107 S.Ct. 1285, 94 L.Ed.2d 143 (1987). This left in effect the Third Circuit's April 1986 mandate in NRDC that "EPA cannot, in the absence of the section 405 [sludge] regulations, authorize the issuance of removal credits under section 307(b)(1) [33 U.S.C. Sec. 1317(b)(1) ]." 790 F.2d at 314. These regulations have yet to be promulgated by USEPA.

USEPA did not and still does not recognize Ohio EPA's action approving Middletown's removal credit application, but rather claims that Congress had expressly prohibited use of removal credits after August 31, 1987. Armco contends that USEPA's October 30, 1987 objection to Ohio EPA's approval was untimely and therefore has no legal effect. In the alternative, Armco contends that USEPA's objection was arbitrary, capricious, an abuse of discretion, and contrary to law because section 406(e) of the Water Quality Act (WQA) specifically authorized Ohio EPA to approve removal credit applications before August 31, 1987, and divested USEPA of the right to reject such authority. Armco also contends that USEPA's failure to promulgate sludge regulations by August 31, 1987 precludes USEPA from prohibiting the Ohio EPA from approving removal credits.

The statute involved in this petition for review of USEPA's action is the Federal Water Pollution Control Act (FWPCA), also cited as The Clean Water Act of 1977, as amended, especially Secs. 307(b) and 405, 33 U.S.C. Secs. 1317(b) and 1345, and Sec. 406 of the Water Quality Act of 1987, Pub.L. No. 100-4, 101 Stat. 7 (1987). The Water Quality Act of 1987 amended FWPCA in certain particulars. Section 406 of the Water Quality Act of 1987 establishes deadlines for USEPA to promulgate comprehensive sludge management regulations and refers to the decision of NRDC v. USEPA, 790 F.2d 289 (3d Cir.1986), which, in turn, addressed the sludge management requirements of Sec. 405(d) of the FWPCA, as amended, 33 U.S.C. Sec. 1345(d). The focus of this appeal is also upon 40 C.F.R. Sec. 403.11 and the provisions of 40 C.F.R. Sec. 403.7, which were amended by USEPA's November 5, 1987 final rule.

So that the reader may understand the background of the statutes in dispute and appreciate the use of shorthand initials for long titles or concepts involved, we set out a brief background of the Federal Removal Credits Program, the primary subject matter of this controversy. For a more detailed discussion, see NRDC v. USEPA, 790 F.2d 289 (3d Cir.1986), and National Ass'n of Metal Finishers v. EPA, 719 F.2d 624 (3d Cir.1983).

FWPCA proscribes generally the discharge of pollutants to waters of the United States unless those discharges comply with the standards specified in the Act. The FWPCA obligates the Administrator of the USEPA to promulgate regulations establishing limits on the types and amounts of pollutants discharged from various industrial, commercial, and public sources of wastewater.

FWPCA calls upon the administrator to establish effluent limitations for "direct dischargers," which are sources that discharge pollutants directly to waters of the United States. Under Sec. 301 of the FWPCA, as amended, 33 U.S.C. Sec. 1311, the administrator is obligated to establish effluent limitations requiring direct dischargers to employ "best practicable control technology" (BPT) by 1977 and "best available demonstrated control technology" (BAT) by 1989. Newly constructed facilities that directly discharge pollutants are obligated to comply with "new source performance standards" established pursuant to Sec. 306 of the FWPCA, as amended, 33 U.S.C. Sec. 1316.

Section 301(b)(1)(B) of FWPCA, 33 U.S.C. Sec. 1311(b)(1)(B), requires that publicly owned treatment works (POTWs) which directly discharge wastewaters meet limitations requiring "secondary treatment" of all wastewaters collected from residential, commercial, and industrial customers. Middletown, Ohio is such a POTW. Direct dischargers, including POTWs, are required to obtain a National Pollutant Discharge Elimination System (NPES) permit in order to directly discharge wastewater to any waters of the United States. Under Sec. 402 of the FWPCA, 33 U.S.C. Sec. 1342, wastewater dischargers must comply with the FWPCA standards.

In addition to requirements imposed upon "direct dischargers," the FWPCA also requires that an "indirect discharger," one whose wastes are collected and treated at a POTW rather than directly discharged into waters of the United States, "pretreat" its wastewaters in order to remove any pollutant (including toxic pollutants) that "... interferes with, passes through or otherwise is incompatible with such works." See Sec. 307(b)(1), FWPCA, as amended, 33 U.S.C. Sec. 1317(b)(1). ¹

Section 307(b) of FWPCA, 33 U.S.C. Sec. 1317(b), provides for the administrator to establish "pretreatment standards for introduction of pollutants into treatment works ... which are publicly owned for those pollutants which are determined not to be susceptible to treatment by such treatment works or which would interfere with the operation of such treatment works." Pretreatment standards for iron and steelmaking facilities, such as those of Armco, were promulgated by USEPA in final form on May 27, 1982 and are set forth in 40 C.F.R. Part 420.

In order to avoid redundant treatment of wastewaters passing from an industrial user through a POTW prior to discharge to surface waters, Congress in 1977 amended Sec. 307(b)(1) of FWPCA to set up a procedure through which one who discharged indirectly could obtain a removal "credit" reflecting the amount of pollutants removed from its wastewaters as a result of treatment by a POTW. ²

USEPA argues that Armco has mischaracterized the issues in this petition for review. According to USEPA, the Third Circuit's decision in NRDC v. EPA and Congress' purported nullification through Sec. 406(e) of the Water Quality Act of Ohio EPA's approval of Middletown's application for removal credit authority have closed the issue. As a result, USEPA contends that Armco's challenge to USEPA's October 30, 1987 letter notifying Ohio EPA that under existing law removal credits are unavailable should be dismissed as moot. USEPA also asserts that this court lacks jurisdiction either to review USEPA's public notice that removal credits are unavailable or to compel USEPA to promulgate sludge regulations. Finally, USEPA contends that, even if this court could or does review USEPA's statements concerning the unavailability of removal credits, these statements are accurate and valid, and that Armco is not entitled to any of the relief it seeks.

Armco seeks to obtain removal credits for two pollutants, total phenols and ammonia-n, which are discharged in the wastewaters from Armco's steel-making coke plant in Middletown, Ohio. Specifically, Armco petitions this court to review USEPA's letter of October 30, 1987 as an agency action; to review USEPA's failure to formulate new regulations, or agency inaction; and to set aside USEPA's indefinite ban upon the authorization of removal credits until such time as USEPA promulgates comprehensive sludge regulations as set out in its November 5, 1987 Federal Register notice. ³

The Clean Water Act requires USEPA to establish effluent limitations for "direct dischargers," such as industrial sources and POTWs that discharge pollutants directly into navigable waters. Different restrictions are imposed on "indirect dischargers," which discharge their pollutants into POTWs rather than directly into navigable waters. Such discharges into POTWs carry the potential to cause serious problems. First, the discharges may interfere with a POTW's operation by causing it to treat wastes and sewage inadequately. Second, the pollutants may pass through the POTW into navigable waters if they are inadequately treated. Finally, they may settle into and contaminate the sludges produced by a POTW, causing potentially serious sludge disposal problems. Congress addressed these problems with sections 307(b)-(d) of the Act, 33...