Champion Intern. Corp. v. U.S. E.P.A.

• Decision Date: 24 June 1988
• Docket Number: No. 87-3529,87-3529
• Citation: 850 F.2d 182
• Parties: , 57 USLW 2020, 18 Envtl. L. Rep. 21,372 CHAMPION INTERNATIONAL CORPORATION, Plaintiff-Appellant, and State of North Carolina, Plaintiff, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Lee M. Thomas, Administrator, U.S. Environmental Protection Agency; Jack E. Raven, Regional Administrator, U.S. Environmental Protection Agency; State of Tennessee, on Behalf of the Tennessee Department of Health and Environment and the Tennessee Wildlife Resources Agency; Pigeon River Action Group; Legal Environmental Assistance Foundation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 182

850 F.2d 182

28 ERC 1013, 57 USLW 2020, 18 Envtl.

L. Rep. 21,372

CHAMPION INTERNATIONAL CORPORATION, Plaintiff-Appellant and State of North Carolina, Plaintiff, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Lee M Thomas, Administrator, U.S. Environmental Protection Agency Jack E. Raven, Regional Administrator, U.S. Environmental Protection Agency; State of Tennessee, on Behalf of the Tennessee Department of Health and Environment and the Tennessee Wildlife Resources Agency; Pigeon River Action Group; Legal Environmental Assistance Foundation Defendants-Appellees.

No. 87-3529.

United States Court of Appeals, Fourth Circuit.

Argued Oct. 5, 1987.

Decided June 24, 1988.

John Jeffrey McNealey (Michael K. Glenn, Michael G. Dowd, John S. Stevens, Gwynn G. Radeker, Benjamin S. Bilus, on brief) for plaintiff-appellant.

Blake Andrew Watson, Dept. of Justice (David C. Shilton, Susan L. Smith, Dept. of

Justice, W.J. Michael Cody, Atty. Gen., Frank J. Scanlon, Deputy Atty. Gen., Michael D. Pearigen, F. Henry Habicht, II, Asst. Attys. Gen., Robert W. Spearman, Adams, McCullough & Beard, Gary A. Davis, Susan C. Lepow, Gail B. Cooper, E.P.A., on brief), for defendants-appellees.

Before WIDENER and WILKINS, Circuit Judges, and BUTZNER, Senior Circuit Judge.

WIDENER, Circuit Judge:

This case comes to us on appeal from summary judgment granted in favor of the defendant, United States Environmental Protection Agency (EPA). While we agree with much of the district court's opinion, we are of opinion that judicial review of the merits of EPA's objections is premature, so we vacate the judgment of the district court and remand with instructions to dismiss the case for lack of subject matter jurisdiction.

The plaintiff in this action, Champion International Corporation (Champion), has operated a pulp and paper mill in Canton, North Carolina since 1907. The mill is located in Haywood County, North Carolina, on the Pigeon River, twenty six miles upstream from the Tennessee-North Carolina border. The Pigeon River is classified as suitable for trout fishing from its source to the Canton mill. From that point to the river's mouth near Newport, Tennessee, the river is classified as Class C, secondary recreation and fish propagation.

The Canton mill diverts 46.4 million gallons per day from the Pigeon River for its pulp and paper production and returns 45 million gallons per day. The average flow of the Pigeon River at Canton is 48 million gallons per day. Thus the Canton mill diverts substantially the entire flow of the Pigeon River, particularly during low flow periods. Because of dissolved solids resulting from the manufacturing process, the Pigeon River has a brown murky appearance below the Canton mill to the Tennessee border and beyond. ¹ From the state line, the Pigeon River flows northwesterly until it joins the French Broad River at a point approximately five miles north of Newport, Tennessee. Directly adjacent to the Tennessee border, the land along the Pigeon River is primarily scenic wooded and recreational areas.

Until 1981, the Canton Mill operated under a National Pollutant Discharge Elimination System (NPDES) permit issued by the State of North Carolina. This permit was originally issued in 1977. On June 30, 1981, the permit expired. No action was taken concerning the permit until 1983. Champion continued to operate the mill under the guidelines of the expired permit.

In January of 1983, Tennessee informed North Carolina that it felt Champion to be in violation of Tennessee water quality standards with respect to uses designated for the Tennessee portion of the Pigeon River. Tennessee requested that any reissuance or modification of the expired permit incorporate its water quality concerns. ² Tennessee developed a model permit that would satisfy the Tennessee water quality standards and submitted it to North Carolina. In May of 1983, Tennessee requested that North Carolina adopt the model permit and renewed this request in June 1983. Tennessee requested EPA assistance the following month. In September 1983, representatives of Tennessee, North Carolina and the EPA met in order to develop a solution that would meet all guidelines while remaining feasible for Champion.

The major area of concern on Tennessee's part, and the only permit requirement at issue in this case, is the amount of color removal necessary for Champion to comply with the Clean Water Act, taking into account Tennessee's legitimate concerns. ³ To that end, each entity conducted a modeling analysis to determine the amount of color removal necessary in order for Champion's discharge to be within limits. ⁴ At the time the administrative proceeding commenced, Tennessee and North Carolina both had narrative color standards. ⁵ While the permit application was pending, North Carolina amended its standard to include a limitation which included aesthetic considerations, effective January 1, 1985.

A public hearing was held on January 29, 1985, at Tennessee's request, in order to hear objections to North Carolina's draft permit. The two primary objections were, first, that North Carolina did not hold Champion to an absolute standard of 75% color removal but had qualified the standard by linking it to technical and economic feasibility. Second, irrespective of technical feasibility, the 75% removal requirement would not guarantee that water quality standards would be met during the low flow periods on the Pigeon River. In February of 1985, the EPA submitted similar objections to North Carolina.

As noted, North Carolina, effective January 1, 1985, during the pendency of the administrative proceeding, amended its water quality standards to include an aesthetic criterion for color. ⁶ Despite this change, North Carolina did not substantially alter the draft permit nor did it respond directly to the objections of either Tennessee or the EPA. North Carolina instead issued a final permit on May 14, 1985 substantially identical to the draft permit.

On July 18, 1985, EPA notified North Carolina that the May 14th permit would be considered to be a proposed permit as defined in the regulations. This was done because North Carolina had not complied with either the Memorandum of Agreement (MOA) ⁷ or the EPA regulations in that it had not provided EPA with a proposed final permit prior to issuance. On August 6, 1985, the EPA formally objected to the May 14th permit on the grounds that it:

1) Did not assure compliance with water quality color standards under 33 U.S.C. Sec. 1311(b)(1)(C), and did not, with certain qualifications, insure a 50 color count standard 26 miles downstream;

2) Did not unequivocally require Champion to comply with color standards; and

3) Was not an adequate response to Tennessee's objections to the permit for the reasons stated just above. ⁸

North Carolina did not modify its May 14th permit. North Carolina's only response was a letter stating that it felt the permit complied with all guidelines and that Tennessee's proposed quantitative color limit, for various reasons, should not be accepted. Neither North Carolina nor Champion requested a public hearing on EPA's objections. On November 13, 1985, EPA informed Champion that it had assumed permitting authority.

Champion brought this action on January 17, 1986, seeking declaratory and injunctive relief. The gravamen of its complaint was that the EPA's objections to the May 14th permit were invalid and that the EPA was without power to assume permitting authority. It complained of EPA's "... failure to approve ... [the North Carolina] wastewater discharge permit for Champion's Canton ... mill...." On March 20, 1986, the State of North Carolina intervened in the action, substantially adopting the position of Champion. ⁹ The district court granted summary judgment in favor of EPA. 648 F.Supp. 1390. Champion brought this appeal. The State of North Carolina has not appealed and apparently has acquiesced in the EPA's assumption of permit granting authority in the instance of the permit in question.

The goals of the Clean Water Act are achieved primarily through the National Pollutant Discharge Elimination System (NPDES), a nationwide system of issuing permits to individuals and entities that discharge pollutants into United States waters. Discharge of pollutants into waters of the United States is prohibited absent compliance with the Clean Water Act. 33 U.S.C. Sec. 1311(a). NPDES permits may be issued by either the EPA or a State that has been granted permitting authority. 33 U.S.C. Sec. 1342. Once a State has gained approval as a permitting authority by the EPA, it is the initial and primary issuer for its geographical jurisdiction, and the EPA exercises oversight authority. 33 U.S.C. Sec. 1342(c). North Carolina gained issuing authority for NPDES permits in 1975.

The EPA's oversight powers were significantly altered by the 1977 amendments to the Clean Water Act. Prior to that time, the EPA could effectively veto a state permit, but could not then issue its own permit. This EPA veto was considered final administrative action subject to judicial review. Crown Simpson Pulp Co. v. Costle, 445 U.S. 193, 100 S.Ct. 1093, 63 L.Ed.2d 312 (1980). As amended in 1977, 33 U.S.C. Sec. 1342(d) now allows the EPA to take jurisdiction and issue a permit in the event of an impasse between a State and the EPA Administrator.

33 U.S.C. Sec. 1342(d)(2) provides two separate grounds for the EPA to object to a state permit. Under 33 U.S.C. Sec. 1342(d)(2)(A), the EPA Administrator may object in the instance of an unresolved interstate dispute. 33 U.S.C. Sec. 1342(d)(2)(B) allows the Administrator to object to a permit which is outside the requirements of the Clean Water Act.

The mechanics of the EPA's oversight of North Carolina's permit granting program are contained in the Memorandum of Agreement (MOA) entered into by the State and the EPA. The EPA may object to a state permit for any of...