Natural Resources Defense Council, Inc. v. U.S. E.P.A., s. 84-3530

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore HUNTER, GARTH, and HIGGINBOTHAM; GARTH
Citation790 F.2d 289
Parties, 54 USLW 2599, 16 Envtl. L. Rep. 20,693 NATURAL RESOURCES DEFENSE COUNCIL, INC. Petitioner, v. U.S. ENVIRONMENTAL PROTECTION AGENCY Respondent, Chemical Manufacturers Association Intervenor, Chicago Assoc. of Commerce & Industry, Illinois Manufacturers' Assoc. and Mid- America Legal Foundation Intervenors. CERRO COPPER PRODUCTS COMPANY, and Village of Sauget, Petitioners, v. William D. RUCKELSHAUS, Administrator, United States Environmental Protection Agency, and United States Environmental Protection Agency, Respondents, Natural Resources Defense Council, Inc., Intervenor.
Docket NumberNos. 84-3530,85-3012,s. 84-3530
Decision Date30 April 1986

Frances Dubrowski (Argued), Washington, D.C., for petitioner (No. 84-3530), for intervenor (No. 85-3012).

Richard J. Kissel, M. Therese Yasdick (Argued), Daniel F. O'Connell, Martin, Craig, Chester & Sonnenschein, Chicago, Ill., Harold G. Baker, Jr., Belleville, Ill., for petitioners Cerro Copper Products Co. and Village of Sauget (No. 85-3012).

F. Henry Habicht, II, Asst. Atty. Gen., Carl Strass, Dov Weitman (Argued), Office of Gen. Counsel (LE-1325), Washington, D.C.; of counsel Gerald H. Yamada, Acting Gen. Counsel, Susan G. Lepow, Asst. Gen. Counsel, for respondents (Nos. 84-3530 & 85-3012).

Theodore L. Garrett, Corinne A. Goldstein, Covington & Burling, Washington, D.C., of counsel David F. Zoll, Frederic P. Andes, Washington, D.C., for intervenor Chemical Manufacturers Ass'n (No. 84-3530).

John M. Cannon, Susan W. Wanat, Ann Plunkett Sheldon, Chicago, Ill., for intervenors Chicago Assoc. of Commerce & Industry, Ill. Manufacturers' Ass'n and Mid-America Legal Foundation (No. 84-3530).

Before HUNTER, GARTH, and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge:

These consolidated petitions challenge an amended final rule of the Environmental Protection Agency (EPA), known as the removal credit rule, 49 Fed.Reg. 31212 (1984) (codified at 40 C.F.R. Sec. 403.7), promulgated pursuant to the Federal Water Pollution Control Act ("FWPCA" or "Clean Water Act") of 1977, Pub.L. No. 95-217, 91 Stat. 1566 (codified at 33 U.S.C. 1251 et seq. ).

The Clean Water Act of 1972 set as a national goal the elimination, by 1985, of the discharge of pollutants into the nation's One aspect of the 1977 Act's strengthened program to control toxic pollutants was a requirement that an indirect discharger i.e. an industrial discharger whose wastes flow into a public sewage system rather than directly into navigable waters, had to "pretreat" its waste waters so as to achieve, together with the Publicly Owned Treatment Works (POTW) that treated the waste before final discharge into navigable waters, the same level of toxics removal as was required of a direct discharger, which discharged directly into a river, lake, or ocean. At the same time, the Act allowed the indirect discharger to receive a "removal credit" from the POTW for the amount of waste removed from the stream of waste water by the POTW itself. 33 U.S.C. Sec. 1317(b)(1). This provision, designed to avoid redundant treatment, permits an increased amount of pollutants to flow from the indirect discharger's plant to the municipal treatment plant provided that the additional pollutants are removed by the municipal plant. By this process, the amount of pollutants ultimately discharged by the combination of the indirect discharger and the POTW will be no greater than the amount discharged by the direct discharger.

navigable waters. Pub.L. No. 92-500, 86 Stat. 816, Sec. 101(a)(1) (codified at 33 U.S.C. Sec. 1251(a)(1)). In 1977, recognizing that the 1972 Act's regulatory mechanism for the control of toxics "ha[d] failed," Congress amended the Clean Water Act to clarify and strengthen its provisions for dealing with toxic pollutants. Leg.Hist. 326-27 1 (comments of the House manager of the bill, Rep. Roberts); see also id. at 369 (statement of Rep. Clausen); id. at 427 (statement of Sen. Muskie).

The Act also required EPA to develop regulations for the disposal and utilization of POTW sewage sludge, so as to prevent contamination of the sludge with toxics removed from the effluent flowing through the POTW, and so as to encourage the productive recycling of sludge. In furtherance of this goal, the Act provided that POTWs could not grant removal credits to indirect dischargers for the POTW's removal of toxics from the liquid waste stream if this removal and consequent transfer of toxics to the POTW sludge would render the sludge toxic and thus prevent sludge disposal in accordance with those regulations. 33 U.S.C. Sec. 1317(b)(1).

NRDC challenges four aspects of the removal credit rule. First, it argues that EPA's method of calculating waste removal by POTWs violates the statutory requirement that direct and indirect dischargers be held to the same standard. Second, it argues that EPA's decision to ignore sewer overflow events in calculating the amount of toxic waste removed by a POTW violates the same requirement. Third, NRDC claims that EPA's action in modifying the test for determining when a credit must be withdrawn violates the Administrative Procedure Act, 5 U.S.C. Sec. 551 et seq., and the Clean Water Act, 33 U.S.C. Sec. 1251 et seq. Fourth, NRDC questions whether EPA may put into effect a relaxed removal credit rule when the sludge regulations that are a precondition for the issuance of such credits have not been promulgated.

In each of these areas, we conclude that EPA's 1984 removal credit regulations fail to meet statutory requirements. Furthermore, even extending the utmost deference to the Agency, we conclude that the promulgation of these regulations on the basis of the administrative record before us is arbitrary and capricious. Thus we grant NRDC's petition for review.

In contrast to NRDC, Petitioners Cerro Copper and Village of Sauget challenge the regulations as too strict and inflexible to take into account situations such as theirs. The petitions of Cerro Copper and the Village of Sauget will be denied.

I.

In order to understand the issues presented on this appeal, it is helpful to trace the history of the statute and regulations which were designed to eliminate the discharge of pollutants into our waters.

A.

The removal credit rule at issue here is a part of a complex regulatory framework mandated by the Federal Water Pollution Control Act Amendments of 1972 and 1977, 33 U.S.C. Secs. 1251 et seq. The statute calls for a two-phase program to limit discharges of effluents. Direct dischargers of toxic wastes were to comply with the Best Practicable Control Technology (BPT) by July 1, 1977. 33 U.S.C. Secs. 1311(b)(1)(A), 1314(b)(1). Between 1983 and 1987, direct dischargers of toxic wastes were to meet the more stringent standards consistent with the Best Available Technology economically achievable (BAT). 33 U.S.C. Sec. 1311(b)(2). The statute also mandated that the EPA set effluent limitations for POTWs engaged in the treatment of municipal sewage or industrial wastewater. 2 Id. Secs. 1311(b)(1)(B)-(C), 1314(d)(1). Such limitations were to result in equal levels of treatment for all toxic discharges, whether issued directly into navigable waters or channelled by a sewage system through a POTW.

Because secondary treatment by POTWs cannot deal adequately with toxic pollutants, the statute required that EPA establish national pretreatment standards, i.e. standards to which an indirect discharger must conform in treating its waste before such waste reaches the POTW. Those standards, applicable to indirect dischargers, provide for pretreatment which is equivalent to BAT standards. 33 U.S.C. 1317(b)(1). 3

In order to avoid redundant treatment by the indirect discharger and the POTW ("treatment for treatment's sake," Leg.Hist. 343), section 307(b)(1) of the 1977 Act, 33 U.S.C. Sec. 1317(b)(1), requires that the POTW be authorized to give credit to the indirect discharger for removal of pollutants achieved by the POTW. The removal credit provision thereby equates the amount of pollutants removed by the combined treatment of the POTW and the indirect discharger with the amount of pollutants removed by the direct discharger operating under the relevant BAT standard. 33 U.S.C. Sec. 1317(b)(1).

The removal credit provision was added to the statute by the Clean Water Act of 1977, Pub.L. No. 95-217, 91 Stat. 1589. That law was enacted in response to Congress's recognition of the growing seriousness of the problems of toxic pollution, and of the woeful inadequacy of the 1972 Act in dealing with them. Leg.Hist. 326-27, 454-55, 862-65.

The 1977 Act strengthened the controls over toxic pollutants in several ways. The 1977 Act explicitly codified the toxics consent decree issued by the District Court for the District of Columbia. That decree resulted from litigation brought by environmental groups to challenge EPA's failure to promulgate the effluent standards mandated for toxic substances by the 1972 Act. See NRDC v. Train, 8 Env't Rep.Cas. (BNA) 2120 (D.D.C.1976), modified sub nom. NRDC v. Costle, 12 Env't Rep.Cas. (BNA) 1833 (D.D.C.1979), modified sub nom. NRDC v. Gorsuch, No. 72-2153 (D.D.C. Oct. 26, 1982), modified sub nom.

                NRDC v. Ruckelshaus, No. 73-2153 (D.D.C. Aug. 2, 1983 and Jan. 6, 1984).  Following that decree, Congress required that BAT effluent guidelines, applicable to direct dischargers, be developed by July 1, 1980 for the 65 toxic pollutants listed in the decree.  Pub.L. No. 95-217, Sec. 53(a), 91 Stat. 1589 (codified at 33 U.S.C. 1317(a)(2)).  Also following the toxics decree, the 1977 Act amended section 307(b)(1) of the Act, 33 U.S.C. 1317(b)(1), to require EPA to promulgate pretreatment regulations for indirect dischargers analogous to the BAT standards for direct dischargers. 4   Congress stressed that pretreatment standards had to be based on BAT or more stringent limits.  See 33 U.S.C.
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