Natural Resources Defense Council, Inc. v. U.S. E.P.A., s. 86-7390

Citation863 F.2d 1420
Decision Date05 December 1988
Docket NumberNos. 86-7390,86-7563,86-7631 and 86-7643,s. 86-7390
Parties, 57 USLW 2375, 19 Envtl. L. Rep. 20,225 NATURAL RESOURCES DEFENSE COUNCIL, INC., and the Sierra Club, Petitioners, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents, and American Petroleum Institute, et al., Intervenors. CONOCO, INC., Petitioner, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents, and Natural Resources Defense Council, Inc., Respondent-Intervenor. Bob MARTINEZ, Governor, * and Robert A. Butterworth, Attorney General, ** ] Petitioners, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents, and American Petroleum Institute, et al., Respondents-Intervenors. AMERICAN PETROLEUM INSTITUTE, et al., Petitioners, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents, and Natural Resources Defense Council, Inc., Respondent-Intervenor.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Ronald J. Wilson and Catherine A. Cotter, Washington, D.C., for petitioners Natural Resources Defense Council, Inc. and Sierra Club.

Lee S. Schroer, E.P.A., Washington, D.C., and Scott Slaughter and Ashley Doherty, Dept. of Justice, Washington, D.C., for respondents U.S. E.P.A.

J. Berry St. John, Jr., Lisko & Lewis, New Orleans, La., for petitioners, respondents/intervenors American Petroleum Institute and Conoco, Inc.

Louis F. Hubener, Asst. Atty. Gen., Tallahassee, Fla., for petitioner Bob Martinez, Governor.

Petitions for Review from an Order of the Environmental Protection Agency.

Before SCHROEDER, REINHARDT and LEAVY, Circuit Judges.

SCHROEDER, Circuit Judge:

INTRODUCTION

The Clean Water Act prohibits the discharge of any pollutant, 33 U.S.C. Sec. 1311(a) (1982), except in compliance with a National Pollutant Discharge Elimination System (NPDES) permit issued under the Act. 33 U.S.C. Sec. 1342(a) (West Supp.1988). We here consider petitions for review of the Environmental Protection Agency's general permit under the Clean Water Act (the Act) authorizing the discharge of pollutants from oil and gas operations in the Gulf of Mexico.

In July of 1986, Regions IV and VI of the Environmental Protection Agency issued this NPDES permit establishing the compliance conditions for discharge of pollutants from oil and gas operations located in the Outer Continental Shelf of the Gulf of Mexico. See 51 Fed.Reg. 24897 (1986). The Natural Resources Defense Council and the Sierra Club (referred to collectively as "NRDC") challenge certain limitations on the discharge of pollutants, essentially arguing that these limitations are too lenient. The American Petroleum Institute and Conoco, Inc. (referred to collectively as "API") also challenge terms of the permit, essentially arguing that some of the limitations are too stringent. In addition, the State of Florida seeks review of the permit on the ground that the permit does not comply with its state water quality standards. This court has jurisdiction pursuant to 33 U.S.C.A. Sec. 1369(b)(1)(F) (West Supp.1988). 1

Permits issued under NPDES are to establish specific limitations on the discharge of pollutants based on water quality standards, see 33 U.S.C. Sec. 1313 (1982), and on imposition of technology-based controls. See id. Secs. 1311(b), 1314(b). The type of technology-based effluent limitation applicable to a discharge depends upon the type of pollutant. For existing sources, 2 toxic pollutants 3 are subject to the "best available technology economically achievable" (BAT). See 33 U.S.C.A. Secs. 1311(b)(2), 1314(b)(2) (West Supp.1988); 33 U.S.C. Sec. 1317(a)(2) (1982). Conventional pollutants 4 are subject to the "best conventional pollutant control technology" (BCT). See 33 U.S.C.A. Sec. 1311(b)(2)(E) (West Supp.1988); 33 U.S.C. Secs. 1314(a)(4), 1314(b)(4)(1982). The Act lists the factors that EPA must take into account in establishing BAT and BCT. See 33 U.S.C. Secs. 1314(b)(2)(B) (1982) (BAT), 1314(b)(4)(B) (1982) (BCT). See generally Natural Resources Defense Council v. EPA, 822 F.2d 104, 110 (D.C.Cir.1987) ("NRDC" ), American Petroleum Institute v. EPA, 787 F.2d 965, 969-70 (5th Cir.1986) ("API ").

Permits for the discharge of pollutants from drilling are generally required to incorporate technology-based effluent limitations promulgated by EPA on a nationwide, industry-wide basis. See 33 U.S.C. Secs. 1311(b), 1314; 40 C.F.R. Sec. 125.3(c)(1) (1987). Such industry-wide guidelines have not yet been promulgated. The Act provides that in this situation, EPA may establish effluent limitations on a case-by-case basis according to its "Best Professional Judgment" (BPJ). See 33 U.S.C.A. Sec. 1342(a)(1)(B) (West Supp.1988); 40 C.F.R. Sec. 125.3(c)(2) (1987). See also NRDC, 822 F.2d at 111; API, 787 F.2d at 971.

The Act originally required compliance with national, industry-wide effluent standards for toxic and conventional pollutants by 1983, but Congress later extended this deadline to 1984. Congress has further extended this deadline to no later than March 31, 1989, but has mandated that compliance with national limitations should be achieved "as expeditiously as practicable." See 33 U.S.C.A. Sec. 1311(b)(2) (West Supp.1988). EPA has indicated to this court that there may be need for further extensions. Although EPA has proposed guidelines for effluent limitations for the offshore oil industry, see 50 Fed.Reg. 34592 In the absence of national standards, the Act authorizes the Administrator to issue permits on "such conditions as the Administrator determines are necessary to carry out the provisions of [the Act]." 33 U.S.C.A. Sec. 1342(a)(1)(B). However, in issuing permits on a case-by-case basis using its "Best Professional Judgment," EPA does not have unlimited discretion in establishing permit effluent limitations. EPA's own regulations implementing this section enumerate the statutory factors that must be considered in writing permits. See 40 C.F.R. Sec. 125.3(c), (d) (1987). See also 51 Fed.Reg. at 24915 ("In developing the BPJ permit conditions, [the EPA] Regions are required to consider a number of factors, enumerated in [33 U.S.C. Sec. 1314(b) ]...."). In addition, courts reviewing permits issued on a BPJ basis hold EPA to the same factors that must be considered in establishing the national effluent limitations. See, e.g., Trustees for Alaska v. EPA, 749 F.2d 549, 553 (9th Cir.1984) (EPA must consider statutorily enumerated factors in its BPJ determination of effluent limitations); API, 787 F.2d at 972, 976 (applying statutory factors in reviewing effluent limitations in a BPJ permit).

(to be codified at 40 C.F.R. Sec. 435) (proposed August 26, 1985), these guidelines are not yet final.

In this proceeding, the NRDC's principal challenge to the permit is to EPA's failure to require reinjection into subsurface rock of water produced during the drilling process. In addition, the NRDC challenges the permit's effluent limitations on toxic and conventional pollutants in drilling fluids, including drilling muds and drill cuttings.

API also mounts substantive challenges to the permit's regulation of drilling fluids. The API's principal substantive challenges are to the test methodology to be employed and to the permit's restrictions on the use of "diesel pills," which are diesel oil based substances used to dislodge stuck drilling pipe.

The State of Florida contends that EPA was required to secure certification from the state for discharges contemplated by the permit. Florida maintains that it has jurisdiction to enforce its own water quality standards in some of the water regulated under the EPA permit.

We are troubled by certain aspects of the permit, most importantly, by the permit provisions concerning produced water and the alternative toxicity limits. However, because the national guidelines for the offshore oil industry are still being formulated, we uphold the permit in most respects; we remand the provisions pertaining to the alternative toxicity limits and the limits on cadmium and mercury.

I. Reinjection of Produced Water

Oil production brings to the surface water which was originally trapped with oil or natural gas in a geological formation, as well as water and other fluids that have been mixed with oil or gas during the production process. These fluids are known as produced water. Produced water is the highest volume waste source in offshore production discharges. J.A. 298; 51 Fed.Reg. at 24917. The record indicates that produced water contains various toxic pollutants. J.A. 58, 359-69. The permit, however, does not impose any BAT limitation on the discharge of toxics in produced water. NRDC contends that EPA erred by not determining that reinjection is BAT for produced water. Reinjection is a disposal technique in which the produced water is reinjected into a sub-surface geologic formation so that none of the pollutants it contains are released into the sea.

EPA's proposed national effluent limitation guidelines for produced water would require reinjection of this discharge for certain new sources. 50 Fed.Reg. at 34605. EPA stated, in announcing those proposals, however, that it required additional information on the technological feasibility and costs of retrofitting reinjection technology on existing offshore facilities before requiring reinjection for existing facilities. See 50 Fed.Reg. at 34603, 34610-11.

Reinjection of produced water is not required under this permit. The EPA stated, in this context as well, that the agency required additional data on the technological feasibility and economic achievability of reinjection for existing sources. See 51 Fed.Reg. at 24910. NRDC asserts that EPA violated the Act by not requiring reinjection of produced water as BAT for toxic pollutants in produced water.

Technology-based limitations under BAT must be both technologically available and economically achievable. See 33 U.S.C. Sec. 1314(b)(2)(B). To be technologically...

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