Shanty Town Associates Ltd. Partnership v. E.P.A.

• Decision Date: 04 April 1988
• Docket Number: No. 87-1091,87-1091
• Citation: 843 F.2d 782
• Parties: , 56 USLW 2616, 18 Envtl. L. Rep. 21,227 SHANTY TOWN ASSOCIATES LIMITED PARTNERSHIP, Plaintiff-Appellant, v. ENVIRONMENTAL PROTECTION AGENCY; Worcester County Sanitary Commission; State of Maryland, Department of the Environment, Defendants-Appellees, Natural Resources Defense Council; Chesapeake Bay Foundation, Inc.; Environmental Policy Institute; Committee to Preserve Assateague Island, Inc.; National Parks & Conservation Association; Worcester Environmental Trust; Worcester Environmental Protection Fund, Inc.; Maryland Conservation Council; Maryland Wetlands Committee; Coalition of O.C. Civic Organizations; Maryland Ornithological Society, Inc.; Maryland Wildlands Committee; Audubon Naturalist Society of the Central Atlantic States, Inc., Amici Curiae, James M. Seif, individually and as Regional Administrator of the U.S. Environmental Protection Agency; William M. Eichbaum, individually and as Assistant Secretary, Department of Health and Mental Hygiene, Richard B. Sellars, Jr., individually and as Director, Water Management Administration; Worcester County Sanitary District, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 782

843 F.2d 782

27 ERC 1540, 56 USLW 2616, 18 Envtl.

L. Rep. 21,227

SHANTY TOWN ASSOCIATES LIMITED PARTNERSHIP, Plaintiff-Appellant, v. ENVIRONMENTAL PROTECTION AGENCY; Worcester County Sanitary Commission; State of Maryland, Department of the Environment, Defendants-Appellees Natural Resources Defense Council; Chesapeake Bay Foundation, Inc.; Environmental Policy Institute Committee to Preserve Assateague Island, Inc.; National Parks & Conservation Association; Worcester Environmental Trust; Worcester Environmental Protection Fund, Inc. Maryland Conservation Council; Maryland Wetlands Committee Coalition of O.C. Civic Organizations; Maryland Ornithological Society, Inc.; Maryland Wildlands Committee; Audubon Naturalist Society of the Central Atlantic States, Inc., Amici Curiae, James M. Seif, individually and as Regional Administrator of the U.S. Environmental Protection Agency; William M. Eichbaum, individually and as Assistant Secretary, Department of Health and Mental Hygiene, Richard B. Sellars, Jr., individually and as Director, Water Management Administration; Worcester County Sanitary District, Defendants.

No. 87-1091.

United States Court of Appeals, Fourth Circuit.

Argued Jan. 6, 1988.

Decided April 4, 1988.

Raymond Stevens Smethurst, Jr. (Barbara R. Trader; Adkins, Potts & Smethurst, Salisbury, Md., on brief), for plaintiff-appellant.

Laura Emily Frossard, Dept. of Justice, Washington, D.C., (J. Joseph Curran, Jr., Atty. Gen., Baltimore, Md., Roger J. Marzulla, Acting Asst. Atty. Gen., Washington, D.C., Richard M. Hall, Asst. Atty. Gen., Baltimore, Md., Lydia Duff, Maryland Dept. of the Environment, Dirk D. Snel, Dept. of Justice, Francis S. Blake, Gen. Counsel, Washington, D.C., Stephen G. Pressman, U.S.E.P.A., Atlanta, Ga., on brief), for defendants-appellees.

(Timothy J. Lindon, Arnold & Porter, Washington, D.C., on brief), for amici curiae Natural Resources Defense Council, Inc., Chesapeake Bay Foundation, Inc., Environmental Policy Institute, Committee to Preserve Assateague Island, Inc., National Parks and Conservation Ass'n, Worcester Environmental Trust, Worcester Environmental Protection Fund, Inc., Maryland Conservation Council, Maryland Wetlands Committee, Coalition of O.C. Civic Associations, Maryland Ornithological Soc., Inc., Maryland Wildlands Committee and Audubon Naturalist Soc. of the Central Atlantic States, Inc.

Before WINTER, Chief Judge, and PHILLIPS and MURNAGHAN, Circuit Judges.

JAMES DICKSON PHILLIPS, Circuit Judge:

This action by a developer challenges the Environmental Protection Agency's imposition of certain restrictive conditions upon funds it granted to a municipality for the construction of a sewage collection system under the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. Secs. 1251-1376. The district court rejected the challenge. Because we conclude that EPA had statutory authority to impose the grant conditions in question, and that it did not act arbitrarily and capriciously in so doing, we affirm.

I

Before 1972, the FWPCA consisted primarily of a system of state-developed ambient water quality standards. ¹ Under this regime, the focus was on the quality of the receiving waters, rather than the nature of the effluent being discharged into them; individual dischargers could be required to reduce their pollution output only if it caused the quality of the receiving body of water to fall below the applicable standard. But this approach proved ineffective in combatting water pollution, due to difficulty in tracing violations of standards to particular polluters, a cumbersome enforcement process, and the "awkwardly shared" federal and state responsibility for promulgating the standards. See generally EPA v. California Water Resources Control Bd., 426 U.S. 200, 202, 203, 96 S.Ct. 2022, 2023, 2024, 48 L.Ed.2d 578 (1976).

In the early 1970s, increasing public concern about the state of the nation's waters led Congress to undertake a major overhaul of the FWPCA. The Federal Water Pollution Control Act Amendments of 1972, Pub.L. No. 92-500, 86 Stat. 816, sharply increased the federal role in regulating water quality, establishing a comprehensive federal program designed "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. Sec. 1251(a). The 1972 amendments declared specific "national goals" of making the nation's waters fishable and swimmable by 1983, and totally eliminating the discharge of pollutants into them by 1985. Id. Sec. 1251(a)(1)-(2).

Responsibility for the implementation of these ambitious goals was vested in the Environmental Protection Agency (EPA), which had been created in 1970. To assist EPA in this task, the 1972 amendments gave it two principal powers. First, Title III of the amended Act gave EPA the authority to develop and impose uniform federal restrictions on the discharge of pollutants into navigable interstate waters. See id. Sec. 1311(b). These technology-based "effluent limitations" were to be enforced through the National Pollutant Discharge Elimination System (NPDES), which made it illegal to discharge pollutants from any "point source" ² without a permit issued by EPA or a state whose permit program has been approved by EPA as meeting federal standards. See id. Sec. 1311(a) (prohibiting discharge of pollutants except in compliance with a NPDES permit); id. Sec. 1342(a) (authorizing EPA to issue NPDES permits for discharges that meet the applicable effluent limitations); id. Sec. 1342(b) (authorizing EPA to transfer the authority to issue NPDES permits to a state whose permit program incorporates federal effluent limitations). Second, and more relevant for our purposes here, Title II of the amended Act gave EPA the authority to administer a massive federal spending program designed to assist state and local governments in their efforts to control water pollution. Id. Secs. 1281-1299.

Section 201 of the Act gives EPA the general authority to make grants to state and local governments for the development and implementation of waste treatment management plans and practices which will achieve the Act's water quality goals. Id. Sec. 1281(a). Section 201(g)(1) specifically authorizes it to make grants for the construction of publicly-owned wastewater treatment works. Id. Sec. 1281(g)(1). As defined in the statute, a "treatment work" need not be a building or facility, but can be any device, system, or other method for treating, recycling, reclaiming, preventing, or reducing liquid municipal sewage and industrial waste, including storm water runoff. Id. Sec. 1292(2)(A)-(B).

Grant funds are appropriated annually by Congress and then allocated by EPA to the states, which are responsible for determining the priority of proposed treatment works in accordance with certain federal guidelines. Local governments seeking grant funds must make application first to the state agency charged with administering the federal grant program; after that agency approves the project and determines its relative priority, it forwards the application to the EPA itself for final approval. See generally 40 C.F.R. Part 35, Subpart I (1987). EPA's approval is conditioned on a number of criteria, including requirements that the proposed facility be cost-effective according to federal standards, see 33 U.S.C. Sec. 1284(a)(4); that its size and capacity be directly related to the needs it is designed to serve, see id. Sec. 1284(a)(5); and that the applicant adopt a system of user fees, see id. Sec. 1284(b). EPA's own regulations implementing the construction grant program authorize it to impose any additional conditions necessary to minimize the water pollution caused by the facility's construction. See 40 C.F.R. Sec. 35.840(a) (1987).

II

Plaintiff Shanty Town Associates Limited Partnership (Shanty Town) owns a lot in West Ocean City, Maryland, an unincorporated region of approximately 2300 acres in Worcester County, on the coast of Maryland. The Isle of Wight Bay borders the region on the north and east, Sinepuxent Bay and the Assateague Island National Seashore lie to the southeast, and to the west, across Herring Creek, is the mainland. Much of the region consists of environmentally sensitive lands--floodplains, wetlands, and prime agricultural lands--that are protected by federal, state, and local regulations. Approximately 60% of the developed property in West Ocean City lies within the 100-year floodplain. ³ The controversy in this case centers around further development of the floodplains area.

Because of its poor soil and high water table, the West Ocean City area has suffered for many years from water pollution caused by failing septic systems. This problem has significantly inhibited development in the area, and the Worcester County Sanitary Commission ⁴ has on several occasions considered installing a public sewage system to remedy it. In 1983, the Sanitary Commission decided to construct a system that would collect sewage and other wastewater from the West Ocean City area and carry it to the County's existing treatment plant in the adjacent community of Ocean City. To finance this project, the Sanitary Commission sought a Title II construction grant from EPA.

EPA determined that awarding funds for the project would be a "major federal action significantly affecting the quality of the human environment." It therefore analyzed the environmental effects of the proposed project in an Environmental Impact Statement (EIS), as it was required to do by the National Environmental Policy Act (NEPA), 42 U.S.C. Secs. 4321-4370. ⁵ The draft EIS concluded that the proposed system would induce considerable development in the floodplains, which would result in increased runoff of pollutants into the adjoining bays. But the draft EIS also determined that the proposed system was the only practicable way to eliminate the acute pollution problems caused by the failing septic systems; it...