National Uniformity Under the Water Act: Two Circuits Uphold EPA's Authority to Issue Effluent Limitations Under § 301

In key decisions concerning one of the most hotly contested ambiguities in the Federal Water Pollution Control Act Amendments of 1972, the Third¹ and Seventh² Circuit Courts of Appeals recently held that the Environmental Protection Agency has authority under § 301³ of the statute to issue a uniform, single number nationwide effluent limitation applicable to all existing point sources within a particular industrial class or category. The cases are in direct conflict with an earlier Eighth Circuit ruling,⁴ which held that such limitations can be established only on a case by case basis for individual sources under the guidelines published by EPA pursuant to § 304⁵ of the Act.

Whether EPA can promulgate rules governing effluent discharges from existing point sources under both §§ 301 and 304, as the agency contends, or can do so only under the latter section, as industrial petitioners claim in the more than 200 lawsuits now pending against EPA's effluent limitations for various point source categories, goes to the very heart of the statutory [6 ELR 10009] scheme for regulating water pollution. The ultimate resolution of this question bears directly on the achievability of nationally uniform effluent limitations within each category or class of industrial polluters, an oft-stated goal of the Amendments.⁶ Congress considered uniformity of standards within point source categories crucial for two reasons: first, to facilitate administration and enforcement under the Act, and second, to prevent industries from using economic blackmail (threats to move to a state with less stringent water pollution control standards) against states trying to do a diligent regulatory job.

Unfortunately, the statute's regulatory scheme was sufficiently ambiguous on the point of national uniformity as to make extensive litigation almost inevitable. The National Pollutant Discharge Elimination System permit program, established by § 402,⁷ is the centerpiece of the regulatory structure for controlling existing dischargers. Under §§ 301(a) and 402(a)(1), most discharges of pollutants are unlawful unless authorized by an NPDES permit, issued either by EPA or by a state which has obtained EPA approval for assuming permit-issuing authority. The focus of the legal battle has been on the discharge standards contained in these permits and the process by which they are determined.

Section 301 states existing point sources must, by 1977 and 1983 respectively, achieve "effluent limitations" which require application of the "best practicable control technology currently available" and the "best available technology economically achievable." Neither the EPA Administrator nor anyone else is, however, explicitly authorized to promulgate regulations establishing such limitations. Section 304, on the other hand, requires the Administrator to publish "regulations, providing guidelines for effluent limitations." These guidelines identify for particular point source categories, "the degree of effluent reduction attainable through application of" the 1977 and 1983 technologies, and must specify the factors, including, inter alia, cost of effluent reduction and age of equipment and facilities involved, which are to be taken into account in giving content to these general technological criteria. A related provision, § 509(b)(1),⁸ makes the Administrator's approval or promulgation of any effluent limitation under § 301 reviewable in the appropriate U.S. court of appeals; guidelines promulgated solely under § 304 are, on the other hand, reviewable in the first instance in federal district court.

When the Administrator finally began to promulgate regulations after a series of delays which had resulted in a court-ordered publication schedule,⁹ he further confused the issue by publishing single sets of rules for a number of point source categories, entitled "Effluent Limitations Guidelines" and claiming that they were being issued pursuant to both § 301 and § 304. Numerous industrial dischargers filed suit attacking these rules in the federal district courts, asserting that this was the proper forum since the rules could only be issued pursuant to § 304. But these parties also lodged review petitions in the various courts of appeals so that review would not be foreclosed by the Act's 90-day filing deadline should their suits ultimately be thrown out of district court.

The battle over the proper interpretation of the statutory structure thus reduced itself in each case to a jurisdictional dispute. The first four courts to face this issue, however, seemed to be playing a game of hot potato. Three federal district courts¹⁰ dismissed challenges to EPA effluent regulations on the grounds that they belonged in the courts of appeals. Then the Eighth Circuit completed the circle by ruling¹¹ that it lacked jurisdiction to consider such a challenge but that the regulations were reviewable in the district courts.

Examining the statute's language, structure and legislative history, the Eighth Circuit found that Congress did not intend to grant the Administrator a separate power under § 301 to promulgate by regulation uniform effluent limitations for existing source categories. Separate, individual limitations must instead be established by EPA or the state permit-issuing authority in the context of each individual NPDES permit proceeding under § 402. In the Eighth Circuit's view, Congress sought to ensure uniformity of effluent standards for existing plants not by authorizing the promulgation of regulations under § 301, but by granting EPA power, under § 402, to issue permits and to veto those state-issued permits which do not comply with guidelines promulgated by the agency under § 304(b). Since, therefore, the EPA regulations in question, governing discharges from existing corn wet milling sources, were necessarily promulgated under § 304 rather than § 301, they could not be directly reviewed by the court under § 509(b).

Its conclusion that the existing source regulations were published solely under § 304(b), emphasized the court, was not meant to "denigrate their importance under the Act or … diminish their clout in the permit-issuing process." In fact, it opined, carefully written guidelines could "assure uniformity of permits for industry categories," and "move the nation responsibly toward the goal of eliminating the discharge of all pollutants into navigable waters by 1985."

This initial appellate interpretation of EPA's powers under §§ 301 and 304 went unchallenged for six months. Then within less than three weeks of one another, the Third and Seventh Circuit Courts of Appeals, in well-reasoned opinions, came to the conclusion that the Eighth Circuit was mistaken. Holding that the statute did give the Administrator authority to issue binding single-number effluent limitations under § 301, which must be applied to all sources within a particular industrial category through § 402 permits, the two courts analyzed the Act and its legislative history. In the process, [6 ELR 10010] they also convincingly critiqued the Eighth Circuit's reasoning in CPC International.¹²

The Seventh Circuit, reviewing a challenge to EPA's regulations governing slaughterhouses and meat-processing plants, relied substantially on the recent Supreme Court precedent of Train v. NRDC¹³ to conclude that EPA's interpretation of the statute (as giving it authority to promulgate effluent limitations under § 301) was sufficiently reasonable to prevent the court from substituting its judgment for that of the agency. The agency's position was found to be supported by the language of §§ 302(a), 401(a)(1), 505(f) and 509(b)(1), among others, and by several excerpts from the legislative history. In addition, the court noted that the EPA interpretation represents a reasonable accomodation of the policies embodied in the Act. On the hand, nationwide effluent limitations will insure the uniformity desired by Congress; on the other, the states will retain a major role in regulating water pollution through the § 402 permit process, in accordance with the policy declaration of § 101(b).

Several weeks earlier, in a challenge to EPA's effluent rules for the steel mills point source category, the Third Circuit had also held that EPA's view of its authority under this very complex statute was sufficiently reasonable to require affirmance under Train v. NRDC. But the court also engaged in an extensive point by point refutation of the Eighth Circuit's statutory and legislative analysis in CPC which left hardly a brick of that decision's underpinnings in place in coming to the conclusion that the effluent rules were promulgated under § 301 as well as under § 304. In response to petitioners' additional claim that the regulations failed to meet the requirements of § 304(b) — a contention not raised before the Seventh Circuit — the Third Circuit proceeded to set forth its view of how the Administrator's power to issue effluent limitations under § 301 is to be reconciled with his duty to publish guidelines under § 304.

According to the Third Circuit, a § 301(b) "limitation" is meant to be a single-number effluent ceiling, a figure which sets the maximum amount of effluent discharge which is permissible. In determining this ceiling, the Administrator is to consider the differences in processes and capabilities of all the various point sources within a given category. He must then promulgate guidelines to aid permit-issuing authorities in deciding whether, and by how much, a particular source's effluent discharge limit must be more stringent (emphasis the court's) than the ceiling. In other words, § 301 limitations set the maximum amount of pollution discharge permissible nationwide within a given category, and the § 304 guidelines provide precise guidance to the permit-issuing authorities on how to weigh factors such as plant age and the cost of effluent reduction in order to establish various lower allowable levels of discharge for individual sources.

The regulations in question (for steel mills) did not meet the latter half of this prescription since they did not specify permissible ranges of limitations below the ceiling set by single number effluent limitations. Moreover, they did not identify any of the factors to be taken into account in determining the precise control measures to be applied to individual point sources. The court therefore remanded the regulations to the Administrator for promulgation of such guidelines. The single number limitations were also remanded for reconsideration in light of the court's discussion of the ceiling concept.

The Seventh Circuit had also remanded several portions of the regulations before it, as not being based on a reasoned analysis supported by the record. If one purpose of the many industry challenges to effluent limitations was to burden EPA in its task of implementing the statute, these remands represent a degree of success for the petitioners. Realizing that the 1977 deadline is fast approaching, the Seventh Circuit made an effort to minimize the delay inherent in its remand order. The court directed that EPA may reissue the limitations without further hearings, notice or opportunity for comment if it concludes, on reconsideration, that evidence in the existing record but upon which it did not previouslyrely is adequate to support the limitations. Any renewed challenge must then be filed within 21 days after the regulations are repromulgated, and will be heard by the court on an accelerated briefing schedule.

In addition, Judge Tone¹⁴ stated that he had taken the highly unusual time-saving step of circulating the American Meat Institute to all judges in active service on the Seventh Circuit, and that no judge had requested that the case be reheard en banc.

The decisions in American Iron and Steel Institute v. EPA¹⁵ and American Meat Institute v. EPA¹⁶ are noteworthy for several reasons. First, the rulings decisively shift the judicial balance in favor of EPA's interpretation of its authority under §§ 301 and 304, and thereby promote the achievement of national uniformity among discharge limitations within particular point source categories. As both the Eighth and Seventh Circuits noted, EPA could, by carefully drafting its § 304 guidelines and consistently vetoing permits which did not comply with them, theoretically accomplish the same result in terms of national uniformity even if it were held to have no power to promulgate single number effluent limitations under § 301. But this alternative is to a large extent illusory, since it would involve the agency in thousands of detailed individual permit evaluations, and worse, such guideline decisions, reviewable in the federal district courts rather than in the courts of appeals, would almost certainly soon produce a welter of divergent judicial rulings which would take years to reconcile.

EPA's view, on the other hand, now vindicated by the Third and Seventh Circuits, will result in less complicated permit evaluations. It also means that review will lie directly in the courts of appeals, and thereby assures a greater chance for uniformity and for swift reconciliation of any judicial disagreements which may arise. As the Seventh Circuit noted, any other result [6 ELR 10011] "conflicts with the congressional purpose of using direct review in the courts of appeals to insure expeditious and consistent application of effluent guidelines." In fact, the consistency and cogency of the Third and Seventh Circuits' reasoning may well have a decisive precedential impact on the nearly 200 suits against effluent limitations presently outstanding.

The second noteworthy feature of these two decisions is their reading of the precedent of Train v. NRDC. Although that suit involved the Clean Air Act, the Third and Seventh Circuits found in it a strong directive from the Supreme Court to defer to EPA's interpretation of its own authority under complex and ambiguous environmental legislation. Even where other interpretations are equally plausible, if EPA's view is "reasonable," i.e., finds support in the statutory language and legislative history, it must be sustained. While such a standard, if consistently adhered to by reviewing courts, would not be of much assistance to the agency in challenges to the evidentiary bases for particular rules or actions, it could make quite a difference in cases such as Ethyl Corp. v.EPA,¹⁷ where the basic question is the proper interpretation of a statutory provision or standard governing the agnecy's exercise of regulatory authority.

This principle of deferring to EPA's interpretation of ambiguous statutory provisions also serves as an answer to Judge Adams' complaint in his concurrence in American Iron & Steel Institute about Congress' sloppy draftsmanship in the Federal Water Pollution Control Act Amendments of 1972.

In rejecting the petitioners' challenge to the total suspended solids standard for 1977, the court noted that the petitioner's comments during the rule-making process had recommended as within its capabilities the standard which EPA ultimately adopted. The court held that EPA could therefore reasonably have concluded the standard was attainable, implicitly infusing an equitable estoppel notion into the commenting process.

We have not heard the last of this dispute over the Administrator's § 301 powers, but it does seem that the Third and Seventh Circuit decisions represent something of a turning point. Whether or not an early Supreme Court ruling on this issue is forthcoming, the judicial momentum seems now clearly to have shifted in EPA's favor.¹⁸

1. American Iron and Steel Institute v. Environmental Protection Agency, __ F.2d __, 6 ELR 20068 (3d Cir. Nov. 7, 1975).

2. American Meat Institute v. Environmental Protection Agency, __ F.2d __, 6 ELR 20029 (7th Cir. Nov. 24, 1975).

3. 33 U.S.C. § 1311, ELR 41110.

4. CPC International, Inc. v. Train, __ F.2d __, 5 ELR 20392 (8th Cir. May 5, 1975).

5. 33 U.S.C. § 1314, ELR 41112.

6. See, e.g., Congressional Research Service, A Legislative History of the Water Pollution Control Act Amendments of 1972 at 162 (1973).

7. 33 U.S.C. § 1342, ELR 41121.

8. 33 U.S.C. § 1369, ELR 41125.

9. National Resources Defense Council v. Train, 4 ELR 20108 (D.D.C. 1973), affirmed in part, 510 F.2d 692, 5 ELR 20046, 20696 (D.C. Cir. 1975).

10. American Paper Institute v. Train, 381 F. Supp. 553, 4 ELR 20815 (D.D.C. 1974), appeal pending, No. 74-1544 (D.C. Cir.); E.I. DuPont de Nemours & Co. v. Train, 383 F. Supp. 1244, 4 ELR 20855 (W.D. Va. 1974), appeal pending, No. 74-2237 (4th Cir.); American Petroleum Institute v. Train, 5 ELR 20298 (D. Colo, Apr. 8, 1975).

11. Supra, n. 4.

12. Id.

13. 42 U.S. 60, 5 ELR 20264 (1975).

14. Writing for himself and Judges Pell and Stevens, the latter recently confirmed by the Senate as an Associate Justice of the Supreme Court.

15. Supra, n. 1.

16. Supra, n. 2.

17. __ F.2d __, 5 ELR 20096, 20450 (D.C. Cir. 1975). For a discussion of the case, see Comment, D.C. Circuit Voids EPA Plan to Cover Lead Content of Gasoline, 5 ELR 10052 (Apr. 1975).

18. See also Comment, Water Act's Oil Spill Notification Rule Survives Constitutional Challenges, 6 ELR 10011 (Jan. 1976) discussing recent judicial validation of oil-spill notification requirements under the FWPCA.