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Natural Resources Defense Council Inc. v. Environmental Protection Agency

decided: April 28, 1976.


Petition to review identical portions of related regulations promulgated by the Environmental Protection Agency pursuant to the Federal Water Pollution Control Act Amendments, 33 U.S.C. §§ 1251, et seq. Held: challenged portions of regulations are valid.

Moore, Circuit Judge, Frederick van Pelt Bryan and Kevin T. Duffy,*fn* District Judges.

Author: Moore

MOORE, Circuit Judge:

Natural Resources Defense Council, Inc. ("NRDC" or "Petitioner"), petitions this Court to review and set aside identical portions of related regulations*fn1 promulgated by the Environmental Protection Agency ("EPA") assertedly pursuant to the mandate of the Federal Water Pollution Control Act Amendments, 33 U.S.C. §§ 1251 et seq. (the "Act").

The regulations, so-called "effluent limitation guidelines", define the maximum permissible effluent discharge of various existing point source categories.*fn2 We have already sketched the role played by such regulations in the overall operation of the Act in our accompanying opinion Hooker Chemicals & Plastics Corp. v. Train, 537 F.2d 620 (2d Cir. 1976) ("74-1687"). Briefly, maximum permissible levels prescribed by the regulations are incorporated by permit-granting agencies into the permits for individual point sources.*fn3 The individual point sources fulfill their obligations under the Act by complying with the conditions incorporated by the permit grantors into the permits.*fn4

The challenged portion of the regulations authorizes the permit-grantor to except individual plants from the regulation's restrictions upon a showing that the discrete plant's relevant factors are "fundamentally different" from those which were considered by the EPA in the promulgation of the regulations themselves. The challenged portion reads as follows:

"In establishing the limitations set forth in this section, EPA took into account all information it was able to collect, develop and solicit with respect to factors (such as age and size of plant, raw materials, manufacturing processes, products produced, treatment technology available, energy requirements and costs) which can affect the industry subcategorization and effluent levels established. It is, however, possible that data which would affect these limitations have not been available and, as a result, these limitations should be adjusted for certain plants in this industry. An individual discharger or other interested person may submit evidence to the Regional Administrator (or to the State, if the State has the authority to issue NPDES permits) that factors relating to the equipment or facilities involved, the process applied, or other such factors related to such discharger are fundamentally different from the factors considered in the establishment of the guidelines. On the basis of such evidence or other available information, the Regional Administrator (or the State) will make a written finding that such factors are or are not fundamentally different for that facility compared to those specified in the Development Document. If such fundamentally different factors are found to exist, the Regional Administrator or the State shall establish for the discharger effluent limitations in the NPDES permit either more or less stringent than the limitations established herein, to the extent dictated by such fundamentally different factors. Such limitations must be approved by the Administrator of the Environmental Protection Agency. The Administrator may approve or disapprove such limitations, specify other limitations, or initiate proceedings to revise these regulations." See, e.g., 39 Fed. Reg. 6583 (February 20, 1974).

NRDC asserts that this "variance" clause violates the "Congressional direction that the rulemaking process of determining sub-categories of industry categories be the only method for dealing with the major variations among dischargers [of pollutants]."*fn5 While Respondent EPA agrees with Petitioner that subject matter jurisdiction is validly predicated on § 509 of the Act,*fn6 it asserts that the "variance" clause is valid.

The issues might have remained restricted to the propriety of the "variance" clause but for a motion to intervene by a group of chemical companies: Celanese Corporation, Union Carbide Corporation, Monsanto Company, Dow Chemical Company, FMC Corporation, Olin Corporation, American Cyanamid Company, E. I. DuPont de Nemours & Company, Allied Chemical Corporation and Hercules Incorporated (hereinafter referred to collectively as "Intervenors"). The motion was granted by this Court. Intervenors challenge the jurisdiction of this Court to review, under § 509 of the Act, the regulations which they assert were issued by EPA exclusively pursuant to § 304(b).*fn7 As a corollary they question whether EPA is authorized to issue regulations under § 301*fn8 of the Act, whether proper notice had been given in compliance with the requirements of the Administrative Procedure Act,*fn9 and whether the regulations comply with the requirements of § 304(b). Finally, they contend that the "variance" clause is invalid.

Briefs were also filed by amici curiae Allegheny Power System, Inc. et al., Chamber of Commerce of the United States of America ("Chamber of Commerce") and American Iron and Steel Institute, Inc. Amici Allegheny Power et al. echo Intervenors' construction of §§ 301 and 304 but hedge on the question of the "variance" clause's validity. Amicus Chamber of Commerce also echoes Intervenors' construction of the Act, but believes the variance clause is valid if construed liberally.

Before we can consider the validity of the "variance" clause, we must first determine whether Intervenors correctly argue that we lack subject matter jurisdiction. Intervenors' jurisdictional argument turns on § 509 of the Act. Under that section, review of the Administrator's action "in approving or promulgating any effluent limitation or other limitation under Section 1311 [§ 301], 1312 [§ 302], or 1316 [§ 306]" and "in issuing or denying any permit under section 1342 [§ 402]" may be had "in the Circuit Court of Appeals of the United States for the Federal judicial district" in which the person seeking review resides, provided the application is made within 90 days from the Administrator's approval, promulgation, issuance or denial. Intervenors contend that the regulations were promulgated exclusively under § 304 of the Act and that since § 509 does not authorize review of agency action under § 304, this Court lacks jurisdiction. This jurisdictional challenge and the arguments in support thereof are the same as those with which we dealt in our decision in 74-1687, which upheld jurisdiction in this Court. Our decision there is equally applicable to this case. Although the question is doubtful and the statute ambiguous, we hold that the challenged regulations may, in combination, be considered as § 301 effluent limitations and § 304 guidelines.

Our decision in 74-1687 also disposes of several arguments addressed by Intervenors to the merits. Thus, the regulations need not provide for the "ranges" envisioned by Intervenors, nor need they contain a more detailed enumeration of the factors that the Act required the EPA to consider in the promulgating process. However, 74-1687 does not dispose of the issue which lies at the heart of this review: whether the challenged "variance" clause is valid.

Intervenors maintain that the variance clause is not sufficiently flexible to compensate for the rigidity which results from the "single number" regulations promulgated by the EPA. They claim that § 301 effluent limitations are to be promulgated, or, in effect, are to be fixed by permit-grantors applying flexible § 304 guidelines, and that a variance is not an acceptable substitute therefor. We disagree. If effluent limitations were not supposed to be formulated as nationwide regulations, then arguably the "variance" clause would not remedy the error. But as we held in 74-1687, single number effluent limitation regulations do not contravene the legislative intent, and without this premise the Intervenors' argument collapses.

We also disagree with amicus Chamber of Commerce's conditional acceptance of the variance clause. As do Intervenors, it maintains that § 304 factors are only to be considered by the permit-grantors who formulate § 301 effluent limitations during the permit-granting process. But, unlike Intervenors, it is willing to wink at the alleged violation of this procedure by the EPA in formulating the regulations sub judice, provided the "variance" clause remedies the defect. Thus, it is willing to accept the "variance" clause only if it is construed to encompass wholesale reconsideration at the permit-granting stage of all the factors that were ...

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