Appeal from a judgment entered in the United States District Court for the Southern District of New York, Robert L. Carter, Judge, dismissing the complaint for lack of subject matter jurisdiction; petition for review of a decision by the General Counsel of the Environmental Protection Agency, which determined that jurisdiction over certain applications for permits to discharge pollution into the Hudson River had not been transferred from the Environmental Protection Agency to New York State's Department of Environmental Conservation. The Court of Appeals held that (1) the district court had jurisdiction over the dispute under the general grant of federal question jurisdiction, (2) the Court of Appeals did not have exclusive original jurisdiction over the dispute, (3) the dispute was ripe for judicial review, and (4) the Environmental Protection Agency retained jurisdiction over the applications for permits. Petition for review dismissed, judgment of the district court reversed, and cause remanded with instructions to enter summary judgment in favor of defendants-appellees.
Before Feinberg and Meskill, Circuit Judges, and Brieant*fn* , District Judge.
Three public utilities*fn1 and the Power Authority of the State of New York*fn2 engaged in the generation and sale of electricity in New York have brought suit against the United States Environmental Protection Agency ("EPA"), the New York State Department of Environmental Conservation ("DENCON") and officials of those bodies. The principal relief sought is a declaration that DENCON, rather than EPA, has jurisdiction over pending applications to discharge pollution into the Hudson River.*fn3 The United States District Court for the Southern District of New York, Robert L. Carter, Judge, dismissed the complaint for lack of subject matter jurisdiction on the ground that the Courts of Appeals have exclusive jurisdiction over the dispute. 444 F. Supp. 628 (S.D.N.Y.1978). By order of this Court, the appeal from the judgment entered in the district court has been consolidated with an original petition for review of a decision by the General Counsel of the EPA which determined that the EPA retained jurisdiction over the applications.*fn4 We hold that the district court had jurisdiction and that the EPA has jurisdiction over the applications.
Petitioners-appellants ("the utilities") operate four steam-driven electric power generating plants at locations on the Hudson River.*fn5 This generation of power requires that heat be removed from the system. To accomplish this, each power plant uses a "once-through" cooling system in which water is pumped from the river, circulated through condensers in the plant, and then returned to the river at elevated temperatures. Heat is a pollutant under the Federal Water Pollution Control Act, 33 U.S.C. § 1362(6), and therefore the utilities must obtain and comply with the terms of a National Pollution Discharge Elimination System ("NPDES") permit issued pursuant to 33 U.S.C. § 1342.*fn6
The Act provides that the Administrator of the EPA may issue a NPDES permit "after opportunity for public hearing." 33 U.S.C. § 1342(a)(1). In recognition of "the primary responsibilities and rights of States," 33 U.S.C. § 1251(b), the Act allows the States to assume control of the administration of the NPDES permit program, provided their own programs meet minimum federal standards. 33 U.S.C. § 1342(b). Once a State has taken over administration of the program, the Administrator of the EPA is directed to "suspend the issuance of permits." 33 U.S.C. § 1342(c)(1).
The utilities applied to the EPA for permits between 1971 and 1974. In accordance with EPA regulations, the regional staff of the EPA prepared "tentative determinations" with respect to each application and drafted proposed NPDES permits. 40 C.F.R. § 125.31. The public was notified of these tentative determinations. 40 C.F.R. § 125.32. After further study, the Regional Administrator of the EPA made a final "determination" with respect to each application. 40 C.F.R. § 125.35(a). In February and July of 1975, the EPA circulated a "Notice of Issuance of Final Determination" with respect to each of the four power plants; annexed to each was a NPDES permit which the EPA "proposed" to issue. The Notice stated that "(t)he Final Determination will become a final NPDES permit, issued and effective (in thirty days as provided in 40 C.F.R. § 125.35(c) and (d)) unless an Adjudicatory Hearing is granted pursuant to 40 C.F.R. § 125.36 . . . ."
The permits which the EPA proposed to issue required, Inter alia, that the thermal discharges now emanating from the power plants be reduced by ninety percent. The parties assume that under current technology this result can be achieved only by reducing the electricity generated or by erecting a closed-cycle cooling system, such as a natural draft wet cooling tower, which would transfer the heat from the cooling water to the air. Such towers were described by the Fourth Circuit Court of Appeals in Appalachian Power Co. v. Train, 545 F.2d 1351, 1357 (1976):
Natural draft (wet) cooling towers are enormous concrete cylinders, which may be 350 to 550 feet in diameter and 300 to 600 feet tall. (The height is necessary to create the natural draft required to draw the air through the tower from bottom to top.) The bottom one-tenth of the tower is filled with slats and baffles to break up the water and expose a larger surface area to the air flow so as to increase evaporation. Warm water from the condenser is pumped to the top of the tower, there discharged, and cooled by moving air as it falls to the bottom. It is there collected and returned to the condenser.
(material in parentheses from Id. at n.19). The physical appearance of these towers is now widely familiar as a result of a tragic construction accident in Willow Island, West Virginia. According to the utilities, these towers would involve a capital cost in excess of $350 million to build and annual costs in excess of $100 million. The operation of the towers would consume the energy equivalent of about 720,000 barrels of oil each year. The cost of compliance with the provisions of the EPA permit would eventually be visited upon the customers and users of electric power in New York State, because the Power Authority of the State of New York is required to be self-supporting by the statute that created it, N.Y. Pub. Auth. Law §§ 1005(5) & 1010(7), and the remaining utilities are entitled to earn a fair return based in part on the "fair value of the property of the corporation used and useful" in the public service, N.Y. Pub. Serv. Law §§ 66(16) & 72.
Each of the utilities filed timely requests for adjudicatory hearings before the EPA. 40 C.F.R. § 125.36. The provisions in the permits which the utilities wished to contest related primarily to the limitations on thermal discharges. The requests for hearings were granted, and notice of that fact was given to the public. 40 C.F.R. § 125.36(c)(4).
At a formal prehearing conference between the EPA and the utilities in February of 1977, the utilities raised the question whether the EPA still had jurisdiction to hold the adjudicatory hearings in light of (1) the EPA's recent approval of New York State's program for the administration of the NPDES permit program, and (2) the command in the statute that after a State program is approved the EPA must "suspend the issuance of permits." 33 U.S.C. § 1342(c) (1). The utilities argued that DENCON had jurisdiction over their applications.
An understanding of the utilities' argument requires a familiarity with the provisions of the Water Pollution Control Act regarding the approval of State programs generally and the approval of New York's program in particular. States compete with each other for industry, and the availability of cheap electric power promotes industry in any locality where it can be had. Natural forces of competition between States may have tended in the past to diminish the ardor of State and local officials for the elimination of water and air pollution caused by the generation of electricity. This makes federal supervision appropriate and, at times, necessary. Nevertheless, it is part of our philosophy of government that the government closest to the people should act in matters of importance in their daily lives to the greatest extent possible, to the exclusion of the federal administrator. Congress was acutely aware of these delicate issues affecting our concept of federalism when, on October 18, 1972, it passed § 402(c)(1) of the Federal Water Pollution Control Act Amendments of 1972, Pub.L.No.92-500, 86 Stat. 882, Codified at 33 U.S.C. § 1342(c)(1), which provides:
Not later than ninety days after the date on which a State has submitted a program . . . the Administrator shall suspend the issuance of permits . . . unless he determines that the State permit program does not meet (legal requirements).
There can be no doubt that "it is the policy of Congress that the States . . . implement the permit programs . . . ." Clean Water Act of 1977, Pub.L.No.95-217, § 26(b), 91 Stat. 1575, Amending 33 U.S.C. § 1251(b).
New York submitted its permit program to the EPA for approval in 1974. The EPA approved the program effective October 29, 1975. 40 Fed.Reg. 54462 (Nov. 24, 1975). The notice in the Federal Register stated that New York's program was being administered in accordance with the provisions of a Memorandum of Agreement dated August 26, 1975, between the EPA and DENCON. The Memorandum provides that
all adjudicatory hearings, hearings with respect to (33 U.S.C. § 1326 (thermal discharges)), citizen suits or other litigation concerning NPDES permits issued by the Regional Administrator prior to the date upon which the Administrator approves the State's permit program will be defended by the Regional Administrator (of the EPA) . . . .
The EPA and DENCON have interpreted this language and their own regulations*fn7 to mean that "the EPA would retain jurisdiction over those cases in which adjudicatory hearings were pending at the time the state program went into force." 444 F. Supp. at 630. The utilities argue that a permit does not "issue" until After the adjudicatory hearing has been concluded. By retaining jurisdiction, they argue, the EPA is violating the Act by refusing to "suspend the issuance of permits."
As is required by 40 C.F.R. § 125.36(m), the jurisdictional dispute was referred to the EPA's Assistant Administrator for Enforcement and General Counsel, who, on July 29, 1977, rendered OGC Opinion Number 63, a Decision of the General Counsel on Matters of Law Pursuant to 40 C.F.R. § 125.36(m), which concluded that the EPA could retain jurisdiction over adjudicatory hearings without violating the statutory command to "suspend the issuance of permits" because the utilities' permits were already "issued" under the EPA's regulations.
The General Counsel's opinion was served on the utilities on August 11, 1977. On October 5, 1977, the complaint in this action was filed in district court, and on November 7, 1977, a petition for review of the General Counsel's opinion was filed in this Court under 33 U.S.C. § 1369(b)(1). The petition was apparently filed as a precaution because of uncertainty over whether § 1369(b) (1) deprived the district court of jurisdiction over this dispute. The petition was withdrawn by stipulation without prejudice to the filing of a supplemental petition as of November 7, after the conclusion of the action in district court.
The district court dismissed the complaint for want of subject matter jurisdiction. The court held that the dispute fell within the ambit of § 1369(b)(1)(F), which gives the Courts of Appeals exclusive jurisdiction over review of agency action "in issuing or denying any (NPDES) permit." In light of this determination, the district court declined to consider EPA's alternative contentions that exclusive jurisdiction lay in the Courts of Appeals by virtue of subsection (D), which deals with agency action "in making any determination as to a State permit program." The district court further declined to consider whether the dispute was ripe for judicial review or whether the EPA had "issued" a permit.
The district court's decision was rendered on February 10, 1978. The utilities filed their notice of appeal on February 17, and a supplemental petition for review was filed in this Court on February 21.
JURISDICTION OF THE FEDERAL COURTS
First we must resolve the threshold question of which federal court, if any, has jurisdiction to resolve the underlying dispute over whether the EPA or DENCON can process the utilities' applications.
The general grant of federal question jurisdiction found in 28 U.S.C. § 1331(a), As amended, Pub.L.No.94-574, 90 Stat. 2721 (1976), gives the district courts jurisdiction to review agency action. Califano v. Sanders, 430 U.S. 99, 105, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977). This action "arises under the . . . laws . . . of the United States" because the basis for the utilities' cause of action is the EPA's alleged violation of 33 U.S.C. § 1342(c)(1). The parties have not brought to our attention any preclusion-of-review statute which might bar such an action, nor are we aware of any. Compare Weinberger v. Salfi, 422 U.S. 749, 95 S. Ct. 2457, 45 L. Ed. 2d 522 (1975). "Only upon a showing of "clear and convincing evidence' of a contrary legislative intent should the courts restrict access to judicial review." Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S. Ct. 1507, 1511, 18 L. Ed. 2d 681 (1967); See Leedom v. Kyne, 358 U.S. 184, 190, 79 S. Ct. 180, 3 L. Ed. 2d 210 (1958). No such evidence is present in this case. This case, of course, does not involve a "final" agency action. But the facts here are both compelling and unusual this is one of the rare cases in which a district court appropriately "interrupts" agency action on the ground that the agency is acting outside its statutory authority. Lone Star Cement Corporation v. F. T. C., 339 F.2d 505 (9th Cir. 1964); See concurring opinion of Judge Feinberg, Infra. Accordingly, it would appear that the district court had jurisdiction to review the EPA's decision to retain jurisdiction over the utilities' applications.
The district court dismissed the complaint on the ground that the dispute lay within the exclusive jurisdiction of the Courts of Appeals. It is clear that if the agency action sought to be reviewed falls within one of the six categories described in 33 U.S.C. § 1369(b)(1),*fn8 the jurisdiction of the Courts of Appeals is exclusive. See Sun Enterprises, Ltd. v. Train, 532 F.2d 280, 287 (2d Cir. 1976). It is also clear, however, that the six categories of § 1369(b)(1) do not cover all possible forms of agency action:
the complexity and specificity of section (1369(b)(1)) in identifying what actions of EPA under the (Act) would be reviewable in the courts of appeals suggests that not all such actions are so reviewable. If Congress had so intended, it could have simply provided that all EPA action under the statute would be subject to review in the courts of appeals, rather than specifying particular actions and leaving out others. . . .
Bethlehem Steel Corp. v. EPA, 538 F.2d 513, 517-18 (2d Cir. 1976). Section 1369(b)(1) arguably gives this Court exclusive jurisdiction over this dispute ...