Respondents Brief — Environmental Protection Agency v. National Crushed Stone Ass'n

Supreme Court brief1980

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INDEX

OPINIONS BELOW AND JURISDICTION ................

STATUTES AND REGULATIONS INVOLVED..........

COUNTERSTATEMENT OF QUESTIONS PRE-

SI sicicancacreceiiesiatinledtedeesscdictectbepinsienninntaniesonshumbiniemnditia

COUNTERSTATEMENT OF THE CASE ....................

SUMMARY OF ARGUMENT .....W0. wo... aren rs

IEE hbescisnicsiainisalilideiiaeisimabhciaisncabiinen withsicatia

I. A Variance Provision that Includes Considera-

tion of Economic Capability Ts Required By the

Language and Structure of the Act ........0...000.....

II.

The Function of the BPT Variance Provi-

The BPT Variance Provision Must at Least

Allow Consideration of All Factors Con-

tained in Section 304(b) (1) (B), and These

Factors Include Economic Capability ............

The Factors Set Forth In Section 301(c) are

By Analogy Relevant to BPT Variance De-

SRE A aA nn eee USO aN TD

The Decisions of the Court of Appeals Are Con-

sistent With Congressional Intent ..........00000.........

The Legislative History of the 1977 Amend-

ments Supports the Decisions Below Be-

cause Congress Implicitly Sanctioned Both

BPT Variances and Appalachian Power......

The Government Consistently Relies on Irrel-

evant Legislative History 2.200.000.0000...

INDEX—Continued

Page

C. Consideration of Economic Capability Would

Not Require EPA to Conduct “Plant-by-

Plant” Economic Impact Determinations...... 36

III. The Agency’s Construction of the Proper Scope

of a BPT Variance Is Not Entitled to Deference.. 38

BI III i cncicncosaneencnsecomeeneirenienvesnnbaanontioniiiensininnenesnie 41

APPENDICES:

Appendix A—EPA Development Document for

Ee I sinicinncescissictiererncorenncnincoinane A-1

Appendix B—EPA Economic Impact Report for

the Mineral Mining and Processing

IT scien cnevcascecennsenciscesionncensenion B-1

Appendix C—EPA Development Document for

Mineral Mining and Processing In-

CI cic censianiersncincintnctnisemntisenl C-1

Appendix D—Written Statement of Robert L.

Hayes, TCS Financial Consultants,

on Behalf of the Environmental

Protection Agency (March 30,

so uanemanantaibianctons D-1

iii

TABLE OF AUTHORITIES

CASES: Page

American Iron & Steel Inst. v. EPA, 526 F.2d 1027

SI I a 6

American Iron & Steel Inst. v. EPA, 568 F.2d 284

I a 21

American Paper Inst. Vv. _EPA, 543 F.2d 328 (D.C.

Cir. 1976), cert. dism’d, 429 U.S. 967 (1976)... 6

American Petroleum Inst. v. EPA, 540 F.2d 1023

(10th Cir. 1976), cert. denied, 430 U.S. 922

EE dei, ..... 6,29

Appalachian Power Co. | Vv. Costle, 545 F.2d 1251

(4th Cir. 1976) 0000... _ passim

Consolidation Coal Co. v. Costle, 604 F.2d 239 (4th

I tee eee eee passim

E. 1. du Pont de Nemours & Co. Vv. Train, 480 U.S.

Le aia passim

E. 1. du Pont de Nemours & Co. v. Train, 541 F.2d

1018 (4th Cir. 1976), aff’d in part, rev'd in part,

ge ee 4, 5, 6, 23

In re Louisiana-Pacific Corp., 10 ERC 1841 (Sept.

15, 1977) . 7

National Crushed Stone ‘Association v. EPA, 601

F.2d 111 (4th Cir. 1979) _. SD PoE A passim

Natural Resources Defense Council v. EPA, 537

eo Fk SS eee 6, 14, 29

Natural Resources Defense Council vy. Train, 8

ERC 2120 (D.D.C. .176), as modified, 12 ERC

1833 (D.D.C. 1979) . a 32

Portland Cement Association Vv. -Ruckelshaus, 486

F.2d 375 (D.C. Cir. 1978), cert. denied, 417 U.S.

RSE cr 37

SEC v. Sloan, 436 U.S. 103 (1978) a ere 38

Teamsters V. Daniel, 489 U.S. 551 38

Union Electric v. EPA, 427 U.S. 246 (1976) . 26, 27

United States v. National Ass’n of Securities

Dealers, Inc., 422 U.S. 694 (1975) : 38

United States Steel Corp. v. Train, 556 F.2d

(7th Cir. 1977)... scavsihtipiainbsaieaannaaneae “8, 21, 39, 40

TABLE OF AUTHORITIES—Continued

Page

Weyerhaeuser Co. v. Costle, 590 F.2d 1011 (D.C.

+ 13, 14, 16, 17, 21, 22, 23, 26, 29, 36, 37

Zenith Radio Corp. v. United States, 437 U.S. 443

RIE «15:2 tris seaicabccssuidenicbncsdlaihenteiiaaishirendbanonnionnamsonadeasts 38

Zuber v. Allen, 396 U.S. 168 (1969) ........................ 38

STATUTES:

Federal Water Pollution Control Act Amend-

ments, Pub. L. No. 95-200, 86 Stat. 816, as

amended by the Clean Water Act Amendments

of 1977, Pub. L. No. 95-217, 91 Stat. 1566, and

by the Act of Nov. 2, 1978, Pub. L. No. 95-576,

I al oesiceardehannbntin’. omawigscnial passim

§ 301, 38 U.S.C. §1311 (1976 & Supp. I,

ic OR SE EE A gee 3, 4, 6

§ 301(b) (1} (A), 33 U.S.C. § 1311 (b) (1) (A)

Ce Oe I, hy BPE OD a cicncnsnicccsessiccsccntncins 2, 3, 18, 24

§ 301(b) (2) (A), 33 U.S.C. § 1311 (b) (2) (A)

CE A, Ba RE OE vic scecsnccreccesnaroenngeesctencin 3

§ 301 (b) (2) (C), 83 U.S.C. § 1311 (b) (2) (C)

I oe i calern aeagthaneiribapmiantiions 3, 32

§ 301 (b) (2) (D), 33 U.S.C. § 1811 (b) (2) (D)

— ___, CRES PREEeererecrer ore 3

§ 301(b) (2) (EB), 33 U.S.C. § 1311 (b) (2) (EB)

ic eaiidinhcehtrnriccmantnytsamneyi 32

§ 301(b) (2) (F), 33 U.S.C. § 1311 (b) (2) (F)

(Supp. I, 1977) ....... ania atiaadeaaipnadesdsannbceabeasia 3

§ 301(c), 33 U.S.C. § 1311 (c) IEE rcnseceneosas passim

§ 304, 33 U.S.C. § 1814 (1976 & Supp. I,

al edth pein 3,9

§ 304(b), 33 U.S.C. $1314(b) (1976 & Supp.

te A i iar EAE iene een er 4,6

§ 364(b) (1), 33 U.S.C. § 1314 (b) (1) (1976).. 2, 138,

§ 304(b) (1) (B}3, 33 U.S.C. § 1814(b) (1) (B)

i RES OE OO TORO Re Oe passim

TABLE OF AUTHORITIES—Continued

Page

§ 304(b) (2), 38 U.S.C. § 1814(b) (2) (1976).. 3, 24,

§ 309(a) (5) (B), 33 U.S.C. § 1819(a) (5) (B)

EN __: SSRRERDIE RS tere sienuaer 3, 27, 28

§ 402, 33 U.S.C. § 1842 (1976) -... oe. 4

§ 502(14), 33 U.S.C. § 1862(14) (1976).......... 3

REGULATIONS:

Oe i is ID cc cadicccnnccsncsscinececcscntesnicsnecs 8

I Ss eee 8, 37

in A ERR aR SR ON AER Rete SRT A el 37

I rr ee kk eT oa 15

| RNASE RED oe A A 15

I ae hh 15

Se lS RE SS TES RAE 15

| eG SE a et eh es ARS 15

FEDERAL REGISTER:

43 Fed. Reg. 8818 (March 8, 1978) .................000.... 8

43 Fed. Reg. 50042 (October 26, 1978) ................. 18, 19

44 Fed. Reg. 31893 (June 7, 1979) 0.00... 8

44 Fed. Reg. 32950 (June 7, 1979) ....000...oeee eee. 8, 37

44 Fed. Reg. 38763 (July 2, 1979) .o00...e ee. 39

MISCELLANEOUS:

A Legislative History of the Water Pollution Con-

trol Act Amendments of 1972, Congressional

Research Service, Library of Congress, Ser. No.

a passim

A Legislative History of the Clean Water Act

Amendments of 1977, Congressiona! Research

Service, Library of Congress, Ser. No. 95-14

RY ec ee ee ge passim

“Case Law Under the Federal Water Pollution

Control Act Amendments of 1977,” Congres-

sional Research Service, Library of Congress,

House Public Works and Transportation Com-

mittee Print 95-35 29

TABLE OF AUTHORITIES—Continued

Currie, “Congress, the Court and Water Pollu-

tion,” Supreme Court Review (1977) . -.........

Federal Water Pollution Control Act Amendments

of 1977, Hearings Before the Subcommittee on

Environment and Public Works, 95th Cong., ist

Sess., Series 9-H25 (1977) .....................-.csssscssseses

Hearings on the Implementation of the Federal

Water Pollution Control Act Before the Subcom-

mittee on Investigations and Review of the

House Committee on Public Works, 93rd Cong.,

RR ALS Ane ene one Ere

Kalur, “Will Judicial Error Allow Industrial Point

Sources to Avoid BPT and Perhaps BAT Later?

A Story of Good Intentions, Bad Dictum and

Ugly Consequence,” Ecological Law Quarterly,

A no cc biaenahneaneeanh

S. 2453, H.R. 6867, 96th Cong., 2d Sess. (1980)

(printed in 126 Cong. Rec. S. 2656-S. 2657 (daily

ed. March 19, 1980) )

APPENDICES:

Appendix A—EPA Development Document for

REPS TRS Olona er CRE NCEA

Appendix B—EPA Economic Impact Report for

the Mineral Mining and Processing Industry ......

Appendix C—EPA Development Document for

the Mineral Mining and Processing Industry .

Appendix D—Written Statement of Robert L.

Hayes, TCS Financial Consultants, on Behalf of

the Environmental Protection Agency (March

RR ee ee ae ae een roe

Page

15, 16

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No. 79-770

ENVIRONMENTAL PROTECTION AGENCY,

- Petitioner

NATIONAL CRUSHED STONE ASSOCIATION, et al.,

Respondents

DouGLAS M. COSTLE, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY,

- Petitioner

CONSOLIDATION COAL COMPANY, et al.,

Respondents

On Writ of Certiorari to the United States Court of Appeals

for the Fourth Circuit

BRIEF FOR RESPONDENTS

OPINIONS BELOW AND JURISDICTION

The opinion of the United States Court of Appeals for

the Fourth Circuit in National Crushed Stone Association

v. EPA is reported at 601 F.2d 111. The opinion of that

court in Consolidation Coal Co. v. Costle is reported at

604 F.2d 239. The opinions below are also set forth at

pages la-37a and 40a-78a of the Government’s Petition

for a Writ of Certicrari.

We agree with the statement concerning this Court’s

jurisdiction set forth at page 2 of the Petitioners’ Brief.

STATUTES AND REGULATIONS INVOLVED

Pertinent portions of the Act and Title 40 of the Code

of Federal Regulations are set forth in Appendix A to

the Government’s Brief, at pages la-6a.

COUNTERSTATEMENT OF QUESTIONS PRESENTED

(1) Whether the variance provision contained in regu-

iations prescribing “presumptively applicable” industry-

wide effluent limitations promulgated pursuant to the

Clean Water Act' by the United States Environmental

Protection Agency (EPA) and based upon application of

the “best practicable technology currently available”

(BPT), 833 U.S.C. §§1811(b) (1) (A), 13814(b) (1)

(1976), must allow some consideration of the variance

applicant’s economic capability to comply with those limi-

tations when such variance provisions redefine BPT for

a “fundamentally different” facility by reference to

statutory factors including “total cost of application of

technology” in relation to effluent reduction benefits?

(2) Whether the court below was correct in concluding

that EPA’s BPT variance provision must allow some

consideration of economic capability versus effluent re-

duction benefits by analogy to section 301(c) of the Act?

COUNTERSTATEMENT OF THE CASE

1. The issue raised by the Government in these cases

concerns the proper scope of EPA’s regulations authoriz-

ing variances from industry-wide BPT effluent limitation

1The Federal Water Pollution Control Act Amendments

(FWPCA), Pub. L. No. 92-500, 86 Stat. 816, were amended

by the Clean Water Act Amendments of 1977 (CWA), Pub.

L. No. 95-217, 91 Stat. 1566, and by the Act of Nov. 2, 1978,

Pub. L. No. 95-576, 92 Stat. 2467. Hereinafter, this statute

as currently amended will be referred to as the “Act” or the

“Clean Water Act.”

regulations. This issue results in large part from the

confused and conflicting language in the Clean Water Act

in which Congress attempted to implement a far reaching

program for the control of water pollution. Technology

based limitations on the amounts of pollutants which are

discharged in effluents are a crucial element of this pro-

gram.

The Act requires “classes and categories of [existing]

point sources” to achieve such effluent limitations based

on the “best available technology economically achievable”

(BAT) by 1984, or in some cases, 1987, while existing

“point sources” are required to achieve BPT limitations

by 1977, or in some cases, 1979.2 33 U.S.C. §§ 1811(b)

(1) (A), 13811 (b) (2) (A), (C), (D), (F), 1819(a) (5)

(B) (1976 & Supp. I, 1977). BPT and BAT are to be

determined by reference to certain statutory factors

specified respectively in sections 304(b) (1), 304(b) (2)

of the Act, which also require EPA to develop BPT and

BAT effluent limitations “guidelines” based on these fac-

tors for “classes and categories of point sources”. 33

U.S.C. $$ 13814(b’ (1), 1314(b) (2) (1976 & Supp. I,

1977).

However, Congress failed to explain the relationship

between these EPA-promulgated section 304 guidelines

and the section 301 effluent limitations. Congress also

failed to explain whether EPA or the states were to

establish section 301 effluent limitations, and how those

2 The Act defines “point source” as:

any discernible, confined and discrete conveyance, includ-

ing but not limited to any pipe, ditch, channel, tunnel,

conduit, weil, discrete fissure, container, rolling stock,

concentrated animal feeding operation, or vessel or other

floating craft, from which pollutants are or may be

discharged.

33 U.S.C. § 1362(14) (1976).

limitations are to be applied through permits issued under

the National Poilutant Discharge Elimination System

(NPDES) established by section 402 of the Act, 33

U.S.C. $ 1342 (1976). Fisaaily, Congress did not explain

why section 301 BPT limitations were to be established

for “point sources”, while BAT limitations were to be

established for “classes and categories of point sources”.

See El. duPont de Nemours & Co. y. Train, 430 U.S.

112, 116-21 (1976).

Early in EPA’s implementation of the Act, these am-

biguities in congressional intent coalesced to form one

crucial question: whether specific, numerical BPT and

BAT effluent limitations were to be developed and applied

by EPA through promulgation of nationally uniform,

industry-wide regulations, or whether EPA was instead

only to provide general guidance through section 304(b)

guidelines to NPDES permit issuers who would then set

specific effluent limitations in individual permits on the

basis of these guidelines. Given Congress’ failure to

answer this question, its resolution was left to the courts.

2. In duPont v. Train, 541 F.2d 1018 (1976), the

United States Court of Appeals for the Fourth Circuit

interpreted the Act as allowing EPA to promulgate

reguiations establishing specific BPT and BAT effluent

limitations regulations which are “presumptively applica-

ble” to classes and categories of existing point sources.

However, that court also held that this presumption may

be rebutted by a particular facility in an application for

a variance from these nationally uniform, industry-wide

regulations. Jd. at 1028. The Fourth Circuit in duPont

v. Train rested its conclusion that industry-wide BPT

effluent limitation regulations must contain variances in

part on the fact that the Act explicitly provided in section

301(c), 33 U.S.C. $1811(c) (1976), for case-by-case

flexibility in applying ‘class and category’ BAT limita-

tions to specific point sources. Section 301(c) authorizes

EPA to modify the industry-wide BAT limitations when

a discharger demonstrates to EPA that it is employing

the “maximum use of technology within [its] economic

capability” and that the modified BAT limitations “will

result in reasonable further progress toward the elimi-

nation of the discharge of potiutants”. 541 F.2d at 1028

(citing 33 U.S.C. § 1311(c) (1976)). However, while the

Fourth Circuit determined that a variance provision was

a necessary component of a regulatory scheme which

rested on nationally uniform BPT effluent limitation

regulations, it declined to discuss the appropriate scope

of such a variance provision because, at the time, EPA’s

administration of its variance provision regulations was

a “matter of speculation.” 541 F.2d at 1028.

On review of the Fourth Circuit’s duPont v. Train

decision, this Court held that the second-stage BAT limi-

tations were clearly to be promulgated by EPA as na-

tionally uniform, industry-wide regulations. duPont, 430

U.S. at 126-27, 136. The Court then held, for various

reasons, that it would be incongruous for the 1977 BPT

limitations to be established by a process different from

that used to establish BAT limitations. 430 U.S. at

127-28. Thus, by analogy to EPA’s more obvious statu-

tory authority to promulgate industry-wide BAT limita-

tions, this Court in duPont agreed with the Fourth

Circuit* that “the statute authorizes the 1977 BPT

limitations as well as the BAT limitations to be set by

regulation, so long as some allowance is made for varia-

tions in individual plants, as EPA has done by including

a variance clause in its 1977 limitations.” 430 U.S. at

i28 (emphasis added). In reaching these conclusions,

this Court noted and discussed section 301(c), the Act’s

* Except for reversing the Fourth Circuit’s holding that

variances are required for new as well as existing sources,

this Court in duPont affirmed “all other aspects” of the Fourth

Circuit’s decision. 430 U.S. at 139.

express provision for modifying industry-wide BAT limi-

tations on economic capability grounds. 430 U.S. at 127

n.17. And in a footnote, this Court agreed with the

Fourth Circuit that “consideration of whether EPA’s

{BPT] variance provision has the proper scope would be

premature.” 430 U.S. at 128 n.19.*

3. Subsequent to its duPont v. Train decision, the

Fourth Circuit addressed the scope of BPT variance pro-

visions in three decisions, including the two now before

this Court for review. Each of these decisions involved

essentially the same variance provision, but EPA’s inter-

pretation of that provision changed considerably from

the first to the last two.

‘In its opinion in duPont, this Court also clarified the am-

biguous relationship between section 304(b) effluent limita-

tion guidelines and section 301 effluent limitations by allow-

ing EPA to combine promulgation of section 304 (b) guide-

lines, which “survey the practicable or available pollution-

control technology for an industry and assess its effective-

ness,” with the Agency’s promulgation of section 301 effluent

limitations, which “determine the effluent limitations for par-

ticular plants.” See 480 U.S. at 130-32.

5 Prior to this Court’s duPont decision, three Circuits in

addition to the Fourth upheld EPA’s authority to promulgate

single-number, industry-wide, BPT effluent limitation regula-

tions which included variance provisions. See American

Paper Inst. v. EPA, 543 F.2d 328, 335-38 (D.C. Cir. 1976),

cert. dism’d, 429 U.S. 967 (1976) ; American Petroleum Insti-

tute v. EPA, 540 F.2d 1023, 1030-33 (10th Cir. 1976), cert.

denied. 480 U.S. 922 (1977); Natural Resources Defense

Council v. EPA. 537 F.2d 642 (2d Cir. 1976). The Third

Circuit rejected both this industry-wide, single-number ap-

proach and EPA’s variance provision as being too inflexible.

See American Iron & Steel, Inst. v. EPA, 526 F.2d 1027,

1046-47 (3rd Cir. 1975). However, none of these courts

reached any holding as to the proper scope of a BPT vari-

ance provision.

The first of these decisions was Appalachian Power Co.

Vv. T'rain, 545 F.2d 1351 (1976), in which the Fourth

Circuit set aside as “unduly restrictive’ a BPT variance

provision for the steam electric power generating point

source category which contained essentially the same lan-

guage as the variance provision later remanded by that

court in the Crushed Stone and Consolidation Coal de-

cisions. Compare Appalachian Power at 1358-60 with

Crushed Stone, 601 F.2d at 122 and Consolidation Coal,

604 F.2d at 243-44. Prior to the Appalachian Power de-

cision, EPA had interpreted its BPT variance provision

as being limited only “to considerations of technical and

engineering factors,” and as precluding any considera-

tion of other factors specified by section 304(b) (1) (B)

of the Act such as non-water quality environmental im-

pact and “total cost” in relation to effluent reduction

benefits. See Appalachian Power, 545 F.2d at 1359-60.

The Fourth Circuit rejected this interpretation and held,

inter alia, that both section 304(b)(1)(B) and section

301(c) of the Act demonstrated that cost considerations

were relevant to BPT variance requests. 545 F.2d at

1359-60.

Subsequent to the Appalachian Power decision, EPA

engaged in a rather convoluted series of actions through

which it ultimately arrived at its current interpretation

in these cases of its standard BPT variance provision.

First, in rejecting an application for a BPT variance

filed by a member of the pulp-paper industry, EPA stated

that BPT variances must be based “on fundamental dif-

ferences in factors which are appropriate to technology-

based regulations and limitations derived through the

variance process must still meet the congressional

definition of best practicable technology currently avail-

able.” In re Louisiana-Pacific Corp., 10 ERC 1841,

1851 (Sept. 15, 1977). Second, in response to the Fourth

Cireuit’s remand in Appalachian Power, EPA promul-

gated a new BPT variance provision applicable only to

steam electric power plants which “would allow the

[NPDES] permit issuers to consider significant cost

differentials and other economic factors applicable to

the particular source involved.” 43 Fed. Reg. 8813

(March 3, 1978). Third, on October 17, 1978, EPA

finally withdrew its original interpretation of its stand-

ard BPT variance provision which limited the scope of

that provision to consideration of only technical and

engineering factors. It was this interpretation which the

Fourth Circuit had struck down in Appalachian Power as

being “unduly restrictive.” See Crushed Stone, 601 F.2d

at 123. Finally, on June 7, 1979, EPA promulgated

regulations governing its NPDES permit program that

contained a BPT variance provision which explicitly in-

cludes consideration of all of the factors contained in

section 304(b) (1) (B) of the Act, including the “cost of

compliance with required control technology.” 40 C.F.R.

§ 125.31(d) (6), 44 Fed. Reg. 32950. However, the

Agency interprets this consideration of “cost” to pre-

clude any examination of the “discharger’s ability to pay

for the required waste treatment.” 40 C.F.R. § 125.31

(e) (3), 44 Fed. Reg. at 32951. See generally 44 Fed.

Reg. 32893-94 (explanatory preamble).

4, The Fourth Circuit in Crushed Stone and Consoli-

dation Coal did not hold that BPT variances must be

granted to any facility which cannot afford to comply

with industry-wide BPT effluent limitation regulations.

Indeed, the court below specifically rejected EPA’s as-

sertion that Appalachian Power required the Agency to

grant variance requests based only on a plant’s economic

inability ‘‘ ‘to comply with the national BPT limitation.’ ”

601 F.2d at 123. On the contrary, the Fourth Circuit

in Crushed Stone only held that if a facility “‘is doing

all that the maximum use of technology within its eco-

nomic capability will permit and if such use will result in

reasonable further progress toward the elimination of the

discharge of pollutants,” it should be given a BPT

variance “ ‘should it comply with any other requirements

of the variance.’” 601 F.2d at 124 (quoting Appalachian

Power, 545 F.2d at 1378) (emphasis in the original).*

In Consolidation Coal, the Fourth Circuit, citing its

Crushed Stone decision, remanded EPA’s BPT variance

provision for the coal mining point source category. 604

F.2d at 243-244. In directing EPA to revise that pro-

vision in conformity with Crushed Stone and Appalachian

Power, the court in Consolidation Coal noted the industry

petitioners’ argument that BPT variances must allow

consideration of all section 304(b)(1)(B) and 801(e)

factors. 604 F.2d at 243-44.

5. The Government attempts to convince this Court

that the position urged by respondents would create a

“loophole” designed to exempt from control marginal

plants that cannot survive with the additional costs im-

posed by BPT limitations. See Petitioners’ Brief at 23,

27, 30-35. Because the Government places such stress on

° The Fourth Circuit in Crushed Stone relied on its previous

holding in Appalachian Power that EPA must consider not

only “the statutory factors set out in” section 301(c) when

ruling on a variance request, but also those factors set out in

section 304(b) (1) (B) of the CWA. Appalachian Power, 545

F.2d at 1359-60. The Appalachian Power court also explained

that “[i]n requiring that EPA give weight to the relevant

statutory factors in developing a subsequent variance provi-

sion, we in no way intend to imply that EPA’s regulations

must provide for a detailed cost-benefit analysis at the permit

granting stage.” 545 F.2d at 1360 n.23. Instead,

an overall cost-benefit analysis for each category or sub-

category satisfies the mandate of § 304 in this regard.

The variance provision should, however, allow the per-

mit issuer to consider significant cost differentials of the

particular point source involved.

545 F.2d at 1360 n. 23.

this issue, we wish at the outset to state clearly our posi-

tion. We do not contend that a plant should be entitled

to a BPT variance simply because it is financially

troubled. Higher “total costs” than those assumed by

EPA in establishing its BPT regulations for a particular

industry do not occur in a vacuum. Rather, they are

normally the result of tangible factors—the age of equip-

ment and facilities involved, the process employed, engi-

neering and process factors, energy and other require-

ments. At the same time, the fact that a particular

discharger is not economically capable of installing the

required control technology which EPA has determined

the industry in general is capable of installing may well

place that discharger in a position that is “fundamentally

different” from others in the industry. The inquiry,

however, does not stop here. Rather, in redefining BPT

for a facility that is “fundamentally different”, the per-

mit issuer must consider all of the statutory factors,

including the “total cost” of various treatment alterna-

tives considered. If an alternative is so expensive that

it would bankrupt the plant, then the economic conse-

quences of forcing the plant to close is part of the “total

cost” in relation to effluent reduction benefits that should

be considered along with the other statutory factors in

determining BPT for the plant.

SUMMARY OF ARGUMENT

BPT variances were not specifically addressed by Con-

gress in the 1972 amendments to the FWPCA. Instead,

they were required by this and other Courts to preserve

EPA’s authority to promulgate presumptively applicable

nationally uniform, industry-wide BPT limitation regu-

lations. EPA’s industry-wide BPT limitations do not

adequately take into account facilities whose characteris-

tics are “fundamentally different” from the assumptions

on which EPA bases those industry-wide BPT limita-

tions. Thus, an adequate BPT variance is an essential

part of the Agency’s effluent limitations regulatory pro-

gram.

Given EPA’s interpretation of its BPT variance prv-

vision as including all of the factors contained in section

304(b) (1) ‘(B), consideration of the economic capability

of the discharger to meet the presumptively applicable

BPT effluent limitations regulations must be relevant to

BPT determinations. EPA interprets its BPT variance

provision as allowing limitations based on BPT to be

defined for anomalous facilities at the NPDES permit

issuing stage, and therefore admits that all factors rele-

vant to its determination of industry-wide BPT limita-

tions are relevant to BPT variance determinations. These

factors, set out in section 304(b)(1)(B) of the Act, in-

clude the “total cost of application of technology” in

relation to effluent reduction benefits. Congress clearly

defined “total cost” to include some consideration of eco-

nomic impact or capability. Since economic capability is

a relevant consideration when EPA is developing indus-

try-wide BPT limitations, it must also be relevant to

BPT variance determinations because these determina-

tions are, according to EPA, based on the same section

304(b) (1) (B) faetors.

Since EPA’s authority to promulgate industry-wide

BPT limitations is derived by analogy to its authority

to develop industry-wide BAT limitations, economic

capability is also a relevant consideration in BPT vari-

ance determinations by analogy to section 301(c) of the

Act. Section 301(c) of the Act allows industry-wide

BAT limitations to be modified for a facility upon a

demonstration that it is doing all within its economic

capability and is achieving a reasonable further progress

in reducing pollutant discharge. This required demon-

stration is analogous to and consistent with the balanc-

ing of “total cost” (including economic impact or capa-

bility) and effluent reduction benefits in BPT variance

determinations.

EPA’s insistence that the express language of section

301(c) renders it inapplicable to BPT variances misses

the point. The court below never literally applied sec-

tion 301(c) to the BPT variance provision. Instead, it

only referred to section 301(c) to determine what eco-

nomic “tests” or “considerations” were appropriate in

applying the “total cost” factor in section 304 (b) (1) (B)

in the context of a BPT variance determination. This

reference to section 301(c) for guidance is analogous to

this Court’s reasoning in duPont that Congress’ express

provision for uniform BAT regulations sustained an im-

plication of EPA’s authority to promulgate industry-wide

BPT limitations. Any other interpretation would result

in BAT limitations being more flexible than BPT limita-

tions, even when those limitations are identical. The

court below did not hold that a BPT variance must be

granted to any facility which cannot afford the industry-

wide BPT limitations. Instead, it held only that the

balance between cost, including economic capability, and

pollutant reduction benefits is always one factor appro-

priate to BPT variance determinations.

The legislative history of the 1977 Amendments to the

Act supports the reasoning of the court below. Congress

was aware of judicially sanctioned BPT variances at the

time it was considering the 1977 amendments. Yet it

did not eliminate them. Congress was also aware of the

Fourth Circuit’s Appalachian Power decision, which re-

quired consideration of economic capability in BPT vari-

ance determinations. Yet Congress never criticized or

overruled that decision despite its express rejection of

other decisions. On the contrary, there is evidence that

Congress agreed with the Fourth Circuit BPT variance

provision holding in Appalachian Power. Moreover, one

of the primary goals of the 1977 Amendments to the Act

was to render the effluent limitations regulatory scheme

more flexible, and this flexibility is one of the functions

served by the BPT variance required by the court below.

The decisions below do not require EPA to determine

economic impact on a plant-by-plant basis. EPA need

only examine a discharger’s demonstration of total cost,

including economic impact, versus effluent reduction

benefits at its facility. There is no evidence that this

comparison would burden EPA any more than determin-

ing fundamental differences at the applicant’s facility in

other pertinent factors set forth in section 304(b) (1) (B).

EPA’s interpretation of the appropriate scope of the

BPT variance provision is not entitled to deference by

the Court. EPA’s interpretation has been inconsistent,

is not longstanding, and conflicts with actual Agency

practice. Moreover, EPA’s interpretation also conflicts

with statutory language and the relevant legislative his-

tory, and it has never been sanctioned by Congress.

Finally, EPA’s interpretation of its BPT variance pro-

vision is internally inconsistent and unreasonable.

ARGUMENT

I. A VARIANCE PROVISION THAT INCLUDES CON-

SIDERATION OF ECONOMIC CAPABILITY IS RE-

QUIRED BY THE LANGUAGE AND STRUCTURE

OF THE ACT

A. The Function of the BPT Variance Provision

BPT variance provisions were not specifically addressed

by Congress when it drafted the 1972 Amendments to

the Act. Instead, they were recognized by this and other

courts both as a necessary concomitant of EPA’s author-

ity to promulgate nationally uniform, industry-wide

BPT effluent iimitations,” and as a mechanism required

7 See, e.g., duPont, 430 U.S. at 127-28; Weyerhaeuser Co.

Vv. Costle, 590 F.2d 1011, 1031-84 (D.C. Cir. 1978). Others

besides the courts have recognized the critical role that a

to ensure that the variety among facilities within an

industry is adequately addressed at some point because

that variety is often not addressed by EPA’s industry-

wide limitations. See NRDC v. EPA, 537 F.2d at 647.°

Indeed, it would be unrealistic to expect EPA’s indus-

try-wide BPT effluent limitations regulations to reflect

fundamental differences among plants given the manner

in which they are developed. For example, EPA did not

add the costs of all individual coal mines, crushed stone,

or construction sand and gravel facilities in arriving at

meaningful variance provision plays in the BPT regulatory

scheme. For example, in testimony before the Subcommittee

on Environmental Pollution in 1977, the Natural Resources

Defense Council (NRDC) testified that “a fundamental vari-

ance provision” was integral to the Act’s system of “national,

uniform, minimum effluent limitations.” See Federal Water

Pollution Control Act Amendments of 1977, Hearings before

the Subcommittee on Environmental Pollution of the Senate

Comm. on Environment and Public Works, 95th Cong., Ist

Sess., Series 9-H25, Part 9, at 37 (1977). Despite this Court’s

holding in duPont that such variances are a prerequisite to

EPA’s promulgation of industry-wide BPT limitations for a

particular category of dischargers, the Government neverthe-

less questions in its Brief “whether EPA need grant any

variances from the 1977 limitations at all.” Petitioners’ Brief,

at 25.

8 As EPA itself pointed out in its BPT variance provisions

for the coal mining and crushed stone industries, its industry-

wide BPT limitations may not address the fundamenta! differ-

ences among plants within these industries. In relevant part,

these variance provisions state that:

In establishing the limitation set forth in this section,

EPA took into account all information it was able to col-

lect, develop and solicit with respect to factors . . . which

can affect the industry subcategorization and effluent

levels established. It is, however, possible that data

which would affect these limitations have not been avail-

its “total cost” estimate for these industries. Instead,

the Agency utilized certain fictional “model plants” em-

ploying all the required treatment technologies to develop

its industry-wide cost estimates.’ Thus, an adequate

BPT variance provision is crucial if fundamental dif-

ferences among real plants, including fundamental dif-

ferences in their “total cost,” are to be adequately ad-

dressed at some stage in the limitation setting process."

Such a provision does not constitute a “loophole” through

which individual facilities may escape BPT compliance.

On the contrary, it redefines BPT for those “funda-

mentally different” individual facilities whose operations

are not accurately reflected by the assumptions under-

lying EPA’s industry-wide BPT limitations.

Hypothetically, other devices could accomplish the same

purpose. EPA could elaborately subcategorize every in-

dustry so that only genuinely similar facilities are subject

to the same BPT limitations.'' However, totally accurate

able and, as a result, these limitations should be ad-

justed for certair plants in this industry.

40 C.F.R. §§ 434.22, 32, .42 (1979) (coal mining category) ;

40 C.F.R. §§ 436.33, .43 (1979) (mineral mining and process-

ing category).

® See, e.g., EPA Development Document for Coal Industry

at 183, 186, Appendix A at A-3, A-4; EPA’s Economic Impact

Report for the Mineral Mining and Processing Industry at

I+ to I-6, Appendix B at B-1 to B-3.

©The Agency has expressly acknowledged the limitations

on its economic models:

“To a certain extent, each plant in the industry is a

special case. The use of a model facility cannot take such

specificity into account.”

See Appendix B at B-3.

™ For example, the D.C. Circuit in Weyerhaeuser pointed

out that in developing effluent limitations for the “bleached”

subcategorization of a very large, diverse industry would

undoubtedly strain EPA’s resources far more than proc-

essing an occasional variance request at the NPDES

permit stage. For example, surface and underground

coal mines and coal preparation plants are in operation

in virtually every major region of the country and are,

therefore, subject to a variety of climatic, hydrological

and geologic conditions. These varying background con-

ditions determine not only volume and constituents of

waste water discharges, but also the type and degree

and therefore the cost of treatment required.'* Similarly,

there are more than 4,800 crushed stone facilities which

range in size from less than 25,000 tons/year to 15 mil-

lion tons/year annual production. The volume of con-

tamination by pollutants at a particular quarry is de-

pendent on site specific precipitation patterns, geological

features, mine layout and topography. The construction

sand and gravel industry is equally diverse, since it en-

compasses more than 5000 facilities located throughout

the country, ranging in size from under 25,000 tons per

year to over 1 million tons per year annual production.

The amount of process water used by these facilities,

and its contamination, depends on the type of raw ma-

terial, the amount of impurities and fines present, and

paper industry, EPA identified 16 different categories, di-

vided into 66 subdivisions, resulting in one set of limitations

for every 5 mills. As the Weyerhaeuser Court noted, “This

extensive subdivision safeguarded against overzealous stand-

ards, increased the confidence that can be placed in the prac-

ticability of the regulations, and diminished the need to

handle variation through the variance process. 590 F.2d at

1053 (emphasis added) ; cf. duPont, 430 U.S. at 131 n.21.

(Court stresses use of subcategorization to support diversity.)

12 See Appendix A at A-2 to A-3.

the customer’s specifications, all of which vary from

plant to plant.*

Totally accurate subcategorization of such large and

diverse industries would be extremely difficult. Therefore,

for these and other similarly situated industries, a BPT

variance provision that allows for consideration of funda-

mental differences between an individual discharger and

the hypothetical or “average” discharger on which the

BPT limitations regulations were based is crucial if

only genuinely similar plants are to be subject to similar

effluent limitations.

Analysis of the Act and its legislative history demon-

strate that such provisions must provide for consideration

of all of the statutory factors relevant to determining

BPT. One of these factors is the “total cost” to the

facility of meeting the nationally uniform regulations,

including the economic capability of the facility to install

necessary control equipment.

B. The BPT Variance Provision Must at Least Allow

Consideration of All Factors Contained in Section

304(b)(1)(B), and These Factors Include Economic

Capability

Since the function of a BPT variance is to determine

BPT at an individual facility, all factors relevant in set-

ting industry-wide BPT limitations must also be relevant

under the BPT variance. Weyerhacuser, 590 F.2d at

1034-36; Appalachian Power, 545 F.2d at 1359-60; see

* See, e.g., EPA Development Document for the Mineral

Mining and Processing Industry, Appendix C at C-5, C-6. EPA

did not even attempt to survey all of the plants in the mineral

mining industry or mines in the coal mining industry that

would be subject to the industry-wide BPT effluent limitations

regulations. There are over 4800 crushed stone plants, ac-

cording to EPA, but the Agency visited only 41 and had data

for only 189, less than 5 percent of the industry. See Appendix

C at C-2 to C-4.

United States Steel Corp. v. Train, 556 F.2d 822, 844-47

(7th Cir. 1977). EPA itself has agreed with this in-

evitable conclusion. Compare Petitioners’ Brief, at 19-20

with 43 Fed. Reg. 50042 (Oct. 26, 1978). Given uni-

versal agreement that BPT variance provisions at least

include consideration of all statutory industry-wide BPT

factors, one must ascertain congressional intent as to the

precise nature of these statutory BPT factors in order to

make a determination of the variance provision’s proper

scope.

These factors clearly include “total cost” since section

304(b) (1) (B) requires EPA to consider “the total cost

of application of technology in relation to the effluent

reduction benefits to be achieved from such application.”

33 U.S.C. §1314(b)(1)(B) (1976)."% The legislative

14 During the House debate on the 1972 FWPCA Confer-

ence Committee Report, Representative Wright emphasized

congressional intent that best “practicable” technology was to

be defined by reference to all the section 304(b) factors,

including “total cost” :

The conference report utilizes the term “practicable” in

section 301(b) (1) (A) in the requirements for effluent

limitations which must be achieved by July 1, 1977. There

are set out in section 304(b)(1)(B), which relates to

section 301(b) (1) (A), a number of factors relating to

the assessment of “best practicable contro! technology

currently available.” This includes consideration of the

total cost of application of technology in relation to the

effluent reduction to be achieved from such application,

nonwater quality environmental impact, and energy re-

quirements.

A Legislative History of the Water Pollution Control Act

Amendments of 1972, Congressional Research Service, Li-

brary of Congress, Ser. No. 93-1 (Jan. 1973) (hereinafter

referred to as 1972 Leg. Hist.), Vol. 1, at 259-60 (emphasis

added).

history of the 1972 Amendments to the Act defined the

phrase “total cost” contained in section 304{b) (1) (B) as

those

internal, or plant, costs sustained by the owner or

operator and those external costs such as potential

unemployment, dislocation and rural area economic

development sustained by the community area, or

region

Despite this unambiguous definition of “total cost,” the

Agency at least in these cases still argues that its re-

quired cost considerations during BPT variance proceed-

ings need encompass no consideration of the variance

applicant’s ability to afford those industry-wide BPT

limitations. See, e.g., Petitioners’ Brief, at 2, 11, 17, 19,

22-24,'°

Contrary to the Government’s arguments, however, Con-

gress unambiguously defined “total cost” not only to in-

clude the individual owner or operator’s “internal, or plant

costs,” but also “external costs” such as “unemployment”

and “dislocation”.’’ Only by surveying the economic

® [1] 1972 Leg. Hist. at 231 (Rep. Jones explaining FWPCA

Conference Rep. on House floor).

*® According to EPA, BPT variances will now be granted

upon a showing that

the plant’s own compliance costs with the national zuide-

line limitation would be X times greater than the coin-

pliance costs of the plants EPA considered in setting the

[1977 limitations].

Petitioners’ Brief at 11 (quoting 48 Fed. Reg. 50042 (Oct. 26,

1978)). In contexts other than the cases now before this

Court for review, however, EPA has apparently agreed that

BPT variance provisions must encompass economic capability

considerations. Text, infra at 39-41.

‘7 One must note the importance of Representative Jones’

statement as to congressional intent underlying the term

“total cost”. Not only was he Floor Manager during the House

capability of the plants which make up the industry in

question, can EPA consider costs in terms of unemploy-

ment and social dislocation in determining what consti-

tutes best “practicable” technology. During oversight

hearings on the 1972 Amendments to the FWPCA, Rep-

resentative Wright reemphasized congressional intent

that the statutory term “practicable” encompassed eco-

nomic capability considerations:

[T]he word “practicable” encompasses technology, it

encompasses economics, it encompasses local circum-

stances, it encompasses the capability of a given

plant or industry to perform to a given level without

incurring such severe financial loss that it would

have to curtail its operations and result in unem-

ployment."*

Thus, the economic capability of affected facilities to in-

stall required pollution control technology is clearly rele-

vant in setting industry-wide BPT limitations under

section 304(b) (1) (B) of the Act. Consequently, it must

also be a relevant consideration under EPA’s BPT vari-

ance provision since, as EPA has stated, that provision

must include consideration of all industry-wide BPT

debate on the 1972 Amendments, but he also is frequently

cited in the Government’s Brief as an authority on Congress’

intent as to the Act. See Petitioners’ Brief, at 31, 34.

In 1977, Congress also stressed the importance of “total

costs” in determining BPT limitations for depressed indus-

tries. A Legislative History of the Clean Water Act of 1977,

A Continuation of the Legislative History of the Federal

Water Pollution Control Act, Congressional Research Service,

Library of Congress, Ser. No. 95-14 (Oct. 1978) (1977 Leg.

Hist.), Vol. 4, at 1314.

18 Hearings on the Implementation of the Federal Water

Pollution Control Act Before the Subcom. on Investigations

and Review of the House Comm. on Pub. Works, 93d Cong.,

2d Sess. 490 (1974) (emphasis added).

factors. Appalachian Power, 545 F.2d at 1359; see United

States Steel, 556 F.2d at 845-46 & n.42; cf. American

Iron & Steel Inst. v. EPA, 568 F.2d 284, 301 (3rd Cir.

1977) (court approves EPA procedure for comparing

general BPT cost estimates with “total (including site-

specific) costs of reporting plants”).

The D.C. Cireuit’s opinion in Weyerhaeuser, upon

which both the Government and NRDC rely, must be

read as reaching this same conclusion if that opinion is

to be internally coherent. In Weyerhaeuser, the court

concluded that

{a]lthough the “total cost” of pollution control at

the petitioning mill must be considered under a satis-

factory variance provision, it is only relevant “in

relation to the effiuent reduction benefits to be

achieved” at that mill, section 304(b)(1)(B); so

long as those costs relative to the pollution reduction

gains are not different from those that may be im-

posed on the industry as a whole, the difficulty, or in

fact the inability, of the operator to absorb the costs

need not contro! the variance decision.

590 F.2d at 1036 ‘footnote omitted) (emphasis in the

original) ."*

'°In construing Congress’ definition of “total cost,” the

D.C. Circuit in Weyerhaeuser concluded that “Cujnder this

definition certain economic factors must be considered but

they need not be decisive if associated with commensurate

pollution-ending gains, and they do not, without more, include

the fact that the operator is experiencing difficulty in, or is

unable to absorb the costs.” 590 F.2d at 1086 n.35 (emphasis

added). This statement is only consistent with other aspects

of the Weverhaeuser opinion if one interprets it as requiring @«

fundamental difference between the varience applicant’s cost”

effluent reduction benefit ratio and that which was established

by EPA for the entire industry. Under Weyerhaeuser, this

fundamentally different cost benefit ratio would be necessary

Implicit in this passage from the Weyerhaeuser opin-

ion is the conclusion that when the variance applicant’s

ratio of “total cost” (including economic capability) to

effluent reduction benefits is “different” from that which

could have been imposed by the relevant industry-wide

BPT limitations, then the applicant’s “difficulty” or “in-

ability” to afford those limitations may “control the

variance decision.” Thus, although the Government cites

the Weyerhaeuser opinion at numerous points in its

Brief, ¢.g., Petitioners’ Brief, at 24 n.19, 25, 29, the

D.C. Circuit’s analysis does not support the Government’s

position that it need not, and, in fact, cannot ever con-

sider economic capability in determining BPT variance

requests.

On the contrary, Weyerhaeuser is generally consistent

with the Fourth Circuit’s opinions on most aspects of this

total cost issue.*® Both courts agree that EPA must

consider an individual operator’s “total cost.” Both

courts also agree that BPT variances should not be

granted simply because an individual operator cannot

afford to install industry-wide BPT limitations. Instead,

an individual operator’s economic ability to comply with

industry-wide BPT limitations is only one component of

a “total cost” calculation which in turn must be balanced

against effluent reduction benefits. Compare 590 F.2d at

1036 with Crushed Stone, 601 F.2d at 123-24. And both

courts also acknowledge the relevance of BPT variance

provision factors other than this total cost/effluent re-

to trigger some consideration of economic capability. Com-

pare 590 F.2d at 1035-36 with 590 F.2d at 1039 nn.38-39,

1040.

20 Indeed, at numerous points in its Weyerhaeuser opinion,

the D.C. Circuit cited the Fourth Circuit’s Appalachian Power

opinion with approval. See 590 F.2d at 1036 n.35, 1038, 1039

n.38.

duction benefit comparison. Compare 590 F.2d at 1035

n.34, 1040 with 601 F.2d at 124 and 545 F.2d at 1359-60.

C. The Factors Set Forth In Section 301(c) of The

The Act are By Analogy Relevant to BPT Variance

Determinations

This Court in duPont upheld EPA’s authority to pro-

mulgate industry-wide BPT limitations only by analogy

to its more obvious statutory authority to promulgate

industry-wide BAT limitations, which are subject to

modifications on grounds including economic capability

balanced against effluent reduction benefits." The Fourth

Circuit in its earlier opinion in duPont v. Train had

reached this same conclusion by a similar analysis.

Crucial to the Fourth Circuit’s duPont v. Train holding

on this point were: (i) EPA’s authority under Section

301(c) to modify BAT limitations; and (ii) that court’s

conclusion that “the ‘best practicable control technology’

for 1977 may not be construed more stringently than the

‘best available technology economically achievable’ as

ameliorated by the qualification of § 301(c) for [BAT]

limitations.” 541 F.2d at 1028.

First in Appalachian Power and subsequently in

Crushed Stone and Consolidation Coal, the Fourth Cir-

cuit used this analogy to the BAT limitations in holding

that any BPT variance provision must take into con-

sideration, inter alia, the statutory factors set out in

section 301(c). 601 F.2d at 123-24; 545 F.2d at 1359-

60. The Fourth Circuit reasoned that Congress did not

intend 1977 BPT limitations to be applied any more

inflexibly than the second-stage BAT standards. Since

the harsh inflexibility of the BAT requirements is miti-

gated by the economic capability consideration specified

by section 301(c), economic capability should also be

21 Text, supra at 5-6.

relevant to the BPT variance.22 This same conclusion

was reached by a commentator cited twice in the Gov-

ernment’s Brief.**

The Fourth Circuit in Appalachian Power, Crushed

Stone, and Consolidation Coal held neither that the BPT

variance provision must be identical to section 301(c),

nor that section 301(c) applied “ex proprio vigore” to

BPT limitations. Petitioners’ Brief, at 26. Rather, it

only held that section 301(c) factors should also be rele-

vant under the BPT variance. In essence, the Fourth

Cireuit referred to section 301(c) to determine what

economic considerations were appropriate when the per-

mit issuer examined, in the context of a BPT variance

request, the “total cost” factor contained in section

304 (b) (1) (B). Nevertheless, the Government continually

recites the actual text of sections 301(c) and 304(b)

(2) (A)—particularly the phrases “economically achiev-

able” and “reasonable further progress toward the elimi-

nation of the discharge of pollutants’—and argues that,

by their terms, these sections render the section 301(c)

factors inapplicable to BPT variances. See Petitioners’

Brief, at 23-25, 27. The Government’s concern with the

Act’s statutory language, which it had earlier described

as “less than pellucid” (id. at 18), is curious since section

22 NRDC argues in its amicus brief that “Congress made

the explicit economic escape value in section 301(c) appli-

cable only to the more costly BAT limitations.” NRDC

Amicus Brief, at 20. BAT limitations will not be “more

costly” than BPT limitations when, as in the case of the

crushed stone industry, EPA promulgates identical BPT and

BAT limitations.

23 See Kalur, Will Judicial Error Allow Industrial Point

Sources to Avoid BPT and Perhaps BAT Later? A Story of

Good Intentions, Bad Dictum and Ugly Consequence, 7 Ecol.

L.Q. 955, 976 (1979) (cited in Petitioners’ Brief at 26, 33

n.25).

301(b)(1)(A) requires effluent limitations for “point

sources”, not “classes and categories” of point sources.

Thus, industry-wide BPT limitation regulations are only

justified “as a matter of statutory language” if one anal-

ogizes to the Act’s required procedures for developing 1984

BAT limitation regulations, as this Court did in duPont.

The Act expressly allows modification of these BAT limi-

tations through section 301(c) on grounds including a

facility’s inability to afford them. Consequently, by anal-

ogy, a BPT variance provision should aiso encompass

similar considerations of economic capability. This con-

clusion underscores the fact that the phrase “total cost”

used in section 304(b) (1) (B), applied in the context of

a request for a variance from “presumptively applicable”

BPT effluent limitations regulations, must include con-

sideration of the “economic capability” of the requestor

to comply with the otherwise appliceble BPT effluent

limitations regulations.

Finally, the Government contends that it is not required

to perform any kind of cost-benefit balancing when de-

veloping BAT limitations, while only some form of indus-

try-wide cost-benefit balancing is required for 1977 BPT

limitations. According to the Government, this is the

“only difference between Section 304(b)(1)(B) and

Section 304(b) (2) (B).” Petitioners’ Brief, at 24 & n.20.

Assuming arguendo that this reading of the Act is cor-

rect, then one could interpret section 301(c) as expressly

providing for some BAT economic capability /effluent

reduction benefit balancing on the individual facility

level. Under section 301(c), the amount of money which

an individual facility can afford to spend on pollution

control technology must be balanced against the effluent

reduction benefits achieved by that level of affordable

pollution control technology in order to determine

whether effluent limits less stringent than industry-wide

BAT limitation levels should be established for that fa-

cility. Thus, Section 301(¢) provides a balancing mecha-

nism in order to relieve the onerous inflexibility of

nationally uniform, industry-wide BAT regulations.

Since EPA has authority to promulgate industry-wide

BPT regulations only by analogy to its authority to

proraulgate industry-wide BAT regulations, and since the

Act expressly provides for such an economic capability/

effluent reduction balancing to adjust these more rigor-

ous, industry-wide BAT regulations, then by analogy,

BPT variance provisions should allow the variance appli-

cant to perform and submit a similar analysis.”' Con-

trary to the Government’s position, such an approach to

BPT variances is buttressed by and consistent with both

the Act’s express requirement of some form of industry-

wide BPT ccst-benefit balancing and EPA’s acknowledg-

ment that all BPT industry-wide factors are relevant

to its BPT variance clause.”

In Weyerhaeuser, the D.C. Circuit also agreed with the

Fourth Circuit that this Court’s duPont decision required

EPA to “give permittees the ability to secure variances from

the 1977 limitations analogous to their statutorily provided

ability to secure the same with respect to the [BAT] limita-

tions.” 590 F.2d at 1034. In a footnote, the court noted that

its conclusion was “somewhat different” from the Fourth

Circuit’s in Appalachian Power. Since it believed that the Act

“reveais quite clearly” the relationship between section 301

sisted “that the EPA’s application of the 1977 variance allow-

ance bear a similar relationship to the factors the statute

deems crucial to the development of the general 1977 limita-

tions.” 590 F.2d at 1034 0.30. This distinction drawn by the

Weyerhaeuser court may be one ‘without a difference,’ because

Weyerhaeuser can only be read as implying that, under some

circumstances, the 1977 BPT “total cost” factor requires con-

sideration of economic capability. See 590 F.2d at 1036 &

n.35.

_ 8 This court’s opinion in Union Electric Co. v. EPA, 427

U.S. 246 (1976), also supports affirmance of the decisions

II. THE DECISIONS OF THE COURT OF APPEALS |

ARE CONSISTENT WITH CONGRESSIONAL IN-

TENT

A. The Legislative History of the 1977 Amendments

Supports the Decisions Below Because Congress

Implicitly Sanctioned Both BPT Variances and

Appalachian Power

The term “variance” appears several times in the

legislative history to the 1977 Amendments to the Act.

In most instances, the references arose in the context of

an amendment to section 309 of the Act, which authorizes

EPA to extend the date for BPT compliance until April

1, 1979. 33 U.S.C. § 1819(a) (5)(B) (Supp. I, 1977).

Congress intended this mechanism for extending BPT

compliance time to complement, not replace BPT variance

provisions. As described by Senator Muskie, this amend-

ment to section 809 was simply an attempt to relieve

the inflexible compliance date for achieving BPT limita-

tions without adding “a new layer of review” to that

below. In Union Electric, this Court held, inter alia, that

when reviewing state implementation plans under the Clean

Air Act, EPA may not consider the economic feasibility of the

plan’s requirement since economic feasibility is not encom-

passed within the specific statutory assessment criteria. 427

U.S. at 256-57. Under a similar analysis, EPA must give

some consideration to a BPT variance applicant’s economic

capability of achieving industry-wi2z BPT limitations because

“total cost,” a statutory BPT consideration factor, as defined

in the Act’s legislative history, encompasses consideration of

economic capability. Also, Congress made economic capability

a consideration in Section 301(c), and those section 301 (c)

factors must apply by analogy to BPT variances. Finally,

one must also note the similar importance of an adequate

variance provision to this Court’s Union Electric decision.

See 427 U.S. at 266-67.

already provided by existing variance provisions. See

[4] 1977 Leg. Hist. at 861-62. In fact, the relevant

legislative history of the 1977 Amendments reveals that

one purpose of these section 309 amendments was to

allow EPA to grant BPT compliance-time extensions to

facilities that raised “legitimate issues,” involving either

the “required technology” or “other points,” through

“established” “[a]ppeal mechanisms” such as administra-

tive variance proceedings and judicial review thereof.

See [4] 1977 Leg. Hist. at 693-94, 861-62, 1054; [3]

1977 Leg. Hist. at 408. Thus, a facility could apply for

a BPT variance and a section 309 extension of the statu-

tory deadline for BPT compliance.”

There is also no doubt that Congress in considering

the 1977 Amendments was aware of the Fourth Circuit’s

Appalachian Power decision on which that court’s sub-

sequent Crushed Stone and Consolidation Coal decisions

were based. In 1977, Congress rejected an amendment

which would have conferred exclusive jurisdiction over

the variance regulations remanded in Appalachian Power,

and other EPA rules of nationwide impact, on the Court

of Appeals for the District of Columbia Circuit. [4] 1977

Leg. Hist. at 878, 1012-29. The potential implications of

passage of such an amendment on the Fourth Circuit’s

remand in Appalachian Power had been specifically

brought to the attention of the Senate.”

26During the debate on the House bill, Representative

Bonker noted congressional intent to extend the BPT compli-

ance deadline for “industrial dischargers who have not com-

pleted their facilities due to bona fide challenges to the EPA’s

effluent limitations.” Among the “bona fide’ challenges

justifying an extension of BPT compliance time was “EPA’s

delay in promulgating a meaningful variance procedure.” [4]

1977 Leg. Hist. at 1314.

27 See Federal] Water Pollution Control Act Amendments of

1977, Hearings before the Subcommittee on Environmental

Congressional awareness and approval of the Appa-

lachian Power holding are also evinced by two other aspects

of the legislative history of the 1977 Amendments. First,

Representative Clausen, ranking minority member of the

Subcommittee on Water Resources, stated during the

House debate on the Conference Report to the final 1977

amendments that “[a] full understanding of Public Law

92-500 [the 1972 Amendments] can only be achieved by

having an understanding of the case law interpreting

the public law.” [3] 1977 Leg. Hist. at 374.2* At the

time Representative Clausen made this statement, only

the Appalachian Power court had addressed the proper

scope of a BPT variance provision; the D.C. Circuit had

not reached its decision in Weyerhaeuser, and the Ameri-

can Petroleum and NRDC v. EPA courts had declined

to rule on its interpretation and application. Consequent-

ly, this passage from the 1977 CWA legislative history

indicates congressional approval of the analysis of the

BPT variance provision contained in Appalachian Power.

In fact, the case law Report cited by Representative

Clausen concluded that, in regard to section 301(c) BAT

modifications based in part on economic capability, “the

language in [this Court’s] duPont case would seem to

Pollution of the Senate Comm. on Environment and Public

Works, 95th Cong., Ist Sess., Series 9-H25, Part 9, at 17

(1977).

** At this point during the House debate, Rep. Clausen re-

ferred to a Library of Congress report on case law under the

1972 FWPCA: “Case Law Under the Federal Water Pollu-

tion Control Act Amendment of 1977, Library of Congress,

Congressional Research Service, House Public Works and

Transportation Committee Print 95-35 (Report). [3] 1977

Leg. Hist. at 374. This Report was prepared in September

1977, before debate on the final CWA, and discusses both

Appalachian Power and this Court’s duPont decision. E.g.,

Report at 20, 28.

mandate similar provisions for 1977 limitations.” Re-

port at 20.*° Thus, consistent with Appalachian Power

and the decisions below, Congress clearly intended EPA

to consider “potential cost to individual companies” when

implementing the Act.

Second, when Congress disapproved of cases interpret-

ing the Act, it did so explicitly in the legislative history

of the 1977 Amendments.*” Consequently, its failure to

reject the Appalachian Power decision can only be con-

strued as approval and acceptance of the Fourth Circuit’s

analysis of the BPT variance issue in that case.

2° Rep. Clausen also pointed out that

it is not the intent of this legislative effort to invest EPA

with discretion in the interest of a precisely target [sic]

series of regulatory activities, and then see this discre-

tion nullified by agency shortcuts and across-the-board

regulatory requirements. Constraints on agency man-

power and other resources may ‘well prove incentives to

such an approach. But it is intended that the Agency

bear in mind the potential cost to individual companies,

entire industries, and the economy at large to result if

the act is not administered as intended by the Congress.

As reflected by the conference report on [the CWA],

these concerns are prominent among those motivating

this legislation. Excessive regulation in the name of ad-

ministrative convenience will not be tolerated. This con-

cern will remain uppermost in mind as the Congress

continues to exercise its legislative and oversight re-

sponsibilities in this field.

{3] 1977 Leg. Hist. at 373 (emphasis added).

3° See {4} i977 Leg. Hist. at 693 (rejecting Sixth Circuit

holding that some circumstances justified extension of BPT

compliance time under FWPCA), 701 (rejecting Eighth Cir-

cuit holding that U.S. Corps of Engineers was exempt from

State environmental law).

In general, the 1977 Amendments evince congressional

intent to render the Act’s effluent limitations more flexi-

ble at least in part because BPT had proven more string-

ent than anticipated. See [3] 1977 Leg. Hist. at 370

(House debate on Conference Report); [3] 1977 Leg.

Hist. at 269 (Conference Report). Thus, although Con-

gress did not explicitly address the BPT variance in the

1977 Amendments, its overall intent to make the Act

more flexible“ is consistent with the Fourth Circuit’s

requirement that BPT variance provisions also be flexi-

ble in their scope. And Congress’ failure to enact an

express BPT variance provision may be traced to its

implicit approval of the decisions in duPont and Appa-

lachian Power.

Ironically, the Government devotes an entire page of

its Brief to passages from the 1977 Amendments’ legis-

lative history demonstrating Congress’ concern over the

Act’s economic impact on industry. See Petitioners’

Brief, at 41. The Government then concludes on the

basis of this legislative concern that Congress determined

not to “ ‘provide general exemptions or extensions for the

1977 deadlines.’”’ Petitioners’ Brief, at 41-42. This con-

clusion, of course, misses the point since as the Govern-

ment admits, BPT variances are not “exemptions or ex-

tensions” from 1977 BPT requirements, but instead re-

define BPT for a particular point source. And, it also

ignores the basic thrust of the 1977 amendments, which

3! Congress’ continuing desire to render ihe Act still more

flexible is evinced by currently pending legislation which

under certain circumstances would require EPA to modify

or withdraw effluent limitations which threaten unemploy-

ment because of plant closings. S. 2453, H.R. 6867, 96th Cong.,

2d Sess. (1980) (printed in 126 Cong. Rec. S. 2656-S. 2657

(daily ed. March 19, 1980) ).

was to provide greater flexibility to the Act. See gen-

erally {3] 1977 Leg. Hist. at 425, 497; [4] 1977 Leg.

Hist. at 1815.

Finally, the Government’s contention that any consid-

eration of economic capability during the BPT variance

process “would impose a substantial burden on” the

Agenev and “further delay implementation of the 1977

limitations”, see Petitioners’ Brief, at 42, ignores both

Congress’ express satisfaction with the degree of indus-

trial compliance with the 1977 BPT limitations® and

the probability that few BPT variances will be filed in

the future because the 1977 BPT deadline is long past

and point source dischargers in major industries will have

to comply with BAT limitations for toxic pollutants and

BCT limitations by July 1, 1984. 83 U.S.C. -§ 1311(b)

(2)(C), (E) (Supp. I, 1977). See generally NRDC v.

Train, 8 ERC 2120 (D.D.C. 1976), as modified, 12 ERC

1833 (D.D.C. 1979).

B. The Government Consistently Relies on Irrelevant

Legislative History

In contrast to its deliberations prior to passage of the

1977 Amendments, Congress never directly addressed or

considered BPT variances in drafting the 1972 Amend-

ments to the Act, despite the Government's hyperbolic

assertion that this legislative history

unequivocally shows that Congress intended EPA to

set the 1977 limitations on an industry-wide basis

* See, e.g., [3] 1977 Leg. Hist., at 323, 330, 369-70, 462-63,

478. It is worth noting that, contrary to the implication given

in the Government’s brief, Congress in its consideration of

the 1977 Amendments repeatedly criticized EPA’s adminis-

tration of the Act. See, e.g., [8] 1977 Leg. Hist. at 377-80,

381, 385, 386, 409.

and that neither Section 304(b) (1) (B) nor Section

3U1(c) requires EPA to grant variances from the

1977 limitations to individual point sources in finan-

cial difficulty.

Petitioners’ Brief, at 30.*

In general, the Government’s use of legislative history

ean be dismissed as falling into several different, but

ielaied categories of error. First, the Government cites

numerous statements to the effect that Congress did not

intend to exempt facilities from BPT limitations simply

because they cannot afford to comply with those regula-

tions. See, e.g., Petitioners’ Brief, at 28-29, 30, 34-36.

The Fourth Circuit has never held, and the respondents

have never argued, that a facility should receive a BPT

variance simply because it cannot afford to comply with

industry-wide BPT limitations. Second, the Government

cites legislative history to the effect that every affected

facility must achieve BPT and that it should not be modi-

fied or waived for economic reasons. See, e.g., Petition-

ers’ Brief, at 28, 31-34, 37-38. This argument misses

the point. As the Government acknowledges in other

sections of its Brief, the NPDES permit limitation re-

ceived through a BPT variance does not “modify” BPT

limitations for a particular facility; it is BPT for that

33 Indeed, were the FWPCA legislative history so un-

equivocal on just the first assertion made in this passage,

then this Court need not have rendered much of its duPont

opinion. Moreover, the Government appears to have missed

those parts of the legislative history of the 1972 Amend-

ments which reflect an overall abiding concern that the cost

of any pollution controls be reasonable and that the economic

impact resulting from such controls be tolerable. See, e.g.,

[1] 1972 Leg. Hist. at 231 (Rep. Jones), 350, 352 (Rep.

Blatnik) ; [2] 1972 Leg. Hist. at 1272 (Sen. Randolph), 1281

(Sen. Bentsen). Affordability is an essential component of

reasonable costs.

facility. Third, the Government cites legislative history

relieving EPA from any duty to determine economic im-

pact on a case-by-case basis. See, e.g., Petitioners’ Brief,

at 31-34. But this discussion by the legislature was in

the context of establishing industry-wide regulations and

is contradicted by other portions of the FWPCA legis-

lative history. See duPont, 480 U.S. at 131 n.21. More-

over, as discussed infra at 36-37, EPA need not perform

such a case-by-case economic impact analysis in a vari-

ance proceeding because the burden is on the variance

applicant to make this showing.

In addition to these categories of general error, some

portions of the legislative history cited by the Govern-

ment warrant specific comment. First, the Government

accords great weight to a written statement Senator

Muskie inserted into the record of the Senate’s debate on

the Conference Report on the 1972 Amendments to the

Act. See Petitioners’ Brief, at 33-34 & n.26. This state-

ment, offered as an “explanation of each of the signifi-

cant provisions of the Act,” appears rather to have been

an effort by the Senator to write his own gloss on agree-

ments reached during the conference." One commentator,

noting contradictory Conference Report statements on

the degree to which effluent limitations may vary with

individual circumstances, observed that Senator Muskie

“chose the half of the Conference Report he preferred,

insisting that the modified bill provided for nationally

uniform limitations based on BPT.”* One portion of

“Senator Muskie’s colleagues in both Houses strongly

disagreed with aspects of this statement. See, ¢.g., [1| 1972

Leg. Hist. at 105-08 (remarks of Rep. Dingell), 205 (re

marks of Senator Jackson).

** Currie, “Congress, the Court and Water Pollution,” 1977

S. Ct. Rev. 39, 51.

the 1972 legislative history ignored by Senator Muskie

stated that

{iJn defining best practicable [technology] for any

given industrial category, the Cornmittee expects the

Administrator to take a number of factors into ac-

count. These factors should include [those listed in

Section 304(b)(1}(B)]. . . . In applying effluent

limitations to any individual plant, the factors cited

above should be applied to that specific plant.

{2| 1972 Leg. Hist. at 1468 (emphasis supplied).

Second, for some reason, the Government also dwells

at great length on that section of the Act which estab-

lished a loan fund to enable facilities to comply with its

requirements. Sec Petitioners’ Brief, at 28, 36-38 (citing

section 8, 86 Stat. 898-99 (amending 15 U.S.C. § 636)).

The Government apparently relies on a statement by

Senator Nelson regarding this loan fund for the proposi-

tion that “Congress deliberately chose not to permit vari-

ances from the 1977 limitations on the ground of financial

hardship.” Petitioners’ Brief, at 37. Senator Nelson’s

statement does not specifically address BPT variance

provisions; rather, it appears to reject all economic vari-

ances from the Act’s “pollution controls.” Thus, Congress

obviously did not agree with Senator Nelson that this

loan fund was an “ ‘alternative to . . . waiving strict

environmental standards where economic hardship could

be shown,’” Petitioners’ Brief, at 37 (quoting [2] 1972

Leg. Hist. at 1355), because it expressly provided for

modification of BAT limitations on economic grounds.

33 U.S.C. §1311/e) (1976). Moreover, a BPT variance

provision does not waive BPT limitations requirements;

it redefines those requirements for an individual plant.

Thus, a facility in compliance with BPT limitations

granted through the variance process would be eligible

for these loans. See generaily Petitioners’ Brief, at 37-

38. Also, as discussed previously, BPT variances may

not be based solely on “financial hardship.” Rather, eco-

nomic capability is only one of a number of factors to be

considered by the permit issuer in deciding on a BPT

variance request. In any event, the availability of such

loans merely demonstrates Congress’ concern over the

economic impact of its effluent limitations.**

C. Consideration of Economic Capability in the BPT

Variance Process Would Not Require EPA to Con-

duct “Plant-by-Plant” Economic Impact Determi-

nations

The Government recites legislative history stating that

EPA need only determine the economic impact of its BPT

limitations on classes or categories of industrial point

source dischargers, not on individual facilities. See Peti-

tioners’ Brief, at 30-34. This legislative history is irrele-

vant because it pertains only to EPA’s promulgation of

industry-wide BPT effluent limitations; it does not ad-

dress the extent of EPA’s duty in the context of a BPT

variance request to consider a discharger’s economic

capability to comply. See 590 F.2d at 1037 n.36.

Moreover, this part of the Government’s argument

completely ignores the process by which variance requests

are determined and, therefore, raises an illusory issue.

At the variance stage, EPA need not itself perform a

plant-specific cost-benefit analysis or any other kind of

86 As stated by Rep. Harrington during the debate on this

funding section of the House Report: ‘No one in Congress

wishes to legislate so irresponsibly that we drive out of

business those who sincerely wish to abide by the new pollu-

tion laws but who, because of a bad state of the economy,

will be forced to close.” [1] 1972 Leg. Hist. at 450.

plant-specific economic impact analysis. Appalachian

Power, 545 F.2d at 1860 n.23. Rather, the burden is on

the variance applicant to present evidence on site-specific

costs. Weyerhaeuser, 590 F.2d at 1037 n.36. See gen-

erally 40 CFR §§ 125.31, 125.32, 44 Fed. Reg. 32950-51

(June 7, 1979). The variance mechanism will be trig-

gered only where the applicant can show a fundamental

difference between it and the rest of the industry. Thus,

EPA need only consider the evidence submitted by the

applicant and compare it to the industry-wide cost-

benefit comparison and other economic analyses already

performed by the Agency in its rulemaking.” This ap-

proach to the variance process would not “place [the]

impossible burden on EPA,” which this Court strove to

avoid in duPont. See generally 480 U.S. at 132. It is

worth noting, in this regard, that the Government has

not even presented this Court with the number of BPT

variance requests which EPA has received.

Finally, as discussed previously, “total cost,” includ-

ing economic capability to comply, is only one factor

relevant to a BPT variance determination. Other factors

specified in section 304(b) (1) (B) may also warrant a

BPT variance. Determination of fundamental differences

with respect to these other factors could also be compli-

cated and time consuming. Yet EPA admits that its

variance must encompass those other factors and has not

complained about the burden such determinations would

place on it.

37 Cf. Portland Cement Ass’n Vv. Ruckelshaus, 486 F.2d 375,

887 (D.C. Cir. 1973) (EPA has no affirmative duty to make

a quantified cost-benefit analysis under the Clean Air Act but

must consider such studies when submitted by companies),

cert. denied, 417 U.S. 921 (1974).

Ill. THE AGENCY’S CONSTRUCTION OF THE

PROPER SCOPE OF A BPT VARIANCE PROVI-

SION IS NOT ENTITLED TO DEFERENCE

Only an Agency’s consistent, long-standing, and sub-

stantially contemporaneous construction of a statute is

entitled to “considerable” weight by a reviewing court.

See Zenith Radio Corp. v. United States, 4837 U.S. 443,

450 (1978) ; United States v. National Ass’n of Securi-

ties Dealers, Inc., 422 U.S. 694, 718-19 (1975). And

even when these conditions are met, the Agency’s con-

struction is “not controlling.” 422 U.S. at 719. “[I]t

is only one input in the interpretational equation,” and

“[i]ts impact carries more weight when the administra-

tors participated in drafting and directly made known

their views to Congress in committee hearings.” Zuber

v. Allen, 396 U.S. 168, 192 (1969) (citations omitted)

(emphasis added) ; accord, SEC v. Sloan, 436 U.S. 102,

117-21 (1978). Thus, deference to the Agency’s construc-

tion of a statute is inappropriate when that construction

is not longstanding, see Teamsters v. Daniel, 439 U.S.

551, 565-66 (1979), and any deference is always “con-

strained” by the court’s “obligation to honor the clear

meaning of a statute, as revealed by its language, pur-

pose, and history.” Jd. at 566 n.20.

Contrary to statements in the Government’s Brief,

EPA has not consistently provided a “well articulated”

interpretation of the BPT variance provision required by

this Court’s reading of the Act. On the contrary, it has

repeatedly changed its view as to the proper scope of the

provision.** After several permutations, EPA finally

agrees with the court below that its variance provision

must encompass all section 304(b)(1)(B) factors, in-

cluding “total cost.” Yet the Agency, at least in these

cases, still ignores Congress’ unambiguous intent that

88 See generally text, supra at 6-8.

“total cost” include some consideration of economic capa-

bility. EPA’s claims about its “consistent” construction

of the proper scope of its BPT variance provision are

rendered even more unreliable by the fact that, until the

Government filed its brief on the merits of this case,

EPA had argued to this Court that this issue was not

ripe for judicial review.”

The interpretation of EPA’s BPT variance provision

put forward in (he Government’s brief also conflicts with

prior Agency practice. For example, in United States

Steel, during administrative proceedings whose “proper

inquiry” was whether a BPT variance was warranted,

EPA presented and assessed evidence on, inter alia, the

cost to a particular steel works of complying with in-

dustry-wide BPT limitation regulations. 556 F.2d at

844-46. In considering the costs of these regulations,

EPA both compared their resulting capital costs to the

facility’s entire capital replacement costs and determined

daily operating costs associated with meeting the regula-

3® Until now, EPA argued that the proper scope and appli-

cation of a BPT variance provision could not be determined

by a court without reference to the record established in an

actual variance proceeding. See Government Petition for a

Writ of Certiorari, at 3, 20-21; Respondents’ Brief, Consoli-

dation Coal v. Costle, at 16-20. Indeed, EPA had unsuccess-

fully petitioned the Fourth Circuit to recall its mandate in

Appalachian Power after this Court’s duPont decision on the

grounds that determination of its variance provision’s proper

scope would be speculative except in the context of an actual

variance application. See No. 74-2096, Order of Sept. 26,

1977.

40 BPA relies on United States Steel for its authority to

set case-by-case NPDES permit limitations. See 44 Fed. Reg.

38763 (column 3) (July 2, 1979). This case and EPA’s con-

duct of the variance proceedings at issue in this case were

also noted with approval in the 1977 amendments’ legisla-

tive history. See [4] 1977 Leg. Hist. at 862.

tions. 556 F.2d at 846 n.42. On the basis of these and

other considerations, EPA determined the industry-wide

BPT limitations to be “feasible” for that particular fa-

cility. 556 F.2d at 846. There is no discussion in United

States Steel of the proposition that this plant’s compliance

costs/effluent reduction benefits ratio must be “funda-

mentally different” from the entire industry’s before

a variance could be granted, and EPA’s actual reassess-

ment of this plant’s ability to comply with the industry-

wide limitations can only be characterized as encom-

passing some consideration of whether the plant can af-

ford those regulations, i.e., whether those industry-wide

regulations are economically “feasible” for that par-

ticular plant.

Moreover, in processing an actual BPT variance re-

quest by the Jones & Laughlin Steel Corporation, EPA

commissioned a financial consultant “to analyze the

financial capability of Jones & Laughlin Steel Corpora-

tion . . . to afford BPT treatment facilities at its Ali-

quippa and Pittsburgh works.” *' Finally, EPA’s reliance

on legislative history stating that it is not required “ ‘to

determine the economic impact of controls on any indi-

vidual plant in a single community,’ ” * conflicts not only

with its actual practice in the United States Steel and

Jones & Laughlin proceedings, but also with its general

interpretation of the BPT variance provision as requiring

a variance if “a discharger . . . could show that given its

unique location and circumstances, adherence to the 1977

“1 See Written statement of Robert L. Hayes, TCS Financial

Consultants, on behalf of the United States Envronmental

Protection Agency concerning the financial capabilities of the

Jones & Laughlin Steel Corp., at 3 (March 30, 1979), in

Appendix D at D-1.

* Petitioners’ Brief, at 34 ‘quoting [1] 1972 Leg. Hist.

at 170) (emphasis in the original).

limitations would be substantially more expensive . . .

than compliance by other members of the same industry.”

Petitioners’ Brief, at 10-11.

Finally, there is no indication either that EPA has ever

presented its interpretation of this provision to Congress

or that Congress has ever agreed with the Agency’s in-

terpretation. However, as demonstrated supra, there is

evidence in the legislative history to the 1977 CWA

amendments that Congress was aware of and approved

the Fourth Circuit’s holding in Appalachian Power that

BPT variance provisions must allow some consideration

of economic capability.

CONCLUSION

For the foregoing reasons the decisions below should

be affirmed in all respects.

Respectfully submitted,

GEORGE C. FREEMAN, JR.

MICHAEL B. BARR

Scott SLAUGHTER

HUNTON & WILLIAMS

1919 Pennsylvania Ave., N.W.

Washington, D.C. 20006

Attorneys for National Coal

Association

Of Counsel:

ROBERT F.. STAUFFER

General Counsel

National Coal Association

1130 Seventeenth St., N.W.

Washington, D.C. 20036

THEODORE L. GARRETT

COVINGTON & BURLING

888 Sixteenth St., N.W.

Washington, D.C. 20006

Attorney for National Crushed

Stone Association, Warren

Brothers Company and

Arkhola Sand and Gravel

Company

LAWRENCE A. DEMASE

ROSE, SCHMIDT, DIXON,

HASLEY & WHYTE

900 Oliver Building

Pittsburgh, Pennsylvania

15222

Attorney for Consolidation Coal

Company and Bethlehem Steel

Corporation

THOMAS E. CAHILL

Peabody Coal Company

919 Bond St.

Evansville, Indiana 47732

Attorney for Peabody Coal

Company

THEODORE L. GARRETT

COVINGTON & BURLING

888 Sixteenth St., N.W.

Washington, D.C. 20006

Attorney for Cedar Coal

Company, Central Appalachian

Coal Company, Central Coal

Company, Central Ohio

Coal Company, Southern

Appalachian Coal Company,

Southern Ohio Coal Company

and Windsor Power House

Coal Company

FRANK J. CLEMENTS

THORP, REED & ARMSTRONG

2900 Grant Building

Pittsburgh, Pennsylvania

15219

Attorney for Nationai Steel

Corporation, Republic Steel

Corporation and United States

Steel Corporation

RONALD R. JANKE

JONES, Day, REAVIS & POGUE

1709 Union Commerce

Building

Cleveland, Ohio 44115

Attorney for the North

American Coal Corporation

APPENDICES

A-1

APPENDIX A

EPA 440, 1-76 057-a

Development Document for Interim Final Effluent

Limitations Guidelines and New Source Performance

Standards for the

COAL MINING

Point Source Category

{EPA SEAL]

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY

May 1976

A-2

(51)

SECTION V

WASTE CHARACTERIZATION

The nature and quantity of pollutants discharged in

waste water from surface and underground coal mining

operations and coal preparation facilities varies signifi-

cantly throughout the United States. The waste water

situation evident in the mining segment of the coal indus-

try is unlike that encountered in most other industries.

Usually, most industries utilize water in the specific

processes they employ. This water frequently becomes

contaminated during the process and must be treated

prior to discharge. In contrast, water is not utilized in

the actual mining of coal in the U.S. at the present except

for dust allaying and fire protection. Waste water handl-

ing and management is required in most coal mining

methods or systems to insure the continuance of the

mining operation and to improve the efficiency of the

mining operation. Water enters mines via precipitation,

groundwater infiltration, and surface runoff where it

can become polluted by contact with materials in the coal,

overburden material and mine bottom. This waste water

is discharged from the mine as mine drainage which may

require treatment before it can enter into navigable

water. The waste water from coal mining operations is

unrelated, or only indirectly related, to production quanti-

ties. Therefore, raw waste loadings are expressed in

terms of concentration rather than uniis of production.

In addition to handling and treating mine drainage dur-

ing actual coal loading or coal production, coal mine

operators are faced with the same burden during idle

periods. Waste water handling problems are generally

insignificant during initial start-up of a new under-

A-3

ground mining operation. However, these problems con-

tinue to grow as the mine is expanded and developed and,

unless control technology is employed may continue in-

definitely as a pollution source after coal production has

ceased. Surface mines can be somewhat more predictable

in their production of waste water pollutants. Waste

water handling within a surface mine can be fairly

uniform throughout the life of the mine. It is highly de-

pendent upon precipitation patterns and control tech-

nology employed, i.e.: use of diversion ditches, burial of

toxic materials, and concurrent reclamation. Without the

use of control measures at surface mines the problems

of waste water pollution would also grow and continue

indefinitely after coal production has ceased.

[183]

Cost For Treating Coal Mine Discharges as Supplied to

EPA Water Economic Branch

The 40 CFR 434 esteblished four subcategories for the

industry :

Subpart A—Coal Preparation Plant Subcategory;

Subpart B—Coal Storage, Refuse Storage and Coal

Preparation Plant Ancillary Area Sub-

category ;

Subpart C—Acid or Ferruginous Mine Drainage Sub-

category ;

Subpart D—Alkaline Mine Drainage Subcategory.

For the purpose of making an economic analysis of the

impact to the coal mine industry for meeting the addi-

tional limitations required by the court order of Decem-

ber 16, 1975 (NRDC vs Train, Civ. Dkt. No. 1609-73)

establishing additional limitations for the coal mining

point source category the industry was segmented into

model mines and preparation plants. These models were

A-4

supplied by the contractor who is preparing the draft

economic analysis. (See Figure 41) A complete copy of

this report is available through EPA Public Information

Reference Unit, Room 2922 (EPA Library) Waterside

Mall, 401 M Street, S.W. Washington, D.C.

[186]

* * * *

The selected approach for costs, cost factors and cost-

ing methodology for the model mine segments provided

entailed the derivation costs for the various facilities

and activities which, in combination, form the specified

treatment processes. Where practical and applicable, the

costs are shown as a function of variables which are

generally known for specific mining operations (e.g. daily

flow rate, size of impoundment area, amount of flocculant

added per volume of waste water). ‘

B-1

APPENDIX B

ECONOMIC IMPACT

EFFLUENT GUIDELINES

MINERAL MINING

AND PROCESSING INDUSTRY

Construction Sand and Gravel

Crushed Stone

Industrial Sand

Phosphate Rock

U.S. Environmental Protection Agency

Office of Water Planning and Standards

Washington, D.C. 20460

[I-4]

The impact in each industry segment is analyzed by

means of a model plant which describes the financial

structure (revenues, normal operating costs, capital em-

ployed, net revenues, etc.) and the control costs required

to meet the guideline standard. The model plants are

used to estimate the impact for each segment. The follow-

ing six levels of impact are analyzed:

1. Price Effects—the segment is analyzed in terms

of competitive structure, price elasticity, avail-

ability of substitutes, etc., all of which will deter-

mine the ability of the plants in the segment to

pass on the increased costs of operation;

Financial E ffects—the exnected shift in net reve-

nues and capital requirements are analyzed to

estimate the [I-5] number of plants in the seg-

ment which would be expected to close;

B-2

3. Production Effects—the impact of expected clo-

sures on production in the segment is analyzed;

4. Employment Effects—the employment impact of

plant clusures is assessed from the anticipated

closures ;

5. Community E ffects—any expected employment or

income loss because of plant closures is analyzed

for its adverse impact on the region in which the

closing plants are located; and

6. Balance of Trade Effects—a substantial shift in

production or prices could hamper exports and/or

encourage imports. Any such events would im-

pact the nation’s balance of trade. Most of the

industries produce relatively low-value products

that are not a significant part of the nation’s

foreign trade. Only phosphate rock has any po-

tential impact on balance of trade.

The application of a general analysis to the

specific problems of those industries is not with-

out limitations. This study has attempted to rec-

ognize the limitations and to make assumptions

that would overstate adverse economic impact

generated by the imposition of the effluent guide-

lines.

7. Industry Growth E ffects—any expected change in

the projected industry growth rate is assessed

from the impact of expected closures, which in-

corporates the expected shift in net revenues,

capital requirements, and prices.

[1-6]

One of the principal limitations of the analysis is that

the natural-resource base industries’ costs of operations

and control will depend on the specific site for each plant.

B-3

To a certain extent, each plant in the industry is a

special case. The use of a model facility cannot take

such specificity into account. Thus, the actual financial

situation and control costs for any given plant may be

different from the model used to represent it.

In many cases, information on the exact numbers of

plants in each required analytical segment has not been

available. Therefore, estimates were made as to the num-

bers of firms in each segment and those estimates are a

significant factor in determining the expected economic

impact.

All these limitations must be considered in light of the

results. Very little adverse economic impact is antici-

pated; so small, in fact, that a doubling or tripling of

impact would not make the national aggregate impact

significant. However, each plant closure causes a signifi-

cant adverse impact for its employees and potentially for

the community that loses the jobs and incomes generated

by the plant.

“

F ilies

‘

rf A ; 7

. - 4 s A : , : nae _ o te 7

> ares a ow -* - 7 i —_ Ss a oe im ye oe ied 4

C-1

APPENDIX C

DEVELOPMENT DOCUMENT

FOR THE

MINERAL MINiNG AND PROCESSING INDUSTRY

Douglas M. Costle

Administrator

Thomas C. Jorling

Assistant Administrator for

Water and Hazardous Matevials

Eckardt C. Beck

Deputy Assistant Administrator for

Water Planning and Standards

Robert B. Schaffer

Director, Effluent Guidelines Division

Ronald G. Kirby

Project Officer

July 1977

Effluent Guidelines Division

Office of Water and Hazardous Meterials

U.S. Environmental Protection Agency

Washington, D.C. 20460

C-2

[12]

TABLE 2

DATA BASE

No. Plants

No. Data

Subcategory Plants Visited Available Sampled

Dimension Stone 194 20 20 5

Crushed Stone 4,800

Dray 5 52 *

Wet 26 130 9

Flotation 8 2 3 i

Shell Dredging 50 4 4 0

Construction Sand

Gravel

Dry 750 0 50 *

Wet 4,250 46 100 15

Dredging (on-land) 50 8 15 0

Dredging (on-

board) 100 3 25 0

Industrial Sand

Dry 20 0 5 #

Wet 130 3 10 2

Flotation 17 4 10 2

Acid Leaching 3 3 3 0

Flotation (HF) 1 1 1 1

Gypsum

Dry 73 5 54 2

Wet Scrubbing 5 1 8 1

HMS 2 1 2 +

Asphaltic Minerals

Limestone 2 0 2 *

Bituminous

Oil Impreg.

Diatomite 1 1 1 *

Gilsonite 1 1 1 1

Asbestos

Dry 4 2 4 1

Wet 1 1 1 *

Woolastonite 1 1 1 *

*There is no discharge of process waste water in the subcate-

gories under normal operating conditions.

C-3

TABLE 2—Continued

DATA BASE

No. Plants

No. Data

Subcategory Plants Visited Available Sampled

Lightweight Aggregates

Perlite 13 4 4 *

Pumice 1 2 7

Vermiculite 2 2 2 bal

Mica & Sericite

Dry 7 5 7 *

Wet 8 2 3 #

Wet Beneficiation Y | 5 Yj bad

Barite

Dry 9 4 8 ™

Wet 14 7 14 *

Flotation 4 3 4 1

Fluorspar

HMS 6 4 6 *

Flotation 6 4 5 2

Drying and

Pelletizing 2 1 2 *

[13]

Salines from Brine

Lakes 3 3 8 *

Borax | 1 1 *

Potash 5 4 5

Trona Ore 4 2 4

Phosphate Rock

Eastern 22 21 20 5

Western 6 6 6 2

Rock Salt 21 11 15 3

Sulfur

Anhydrite 2 1 2 *

On-Shore 9 7 9 5

Off-Shore 2 1 1 1

Mineral Pigments 11 3 8 bad

2 2 2

Lithium Minerals 2

* There is no discharge of process waste water in the subcate-

gories ur ’_s normal operating conditions.

Subcategory

Sodium Sulfate

Bentonite

Fire Clay

Fuller’s Earth

Attapulgite

Montmor.

Ball Clay

Feldspar

Wet

Dry

Kyanite

Magnesite

Shale and Common

Clay

Aplite

Talc Minerals

Dry

Washing

HMS, Flotation

Natural Abrasives

Garnet

Tripoli

Diatomite

Graphite

Misc. Minerals

Jade

Novaculite

Total

C-4

Table 2—Continued

DATA BASE

nn ;

No. Data

Plants _ Visited Available Sampled _

6 2 2 *

37 : 2 *

81 9 9 *

10 4 5 2

4 3 8 3

4 4 °

37 total 6 7 0

12 4 4 0

5 5 5 5

2 2 2 *

3 2 2 *

1 1 1 *

129 10 20 *

2 2 2 *

27 12 20 ”

2 1 2 *

4 4 4 4

3 2 a 0

4 P 4 *

9 3 3 *

1 1 1 0

est. 10 1 1 .

1 1 1 *

11,019 312 735 17

* There is no discharge of process waste water in the subcate-

gories under normal cperating conditions.

«lll

C-5

[18]

The crushed stone industry is widespread and varied in

size of facilities and types of material produced. The

size of individual firms varies from small independent

producers with single facilities to large diversified cor-

porations with 50 or more crushed stone facilities as

well as other important interests. Facility capacities

range from less than 22,700 kkg/yr (25,000 tons/yr) to

‘about 13.6 million kkg/yr (15 million tons/yr). As Table

5 shows only about 5.2 percent of the commercial fa-

cilities are of a 816,000 kkg (900,000 ton) capacity or

larger, but these account for 39.5 percent of the total

output. At the other extreme, facilities of less than

22,700 kkg (25,000 ton) annual capacity made up 33.3

percent of the total number but produce only 1.3 percent

of the national total. Geographically, the facilities are

widespread with all States reporting production. In gen-

eral, stone output of the individual States correlates with

population and industrial activity as shown by Figure

2. This is true because of the large cost of shipment in

relation to the value of the crushed stone.

[24]

* a * *

The crushed stone and sand and gravel industries, on the

basis of tonage are the largest nonfuel mineral indus-

tries. Because of their widespread occurrence and the

necessity for producing sand and gravel near the point

of use, there are more than 5,000 firms engaged in com-

mercial sand and gravel output, with no single firm

being large enough to dominate the industry. Facility

sizes range from very small producers of pit-run ma-

terial to highly automated permanent installations cap-

able of supplying as much as 3.6 million kkg (4 million

tons) yearly of closely graded and processed products;

the average commercial facility capacity is about 108,000

C-6

kkg/yr (120,000 tons/yr). As seen from Table 7 about

40 percent of all commercial facilities are of less than

22,600 kkg (25,000 tons) capacity, but together these

account for only 4 percent of the total commercial pro-

duction. At the other extreme, commercial operations

with production capacities of more than 907,000 kkg (1

million tons) account for less than 1 percent of the total

number of facilities and for 12 to 15 percent of the

commercial production.

D-1

APPENDIX D

WRITTEN STATEMENT

Robert L. Hayes

TCS Financial Consultants

210 25th Avenue North

Nashville, Tennessee 37203

ON BEHALF OF THE

United States Environmental Protection Agency

concerning the financial capabilities of the

Jones & Laughlin Steel Corporation

March 30, 1979

[3]

SCOPE OF THE ANALYSIS

I have been _,uested by EPA to analyze the financial

capability of Jones & Laughlin Steel Corporation (J&L)

to afford BPT treatment facilities at its Aliquippa and

Pittsburgh works.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.