Record and brief — Crown Simpson Pulp Co. v. Gorsuch

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| Office-Supreme Court, U.

FILED

No. AUG 10 198)

REPRESS |. STEVAS

In the Supreme Court of the

United States

OcToBer TERM, 1981

CROWN SIMPSON PuLP CoMPANY, and

LOUISIANA-PACIFIC CORPORATION,

Petitioners,

Vv.

ANNE M. Gorsucn, Administrator,

Environmental Protection Agency,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

W. Rrece BADER PAUL R. HAERLE

Davip W. ALDEN JoserH A. DARRELL

ALAN C. WALTNER THELEN, MARRIN, JOHNSON

Of Orrick, HERRINGTON & BRIDGES

& SUTCLIFFE Two Embarcadero Center

A Professional Corporation San Francisco, California 94111

60C Montgomery Telephone: (415) 392-6320

San Francisco, Califo:nia 94111 Attorneys for Petitioner

Telephone: (415) 392-1122 Louisiana-Pacific

Attorueys for Petitioner Corporation

Crown Simpson Pulp

Company

August 10, 1981

SORG PRINTING COMPANY OF CALIFORNIA, 346 FIRST STREET, SAN FRANCISCO 94105

LISTING OF PARENT COMPANIES, NON WHOLLY OWNED

SUBSIDIARIES AND AFFILIATES OF PETITIONERS

Petitioner Crown Simpson Pulp Company is a partnership

between Crown Zellerbach Corporation and Simpson Timber

Company. Crown Zellerbach Corporation's other non wholly

owned subsidiaries or affiliates are Crown Simpson Corporation,

50% of which is owned by Simpson Timber Company, Crown

Zellerbach Canada Limited, Papierfabrieken Van Gelder Zonen,

N.V. (Van Gelder Papier), a Netheriands corporation, and Laja

Crown, S.A., a Chilean corporation, 50% of which is owned by

Compania Manufacturera de Papeles y Cartones, S.A. Simpson

Timber Company is a closely held corporation. Approximately

ninety percent of its stock is held by Kamilche Company, a private

holding company owned by members of the Reed family.

Petitioner Louisiana Pacific Corporation has no affiliates which

are not wholly owned.

QUESTIONS PRESENTED

The California State Water Resources Control Board granted

petitioners variances from the Environmental Protection Agency's

national effluent limitation guidelines because it found that those

guidelines, if applied to petitioners’ unique facilities, would result

in significant adverse environmental and energy impacts, with no

corresponding effluent reduction benefit whatsoever. The veto of

that action by the Agency, and the approval of that veto by the

court below, were predicated on the proposition that the cost/bene-

fit analysis required by section 304 of the Clean Water Act may

never include any water quality considerations. Both the Agency

and the court below disregarded the plain meaning of section 304,

ignored decisions of other courts of appeal and this Court, and

failed to give the due deference which Congress intended to the

role of states in the permitting process. Accordingly, the ques-

tions presented are as follows:

1. Does the opinion below, by prohibiting a duly-authorized

permit issuer from considering the expected effluent reduction

benefits of treatment in relation to the environmental, energy and

economic costs of treatment when deciding whether a variance

is appropriate, a) contravene the language and intent of section

304(b)(1)(B) of the Clean Water Act and b) conflict with

decisions of other courts of appeal ?

2. Is the decision of the court of appeals consistent with this

Court’s intended applications of its decisions in E.1. duPont de

Nemours & Co. v. Train, 430 U.S. 112 (1977) and National

Crushed Stone Ass'n. v. EPA, ........ i) , 101 S. Ct. 295

(1980) ?

3. Does the court of appeal’s approval of EPA's veto of an

authorized state permit and variance, issued after lengthy state

administrative proceedings, and its deference to EPA's interpreta-

tion of the Act and its regulations and EPA's characterization of

state administrative proceedings in which EPA did not participate,

wrongfully usurp the role which Congress intended the states

have in administering the National Pollutant Discharge Elimina-

tion System ?

TABLE OF CONTENTS

Page

IU ITT sci ciaciaceactnliinaieainsemnaminnieaianiei i

ee ey HR cisesccinsinsnnsipabcnictcsiticiesccactiinapcredeniniaaninsssepees ii

Table of Authorities ................... ninininasandai iii

SIN cestcctvesitaittescntiacintineininnctnstsnnnnicinlininicnansiateatai 1

Jurisdiction , 2

Statutory and Regulatory Provisions Involved 2

Statement of the Case 3

Reasons for Granting the Writ 8

1. The Opinion Below Contravenes the Language of

Section 304(b) (1) (B) and Creates a Conflict Between

Circuits, Within the Ninth Circuit and with Decisions

of This Court on an Issue of National Significance

Which Requires Resolution ... 10

2. The Opinion Below Usurps the Role of States in

Administering the Clean Water Act and Is in Conflict

with Decisions of Other Circuits Because It Fails to

Give Due Deference to the State 16

3. The Opinion Below Fails to Follow This Court's In-

tended Application of duPont and Conflicts with De-

cisions of Other Circuits Which Require a Flexible Vari-

ance Mechanism 19

4. This Case Presents an Issue of National Importance in

an Area of Law Not Previously Considered by This

Court 21

Comin nanan nanan nnnnennnnvnnnnsnenvennnsenneronnnvrennsecnnecennce 21

Appendix

(Opinion and Judgment of Court of Appeals) ........Appendix A

(Order Recalling and Staying Mandate) —.............. Appendix B

(Decision of the Administrator) Appendix C

(State Board Order Granting Permit) Appendix D

(Order Extending Time to File Petition) —............ -Appendix E

(Statutory and Regulatory Provisions) Appendix F

TABLE OF AUTHORITIES

CASES

Pages

American Textile Manufacturers Institute, Inc. v. Donovan,

ee Te ee 9,11

Appalachian Power Co. v. Train, 545 F.2d 1351 (4th Cir.

IGIG) --2a-0nee-nennoencenensvecnensereseervncenenesnonens 4, 10, 11, 12, 13, 16, 19

Appalachian Power Co. v. Train, 620 F.2d 1040 (4th Cir.

SEED cedisesiacidiashvabutdineahbcabcicesdanieladpoins 10, 11, 13, 14, 16

Association of Pacific Fisheries v. EPA, 615 F.2d 794 (9th

I cs caida iliinlgeldaseniasaciiesaiseaipioneatenninli 14, 15, 16

Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402

I Rist dliaslis siadtinitehscouetilpbinemabsnebsnaioenianent 16

Cleveland Electric _—— Co. v. EPA, 603 F.2d 1 (6th

Cis, 1979) —............. _ ..10, 16, 17, 18

Consolidation Coal ©. v. ‘Costle, 604 F. 2d 239 “(4th Cir.

Sauls eciepeaecneineisadehcpnhabenliciopienesoadsaoniinniaaietie 11

E. I. duPont de Nemours & Co. v. Train, 430 U.S. 112

jena i, 4, 8, 16, 17, 19, 20, 21

E. I. duPont de Nemours & Co. v. Train, 541 F.2d 1018

(4th Cir. 1976) 19

National Crushed Stone Ass'n v. EPA, .... U.S. ...., 101 S.Ct.

295 (1980) eceqaqusmmnenenecensecaptonsqneniacencesnnnnned i, 8, 11, 12, 16, 20, 21

National Crushed Stone Ass'n v. EPA, 601 F.2d 111 (4th

Cir. 1979) 11

Natural Resources Defense Council v. . Teaia, 537 F.2d 642

A COND cesttiitiiatesincnieccisharereonnninineenoeeneenat 19, 20

Weyerhaeuser Co. v. Costle, 590 F.2d 1011 (D.C. Cir. 1978)

ee ee 11, 14, 17, 18

STATUTES, RULES AND REGULATIONS

33 U.S.C. § 1251, et seg. [Clean Water Act}

40 CFR. § 125.30

40 C.F.R. § 125.31

40 C.F.R. § 125.32

40 CFR. § 430.72

In the Supreme Court of the

United States

OctToBER TERM, 1981

CROWN SIMPSON PuLP CoMPANY, and

LOUISIANA-PACIFIC CORPORATION,

Petitioners,

Vv.

ANNE M. Gorsucn, Administrator,

Environmental Protection Agency,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

Crown Simpson Pulp Company and Louisiana-Pacific Corpora-

tion (“petitioners”) petition for a writ of certiorari to review the

judgment and opinion of the United States Court of Appeals for

the Ninth Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App. A, infra) is reported

at 642 F.2d 323 (9th Cir. 1981). The order of the court of appeals,

dated July 31, 1981 (App. B, infra), entered on petitioners’ mo-

tion, recalling and staying its mandate pending resolution of this

petition, is not reported. The decision of the Administrator of

the EPA (App. C, infra) is reported at 10 ERC 1841 (1977). The

decision of the California State Water Resources Control Board

(the “State Board”) (App. D, infra) was not reported. Since this

case was brought on a direct review petition to the court of appeals,

there is no district court opinion.

This case was previously before this Court on a writ of certiorari

to review the judgment and opinion of the Ninth Circuit on the

issue of jurisdiction. On March 17, 1980 this Court issued a per

curiam opinion, reported at 445 U.S. 193 (1980), granting that

petition, summarily reversing the Ninth Circuit on the jurisdic-

tional issue, and remanding the case to the Ninth Circuit for

consideration on the merits. Upon remand the case was reargued

and decided, and it is from this latter decision on the merits that

petitioners seek this writ of certiorari.

JURISDICTION

The judgment of the court of appeals (App. A, infra) was

entered on April 20, 1981. On June 18, 1981, by order of this

Court (App. E, infra), petitioners were granted an extension of

time to and including August 10, 1981 within which to file this

petition for writ of certiorari.

The jurisdiction of this Court is invoked under 28 U.S.C.

§1254(1).

STATUTORY AND REGULATORY PROVISIONS INVOLVED

The pertinent statutory and regulatory provisions are: 33 U.S.C.

§1311(a) and (b) [Sections 301(a) and (b) of the Clean Water

Act}; 33 U.S.C. §1314(b) (1) and (B) [Section 304(b)(1) and

(B) of the Clean Water Act}; 40 C.F.R. §430.72 [EPA's variance

provision for market bleached kraft pulp mills}; 40 C.F.R.

§125.31 [EPA's variance regulations}. These are reprinted ver-

batim in App. F, infra.

STATEMENT OF THE CASE

Petitioners operate the only two market bleached kraft pulp

mills in the United States which discharge directly into offshore

ocean waters: All other such mills discharge into confined inland

waters. The mills are located on the remote Northern California

coast and discharge through deepwater outfall diffuser systems

into the Pacific Ocean. The design of the discharge systems was

chosen in cooperation with the State Board and the plant and

diffuser sites were selected (despite additional costs) because

the currents, depth, turbulence and other characteristics of the Pa-

cific Ocean in the area eliminate environmental concerns that may

arise from the location of such plants in other areas.

In 1972 Congress amended the Clean Water Act (the “Act”),

to require industrial dischargers to achieve the best practicable

control technology currently available (“BPT’) by July 1, 1977.

33 U.S.C. § 1311(b)(1) (A). BPT requirements are imposed on

individual dischargers (“point sources”) through National Pol-

lution Discharge Elimination System (“NPDES”) permits. 33

US.C. § 1342. Pursuant to the statutory scheme, and consistent

with congressional policy to preserve the primary responsibilities of

states to control water pollution, EPA delegated its authority to

issue NPDES permits in California to the State, 33 U.S.C. § 1342

(b) and (C), retaining, however, authority to review state-issued

permits. 33 U.S.C. § 1342(d) (2).

The Act also directed EPA to promulgate nationwide “effluent

limitations” for “point sources,” 33 U.S.C. $1311, to publish

“guidelines” for effluent limitations defining BPT for “categories”

of point sources, 33 U.S.C$1314(b) (1), and to specify the fac-

tors to be taken into account in determining the control measures

and practices to be imposed on individual point sources within

such categories. 33 U.S.C. §1314(b)(1)(B). Recognizing that

implementation of the entire program contemplated by Congress

would be a major undertaking, EPA issued generic BPT guide-

line limitations on an industry-by-industry basis. EPA’s method-

ology was challenged in E. I. duPont de Nemours & Co. v. Train,

430 U.S. 112 (1977). Because the relationship between “effluent

limitations” for “point sources” and “guidelines” for “categories”

was unclear, this Court upheld EPA's authority to establish gen-

eralized BPT effluent guideline limitations, but only “so long as

some allowance is made for variations in individual piants. . . .”

430 US. at 128.7

EPA belatedly published final BPT effluent guideline limita-

tions tor the pulp and paper industry in January 1977, only six

months before the July 1, 1977 BPT deadlines. E.g., 40 C.F.R.

§ 430.72 (1977). These guidelines considered pulp and paper fa-

cilities by general classification, without regard to environmental

design or location. They did, however, contain what has become

EPA’s standard variance clause, which allowed an evaluation,

on a case-by-case basis, of the application of the 1977 BPT

guidelines to facilities found to be “fundamentally different’

from those considered by EPA in the development of the guide-

lines. Ibid. The EPA regulation specifically granted authorization

to issue variances to states, such as California, which EPA had

previously approved to issue NPDES permits directly, but did

not articulate any standards to be applied by state permit-issuing

authorities in refusing or granting variances. E.g., Appalachian

Power Co. v. Train, 545 F.2d 1351 (4th Cir. 1976) (“Appala-

chian I’). The first time EPA purported to define variance stand-

ards applicable to petitioners or anyone else was in the very

opinion of the Administrator denying petitioners’ variances in

this case. (App. C.) Two years later, EPA finally issued additional

variance regulations. 40 C.F.R. § 125.31 (1979).?

1. This Court did not rule on the sufficiency of EPA's variance clause,

430 US. at 128 n. 19.

2. Although the 1979 regulations have never been applied to ol

tioners’ variance applications, they perpetuate the restrictive view of the

variance mechanism — by the Administrator to the variances granted

petitioners by the State Board, thereby ex post facto confirming EPA's veto.

The State Board, in March 1977, at the culmination of several

years of extensive evidentiary and administrative proceedings

before state agencies,® unanimously granted NPDES permits to

petitioners together with BPT variances for two effluent para-

meters--BOD and pH. (App. D.) At the same time, the State

Board imposed on petitioners other stringent and costly BPT

limitations.

BOD is a measure of oxygen depletion caused by effluent dis-

charges; pH is a measure of acidity and alkalinity. Based on uncon-

troverted evidence the State Board found that: 1) neither BOD

nor pH is a pollutant in the circumstances of petitioners’ dis-

charges and that both parameters were meaningless when applied

to petitioners’ mills; and 2) imposition of EPA’s BOD and pH

guidelines would result in no environmental improvement or

benefit. (App. D, pp. 47-49.) At the same time, the State Board

found that substantial environmental and energy costs would un-

necessarily and inescapably result from a requirement of full BOD

and pH controls, and that it was environmentally counterpro-

ductive to impose EPA’s BOD and pH guideline limitations. For

example, installation of the secondary treatment facilities neces-

sary to meet EPA’s BOD and pH guidelines would, wholly apart

from capital costs of millions of dollars, consume 5,200 tons of

chemicals per year per plant, involve a total power use of

148,232,000 KWH annually (enough to supply nearly 10,000

homes), and produce substantial quantities of air pollutants

(830,000 pounds annually of nitrogen oxides, sulpher dioxide and

particulates) and biological sludge (4,200 tons per year) present-

ing substantial disposal problems. (App. D, p. 55.) In his veto

decision, the Administrator of EPA did not dispute these findings.

(App. C, p. 14.)

3. The arduous course of the proceedings before the state agencies

and EPA's lack of diligence therein are described in detail in App. C,

pp. 27-30 and App. D, pp. 55-56.

The State Board also expressly found significant non-water

quality impacts which were specific to petitioners’ mills and

which were not discussed in EPA's guideline Development

Document.* For example, the State Board found that “very

difficult” sludge disposal problems were presented “because of

the unique situation of the dischargers’ location on a sand spit

in a heavy rainfall area... .” (App. D, p. 55.) The unique

environmental setting of petitioners’ mills is not mentioned

anywhere in EPA’s Development Document. Similarly, the State

Board recognized regioual energy issues, which are also ignored

by the Development Document. (App. D, p. 56.)° The State

Board then properly weighed the magnitude of the environmental,

energy and economic costs of treatment against the complete

abs nce of expected environmental benefits, and concluded that

a variance was justified:

In appraising the evidence related to non-water quality

environmental effects and energy requirements the Board

must at least in part appraise the significance in terms of

the potential environmental benefits to be gained as a result

of the imposition of the EPA Guidelines. In this case we

have unrefuted evidence presented by the dischargers and

concurred with by the Regional Board Executive Officer

4. The Development Document describes the facts and assumpti

upon which EPA based its BPT guidelines for the industry in general.

5. The only factors pertaining to petitioners’ mills that apparent

were specifically considered by EPA i deveopin the BPT qoidions

were the data for “production, flow, BODS, and ss " for one of the mills.

(App. C, p. 33, n. 23.) While EPA has complained that the State Board

did not make specific findings of “fundamental differences” in the fashion

required by EPA, nowhere in the proceedings below has the Administrator

stated or presented examples showing that EPA in fact considered these

same environmental impacts, or upon what basis EPA assumed such

problems were the norm for the industry. The plain fact is that these mills

are fundamentally different from all other bleached kraft pulp mills.

that the existing discharges result in no water quality prob-

lems. Secondly, there is no expected or predictable water

quality improvement to be achieved as the result of imposi-

tion of the EPA Guidelines. In light of these facts (the

magnitude of the cheinical and energy requirements, and

the potential air and land management problems associated

with sludge disposal) we can only conclude the evidence

justifies the variance requested. (App. D, pp. 56-57; emphasis

added.)

The State Boarc thus evaluaced the total costs of treatment in

relation to the effluent reduction benefits to be expected, as

required by Section 304(b) (1) (B), 33 U.S.C. § 1313(b) (1) (B),

and concluded that the variances were justified.*

The EPA then took over. On September 15, 1977, after deny-

ing petitioners’ requests for hearings, the EPA Administrator

issued a lengthy opinion cejecting the variances and permits

granted by the State Board. (App. C.) Although EPA mischarac-

terized the State Board's decisic as being based solely on the

fact that petitioners’ discharges do not harm water quality, EPA's

veto effectuated its clearly declared position, affirmed below, that

rhe envitunmental benefits of treatment, or the lack thereof, may

aever be considered in ruling upon a variance request. The fact

that the State Board considered the lack of effluent reduction

6. EPA's characterization of the State Board's opinion as be-

Sr considerations, concurred in by the court

yo a7 > See was very clear

benefits of treatment in weighing the total costs of ‘at treatment

appeared to taint the entire variance proceeding in the eyes of

the Administrator. Because of this, while accepting as true the

factual findings of the State Board, the Administrator gave no

deference to the State Board's conclusion that the total cost of

ireatment in relation to the iack of expected effluent reduction

benefits justified the variances.

Petitioners sought direct review ot the Administrator's veto

of the variances before the Court of Appeals for the Ninth

Circuit on October 5, 1277, relying upon the review provisions

set forth in 33 U.S.C. § 1369(b)(1). Following briefing and

oral argument, the Ninth Circuit rejected jurisdiction. 599 F.2d

897 (9th Cir. 1979). Subsequently, this Court granted a petition

for a writ of certiorari on March 17, 1980, and issued a per

curiam opiniot. summarily reversing the Ninth Circuit on the

jurisdictional question and remanding the matter for consider-

ation on the merits. 445 U.S. 193 (1980). After further briefing

and reargument below, the court of appeals issued its opinion

affirming the Administrator's decision on April 20, 1980. (App.

REASONS FOR GRANTING THE WRIT

In direct challenges to the sufficiency of EPA’s BPT variance

provisions on their face, the courts of appeal have reached con-

flicting conclusions as to the proper scope of the variance provi-

sions mandated by this Court in duPont, supra. In National

Crushed Stone, supra, this Court held that EPA may not grant

a BPT variance simply because an individual discharger could

not afford to meet the effluent limitation guideline arrived at by

EPA in applying the section 304 cost/benefit calculation, where

there was no indication that EPA's cost/benefit calculation did

not fit the circumstances of that discharger's facility. This case,

however, presents the Court's first opportunity to address and

finally resolve what factors may be considered in granting or

denying variances from EPA's BPT guidelines and, in particular,

to decide whether the factors which may be considered include

at least all of the factors identified in § 304(b)(1)(B) of the

Act, including the total cost of technology in relation to the

effluent reduction benefits to be expected from application of

that technology. Furthermore, this case presents the Court with

its first opportunity to consider these issues in the context of

an actual variance proceeding and based upon a complete adminis-

trative record.

As an additional reason for granting the writ, this Court

recently noted, “[w]hen Congress has intended that an agency

engage in cost-benefit analysis, it has clearly indicated such intent

on the face of the statute.” American Textile Manufacturers

Institute, Inc. v. Donovan, ...... ! a ree 101 S. Ct. 2478, 2491

(1981). One of the specific examples given by this Court in

that case is the same statute involved here, Section 304(b) (1)

of the Clean Water Act, 33 U.S.C. § 1314(b) (1). Id. at 2491 n.

30. In granting the variances, the State Board accurately per-

formed the responsibility delegated to it, weighed all of the

Section 304(b) (1) (B) factors to be considered, and determined

that substantial adverse non-water quality impacts would result

f.om imposition of national effluent limitations and that the total

costs (environmental and energy) of application of technology

far outweighed the effluent reduction benefits to be achieved. In

refusing to accept the State Board's conclusions both EPA and the

court of appeals followed a rigid, dogmatic approach that can only

be characterized as “treatment for treatment’s sake.” That

approach contravenes the intent of Congress set forth in Section

304(b)(1)(B), and the petition should be granted to correct

that error.

Additionally, the issues presented by this case are of national

importance about which the courts of appeal are in substantial

conflict. The decision below stands in conflict with the decisions

of the Fourth Circuit in Appalachian Power Co. v. Train, 545

F.2d 1351 (4th Cir. 1976) (“Appalachian I’) and Appalachian

Power Co. v. Train, 620 F.2d 1040 (4th Cir. 1980) (“Appa-

lachian II” ). Those cases stand for the proposition that all Section

304 factors, including adverse non-water quality environmental

impact resulting from strict application of national effluent limita-

tions, and receiving water quality, must be considered by EPA in

granting or denying a variance. Clarification of these issues is

necessary for future uniformity of administration of the Clean

Water Act. |

Lastly, an integral part of the Clean Water Act's implementation

rests upon the states. Here the State Board fulfilled its responsi-

bilities and made its findings. The Administrator rejected the find-

ings and mischaracterized the State Board decision as based solely

on receiving water quality. The court of appeals agreed. The re-

sult directly conflicts with Cleveland Electric Illuminating Co. v.

EPA, 603 F.2d 1 (6th Cir. 1979), which held that EPA must base

its review of state action upon the state agency's true rationale,

not upon a technically narrow view. Resolution of this conflict on

the issue of whether state permitting agencies are to fulfill their

obligations under the Act in a meaningful manner or as mere

clerical entities is necessary and appropriate.

1. The Opinion Below Contravenes the Language of Section

304(b)(1)(B) and Creates a Conflict Between Circuits,

Within the Ninth Circuit and with Decisions of This Court on

an Issue of National Significance Which Requires Resolution.

Under the Act, BPT is defined by taking into account a series

of factors listed in section 304(b)(1)(B), 33 U.S.C. § 1314(b)

(1)(B), including the total cost of application of technology in

relation to the effluent reduction benefits to be achieved from such

application, as well as the non-water quality environmental im-

pacts (including energy requirements). That cost/benefit analysis

was clearly intended. American Textile Mfg. Institute, Inc. v.

Donovan, supra, 101 S.Ct. at 2491 n. 30.

The courts of appeal have repeatedly held that the BPT vari-

ance policy must, at a minimum, also permit consideration of

these Section 304 factors. Appalachian II, supra, 620 F.2d at 1046;

Consolidation Coal Co, v. Costle, 604 F.2d 239, 243-44 (4th Cir.

1979); National Crushed Stone Ass'n. v. EPA, 601 F.2d 111, 124

(4th Cir. 1979); Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1035

(D.C. Cir. 1978); Appalachian I, supra, 545 F.2d at 1359-60.

The principle urged by petitioners is therefore very simple, and

clearly provided for under the Act and applicable court decisions:

The total cost of application of technology in relation to the

effluent reduction benefits to be achieved from such application

(a factor which might be termed “cost/benefit” as well as non-

water quality environmental impact, including energy, is to be

taken into consideration both at the regulation issuing stage and

at the permit-issuing stage, wh. -e variances from the regulations

are determined.

This Court's opinion in National Crushed Stone, supra, suggests

an identical analysis in indicating that a “recaiculation” of the

cost/benefit analysis is appropriate when applying BPT limita-

tions to individual point sources to determine if EPA's calculation

is incomplete or would lead to unexpected results:

. .. under § 304, the Administrator is directed to consider

the benefits of effluent reductions as compared to the costs

of pollution control in determining BPT limitations. Thus,

every BPT limitation represents a conclusion by the Admini-

strator that the costs imposed on the industry . . . are worth

the benefits in pollution reduction that will be gained by

meeting those limits. To grant a variance because a partic-

ular owner . . . cannot meet the normal costs of the tech-

nological requirements imposed on him, and not because

there has been a recalculation of the benefits compared to

the costs, would be inconsistent with this legislative scheme

and would allow a level of pollution inconsistent with the

judgment of the Administrator. 101 S. Ct. at 303 (emphasis

added). See also 101 S. Ct. at 304.

It is on the propriety of this “recalculation”, however, that the

circuits diverge, and the Ninth Circuit opinion below erred.

The State Board in this case balanced the total costs of treat-

ment (including environmental and energy costs) against the

complete absence of expected pollution reduction benefits and

found that variances were justified because, as applied to peti-

tioners’ mills, EPA’s BPT calculation was incomplete (e.g., it had

not considered ocean die“arges or petitioners’ unique location,

and sludge disposal proplems) and had an unexpected effect—it

resulted in mo water quality benefits and a net detriment to the

environment by the massive pollution which would be created by

application of technology required to meet the national guidelines.

The Fourth Circuit would apparently agree with the action

taken by the State Board. In Appalachian I, industry challenged

certain effluent limitations established by EPA on the ground that

EPA had “. . . failed to balance the overall social benefits to be

derived from its regulations against their social costs.” 545 F.2d

at 1361. EPA, in turn, contended that it had no such obligation.

Rejecting EPA's position, the court made it clear that consid-

eration of the ecological benefit to be gained from the imposition

of effluent limitations is fundamental to the requirements of Sec-

tiom 304 of the Act:

Even assuming that it might not be possible to articulate

with reasonable certainty the achievability of the benefits to

be derived from a specified amount of heat removal, it seems

to us that the expectancy might be stated, for if there is no

expectancy of benefits to aquatic life, is the expenditure of

billions of dollars justified under any standard?

Thus in choosing among alternative strategies, EPA must

not only set forth the cost of achieving a particular level of

heat reduction but must also state the expected environmental

benefits, that is to say the effect on the environment, which

will take place as a result of reduction... .” 545 F.2d at

1364 (emphasis added).

Appalachian I also explicitly ruled in 1976 that the non-water

quality environmental impact factor of Section 304(b) (1) (B)

might, in an appropriate case, justify a BPT variance. Three years,

and several decisions later, EPA accepted this aspect of Ap-

palachian 1. 40 C.F.R. $§ 125.30-125.32. It has not, however, per-

mitted any consideration of the impact of a discharge on receiving

water quality, and it is the erroneous approval of that position by

the court below which exacerbates the conflict among circuits, con-

travenes the intent of Congress expressed in Section 304, and raises

a serious constitutional issue.

In Appalachian Il, the Administrator boldly argued that

“[r]eceiving water quality simply cannot legally be considered a

relevant factor in evaluating a variance request.” 620 F.2d at

1045. The Fourth Circuit responded in blunt fashion:

Much as we disagree with the statement, there has been no

application of it in the case before us, and no binding state-

ment has been made to that effect by the Administrator. We

will have to await a proper case to see if the Administrator

in actual practice, or in the administration of the statute,

takes the same extreme position his attorneys do in the brief

in this case. 620 F.2d at 1046 (emphasis added) .*

7. Subsequent to the Fourth Circuit's decision in Appalachian II, and

after the veto involved here, EPA made the position taken by its attorneys

ey ae by stating in its variance regulations

that a variance not be granted on the basis of “[{t}he impact

of a discharge on receiving water quality.” 40 C.F.R. § 125.31(e) (4)

Accordingly, the issue of whether it is appropriate to consider expected

environmental benefits in a variance proceeding is once more pending

before the Fourth Circuit in Appalachian Power Co. v. Train, No. ..... A

decision by this Court in the instant case may assist the Fourth Circuit

in resolving this question.

That “proper case” is squarely presented by the facts of this case.

The Court in Appalachian II said further:

“To determine whether or not progress is reasonable, we

repeat, it may be appropriate to consider water quality as a

factor, that is to say as an item of evidence [in granting a

variance}. Its sought-for arbitrary exclusion by EPA is simply

too rigid a construction of the statute, and we do not believe

it is justified. To hold otherwise ultimately can only result

in regulation for regulation’s sake, at which point, of course,

a serious question of constitutional limitations would arise.

We believe this useful statute deserves better treatment. 620

F.2d at 1046.

The opinion of the Ninth Circuit in this case is in direct conflict

with these Fourth Circuit opinions. The court below said:

The opinion of the Administrator persuasively argues that

to base effluent limitations or variances from these limitations

on local water quality considerations would be inconsistent

with the Act and its legislative history. 642 F.2d at 326.*

The District of Columbia Circuit, in Weyerhaeuser, supra, is

also in direct conflict with the Fourth Circuit by holding that EPA

need not consider water quality in setting its limitations, 590

F.2d at 1044, although that court did not have before it the ques-

tion of the propriety of EPA's application or interpretation of

the variance clause in specific cases.

Incongruously, the opinion below is also directly inconsistent

with another decision of the Ninth Circuit itself. In Association of

Pacific Fisheries v. EPA, 615 F.2d 794 (9th Cir. 1980), the Ninth

Circuit was called upon to consider whether EPA had acted prop-

8. Because the Act itself, whan S08) oat, te a ee

sideration of expected environmental benefit from treatment in relation

to its total cost, both EPA and the Ninth Circuit have relied

erly when it based a BPT effluent limitation solely on water quality

considerations. Starting from the proposition that

We think it plain that, as a general rule, the EPA is required

to consider the costs and benefits of a proposed technology in

its inquiry to determine the BPT [guidelines] . . . . 615

F.2d at 805 (emphasis added),

the court upheld EPA's action in setting BPT guidelines not on

technology standards, but solely on the basis of the quality of the

receiving waters. Apparently, consideration of water quality con-

ditions and benefits to be expected from treatment is appropriate

when the EPA is considering the establishment of effluent limita-

tions pursuant to Section 304 factors, but inappropriate when

those identical factors are applied by an authorized State agency

in the context of a variance application. The inconsistency between

the Ninth Circuit's decision in Pacific Fisheries and the instant

case is particularly anomolous because many of the same environ-

mental facts were involved.°

In summary, the decision of the court below prohibits the

permit issuer from considering the expected effluent reduction

9. In Pacific Fisheries, EPA had issued BPT guidelines for seafood

processors which required them to transport fish waste some distance off-

shore for ocean dumping. EPA's approach did not either require or

necessarily result in a reduction in the amount of effluent discharged, but

—* ocated the waste from near-shore waters to waters—such

as into which petitioners discharge—under the justification of result-

ing environmental benefits. Petitioners cannot help but note the irony

presented by EPA's position in Pacific Fisheries. In setting BOD control

technology for the seafood processing industry, EPA relied upon the same

“receiving water ity” factors that the State Board relied upon in this

case in its original recommendation of the site and outfall locations for

petitioners’ mills, and which the Board found, in ruling upon petitioners’

variance requests, meant that BOD and pH are simply not pollutants. The

only environmentally acceptable BPT requirement for Alaskan fisheries,

given the excessive environmental costs of treatment, was direct offshore

discharge. EPA recognized this in its seafood processing guidelines. How-

ever, since petitioners have the only two mills in their industrial category

which have ocean discharges, EPA looked to other means of control in

adopting general guidelines for petitioners’ industrial category.

benefits of treatment in relation to the total cost of treatment in

determining whether a variance from EPA's BPT guidelines is

appropriate. That decision directly conflicts with Appalachian I,

Appalachian Il, and Association of Pacific Fisheries v. EPA, supra.

This petition should be granted to resolve these conflicts, to

clarify the scope of Section 304(b)(1)(B), and to implement

this Court's decisions in duPont, supra, where the Court required

flexibility in the variance procedure, and in National Crushed

Stone, supra, where the Court suggested that the variance mech-

anism must involve a balancing of the effluent reduction benefits

resulting from treatment in relation to the total cost of such treat-

ment.

2. The Opinion Below Usurps the Role of States in Administering

the Clean Water Act and Is in Conflict with Decisions of

Other Circuits Because It Fails to Give Due Deference to the

State.

The essential role played by the states under the Act was recog-

nized in Cleveland Electric Illuminating Co. v. EPA, supra,

which held that EPA must give due regard to the find-

ings of a state agency authorized to issue NPDES permits.

Cleveland Electric ruled that an authorized state agency need not

even frame its action as the grant of a “variance,” much less adopt

express findings of “fundamental difference.” In reversing EPA's

veto of a state granted variance, the court held that EPA's rejection

of a variance on the ground that the findings of the state agency

did not adhere precisely to the language of the variance clause

was arbitrary and capricious and contrary to the decision in

Citizens to Preserve Overton Park v. Volpe, 401 U.S, 402 (1971).

10. The court held:

When U.S. EPA acted on the Ohio EPA proposal there was no

variance procedure for electric generating units because 40 C.F.R.

§ 423.12(a) as adopted in 1974 had been set aside in Appalachian

Power Co., supra, and no replacement had been adopted. The effect

of the Ohio EPA proposed permit was to grant a variance based

on plant-specific factors. In its brief before this court U.S. EPA

argued that since Ohio EPA did not make any explicit finding that

The D.C. Circuit in Weyerhaeuser, supra, reached the same

conclusion as the Cleveland Electric court. Referring to this Court's

opinion in duPont, supra, the D.C. Circuit said:

Finally, the Court emphasized the need for a meaningful

variance when it argued that giving EPA the power to set

general regulations would not undermine the Act's intent to

give the states, through the permit-granting agencies, an

important role in administering the Act. The Court sub-

scribed to the view that, by leaving the granting of variances

to the state agencies in the first instance, the significance of

their role would be preserved [citations omitted}.

Because the states can only grant variances that conform

to EPA's interpretation of its variance provision, [citation

omitted] the states’ role could still be severely undercut if

the Agency were to interpret the variance allowance so

narrowly as to remove its effect. 590 F.2d at 1034.

The opinion below, in adopting EPA's position, presents the

same issue of form over substance addressed in Cleveland Electric

and results in the very same undercutting of the states’ role feared

by the court in Weyerhaeuser.

Deference to the role of the State Board is particularly appro-

priate where, as here, the State Board was required to act upon a

variance application without the benefit of EPA's detailed variance

fundamentally different factors existed at CEI's plants, US. EPA

was not required to consider its factual J pry 4 and orders. We be-

lieve that U.S. EPA failed to consider all of the relevant factors and

committed a clear error of judgment. Citizens to Preserve Overton

Parks, supra. Under a statutory scheme which gives initial authority

to a state agency, subject to approval of its recommendations by a

federal agency, considerations of comity require the reviewing agency

to consider te findings of the initiating agency. This arbitrary deter-

mination by U.S. EPA is completely me geo a in

view of the finding of the court of sppea s in Appalachian Power

Co. that the ‘fundamentally different factors’ requirement is ‘unduly

restrictive.’ 603 F.2d at 6-7 (emphasis added).

regulations, which were not published until some years after the

State Board acted. When the State Board granted the variance in

March of 1977, the only standard it had to look to was that

contained in the variance clause itself (40 C.F.R. § 430.72),

which simply said that a variance may be granted based upon

evidence “that factors relating te ‘he equipment or facilities

involved, the process applied, or other such factors related to

such discharger are fundamentally different from the factors

considered in the establishment of the guidelines.” Putting the

semantics of its decision aside, it is quite clear that taking all

relevant 304 factors into account, the State Board found that

application of EPA’s BOD and pH limitations to petitioners’

mills resulted in a fundamentally different situation than that

contemplated by EPA—no environmental benefit to the nation’s

waters and a concommitant environmental and energy /oss. In

addition, some of the factors relating to petitioners’ mills con-

sidered by the State Board are not to be found in EPA’s Develop-

ment Document for the BPT guidelines. However, both the

Ninth Circuit and EPA ignored the substance of these findings

by a responsible state agency. Instead, the opinion below would

require that the State Board frame its findings of ‘fundamental

differences” in a more particular fashion as ow contemplated

by EPA's subsequently issued regv'ations.

Had EPA's more recent regulations been available to the State

Board, it might very well have phrased its decision in a manner

more to the liking of EPA and the Ninth Circuit. The unavail-

ability of these regulations to the State Board at the time of its

decision requires even greater deference to its decision than might

otherwise be the case, as Cleveland Electric Illuminating Co. and

Weyerhaeuser held. Yet the Ninth Circuit, in conflict with these

decisions, failed to give any deference whatsoever to the State

Board's findings.

This failure to defer places the Ninth Circuit in conflict with

the Sixth Circuit and the District of Columbia Circuit. Moreover,

it reduces the role of the State Board to a mere clerical function-

ary. This Court should grant the petition, resolve that conflict

and restore the role of state permitting agencies in the manner

intended by Congress.

3. The Opinion Below Fails to Follow This Court's Intended

Application of duPont and Conflicts with Decisions of Other

Circuits Which Require a Flexible Variance Mechanism.

In duPont, supra, this Court considered, inter alia, the issue of

whether the EPA could establish regulations for classes of plants,

or whether limitations must be set for each plant on an individual

basis during the permit-issuance process. This Court held that

industrywide regulations were appropriate only ‘so long as some

allowance is made for variations in individual plants, as EPA

has done by including a variance clause in its 1977 limitations.”

430 US. at 128. This Court was affirming in pertinent part the

decision of the Fourth Circuit in E. I. duPont de Nemours & Co.

v. Train, 541 F.2d 1018, 1028 (4th Cir. 1976), where that court

said: “Provisions for variances, modifications, and exceptions are

appropriate to the regulatory process.” In Appalachian I, the

Wourth Circuit stated:

As we noted in duPont [supra}, provisions for variances

are appropriate to the regulatory process. This is particu-

larly so in the case of [EPA § 301 effluent} regulations hav-

ing presumptive applicability throughout the nation. 545

F.2d at 1358-59.

The Second Circuit has also declared, in light of the com.

plexity of the area to be regulated and the stringency of the

congressional requirements, that “{i]n the context of the Federal

Water Pollution Control Act Amendments the variance provision

is peculiarly appropriate,” Natural Resources Defense Council,

Inc. v. EPA, 537 F.2d 642, 647 (2d Cir. 1976), and that “{w]Jith-

out variance flexibility, the [FWPCA]} program might well floun-

der on the rocks of illegality.” Ibid.

Clearly, the extreme stringency and potential for excessive

rigidity of the EPA’s BPT guidelines demands a flexible variance

provision. By those guidelines, EPA sets standards presumptively

applicable to all dischargers in an industry category, often with-

out considering the specific circumstances of more than a handful

of such dischargers. The opinion below fails to follow the mandate

of duPont requiring flexibility. While the Ninth Circuit pro-

fessed that “[o]ur holding does not deprive the Act or industry

of a meaningful variance provision or the states of a significant

role in administering the Act” (642 F.2d at 327), the court did

just that when it refused to permit a State Board to consider, in

a variance proceeding, the most fundamental of the § 304 factors

the total cost of application of technology in relation to the

expected environmental benefit. Instead, the Ninth Circuit has

limited the permissible inquiry to the cost side of the equation.

Instead of the balancing contemplated by Section 304, instead

of the “recalculation” of the cost/benefit analysis suggested in

National Crushed Stone, supra, the opinion below results only

in a comparison of cost assumptions. It does not permit any com-

parison of effluent reduction benefits sought to be achieved because

such comparison involves consideration of receiving water quality.

Yet, Section 304, as well as common sense, dictate that effluent

reduction benefits must include such a consideration. The opinion

below, in effect, rewrites Section 304(b)(1)(B). The result,

when applied to the facts of this case, entirely loses sight of the

overall objective desired by Congress—a better environment. In-

stead, it debits one environmental account with substantial in-

creased pollution and energy needs without any corresponding

credit. The petition should be granted to restore responsibility in

the regulating scheme.

4. This Case Presents an Issue of National importance in an Area

of Law Not Previously Considered by This Court.

In its decision in duPont, supra, this Court held that while

a BPT variance mechanism was required, consideration of its

proper scope was premature until the question arose in a claim

for a variance in a permit application. 430 F.2d at 128 a. 19. In

National Crushed Stone, supra, 101 S. Ct. at 195 n. 12, this Court

held ripe for review a narrow challenge to an identical variance

clause applicable to certain segments of the mining industry be-

cause the EPA had definitely stated its position that economic

capability would not be a g:ound for a variance.

However, the Court still has not reviewed the proper scope of

the variance clause in the context of a completely documented

factual situation. The variance clause at issue here is identical

to the variance clauses applicable to all other industries regulated

by effluent limitations—regulations which control the discharges

of thousands and thousands of industrial plants throughout the

country—and which are presently before at least the Fourth Cir-

cuit in the continuing A*palachian Power litigation referred to in

note 7, supra. This case, with a detailed administrative record,

presents this Court wita a unique opportunity to decide an issue

of national importance on which the circuits are divided, and to

provide future guidance for all permit-issuers considering variance

CONCLUSION

The opinion below, and its wholesale approval of the EPA

veto, emasculates the concept of variances mandated by duPont

and National Crushed Stone, and eviscerates the variance clause

promulgated for 1977 BPT limitations. The opinion is not only

environmentally unsound because it requires treatment for treat-

ment's sake, but is squarely in conflict with other courts of appeal

as to the factors which may be considered in evaluating variance

requests and as to the significant role of states in administering

NPDES permits. Lastly, the opinion below subverts the congres-

sional objectives of preserving the role of states and requiring

application of the Section 304 cost/benefit analysis because it pre-

vents an authorized state agency from balancing non-water quality

environmental and other harms against a complete, undisputed,

absence of environmental benefit. These issues are important and

of national concern, and require clarification. The petition for a

writ of certiorari should be granted.

August 10, 1981

Respectfully submitted,

W. Reece BADER

Davip W.. ALDEN

ALAN C. WALTNER

Of Orrick, HERRINGTON, &

SUTCLIFFE

A Professional Corporation

Attorneys for Petitioner

Crown Simpson Pulp Company

PAUL R. HAERLE

JoserH A, DARRELL

THELEN, MARRIN, JOHNSON & BRIDGES

Attorneys for Petitioner

Louisiana-Pacific Corporation

Appendix A

In the

United States Court of Appeals

For the Ninth Circuit

No. 76-3161

CROWN SIMPSON PuLP COMPANY,

Petitioner,

vs.

Douc tas M. Costie (formerly Russell E.

Train), As Administrator, Environmental

Protection Agency,

Respondent.

No. 76-3287

LOUISIANA-PACIFIC CORPORATION,

Petitioner,

Vs.

Douc as M. Coste (formerly Russell E.

Train), As Administrator, Environmental

Protection Agency,

Respondent.

No. 77-3322

CROWN SIMPSON PuLP CoMPANy and

LOUISIANA-PACIFIC CORPORATION,

Petitioners,

VS.

Douc.as M. Coste, As Administrator,

Environmental Protection Agency,

Respondent.

Petitions to Review Decisions of the

Environmental Protection Agency

OPINION

Before DUNIWAY, CHOY AND SNEED, Circuit Judges.

DUNIWAY, Circuit Judge:

Crown Simpson Pulp Company and Louisiana-Pacific Corpora-

tion petition for review of the decision of the Environmental

2 Ap pendix

Protection Agency (EPA) to veto two pollutant discharge permits

that the California State Water Resources Control Board pro-

posed to issue to the Companies. The proposed permits would

grant the Companies variances from two EPA effluent limitations.

In Crown Simpson Pulp Co. v. Costle, 9 Cir., 1979, 599 F.2d 897,

we dismissed these cases for lack of jurisdiction. The Supreme

Court reversed, finding jurisdiction under §509(b)(1)(F) of

the Federal Water Pollution Control Act Amendments of 1972

(the Act), 33 U.S.C. § 1369(b)(1)(F), and remanded the case

to us for further proceedings. Crown Simpson Pulp Co. v. Costle,

1979, 445 U.S. 193, 100 S.Ct. 1093, 63 L.Ed.2d 312. Reaching

the merits, we now affirm the agency's action.

I. The Facts.

Because we have already described the facts and relevant statu-

tory provisions in this case in our earlier decision, 599 F.2d at

899-900, we sketch them only briefly here. Further description of

the statutory scheme can be found in EPA v. National Crushed

Stone Association, 1980, .... U.S. ..., 101 S.Ct. 295, 66 L.Ed.2d

268; E.l. du Pont de Nemours & Co. v. Train, 1977, 430 US. 112,

97 S.Ct. 965, 51 L.Ed.2d 204; Weyerhaeuser Co. v. Costle,

D.C.Cir., 1978, 590 F.2d 1011.

The Companies operate two bleached kraft pulp mills located

on the Samoa Peninsula, on the west side of Humboldt Bay in

California. Each mill discharges effluent into the Pacific Ocean

through a separate deepwater outfall diffuser system designed in

consultation with the State. In February, 1976, acting under

Section 301(b) of the Act, 33 U.S.C. § 1311(b), the EPA issued

effluent limitations for different types of bleached kraft pulp,

paper and paperboard mills discharging into navigable waters.

40 C.F.R. part 430, subparts F-I. As required by this section of

the Act, these regulations impose discharge limits, for the period

July 1, 1977 to July 1, 1983, based on “the application of the best

practicable control technology currently available as defined by

Appendix 3

the Administrator.” The regulations also include a provision for

a variance from the discharge limits where the discharger demon-

strates that “factors relating to the equipment or facilities in-

volved, the processes applied, or other such factors related to

such discharger are fundamentall; different from the factors

considered in the establishment of the guidelines.” See, e. g., 40

C.F.R. § 430.62. (emphasis added).

In March, 1977, the California State Water Resources Control

Board—an agency approved by the EPA under § 402(b) of the

Act, 33 U.S.C. § 1342(b) to grant discharge permits-—proposed

to issue discharge permits to the Companies that included vari-

ances from two of the effluent limitations set by the EPA guide-

lines for bleached kraft pulp mills. Under § 402 of the Act, 13

U.S.C. § 1342, all dischargers must obtain such discharge permits

to continue discharging, and permits are granted only to discharg-

ers who either conform to EPA's effluent limits or merit a

variance.

Subject to the approval of the Administrator of EPA, the State

Board granted variances to the Companies from EPA guidelines

for biochemical oxygen demand of effluent (BOD)—"The BOD

of a waste exerts an adverse effect upon the dissolved oxygen

resources of a body of water by reducing the oxygen available

to fish, plant life, and other aquatic species,” In re Louisiana-

Pacific Corp., 1977, 10 E.R.C. 1841, 1845 (citation omitted)—

and for the pH, e. g., acidity or alkalinity, of effluent. The State

Board concluded after several days of hearings that the non-water

quality environmental effects of adhering to these guidelines—

adherence to the EPA guidelines for BOD and pH would require

construction and operation of a treatment facility—outweighed

the water quality benefits. It said: ". . . the existing discharges

result in no water quality problems . . . there is no expected

or predictable water quality improvement to be achieved as the

result of imposition of the EPA Guidelines. In light of . . . the

magnitude of the chemical and energy requirements. and the

4 Appendix

potential air and land management problems associated with

sludge disposal . . . we can only conclude the evidence justified

the variance requested.” In re Louisiana Pacific Corp., supra, 10

E.R.C. at 1850. Accordingly the State Board proposed to grant

permits to the Companies, authorizing limits of BOD and pH far

above those set in EPA’s guidelines.

In a lengthy decision issued September 15, 1977, the Adminis-

trator vetoed the permits and denied the variance requests. In re

Louisiana-Pacific Corp., supra. The Administrator emphasized

that the State Board had not found—as the variance provision

required—that the non-water quality environmental effects of

adherence to the limitations in this case were “fundamentally

different” from those considered by EPA in publishing effluent

limitations for the industry as a whole: “It is clear that the Board

did not find a ‘fundamental difference’ in terms of non-water

quality impact itself but instead found non-water quality impact

to be significant because of lack of improvement of local receiving

water quality. In effect, the State granted an exemption from

minimum national technology-based standards because of local

water quality considerations. This was contrary to the letter

and intent of the [Act] and I have no choice but to disapprove

the state action.” 10 E.R.C. at 1844. (emphasis in original). The

Companies petition for review of EPA's decision.

Il. The Merits.

To begin with, we note that the issue in this case is not whether

a variance may be granted because of such factors as the non-watcr

environmental effects of adherence to the general effluent limita-

tions. The agency has now explicitly stated, both in its opinion

in this case as well as in more recent regulations, 40 C.F.R.

§§ 124.30-125.32, that the factors which the agency must consider

under § 304(b) (1), 33 U.S.C. § 1314(b) (1), in determining the

standard of best practicable technology will also be considered by

Appendix 5

the agency in deciding whether a plant is fundamentally different

and thus whether a variance is appropriate. These factors include

non-water quality environ: ental impact, energy requirements,

and cost in relation to effluent reduction benefit as well as several

other factors.

Nor is the issue whether the agency must insist that a particular

discharger show a “fundamental difference” in his plant as to

one or more of the factors considered by EPA in setting the guide-

lines for the industry category before granting a variance. The

Companies do not challenge the fundamental difference require-

ment and it has been upheld explicitly in Weyerhaeuser Co. v.

Costle, supra, 590 F.2d at 1040, a case to which Crown Simpson

was a party, as well as implicitly in the recent opinion in EPA

v. National Crushed Stone Association, 1980, .... US. ..., 101

S.Ct. 295, 66 L.Ed.2d 268 (Dec. 2, 1980).

Rather, the issue is whether, in insisting that a particular dis-

charger show a “fundamental difference” in his plant before

granting a variance, the agency must consider receiving water

quality as a factor that may make a fundamental difference—either

in itself or because other factors may be considered fundamentally

different when assessed in the light of receiving water quality.

Thus, the Companies contend that a variance must be granted

where the non-water environmental costs of adherence to the

guidelines are high—although not “fundamentally different’ —

and the benefits of adherence to the receiving v uter are apparently

negligible. We disagree.

In granting a variance on the basis of non-water quality environ-

mental effects viewed in the light of receiving water quality, the

State Board nowhere found that the non-water environmental

effects of adherence to EPA's guidelines would be “fundamentally

different” for these two companies’ plants as opposed to others in

the industry. This was not simply a failure by the State Board to

make itself clear. The State Board fully understood the require-

ment: It rejected the Companies’ claim that their costs of adherence

6 Appendix

justified a variance by finding that these costs were not “sub-

stantially different from the costs EPA found would be sustained

on an industry-wide basis.” Moreover, one of the Companies’ own

witnesses gave testimony to the State Board specifically denying

any fundamental difference as to non-water quality environmental

impact:

Q. How does your plant compare in the area of non-

water quality environmental impacts with the plants that

EPA utilized in developing the guidelines ?

A. I don’t think there's that much difference. 10 E.R.C.

at 1853 n.29.

His answer applied to the mills of both Companies.

Thus, we reject the Companies’ suggestion that the State Board

found a fundamental difference as to non-water quality environ-

mental impact in substance and merely failed to enunciate the

exact words or that receiving water quality played only a sub-

sidiary part in the Board's decision to grant variances. To the

contrary, it is clear from the State Board's opinion that it would

not have granted the variances except for its consideration of

receiving water quality. And it was because of this heavy reliance

on receiving water quality that the Administrator felt compelled,

in view of his interpretation of the Act, to disapprove the variances.

It is thus upon this interpretation of the Act that the dispute

hinges.

When faced with a problem of statutory construction, “[we

show] great deference to the interpretation given the statute by

the officers or agency charged with its administration.” EPA rv.

National Crushed Stone Association, supra, 101 S.Ct. at 307,

quoting Udall v. Tallman, 1965, 380 US. 1, 16, 85 S.Ct. 792, 801,

13 L.Ed.2d 616. The opinion of the Administrator persuasively

argues that to base effluent limitations or variances from these

limitations on local water quality considerations would be incon-

sistent with the Act and its legislative history. 10 E.R.C. at 1846-

50. Judge McGowan’s enlightening opinion in Weyerhaeuser Co.

Appendix 7

v. Costle, supra, reached the same conclusion, finding ‘that based

on long experience, and aware of the limits of technological and

administrative flexibility, Congress made the deliberate decision

to rule out arguments based on receiving water quality.” 590

F.2d at 1042. Similarly, we stated in Association of Pacific Fish-

eries v. EPA, 9 Cir., 1980, 615 F.2d 794, 805, that “We agree

with the Agency's contention that Congress intended BPT [Best

Practicable Control Technology} standards to be based primarily

on employment of available technology for reducing effluent dis-

charge, and not primarily on demonstrated changes in water

quality.” See Pacific Legal Foundation v. Quarles, C.D.Cal., 1977,

440 F.Supp. 316, 326, affirmed Kilroy v. Quarles, 9 Cir., 1980,

614 F.2d 225.

We need not repeat here the exhaustive discussions of the legis-

lative history of the Act provided by the Administrator's decision

and by the court in Weyerhaeuser Co. v. Costle, supra. These dis-

cussions demonstrate that a fundamental purpose of the Act was

to shift pollution control from a focus on receiving water quality

to a focus on the technological control of effluent. See EPA v.

State Water Resources Control Board, 1976, 426 U.S. 200, 204-

05, 96 S.Ct. 2022, 2024-25, 48 L.Ed.2d 578. Above all the Act

seeks to “avoid imposing on the Administrator any requirement

to consider the location of sources w’ hin a category or to ascertain

water quality impact of effluent controls.” Weyerhaeuser Co. v.

Costle, supra, 590 F.2d at 1045 n.52 (quoting Senator Muskie).

We therefore affirm the agency's decision that the State Board

erred in proposing a variance for reasons relating to receiving

water quality. Without finding a fundamental difference as to any

factor or combination of factors considered by EPA in setting

effluent limitations for the industry category, the State Board could

not, consistently with the Act, grant variances on the basis of

receiving water quality. See Consolidation Coal Co. v. Costle, 4

Cir., 1979, 604 F.2d 239, 244-45.

8 Ap pendix

Our holding does not deprive the Act or industry of a meaning-

ful variance provision or the states of a significant role in adminis-

tering the Act. Under EPA regulations variances have been granted,

and are appropriately granted, by the state or FPA when a dis-

charger's plant is substantially or fundamentally different as to

those factors considered by the EPA in drawing up the guidelines.

Indeed, in his opinion in this case, the Administrator took care

not to foreclose the possibility of a future variance for the two

companies here, and emphasized the continuing importance of the

State Board in the variance and permit process: “I . . . express

no opinion as to whether the two mills could be found funda-

mentally different in terms solely of non-water quality environ-

mental impact. This is a matter properly addressed in the first

instance by the State. . . . There is no reason why, in a proper

case, a fundamental difference in non-water quality environmental

impact could not justify a variance.” 10 E.R.C. at 1853 n.30. To

rule out variances granted in large measure because of receiving

water quality merely requires that the states or EPA grant var-

iances in accordance with the basic purpose of the Act; it does

not put an end to variances or to the state's role in granting them.

Our holding in this case is consistent with our decision in Asso-

ciation of Pacific Fisheries v. EPA, supra, 615 F.2d at 794, In

Pacific Fisheries we upheld EPA's issuance of permits to certain

Alaskan fish processors. The best practicable control technology

for these processors was determined to be the installation of

screens to strain out larger fish particles from the plant's discharge.

The permits issued to certain of these processors allowed, among

several methods of disposal, the barging and dumping of screened-

out solids at certain offshore ocean sites. EPA had not considered

water quality in categorizing the industry or in setting effluent

limitations for each category. It considered water quality only

in issuing certain permits. Plaintiff did not challenge EPA's con-

sideration of water quality in issuing permits but argued that if

Appendix 9

barging and dumping were permissible so too should grinding

and dispersion of effluent be permissible.

Although noting that “[t}he Agency has not explained to this

court as clearly as it might have how the asserted water quality

benefits of discharging a given amount of effluent farther offshore

should be considered within the statutory framework of tech-

nology-based, not water quality-based, pollution limitations,” we

held that “[i}t was not an abuse of discretion for the Agency to

consider an improvement in nearshore water quality as one factor

in support of the effluent limitation.” 615 F.2d at 807. We found

specific support in the legislative history for a limited considera-

tion of water quality in framing effluent standards for the Alaskan

fish processing industry.

We certainly did not hold in Pacific Fisheries, as the Companies

appear to contend, that the agency must consider water quality in

framing effluent guidelines. Indeed, we explicitly affirmed the

D.C. Circuit's position that the Act seeks to reduce pollution by

technology based standards and not by standards based on re-

ceiving water quality. Thus, we only permitted a limited con-

sideration of receiving water quality in an unusual factual setting.

Moreover, we explicitly declined to decide “the extent to which,

if the EPA relies on water quality evidence in measuring the

benefits of requiring a particular technology for a category or

subcategory of point sources, it must also consider water quality

evidence at particular sites in passing on applications for vari-

ances.” 615 F.2d at 807 n.9. Here, EPA did not rely on water

quality evidence and thus the question posed but not answered

in Pacific Fisheries need not be answered here. We also note, as

we did there, that a fundamental purpose of the Act was to free

EPA from the incubus “of proving in every case the application

of an effluent limitation at a specific site will improve water

quality at that site.” 615 F.2d at 807 n.8. Thus, even if EPA

could base industry guidelines to a limited degree on local water

quality considerations, if we were to permit companies to seek

10 Appendix

variances from these guidelines on the basis of water quality at

particular sites, we would be returning water pollution control

to its ineffective pre-1972 status in defiance of Congress's desire

“to restore and maintain the chemical, physical, and biological

integrity of the Nation's waters.”

In short, our decision in Pacific Fisheries has not suddenly re-

habilitated the discredited approach of water quality based pollu-

tion control. The Administrator's holding that the Act doe: not

permit either the industry-wide guidelines or variances to be based

solely or in large part on local water quality considerations is not

inconsistent with our Pacific Fisheries opinion.

Finally, the Companies argue on the basis of Costle ». Pacific

Legal Foundation, 1980, 445 U.S. 198, 100 S.Ct. 1095, 63 L.Ed.2d

329, that if any material issues of fact were present further

hearings should have been provided before the Administrator

decided. However, the Companies do not contend that there were

any such issues, and the Administrator accepted all of the State

Board's factfindings for purposes of his opinion. We need not

consider the merits of the Company's claim that a hearing would

be required in different circumstances.

The decision of the Administrator is affirmed.

Appendix il

Appendix B

FILED

JUL 31 1981

RICHARD H. DEANE

Clerk, U.S. Court of Appeals

United States Court of Appeals

for the Ninth Circuit

Nos. 76-3161

Nos. 76-3287

Nos. 77-3322

CROWN SIMPSON PULP COMPANY;

LOUISIANA-PACIFIC CORPORATION,

Petitioners,

ys.

ANNE M. GorsucH (formerly DouGLas M. CostTLe), as

Administrator, ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

ORDER

The motion of petitioners to recall and stay the mandate in this

case is granted and the mandate is hereby recalled.

Reissuance of the mandate is stayed pending the filing by the

petitioners of a petition for a writ of certiorari in the Supreme

Court. If a petition is not filed within the time authorized by law,

the stay hereby granted will terminate. If such a petition is filed

within the time allowed by law, the stay will continue until the

Supreme Court acts upon the petition either by denial, or by a

decision in the matter if the petition for a writ of certiorari is

granted.

Ben C. Duntway

United States Cirguit Judge

12 Appendix

Appendix C

IN RE LOUISIANA-PACIFIC CORPORATION

Environmenta! Protection Agency

IN THE MATTERS OF LOUISIANA-PACIFIC CORPORA-

TION, NPDES NO. CA0005894 and CROWN SIMPSON

PULP COMPANY, NPDES NO. CA0005882, September 15,

1977

Two companies request variances from best practicable tech-

nology effluent limitations.

Requests denied.

Full Text of Opinion

Decision of the Administrator

I have been asked to consider the granting of variances from

effluent limitations guidelines for two pulp, paper, and paper-

board mills located on the Pacific Coast of California. The re-

quests for variances are denied.

I. Procedural Background

On March 29, 1977, Mr. Bill B. Dendy, Executive Officer of

the State Water Resources Control Board for the State of Cali-

fornia, submitted extensive materials concerning the actions taken

before the California Regional Water Quality Control Board,

North Coast Region, and before the State Board itself, with

respect to these two mills. A list of the enclosures to that March

Appendix 13

29 letter appears in the margin.’ Mr. Dendy noted in his March

29 letter that the “state board finds that a variance is warranted

for the two dischargers . . . on the grounds that the environmental

benefits (if any) to be derived from the application of the treat-

ment required to meet the guideline limitations for BOD and

pH would be far outweighed by the non-water quality environ-

mental costs including use of energy.” Mr. Dendy went on to say

that he believes “that variance based on these grounds is in

accordance with the precedents established in the decisions of

several U.S. Court of Appeals, particularly the Fourth Circuit's

decision of the case of Appalachian Power v. Train [545 F.2d

1351 [9 ERC 1033} (1973)}.”

On May 26, 1977 Mr. G. William Frick, EPA General Counsel,

issued a Recommended Decision of the Administrator which

recommended denial of the variance requests of the two com-

1. A. State Board Order No. WQ 77-6 (with exhibits thereto).

B. Transcript of hearing before the State Board, December 22, 1976.

C. Transcript of hearine before the Regional Board, July 29, 1976.

D. Transcript of hearing before the Regional Board, August 26, 1976.

E. “Written Comments on Tentative Orders” presented to the Regional

Board July 21, 1976.

F. “Request for Variance in EPA Limitations on the Basis of Funda-

mentally Different Factors” dated June 21, 1976.

G. Written Statement of Dr. Herman R. Amberg before the California

Regional Water Quality Control Board, North Coast Region, July 19, 1976.

H. “Written Comments on Tentative Wastes Discharge Orders” dated

December 1976.

I. Interoffice Memorandum from John R. Hannum to D.C. Joseph

and Gary Grimm dated December 13, 1976.

J. “Non-water Quality Environmental Impacts” calculation by Dr.

Araberg; presented at State Board Hearing, December 22, 1976.

K. Letter from Dr. C. Edward Taylor to Mr. W. Don Maughan

dated January 13, 1977.

The two companies have commented that this list does not include

certain documents which were before the State during its proceedings.

However, they do not argue that the documents are vital to this decision

nor have they taken the opportunity afforded by the notice and comment

—, make any such ‘ine — to = Under the circum.

stances, given purely nature ision, I see no need

to amplify the record. i”

14 Appendix

panies. 42 Fed. Reg. 28167-72 (June 2, 1977). The preamble to

the recommended decision advised that written comments on the

decision could be submitted and that all such comments received

by July 5, 1977 would be considered prior to issuance of a final

decision of the Administrator. Comments were timely filed by

Crown Simpson Pulp Company and Louisiana-Pacific Corporation

(joint submission), the law firm of Hunton & Williams (on

behalf of the Utilities Water Act Group and other petitioners in

Appalachian Power Co. v, Train), Southern California Edison

Company, East Bay Municipal Utility District and the National

Wildlife Federation.

In reviewing the submissions by the State of California and the

extensive materials, including legal briefs, submitted by the

Louisiana-Pacific Corporation and the Crown Simpson Pulp Com-

pany to the State as well as the comments on the recommended

decision, | have assumed for the purpose of the opinion as factu-

ally accurate the statements by the State and the industry as to

the essential nature of operations at these facilities, the water

quality effects of the discharges, the energy impact, the cost of

application of the technology which would be required to meet

EPA's national limitations, and other major relevant facts. The

Environmental Protection Agency has conducted no independent

review of the facts following the submission of the requests for

variances. In other words, the record of the State Board hearing

as submitted by Mr. Dendy with the addition of the Development

Document for the effluent limitations guidelines applicable to

these mills, constitutes the record which I have reviewed. While

the Development Document was not formally forwarded to me

as part of the record, I note that it is referred to repeatedly in

the various materials which are part of the record, including the

opinion and order of the State Board, and it is therefore properly

before me.

As I discuss in more detail below, the issues which are to be

resolved in these variance requests are solely legal, and do not

Ap pendix 15

require an independent analysis or weighing of facts. This is not

to say, however, that in other variance requests it would not be

appropriate to conduct factual reviews."

The Crown Simpson Pulp Company and the Louisiana-Pacific

Corporation each operate bleached kraft pulp mills on the Samoa

Penninsula, on the west side of Humboldt Bay, near Eureka,

California. Louisiana-Pacific also operates a plywood mill at this

location. Each mill produces about 600 air dry tons per day of

bleached kraft pulp; the Louisiana-Pacific saw mill also produces

about 500,000 board feet per day of lumber. Each mill principally

discharges through separate ocean outfalls about 2500 feet from

shore and at a depth of approximately 30 to 40 feet. The outfalls

are about one mile apart, and each has a diffuser at the end.

On December 4, 1974 the Regional Board of the California

Water Resources Control Board adopted waste discharge re-

quirements for these dischargers; at that time national effluent

limitations guidelines for these sources were not available. EPA

Region IX objected to the Regional Board orders on the grounds

that the Regional Board failed to implement the provisions of

Sections 301 and 304 of the Federal Water Pollution Control

Act by not imposing effluent limitations in those orders which

would require achievement of best practicable control technology

currently available by July 1, 1977. The State Board reviewed

2. Crown Simpson and Louisiana-Pacific complain of the lac’ of

an opportunity for a hearing before me, arguing that such a hearin, is

required by law. But the companies were given extensive opportunity for

hearings by the State and an opportunity to comment upon the General

Counsel's recommended decision. I have not augmented the record compiled

by the State nor have I independently evaluated the factual conclusions

reached below. A hearing, particularly of the nature ye envisioned

by the two companies in which they would “respond to {my} questions

concerning the voluminous record in the . . . proceedings before the

State . . ."” would be a useless exercise. I have carefully considered the

arguments made by the companies concerning the legal issues involved in

this proceeding. I am convinced that the procedures I have used have been

fair and entirely adequate and that all process ‘‘due’’ has been provided.

16 Appendix

the regional orders and, after a hearing on March 7, 1975, re-

manded the orders to the Regional Board with directions that

effluent limitations based on best practicab!e control technology,

or “BPT”, be included. These BPT limitations were to be based

on promulgated national regulations if available, otherwise the

Regional Board was directed to establish the numbers based on

its best judgment as to what constituted BPT.

On February 19, 1976, EPA promulgated interim final effluent

limitations guidelines for the bleached kraft sector of the pulp,

paper and paperboard point source category. 40 CFR Part 430

Subparts F-I. EPA issued final amendments to these regulations

on January 6, 1977. The validity of the national regulations is

not at issue in this variance proceeding.* Each national limitation

contains a variance clause* which in essence provides that a dis-

charger may submit evidence that factors such as the age or size

of plants, raw materials, manufacturing processes, treatment tech-

nology available, energy requirements or other such factors, are

3. The regulations are being challenged in Weyerhaeuser Company,

et al. v. Train, No. 76-1674, et al. before the United States Court of

Appeals for the District of Columbia Circuit. See footnote 5, infra.

4. For example, Section 430.72 reads in part as follows:

In establishing the limitations set forth .n this section, EPA took

into account all information it was able to collect, develop and

solicit with respect to factors (such as age and size of plant, raw

materials, manufactweing processes, products produced, treatment

technology available, energy requirements and costs) which can

affect the industry sub-categorization and effluent levels established.

It is, however, possible that data which would affect these limitations

have not been available and, as a result, these limitations should be

adjusted for certain plants in this industry. An individual dis-

charger or other interested person may submit evidence to the

Regional Administrator (or to the State, if the State has the authority

to issue NPDES permits) that factors relating to the equipment or

facilities involved, the process applied, or other such factors related

to such discharger are fundamentelly different from the factors con-

sidered in the establishment of the guidelines. On the basis of such

Ap pendix 17

fundamentally different from the factors considered during the

establishment of the national effluent limitations guidelines.’

In accordance with the instructions from the State Board, the

Regional Board conducted hearings with respect to these two

mills, on June 24, July 29, and August 26, 1976. The discharge

restrictions for Crown Simpson and Louisiana-Pacific established

by the Regional Board did not follow the EPA national effluent

limitations guidelines. On September 3, 1976. EPA Region IX

issued a letter of objection to the Regional Board orders, noting

that the Regional Board had in effect granted variances from the

national limitations without submitting the matter to the Admin-

istrator of EPA for approval. This action by EPA prompted the

two mills to seek review in the United States Court of Appeals

for the Ninth Circuit (Nos. 76-3161 and 76-3287). Those actions

have been stayed pending decision on this matter.

On October 21, 1976 the State Water Resources Control Board

adopted resolution 76-108 to review the action of the Regional

Board with respect to these two mills. On December 22, 1976, the

State Board held a hearing, and on March 17, 1977, the Board

issued its opinion.

The Board ordered that the Regional Board Orders No. 76-134

and 76-134 be set aside and .eplaced by the permits established

by the State Board. It granted the requested variances from the

effluent limitations guidelines for BOD and pH, subject to ap-

evidence or other available information, the Regional Adminis-

trator (or the State) will make a written finding that such factors

are or are not fundamentally different for that facility compared

to those specified in the Development Document. If such factors

are found to exist, the Regional Administrator or the State shall

establish for the discharger effluent limitations in the NPDES

— either more or less stringent t).n the limitations estab-

ished herein, to the extent dictated by such fundamentally different

factors. Such limitations must be approved by the Administrator of

the Environmental Protection Agency. The Administrator may

approve or disapprove such limitations, specify other limitations or

initiate proceedings to revise these regulations.

5. Crown Simpson and Louisiana-Pacific note in their comments that

should I deny their variance request they may seck judicial review of my

decision and raise the question of whether the variance provision is valid.

18 Appendix

proval by the EPA Administrator, and ordered the Executive

Officer of the State Board to forward to EPA all necessary in-

formation, data and documents for a prompt decision on this

matter. Alternative effluent limitations for BOD and pH, to apply

in the event the variances were approved or denied by the Admin-

istrator, were established in the permits. The dischargers also were

granted an extension of time until July 1, 1983, to meet the

effluent quality requirements for chromium contained in the Cali-

fornia Ocean Plan.*

The differences between the permit conditions based on the

national effluent limitations guidelines, on the one hand, and those

which will result from the granting of the variances from those

guidelines, on the other hand, are substantial. In NPDES Permit

No. CA0005882 the limitation on BODS (daily maximum) is

18,450 pounds, and the limit on total solids is 36,480 pounds.

The pH must be maintained within the range of 5.0 - 9.0. Accord-

ing to the terms of the permit, “Upon approval by the Adminis-

trator of EPA of the finding of ‘fundamental difference’ . . . the

following limitations shall apply in lieu of the limitations [set

forth above}. These are 96,000 pounds per day of BODs (daily

maximum) and pH within the range of 3.0 to 10.0.

For the Louisiana-Pacific Mill (NPDES permit No. CA0005894)

the differences are similar. In all cases the BOD figures cited per-

tain to the pulp operations, which are by far the major sources

of BOD at these facilities.

6. The National Wildlife Federation filed comments which fully

support my denial of the BPT variances but which urge that I also dis-

approve the extension of time given the two companies by the State for

meeting chromium effluent quality requirements derived from the Cali-

fornia Ocean Plan. This proceeding, however, is not a general review of

the State-issued permits. It concerns only the appropriateness of granting

variances from EPA Effluent limitations guidelines, and my decision is

limited to this question. I express no opinion whatever on any other aspect

of the State proceedings.

Appendix 19

Il. The Legal Issue

The California State Water Resources Control Board found

that because there would be “no expected or predictable water

quality improvement as the result of imposition of the EPA

guidelines [and i}n light of . . . the magnitude of the chemical

and energy requirements, and the potential air and land manage-

ment problems associated with sludge disposal . . . the evidence

justifies the variance requested.” (Board Opinion p. 17). It is

clear that the Board did not find a “fundamental difference” in

terms of non-water quality impact itself but instead found non-

water quality impact to be significant because of lack of improve-

ment of local receiving water quality. In effect, the State granted

an exemption from minimum national technology-based standards

because of local water quality cunsiderations. This was contrary

to the letter and intent of the FWPCA and I have no choice but

to disapprove the state action.

The heart of the Louisiana-Pacific and Crown Simpson presen-

tations to the State Boards was the absence of a need to control

BOD and pH. In essence, what the companies argue is that be-

cause they are located on the Pacific Ocean, with its vast dilution

and regenerative powers, one need not be concerned with pollu-

tion requirements which assertedly are designed solely to protect

the oxygen levels or pH of receiving streams. They argue that

the oxygen level even in the immediate area of their discharge

pipes is not a matter of concern.

BOD is not a metal or a chemical compound or a specific sub-

stance that pollutes the environment. It is a measure of the quantity

of oxygen required for the biological and chemical oxidation of

water-borne substances under ambient or test conditions. The

BODS test is a procedure which provides an estimate of the oxy-

gen consumed by micro-organisms utilizing the degradable matter

present in a waste under conditions that are representative of

those that are likely to occur in nature. Standard conditions of

20 Appendix

time (5 days), temperature, suggested microbial seed, and dilu-

tion water for the wastes have been defined and are incorporated

in standard analytical procedures. As noted in the Development

Document fer the Effluent Limitation Guidelines (BPT) for the

Bleached Kraft, Groundwood, Sulfite, Soda Deink, and Non-in-

tegrated Paper Mills Segment of the Pulp, and Paperboard Point

Source Category, at pages 267 and 268:

The BOD of a waste exerts an adverse effect upon the dis-

solved oxygen resources of a body of water by reducing the

oxygen available to fish, plant life, and other aquatic species.

Conditions can be reached where all of the dissolved oxygen

in the water is used resulting in anaerobic conditions and

the production of undesirable gases such as hydrogen sulfide

and methane. The reduction of dissolved oxygen can be

detrimental to fish populations, fish growth rate, and organ-

isms used as fish food. A total lack of oxygen due to the

exertion of an excessive BOD can result in the death of all

aerobic aquatic inhabitants in the affected area.

** *

The BODS test is also an indicator of the total organic load

that is being discharged to a receiving stream. Compounds

contributing to this total organic waste load found in pulp

and paper mill wastes include terpenes, resin acids, fatty

acids, phenols, formic acid, saccharinic acids and other small

organic acids. These compounds also contribute to the

toxicity of a pulp and paper mill waste.

There are substantial testimony and a number of documentary

materials referred to in the record indicating that the waste ma-

terials discharged by Crown Simpson and Louisiana-Pacific

through their ocean outfalls are not causing a significant environ-

mental problem with respect to oxygen reduction or pH levels in

the receiving waters. I do not believe that it is necessary to con-

sider the extent of that problem or debate such issues as the limits

Appendix 21

of the mixing zone for the dischargers.’ For the purposes of re-

viewing these applications for variances, I will assume that the

arguments of Crown Simpson and Louisiana-Pacific are correct in

that there is not a need, based purely on water quality considera-

tions, to control the BOD emanating from these mills beyond

those levels contained in the variance-based permits. While the

facts and arguments are less clear with respect to the pH require-

ments contained in the national effluent limitations guidelines, I

will also assume for the purposes of this proceeding that there is

no water quality need to limit the pH discharge other than as

contained in the California permits based on the variances.*

In its March 17, 1977, opinion the State Board noted that the

dischargers had submitted evidence regarding the chemicals

required should they be forced to treat their wastes to meet EPA

national guidelines, the direct and indirect power requirements

associated with such treatment and the potentia! biological sludge

disposal problems which would result from the use of EPA

recommended technology (Opinion pages 15-18). Again, for the

7. I note that the State Board observed that “some of the organic

compounds which contribute to the BOD may cause problems in the re-

ceiving water . . . .” Opinion p. 7. Crown Simpson and Louisiana-Pacific

argue in their comments that it is improper to st:te that there is any rela-

tionship between effluent toxicity and BOD and pH. The quotation, how-

ever, accurately reflects the finding of the State Board and I see nothing

improper in its inclusion in this opinion.

8. Crown Simpson and Louisiana-Pacific criticize the recommended

decision for being too equivocal on the question of the water quality im-

pact of their discharges. However, as noted previously, no independent

review of the evidence has been undertaken, and it would Guediene not

be appropriate for me to endorse or concur in any conclusions reached on

this subject by the State. Instead, it is accurate to say only that for the

limited of deciding the legal issue presented in this proceeding

I assume limitations on BOD and pH more stringent than those

imposed in the variance-based permits would not improve receiving water

quality. I find the attack upon the propriety of this procedure curious,

since assumption of the existence of facts for limited legal purposes is a

judicial technique of long standing.

22 Appendix

purposes of this variance proceeding I consider as true the Board

findings in these respects.°

The issue to be resolved is straightforward: does the Federal

Water Pollution Control Act, as amended (“FWPCA’’) allow

EPA to vary technology-based water pollution regulations simply

because the receiving water quality at particular sites will not be

measurably improved by compliance with those regulations?

Counsel for the companies stated the matter this way in a brief

before the State Board:

“[Crown Simpson] and [Louisiana-Pacific} are not asking

this Board to countenance a wholesale return to an ineffec-

tual water quality approach. Rather, they submit that they

have affirmatively demonstrated that there is a fundsmental

difference between the marine environment into which they

discharge and all other receiving waters. None of the dila-

tory or obscurantic tactics sometimes encountered under the

old system are possible when the applicant bears the burden

of proving its entitlement to a variance. And while most dif-

ferences in receiving waters are ones of degree, which may

be burdensome administratively to distinguish, the difference

between the ocean and inland waters is categorical, so that

the differentness of the ocean need only be decided once.”

(p. 24)

9. The Board did not make independent findings of fact with respect

to several of these factors; it merely stated, “the dischargers submitted

evidence regarding [these factors.}” In effect, 1 am accepting as true the

assertions of the companies before the State Boards, for the purposes of

this proceeding. There was also testimony to the effect that redwood pulp

es more BOD than any other wood species, and that these two

mills may be the only mills using that wood (Tr. 47), but there is no

explanation in the record as to the contribution this factor would have to

the much higher BOD allowed under the variance-based permits. More-

over, I note that this issue was not pressed as an important fact by the

companies or relied upon by the State Board, and no mention of this

factor was made in comments submitted by the companies on the recom-

mended decision.

Appendix 23

Counsel for Crown Simpson reiterated this point during the

December hearing (Tr. 101):

What the companies are saying is that essentially all of the

requirements can be met with the exception. perhaps, of the

chromium heavy metal requirement through the use of

internal procedures. It can be met at a certain cost. To im-

pose the BOD limitation is to impose on them an enormous

additional cost with no environmental benefit.

When Congress enacted the Federal Water Pollution Control

Act Amendments of 1972, it brought about a major change in the

approach to water pollution contro!. Congress declared in unmis-

takable statutory language that certain key regulations were to be

based on pollution control technology, not water quality. Localized

improvement in water quality as the result of compliance with

technology-based regulations was desired, but the existence of the

nexus was not to be dispositive as to the application of those

regulations. The Senate Committee on Public Works explained

the reasons for the change in approach:

The water quality standards program is limited in its

success. After five years, many States do not have approved

standards. Officials are still working to establish relationships

between pollutants and water uses. Time schedules for abate-

ment are slipping away because of failure to enforce, lack

of effluent controls, and disputes over Federal-State standards.

The Committee adopted this substantial change because

of the great difficulty associated with establishing reliable

and enforceable precise effluent limitations on the basis of

given stream quality. Water quality standards, in addition

to their deficiencies in relying on the assimilative capacity of

receiving waters, often cannot be translated into effluent

limitations—defendable in court tests, because of the im-

precision of models for water quality and the effects of

effluents in most waters.

Under this Act the basis of pollution prevention and

elimination will be the application of effluent limitations.

24 Appendix

Water quality wil! be a measure of program effectiveness and

performance, not a means of elimination and enforcement.

The Committee recommends the change to effluent limita-

tions as the best available mechanism to control water pollu-

tion. With effluent limits, the Administrator can require the

best control technology; he need not search for a precise link

between pollution and water quality."

S. Rept. No. 92-414, 92nd Cong. Ist Sess. at 8 (1971), Committee

Print, A Legislative History of the Water Pollution Control Act

Amendments of 1972, 93d Cong. ist Sess. (1973) (2 vols.)

(hereafter cited as Leg. Hist.) at 1426.

Both the Act and its legislative history clearly indicate that

Section 301(b) (1) (A) effluent limitations are not to be based on

the nature, quality or location of receiving waters. This is demon-

strated by Section 301(b) itself. Section 301(b) (1) provides that

point sources other than publicly owned treatment works must

meet, “(A) not later than July 1, 1977 effluent limitations . . .

which shall require the application of the best practicable control

technology currently available ... and... (C) ... any more

stringent limitation, including those necessary to meet water

quality standards . . . .” (emphasis added). The basic structure

of the Act is therefore clear. Technology-based limitation imposed

pursuant to Section 301(b) (1) (A) are independent of local water

quality considerations, but where local water quality-based require-

ments are more stringent than 301(b)(1)(A) requirements they

may be imposed pursuant to Section 301(b) (1) (C). This statu-

tory structure would be rendered meaningless if 301(b) (1) (A)

limitations can be downgraded due to water quality considerations.

Section 304(b) of the Act, which lists the factors which must be

taken into account in developing Section 301(b)(1)(A) indus-

11. From 1965 until the enactment of the FWPCA, the quality of

interstate waters had been regulated primarily by State water quality

standards, which States were required to promulgate and have approved

by the Federal Government under the Water Quality Act of 1965.

Appendix 25

trial effluent limitations—from which Crown Simpson and Louisi-

ana-Pacific seek relief—conspicuously omits any reference to water

quality.” Similarly, Section 304(d)(1), which requires the Ad-

ministrator to publish information on “the degree of effluent

reduction attainable through the application of secondary treat-

ment” for the purpose of developing Section 301(b) effluent

limitations for municipal treatment works, contains no reference

to the nature or quality of the receiving waters. Clearly, Section

301(b) (1) (A) effluent limitations are not to be baséd on ambient

water quality considerations. The Committee hearings and Con-

gressional debates show that there was no misunderstanding of

this vital point by the Congressmen voting for this major bill.”

12. Crown Simpson and Louisana-Pacific argue that the statutory phrase

“effluent reduction benefits” means water quality impact. As will be shown

below, this argument is entirely anteunded. See infra at pp. 31-32.

13. See e.g.:

From the Senate Report:

The application of Phrase I technology to industrial point sources is

based upon the control technologies for those sources and to publicly

owned sewage treatment works is based on secondary treatment. It is

not based on ambient water quality considerations. [Leg. Hist. at 1461

(emphasis added.)} The use of any river, lake, stream or ocean as a

waste treatment system is unacceptable. [Leg. Hist. at 1425 (emphasis

added).

From the Report:

The determination of the best practicable control technology currently

available under Section 301(b)(1) is not to be governed by the existing

lity of the receiving waters. [Leg. Hist. at 788.]}

From the Conference Report :

ec AS intent of the Conferees is that effluent limitations applicable

to individual point sources within a given category or class be as uniform

as possible. Administrator is expected to be precise in his cuidelines

under [Section 304(b)}, so as to assure that similar point sources with

similar characteristics, regardless of their location or the nature of the

water into which the discharge is made, will meet similar effluent limita-

tions. [Leg. Hist. at 309.]}

From Congressional Debates:

Remarks of Senator Muskie, Chairman, Senate Subcommittee on Air and

Water Pollution, Leg. Hist. at 170.

Remarks of Representative Jones (Alabama), House Conferee, Leg.

Hist. at 231.

Remarks of Senator Tunney, Leg. Hist. at 209.

26 Appendix

It perhaps is best summed up in the remarks of Representative

Clausen, a House conferee:

Now, and I emphasize this, such “best practicable control

technology” will be required even if the quality of the receiv-

ing waters do [sic} not require the imposition of effluent

limitations consistent with best practicable control technology.

This is a technological standard [Leg. Hist. at 378].

Water quality standards remain a vital part of the amended

law, but they are not to be used as a means to avoid compliance

with effluent limitations guidelines and new source standards; the

discharger must comply with all applicable regulations. The fol-

lowing appears in the Senate Public Works Committee Report:

Section 301(b) (1) (C) provides adequate authority to apply

new information to existing water quality requirements and

upgrade effluent limits accordingly.

In other words, wherever the Administrator determines that

application of the best practicable treatment requirements

of Phase I will not provide for implementation of existing

water quality standards for interstate or intrastate streams,

he must tighten the requirements against a source of dis-

charge or group of sources. Leg. Hist. at 1462.

The same is true of water quality related effluent limitations

under Section 302:

Where application of the best available control technology

... Will not attain . . . [the prescribed] standard of water

quality, more stringent effluent limitations or alternative

control strategies can be imposed [under Section 302}.

** *

Section 302 is intended to furnish a suppleme::tal basis for

improving water quality, and not be a cause for delay in

executing the requirements of Section 301, or for requiring

Appendix 27

any less stringent effluent limitations. [Leg. Hist. at 1464,

1466 (emphasis added) }."*

Congressman Wright, a House conferee, expressed his belief that

EPA and the States would approach their regulatory duties as

the Senate had outlined. He stated that the combination of tech-

nology-based and water-quality based restrictions on discharges

was ‘a new system of cleaning up streams by a limitation upon

point discharges, a dual approach [which} provides that which-

ever is the stronger shall apply.” Leg. Hist. at 488.

The Supreme Court recently acknowledged the roles water

quality and technology feasibility play under the FWPCA.

The reasons for the statutory scheme have been described

as follows: “Such direct restrictions on discharges facilitate

enforcement by makinug it unnecessary to work backward

from an overpolluted body of water to determine which point

sources are responsible and which must be abated. In addi-

tion, a discharger’s performance is now measured against

14. See also Leg. Hist. at 791 Ghee Sees Contain Sette

302 as providing authority to “ any effluent limitations set pur-

suant to [Section 301 (b)(2)}” nes ee ae

under Section 302 “shall in no case to delay the application of any

effluent limitation established under 301”); 209 (Senator Tunney

observes that eflunt limitations are only ‘a minimum measure of com-

alt ); 246 (Representative Harsha, a House conferee, notes that ie

irements are not intended to be in lieu of the

ton 303". is intended to be a supplement tothe 1977 and 1983 require-

ments.”), 1281, 1283, 1285 (Senator Bentsen, a Senate Committee mem-

ber, notes that “[w]here a State or the Administrator finds [Section 301

(b) (2) limitations] are insufficient under the criteria of section 302,

effluent limitations and alternative control strategies must be

established.”’).

28 Appendix

strict technology-based effluent limitations—specified levels

of treatment—to which it must conform, rather than against

limitations derived from water quality standards to which it

and other polluters must collectively conform.” EPA v.

State Water Resources Control Board, 426 U.S. 200, 204-

205, 96 S. Ct. 202, 204, 48 L. Ed.2d 578 (footnotes

omitted).

E. 1. duPont de Nemours and Co. v. Train, 430 US. 112, 97 S.

Ct. 965, 972, n. 3 [9 ERC 1753] (1977).™

When Congress intended there to be deviation from technology

standards due to water quality considerations, it provided definite

indication of that intent. Thus, Section 316(a) provides for re-

laxation of technology-based limitations for thermal discharges,

when the discharger can demonstrate that the environment will

be protected adequately.’®

It is in light of this strong Congressional sentiment against

water-quality based exceptions from national technology standards

that the Crown Simpson and Louisiana-Pacific appeals must be

considered, and against which the decisions of the California

15. Similarly, the U.S. District Court for the Central District of Cali-

fornia recently observed that “Section 301 deals with the technological

control of pollutants at their source, without regard to their effect on the

immediate environment .. . .” Pacific Legal Foundation v. Quarles, Civil

No. 77-521-HP [10 ERC 1369] (July 20, 1977), slip op. at 8 (emphasis

added).

16. That section states:

With respect to any point source otherwise subject to the provisions of

section 301 or section 306 of this Act, whenever the owner or operator of

any such source, after opportunity for public hearing, can demonstrate to

the satisfaction of the Adtministrator (or, if ee. the State) that any

effluent limitation p for the control of the thermal component of

any discharge from such source will require effluent limitations more string-

ent than necessary to assure the projection ceed agation of a

balanced, indigenous population of shellfish, fish, and wildlife in and on

the body of water into which the discharge is to be made, the Administrator

(or, if riate, the State) may impose an effluent limitation under such

sections for such piant, with respect to the thermal component of such

discharge (taking into account the interaction of such thermal component

of such discharge with other pollutants) that will assure the protection and

——— of a balanced indigenous population of shellfish, fish, and

wildlife in and on that body of water.

Appendix 29

Water Resources Control Board must be viewed. To the extent

that the Board Opinion assumes regulatory authority to relax

implementation of technology-based standards for reasons related

to water quality, that Opinion is wrong. Efforts by commenters

(particularly Hunton & Williams) to argue otherwise are unper-

suasive. There is nothing inconsistent between the ultimate con-

gressional goal of cleaner water and the technology-based approach

required by Section 301(b)(1)(A) of the Act. As explained by

Senator Cooper, a Senate Conferee,

This is a very direct approach. It is a pragmatic approach.

I think we all acknowledge that, in the short run, it may

often require larger expenditures then permitting discharges

to the point where the water can be shown to be degraded

for some use. But I think it is fair to say that after the most

thorough examination, the committee concluded that the

approach adopted in the bill promised to be a far more

effective means of attacking the problems of water pollution

control than the 1965 act. Leg. Hist. at 1304. While Hunton

& Williams quote Representative Jones’ statement that Con-

gress did not wish “to credit one environmental account

and debit another” so as to “negate the overall benefit of the

achievement of higher water quality”, Leg. Hist. at 232, they

ignore the same congressman's statement that “With the

exception of modifications of section 301 requirements for

the discharges of heat which may be made pursuant to

section 316(a), the determination of the ‘best practicable

control technology currently available’ is not to be based

upon the existing quality of the receiving waters.” Leg. Hist.

at 231. (emphasis added). Congress consciously adopted

the Section 301 approach of uniform minimum levels of

controls based on technological achievability rather than

receiving water quality as its chosen means to atta. the

30 Appendix

goals set out in Section 101 of the Act.’” I have no authority

to defy that statutory mandate.’

Crown Simpson and Louisiana-Pacific argue that this proceed-

ing presents a situation in which the practical problems normally

associated with a water quality related approach to pollution

control do not apply, and that therefore an exception to the

technology-based approach of Section 301(b)(1)(A) is war-

ranted. They contend that Congress adopted the technology-based

approach largely out of concern with the difficulty of calculating

and defending water-quality based requirements, but that this

concern does not apply here because the burden of proof in a

17. Moreover, I think that it should be remembered that the first

enumerated goal set out in Section 101(a) is “that the discharge of —_

tants into navigable waters be eliminated by 1985.” As thoughtfully ex-

plained by Senator Buckley this goal indicates a congression belief that

ultimately no level of discharge of pollutants should be tolerable.

Of course, the bill itself has abandoned the attempt, as an ultimate

goal, of drawing a causal connection between the discharge of pollut-

ants and the degradation of our streams. In effect, we are saying we

know so little about the ultimate consequences of injecting new

matter into water that it involves a presumption of pollution, and the

way to insure ourselves against pollution is through the control and

ultimate elimination of pollutants.

Leg. Hist, 1332.

19. {sic} Hunton & Williams also argue that my decision in In Re Public

Servi-e Company of New Hampshire [10 ERC 1257} (No. 76-7, June 17,

1977) ¢‘Seabrook”’) is inconsistent with the legal analysis in this decision.

In Seabrook at page 13 I found that Section 316(b), which concerns cool-

ing water intake structures, does not require use of technology whose cost

is wholly disproportionate to the environmental benefit to be gained. I see

no inconsistency. Sections 301(b)(1)(A) and 316(b) are quite different.

Section 316(b) is explicitly site-specific while Section 301(b)(1)(A), as

discussed above, concerns uniform national standards. Moreover, Section

316(b) concerns the environmental impact of entrapment and entrainment

while Section 301(b)(1)(A) concerns reduction in the amount of pollu-

tants discharged by industrial point sources. In establishing effluent limita-

tions guidelines for the — industry the Agency considered cost in rela-

tion to effluent reduction benefits. But the fact that this analysis did not

involve consideration of local receiving water quality is inconsistent with

neither my decision in Seabrook or the language and history of Section

301(b)(1)(A).

Appendix 31

variance proceeding is on the discharger rather than EPA and

because the discharger must show a “fundamental” difference in

water quality impact. Similarly, the fact that this is a variance

proceeding is said to mean that the congressional desire for

uniformity of requirements will not be compromised and that

the administrative burden upon EPA will not be exessive.

I do not share the companies’ confidence that merely by casting

matters in the form of a variance that all problems associated

with a water-quality based approach evaporate. At best, prob-

lems of correlating effluent discharge levels to water quality and

of maintaining a measure of national uniformity may be reduced.

But these problems will certainly remain severe. More important,

regardless of whether or not a water-quality based variance would

be meritorious, it would not be consistent with the statute. Con-

gress was well aware of the possibility of such a variance and

adopted just such a provision for thermal discharges in Section

316(a). The limitation of Section 316(a) to heat was, in effect, a

deliberate rejection by Congress of the kind of scheme proposed

by the two companies here.”

The question presented is one of fundamental importance under

the Act. Congress deliberately chose a technology-based approach

and fully appreciated the fact that under certain circumstances it

would result in treatment beyond that needed to attain or main-

tain water quality. To retreat from this basic congressional scheme

in this proceeding would, despite Crown Simpson's and Louisiana-

Pacific's bland assurances to the contrary, set a precedent which

would threaten the integrity of the Act."

20. Congress is now considering amendments to the Act which would

provide relief to publicly owned treatment works discharging to marine

waters. See H.R. 3199, S. 1952. These amendments would not apply to

industrial dischargers.

21. While the companies assured the State that their arguments

applied only to marine discharges, see supra at p. 14, the fact is that

their arguments logically apply to discharges into any body of water with

high dispersion characteristics, and therefore these arguments represent

an assault upon one of the basic elements of the 1972 amendments.

32 Appendix

The March 17, 1977, Order and Opinion of the California

Water Resources Control Board does not directly dispute the

interpretation of the FWPCA which I have presented. Instead,

the Board appears to rely heavily on recent judicial discussion of

EPA's variance clause to support its approval of variances for

Crown Simpson and Louisiana-Pacific. However, I cannot agree

with the Board's determination. One reason is that I do not

believe the cases support the legal position adopted by the Board.

Second, I believe the Board's action in effect is the granting of

water quality-based variances, which is prohibited.

Essential to a careful review of the Board's determination are

the following findings by the Board:

1. “There do not appear to be any environmental benefits

which will be derived by requiring these discharges to meet either

the [California State} Ocean Plan or Guideline limitations fur

BOD or pH.” (Board Opinion p. 9)

2. “In appraising the evidence related to non-water quality

environmental effects and energy requirements the Board must

at least in part appraise the significance in terms of the potential

environmental benefits to be gained as a result of the imposition

of the EPA Guidelines. In this case we have unrefuted evidence

presented by the dischargers and concurred with by the Regional

Board Executive Officer that the existing discharges result in no

water quality problems. Secondly, there is no expected or predict-

able water quality improvement to be achieved as the result of

imposition of the EPA Guidelines. In light of these facts (the

magnitude of the chemical and energy requirements, and the

potential air and land management problems associated with

sludge disposal) we can only conclude the evidence justifies the

variance requested.” (Board Opinion pp. 16-17).

The variances were granted not because the non-water quality

environmental impacts of BPT were of themselves fundamentally

different from the impacts considered in the development of the

Appendix 33

effluent limitations guidelines, but instead because this factor in

relation to the absence of water quality problems was deemed to

be fundamentally different. I cannot find any statement by the

State Board that the non-water quality environmental impacts (i.e.

sludge, energy etc.) of BPT for the two mills are fundamentally

different in and of themselves.”

The only aspect of the Crown Simpson and Louisiana-Pacific

situation which was found different from most other mills is, in

effect, that they discharge directly into the ocean. The companies

candidly admitted that this is the “fundamental” difference in

the State proceedings.”*

The issue resolves into asking whether water quality considera-

tions are valid grounds for variances from effluent limitations

based upon best practicable technology. The answer to this, as

the California Board itself stated, is that it is not a valid basis:

The argument advanced by the dischargers (variance based

on type of the receiving water) is, in our oninion, the essence

of what Congress intended to avoid with the Federal Water

Pollution Control Act Amendments of 1972. The legislative

history of the Amendments reflects a conclusion that regula-

tion of pollution based on a plant by plant basis was unwork-

22. The problems associated with sludge disposal on the Samoa pen-

insula was mentioned by the Board as if this were possibly a fundamen-

tally different factor. But the record is ambiguous on the point. The

companies did not rely on this difference in their requests for variances to

the State. And the State never explicitly found sludge disposal problems

at the two mills to be fundamentally different from those problems con-

sidered by EPA in developing the regulations.

23. See supra at p. 14. Witnesses for the companies, and counsel in

their behalf, have stated that these mills were never considered by EPA

in drafting national regulations. The State Board opinion also states this

(p. 5). According to a key to the identification of plants used in the

P ion of the Development Document, which key has been made

available to all who have req access—including Crown Sim

and ay pe py hw mills were evaluated by EPA. For example,

on 1 lopment Document, plant 185 (Crown Simpson)

pad pt 186 (Louisiana-Pacific) are listed. Data for production, flow,

BODS, and TSS for the Crown Simpson mill were used in calculating

national limitations. There were insufficient data for Louisiana-Pacific’s

mill to be used this way.

34 Appendix

able from a practical regulatory standpoint. Congress based

the Amendments on predefined minimum levels of treatment

technology which were to be applied regardless of the type

of receiving water. (Opinion, p. 6).

My authority to provide for variances from BPT flows from, and

is inherent in, my authority to promulgate effluent limitations

guidelines under Sections 301(b) (1) (A) and 304(b) (1).** Thus,

in considering variances from effiuent limitations | am as con-

strained by the language ard legislative history of the Act with

regard to this issue as I am in promulgating the national limita-

tions. Variances can only be based on fundamental differences in

factors which are appropriate to technology-based regulations and

limitations derived through the variance process must still meet

the congressional difinition of best practicable control technology

currently available.

I therefore reject as unsound the argument by Crown Simpson

and Louisiana-Pacific that because variances from BPT are not

explicitly mentioned in the Act or its legislative history that I

may completely ignore the statute and the intentions of its drafters

in administering the variance provision. But in so doing I do not

agree that I have rendered the variance provision meanivgless. I

find only that the variance provision cannot be used to do what

Congress clearly forbade. This does not mean that where a

fundamental difference can be shown with respect to a factor

other than water quality that a variance may not be appropriate.**

24. For this reason it is entirely appropriate that variances from

BPT be subject to my approval.

25. The two companies charge that by rejecting their requests I have

established that “it is never riate to grant a variance from the

irement of BP Sry treatment facility.” If a fundamental

diference can be shown in «factor (other than water quay) and

degree of treatment ‘secondary” would under

the Act, then such a reduced requirement may be establiche!. But whan

quer coquicapent ts eiifideed Gar o Gedung, whether or not by vari-

ance and whether or not it represents “secondary” treatment, it must,

“best

for the July 1, 1977 phase of the statutory program, represent

Salcedle Goaneeh eutldiony eummaily anami”

Appendix 35

The State Board also recognized that water quality considera-

tions cannot be utilized to grant a variance through a weighing of

costs and benefits with regard to an individual! mill. The Board

properly rejected the companies’ contention that while their costs

of compliance are not substantially different** from the costs EPA

found would be sustained on an industry-wide basis, their costs

weighed against the local water quality benefits justify a variance.

The legislative History of the Act firmly rejects any individualized

cost/benefit analysis, and no court has ever required it.**

Crown Simpson and Louisiana-Pacific also contend that the

phrase “effluent reduction benefits” in Section 304(b) (1) (B)

means “receiving water quality improvement” and, further, that

EPA conceded as much in its brief filed in Weyerhaeuser Co. v.

Costle (No. 76-1674) tow pending in the U.S. Court of Appeals

for the D.C. Circuit. But, as explained by Senator Muskie:

The modification of subsection 304(b) (1) is intended to

clarify what is meait by the term “practicable”. The ba ancing

test between total cost and effluent reduction benefits is in-

tended to limit the application of technology only where the

additional degree of effluent reduction is wholly out of pro-

26. Opinion p. 14.

27. See Leg. Hist. at 170 (statement of Senator Muskie). See also

Leg. Hist. at 304, 309 (Conf. Rept.). The Fourth Circuit in Appalachian

Power Co, v. Train, 545 F.2d 1351 [9 ERC 1033} (4th Cir. 1976),

although it found the variance clause too narrow, noted that:

In requiring that EPA give weight to the relevant statutory factors

in developing a subsequent variance provision, we in no way intend

to imply that EPA's regulations must provide for a detailed cost-

benefit analysis at the permit granting stage. As we indicated in

{duPont v. Train, 541 F.2d 1018 (4th Cir., 1976)]}, an overall

cost-benefit analysis for each category or subcategory satisfies the

mandate of § 304 in this regard. The variance provision should,

however, allow the permit issuer to consider significant cost dif-

ferentials of the particular point source involved. 545 F.2d at

1360, n. 23.

In arguing that Appalachian Power stands for the proposition that water

quality benefits must be considered in variance dockiole Crown Simpson

and Louisiana-Pacific ignore this (and other) pertinent language of that

case.

36 Appendix

portion to the costs of achieving such marginal level of

reduction for any class or category of sources.

The Conferees agreed upon this limited cost-benefit

analysis in order to maintain uniformity within a class and

category of point sources subject to effluent limitations, and

to avoid imposing on the Administrator any requirement to

consider the location of sources within a category or to asser-

tain water quality impact of effluent controls, or to determine

the economic impact of controls on any individual plant in a

single community.

Leg. Hist. at 170 (emphasis added). See also Leg. Hist. at 304,

309 (Conf. Rept.).

Thus, it is clear that consideration of effluent reduction benefits

does not entail consideration of local receiving water quality im-

provement. Nothing in EPA's brief in Weyerhaeuser is to the

contrary.** Moreover, the Development Document, at page 566,

28. On pages 50-51 of that brief any notion to the contrary was

explicitly repudiated:

Petitioner's suggestion that the method by which the pollutant

parameters for the pulp and paper industry were selected is inconsist-

ent with EPA's argument that it may not base effluent limitations

on receiving water quality is also without merit. As discussed at

length in Section VI of the Final Development Document, EPA

based its selection of pollutant parameters on its consideration of a

number of factors. Petitioners correctly note that one of those

factors was the environmental harm caused by the particular pol-

lutant. But it must be emphasized that the Agency's evaluation of

that factor was limited to a consideration of harmfulness in a

generic sense. That analysis is far different from the site-specific

water quality assessment which petitioners would require of the

Agency. EPA has never required, nor has any Court, that the pollu-

tants it regulates have an equally harmful effect in all water bodies.

That BOD and pH are generally harmful is not disputed by peti-

tioners and is documented in the record.

Moreover, harmfulness was only one element in EPA's selection

of BOD and pH for the paper industry. At least as important a

factor was the historic measurement of those two parameters by the

industry itself—including mills with marine discharges. BOD was

selected for the additional reasons that the BODS test provides an

indirect measure of other pollutants in mill waste streams and

that systems for ue removal of BOD also remove these other,

Appendix 37

shows that EPA analyzed ‘Costs of BPCTCA vs. Effluent Reduc-

tion Benefits’ not in terms of receiving water quality improvement

but in terms of the amount of pollution removed from discharges.

Where the State Board erred was in finding grounds for vari-

ances on the basis of non-water quality environmental impacts.

As I have already observed, the Board did not find these impacts,

of themselves, to be fundamentaliy different from the impacts

considered on a national basis. Instead, the Board found these

impacts to be the basis for variances when weighed against, or

considered in light of, the lack of environmental improvement.

Crown Simpson and Louisiana-Pacific argue in their comments

that the State did not rely upon local water quality considerations

in its decision and that it did in fact find a fundamental difference

in terms of non-water quality impact alone. But the companies

cite only to State observations that there would be non-water

quality environmental impacts as a result of compliance with

EPA effluent limitations guidelines, not to any finding of funda-

mental difference on this point.”

indirectly measured pollutants, including long term BOD, oil and

grease, foam, and a number of compounds which contribute to

toxicity. There is nothing inconsistent between this analysis and the

neral legislative history forbidding the establishment of effluent

imitations based on the assimilative capacities of receiving waters.

(footnotes and citations omitted.)

29. Extensive analyses of the non-water quality environmental im-

pacts of the effluent limitations guidelines for the pulp and paper indus-

try, including sludge landfilling and incineration, air pollution, noise

effects, and energy impacts, were performed by EPA and are reflected in

the Development Document. See, e.g., pages 349-354, 433-440, 480-483,

490-494, 504-506, 512, 524-538.

Perhaps one reason why no finding of fundamental difference in non-

water quality environmental impact alone was found by the State was

the testimony of Dr. Herman R. Amberg, Director of Environmental

Sciences for Crown Zellerbach Corporation (part owner of the Crown

Simpson Company), a witness on behalf of Louisiana-Pacific and Crown

Simpson. In response to questions posed by Mr. Sam Johnson, a staff

engineer for the State, at he December 22, 1976, hearing he said: (Tr.

79, 80, 82):

38 Appendix

I find the State’s conclusion as to the propriety of granting the

variances to be based on non-water quality environmental impacts

only in light of water quality considerations, and not indepen-

dently.*°

Mr. JOHNSON: Q. With regard to the issue of variance funda-

mental differences, is there any difference in your plant and the

plants that were examined by EPA with regard to age of the facili-

ties that would support a variance?

A. No, sir.

Q. The process —_——

A. It's essentially the same process.

Q. The engineering aspec’s of the control technology ?

A. I don’t think so. I'm not that familiar with the 25 mills

that they used.

The process changes required by the guidelines?

A. I'm not sure.

. Is the installation of the technology specified by EPA in

the development document as BPCTCA within the economic capac-

ity of your company?

A. Yes.

Q. How does your plant compaie in the area of non-water

—= environmental impacts with the plants that EPA utilized in

eveloping the guidelines ?

A. I don’t think there's that much difference. However, I should

point out, too, that those plants that EPA considered, there was a

need for secondary treatment in that they did improve water qual-

ity. There was a bona fide need for improvement of the water

quality while here there will be no benefit as far as water quality

is ¢ i

Dr. Amberg’s comments apply oy to the two mills. His counsel

asked him: “And just to clarify for the entire part of your testimony,

are the Louisiana-Pacific and Crown Simpson Mills sufficiently similar so

that what you have testified to with respect to Crown Sim would

equally apply to Louisiana-Pacific?” His response was “Yes.” (Tr. 67, 68.)

30. However, I do find well taken the companies’ admonition that

I should not make a finding that the State could not had it properly

interpreted the Act, have found fundamental difference with regard to

non-water quality environmental impact. I have not independently re-

viewed the factual record. I therefore express no opinion as to whether

the two mills could be found fundamentally different in terms solely of

non-water poy J environmental impact. This is a matter properly ad-

dressed in first instance by the State. Further, this decision does not

stand for the proposition that fundamental difference in this factor cannot

justify a variance. Concerns along this line expressed by Southern Cali-

fornia Edison Company and others are based on a misunderstanding of the

Appendix 39

First of all, the Act does not require that non-water quality

environmental impact (or energy requirements) be weighed

against environmental benefit. This factor is only to be given

“consideration”. Section 304(b)(1)(B).** Moreover, it should

be obvious that where this factor is deemed fundamentally differ-

ent, not in its own right but only because water quality effects

are different, then the distinction between a variance granted on

this basis and one granted directly for water quality reasons is

only a form of words. A water quality based variance cannot be

granted merely because it is in the guise of a non-water quality

environmental impact based variance. Appalachian Power Co. v.

Train, supra, does not support the State’s Opinion on this point.

Nothing in that court's opinion authorizes any balancing of non-

water quality benefits with water quality benefits, or any localized

consideration of water quality improvement. In fact, the court

rejected a request by Consolidated Edison Company that it be

relieved from meeting the effluent limitations for its plant because

of the high cost of non-water quality environmental impacts of

the regulations as applied to it as weighed against an asserted

lack of water quality improvement in New York Harbor. The

court responded:

“so far as [Con Ed’s} petition may be read as a request for

leniency because of the already polluted condition of the

harbor, it must be rejected. The 1972 amendments to the

analysis which is the basis for my denial of the variance requests

7s here. There is no reason why, in a proper case, a fundamental

difference in non-water quality environmental impact could not justify

a variance,

31. Crown Simpson and Louisiana-Pacific argue that non-water quality

environmental impact can only be considered by means of a balancing

with water quality improvement and that my interpretation of Section

304(b) (1) (B) is strained. On the contrary, I read Section 304(b) (1) (B)

quite faithfully. Where Congress intended one factor to be considered in

relation to another, such as cost and effluent reduction benefits, it so

specified. Where it did not do so I take the omission to be deliberate.

40 Appendix

statute changed the system from that of control of the

quality of the body of water to effluent limitations as we

have before noted. 545 F.2d at 1378.

Moreover, as noted previously, the Fourth Circuit specifically

noted that “we in no way intend to imply that EPA's regulations

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

granting stage.” See note 27 supra. I do not understand how the

opinion in the Appalachian Power case can be held to stand for

a principle specifically disavowed by the Court.” In fact, the

Second Circuit squarely faced this issue and held that:

The EPA . . . need not document specifically the benefits to

society from the curtailment of pollutants from a particular

point source. Congress has established as a national goal the

complete elimination of pollutant discharges by 1985... .

The EPA must lead industry toward that goal through the

1977 and 1983 standards, and the agency's discretion is

necessarily broad. California & Hawaiian Sugar Company v.

Environmental Protection Agency, 553 F.2d 280, 289 [9

ERC 2129} (C.A. 2, April 14, 1977) .*

32. In any event, the continuing vitality of the criticism of the

variance clause in Appalachian Power is now in doubt in light of the

recent decision of the Supreme Court in E. 1. duPont de Nemours and

Co. v. Train, 430 US. 112, 97 S. Ct. 965 (1977). In that case the

Supreme Court reviewed an earlier decision of the Fourth Circuit con-

cerning EPA effluent limitations and noted that “consideration of whether

EPA's variance provision has the proper scope would be premature.” 97

S. Ct. at 975, n. 19. See also; Natural Resources Defense Council v. EPA,

537 F.2d 642, 647 [8 ERC 1988} (2d Cir. 1976); American Petro-

leum Institute v. EPA, 540 F.2d 1023 [10 ERC 1252} (10th Cir. 1976).

33. See also FMC Corp. v. Train, 539 F2d 973, 983 [8 ERC 1731}

(4th Cir. 1976) in which the court rejected the argument that EPA can

only regulate pollutants which it finds to be harmful to receiving waters.

Appendix 41

Conclusion

Providing relief from technology-based effluent limitations

guidelines due solely to the characteristics of particular receiving

waters is not within my authority. I am convinced that the law

does not permit exemption of Crown Simpson and Louisiana-

Pacific from effluent limitations guidelines on the record before

me, in which I discern the type of receiving water as being the

“fundamental difference” between Crown Simpson's and

Louisiana-Pacific’s Samoa Peninsula mills on the one hand, and

other pu!p and paper mills, on the other.

Accordingly, I deny the variance requests and disapprove the

effluent restrictions contained in NPDES Permit No. CA0005882,

paragraph B4, and NPDES Permit No. CA0005894, paragraph BS.

42 Appendix

Appendix D

State of California

State Water Resources Control Board

In the Matter of the Review of Crown Simp-

son Pulp Co. and Louisiana-Pacific Cor-

poration Orders Nos 76-133 (NPDES No. | Order No.

CA0005282) and 76-134 (NPDES No. CA / WQ 77-6

0005894) of the California Regional Water

Quality Control Board, North Coast Region.

BY BOARD VICE CHAIRMAN MAUGHAN:

On August 26, 1976 the California Regional Water Quality

Control Board, North Coast Region (Regional Board) adopted

waste discharge requirements (Orders Nos. 76-133, NPDES No.

CA0005282 and 76-134, NPDES No CA0005894) for Crown

Simpson Pulp Co. (Crown Simpson) and Louisiana-Pacific Cor-

poration (Louisiana-Pacific) (hereinafter sometimes collectively

“ferred, to as “dischargers”, respectively. On September 3, 1976,

the United States Environmental Protection Agency (EPA) issued

a letter of objection to the Regional Board orders prescribing

waste discharge requirements for the discharges. On October 7,

am’ October 27, 1976, Crown Simpson and Louisiana-Pacific,

respectively, filed petitions in the Ninth Circuit Court of Appeal

requesting the Court to overturn the action of the Administrator

of EPA, Region IX, in objecting to the granting of a variance by

the Regional Board. On October 21, 1976, the State Water Re-

sources Control Board (State Board) adopted Resolution No.

76-108 to review the action of the Regional Board On December

22, 1976, the State Board held a hearing regarding the establish-

ment of appropriate waste discharge requirements for the dis-

chargers.

Appendix 43

I. BACKGROUND

The dischargers each operate bleached kraft pulp mills located

on the Samoa Peninsula, on the west side of Humboldt Bay.

Louisiana-Pacific also operates a saw and plywood mill at this

location. Louisiana-Pacific was formed in September 1972 from

a portion of Georgia-Pacific Corporation.

Each pulp mill produces about 600 air dry tons per day of

bleached kraft pulp. The Louisiana-Pacific saw mill produces

about 500,000 board feet per day of lumber. Each mill primarily

discharges through a separate ocean outfall about 2,500 feet long

with the diffuser located at a depth of 30-40 feet. The outfalls are

about one mile apart.

The dischargers are presently discharging under waste discharge

requirements issued by the Regional Board on September 4, 1968.

Monitoring and reporting is being done under the requirements

of Monitoring and Reporting Programs Nos. 74-211 (Crown

Simpson) and 74-212 (Louisiana-Pacific) which were issued

December 31, 1974, effective February 1, 1976.

On December 4, 1974, the Regional Board adopted waste dis-

charge requirements for the dischargers. At that time formally

promulgated EPA effluent limitations guidelines were not avail-

able. EPA objected to the Regional Board orders on the basis

that the Regional Board failed to implement fully the provisions

of Section 301 of the Federal Water Pollution Control Act* by

not imposing effluent limitations which would require achievement

of “best practicable control technology currently available”

(BPCTCA) by July 1, 1977.

Subsequently, the State Board reviewed the Regional Board

o Jers both on its own motion and in response to petitions filed

by each of the dischargers. The State Board, after receiving evi-

dence at a hearing on March 7, 1975, remanded the orders to the

1. 33 U.S.C. 1251 et seq.

44 Appendix

Regional Board with the direction that effluent limitations based

on BPCTCA be included. If formally promulgated guidelines were

available, they were to be applied. Otherwise, the Regional Board,

after considering all relevant evidence, was to establish limitations

based on its best judgment of what constituted BPCTCA.

On February 19, 1976, EPA promulgated Effluent Limitations

Guidelines and Standards, Pulp, Paper, and Paperboard Point

Source Category (Guidelines)*. The Guidelines contain a variance

provision for each subcategory of this Point Source Category. The

variance provision is set forth, in pertinent part, at page 5 of

this Order. On July 6, 1976, various corrections to the Guidelines

(mostly of typographical errors) were promulgated. On January

6, 1977, EPA further modified the Guidelines. The effect of this

latest modification on these dischargers is limited to a slight relaxa-

tion of the limitations on BODS and total suspended solids.

After hearing extensive testimony at its June 24, 1976, July

29, 1976, and August 26, 1976, meetings, the Regional Board

adopted Order No 76-133 (NPDES CA0005282) for Crown

Simpson and Order No. 76-134 (NPDES CA0005894) for Louisi-

ana-Pacific on August 26, 1976.

On September 3, 1976, EPA issued a letter of objection to the

Regional Board orders. Grounds cited by EPA were inclusion of

effluent limitations less stringent than the Guidelines without

prior approval by the Administrator. It appears that EPA’s objec-

tion on procedural issues could have been precluded had the

Regional Board orders included Guideline limitations and provi-

sions that the alternate limits for BOD and pH would become

effective only upon approval by the Administrator.

II. ISSUES AND FINDINGS

The dischargers requested (and the Regional Board granted)

a variance from the EPA Guidelines for BOD and pH based

2. Title 40, Code of Federal Regulations, Part 430.

Appendix 45

both on a claim of “fundamental difference” in accordance with

the variance provisions of the Guidelines and on precedent estab-

lished in the decisions of several U.S. Courts of Appeals; par-

ticularly the Fourth Circuit's decision in the case of Appalachian

Power Company v. Train® (hereinafter, Appalachian). The dis-

chargers have also requested several variances from Ocean Plan

requirements.‘ Finally, they have raised a procedural objection

to the State Board's resolution of the question as to whether a

variance from EPA Guideline limitations is appropriate at this

time. The dischargers contend that the State Board should not

take action on this question pending resolution in the Federal

courts of certain lawsuits involving the validity of EPA’s Guide-

lines and variance provisions. Each of the dischargers’ conten-

tions will be discussed separately below.

1. Contention that the Dischargers’ Facilities are Fundamentally

Different in that they Discharge to Ocean Waters.

The dischargers argue that the fact that they discharge to the

ocean with its vast diluting and buffering capacity is sufficient

for a finding of “fundamental difference” under the variance

provision of EPA’s Guidelines. They base this on the following

portion of the currently applicable variance provision:

“An individual discharger . . . may submit evidence . . .

that . . . factors relating to the equipment or facilities in-

volved, the processes applied, or other such factors related

to such discharger are fundamentally different from the fac-

tors considered in the establishement of the guidelines.”

(Emphasis Added)

Since none of the bleached kraft pulp mills considered by EPA

in the process of Guideline development discharge to the ocean,

3. 545 F. 2d 1351.

4. Water Quality Control Plan for Ocean Waters of California adopted

by the State Board on July 6, 1972.

46 Appendix

the dischargers contend that this fact alone is sufficient to estab-

lish fundamental difference.

The State Board disagrees with the contention of petitioners

that a variance from the Guidelines based upon a finding of fun-

damental difference should be granted because of the type of

receiving water. This position is supported by the following quo-

tations from the Legislative History of the Federal Water Pollu-

tion Control Act:

“The balancing test between total cost and effluent reduction

benefits is intended to limit the application of technology

only where the additional degree of effluent reduction bene-

fits is wholly out of proportion to the costs of achieving

such marginal level of reduction for any class or category

of sources.

“The Conferees agreed upon this limited cost-benefit analy-

sis in order to maintain uniformity within a class and cate-

gory of point sources subject to effluent limitations, and to

avoid imposing on the Administrator any requirement to

consider the location of sources within a category or to ascer-

tain water quality impact of effluent controls, or to deter-

mine the economic impact of controls on any individual

plant in a single community.’”®

* * *&

“, .. the intent of the Conferees is that effluent limitations

applicable to individual point sources within a given cate-

gory or class be as uniform as possible. The Administrator

is expected to be precise in his guidelines . . . so as to assure

that similar point sources with similar characteristics, re-

gardless of their location or the nature of the water into

5. Exhibit 1 to the remarks of Senator Muskie, Senate Consideration

of the R of the Conference Committee, as set forth in A Legislative

History of the Water Pollution Control Act Amendments of 1972, Con-

gressional Research Service, Library of Congress, Vol. 1, January 1973, at

170,

Appendix 47

which the discharge is made, will meet similar effluent

limitations.’”*

The argument advanced by the dischargers (variance based on

type of the receiving water) is, in our opinion, the essence of

what Congress intended to avoid with the Federal Water Pollu-

tion Control Act Amendments of 1972. The legislative history

of the Amendment reflects a conclusion that regulation of pollu-

tion based on a comparison of cost with receiving water benefits

on a plant by plant basis was unworkable from a practical regu-

latory standpoint. Congress based the Amendments on pre-defined

minimum levels of treatment technology which were to be applied

regardless of the type of receiving water.

2. Contention that Biochemical Oxygen Demand (BOD) and

pH do not Constitute Pollutants in this Specific Case and that

the Present Dischargers have no Adverse Environmental

Effects.

The dischargers presented extensive evidence both before the

Regional Board and before the State Board that there are no

adverse environmental effects associated with their present dis-

charges. Dr. Joseph, Regional Board Executive Officer, agreed

that he knew of no evidence that indicates that, in the case of

these two discharges, BOD is a problem.

The State Board publication Water Quality Criteria™ states:

“In itself, BOD is not a pollutant and exercises no direct

harm. Only by depressing the dissolved-oxygen content to

levels that are inimical to fish life and other beneficial uses

does BOD exert an indirect effect. Where reaeration, dilu-

6. Conference Report, House-Senate Conference Committee, discussion

of Section 304 of the conference substitute, as set forth in A Legislative

History of the Water Pollution Control Act Amendments of 1972, op.

cit., note 5, at page 309.

7. McKee and Wolf, Water Quality Criteria, Second Edition, State

Water Resources Control Board, Pub. No. 3A, Reprint June 1, 1976, at

page 147.

48 Appendix

tion, and/or photosynthetic action offset or minimize this

depletion, BOD does not interfere with the reasonable uses

of the water.”

Thus, while some of the organic compounds which contribute

to the BOD may cause problems in the receiving water, the State

Board does not dispute the dischargers’ contention that BOD, in

and of itself, is not a pollutant when properly discharged into a

marine environment. Further, the record contains no evidence to

contradict this conclusion, and there is evidence that the dissolved

oxygen content of the seawater is not depressed to any noticeable

degree outside the initial dilution zone.

The dischargers have also submitted substantial evidence that

the discharge of waste outside the 5-9 pH range permitted by the

EPA Guidelines has no effect on a marine environment.

The EPA Development Document® cites no adverse effects of

pH that would be of concern in the marine environment.

Concerning pH, Water Ouality Criteria® also states:

“Conversely, the concentration of weakly dissociated acids

and bases markedly affects the pH value and the ease with

which it can be altered. For this reason, pH should not be

confused with acidity and alkalinity. The presence of car-

bonates, phosphates, borates, and similar ions give water a

buffering power so that the addition of an acid or base is

less likely to be deleterious.”

It cannot be said that the discharge from these two plants is

exceptionally low in either acidity or alkalinity, but the buffering

capacity of seawater is so strong that there is no reason to doubt

mulgated Rule Making for Effluent Limitations Guidelines and New

Source Performance Standards for the Bleached Kraft, Groundwood, Sul-

fite, Soda, Deink, and Non-integrated Paper Mills Segment of the Pulp,

Paper, and Paperboard Mills, August 1975.

9. Op.

8. Development Document for Advanced Notice of Proposed or Pro-

. Cit., footnote 7, at page 235.

Appendix 49

the testimony of the dischargers’ experts that the receiving water

PH is not changed more than 0.2 units outside the initial dilution

zone. Thus, with pH, also, there is no evidence in the record to

dispute the dischargers’ allegation that the high or low pH of

their discharges causes no problem when diffused into seawater.

In summary, it has been clearly shown, in this particular case,

that neither the discharge of BOD nor pH results in a discernible

impact or a threat of damage to the marine environment. EPA

in its Development Document cites the reasons why it has selected

BOD and pH as pollutants to be controlled in the discharge from

pulp mills. The discussion of BOD effects in the Development

Document indicates that BOD must be controlled because it de-

presses dissolved oxygen levels resulting in damage to fish popu-

lations (such as delayed hatching of eggs and decreased tolerance

to certain toxicants) and damage to fish food organisms. The

Development Document points out that death may result if dis-

solved oxygen is reduced severely by high levels of BOD."® The

discussion of pH effects in the Development Document indicates

that low pH water supplies may corrode household plumbing

and, thus, add heavy metals to drinking water supplies. Extremes

of pH or rapid changes in pH may stress or kill acquatic life

and toxicity of many materials is increased by changes in pH.™

As the above discussion indicates, the reasons cited by EPA for

the Guideline BOD and pH requirements are not valid in this

case. The dischargers have submitted adequate evidence to refute

the presumptions made by EPA regarding the polluting nature

of BOD and pH.

Therefore, based on the record before us, we must conclude

that there do not appear to be any environmental benefits which

will be derived by requiring these dischargers to meet either the

Ocean Plan or Guideline limitations for BOD or pH.

19. Development Document, op. cit., note 8, at 188.

11. Id. at 192.

50 Appendix

3. Contention that Judicial Precedent Dictates that a Broad

Range of Factors including Non-water Quality Environmental

Effects and Energy Requirements be Considered in Deciding

whether Guideline Numbers should be applied to a Particular

Discharger

The dischargers assert that the Regional Board and State

Board should be guided in resolving the question of ‘fundamental

difference” by the logic contained in the decision in the Ap-

palachian case.

The variance provision under consideration in Appalichian

was identical to the provision which has been promulgated by

EPA for the sources under consideration here. The operative

language from the variance provision is set forth at page 5

above. The court found in Appalachian thet the provision did

not allow for adequate flexibility in application of nationwide

guidelines to particular point sources and remanded the variance

provision to EPA for modifications which would allow for recon-

sideration at the permit issuance stage of all factors required by

P.L. 92-500 to be considered at the time guidelines are originally

developed. Specifically, the court stated:

“As we noted in duPont, 541 F.2d 1018, Nos. 74-1261,

et al, provisions for variances are appropriate to the regula-

tory process. This is particularly so in the case of regula-

tions having presumptive applicability throughout the nation.

The factors to be taken into consideration, however, ought

ordinarily to be at least as broad as the factors relied upon

in establishing the limitation if the provision is to have

meaning. In the instant case, EPA has said that a variance

from the 1977 standards will be granted only where ‘the

factors relating to the equipment or facilities involved, the

process applied, or other such factors related to such dis-

charger are fuiidamentally different from those factors con-

sidered in establishing the guidelines’. Thus, only technical

and engineering factors, exclusive of cost, may be con-

sidered in granting or denying a variance. Based upon the

Appendix 51

Act taken as a whole, we are of the opinion that such a

variance clause is unduly restrictive and, accordingly, 40

CFR 423.12(a), must be set aside and remanded for

further consideration.”

* * * *

". .. [w]e note that both § 304 (1977) and $306 (new

sources) provide that the factors to be taken into considera-

tion in determining the 1977 and new source standards

include not only the engineering aspects of the various types

of control technology, but also (1) the total cost of applica-

tion of such technology (cost of achieving such effluent

reduction) and (2) the resulting non-water quality environ-

mental impact (including energy requirements). The EPA

has offered no reasoned explanation for limiting the variance

clause to considerations of technical and engineering factors

only. Certainly the adverse non-water quality environmental

impact which may result from the strict application of the

agency's effluent limitations to a particular plant is as sig-

nificant as the technological difficulties which may be en-

countered. The same may be said for a consideration of

energy requirements.”* (Emphasis Supplied.)

The court in Appalachian described, as follows, how the uniformity

in effluent requirements which Congress anticipated from permit

to permit within a point source category could be maintained

while, nevertheless, providing for a reasonable amount of flexi-

bility in the permit program:

“... ‘we believe that the solution which most nearly satisfies

congressional intent is recognition that the regulations are

presumptively applicable to permit applications’ (citation

omitted). Thus, the issuer of a permit under § 402 may con-

sider whether a particular applicant is to be held strictly to

the confines of the agency's regulations. The burden of

proof remains upon the applicant, however. Only after he

has established the inappropriateness of the regulations as

12. Op. cit., mote 3 at 1358-1359.

52 Appendix

applied to him, for example, employing the generic factors

of §§ 304, 306 or any specific variance clauses promulgated

thereunder, need the permit issuer go beyond the regulations.

Of course, the permit issuer does not have unreviewable dis-

cretion in determining whether limitations prescribed under

a particular regulation should be deemed inapplicable to

any individual point source. Under § 402(d) (2), EPA may

prevent the issuance of any permit to which it objects. Thus,

through the exercise of this veto power, the agency may

insure that the permit grantors give proper recognition to

the need for uniformity in the application of the Act while

at the same time recognizing variables which may exist

from location to location and plant to plant.”** (Emphasis

supplied. )

Other courts have echoed the opinion of the Appalachian

court with regard to the need for flexibility in a regulatory

program involving standards which are applied nationwide. For

example, the Second Circuit in Natural Resources Defense Coun-

cil v. EPA stated:

“Not all of the thousands of plants in operation can be

expected to fit into prefabricated molds or templates. By

specifying a permit procedure, Congress implicitly conferred

on the permit-grantor the privilege of construing the broader

regulations in light of the specific type of plant applying for

the permit. Without variance flexibility, the program might

well founder on the rocks of illegality.’"*

Section 304 (b)(1)(B) of the Federal Water Polluticn Con-

trol Act sets out the factors which are to be considered by the

Administrator of EPA in specifying effluent guidelines for

BPCTCA for non-publicly owned treatment works. According to

13. Id. at 1358.

14. 537 F.2d 642 at 647. See also: E. 1. DuPont de Nemours and

Co. v. Train, 541 F.2d 1018 at 1028 (Fourth Circuit) and American

Paper Institute v. Train, 9 ERC 1065 at 1070. (District of Columbia

Circuit. )

Appendix 53

the Appalachian court, as quoted above, all of those same factors

must be considered again at the time of permit issuance where

a dis harger challenges the application of guideline limitations

to his facilities. The factors listed in Section 304(b) (1) (B) are

as follows:

“, .. the total cost of application of technology in relation

to the effluent reduction benefits to be achieved from such

application, . . . the age of equipment and facilities involved,

the process employed, the engineering aspects of the appli-

cation of various types of control techniques, process changes,

non-water quality environmental impact (including energy

requirements ), and such factors as the Administrator deems

appropriate.""** (Emphasis Supplied).

There have been no decisions in the Ninth Circuit which would

indicate the proper application of variance regulations as a part

of the NPDES permit program and we, of course, are not bound,

in a strict legal sense, by the Fourth Circuit's decision in Appa’a-

chian. However, the Appalachian decision does leave a cloud on

the continued viability of all variance provisions containing the

same language as the provision considered in Appalachian. Fur-

ther, we find the reasoning in the Appalachian decision compell-

ing. Therefore, in the following discussion we evaluate the

dischargers’ arguments with regard to their entitlement to a vari-

ance based upon the costs, the non-water quality environmental

impacts and the energy requirements of compliance with Guide-

line limitations.

4. Contention that the Costs are Disproportionate to the Water

Quality Benefits and thus justify. the Issuance of a Variance.

The dischargers introduced evidence that it would cost approxi-

mately $1814 million for each facility for construction of the

necessary treatment facilities to meet all Guideline and Ocean

Plan limitations with the exception of the Ocean Plan chromium

is. 33 USC. 1314(b)(1)(B).

34 Appendix

requirements. Operation and maintenance costs are expected to be

$1% million per year for each plant. Therefore, the total capital

expenditure would be $36.5 million with an annual operation cost

of $2.5 million. These costs are in addition to the costs which have

already been incurred by the dischargers in constructing their

existing ocean outfalls and diffusers. These com. vere approxi-

mately $2 million each and represent costs which are not required

by the Guidelines and would generally not be imposed upon similar

discharges to a freshwater stream. The expected costs are sub-

stantial in that the original mills together cost approximately $110

million.

The dischargers contend that a variance should be granted

because if the Guideline limitations are imposed they will sustain

the above costs with no discernible water quality benefit. However,

it should be noted that with regard to economic costs the Appala-

chian case found that a narrow consideration was required at the

permitting stage.

In Appalachian the court specifically found that it was not

necessary for EPA to provide for an analysis of economic costs

versus water quality benefits on a plant-by-plant basis at the permit

issuing stage, but that provision should be made for consideration

of cost differentials between the guideline plants and the partic-

ular plant for which a permit is sought. Specifically, the court

stated:

“In requiring that EPA give weight to the relevant statutory

factors in developing a subsequent variance provision, we in

no way intend to imply that EPA’s regulations must provide

for a detailed cost-benefit analysis at the permit granting

stage. As we indicated in du Pont, 541 F.2d 1018, Nos.

75-1261, et al., an overall cost-benefit analysis for each

category or subcategory sati

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