Respondents Brief — Chemical Manufacturers Ass'n v. Natural Resources Defense Council, Inc.

r

Nos. 83-1013 and 83-1373

Iu the Supreme Court of the Au ties —

OcTOBER TERM, 1983

CHEMICAL MANUFACTURERS ASSOCIATION, ET AL.,

PETITIONERS

v.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, PETITIONER

v.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

Rex E. Lee

Solicitor General

F. Henry Hasicnt, Il

Assistant Attorney General

Louts F. CLAIBORNE

I -vuty Solicitor General

SAMUEL A. ALITO, JR.

Assistant to the Solicitor General

Jose R. ALLEN

Barry S. NEUMAN

Attorneys

A. JAMES BARNES Department of Justice

General Counsel Washington, D.C. 20530

SusAN G. LEPOW (202) 633-2217

Assistant General Counsel

Environmental Protection Agency

Washington, D.C. 20460

BEST AVAILABLE COPY

QUESTION PRESENTED

Whether Section 301(/) of the Clean Water Act,

33 U.S.C. 1311(1), bars the Environmental Protec-

tion Agency from granting variances from nztional

pretreatment standards for toxic pollutants to plants

having fundamentally different factors from those

considered by EPA in establishing the national

standards.

(1)

TABLE OF CONTENTS

Argument:

The EPA may grant “fundamentally different fac-

tors” (FDF) variances from pretreatment stand-

A. The EPA’s practice of allowing FDF variances

for existing direct and indirect dischargers con-

stitutes a reasonable and permissible exercise

of discretion under the statute _......»_»_»»»>>> =.

B. Section 301(1) of the Act does not prohibit

FDF variances from categorical pretreatment

standards for toxic pollutants =.

1. The language of Section 301(/) does not

support the court of appeals’ interpretation.

2. The legislative history of Section 301(/) in-

dicates that Congress did not intend to

prohibit FDF variances

8. EPA’s interpretation of Section 301(/)

gives that provision its most reasonable

meaning and is fully consistent with the

purpose of that provision —..............

TABLE OF AUTHORITIES

Cases :

American Frozen Food Institute vy. Train, 539 F.2d

LLL

Page

13

18

18

& $

Iv Vv

Cases—Continued : Page Cases—Continued : Page

American Iron & Steel Institute v. EPA, 526 F.2d Watt v. Alaska, 451 U.S. 259 0... ecco 25

1027, modified, 560 F.2d 589, cert. denied, 435 Weyerhaeuser Co. Vv. Costle, 590 F.2d 1011 ............ 8, 37

a 37

Appalachian Power Co. V. Train, 620 F.2d 1040....8, 13, 24 Statutes and regulations:

Bankamerica Corp. Vv. United States, No. 81- 1487 Clean Water Act, 33 U.S.C. 1251 et SEQ. ........-----+---- 2, 13

ean a 26 Section 301, 38 U.S.C. 1811 .............................. 8, 17, 22

Blum Vv. Bacon, 457 U.S. 182 ..............-------------.---<-00-- 23 Section 301 (b), 33 U.S.C. 1311(b) —.......... 7

Chevron US.A., Inc. V. Natural Resources De- Section 301 (b) (1), 33 U.S.C. 1811(b) (1) ...... 23

fense Council, Inc., No. 82-1005 (June 25, 1984).. 17, 24 Section 301 (b) (1) (A), 33 U.S.C. 1311(b) (1)

Crown Simpson Pulp Co. v. Costle, 642 F.2d 323, RE RCE SBR ese oe 4, 20

cert. denied, 454 US. 1053 covsssceneeccnsecnneecenseecaseeees 31, 36 Section 301 (b) (1) (A) (ii), 33 U.S.C. 1811 (b)

Edmonds v. Compagnie Generale Transatlantique, A ER es a ALR TS Se 24

Se coseececeeeaneeeeses 29 Section 301 (b) (2), 33 U.S.C. 1811 (b) (2) -.... 23

E.I. duPont de Nemours & Co. v. Train, 430 U.S. Section 301 (b) (2) (A), 33 U.S.C. (1976 ed.)

112 Ee passim 1311(b) (2) (A) ..... siatitdpmemmiguttenmiemasieummieatbenents 20

Environmental Defense Fund, Inc. v. Costle, 636 Section 301 (b) (2) (A), 33 U.S.C. 1311 (b) (2)

a corcresieipsesttateareaatarrirertainmrcmeniadinetinntitiaiein 9-10 Se ae ETS AR NR 4, 20

EPA Vv. National Crushed Stone Ass’n, 449 U.S. 64.. 14, 15, Section 301 (b) (2) (C), 33 U.S.C. 1811 (b) (2)

18, 19, 23, 26, 31, 32, 33 eae RN a RR Cea ee PE ea eee 4, 20

Farmers Irrigation Co. V. McComb, 337 U.S. 7565.... 25 Section 301(c), 38 U.S.C. 1811(e) 000000000... passim

Ford Motor Credit Co. v. Milhollin, 444 U.S. 555... 23 Section 301(g), 38 U.S.C. 1811(g) —............. passim

Kennecott Copper Corp. v. EPA, 612 F.2d 1232... 8, 37 Section 301 (1), 38 U.S.C. 1811(1) 0... passim

Mohasco Corp. V. Silver, 447 US. = ee 27 Section 304, 33 U.S.C. 1814 22000... 6, 7,8

Morrison-K nudsen Construction Co. Vv. Director, Section 304 (b) (1), 33 U.S.C. 1814(b) (1) .... 6

Office of Workers’ Compensation Programs, No. Section 304 (b) (1) (B), 33 U.S.C. 1314(b) (1)

81-1891 (May 24, 1988) _...............-00 26-27 EAE Ra Ne Cilio eames AINE SoM. i eS 4

NRDC v. EPA, 687 F.2d 642 ......................---....-----.. 7-8 Section 304 (b) (2) (A), 33 U.S.C. 1814 (b) (2)

NRDC v. Train, 6 Env’t Rep. Cas. (BNA) 1033, UE A SE ARS. bales eR SES 4

= in part and remanded in part, 510 won’ “ Section 304 (b) (2) (C), 33 U.S.C. 1314 (b) (2)

or ceeeeseeeene ~Vephe wer" “may ag eee ’ - (C) oe een n cena een ee ene eeenn nate eeen eee nneeterceeeene seeenceeeeeeercecs 4

NRDC Vv. Train, 8 Env’t Rep. Cas. (BNA) 2120, Section 304(g) (1), 33 U.S.C. 1814(g¢) (1) _.... i)

modified sub nom. NRDC vy. Costle, 12 Env’t Rep. Section 306, 33 U.S.C. 1316 ...... cieniaadeniedinaanl 4, 9, 23

Cas. (BNA) 1833, modified sub nom. NRDC v. Section 306(b) (3), 338 U.S.C. 13816(b) (3) _.... 20

Gorsuch, No. 2153, modified sub nom. NRDC v. Section 307 (b), 33 U.S.C. 1817(b) 9, 23

Ruckelshaus, No. 2153 (D.D.C. Aug. 2, 1983 & Section 397 (b) (1), 33 U.S.C. 1817(b) (1) 25

“Ss ¢ jee Se 9 Section 307 (b) (2), 838 U.S.C. (1976 ed.) 1317

Train ¥. NRDC, 421 U.S. GO ..2.....2.22..2..-22cccccceeeeeceeeee. 23, 24 SE ee ee ae eee 35

Union Electric Co. v. EPA, 427 U.S. 246 0... 23 Section 307 (b) (2), 33 U.S.C. 1317(b) (2) ...... 16, 25

Vermont Yankee Nuclear Power sient v. NRDC, Section 307 (b) (3), 33 U.S.C. 1817(b) (3) ...... 9, 20

Sy EY MEY cxcicusitatinnrsiiibigliadidesniitealentbaintabitintanindaaditinintenes 36 Section 307 (c), 38 U.S.C. 1817(¢) 00000. 9, 23

VI vil

Statutes and regulations—Continued : Page Miscellaneous—Continued : Page

Section 307 (d), 38 U.S.C. 1817(d) 22 Senate Comm. on Environment and Public Works,

Section 309, 38 U.S.C. 1819 eee eeeeeeeeeneee 22 95th Cong., 2d Sess., Legislative History of the

40 CFR. (1976) : Clean Water Act of 1977 (1978) —.................... 27, 28, 34

FR. ( ): Parenteau & Tauman, The Effluent Limitations

Pt. 415: Controversy: Will Careless Draftsmanship Foil

i 29, 30 the Objectives of the Federal Water Pollution

SE 30 Control Act Amendments of 1972?, 6 Ecology

Section 415.220 et Sq. --.-ceeconc-e-sseenees 7 LQ. 1 (1976). ---nnnneeennneeeeeeesnseeeeenneeenncteeecene 7

40CFR: Webster's Third New International Dictionary

ae SS 24

Pt. 125:

Section 125.30 et seq. ..................--------------- 3

Pt. 4038:

CC a 2, 3, 10, 22

| ES SS RSE 10

ID ccccccccctececscncccsces.-cosccsvtocs 10

LTTE TE ae 10

Section 408.18 (e) (3) ............................-....- 11, 31

TLE TT 31

EE Se 34

RRA eae 8 EE a 6

Miscellaneous :

a ae 11

44 Fed. Reg. (1979) :

EE a 11

ES 11

EE 11

46 Fed. Reg. (1981) :

I i incall emeeadienetenniidinetnenttadein 11

See eilaibiasbiignnnens 11

48 Fed. Reg. 52396 (1983) .........-.cecccovcccccenn. 35

Final Decision of the Administrator FDF 76-08,

Southern California Edison Co. Huntington

Beach Generating Station, NPDES Permit No.

CA0001163 (Feb. 22, 1977) ............-.ccccccccewn. 30

Iu the Supreme Court of the United States

OCTOBER TERM, 1983

No. 83-1013

CHEMICAL MANUFACTURERS ASSOCIATION, ET AL.,

PETITIONERS

v.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

No. 83-1373

UNITED STATES ENVIRCNMENTAL PROTECTION

AGENCY, PETITIONER

v.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

OPINION BELOW

The opinion of the court of appeals (Pet. A»p. Al-

A88)' is reported at 719 F.2d 624.

'“Pet. App.” refers to the Appendix to the Petition in No.

83-1013.

(1)

JURISDICTION

The judgment of the court of appeals was entered

on September 20, 1983. The petition for a writ of

certiorari in No. 83-1013 was filed on December 19,

1983. By order dated December 12, 1983, Justice

Brennan extended the time to file a petition for a

writ of certiorari in No. 83-1373 until February 17,

1984, and the petition was filed on that date. The

petitions were granted, and the cases were consoli-

dated on April 30, 1984. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

STATUTES AND REGULATIONS INVOLVED

Pertinent provisions of the Clean Water Act, 33

U.S.C. 1251 et seq., are reproduced at Pet. App.

A116-A121. The “fundamentally different factors”

(FDF) variance provision, 40 C.F.R. 403.13, is re-

produced at Pet. App. A122-A127.

STATEMENT

The Clean Water Act, 33 U.S.C. 1251 et seq., re-

quires the Administrator of the United States En-

vironmental Protection Agency (EPA) to regulate

two types of industrial facilities: (1) “direct” dis-

chargers, i.e., facilities that discharge waste water

directly into navigable waters; and (2) “indirect”

dischargers, i.e., facilities that discharge waste water

into publicly owned treatment works (POTWs) prior

to discharge into navigable waters. For both types of

dischargers, EPA conducts rulemaking proceedings

and promulgates nationwide, technology-based re-

quirements applicable to categories of dischargers

(e.g., iron and steel, metal finishing, and leather

tanning).

In each rulemaking proceeding, EPA attempts to

gather as much data as possible regarding facilities

in the particular category. Nationwide requirements

for all plants in that category are based on these data.

On occasion, however, the Agency may be unaware

of or may not consider a factor that is applicable to

a few plants and that would dictate a change in the

reyuirements applicable to those facilities. The EPA

has therefore developed a mechanism by which the

national requirements may be adjusted, on a case-by-

case basis, to better suit those few atypical plants.

This vehicle is known as the “fundamentally differ-

ent factors” (FDF) variance. As its name suggests,

this mechanism allows variances for existing sources

that can demonstrate that their situation is char-

acterized by factors that are “fundamentally differ-

ent” from those considered by EPA in developing the

national rule for their category.

In this case, the court of appeals held that the

Clean Water Act prohibits EPA from issuing such

FDF variances to indirect dischargers’ with respect

to all pollutants identified under the Act as toxic.

The issue in this case is whether the court’s con-

clusion is correct.

1. Because the agency’s regulation of indirect dis-

chargers is patterned after its regulation of direct

2The FDF variance provision for indirect dischargers,

which was struck down by the court of appeals in this case, is

found at 40 C.F.R. 403.13 (Pet. App. A122). EPA has pro-

mulgated an analogous provision for direct dischargers, 40

C.F.R. 125.30 et seq., which the respondent herein has chal-

lenged in the United States Court of Appeals for the District of

Columbia Circuit. NRDC v. EPA, No. 80-1607 and consoli-

dated cases. That case has not yet been briefed. As discussed

below, the court of apepals’ reasoning in this case would apply

equally to direct dischargers.

4

dischargers, a brief review of the statutory scheme

applicable to both types of dischargers is nceessary.

The Act requires direct dischargers to be regulated

through phased implementation of technology-based

requirements. By July 1, 1977, existing direct dis-

chargers were required to meet effluent limitations

based on the “best practicable control technology cur-

rently available” (BPT). 33 U.S.C. 1311(b) (1) (A).

By July 1, 1984, such dischargers were obligated to

meet potentially more stringent effluent limitations

for toxic pollutants based upon the “best available

technology economically achievable” (BAT). 33

U.S.C. 1311(b) (2) (A) and (C). “New source” di-

rect dischargers must meet new source performance

standards (NSPS) based on the “best availabie dem-

onstrated control technology” (BADT). 33 U.S.C.

1316. The Act required the Administrator to amass

a wide range of information and to publish “regula-

tions, providing guidelines,” based upon specific crite-

ria, for the BPT and BAT effluent limitations and

new source performance standards. 33 U.S.C. 1314(b)

(1)(B), (b)(2)(A), and (B). See E.J. duPont de

Nemours & Co. v. Train, 430 U.S. 112, 116 (1977)

[hereinafter duPont].

2. The development of national technology-vased

requirements for direct and indirect dischargers has

proven to be an enormous and complex undertaking.

For each industrial category, the Agency and its con-

tractors typically seek to obtain as much information

as possible regarding all of the relevant factors, in-

cluding the types of industrial processes involved,

water use practices, the nature and amounts of pol-

lutants in raw waste water, and the costs and effec-

tiveness of various waste water treatment technolo-

gies. Questionnaires requesting information on these

matters, as well as cost and financial data, are typi-

cally sent to at least a cross section of affected plants.

Representative facilities are then selected for visits

and on-site sampling in order to gain more detailed

information. Data are collected on the treatment ef-

ficiency of technologies already being used, and tests

are often conducted to determine the feasibility and

effectiveness of other potential technologies. In addi-

tion, the Agency’s contractors attempt to determine

model costs (both capital and annualized) for various

treatment technologies and, using available financial

data, they assess the potential impacts on the indus-

try, including estimated plant closures and the effect

on employment and prices. The treatment efficiency

of each technology is determined on a national basis

through the combined use of statistical analyses and

engineering judgments.’ In most instances, EPA has

found that application of one or more of the statu-

® The scope of the task of formulating national categorical

standards is illustrated by the procedures followed by EPA in

developing the BPT-level electroplating pretreatment stand-

ards that were unsuccessfully challenged in the proceedings

below. EPA initially sent questionnaires to over 500 plants

that it had identified as possibly falling within the category.

Of these plants, approximately 200 provided at least some of

the requested information. On the basis of the responses, EPA

conducted on-site visits of 82 plants to take samples of raw

and treated waste water over severa! days, inspect treatment

technology already in place, and collect other first-hand infor-

mation. These visits enabled EPA to determine that approxi-

mately 25 of the plants were representative in terms of treat-

ment technology, character of raw waste water, and other

factors. The data from these plants were then used to derive

achievable effluent limitations, using a combination of statis-

tical methodologies and engineering judgments.

‘sry factors warrants different requirements for sep-

arate subcategories within the national category.‘

3. During the rulemaking process, the Agency at-

tempts to obtain all pertinent information. However,

due to the magnitude of the effort involved in each

categorical rulemaking, the Agency occasionally may

not consider a unique factor that applies w a few

plants and would dictate a change in the require-

ments applicable to those facilities. In addition, a

particular plant may be so different from all of the

other plants considered by the Agency that the factors

generally deemed relevant to the treatment capabili-

ties of the other plants are inapplicable to the circum-

stances of that particular plant.

Moreover, from the outset EPA has been subjected

to very stringent court-ordered deadlines for develop-

ing these technology-based regulations. Section 304

(b)(1) of the Act, 33 U.S.C. 1314(b)(1), directed

EPA to issue BPT guidelines for all industrial cate-

gories within one year after the statute’s enactment,

i.e., by November 1973. This task proved impossible,

and in 1973 the respondent herein, the Natural Re-

sources Defense Council, Inc. (NRDC), sued the

Agency to establish these guidelines. As a result of

this litigation, EPA was placed under a timetable for

promulgating BPT effluent limitations guidelines for

categories of direct dischargers. NRDC v. Train, 6

Env’t Rep. Cas. (BNA) 1033 (D.D.C. 1973), rev'd

in part and remanded in part, 510 F.2d 692 (D.C.

Cir. 1974). Because of these schedules and the fact

that the guidelines required under Section 304 of the

Act, 33 U.S.C. 1314, had not yet been issued, the

‘ For example, in the bi’T electroplating pretreatment rule-

making, the electroplating category was subdivided into seven

categories. 40 C.F.R. Pt. 413.

7

Agency adopted a regulatory approach that combined

its obligations under certain provisions of the Act.

Specifically, EPA developed “effluent limitations

guidelines” for each industrial category. These were

intended to constitute both the guidelines required by

Section 304 and the nationally applicable effluent limi-

tations that, under Section 301(b), 33 U.S.C. 1311(b),

must be achieved by all dischargers within the cate-

gory.” In view of the complexity of the national

rulemaking efforts for each category, EPA included

in its categorical regulations an FDF variance pro-

vision to ensure that facilities with unique, plant-

specific factors were not unfairly treated as a result

of the tight judicial deadlines.*

EPA’s approach came under attack from both

sides. On the one hand, industry challenged EPA's

authority to establish BPT requirements, contending

that EPA could only set guidelines under Section 304

of the Act aad that only individual permit writers

could set the specific effluent limitations applicable to

each facility within the category. On the other hand,

NRDC, while accepting EPA’s authority to establish

BPT requirements for categories of dischargers, ar-

gued that the Agency could not authorize FDF vari-

ances based on plant-specific factors.

A number of courts of appeals issued conflicting

rulings with respect to industry's challenge.’ NRDC’s

challenge, however, was rejected in NRDC vy. EPA,

* See generally Parenteau & Tauman, The Effluent Limita-

tions Controversy: Will Careless Draftsmanship Foil the Ob-

jectives of the Federal Water Pollution Control Act Amend-

ments of 1972?, 6 Ecology L.Q. 1 (1976).

*E.g., 40 C.F.R. 415.220 et seq. (1976) (inorganic chem-

icals).

* See cases collected in duPont, 430 U.S. at 125.

537 F.2d 642 (2d Cir. 1976), which upheld the FDF

variance provision as an appropriate “administrative

safety valve” that “permits a more rigorous ad-

herence to an effective regulation” and that accom-

modates the need to promulgate national regulations

quickly while allowing individual problems to be dealt

with later (id. at 646-647).°

Ultimately, EPA’s approach was upheld by this

Court in duPont. The Court held that EPA had

properly construed its authority under Sections 301

and 304 of the Act and that the Agency has the au-

thority to issue nationally applicable regulations for

existing direct dischargers, “so long as some allow-

ance is made for variations in individual plants, as

EPA has done by including a variance clause in its

[BPT] limitations” (430 U.S. at 128 (footnote

omitted ) ).°

4. The Agency’s regulatory effort with respect to

indirect dischargers has been patterned after its ap-

proach with respect to direct dischargers. Indirect

dischargers are subject to “pretreatment” standards

applicable to pollutants, including toxic pollutants,

that are not susceptible to treatment by or would

* The District of Columbia Circuit .ikewise approved of

EPA’s approach of setting nationally applicable BPT regula-

tions tempered by the FDF variance mechanism. -imerican

Frozen Food Institute v. Train, 589 F.2d 107, 131 ,1976).

® Several courts of appeals subsequently took note of duPont

in emphasizing the importance of the FDF variance mecha-

nism to the categorical rulemaking process. E.g., Weyer-

haeuser Co. ¥. Costle, 590 F.2d 1011, 1087 (D.C. Cir. 1978) ;

Kennecott Copper Corp. v. EPA, 612 F.2d 1232, 1244 (10th

Cir. 1979) ; Appalachian Power Co. v. Train, 620 F.2d 1040,

1044-1048 (4th Cir. 1980).

interfere with the operation of POTWs.” 33 U.S.C.

1317(b). Like the direct discharger requirements,

pretreatment standards must be established by notice-

and-comment rulemaking for categories of dis-

chargers. 33 U.S.C. 1317(b) (3). And as with direct

discharger requirements, EPA was required by Sec-

tion 304(g)(1) of the Act, 33 U.S.C. 1314(g) (1),

to publish guidelines for the establishment of pre-

treatment standards. EPA decided at an early stage

to use the technology-based criteria specified by stat-

ute for direct dischargers as the basis for indirect

discharger requirements. However, as was the case

with the direct discharger requirements, the Agency

fell behind in promulgating pretreatment standards,

and NRDC soon brought suit seeking a court-ordered

schedule for promulgating pretreatment standards.

That litigation culminated in a consent decree that

placed EPA under stringent deadlines for promulgat-

ing categorical pretreatment standards. The decree

also incorporated EPA’s preferred regulatory ap-

proach of using the technology-based BPT, BAT, and

NSPS criteria to develop the indirect discharger re-

quirements. NRDC v. Train, 8 Env't Rep. Cas.

(BNA) 2120 (D.D.C. 1976), modified sub nom.

NRDC vy. Costle, 12 Env’t Rep. Cas. (BNA) 1833

(D.D.C. 1979), modified sub nom. NRDC vy. Gorsuch,

No, 2153( D.D.C. Oct. 26, 1982), modified sub nom.

NRDC vy. Ruckelshaus, No. 2153 (D.D.C. Aug. 2,

1983 & Jan. 6, 1984). In subsequent amendments to

the Act in 1977, Congress sanctioned this approach to

establishing pretreatment standards. See Environ-

Indirect dischargers that would be considered new sources

under 33 U.S.C. 1316 if they were direct dischargers are sub-

ject to new source pretreatmen’ standards. 33 U.S.C. 1317 (c).

10

mental Defense Fund, Inc. v. Costle, 636 F.2d 1229,

1244 (D.C. Cir. 1980).

Since the pretreatment regu'atory effort was pat-

terned after the approach to direct dischargers, when

EPA turned its attention to establishing pretreat-

ment standards, it similarly provided an FDF vari-

ance mechanism in its General Pretreatment hegula-

tions for existing indirect dischargers. 40 C.F.R.

403.13." This provision allows EPA to establish a

more or less stringent standard if the affected facility,

the POTW, or any other interested person shows

(1) that the facility is fundamentally different from

other plants in the category with respect to one or

more of the factors considered by EPA in establish-

ing the standards and (2) that compliance with the

national standard would result either in a pollutant

removal cost wholly out of proportion to the costs

considered by EPA in setting the national standard

or a non-water-quality environmental impact (such

as the amount of energy required) that is funda-

mentally more adverse than those considered in de-

veloping the standard. 40 C.F.R. 403.13(c). Among

the factors that may justify a variance are the

nature, quantity, or combination of pollutants in a

particular facility’s wastewater; the volume of waste-

water discharged by a facility; the amount of energy

required for a facility to meet the pretreatment

standard; the amount of space available for installa-

tion of the required control technology; and the cost

of compliance. 40 C.F.R. 403.13(d). However, fac-

tors having nothing to do with the appropriateness

of the pretreatment standard—such as a particular

In accordance with duPont (see 430 U.S. at 137), FDF

variances are not allowed for new source indirect dischargers.

See 40 C.F.R. 408.13(b).

11

facility’s “ability to pay for the required waste treat-

ment” (40 C.F.R. 403.13(e) (3) )—are not grounds

for a variance.

The FDF variance does not excuse compliarice with

a correct requirement but instead represents an ac-

knowledgement that not all relevant factors were

taken sufficiently into account in framing the require-

ment in the first place. As the Agency has described

it (44 Fed. Reg. 32854, 32893 (1979)):

No discharger * * * may be excused from the

Act’s requirement to meet * * * a pretreatment

standard through this variance clause. A dis-

charger may instead receive an individualized

definition of such a * * * standard where the

nationally prescribed limit is shown to be more

or less stringent than appropriate for the dis-

charger under the Act.

In effect, the FDF variance creates a new sub-

category for the discharger in question based on fac-

tors that would have justified—and required—the

creation of that subeategory had EPA been aware of

those factors or taken them into account during the

national rulemaking process.

5. In a petition for review filed in the United

States Court of Appeals for the Third Circuit, NRDC

challenged the FDF variance provision on two

grounds (see Pet. App. A38-A40).” First, NRDC

argued that because the Clean Water Act does not

specifically authorize FDF variances, EPA lacks the

12 The court of appeals also considered challenges by nu-

merous parties to various aspects of EPA’s General Pretreat-

ment Regulations, 48 Fed. Reg. 27736 (1978), as amended,

46 Fed. Reg. 9404 (1981), and to EPA's categorical pretreat-

ment standards for existing electroplating sources, 44 Fed.

Reg. 52590 (1979), as amended, 46 Fed. Reg. 9462 (1981).

12

authority to grant them (id. at A38-A39). Second,

NRDC contended (id. at A40) that Section 301(/)

of the Act, 33 U.S.C. 1311(l), which was added to

the statute in 1977, specifically prohibits such var-

iances insofar as they apply to toxic pollutants. Sec-

tion 301(/) provides that the “Administrator may

not modify any requirement of this section as it ap-

plies to any specific pollutant which is on the toxic

pollutant list.”

In response to NRDC’s first argument, EPA con-

tended (Pet. App. A39) that the statute accords the

Administrator the discretion to adjust national stand-

ards for particular plants. EPA relied on duPont,

in which this Court held (see 430 U.S. at 128) that

EPA may establish nationally binding BPT effluent

limitations guidelines provided that variances are

available for individual plants. With respect to

NRDC’s second argument, EPA argued (Pet. App.

A41) that Section 301/1) was not intended to bar

the Agency’s longstanaing practice of granting FDF

variances but was instead meant only to prohibit

those modifications authorized by Section 301(c) and

(g) of the Act, 33 U.S.C. 1311(¢) and (g), which

allow modifications of BAT requirements based, re-

spectively, on a facility’s inability to afford installa-

tion of the required control technology and the high

quality of the waters into which the discharge will

be made.

6. The court of appeals held that Section 301(/)

prohibits the granting of FDF variances for toxic

pollutants (Pet. App. A36-A43). The court rejected

(Pet. App. A39) EPA’s contention that this Court’s

decision in duPont supported EPA’s authority to

grant FDF variances from pretreatment standards.

The court also rejected EPA’s contention that FDF

13

variances are not the type of “modifications” that

Section 301(/) was intended to prohibit (Pet. App.

A42-A43). While acknowledging that “[t]he legisla-

tive history of Section 301(/) does indicate that

Congress was primarily concerned with prohibiting

modifications under Section 301(c) and (g),” the

court concluded (Pet. App. A42 (footnote omitted) )

that Congress did not “use[] ‘modification’ as a term

of art so as to exclude variance provisions from the

proscription of section 301(/).” The court also per-

ceived no difference between “the policy behind FDF

variances” and “the policies behind the ‘modification’

provisions” (Pet. App. A42). The court found it “dif-

ficult to imagine” why Congress would have intended

to prohibit Section 301(1) economic affordability mod-

ifications but not purportedly “similar” FDF var-

iances (Pet. App. A43).”

SUMMARY OF ARGUMENT

Under the Clean Water Act, 33 U.S.C. 1251 et

seq., the Administrator of the Environmental Pro-

tection Agency was given the responsibility of issuing

regulations establishing limitations on the discharge

of pollutants by industrial facilities. By statute and

judicial decree, demanding timetables for the promul-

gation of these requirements have been set.

In discharging these responsibilities, the EPA first

confronted the task of establishing limitations for

“direct” dischargers—plants that discharge waste di-

rectly into navigable waters. In an effort to issue

'§ The court recognized (Pet. App. A43) that its reading of

Section 301(/) directly conflicts with that of the Fourth Cir-

cuit in Appalachian Power Co. v. Train, supra.

14

those requirements as soon as possible, EPA decided

to promulgate effluent limitations guidelines for cate-

gories of facilities—e.g., all iron and steel mills or

all leather tanning plants—and to base those require-

ments primarily upon data concerning representative

or typical plants. Among other things, the agency

considered the types and quantities of pollutants in a

typical plant’s waste water and the effectiveness and

cost of various methods of eliminating these pollu-

tants.

Because the categorical regulations were based

upon a study of representative plants, EPA realized

that its calculations might not be valid for all plants.

For example, some plants might produce waste water

with different types or quantities of pollutants; the

methods of pollutant control employed by most plants

might be impractical or ineffective; and the cost of

complying with the categorical limitations migit dif-

fer greatly from the costs considered by the Agency.

In order to adapt the categorical limitations to these

plants, EPA developed the practice of granting vari-

ances to those facilities able to demonstrate that they

faced factors fundamentally different from those that

the agency had considered in framing the categorical

standards. EPA called these “fundamentally different

factors” or “FDF” variances.

An FDF variance is substantively the same as an

amendment refining the categorical standard to take

into account factors that the Agency did not suffi-

ciently consider in setting that standard in the first

place. As this Court has explained (EPA v. National

Crushed Stone Ass'n, 449 U.S. 64, 77-78 (1980)), an

FDF “variance is an acknowledgment that the uni-

form * * * limitation was set without reference to

the full range of current practices, to which the Ad-

15

ministrator was to refer. Insofar as a * * * limita-

tion was determined without consideration of a cur-

rent practice fundamentally different from those that

were considered by the Administrator, that limita-

tion is incomplete.”

In E. I. duPont de Nemours & Co. v. Train, 430

U.S. 112 (1977), EPA’s approach to these problems

was sustained. The Court held (id. at 128) that

EPA has the authority to issue regulations setting

effiuent limitations for categories of facilities “so long

as some allowance is made for variations in indi-

vidual plants,” as EPA had done through its FDF

variance provisions. See also EPA v. National

Crushed Stone Ass’n, 449 U.S. at 72.

When the agency turned to the task of setting pre-

treatment standards for “indirect” dischargers—fa-

cilities that discharge their waste water into publicly

owned treatment works—EPA followed the same

approach previously used for direct dischargers. That

approach was not proscribed, in EPA’s view, by the

enactment in 1977 of Section 301(/) of the Act, 33

U.S.C. 1311(1), which forbids the EPA to “modify”

any effluent limitation or pretreatment standard for

a toxic pollutant. EPA has interpreted this provision

as affecting, not FDF variances, but those “modifica-

tions” authorized by Section 301(c) and (g). Sec-

tion 301(c) and (g) modifications may be granted

based upon a facility’s financial weakness or the high

quality of the water into which the discharge will be

made—factors that obviously would not justify any

change in the categorical standard and that accord-

ingly are not grounds for an FDF variance. The

court of appeals was mistaken in reading Section

301(1) as applying to FDF variances, as well as

Section 301(c) and (g) modifications.

16

This case cannot be decided by looking only at the

language of Section 301(/). There is no denying the

fact that an FDF variance “modifies” an effluent

limitation or pretreatment standard in the dictionary

sense of the word, i.e., it changes or alters those re-

quirements. But construing Section 301(/) to pro-

hibit any change or alteration in an effluent limitation

or pretreatment standard for a toxic pollutant would

bring that provision into conflict with another section

of the Clean Water Act and weuld lead to absurd

results that Congress could not have intended. A

literalistic interpretation of Section 301(/) would

prohibit far more than FDF variances for toxic pol-

lutants; it would mean that effluent limitaticns and

pretreatment standards for toxic pollutants, once

issued, could never be amended by the Agency. EPA

It is impossible to believe that

such absurd results. Indeed, Congress has specifically

required EPA to “revise” its standards, including

those for toxic pollutants, as technology and other

factors change. 33 U.S.C. 1317(b)(2). Since EPA

is commanded to “revise” but not to “modify” its

requirements for toxic substances, it cannot plausibly

be argued that the statutory language clearly sup-

ports the court of appeals’ interpretation.

EPA’s interpretation, on the other hand, gives the

term “modify” a consistent interpretation in Section

301(c), (g), and (1).

17

tl

The court of appeals acknowledged (Pet. App.

A42 (footnote omitted)) that “[t]he legislative his-

tory * * * does indicate that Congress was primarily

concerned with prohibiting modifications under Sec-

tion 301(c) and (g).” In fact, the only legislative

history directly relevant to the question presented

here indicates that Section 301(/) was intended to

affect modifications sought under Section 301(c) and

(g). See pages 27-28, infra.

In rejecting this interpretation of Section 301(/),

the court of appeals relied on the fact that Section

301(¢) and (g) were described in passing during con-

gressional debate as “variance” provisions. However,

just because Section 301(c) and (g), which are af-

fected by Section 301(/), were described as “vari-

ance” provisions, it obviously does not follow that

every other “variance” provision is likewise within

Section 301(/)’s scope.

IV

Since the statutory language and legislative histor)

provide no clear support for the court of appeals’ and

respondent’s construction of the Act, the only remain-

ing question is whether the agency has adopted “a

permissible construction of the statute.” Chevron

U.S.A., Inc. v. Natural Resources Defense Council,

Inc., No. 82-1005 (June 25, 1984), slip op. 5 (foot-

note omitted ).

Here, there can be no doubt that the EPA’s in-

terpretation was permissible. As already noted, it

is inconceivable that Congress intended to prevent

EPA from amending its effluent limitations and pre-

treatment standards for toxic pollutants, and an FDF

variance is substantively the same as such an amend-

ment. Both “modify” requirements of Section 301 in

18

the same way. Since neither the court of appeals nor

respondent has questioned EPA’s authority to amend

its regulations relating to toxic pollutants, it is puz-

zling why they believe that FDF variances stand on

a different footing. To be sure, the procedure for

adopting an FDF variance differs from the procedure

for amending a rule, but there is no evidence that

Section 301(/) was at all concerned with such pro-

cedural questions. Nor is there reason to believe that

the rulemaking procedure is preferable. At all events,

if deference to an agency’s interpretation of the

statute it administers means anything, it surely must

mean that the agency is free, in the absence of con-

gressional direction, to choose between these two

procedures.

ARGUMENT

THE EPA MAY GRANT “FUNDAMENTALLY DIF-

FERENT FACTORS” (FDF) VARIANCES FROM

PRETREATMENT STANDARDS FOR ALL POL-

LUTANTS

A. The EPA’s Practice of Allowing FDF Variances for

Existing Direct and Indirect Dischargers Constitutes

a Reasonable and Permissible Exercise of Discretion

Under the Statute

Although the Clean Water Act does not specifically

empower the Environmental Protection Agency to

grant FDF variances for either direct or indirect

dischargers, the EPA is clearly authorized to do so,

as this Court’s decisions in duPont and EPA v. Na-

tional Crushed Stone Ass'n, 449 U.S. 64, 72 (1980),

established. The FDF variance provision for existing

indirect dischargers was first promulgated in 1978,

but its roots lie in EPA’s regulatory program for di-

rect dischargers, on which the pretreatment effort is

19

patterned. See pages 8-9, supra. In duPont, this Court

upheld EPA’s authority to establish binding BPT and

BAT effluent limitations for categories of existing

direct dischargers, “so long as some allowance is

made for variations in individual plants, as EPA has

done by including a variance clause in its [BPT]

limitations” (430 U.S. at 128 (footnote omitted) ).

In National Crushed Stone Ass'n, the Court reiterated

(449 U.S. at 72):

No * * * explicit variance provision exists with

respect to BPT standards, but in FE. J. du Pont de

Nemours & Co. vy. Train, 430 U.S. 112 (1977),

we indicated that a variance provision was a nec-

essary aspect of BPT limitations applicable by

regulations to classes and categories of point

sources. /d., at 128.

What the Court said in these cases about FDF var-

iances for direct dischargers applies equally to FDF

variances for indirect dischargers.

The factors that make the FDF variance provision

appropriate in the direct discharger context are no

less applicable in the case of indirect dischargers. As

noted, regulations for both types of dischargers must

be developed uncer stringent timetables. During this

period, the Agency is required to collect and analyze

large amounts of technical information concerning

complex industrial categories. The possibility that

EPA might overlook or fail adequately to consider

unique factors applicable to a few atypical plants

during the categorical rulemaking process is just as

likely in the indirect discharger context as in the

direct discharger context. It is thus equally impor-

tant that the Agency’s nationally binding categorical

pretreatment standards for indirect dischargers be

tempered with the flexibility that the FDF variance

mechanism offers.

Both the court below and respondents have at-

tempted to distinguish duPont on specious grounds.

Both argue (Pet. App. A39; Br. in Opp. 6-7) that

duPont sanctioned FDF variances only in the case of

BPT limitations and that variances are appropriate

in that context only because BPT limitations are de-

scribed by statute as applicable to individual “point

sources” (33 U.S.C. 1311(b)(1)(A)). Since pre-

treatment standards for indirect dischargers are de-

scribed as applicable to “categories of sources” (33

U.S.C. 1317(b)(3)), it is argued that duPont does

not support the granting of FDF variances to indi-

rect dischargers. Respondent amplifies this argument

(Br. in Opp. 6-7) by noting that in duPont the Court

agreed with EPA (430 U.S. at 137-139) that FDF

variances may not be granted in the case of “new

source” standards for direct dischargers, which are

described as applicable to “categories of sources” (33

U.S.C. 1316(b)(3)). Since this language is similar

to that employed in describing the pretreatment

standards, respondent deduces that FDF variances

may not be granted to indirect dischargers.

The court of appeals’ and respondents’ analysis is

plainly flawed. In the first place, duPont sanctioned

FDF variances from BAT, as well as BPT, limita-

tions, and BAT limitations apply to “categories and

classes of point sources” (33 U.S.C. 1311(b)(2)(A)).

The Court stated (430 U.S. at 128 (footnote

omitted ) ) :

We conclude that the statute authorizes the 1977

[i.e., BPT] limitations as well as the 1983 '**!

™ When duPont was decided, the Act required compliance

with BAT standards by July 1, 1983. 33 U.S.C. (1976 ed.)

1311 (b) (2) (A). See 430 U.S. at 118 0.5. Later in 1977, this

date was extended until July 1, 1984. 33 U.S.C. 1811

(b) (2) (A).

[i.e., BAT] limitations to be set by regulation,

as long as some allowance is made for variations

in individual plants, as EPA has done by includ-

ing a variance clause in its 1977 [ie., BPT]

limitations.

Moreover, the essence of the court of appeals’ and

respondent’s argument—that Congress intended for

BPT limitations to be set on a more individualized

basis than BAT limitations or pretreatment standards

—is contrary to duPont’s reasoning. In duPont, the

Court upheld EPA’s authority to issue regulations

establishing effluent limitations for classes of plants

and rejected the argument that those limitations

could only be set in individual permits. The Court

first concluded (430 U.S. at 126-127) that the BAT

limitations may be set on a categorical basis. The

Court then turned (id. at 127) to the difference in

the statutory language used to describe the BPT and

BAT limitations. The Court held (id. at 127-128),

however, that the BPT limitations could also be set

by regulation. The Court noted (id. at 127) that

“(njothing elsewhere in the Act * * * suggests any

radical difference in the mechanism used to impose

limitations for the [BPT] and [BAT] deadlines.”

The argument upon which the court of appeals and

respondent rely flies in the face of this reasoning.”

'® Respondent’s reliance upon this difference in the statu-

tory language is all the more unconvincing in light of respord-

ent’s insistence for more than a decade that BPT direct dis-

charger requirements be set for industrial categories of

sources, just like BAT direct discharger requirements, new

source performance standards, and pretreatment standards.

See NRDC v. Train, 6 Env’t Rep. Cas. (BNA) 1083 (D.D.C.

The court of appeals’ interpretation of the statute

also proves more than that Court was willing to accept

or acknowledge, for it means that no FDF variances

may be granted to indirect dischargers, not just that

variances may not be granted for toxic pollutants.

Respondent, by analogizing pretreatment standards

to new source standards (from which FDF variances

have never been granted “), points up this conclusion.

However, not only is this conclusion inconsistent with

duPont, for the reasons stated, but the analogy be-

tween new source standards and pretreatment stand-

ards applicable to all indirect dischargers, including

those already in existence prior to the issuance of the

standards, is obviously invalid. Both in the case of

1973), rev’d in part and remanded in part, 510 F.2d 692 (D.C.

Cir. 1974).

Respondent has attempted (Br. in Opp. 6-7) to distinguish

pretreatment standards from direct discharger BPT require-

ments on other grounds, but none of the distinctions is valid.

Respondent notes (Br. in Opp. 6) that a pretreatment

standard may require “no discharge.” So may a BPT regula-

tion—and many have done so.

Respondent observes (Br. in Opp. 6-7) that “it is ‘unlawful

for any owner or operator of any source to operate any source

in violation of’ ” a pretreatment standard. Section 307(d), 33

U.S.C. 1317(d). However, the same is true with respect to

BPT limitations. Once a permit is issued to a direct dis-

charger incorporating a BPT limit, it is illegal for that source

to discharge in violation of the permit. Sections 301 and 309

of the Clean Water Act, 33 U.S.C. 1311 and 1319.

* Accordingly, the regulation at issue here does not allow

FDF variances for new source indirect dischargers. 40 C.F.R.

403.13.

direct and indirect dischargers, new and existing

sources are treated differently." FDF variances are

not available for new source direct or indirect dis-

chargers because such plants can be planned and con-

structed so as to meet the national standards. It

hardly follows, however, that existing indirect dis-

chargers should be treated in the same way. On the

contrary, as previously noted, existing indirect dis-

chargers have just as much need for FDF variances

as existing direct dischargers.

In sum, duPont and National Crushed Stone Ass’n

settled the question of EPA’s authority to issue FDF

variances from categorical effluent standards. The

remaining question here is whether Section 301(/)

of the Act, 33 U.S.C. 1311(/), prohibits such vari-

ances in the case of toxic pollutants.

B. Section 301(7) of the Act Does Not Prohibit FD:

Variances From Categorical Pretreatment Standards

for Toxic Pollutants

This Court has recognized that the EPA’s interpre-

tation of the Clean Water Act is entitled to substan-

tial deference. EPA v. National Crushed Stone Ass’n,

449 U.S. at 83. See also Blum v. Bacon, 457 U.S. 132,

141 (1982); Ford Motor Credit Co. v. Milhollin, 444

U.S. 555, 556 (1980); Union Electric Co. v. EPA,

427 U.S. 246, 256 (1976). To sustain the Agency’s

position, a court need not “go[] so far as to hold

that * * * [EPA’s] construction of the Act was the

only one it permissibly could have adopted.” Train v.

NRDC, 421 U.S. 60, 75 (1975) (Clean Air Act).

Instead, a court must find only that EPA’s construc-

For direct dischargers, compare 33 U.S.C. 1311(b) (1)

and (2) with 33 U.S.C. 1316. For indirect dischargers, com-

pare 33 U.S.C. 1317(b) with 33 U.S.C. 1317(c).

24

tion of this “complex statute” is “sufficiently reason-

able to preclude the [court] from substituting its

judgment for that of the Agency” (id. at 87). See

also Chevron U.S.A., Inc. v. Natural Resources De-

fense Council, Inc., No. 82-1005 (June 25, 1984),

slip op. 4-7. Under this standard, EPA’s interpreta-

tion of Section 301(/) of the Act, 33 U.S.C. 1311(/),

clearly should have been sustained.

1. The Language of Section 301(1) does not support

the court of appeals’ interpretation

The court of appeals held that the language of Sec-

tion 301 (1) clearly prohibits FDF variances (Pet.

App. A42),"* and it cannot be denied that on first

reading the statutory language appears to support

the Third Circuit’s analysis. Section 301(/) provides

that the “Administrator may not modify any re-

quirement of this section as it applies to any specific

pollutant which is on the toxic pollutant list.” A na-

tional categorical pretreatment standard is unques-

tionably a “requirement” of Section 301(b) (1) (A)

(ii), 33 U.S.C. 1311(b)(1)(A) (ii), and an FDF

variance “modifies” such a standard in the dictionary

sense of the word, ie., it changes or alters it. See

Webster’s Third New International Dictionary 1452

(1976). Thus, if we go no further, the Third Cir-

cuit’s decision seems correct.

This Court, however, does not “ ‘make a fortress

out of the dictionary’ ” and has therefore “consistently

refused to pervert the process of interpretation by

mechanically applying definitions in unintended con-

18 By contrast, the Fourth Circuit found the language of

Section 301(1) to be unclear and therefore deferred to the

EPA’s reasonable construction. Appalachian Power Co. V.

Train, 620 F.2d at 1044-1048.

25

texts.” Farmers Irrigation Co. v. McComb, 337 U.S.

755, 764 (1949) (footnote omitted) ; see also Watt v.

Alaska, 451 U.S. 259, 266 (1981). The problem with

a literalistic interpretation of Section 301(/) is that

it conflicts with other provisions of the Act and would

lead to unreasonable results that Congress could not

have intended. Under this interpretation, a limita-

tion or standard for a toxic pollutant, once promul-

gated by EPA, could never be changed by the Agency

for any reason, because any such change would be a

proscribed “modification.” Neither the discovery of

an error in the Agency’s previous analysis, the com-

pilation of better or more accurate data, or subse-

quent scientific developments would allow the Agency

to change the standard. Not only would FDF vari-

ances be prohibited, but administrative amendment or

repeal of the standard would likewise be precluded.

Unless Congress acted, the standard would remain

unchanged.

It seems clear that Congress did not intend such

results. Having entrusted the EPA with the responsi-

bility for issuing requirements regarding toxic pollu-

tants in the first place, Congress could not have

wanted to prevent the Agency from altering those

requirements after promulgation, as circumstances

warrant. Indeed, far from precluding such altera-

tion, in Section 307(b) (2), 33 U.S.C. 1317(b) (2),

Congress provided that the EPA must “revise” its

pretreatment standards, including those for toxic pol-

lutants (see 33 U.S.C. 13i7(b)(1)), “from time to

time, as control technology, processes, operating

methods, or other alternatives change.” In our view,

a statute that commands EPA to “revise” pretreat-

ment standards for toxic pollutants but not to “mod-

ify” them is not “clear”on its face, as the court below

believed (Pet. App. A42) and as respondent main-

tains (Br. in Opp. 11).

If Section 301(1) does not prohibit all “modifica-

tions” in the literal sense, the question is which

changes are allowed and which are proscribed. EPA’s

position has always been that Section 301(/) pro-

hibits, in the case of toxic pollutants, those statutory

modifications that are otherwise allowed under Sec-

tion 301(c) and (g). As this Court has noted (EPA

y. National Crushed Stone Ass’n, 449 U.S. at 71-72

(footnote omitted) ) :

A variance under § 301(c) may be obtained upon

a showing “that such modified requirements (1)

will represent the maximum use of technology

within the economic capability of the owner or

operator; and (2) will result in reasonable fur-

ther progress toward the elimination of the dis-

charge of pollutants.” Thus, the economic ability

of the individual operator to meet the costs of

effluent reductions may in some circumstances

justify granting a variance from the 1987 limita-

tions.

Under Section 301(g), the BAT limitations for any

non-toxic pollutants may be modified based upon the

quality of the water into which the discharge will be

made.

EPA’s construction is supported by the fact that

the identical term—‘“modification”—is used in Sec-

tion 301(c), (g) and (/). It is, of course, a canon

of statutory interpretation that a term is presumed

to have the same meaning in different portions of

the same statute. Bankamerica Corp. v. United

States, No. 81-1487 (June 8, 1983), slip op. 6-7;

Morrison-K nudsen Construction Co. v. Director, Office

of Workers’ Compensation Programs, No. 81-1891

27

(May 24, 1983), slip op. 9; Mohasco Corp. v. Silver,

447 U.S. 807 (1980). EPA’s interpretation also finds

support in the legislative history. And most im-

portant, it gives Section 301(/) a reasonable mean-

ing that is consistent with the purpose of that

provision.

2. The legislative history of Section 301(1) indicates

that Congress did not intend to prohibit FDF

variances

Although the court of appeals stated (Pet. App.

A43) that the meaning of Section 301(/) is “clear,”

the court looked beyond the language of the statute

to the legislative history. However, instead of sup-

porting the court of appeals’ construction of the Act,

the legislative history of the 1977 amendments but-

tresses EPA’s view that Section 301(/)’s proscrip-

tion was not directed to FDF variances. In accord-

ance with EPA’s interpretation, the legislative history

indicates that Congress was focusing on the statutory

modifications explicitly authorized by Section 301(c)

and (g). Representative Roberts, the House floor

manager of the Act, stated with regard to the Con-

ference Committee bill :

Due to the nature of toxic pollutants, those iden-

tified for regulation will not be subject to waivers

from or modification of the requirements pre-

scribed under this section, specifically, neither

section 301(c) waivers based on the economic

capability of the discharger nor 301(g) waivers

based on water quality considerations shall be

available.

Senate Comm. on Environment and Public Works,

95th Cong., 2d Sess., Legislative History of the Clean

Water Act of 1977, at 328-329 (1978) [hereinafter

Leg Hist.]. Similarly, Senator Muskie, the Act’s pri-

mary author and then Chairman of the Senate Com-

mittee on Environment and Public Works, directed

his attention to Section 301(c) and (g) modifications

without mentioning the FDF variance provision. Leg.

Hist. 458, 461.

The court below reviewed this legislative history

and agreed with EPA that it “does indicate that

Congress was primarily concerned with prohibiting

modifications under section 301(c) and (g)” (Pet.

App. A42 (footnote omitted)). But relying (ibid.)

on the fact that supporters of the 1977 ainendments

at times referred to Section 301(c) and (g) as

“waiver” or “variance” provisions, the court found

(Pet. App. A42) that Congress did not appear to

have “used ‘modification’ as a term of art so as to

exclude variance provisions from the proscription of

section 301(/).” However, those references shed little

light on the meaning of that provision. Just because

Section 301(c) was described in passing during floor

debate as a “variance” provision, it cannot be in-

ferred, as the court of appeals apparently did (Pet.

App. A42), that Congress intended for Section 301

(1) to apply to every “variance” provision. The court

of appeals was guilty of bad logic and of ignoring

the realities of the legislative process.

A far more telling feature of the legislative history

is the absence of any indication that Congress in-

tended to alter EPA’s well-established and well-known

practice of granting FDF variances. EPA had :n-

cluded FDF variance provisions in numerous BPT

” Congressman Roberts went on to note that, in contrast,

certain pollutants not listed as toxic, known as nonconven-

tional pollutants, “will be subject to waivers under section

301(c) * * * and section 301(g) * * *.” Leg. Hist. 331.

regulations prior to the 1977 statutory amendments.”

Similarly, in duPont, which was handed down while

the 1977 amendments were under consideration, this

Court stated that variances from BPT and BAT

requirements are appropriate (430 U.S. at 128).

Surely, had Congress intended to alter the Agency’s

practice of authorizing FDF variances, or to legisla-

tively reverse duPont, Congress would have made that

intention clear, just as it expressed its intention to

limit the availability of Section 301(c) and (g)

modifications. But no member of Congress, including

the bill’s leading sponsors in the House and Senate,

expressed such an intent. In the absence of an express

indication of an intent to overrule this preexisting

law, the Third Cireuit erred in ascribing such an

intent to Congress. Edmonds v. Compagnie Generale

Transatlantique, 443 U.S. 256, 266-267 (1979).

Respondent has taken issue with this argument on

several grounds. First, respondent has asserted (Br.

in Opp. 12) that Congress had no reason to refer to

FDF variances because relatively few dischargers

had applied for variances from BPT requirements by

1977. But irrespective of the number of the appli-

cants, it is clear that by 1977 the FDF variance was

a well-entrenched feature of EPA practice that could

not have escaped Congress’s notice. Not only did

BPT regulations routinely contain a provision allow-

ing such variances but, as noted, FDF variances had

been prominently discussed in duPont.

Respondent also contends (Br. in Opp. 12) that in

1977 Congress had no need to address this Court’s

opinion in duPont because the BAT regulations in-

volved in that case did not include an FDF variance

provision and the focus of the 1977 amendments was

* See, e.g., 40 C.F.R. 415.62 (1976).

on strengthening EPA’s authority to regulate toxic

pollutants, primarily through the vehicle of BAT

regulations. However, the BPT regulations at issue

in duPont did contain an FDF variance clause, and

thus* regulations applied to pollutants that Congress,

in tae 1977 amendments, declared to be toxic.” In

addition, in February 1977, prior to the enactment of

the 1977 amendments, EPA had granted an FDF var-

Congress had intended to prohibit FDF variances for

toxic pollutants. As noted, however, the legislative

history is devoid of any such 1_ference.

Finally, respondent has argued (Br. in Opp. 11)

that the courts may not infer a nonstatutory excep-

3. EPA’s interpretation of Section 201(1) gives that

provision its most reasonable meaning and is fully

consistent with the purpose of that provision

a. Apart from its mistaken reading of the legisla-

tive history, the only other basis for the court of ap-

peals’ decision was its erroneous belief that Section

*! See, e.g., 40 C.F.R. 415.62 and 415.172 (1976).

2 Final Decision of the Administrator FDF 76-08, South-

ern California Edison Co. Huntington Beach Generating Sta-

tion, NPDES Permit No. CA0001163 (Feb. 22, 1977).

31

301(c) modifications “serve the same function” as

FDF variances (Pet. App. A42). On that premise,

the court concluded (id. at A43) that “[i]f Congress

was willing to prohibit section 301(c) modifications

where toxic pollutants are concerned, it is difficult to

imagine why Congress would have permitted similar

FDF variances for those same pollutants.”

The court of appeals’ analysis betrays a funda-

mental misunderstanding of the nature of both FDF

variances and Section 301(c) modifications. An FDF

variance is substantively the same as an amendment

of the regulation establishing the effluent limitation

or pretreatment standard. As this Court has written,

an FDF variance “is an acknowledgment that the

uniform * * * limitation was set without reference

to the full range of [factors], to which the Adminis-

trator was to refer. Insofar as a [categorical] limita-

tion was determined without consideration of a [fac-

tor] fundamentally different from those that were

considered by the Administrator, that limitation is

incomplete.” EPA vy. National Crushed Stone Ass'n,

449 U.S. at 77-78. In effect, the FDF variance

creates an appropriate subcategory for the plant or

plants in question, a category that should have been

established at the outset had EPA been aware of all

the relevant factors and taken them into account.

In considering whether an FDF variance will be

granted, EPA cannot take into account factors that

could not have justified a change in the national regu-

latiun, such as the economic plight of the affected

plant or plants (40 C.F.R. 403.13(e)(3)) or “the

impact of a [d]ischarge on the quality of the POTW’s

receiving waters” (40 C.F.R. 403.13(e) (4); see also

Crown Simpson Pulp Co. v. Costle, 642 F.2d 323

(9th Cir. ), cert. dented, 454 U.S. 1053 (1981)).

A modification under Section 301(c), by contrast,

serves an entirely different purpose.” A Section 301

(c) modification requires a showing that the “modi-

fied requirements * * * will represent the maximum

use of technology within the economic capability of

the owner or operator” (33 U.S.C. 1311€c) (empha-

sis added) ). Thus, a Section 301(c) modification ex-

cuses compliance with a valid requirement by a direct

discharger. Unlike an FDF variance, such a modifi-

cation is not in any way an acknowledgement that

the effluent limitation was incomplete or deficient. As

this Court has already explained (EPA v. National

Crushed Stone Ass'n, 449 U.S. at 78):

A variance based on economic capability * * *

would allow a variance simply because the point

source could not afford a compliance cost that is

not fundamentally different from those the Ad-

ministrator has already considered * * *. It

would force a displacement of calculations al-

ready performed, not because those calculations

were incomplete or had unexpected effects, but

only because the costs happened to fall on one

particular operator, rather than on another

who might be economically better off.

Similarly, a Section 301(g) modification may be

obtained by showing that if the modification is

granted, BPT requirements will nevertheless be met;

additional requirements for other sources will not re-

sult; and public water supplies, the environment, and

human health will be protected. Like a Section 301

(c) modification, a modification under Section 301(g)

28 Modifications under Section 301(c) and (g) are not avail-

able for indirect dischargers. Under the statute, they are only

available for direct dischargers.

does not suggest that the direct discharger’s effluent

limitation was inaccurate or incomplete.”

In short, the court of appeals’ equation of FDF

variances with Section 301(c) and (g) modifications

is simply wrong.”

b. Once the fundamental difference between an

FDF variance and a statutory modification is recog-

nized, the soundness of the EPA’s interpretation be-

comes apparent. While a literalistic reading of Sec-

tion 301(/) would prevent EPA from ever changing

a standard relating to a toxic pollutant—an unrea-

sonable result that Congress could not have intended

—EPA’s interpretation leaves the Ag*ivy free to

* By its terms, Section 301(g¢), which was enacted in 1977

together with Section 301 (1), does not permit a “modification”

for toxic pollutants. Thus, the primary purpose of Section

301(l) appears to have been to preclude Section 301(c) modi-

fications for toxic pollutants.

* In concluding (Pet. App. A42) that Section 301(c) mod-

ifications and FDF variances “serve the same function,” the

court of appeals relied on the following statement in National

Crushed Stone Ass'n, 449 U.S. at 74:

A §$301(c) variance * * * creates for a particular point

source a BAT standard that represents for it the same

sort of economic and technological commitment as the

general BAT standard creates for the class.

This statement, however, makes no reference whatever to

FDF variances from either BPT or BAT standards. The

Court was merely pointing out that a Section 301(c) modifica-

tion results in a standard that is within the economic capa-

bility of the discharger. It does not follow, however, as the

court of appeals concluded (Pet. App. A42), that this Court

viewed Section 301(c) modifications and FDF variances as

“serv[ing] the same function.” On the contrary, later in Na-

tional Crushed Stone Ass'n (449 U.S. at 77-78), this Court

took pains to point out the significant differences between

these two measures.

change the categorical standard by amendment or

FDF variance, if warranted. But EPA’s interpreta-

tion also means that compliance with a valid cate-

gorical standard for a toxic pollutant may never be

excused due to the economic plight of a particular

plant or the quality of the receiving waters; elimina-

tion of toxic pollutants must take precedence over

such considerations. This interpretation is entirely

consistent with the 1977 amendments’ emphasis on

restricting the discharge of toxic pollutants. Leg.

Hist. 326, 454.

c. Respondent has argued (Br. in Opp. 13) that

while EPA may not grant FDF variances for toxic

pollutants, EPA may “revise” its limitations and

standards for such pollutants through informal rule-

making procedures. While contending (Br. in Opp.

11) that FDF variances are “clear[ly]” “modifica-

tions” proscribed by Section 301(/), respondent does

not explain why the revisions it espouses are any less

“modifications.”

Respondent has also conceded throughout this liti-

gation that EPA has the flexibility to establish plant-

specific requirements by creating tailor-made sub-

categories during the national rulemaking process.

However, respondent has offered no convincing argu-

ment why it is a reasonable construction of the Act

to allow the creation of such subcategories during the

initial rulemaking but unreasonable to accord EPA

the same flexibility through the FDF variance process

in those relatively few cases in which a discharger

can demonstrate that EPA has not adequately con-

sidered some factor during the rulemaking process.”

2* Respondent has offered various arguments on this point

over the course of this litigation, but none is well founded. In

the court below, respondent contended that the FDF variance

process circumvents the public notice and comment require-

Moreover, since respondent agrees that EPA may

adopt rules creating special categories for plants with

fundamentally different factors and that EPA may

amend its rules setting requirements for toxic pol-

lutants, respondent would appear to concede by im-

plication that EPA, after issuing categorical require-

ments relating to toxic pollutants, may revise those

requirements to take into account the fundamentally

different factors affecting a particular plant or group

of plants.” Such an amendment, of course, would be

ments attendant to national rulemakings. Transcript of Oral

Argument in Court of Appeals at 249. However, the FDF var-

iance process clearly provides for public notice and comment.

40 C.F.R. 403.13(j). In opposing the petitions for certiorari,

respondent argued that the FDF variance procedure entails

several layers of review and public comment and is thus “ex-

traordinarily slow of resolution” (Br. in Opp. 13). However,

the review procedures about which respondent complains help

to ensure that FDF variances will only be yranted in the rela-

tively few appropriate cases. Respondent's claim (Br. in Opp.

14) that FDF variance applications permit companies to delay

compliance with the Act is inconsistent with respondent's

assertion (Br. in Opp. 7) that “[f]ew companies are inter-

ested in the FDF variance.” Finally, respondent has argued

that Section 307(b)(2) of the Act, 33 U.S.C. 4946034

1317(b) (2), contains the exclusive statutory mechanism for

correcting the national pretreatment standards. That section

directs EPA, “from time to time,” to revise the standards “as

control technology, processes, operating methods, or other

alternatives change.” Clearly, however, this provision is in-

tended to reflect periodic changes in the industry, not to ad-

just the national standards in light of preexisting factors not

considered by EPA at the time of promulgation.

** Following the decision in this case, EPA announced that

it would entertain petitions for amended rulemaking by cer-

tain indirect dischargers who were previously eligible for

FDF variances. See 48 Fed. Reg. 52396 (1983). EPA ex-

plained (ibid.) that in such cases “it may be appropriate to

substantively indistinguishable from an FDF vari-

ance. Thus respondent’s disagreement with the

Agency appears to concern, not the result achieved

when an FDF variance is granted for a toxic pol-

lutant, but the procedure employed. There is how-

ever, no evidence that Section 301(/) was concerned

with such procedural questions. Furthermore, re-

spondent has never provided a cogent or consistent

explanation of why the rulemaking procedure it fa-

vors is preferable. Respondent has argued, alterna-

tively, that the FDF variance procedure is too sum-

mary and too slow. See note 25, supra. At all

events, if deference to EPA’s construction of the

Clean Water Act means anything, it surely must

mean that the Agency is free to choose between these

two procedures. See Vermont Yankee Nuclear Power

Corp. v. NRDC, 435 U.S. 519 (1978).

d. FDF variances are granted infrequently * and

present no threat to the achievement of the Clean

Water Act’s goal of improving the quality of the na-

tion’s waters through national regulation.” The

issue specific categorical standards for such facilities, treating

them as a separate subcategory with more, or less, stringent

standards as appropriate.”

2* As respondent itself acknowledges (Br. in Opp. 12), by

1977 only 50 of 4,000 major industrial dischargers covered by

BPT limits had applied for FDF variances, and only two var-

jiances had been granted. As of today, only four variances

have been granted to direct dischargers, and none has yet

been granted to an indirect discharger. The Agency estimates

that approximately 40 FDF variance requests have been filed

by indirect dischargers and are pending.

2® See Crown Simpson Pulp Co. v. Costle, 642 F.2d 323 (9th

Cir.), cert. denied, 454 U.S. 1053 (1981) (upholding EPA's

veto of FDF variances from BPT requirements that had been

granted by the State based upon lack of harm to receiving

waters).

37

small number of variances obtained, however, does

not mean that such variances are unimportant or

unnecessary. There are at least 60,000 existing in-

direct dischargers potentially subject to national pre-

treatment standards. Within the past several years,

EPA has promulgated BAT-level pretreatment stand-

ards for 17 industrial categories, and it is now mov-

ing rapidly toward completion of BAT-level require-

ments for an additional seven categories within the

next year. All of these regulations were or are being

developed under the very rationale that this Court

found persuasive in duPont, i.e., that it is sound ad-

ministrative practice to promulgate categorical regu-

lations for existing dischargers as soon as possible

with an FDF variance available as a safety valve.

In light of the stringent deadlines that have been

imposed on the Agency, EPA has found it nec-

essary to base the national standards on the more

typical plants and to focus on unique situations

through the FDF variance process. In the past, the

FDF variance mechanism has helped to protect the

national standards against challenges by plants with

unique circumstances.” If FDF variances for toxic

pollutants may not be granted, then existing regula-

tions may be more vulnerable in the future. And is-

suance of standards now under development by the

Agency may be delayed if EPA must account for all

* See, e.g., Kennecott Copper Corp. v. EPA, 612 F.2d 1232,

1244 (10th Cir. 1979) (rejecting challenge to BPT effluent

limitations guidelines for ore mining direct dischargers be-

cause FDF variance procedure was available to address unique

plant) ; Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1040-1041

(D.C. Cir. 1978) (finding existence of FDF variance “crucial”

to affirmance of BPT regulations for direct dischargers) :

American Iron & Steel Institute v. EPA, 526 F.2d 1027, 1061

(1975), modified, 560 F.2d 589 (3d Cir. 1977), cert. denied,

435 U.S. 914 (1978).

unique plant-specific factors in developing these

standards.

In sum, the FDF variance provision is a longstand-

ing and integral feature of the EPA’s categorical

rulemaking activities for direct and indirect dis-

chargers. It provides an important, albeit limited,

safety valve for atypical plants that are improperly

regulated by the initial rule. There is no sound basis

for disturbing EPA’s construction of the Act which

allows such variances to be granted for all pollutants.

Upsetting EPA’s interpretation at this late juncture

could inject considerable uncertainty into the imple-

mentation of the Act and could thwart the achieve-

ment of its goals.

CONCLUSION

The judgment of the court of appeals should be

reversed.

Rex E. LEE

Solicitor General

F. HENRY HABICHT, II

Assistant Attorney General

Louts F. CLAIBORNE

Deputy Solicitor General

SAMUEL A. ALITO, JR.

Assistant to the Solicitor General

JOSE R. ALLEN

BARRY S. NEUMAN

Attorneys

A. JAMES BARNES

General Counsel

SUSAN G. LEPOW

Assistant General Counsel

Environmental Protection Agency

JULY 1984

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