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

Iu the Supreme Court of the

OCTOBER TERM, 1986

CHEMICAL MANUFACTURERS ASSOCIATION, PETITIONER

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

CHICAGO ASSOCIATION OF COMMERCE AND

INDUSTRY, ET AL., PETITIONERS

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE

FEDERAL RESPONDENTS IN OPPOSITION

DONALD B. AYER

Acting Solicitor General

F. HENRY HABICHT II

Assistant Attorney General

PETER R. STEENLAND, JR.

ANNE S. ALMY

Attorneys

Department of Justice

Washington, D.C. 20530

FRANCIS §. BLAKE (202) 633-2217

General Counsel ‘

& Environmental Protection Agency

Washington, D.C. 20460

10 p?.

QUESTIONS PRESENTED

Section 307(b)(1) of the Clean Water Act, 33

U.S.C. 1317(b) (1) authorizes the Environmental Pro-

tection Agency (EPA) to promulgate pretreatment

standards applicable to industrial discharges into pub-

licly owned treatment works. Section 307(b) (1) also

provides that EPA may permit revision of pretreat-

ment requirements to reflect removal of toxic pollut-

ants achievable by publicly owned treatment works

as long as those “removal credits’ do not prevent

sludge use or disposal by such works in accordance

with Section 405 of the Act, 33 U.S.C. 1845. The

questions presented are:

1. Whether the court of appeals exceeded its juris-

diction, conferred by Section 509(b) (1) of the Clean

Water Act, 33 U.S.C. (Supp. II) 1869(b) (1), in rul-

ing that EPA could not promulgate a removal credit

rule under Section 307(b) of the Act because EPA

had not yet promulgated comprehensive sludge reg-

ulations under Section 405 of the Act.

2. Whether EPA may allow removal credits un-

der Section 307(b)(1) prior to promulgating com-

prehensive sludge regulations pursuant to Section

405.

3. Whether the court of appeals erred in setting

aside EPA’s determination that, for the purposes of

allowing removal credits, the consistent rate of re-

moval of pollutants by publicly owned treatment

works can be measured by the average rate of re-

moval achieved by the works.

(I)

~

TABLE OF CONTENTS

Page

EGRET SPREE IER RENE col eta OO Ro oe RoR 1

i ccatcnmestmopennine 2

I i tdelhnionebiiionmdlagionns 2

as ascuelieniidsebsiomaiaanmnaneente 2

Tc capnsinpeinianiiiniioennnge 7

i hla dosiendmeniemnsones 11

TABLE OF AUTHORITIES

Cases:

Chemical Manufacturers Ass’n Vv. NRDC, 470 U.S.

I ae RIED eis HS Sve Ms Se ee 9

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 ............ 9

National Ass’n of Metal Finishers v. EPA, 719 F.2d

624, rev’d sub nom. Chemical Manufacturers

So A ob ae 4-5, 10

Statutes and regulations:

ESE DoE 6 5 eee 4

Clean Water Act, 33 U.S.C. (& Supp. II) 1251 et

Tt ois cccnnbasntdnttonantrnntommesesononnens 2

A. See 2

8 Gs | ESI 2

§ 807(b), 38 U.S.C. 1817 (b) .......................... 2, 3, 4, 8,9

§ 307 (b) (1), 833 U.S.C. 1817 (b) (1)....0000 ee. 3

Cn . cccesemmnscneniisll 2

88 DS | Reece 3, 5, 6, 7, 8, 9, 10

§ 406 (d), 88 U.S.C. 1845 (d) ..............2................ 3,4

© Sees ars. BO CO)....................0.....-...... 3

tN sc ecceneree 7

§ 509 (b), 33 U.S.C. (Supp. II) 1369 (b)-..... 6, 7,8

§ 509(b) (1) (C), 33 U.S.C. (Supp. II) 1369

ST icllilisiiniichladanoantiinendstemiccsnsisassencinianties 8

Marine Protection, Research, and Sanctuaries Act

of Bera, ae Ue. Beek OF O08. .............................. 4

(II)

IV

Statutes and regulations—Continued:

GD Ca Bix BIBT) CB) CR) aicicencsccsiweneevcrsnnecnscnencetes

44 Fed. Reg. 53460 (1979) (codified at 40 C.F.R.

RE I sieeddericiteisosie oonlpon endian akarensnegr eal ubtinaiaigneenanaionete

Miscellaneous:

43 Fed. Reg. (1978) :

EE SEES Ee Tae TOPE One ea

etme ;

i I TE asin cipeccncerccwciiesesensetoonsons

is ecesnsdinnrencmncatenaie

2 5. gy) |: REESE Snr sna

FLR. Conf. Rep. 95-830, 95th Cong., ist Sess.

fc PRERS PAG et 20° Sri oo ane Wo RCs Sane eT RS

S. Rep. 95-370, 95th Cong., Ist Sess. (1977) -..........

ar >} Ph >

co ©

Iu the Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-2389

CHEMICAL MANUFACTURERS ASSOCIATION, PETITIONER

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

No. 86-608

CHICAGO ASSOCIATION OF COMMERCE AND

INDUSTRY, ET AL., PETITIONERS

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF FOR THE

FEDERAL RESPONDENTS IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (86-239 Pet.

App. A1-A69) is reported at 790 F.2d 289.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered

on April 30, 1986. The petition for a writ of certi-

orari in No. 86-239 was filed on August 15, 1986.

The petition for a writ of certiorari in No. 86-608

was filed on October 9, 1986. The jurisdiction of this

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

STATUTE INVOLVED

The relevant portions of Sections 307(b)(1) and

405(d) of the Clean Water Act, 33 U.S.C. 1817(b) (1)

and 1345(d), are set forth in the appendix to the

petition for a writ of certiorari in No. 86-239 (Pet.

App. A55-A57).

STATEMENT

1. This case concerns the validity of pretreatment

standards promulgated by the Environmental Protec-

tion Agency (EPA) pursuant to Section 307(b) of

the Clean Water Act, 33 U.S.C. 1817(b). The Clean

Water Act, 33 U.S.C. (& Supp. II) 1251 et seq., di-

vides industrial facilities into two groups: direct dis-

chargers into the waters of the United States and in-

direct dischargers into sewer systems that lead to

publicly owned treatment works (POTWs). Direct

dischargers are regulated through the National Pol-

luefant Dischargey Elimination System permit pro-

gram (NPDES or Section 402 permit, 33 U.S.C.

1342). The terms and conditions of a NPDES per-

mit are governed by effluent limitations guidelines

(see 33 U.S.C. 1814) and by relevant state water

quality standards (see 33 U.S.C. 1312). POTWs also

are regulated by the NPDES permit system, and for

some pollutants that industrial plants discharge,

POTWSs provide a level of treatment that is equiva-

3

lent to that required of direct dischargers under the

industrial NPDES program.

Congress, however, recognized that POTWs gen-

erally were not designed to treat all forms of indus-

trial pollutants. In Section 307(b), Congress directed

the Administrator to issue regulations “establishing

pretreatment standards” for ‘those pollutants which

are determined not to be susceptible to treatment” by

POTWs or “which would interfere with the opera-

tion” of POTWs. Congress also recognized that

POTWSs often do remove at least some offending pol-

lutants. Hence, Congress also authorized POTWs to

grant industries “removal credits”—.e., revisions to

the applicable pretreatment standards to reflect the

level of pollutant removal by the POTWs (ibid.).

Under Section 307(b) (1), these credits are available

(1) if the combined level of treatment by the indirect

discharger and the POTW is equivalent to the ef-

fluent limitations imposed on the comparable direct

discharger and (2) if the granting of a credit does

not “prevent sludge use or disposal” in accordance

with Section 405 of the Act (33 U.S.C. 1845). Sec-

tion 405, in turn, addresses disposal of sewage sludge.

Section 405(e) states that the manner of disposal or

use of sludge is a local determination, but use or dis-

posal may not violate guidelines established by the

EPA Administrator. Section 405(d) states that the

Administrator “shall develop and publish * * * reg-

ulations providing guidelines for the disposal of

sludge.”

In 1979, EPA first promulgated sludge criteria

pursuant to Section 405(d) for landfilling, land ap-

plication, and incineration. See 44 Fed. Reg. 53460

(1979) (codified at 40 C.F.R. Pt. 257). Sludge dis-

posal is also regulated by a variety of statutes de-

4

pending upon the method of disposal. For example,

ocean dumping of sludge requires a permit under the

Marine Protection, Research, and Sanctuaries Act of

1972, 38 U.S.C. 1401 ef seqg., and sludge incineration

is regulated by Section 111 of the Clear Air Act, 42

U.S.C. 7411. EPA has consistently interpreted the

Section 307(b) requirement that removal credits not

prevent the use or disposal of sludge to mean that

whatever use or disposal the POTWs make of their

sludge, they must comply with all applicable federal,

state, and local requirements, not just whatever guide-

lines EPA may have explicitly promulgated under Sec-

tion 405(d). See 48 Fed. Reg. 27749 (1978); 40

C.F.R. 403.7 (a) (3) (iv).

2. In 1978, EPA promulgated General Pretreat-

ment Regulations that established the administrative

framework for all indirect dischargers, including pro-

vision for removal credits (see 48 Fed. Reg. 27736

(1978)).2. The Natural Resources Defense Council,

Inc. (NRDC) and various industry groups sought re-

view of those regulations in the Court of Appeals for

the District of Columbia Circuit. This litigation was

stayed pending a settlement agreement with the in-

dustry petitioners in which EPA agreed to propose

changes to the 1978 regulations. EPA subsequently

published revised regulations on January 28, 1981

(see 46 Fed. Reg. 9404), which both NRDC and in-

dustry groups challenged by filing petitions for re-

view that were heard in the Third Circuit. In Na-

tional Ass’n of Metal Finishers v. EPA (NAMF),

1EPA has also promulgated categorical regulations for

many industries to establish pretreatment standards for the

pollutants discharged by those industries. EPA plans to

promulgate additional categorical regulations for several

industries.

5

719 F.2d 624 (1983), rev’d in part sub nom. Chemical

Manufacturers Ass’n v. NRDC, 470 U.S. 116 (1985),

the Third Circuit upheld the removal credit provi-

sions of the regulations but set aside other portions

of the regulations, including the “fundamentally dif-

ferent factor’ variance provision for pretreatment

standards. The latter ruling was reversed by this

Court in Chemical Manufacturers Ass’n.

In 1984, EPA promulgated revisions to the removal

credit provisions of the pretreatment regulations (see

49 Fed. Reg. 31212). These revisions, inter alia, (1)

changed the measure of “consistent removal” of pol-

lutants, for the purpose of calculating the appropriate

credit, from removal rates attained at least 75% of

the time to average removal rates; (2) eliminated the

adjustment for storm water bypass of the POTW;

and (3) provided that removal credit authorization

would not be withdrawn during the effective period

of a POTW’s NPDES permit, except in instances of

substantial under-removal of pollutants. During the

comment period, NRDC claimed that EPA should not

authorize removal credits because a comprehensive

set of Section 405 sludge regulations had not been

promulgated (86-239 Pet. App. A6-A7).

On review, the Third Circuit held that EPA’s re-

moval credit rule was arbitrary and capricious in

several respects (86-239 Pet. App. Al-A55).? First,

the court ruled that the rule did not provide for con-

sistent removal of pollutants equivalent to the re-

moval achieved by direct dischargers. The court

2 Petitioners are the Chemical Manufacturers Association,

Chicago Association of Commerce and Industry, Illinois Manu-

facturers Association, and related entities that intervened as

respondents in the court of appeals.

:

found that basing credits on average removal rates

achieved by POTWs meant that when the plants were

operating at below average performance, the dis-

chargers would exceed the daily or monthly effluent

limitations applicable to direct dischargers (id. at

A29). Second, the court disapproved of EPA’s deci-

sion to ignore the effects of storm water bypasses of

the treatment plant. EPA had estimated that such

bypasses contributed approximately eight percent of

the pollutants discharged by the system and dismissed

this effect as dé minimis, but the court of appeals dis-

agreed and found that EPA had ignored the variabil-

ity of this factor among POTWs (id. at A41). Third,

the court set aside EPA’s determination not to with-

draw removal credits except for substantial under-

removal of pollutants. The court concluded that un-

der that policy the limits imposed on direct dis-

chargers would not be equivalent to the limits im-

posed on indirect dischargers and POTWSs, as re-

quired by the Clean Water Act (7d. at A46). Finally,

the court of appeals held that EPA erred in authoriz-

ing the issuance of removal credits prior to promul-

gating a comprehensive set of sludge regulations pur-

suant to Section 405. The court determined that

NRDC was not precluded from raising this challenge

by the 90-day review period in Section 509(b) of the

Act, 338 U.S.C. (Supp II) 1869(b), even though

NRDC might have raised the issue in response to

earlier rulemakings (86-239 Pet. App. A49). On the

merits, the court noted that EPA had acknowledged

that additional sludge rules were necessary. The

court also concluded that EPA’s “device of incorpo-

rating other regulations” did not meet the require-

ments of Section 405 (86-239 Pet. App. A52).

7

ARGUMENT

The decision of the court of appeals is erroneous

and may impose additional, ultimately unnecessary,

costs on industrial indirect dischargers that must

comply with pretreatment standards under the Clean

Water Act. Nevertheless, we cannot conclude that

further review by this Court is warranted, since

EPA rulemaking efforts now in progress should even-

tually alleviate the principal burdens cfdefted by the

decision.

1. Petitioner Chemical Manufacturers Association

(CMA) asserts that the court of appeals lacked juris-

diction under Section 509(b) of the Act, 33 U.S.C.

(Supp II) 1369(b), to review the adequacy of the

Section 405 sludge regulations. CMA argues, first,

that promulgation of regulations under Section 405

of the Act is not one of the “Administrator’s ac-

tion[s]” expressly made reviewable in the court of

appeals by Section 509(b) (see Pet. 14) and, second,

even if promulgation of Section 405 regulations was

reviewable, NRDC’s challenge in early 1985 was time-

barred because NRDC failed to seek review of the

regulations, issued in 1979 and amended in 1981,

within 90 days as required by Section 509(b) (see

Pet. 17).

We do not believe, however, that this case presents

a proper vehicle for considering the claimed limita-

tion on a court of appeals’ jurisdiction imposed by

Section 509(b). The issue before the court of appeals

was not whether to compel the Agency to promulgate

regulations under Section 405; such an issue, as peti-

tioner CMA points out (Pet. 15) , could only be raised,

in the first instance, in a district court. See 33

U.S.C. 13865. Instead, the issue before the court of

appeals was whether EPA was authorized by statute

8

to adopt a removal credits program under Section

307(b) of the Act. Section 509(b) (1) (C) explicitly

provides that “[rJeview of the Administrator’s ac-

tion * * * in promulgating any * * * pretreatment

standard under section 307 * * * may be had [in

the court of appeals],”’ and hence, apart from time-

liness concerns, we do not dispute that the court of

appeals had jurisdiction over NRDC’s challenge to

the removal credit rule.

Second, although we disagree with the court of

appeals’ ruling that NRDC’s challenge to the removal

credit program is timely,® that ruling is limited to

the unusual circumstances presented by this case and

it is, therefore, relatively unimportant. As the court

of appeals observed, Section 509(b) permits late chal-

lenges to administrative actions “on ‘grounds which

arose after’ ” the 90-day period for petitioning for re-

view has expired (86-239 Pet. App. A49). While we

disagree with the court’s finding that the lengthy de-

lay in promulgating additional Section 405 regulations

qualified NRDC’s challenge under ‘his exception

(ibid.), that determination is not of sufficient sig-

nificance to warrant this Court’s review.*

3 We argued below that NRDC’s lawsuit was untimely be-

cause the legal basis for NRDC’s current challenge to the

removal credit provision—the absence of comprehensive Sec-

tion 405 sludge guidelines—had existed as well in 1978 (when

EPA first promulgated removal credit regulations) and NRDC

had failed to assert that ground in its earlier challenge to the

1978 pretreatment regulations.

* We strongly disagree with the court of appeals’ suggestion

(86-239 Pet. App. A48) that the changes made by the 1984

rule and the reprinting of the rule in its entirety authorized a

challenge after the 90-day period set forth in Section 509(b)

to removal credit provisions that were not changed in 1984.

9

2. Petitioner CMA also asserts (Pet. 17, 22) that

the court of appeals’ decision to set aside EPA’s rea-

sonable, long-standing interpretation of the Clean

Water Act was contrary to the rationale of Chemical

Manufacturers Ass’n v. NRDC, 470 U.S. 116 (1985),

and Chevron U.S.A. Inc. v. NRDC, 467 U.S. 887

(1984). We agree that the court of appeals should

have deferred to EPA’s interpretation of the relation-

ship between Section 405 sludge regulations and the

removal credits provisions of Section 307 (b). The court

of appeals’ blanket reliance (86-239 Pet. App. A31)

on the Senate Report (S. Rep. 95-370, 95th Cong., 1st

Sess. 57-58 (1977)) to support its interpretation is,

moreover, misdirected because the Conference Com-

mittee substantially rejected the Senate version of the

relevant provisions when the Committee fashioned

the Conference bill ultimately enacted in 1977. See

H.R. Conf. Rep. 95-830, 95th Cong., 1st Sess. 86-88

(1977).

We also share petitioner CMA’s concern that the

court of appeals’ decision threatens to impose hard-

ships on the regulated community. By forbidding re-

moval credits in the absence of more comprehensive

Section 405 sludge guidelines, the court of appeals’

decision will force some individual indirect dis-

chargers, which must comply now or in the near

future with categorical pretreatment standards, to

invest in pollution control systems that may ulti-

mately be unnecessary once EPA has promulgated

Section 405 sludge guidelines and made removal

credits available.

Nevertheless, we do not urge further review. It is

our view that, ultimately, disruption to the pretreat-

ment program can be substantially cured by promul-

gation of the Section 405 regulations required by the

court of appeals. As noted by petitioner CMA (Pet.

10

11-12), the EPA regulatory agenda had Section 405

regulations scheduled for promulgation in September

1987. The Agency, however, will not be able to meet

that timetable. The earliest it now expects to be able

to propose Section 405 regulations is August 1987.

This rulemaking is one of the most complex on which

the Agency is working; it raises issues that affect

many of the Agency’s programs under a host of fed-

eral environmental laws. We acknowledge that the

unavailability of removal credits during the interim

will impose a significant impact on some members of

the regulated community. Because, however, the

Agency is presently engaged in the process of filling

the regulatory gap perceived by the court of appeals,

we do not believe that the legal issues presented war-

rant further review.

3. Petitioners Chicago Association of Commerce

and Industry, et al. (CACI), also seek review of that

portion of the court of appeals’ ruling that struck

down the use of POTWs’ average removal rate to

calculate the appropriate “removal credit” (86-608

Pet. 4). Petitioner CACI asserts that the court of

appeals’ decision mandates compliance with the

monthly and daily discharge limitations imposed on

direct dischargers (id. at 5). We believe that the

relationship between the effluent limitations in a

direct discharger’s NPDES Permit and the calcula-

tion of allowable removal credits available to an in-

direct discharger is quite complex, given the existing

methodology for calculation of POTW removal rates.

The court of appeals’ decision is quite explicit in rul-

ing that the use of average removal rates to calculate

removal credits does not provide for consistent re-

moval of pollutants equivalent to the level of treat-

ment required of direct dischargers (86-239 Pet. App.

ia

11

A46). Precisely what showing of consistent removal

would be required should EPA promulgate new re-

moval credit regulations, however, is not clearly

stated in the court of appeals’ opinion.’ In these cir-

cumstances, we believe it appropriate to await the

judicia] response to the promulgation of new regula-

tions rather than for this Court to undertake review

of the issue now.

CONCLUSION

The petitions for a writ of certiorari should be

denied.

Respectfully submitted.

DONALD B. AYER

Acting Solicitor General *

F. HENRY HABICHT II

Assistant Attorney General

PETER R. STEENLAND, JR.

ANNE S. ALMY

Attorneys

FRANCIS S. BLAKE

General Counsel

Environmental Protection Agency

DECEMBER 1986

5 We note that in NAMF y. EPA, 719 F.2d 624 (3d Cir.

(1983) ), the court of appeals upheld removal credit regula-

tions that were based on the removal rates achieved by the

POTW 75% of the time.

* The Solicitor General is disqualified in this case.

We oU. S. GOVERNMENT PRINTING orrice; 1986 181483 40144