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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1987
- **Citation:** 479 U.S. 1084

## Text

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

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