Opinion ID: 516043
Heading Depth: 2
Heading Rank: 2

Heading: Effluent Limitations

Text: 24 Both NRDC and the API mount a number of challenges to the permit's effluent limitations. These challenges go both to limitations on toxic pollutants and conventional pollutants. The challenges are both substantive and procedural.
25 The permit in this case sets BAT standards which establish a toxicity limit of 30,000 ppm (parts per million) based on the standard bioassay test for toxic pollutants in drilling muds and cuttings. 51 Fed.Reg. at 24899-902. In addition the permit provides for the agency to set alternative toxicity limits for operators who require use of drilling fluids that the operator anticipates will be unable to meet the toxicity limitation. See 51 Fed.Reg. at 24901, 24926. 26 Both NRDC and API maintain that EPA failed to follow rule making procedural requirements. They contend that the EPA unlawfully failed to expose the final toxicity limitations to public notice and comment. See 5 U.S.C. Sec. 553(b), (c) (1982); 33 U.S.C. Sec. 1251(e) (1982); 40 C.F.R. Part 124 (1987). Some background explanation is necessary. 27 The draft permit published for public comment proposed a single toxicity limit of 7,400 ppm. See 50 Fed.Reg. 30569-70, 30573 (1985) (proposed July 26, 1985). This was a more lenient standard than the 30,000 ppm eventually promulgated. 6 The draft permit also considered other alternatives. See id. at 30569-70. EPA considered establishing two toxicity limitations: a less stringent limitation of 7,400 ppm for drilling muds containing lubricants, and a more stringent limitation of 30,000 ppm for muds without lubricants. See id. at 30569. EPA rejected this option, however, because it was concerned that the two-tiered approach might serve as an incentive for industry operators to use a lubricity agent in order to qualify for the less stringent limitation. Id. EPA also considered a single 30,000 ppm toxicity limit, which would allow the use of even the most toxic generic drilling mud without additives, but it stated that this limit would have to be coupled with an additives approval process for those situations in which generic drilling muds were insufficient and additives would have to be used. Id. In this context, EPA requested comments on whether the proposed 7,400 ppm toxicity limit was appropriate. Id. at 39570. 28 The final permit established a two-tiered toxicity limit, which includes a toxicity limitation of 30,000 ppm, and an alternative toxicity request procedure which authorized operators to request case-by-case limitations. See 51 Fed.Reg. 24900-901. NRDC and API contend that the failure to ask for notice and comment on the alternative limitation violates the Administrative Procedure Act. API also claims that the EPA was required to ask for notice and comment on the 30,000 ppm limit. 29 EPA is bound by 5 U.S.C. Sec. 553 and must provide notice sufficient to fairly apprise interested persons of the 'subjects and issues' before the Agency. NRDC, 822 F.2d at 121 (quoting American Iron and Steel Inst. v. EPA, 568 F.2d 284, 293 (3d Cir.1977), cert. denied, 435 U.S. 914, 98 S.Ct. 1467, 55 L.Ed.2d 505 (1978)). The agency must have authority to promulgate a final rule that differs in some particulars from its proposed rule. See, e.g., Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 546-47 (D.C.Cir.1983). Otherwise the process might never end. If the final rule deviates too sharply from the proposal, however, affected parties will have been deprived of notice and an opportunity to respond to the rule. Id. at 547. Accordingly, a final rule which departs from a proposed rule must be a logical outgrowth of the proposed rule. Id. (construing the Clean Air Act and the Administrative Procedure Act); NRDC, 822 F.2d at 112 (Clean Water Act). The essential inquiry focuses on whether interested parties reasonably could have anticipated the final rulemaking from the draft permit. See Small Refiner Lead, 705 F.2d at 547-49. 30 In NRDC, the proposed rules contained a query requiring permit applicants to list every source that discharged toxics, and the final rule required applicants to list all toxic pollutants the applicant used or manufactured. NRDC, 822 F.2d at 117, 121. The D.C. Circuit held that EPA adequately alerted interested parties of EPA's intent to ask applicants to provide information regarding toxics present in their facilities. Id. at 121. Similarly, in Kennecott v. EPA, 780 F.2d 445, 451 (4th Cir.1985), cert. denied, 479 U.S. 814, 107 S.Ct. 67, 93 L.Ed.2d 25 (1986), after industry objected to one method of treating wastewater, EPA required an additional step in the treatment. The court held that there was adequate notice and opportunity for comment. 31 In this case, the EPA fairly apprised the interested public of the subjects and issues it was considering concerning toxic pollutants. Although EPA proposed a single limit of 7,400 ppm, interested parties were informed that other alternatives were being considered. Public comment made it evident that this proposed limit was too lenient for most wells. EPA considered a more stringent limit of 30,000 ppm, but it stated that some additional provisions would have to be made for operators requiring the use of additives. See 50 Fed.Reg. at 30569-70. We find that the final dual toxicity limit, which establishes a limit of 30,000 ppm and a procedure for alternative toxicity limits, was a logical outgrowth of the proposed limit and the rulemaking surrounding this proposal. 7
32 Having determined that notice and comment opportunity for the toxic effluent limitations was adequate, we turn to the substantive attacks on the toxic effluent limitations. We address first API's challenges to the validity of the test EPA has selected to establish the toxicity level of drilling fluids. That is a process known as the bioassay test. See supra note 6. 33 API makes three separate challenges to the test. API first contends that the toxicity test demonstrates too high a degree of variability of test results and that this test variability renders the toxicity limitation arbitrary and capricious. Here we deal with issues not of fact or law but of scientific measurement. In assessing difficult issues of scientific method and laboratory procedure, we must defer to a great extent to the expertise of the EPA. See Baltimore Gas & Elec. Co. v. Natural Resources Defense Council, 462 U.S. 87, 103, 103 S.Ct. 2246, 2255, 76 L.Ed.2d 437 (1983). There the Supreme Court recognized that a reviewing court should be at its most deferential in reviewing an agency's scientific determinations in an area within the agency's expertise. 34 In considering the bioassay test, we must observe that there is no test which has found more favorable acceptance. In the Alaska permit litigation, API challenged the test on other grounds, but conceded that the test was the most widely accepted benchmark for toxicity evaluations by EPA. API, 787 F.2d at 978. Given the widespread acceptance of this test, we find no basis for substituting our judgment for that of the agency. The choice of the bioassay test was within the limits of agency discretion. 35 API next contends that while the EPA set overall toxicity limitations using the bioassay test, it should instead have set limitations for specific toxic pollutants. The regulations, however, do not require EPA to identify and regulate specific toxic pollutants in setting BAT effluent limitations. See 40 C.F.R. Sec. 125.2(d)(3) (1987). Previous limitations that regulated a characteristic of a waste stream without identifying specific pollutants have been upheld. See, e.g., BASF Wyandotte, 598 F.2d at 651 (limiting Chemical Oxygen Demand (COD) in a waste stream). Recent amendments to the Act support the view that EPA may set limits on toxicity without regulating specific toxic pollutants. In developing information on methods for measuring water quality criteria for toxic pollutants, the Act specifically provides for establishing such measurements on other bases than pollutant-by-pollutant criteria, including biological monitoring and assessment methods. 33 U.S.C.A. Sec. 1314(a)(8) (West Supp.1988). Toxicity testing is a form of biological monitoring. 36 Additionally, the statutory definition of effluent limitations includes regulation of the concentrations of pollutants. 33 U.S.C. Sec. 1362(11) (1982). The toxicity test at issue here measures the lethal concentration of a toxic pollutant that will kill test organisms. See API, 787 F.2d at 978. Accordingly, the toxicity test is an appropriate effluent limitation gauge. 37 API also contends that the toxicity test procedure is invalid because it has not been approved in accordance with EPA regulations pertaining either to approved or alternative test procedures for pollutants. See 40 C.F.R. Secs. 136.3, 136.4, 136.5 (1987). These regulations, however, do not apply. EPA regulations provide that EPA must use approved test procedures under 40 C.F.R. Part 136 for the analyses of pollutants having approved methods under that part, and according to a test procedure specified in the permit for pollutants with no approved methods. 40 C.F.R. Sec. 122.44(i)(1)(iv) (1987). Because many of the pollutants covered by the permit do not have approved test methods, EPA may use a test procedure specified in the permit. Id. 38
39 We now turn to the difficult issues raised by NRDC's challenge to the toxicity limitations. NRDC first claims that the toxicity limit of 30,000 ppm is not BAT. It stresses that the EPA based that standard upon use of the most toxic of the eight generic drilling muds used by the industry, a mud known as generic mud number one. NRDC argues that the EPA should have provided that drilling muds be barged to shore, or, in the alternative, that a standard of 100,000 ppm should have been adopted. 40 The BAT standard must establish effluent limitations that utilize the latest technology, see Kennecott, 780 F.2d at 448, in order to reach the greatest attainable level of effluent reduction which could be achieved. NRDC, 822 F.2d at 115 n. 12. See also 33 U.S.C. Sec. 1311(b)(2)(A)(i) (1982) (BAT should result in reasonable further progress toward the national goal of eliminating the discharge of all pollutants). 41 The 30,000 ppm limitation in the permit appears to allow operators to use all generic muds except the most toxic drilling mud, see 51 Fed.Reg. at 24906, and seems readily achievable by average drilling procedures. It does not appear to push the industry to achieve greater levels of effluent control, as Congress intended BAT standards to do. See S.Rep. No. 414, 92nd Cong. 1st Sess., 42 (1971), U.S.Code Cong. & Admin.News 1972, pp. 3668, 3708, reprinted in Leg.Hist. at 1460 (Administrator has mandate to press technology and economics to achieve attainable levels of effluent reduction); id. at 51-52, U.S.Code Cong. & Admin.News 1972, p. 3718, reprinted in Leg.Hist. at 1469-70 (effluent limitations may be based on technology not in actual or routine use, so long as such technology will be available at a reasonable time and cost); Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1025 (D.C.Cir.1978) (Congress's intent was to force each industry on its own to develop the technology necessary to achieve the Act's aspiring goal). 42 At the same time, however, the Act grants EPA some latitude in defining BAT. See Kennecott, 780 F.2d at 448. The 30,000 ppm standard appears to be within the range upheld by the Fifth Circuit in the Alaska permit litigation. See API 787 F.2d at 977-79. 8 The 30,000 ppm limitation does restrict the use of some of the most toxic muds and additives. Here, as we also observed in regard to BAT for produced water, some special latitude is in order because of the agency's interest in coordinating the standards in this permit with evolving national standards. In evaluating the 30,000 ppm limitation independent of the permit's concomitant alternative toxicity limits, we hold in the circumstances of this case that the 30,000 ppm standard is not arbitrary or capricious. 9 43 We therefore turn to the alternative limit provisions. The alternative toxicity limit is a permit provision that allows operators to use mud systems more toxic than the 30,000 ppm toxicity limitation. The permit sets forth the procedure for requesting an alternative toxicity limit, in which the operator is required to submit certain information to the EPA prior to discharging the mud. See 51 Fed.Reg. at 24926 Section C. 44 NRDC argues, compellingly, that having established a 30,000 ppm BAT standard for the toxic pollutants, the agency cannot turn around and authorize discharges at variance from that standard. It points out that the Act expressly provides that the Administrator may not modify any requirement [pertaining to BAT controls on the discharge of toxic pollutants.] 33 U.S.C.A. Sec. 1311(l ) (West Supp.1988). 45 EPA's rejoinder is to the effect that each alternative limitation, in and of itself, amounts to BAT for the particular well involved. Yet BAT is to be established in accordance with technological standards and after consideration of congressionally enumerated factors. See 33 U.S.C. Sec. 1314(b)(2). Although the alternative toxicity test procedure requires operators to submit certain information, see 51 Fed.Reg. 24926, the alternative limit procedure is wholly silent as to what factors the agency is to consider in granting exceptions to the 30,000 ppm limit. Agency discretion is unfettered. We find no discernible standard that limits this discretion and defines when requests for alternative limits should be granted or denied. This is contrary both to the letter and spirit of the Clean Water Act. Section 1311(l ) prohibits the BAT standard from being modified as it applies to toxic pollutants, and the alternative limits appear to modify impermissibly the 30,000 ppm limit at the request of certain operators. In addition, the alternative limits conflict with the Act's goal of uniform standards within an industry. See 33 U.S.C. Sec. 1314(b)(2)(B); Committee on Public Works, 92nd Cong., 1st Sess., Report on S. 2770, reprinted in Leg.Hist. at 162, 172. 46 EPA here also suggests that it lacks sufficient information as to the ability of all wells to meet the 30,000 ppm standards and that this lack of knowledge justifies the exception. Yet EPA's alternative procedure creates a possibility of incalculable toxic discharges more toxic than the 30,000 ppm limit. It is an exception which threatens to swallow the rule. 47 There is similarly no way of ascertaining to what extent this alternative procedure may result in degradation of the ocean environment. Section 403(c) of the Act provides that [i]n any event where insufficient information exists on any proposed discharge [of pollutants] to make a reasonable judgment on any of the guidelines [concerning the degradation of waters, including the effect of disposal of pollutants on human health, marine life, esthetic, recreational, and economic values, as well as other considerations] no permit shall be issued. See 33 U.S.C. Sec. 1343(c)(2) (1982). Thus, the Act requires ocean polluters who receive a permit to satisfy both the technological requirements of the effluent limitations and also the ocean degradation criteria of section 403. See Pacific Legal Found. v. Quarles, 440 F.Supp. 316, 326 (C.D.Cal.1977), aff'd sub nom., Kilroy v. Quarles, 614 F.2d 225 (9th Cir.1980), cert. denied, 449 U.S. 825, 101 S.Ct. 88, 66 L.Ed.2d 29 (1980). See also 33 U.S.C.A. Sec. 1342(a)(1) (permit may be issued only upon condition that the discharge of pollutants will meet all applicable requirements, including section 403(c) of the Act). EPA has issued regulations implementing section 403(c) of the Act. See 40 C.F.R. Sec. 125 Subpart M (1987). These provisions prohibit the discharge of pollutants into the marine environment if EPA has insufficient information regarding ocean degradation, unless EPA makes certain detailed determinations. See id. The alternative limitation authorizing EPA to grant exceptions to the 30,000 ppm standard without apparent regard to the degradation of the marine environment does not comply with these statutes or regulations. For all of these reasons, we hold that the alternative limitations are arbitrary, capricious and contrary to law. 10
48 The NRDC's final challenge to the toxicity limitations is its contention that the EPA should have regulated discharges of cadmium and mercury. Trace amounts of cadmium and mercury are found in barite, which is a compound contained in drilling fluids. See API, 787 F.2d at 971-72; 50 Fed.Reg. 23586 (1985). Cadmium and mercury and their compounds are listed as toxic pollutants. See 40 C.F.R. Secs. 401.15(11), (45) (1987). 49 Different types of barite deposits contain varying amounts of cadmium and mercury. Bedded deposits of barite (often referred to as clean barite) contain low metal levels, while vein deposits have much higher concentrations of cadmium and mercury. See API, 787 F.2d at 973 n. 13. Use of clean barite would reduce toxic discharges of cadmium and mercury. 50 EPA decided not to impose limits on the concentration of cadmium and mercury in discharged barite, because it said it did not know how much clean barite is available. It stated that additional data is needed on the availability of barite which contains mercury and cadmium at the minimum concentrations prior to setting an effluent limitation on these metals. 51 Fed.Reg. at 24912. Although EPA has proposed national limitations on cadmium and mercury concentrations in discharged drill fluids that would require use of clean barite, see 50 Fed.Reg. at 34611, and the general permit for oil drilling in Alaska set such limits, see API, 787 F.2d at 972-73, EPA concluded in this permit that [t]he large number of operations in the Gulf of Mexico prevent the [EPA] Regions from concluding that adequate supplies of clean barite currently are available for all Gulf operations. 51 Fed.Reg. at 24912. 51 We can accept the EPA's statement that it does not have complete information as to the size of the potential supply of clean barite and how long it will be available, but we perceive no justification for the agency's failure to provide in the Gulf of Mexico permit, as it did in the Alaska permit, that clean barite should be used as long as it is available. Congress has demonstrated its intent to require industry to do as much as possible to control toxic discharges. See 33 U.S.C. Sec. 1311(b)(2)(A)(i) (BAT controls for toxic pollutants should result in reasonable further progress toward the national goal of eliminating the discharge of all pollutants). We hold that the agency's failure to provide any regulation at all on mercury and cadmium discharges is invalid.
52 The permit prohibits the discharge of drill cuttings generated during the use of oil-based muds because the oil within the cuttings are conventional pollutants. During the notice and comment proceedings, API, among others, submitted comments describing innovative technology which would incinerate or vaporize the oils within the cuttings, thus permitting the discharge of cuttings without oil pollution. API now contends that the agency failed to respond adequately to these comments. It is true that the agency did not expressly respond to the incineration technology comments. Since the technology is, as admitted by the industry, still innovative, the EPA has subsequently responded in an appropriate manner by issuing a demonstration permit to an oil company in order to provide EPA further information as it continues its development of national guidelines. See 52 Fed.Reg. 10262 (1987). Accordingly, a remand in the context of this proceeding to require further comment would appear to serve no useful purpose. 53 NRDC also attacks the permit's regulation of drill cuttings. NRDC objects to the use of a visual sheen test as a method of monitoring compliance with the prohibition on the discharge of free oil. The visual sheen test amounts to a visual observation of the receiving water after drilling fluids are discharged, to determine if a sheen results on the surface of the water. 51 Fed.Reg. at 24899. As an alternative to this test, NRDC believes the permit should require the use of the static sheen test which was required by EPA Region 10 in the Alaska permit. See API, 787 F.2d at 982-84. 54 The visual sheen test has been determined to be a generally valid and useful standard in other contexts. See United States v. Chevron Oil Co., 583 F.2d 1357, 1363 (5th Cir.1978) (civil penalties under the Act for an oil spill). In addition, EPA has imposed certain modifications on the test to make it more reliable, see 51 Fed.Reg. at 24899, and there is no indication in the record that the conditions present in Alaska offshore operations, which led to the requirement of the static sheen test, would similarly hamper use of the visual sheen test under Gulf conditions. See API, 787 F.2d at 983. Accordingly, because EPA has wide discretion and authority to determine monitoring requirements in NPDES permits, see 33 U.S.C.A. Sec. 1318(a) (West Supp.1988); United States Steel Corp. v. Train, 556 F.2d 822, 850 (7th Cir.1977), we find that EPA acted reasonably in deciding to require the visual sheen test as a method for monitoring compliance of the no discharge of oil limitation. 55 NRDC also contends that EPA erred by failing to require barging of conventional pollutants in drilling fluids as BCT for these pollutants. NRDC has failed to direct us to relevant portions of the permit record that suggest that EPA acted unreasonably in this regard. Accordingly, under these circumstances, we are unable to conclude that EPA's scientific determination regarding conventional pollutants was arbitrary and capricious.