Court Opinion

ID: 16325
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:53:20+00
Date Added: 2024-06-11T16:46:34.131676
License: Public Domain

Revised December 17, 1998

                 UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit

                  ___________________________

                          No. 97-60042
                  ___________________________

 TEXAS OIL & GAS ASSOCIATION; MARATHON OIL COMPANY; TRUSTEES FOR
  ALASKA; NATURAL RESOURCES DEFENSE COUNCIL; COOK INLET KEEPER;
    NATIONAL WILDLIFE FEDERATION; ALASKA CLEAN WATER ALLIANCE;
   GREENPEACE; ALASKA CENTER FOR THE ENVIRONMENT; ALASKA MARINE
 CONSERVATION COUNCIL; KACHEMAK BAY CONSERVATION SOCIETY; ALASKA
WAVERIDERS; UNION OIL CO. CA; PHILLIPS PETROLEUM; SHELL OIL CO.;
           RAILROAD COMMISSION OF TEXAS; STATE OF TEXAS,

                                                    Petitioners,

                             VERSUS

         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

                                                      Respondent.
     ______________________________________________________

                 AMERICAN PETROLEUM INSTITUTE,

                                                     Petitioner,

                             VERSUS

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; CAROL M. BROWNER,
  ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

                                                    Respondents.

                  ___________________________

                          No. 97-60321
                  ___________________________

         RAILROAD COMMISSION OF TEXAS; STATE OF TEXAS,

                                                    Petitioners,

                             VERSUS
         UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

                                                                  Respondent.

     ______________________________________________________

              Petitions for Review of Orders of the
                 Environmental Protection Agency
     ______________________________________________________
                        December 10, 1998
Before REAVLEY, DAVIS, and DUHE’, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

     Eighteen petitioners from six consolidated actions seek review

and reversal of a series of final effluent limitation guidelines

for the coastal oil- and gas-producing industry, promulgated on

January 15, 1997 by the United States Environmental Protection

Agency ("EPA") pursuant to Sections 301, 304, 306-08, and 501 of

the Clean Water Act ("CWA" or "Act"), 33 U.S.C. §§ 1311, 1314,

1316-18, 1361. Three of the petitioners also seek review of a

general National Pollution Discharge Elimination System permit

issued on January 9, 1995 by EPA Region 6 ("Region 6") pursuant to

Section 402 of the CWA, 33 U.S.C. § 1342. Petitioners challenge the

EPA’s promulgation of   zero discharge limits on produced water and

produced sand, the EPA’s decision to set more lenient discharge

limits for coastal facilities in Cook Inlet, Alaska than for other

coastal facilities, and Region 6's issuance of a general permit

banning the discharge of produced water from coastal facilities in

Texas.

     For reasons that follow, we uphold the EPA’s zero discharge

limits for   produced   water   and       produced   sand   in   the   effluent

limitation guidelines and its order setting more lenient discharge

                                      2
limits for produced water and drilling wastes in Cook Inlet. This

decision makes it unnecessary for us to reach the challenges to the

general permit.

                                   I.

     Congress enacted the CWA in 1972 "to restore and maintain the

chemical,   physical,   and   biological   integrity   of   the   Nation’s

waters." 33 U.S.C. § 1251(a). As part of this mission, the Act

declared a national goal that the discharge of pollutants into the

navigable waters be eliminated by 1985. 33 U.S.C. § 1251(a)(1). It

was designed to achieve this goal through a system of effluent

limitations guidelines ("ELGs") and National Pollutant Discharge

Elimination System ("NPDES") permits that set technology-based

discharge limits for all categories and subcategories of water

pollution point sources.1 Although the statutory framework of the

CWA has already been detailed at length by both the Supreme Court

and this Court, see EPA v. Nat’l Crushed Stone Ass’n, 449 U.S. 64,

101 S. Ct. 295 (1980); Am. Petroleum Inst. v. EPA, 661 F.2d 340

(5th Cir. 1981), a brief review of ELGs and NPDES permits is

helpful in understanding the present case.

     ELGs are the rulemaking device prescribed by the CWA to set

national effluent limitations for categories and subcategories of

point sources. 33 U.S.C. § 1314(b). An "effluent limitation" is

     1
      A "point source" is "any discernible, confined, and discrete
conveyance . . . from which pollutants are or may be discharged."
33 U.S.C. § 1362(14). The CWA requires the EPA to identify and
categorize all point sources warranting effluent guidelines. 33
U.S.C. §§ 1314(m), 1316(b)(1)(A).

                                   3
"any restriction established by a State or the Administrator on

quantities,     rates,    and   concentrations          of    chemical,     physical,

biological, and other constituents which are discharged from point

sources into navigable waters, the waters of the contiguous zone,

or the ocean, including schedules of compliance." 33 U.S.C. §

1362(11). These limitations are technology-based rather than harm-

based;   that   is,   they      reflect       the    capabilities    of     available

pollution   control      technologies         to    prevent   or   limit    different

discharges rather than the impact that those discharges have on the

waters. See generally E.I. du Pont de Nemours & Co. v. Train, 430

U.S. 112, 130-31, 97 S. Ct. 965, 976-77 (1977); Am. Petroleum

Inst., 661 F.2d at 343-44. The CWA prescribes progressively more

stringent technological standards that the EPA must use as a

guidepost in setting discharge limits for regulated pollutants. 33

U.S.C. § 1311(b)(1).

     Under this scheme, since March 31, 1989, a majority of ELGs--

including most of those at issue in the present case--have been

required to represent the "best available technology economically

achievable" ("BAT"). 33 U.S.C. §§ 1311(b)(2), 1314(b)(2). In other

words, in promulgating ELGs the EPA must set discharge limits that

reflect the amount of pollutant that would be discharged by a point

source   employing    the    best   available         technology     that    the   EPA

determines to be economically feasible across the category or

subcategory as a whole. BAT is the CWA’s most stringent standard.

"Congress intended these limitations to be based on the performance

of the single best-performing plant in an industrial field." Chem.

                                          4
Mfrs. Ass’n v. EPA, 870 F.2d 177, 226 (5th Cir. 1989).

       The CWA specifies several factors that must be considered by

the EPA in determining BAT limits:

       Factors relating to the assessment of best available
       technology shall take into account the age of equipment and
       facilities involved, the process employed, the engineering
       aspects of the application of various types of control
       techniques, process changes, the cost of achieving such
       effluent reduction, non-water quality environmental impact
       (including energy requirements), and such other factors as the
       Administrator deems appropriate . . . .

33 U.S.C. § 1314(b)(2)(B). The EPA nonetheless has considerable

discretion in evaluating the relevant factors and determining the

weight   to    be    accorded   to    each       in   reaching      its   ultimate      BAT

determination. See Natural Resources Defense Council v. EPA, 863

F.2d 1420, 1426 (9th Cir. 1988). Thus, the EPA has significant

leeway in determining how the BAT standard will be incorporated

into final ELGs.

       Despite their central role in the framework of the CWA, ELGs

are not self-executing. They cannot be enforced against individual

dischargers,        and   individual    dischargers           are    under   no    legal

obligation to obey the limits set by ELGs. Rather, ELGs achieve

their bite only after they have been incorporated into NPDES

permits. See Am. Paper Inst., Inc. v. EPA, 996 F.2d 346, 350 (D.C.

Cir.   1993)    (the      "rubber    hits       the   road"   only    when     ELGs     are

incorporated into NPDES permits); Am. Petroleum Inst., 661 F.2d at

344 (NPDES     permits       "transform[]        generally     applicable      effluent

limitations . . . into obligations (including a timetable for

compliance)     of     the   individual         discharger.")       (quoting      EPA   v.

                                            5
California Ex Rel. State Water Resources Control Bd., 426 U.S. 200,

205, 96 S. Ct. 2022, 2025 (1976)).

     NPDES permits are the CWA’s implementation mechanism; they are

the instrument      by   which    ELGs   are   made   binding    on    individual

dischargers. The CWA makes it unlawful to discharge any pollutant

from any point source without an NPDES permit.2 33 U.S.C. §

1311(a); Am. Petroleum Inst. v. EPA, 787 F.2d 965, 969 (5th Cir.

1986). These permits must generally incorporate, as a technology-

based floor, all applicable ELGs promulgated by the EPA for the

pertinent   point    source      category    or   subcategory.    33    U.S.C.   §

1342(a)(1). There are only two ways for an individual discharger to

avoid the incorporation of applicable ELGs into an NPDES permit:

first, where the discharger is operating under a permit that was

issued prior to the promulgation of the ELGs3; or second, in rare

cases, where the EPA grants the discharger a variance based on the

discharger’s demonstration that it is "fundamentally different"

from other dischargers in the category or subcategory. 33 U.S.C. §

1311(n); 40 C.F.R. §§ 122.21(m)(1), 125.30-125.32.

     In situations where the EPA has not yet promulgated any ELGs

for the point source category or subcategory, NPDES permits must

     2
      NPDES permits may be issued either by the EPA or, in those
jurisdictions where the EPA has authorized a state agency to
administer the NPDES program, by a state agency subject to EPA
review. See 33 U.S.C. § 1342(a)-(d).
     3
      A preexisting NPDES permit is not altered by the creation of
new ELGs. No NPDES permit, however, may be issued for a term
exceeding five years. 33 U.S.C. § 1342(a)(3), (b)(1)(A). This
ensures that all newly reissued permits will incorporate the most
recent ELGs.

                                         6
incorporate "such conditions as the Administrator determines are

necessary to carry out the provisions of the Act." 33 U.S.C. §

1342(a)(1). See also Am. Petroleum Inst., 787 F.2d at 969. In

practice, this means that the EPA must determine on a case-by-case

basis what effluent limitations represent the BAT level, using its

"best professional judgment." 40 C.F.R. § 125.3(c)-(d). Individual

judgments thus take the place of uniform national guidelines, but

the technology-based standard remains the same.

      NPDES permits may be either individual or general; that is,

either site-specific or generally applicable to a whole category or

subcategory of point sources. General NPDES permits are permissible

only where the point sources: 1) all involve the same or similar

types of operations; 2) discharge the same types of wastes; and 3)

require the same or similar monitoring. 40 C.F.R. § 122.28. The EPA

frequently uses such general permits for the oil and gas industry.

      We turn now to the specific issues raised in this appeal.

                                 II.

      The consolidated petitions challenge various actions taken by

the EPA in fulfilling its statutory mandate under the CWA with

respect to the Coastal Subcategory of the Oil and Gas Extraction

Point Source Category. The Coastal Subcategory consists of oil and

gas   exploration,   drilling,   production,   and   well   treatment

facilities located in or on a water of the United States--including

wetlands--landward of the inner boundary of the territorial seas.

Except for facilities in Cook Inlet, Alaska, most coastal oil and

gas facilities are located on wetlands or relatively shallow bodies

                                  7
of water. The Cook Inlet coastal facilities consist of platforms in

relatively deep water, similar to offshore oil and gas facilities.

     The Coastal Subcategory generates a number of pollutant waste

streams, including produced water, produced sand, and drilling

wastes. Produced water is highly saline water brought up from wells

along with oil and gas during the production phase. Among the toxic

pollutants   found   in   it   are       phenol,   benzene,   naphthalene,

ethylbenzene, and toluene. Produced sand consists of slurried

particles that surface from hydraulic fracturing and accumulated

formation sands and other particles generated during production. It

may also include sludges generated in produced water treatment

systems. Produced sand contains toxic metals and essentially the

same toxic organic pollutants found in produced water. Drilling

wastes consist of drilling fluids and drill cuttings generated

during exploration and well development operations. They contain a

number of toxic pollutants, including organics and metals.

     Petitioners challenge two separate EPA regulatory actions

affecting members of the Coastal Subcategory. First, they challenge

as arbitrary and capricious a General Permit issued by Region 6

regulating discharge of produced water for coastal oil and gas

facilities in Texas and Louisiana. Second, they challenge as

arbitrary, capricious, and unlawful the final ELGs promulgated by

the EPA regulating discharge of produced water, produced sand, and

drilling wastes for the entire Coastal Subcategory. The pertinent

history of each action is laid out below.

                                     A.

                                     8
     The challenged General Permit was issued in 1995 by Region 6,

acting without the guidance of any ELGs and therefore exercising

its best professional judgment. In December 1992, Region 6 proposed

to issue a General Permit governing the discharge of produced water

and produced sand for coastal oil and gas facilities in Texas and

Louisiana. The permit proposal was preceded by an examination of

the various types of produced water and produced sand control

technologies available to coastal operators in Texas and Louisiana.

From this examination, Region 6 determined in its best professional

judgment that the BAT standard required the use of reinjection

technology,   which   produces   no       discharge.   Region   6   therefore

concluded that a zero discharge requirement on produced water and

produced sand best represented the BAT standard, and included such

a limit in the proposed General Permit.

     Region 6 received extensive comments on the proposed General

Permit from industry representatives, environmental groups, and the

Railroad Commission of Texas ("RRC"). Following a reevaluation of

its analyses based on these comments, Region 6 determined that a

zero discharge requirement remained economically achievable for

coastal oil and gas facilities in Texas and Louisiana overall, even

though some smaller operators might experience economic failure.

Region 6 also determined that a zero discharge requirement was

necessary to prevent violations of state water quality criteria for

toxicity and salinity.

     On January 9, 1995, Region 6 issued a final General Permit

prohibiting the discharge of produced water and produced sand from

                                      9
all existing and future coastal oil and gas facilities in Texas and

Louisiana.4 The effective date of the General Permit was February

8, 1995. Region 6 also issued an Administrative Order at the same

time allowing coastal operators two years--until January 1, 1997--

to come into compliance with the General Permit.

     The final General Permit contained a provision that was absent

in the General Permit as originally proposed. Section B of the

final General Permit provided that dischargers could apply for

individual permits exempting them from the requirements of the

General Permit and imposing more lenient discharge limitations.

There is evidence that this provision was added at the urging of

the RRC and Texas operators to mitigate the economic consequences

of the General Permit with respect to those facilities in Texas

that would be forced to shut down as a result of the General

Permit’s zero discharge limit. There is also evidence that the

General Permit was not challenged within the 120-day statutory time

limit, 33   U.S.C.   §   1369(b)(1)(F),   only   because   Region   6   had

informed the RRC and Texas operators that it would not grant any

individual permits if the General Permit were challenged. Eighty-

two operators have applied for individual permits, but none have

been granted.

                                  B.

     The challenged ELGs represent the culmination of nearly two

decades of rulemaking efforts by the EPA. In 1979, the EPA first

     4
      The general permits did not address discharge of drilling
wastes.

                                  10
published ELGs governing waste streams discharged by the Coastal

Subcategory. 44 Fed. Reg. 22,069 (Apr. 13, 1979), codified at 40

C.F.R. Part 435, Subpart D. These ELGs, however, were based on the

CWA’s then-governing technological standard of "best practicable

control   technology    currently     available"   ("BPT").   33   U.S.C.    §

1311(b)(1). BPT is the CWA’s least stringent standard. The 1979

ELGs became outdated in 1989, when the CWA-mandated standard

shifted from BPT to BAT. See 33 U.S.C. § 1311(b)(2).

     The EPA first took action to establish BAT-based limits in

1989, when it published a notice of information and request for

comments on the Coastal Subcategory. This notice was followed by

voluminous comments from industry representatives, environmental

groups, and government agencies like the RRC. In 1992, the EPA

distributed   a    99-page   questionnaire   ("Section   308   Survey"      or

"Survey") to all known coastal operators pursuant to its authority

under Section 308 of the CWA, which authorizes the EPA to collect

information necessary to carry out the objectives of the CWA. 33

U.S.C. § 1318. Other information-gathering activities performed by

the EPA included collecting samples and gathering technical data at

three   drilling    operations   in   coastal   Louisiana;    visiting   ten

coastal oil and gas production facilities in Texas and Louisiana to

collect samples of produced water and associated wastes and to

collect technical and cost data; and reviewing state permit data

for all known Texas and Louisiana operators to obtain detailed

information on produced water discharges.

     In February 1995, shortly after Region 6 issued the General

                                      11
Permit, the     EPA    published   its   proposed   ELGs   for   the   Coastal

Subcategory. 60 Fed. Reg. 9,428 (Feb. 17, 1995). This resulted in

another   round   of    comments   and    public    meetings,    followed   by

publication of the final ELGs for the Coastal Subcategory on

December 16, 1996. 61 Fed. Reg. 66,085 (Dec. 16, 1996), to be

codified at 40 C.F.R. Part 435. The final ELGs set a zero discharge

limit on produced water and drilling wastes for all coastal oil and

gas facilities except those located in Cook Inlet, Alaska. The

final ELGs also set a zero discharge limit on produced sand for all

coastal oil and gas facilities, including those located in Cook

Inlet.

      The discharge limit on produced water was based on a number of

EPA findings. First, the EPA found that--due to a combination of

factors including operational preference, waterflooding, and state

or   federal   requirements--no     coastal   facilities    in   California,

Florida, Mississippi, Alabama, or the North Slope of Alaska were

discharging produced water. The EPA further found that 99.9 percent

of coastal facilities in Louisiana and Texas either had already

stopped discharging produced water or soon would as a result of new

Louisiana water quality regulations and Region 6’s General Permit,

both of which were set to take full effect in January 1997. The EPA

also noted that 62 percent of coastal facilities along the Gulf of

Mexico had been practicing zero discharge since at least 1994. Of

876 facilities in the Coastal Subcategory, the EPA concluded that

only fourteen would be able to discharge produced water lawfully

after January 1997. All but six of those facilities were located in

                                     12
Cook Inlet.

      The EPA next considered the control technologies available to

coastal dischargers, and concluded that the BAT standards required

all dischargers outside of Cook Inlet to reinject produced water.

The   EPA   noted     that   reinjection           was    already   widely    practiced

throughout the Coastal Subcategory, with the exception of Cook

Inlet. Because reinjection results in a zero discharge level, the

EPA determined the proper discharge limit on produced water to be

zero.

      Lastly, assessing the economic achievability of the zero

discharge     standard,      the   EPA    found      that    only   the     six   coastal

facilities not already covered by either the General Permit or the

new   Louisiana     water    quality      standards         would   incur    additional

compliance costs as a result of the limit, and none of the six

facilities would be forced to close. Moreover, the EPA found the

total economic costs considered in the context of the coastal

subcategory as a whole to be minimal.

      The EPA also conducted an "alternative baseline" analysis in

which it assumed that the General Permit’s zero discharge standard

would   not   apply    to    the   eighty-two            Texas   dischargers      seeking

individual     permits,      and    that       Louisiana’s       new   water      quality

standards     would    not    apply      to    eighty-two        Louisiana     open   bay

dischargers. It estimated that 80 percent of coastal facilities in

Texas and Louisiana would still be meeting or be required to meet

zero discharge by January 1997, meaning that those 80 percent would

still incur no additional compliance costs. Assuming that the ELGs

                                              13
would cause incremental compliance costs to all eighty-two Texas

individual permit applicants and all eighty-two Louisiana open bay

dischargers, the EPA concluded that up to ninety-four wells--or

approximately 2 percent of all Gulf of Mexico coastal wells--could

be first year shut-ins under the zero discharge standard, and that

a maximum of one firm among Louisiana open bay dischargers and

three firms among the Texas individual permit applicants could fail

as a result of the standard. Because this potential failure rate

represented less than 1 percent of all Gulf of Mexico coastal

facilities,    the     EPA   determined      that    zero    discharge     remained

economically achievable for the Coastal Subcategory as a whole

(except Cook Inlet) despite its potentially significant economic

effect on some individual operators.

     The EPA provided pollution reduction estimates for both the

current     requirements     analysis      and      the    alternative     baseline

analysis.    Under     the   current    requirements         analysis,     the    EPA

estimated that the zero discharge limit would reduce discharges of

conventional        pollutants    by   2,780,000          pounds   per    year,    of

nonconventional pollutants by 1,490,000,000 pounds per year, and of

toxic pollutants by 228,000 pounds per year. Under the alternative

baseline analysis, the EPA projected a reduction of conventional

pollutants    by     11,300,000   pounds     per    year,     of   nonconventional

pollutants     by    4,590,000,000     pounds       per    year,    and   of     toxic

pollutants by 880,000 pounds per year.

     The discharge limit on produced sand was based on the EPA’s

finding that only one operator in the country was discharging

                                        14
produced sand, and that even the one discharging operator had

reported plans to cease doing so. Examining available control

technologies, the EPA concluded that the BAT standard required some

combination of landfarming, underground injection, landfilling, and

on-site storage. Because none of these techniques involved the

discharge of produced sand, the EPA determined the appropriate

discharge limit for produced sand to be zero. Likewise, because the

zero discharge limit reflected current industry practice, the EPA

found the economic effect of the zero discharge limit also to be

zero.

     The discharge limit on drilling wastes was based on the EPA’s

finding that, outside of Cook Inlet, the entire Coastal Subcategory

had already attained zero discharge of drilling wastes. Examining

available control technologies, the EPA determined that the BAT

standard required coastal facilities outside of Cook Inlet either

to grind and inject drilling wastes or to dispose of drilling

wastes onshore. Because neither method results in any drilling

waste discharge, the EPA found the appropriate discharge limit on

drilling wastes to be zero. The EPA estimated that operators would

incur no costs under this limit because it reflected current

practices.

     In distinguishing Cook Inlet facilities from other coastal

facilities,   the   EPA   found   that   Cook   Inlet   facilities   face

substantially different circumstances from those faced by other

coastal facilities. The Cook Inlet facilities are located in

relatively deep water, and operate more like offshore oil and gas

                                   15
facilities than like other coastal oil and gas facilities. There is

a scarcity of land disposal facilities in the vicinity of Cook

Inlet, and, more significantly, geologic formations in the area are

generally         unsuitable   for   reinjection.   There    are   also    unique

difficulties associated with transporting drilling wastes to shore

for disposal. Based on these findings, the EPA determined that the

zero discharge standard for produced water and drilling wastes was

not economically achievable for Cook Inlet facilities because it

would have disproportionate adverse economic impacts.5 The ELGs

therefore treated Cook Inlet facilities differently from other

coastal facilities, setting more liberal discharge limits.6 The EPA

never formally designated Cook Inlet facilities as a separate

subcategory of point sources under the CWA.

                                           C.

       The final ELGs took effect on January 15, 1997, at which time

they       were    deemed   issued   for     purposes   of   judicial     review.

Petitioners Texas Oil and Gas Association ("TOGA"), RRC, and State

of Texas (collectively, "Texas Petitioners") filed two petitions

seeking reversal or remand of the zero discharge limit on produced

       5
      For example, the EPA estimated that compliance with a zero
discharge limit on drilling wastes would cost Cook Inlet operators
an additional $8,200,000 annually, as compared to the zero cost
increase for all other dischargers.
       6
      Specifically, the EPA determined that "improved gas
flotation" satisfied the BAT standard for produced water in Cook
Inlet. Using this determination as a baseline, the ELGs limit
produced water oil and grease concentrations from Cook Inlet
facilities to 42 mg/l on any given day, and 29 mg/l for each
monthly average. Discharge of most drilling wastes is likewise
allowed so long as toxicity limits do not exceed 30,000 ppm.

                                           16
water   contained      in     both    the     General      Permit       and    the     ELGs.

Petitioners American Petroleum Institute, Union Oil Company of

California, Marathon Oil Company, Phillips Petroleum, and Shell Oil

Company    (collectively,         "Cook      Inlet    Petitioners")           filed    three

petitions seeking reversal or remand of the zero discharge limit on

produced sand contained in the ELGs. Petitioners Trustees for

Alaska, Natural Resources Defense Council, Cook Inlet Keeper,

National     Wildlife       Federation,        Alaska     Clean        Water    Alliance,

Greenpeace,       Alaska    Center     for    the    Environment,        Alaska       Marine

Conservation Council, Kachemak Bay Conservation Society, and Alaska

Waveriders (collectively, "Alaska Petitioners") filed one petition

seeking reversal or remand of the ELGs to the extent that they

treated    Cook    Inlet     coastal      facilities      differently          from   other

coastal facilities. The six petitions were consolidated into the

present action.

     The    EPA     filed     a   motion      to     dismiss     Texas        Petitioners’

challenges    to    the     General    Permit       for   lack    of    subject       matter

jurisdiction, arguing that both petitions were filed after the

expiration of the 120-day statutory period for seeking judicial

review of the permit. The EPA does not question the timeliness of

any of the challenges to the ELGs. We therefore evaluate the

validity of the ELGs first.

                                          III.

     Texas Petitioners argue that the EPA’s decision to set a zero

discharge limit on produced water was based on a flawed analysis of

the economic achievability of the limit. First, they argue that the

                                             17
EPA excluded from its consideration wells drilled before 1980 and

not recompleted since then ("pre-1980 wells"), thereby failing to

consider the "age of equipment and facilities" factor mandated by

Section 304(b)(2)(B) of the CWA. 33 U.S.C. § 1314(b)(2)(B). Second,

they argue that the EPA based its pollutant reduction estimates on

a deficient study that egregiously overestimated the pollutant

loading for produced water in the Gulf Coast.7 For reasons that

follow, we are satisfied that the EPA adequately considered the age

factor in promulgating the zero discharge limit, and that the EPA’s

use of the challenged study provides no basis to contest the

produced water limit.

                                      A.

      Texas Petitioners challenge substantive conclusions that the

EPA drew from the administrative record. Review of their petitions

is therefore governed by the Administrative Procedure Act ("APA"),

5   U.S.C.   §§   551-59,   701-06,   which   establishes   a   deferential

standard of review for agency action. To invalidate an agency

      7
      Texas Petitioners also challenge the EPA’s promulgation of a
zero discharge limit on produced water in its new source
performance standards ("NSPS"). It appears from Petitioner TOGA’s
Reply Brief that this challenge rests on the same grounds as the
challenge to the ELGs. See TOGA Reply Brief at 13 ("TMOGA’s point
is that, because EPA’s analysis in setting BAT was flawed, EPA’s
setting of NSPS on the basis of BAT is also flawed."). To the
extent that any independent challenges to the NSPS limits were
made, we hold that they were waived by Texas Petitioners’ failure
to raise the objections during the notice and comment period. See
United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 35-37,
73 S. Ct. 67, 68-69 (1952). Likewise, arguments raised by amicus
parties challenging the accuracy of the EPA’s shut-in estimates
were not raised to the EPA during notice and comment, and therefore
will not be considered here. Id.

                                      18
action,   the   Court   must   determine   that   it   was   "arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law"; "in excess of statutory jurisdiction, authority, or

limitations, or short of statutory right"; or "without observance

of procedure required by law." 5 U.S.C. § 706(2)(A),(C)-(D).8

     An agency rule is arbitrary and capricious "if the agency has

relied on factors which Congress has not intended it to consider,

entirely failed to consider an important aspect of the problem,

offered an explanation for its decision that runs counter to the

evidence before the agency, or is so implausible that it could not

be ascribed to a difference in view or the product of agency

expertise." Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.

Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 2867 (1983). The Court must

make a "searching and careful review" to determine whether an

agency action was arbitrary and capricious, but "the ultimate

standard of review is a narrow one." Citizens to Preserve Overton

     8
      Petitioner TOGA argues that the EPA is not entitled to APA
deference in this case because it "failed to consider clearly
specified statutory factors in its analysis," "failed to rely on
valid reasoning," "failed to explain its radical change in policy,"
and "adopted an inflexible regulation." TOGA instead proposes a "no
deference" standard, and cites several cases that purportedly favor
such a standard. See Chem. Mfrs. Ass’n v. Natural Resources Defense
Council, 470 U.S. 116, 125, 105 S. Ct. 1102,1107 (1984) (citing
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 842-43 (1984), 104 S. Ct. 2778, 2781-82; Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29,
42, 103 S. Ct. 2856, 2866 (1983). None of these cases provide any
support for TOGA’s argument. Indeed, Motor Vehicle Mfrs. Ass’n
expressly adopted the "arbitrary and capricious" standard employed
here. Adopting TOGA’s line of reasoning would turn jurisprudence on
its head by requiring us to determine the merits of the case prior
to the standard of review, an impossibly circular task. We decline
TOGA’s invitation to do so.

                                   19
Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 823 (1971).

     Under this deferential standard, the Court may not substitute

its own judgment for that of the agency. Id. at 416, 91 S. Ct. at

823 (1971). Rather, the Court must determine whether the agency

action "bears a rational relationship to the statutory purposes"

and whether "there is substantial evidence in the record to support

it." Mercy Hosp. of Laredo v. Heckler, 777 F.2d 1028, 1031 (5th

Cir. 1985). If the agency’s reasons and policy choices conform to

minimal standards of rationality, then its actions are reasonable

and must be upheld. Small Refiner Lead Phase-Down Task Force v.

EPA, 705 F.2d 506, 521 (D.C. Cir. 1983); Chem. Mfrs. Ass’n, 870

F.2d at 199.

     In assessing the validity of the Coastal Subcategory ELGs, the

EPA’s decision "is entitled to a presumption of regularity." Chem.

Mfrs.   Ass’n,     870   F.2d   at   198.   This     presumption   places   a

"considerable burden" on the challenger to overcome the EPA’s

chosen course of action. Am. Petroleum Inst., 787 F.2d at 983. This

is particularly true where--as here--the agency’s decision rests on

an evaluation of complex scientific data within the agency’s

technical expertise. See New York v. Reilly, 969 F.2d 1147, 1152

(D.C.   Cir.     1992)   (stating    that   courts    must   be    "extremely

deferential" in such cases); Avoyelles Sportsmen’s League, Inc. v.

Marsh, 715 F.2d 897, 910-11 (5th Cir. 1983).

     Texas Petitioners face an especially difficult challenge in

this case, given the proportion of dischargers already practicing

zero discharge at the time of rulemaking. The EPA found that 100

                                      20
percent of coastal oil and gas facilities outside of Cook Inlet,

Louisiana, and Texas, and at least 62 percent of facilities in

Louisiana and Texas, were practicing zero discharge by 1992. This

finding--not challenged by any party--lends significant additional

weight to the EPA’s "presumption of regularity," suggesting as it

does that reinjection was not only economically achievable but was

actually practiced by a large majority of coastal facilities at the

time of the rulemaking.

      Added to this is the EPA’s further finding that only six

coastal facilities would be able to discharge produced water after

January 1997, meaning that the incremental economic impact of the

zero discharge limit on coastal facilities would be limited to only

those six facilities. Even under the alternative baseline analysis,

the EPA still found that 80 percent of coastal facilities in Texas

and Louisiana would be required to practice zero discharge by

January 1997, meaning that only 20 percent of coastal facilities

could   suffer   any   incremental   economic      impact.   These   findings

present   a   very   significant   barrier    for    Texas   Petitioners    to

overcome in order to establish that the zero discharge limit is not

economically achievable.

                                     B.

      Texas Petitioners first seek to meet their burden by arguing

that the EPA failed to consider a statutory factor in making its

BAT   determination    for   produced     water.    Although   the   EPA   has

significant discretion in deciding how much weight to accord each

statutory factor under the CWA, see Natural Resources Defense

                                     21
Council, 863 F.2d at 1426; Weyerhaeuser Co. v. Costle, 590 F.2d

1011, 1045 (D.C. Cir. 1978) (Congress left the EPA "discretion to

decide how to account for the [BAT] factors, and how much weight to

give each factor."), it is not free to ignore any individual factor

entirely. Both the CWA, 33 U.S.C. § 1314(b)(2), and the EPA’s own

regulations, 40 C.F.R. § 125.3(c)-(d), state that the EPA shall

take into account (or apply) certain factors in making a BAT

determination, including "the age of equipment and facilities

involved." 33 U.S.C. § 1314(b)(2)(B); 40 C.F.R. § 125.3(d)(3)(I).

Failure to consider the age factor is therefore, under the plain

meaning of the Act and its implementing regulations, an abuse of

discretion. See generally Am. Iron & Steel Inst. v. EPA, 526 F.2d

1027, 1048 (3d Cir. 1975), cert. denied, 435 U.S. 914 (1978)

(remanding agency rule to EPA where EPA failed to consider a

similar statutory age factor as it bore on the cost or feasibility

of retrofitting certain older steel mills).

     Texas Petitioners argue that, although the EPA paid "lip

service"    to   the   age   factor,   in    reality    the   agency   made    its

decisions    without    regard   to    the   economic    effects   of   a     zero

discharge standard on older wells. They argue that the EPA’s error

resulted from its exclusion of pre-1980 wells from the Section 308

Survey, on which the EPA relied heavily in making its economic

impact analysis. Rather than actually surveying pre-1980 wells, the

EPA extrapolated from information it received on other wells to

estimate the results it would have obtained if it had included pre-

1980 wells in the Survey. Texas Petitioners characterize this

                                       22
omission as "particularly egregious" because the volume of produced

water generated by a well increases as the well ages, meaning that

the expense of meeting a zero discharge limit rises as the well

gets older. Thus, they say, the EPA’s economic impact assessment

methodology specifically excluded those wells that stood to suffer

the greatest economic impact.

       Although the exclusion of pre-1980 facilities may have had

some effect on the precision of the EPA’s analysis of the age

factor, we cannot agree with Texas Petitioners that this exclusion

rose to the level of an arbitrary and capricious agency action. An

agency’s choice to proceed on the basis of "imperfect" information

is not arbitrary and capricious unless "there is simply no rational

relationship"    between    the    means      used   to   account   for   any

imperfections and the situation to which those means are applied.

Am. Iron & Steel Inst. v. EPA, 115 F.3d 979, 1004 (D.C. Cir. 1997)

(citation omitted). Here, the EPA found that the only relevant

distinction between pre-1980 wells and post-1980 wells is that pre-

1980   wells   are   primarily    "marginal    producers,"   producing    ten

barrels or less of oil per day. Noting that post-1980 marginal

producers were well-represented in the Section 308 Survey, and that

pre-1980 marginal producers do not differ significantly from post-

1980 marginal producers, the EPA extrapolated from the Section 308

Survey data to estimate the impact of the zero discharge limit on

pre-1980 facilities. It then confirmed its findings through a

facility-level analysis of economic impacts on the Texas individual

permit applicants. These actions were more than sufficient to

                                     23
establish a rational relationship between the Section 308 Survey

data and the pre-1980 wells. Thus, the EPA’s decision to proceed

without collecting data on pre-1980 wells was not arbitrary and

capricious.

                                   C.

     Next, Texas Petitioners attempt to satisfy their burden by

attacking one of the studies cited by the EPA in promulgating the

produced water limit. A regulation cannot stand if it is based on

a flawed, inaccurate, or misapplied study. "When an agency adopts

a regulation based on a study [that is] not designed for the

purpose and is limited or criticized by its authors on points

essential to the use sought to be made of it the administrative

action is arbitrary and capricious and a clear error in judgment.

Humana of Aurora, Inc. v. Heckler, 753 F.2d 1579, 1583 (10th Cir.),

cert. denied, 474 U.S. 863 (1985).

     Texas Petitioners argue that the EPA inaccurately derived its

pollutant reduction estimates from a limited study ("10-Facility

Study" or "Study") of ten unrepresentative coastal facilities in or

near Louisiana, and then based the zero discharge limit on its

results. The 10-Facility Study reports the results of an EPA

sampling program in which an EPA consultant visited ten facilities

for one day each to collect a limited number of samples from a

broad array of processes and waste streams. Texas Petitioners’

objections to the 10-Facility Study are as follows: 1) Only one of

the facilities involved in the Study discharged produced water,

while nine    used   reinjection   technology;   2)   Only   four   of   the

                                   24
facilities studied were in Texas, and all of those were close to

the Louisiana border; 3) In response to comments that the 10-

Facility Study was unrepresentative, the EPA merely removed three

facilities from the study, conceding that those facilities were

unrepresentative based on excessive oil and grease concentrations

but   maintaining     that   the    remaining     seven   facilities   were

representative; 4) Even though the revised Study never concluded

that its results were representative of Gulf Coast discharges, the

EPA   used   the    data   from    the    Study   to   represent   pollutant

concentrations for the entire Gulf of Mexico; and 5) The EPA

ignored the results of a superior study (the "Avanti Study") that

evaluated actual Texas Gulf Coast data from 173 outfalls.

      We need not address Texas Petitioners’ individual criticisms

of the 10-Facility Study to resolve this issue, because even if

every one of the criticisms were accurate we still could not

reverse or remand the produced water limit on that basis. The EPA

only used the 10-Facility Study to estimate pollution reduction

benefits that would result from the zero discharge limit. Whatever

value such benefit estimates may have, they are not a required part

of the BAT determination. In applying the BAT standard, the EPA is

not obligated to evaluate the reasonableness of the relationship

between costs and benefits. See EPA v. National Crushed Stone

Ass’n, 449 U.S. at 71, 101 S. Ct. at 300 ("in assessing BAT total

cost is [not] to be considered in comparison to effluent reduction

benefits"). Indeed, the EPA may prescribe ELGs whose costs are

significantly disproportionate to their benefits, just as long as

                                     25
the   BAT   determination   remains    economically      feasible    for   the

industry as a whole. See Am. Petroleum Inst. v. EPA, 858 F.2d 261,

265 (5th Cir. 1988) ("[A] direct cost/benefit correlation is not

required [for BAT], so even minimal environmental impact can be

regulated,     so   long    as   the        prescribed     alternative      is

‘technologically and economically achievable.’").9 The EPA included

the Study’s effluent reduction estimates only to satisfy the CWA’s

unrelated requirement that the EPA "identify" in its regulations

the degree of effluent reduction attainable through the application

of BAT. 33 U.S.C. § 1314(b)(2)(A). They had nothing to do with

either the BAT determination or the actual inclusion of a zero

discharge limit on produced water in the ELGs. As such, even

serious flaws in the effluent reduction estimates could not provide

grounds for remanding the zero discharge limit.

      Texas   Petitioners   attempt    to   tie   the    effluent   reduction

estimates to the BAT determination by arguing that the estimates

are integral to the statutory BAT factor of "cost of achieving such

effluent reduction," 33 U.S.C. § 1314(b)(2)(B). They assert that

the cost factor cannot be considered without reference to the

amount of effluent reduction, and that the EPA cannot properly

consider the cost of achieving a particular effluent reduction if

the degree and quality of the effluent reduction itself is grossly

      9
      Texas Petitioners urge us to reverse years of precedent and
to hold that the clear language of the CWA (specifically, 33 U.S.C.
§ 1314(b)(2)(B)) requires the EPA to perform a cost-benefit
analysis in determining BAT. We find nothing in the language or
history of the CWA that compels such a result.

                                      26
mischaracterized. We disagree. The benefit to be achieved from

adopting a particular pollution control technology is not an

element of that technology’s cost. The cost of complying with a

BAT-based regulation can be gauged by reference to the cost of the

technology itself, even if the benefits of using that technology

are unclear. Reinjection technolgoy, for example, costs the same

regardless of whether it reduces pollutant discharge by three

million pounds per year or three pounds per year. Thus, the EPA was

fully capable of assessing the "cost of achieving such effluent

reduction" even if its reduction estimates were flawed.

                                    IV.

     Cook Inlet Petitioners argue that, in setting a zero discharge

limit on produced sand in the ELGs, the EPA erroneously refused to

consider a "no free oil" alternative limit based on sand washing

technology.   They   claim   that   the   EPA,   relying   exclusively   on

prevalent industry practice, closed its mind to any option that did

not involve zero discharge, and thereby ignored a potentially

superior option. We are satisfied that the EPA’s decision to set a

zero discharge limit on produced sand based on nearly uniform

industry practice at the time of rulemaking was valid, and that the

EPA gave adequate attention to the "no free oil" alternative.

                                    A.

     Cook Inlet Petitioners, like Texas Petitioners, challenge

substantive conclusions that the EPA drew from the administrative

record. Review of their petitions is therefore governed by the

APA’s deferential "arbitrary and capricious" standard. 5 U.S.C. §

                                    27
706(2)(A). If, following a "searching and careful review," Overton

Park, 401 U.S. at 416, 91 S. Ct. at 823, we find that the agency’s

reasons   and    policy   choices     conform   to   minimal   standards   of

rationality, then its actions are reasonable and must be upheld,

Small Refiner, 705 F.2d at 521. The produced sand limit is entitled

to the same "presumption of regularity" as the produced water

limit, Chem. Mfrs. Ass’n, 870 F.2d at 198, and petitioners carry

the same "considerable burden" to overcome this presumption. Am.

Petroleum Inst., 787 F.2d at 983.

                                       B.

     Cook Inlet Petitioners contend that the EPA’s selection of a

zero discharge limit based on the widespread industry use of zero

discharge technologies such as landfarming, underground injection,

landfilling, and onsite storage was arbitrary and capricious. They

argue that the EPA ignored the BAT factors of non-water quality

environmental impacts and cost of achieving effluent reduction, and

that had the EPA taken these factors into account it might have

found that a "no free oil" limit based on sand washing technology

better represented the BAT standard, despite the fact that it

involves some discharge. Petitioners further suggest that the EPA

gave inadequate consideration to new information showing that sand

washing provides a viable alternative to zero discharge, meeting

the requirements of the CWA while providing economic and non-water

quality benefits.

     These arguments are unpersuasive. Even if the EPA completely

ignored   sand    washing   as   an     alternative    to   zero   discharge

                                       28
technologies, it still did not abuse its discretion. The EPA found-

-and no party disputes--that every coastal facility surveyed except

one was practicing zero discharge at the time of rulemaking, and

that even the one discharging facility was planning to switch to

zero discharge. Given the near-perfect uniformity of industry

practice in this area, it could hardly be said that the EPA’s

decision to set a zero discharge limit on produced sand did not at

least conform to minimal standards of rationality.

     Moreover, the record plainly shows that the EPA gave adequate

consideration to the sand washing option. The EPA thoroughly

explained why it rejected the "no free oil" limit, noting that such

a limit would have been less stringent than the technology-based

limitations in existing NPDES permits in Texas, Louisiana, and

Arkansas, and that even when the limit is met, produced sand still

contains "total suspended solids" and may still contain oil,

grease, and other pollutants. The EPA did not ignore the sand

washing option; it simply found that sand washing was not always

effective in eliminating residual pollutants from produced sand.

Accordingly, the EPA determined that sand washing did not meet the

BAT standard. We can find no fault with this determination.

                                  V.

     Alaska Petitioners argue that the EPA violated the CWA when

the agency opted to set different effluent limits for Cook Inlet

without labeling Cook Inlet as a separate subcategory. They claim

that the CWA requires the EPA to establish nationally uniform ELGs

for each   category   or   subcategory   of   point   sources,   and   that

                                  29
differentiated treatment of point sources within a category or

subcategory violates the express terms of the statute. We are

satisfied that the EPA’s actions were based on a permissible

construction of the CWA, and therefore must be upheld.

                                    A.

     Challenges to an agency interpretation of a statute that the

agency administers are governed by the two-step standard of review

set forth by the Supreme Court in Chevron U.S.A. v. National

Resources Defense Council, 467 U.S. 837, 104 S. Ct. 2778 (1984).

First, the Court determines whether Congress "has directly spoken

to the precise question at issue. If the intent of Congress is

clear, that is the end of that matter; for the court, as well as

the agency, must give effect to the unambiguously expressed intent

of Congress." Id. at 842-43, 104 S. Ct. at 2781. Second, if

Congress has not directly addressed the precise question at issue,

the Court asks whether the agency’s interpretation "is based on a

permissible construction of the statute." Id. at 843, 104 S. Ct. at

2782. As long as the agency’s construction of an ambiguous statute

is permissible, it must be upheld. Id. See also America Forest and

Paper Ass’n v. EPA, 137 F.3d 291, 297 (5th Cir. 1998) (applying the

Chevron test to the EPA’s interpretation of the CWA).

                                    B.

     The   question   at   issue   here   is   whether   the   EPA   has   the

authority under the CWA to set different effluent limits for

different point sources within a single category or subcategory.

Alaska Petitioners contend that Congress has already directly

                                    30
answered this question in the negative. They point to the text,

legislative history, and structure of the CWA in support of this

argument. None of the support they provide, however, amounts to a

direct statement by Congress on this issue.

     We find nothing in the text of the CWA indicating that

Congress   intended   to   prohibit    the   promulgation   of   different

effluent limits within a single category or subcategory of point

sources. Alaska Petitioners point to two sections of the CWA,

neither of which is availing on this question. Section 301(b)(2)

requires that ELGs be established for "categories and classes" of

point sources, 33 U.S.C. § 1311(b)(2), while Section 304(b)(2)(B)

mandates that the BAT factors be applied "within such categories or

classes," 33 U.S.C. § 1314(b)(2)(B). These sections do not express

a clear congressional intent on the question at issue here. The

fact that the EPA must promulgate rules for classes of polluters

rather than individual polluters does not mean that the EPA is

required to treat all polluters within each class identically. The

phrases "for categories and classes" and "within such categories or

classes" simply do not, by their terms, exclude a rule allowing

less than perfect uniformity within a category or subcategory.

     The legislative history also falls short of expressing a clear

congressional intent to prevent differentiated treatment of point

sources within a category or subcategory. Alaska Petitioners cite

numerous quotations from the legislative history emphasizing the

importance of national uniformity and categorical rather than

individual treatment of point sources within each category or

                                      31
class. See, e.g., A Legislative History of the Water Pollution

Control Act Amendments of 1972 at 172, Cong. Research Service,

Comm. Print No. 1, 93d Cong., 1st Sess. (1973) ("The Conferees

intend that the factors described in section 304(b) be considered

only within classes or categories of point sources and that such

factors not be considered at the time of the application of an

effluent limitation to an individual point source within such a

category or class."). At best, however, these quotations simply

reinforce the textual mandate of the CWA that ELGs be established

for "categories and classes" rather than individual point sources.

Nothing   in   the   quoted   excerpts,   nor   anywhere   else   in   the

legislative history or case law, suggests that Congress intended to

deny the EPA discretion to set different limits for different point

sources within the same category or subcategory when circumstances

so warrant. As our sister court noted in Natural Resources Defense

Council v. EPA, 859 F.2d 156 (D.C. Cir. 1988): "[N]othing in all

this specifies that the EPA must apply these uniform guidelines

uniformly to all point sources within industry categories, no

matter what. . . . [A]lthough exalting the value of uniformity, the

statute simply does not require uniformity in all circumstances."

Id. at 200-201.

     Finally, nothing in the structure of the CWA suggests that

Congress intended to prevent the EPA from promulgating different

effluent limits for different point sources in a single category or

subcategory. Alaska Petitioners argue that the CWA contains a

                                   32
number    of   carefully   enumerated       exceptions   to   the   uniformity

requirement, see 33 U.S.C. § 1311(c),(g)-(h),(m)-(n), and that

these exceptions are the exclusive mechanism for avoiding that

requirement. They cite the long-established canon of statutory

construction that "[w]here Congress specifically enumerates certain

exceptions to a general prohibition, additional exceptions are not

to be implied, in the absence of evidence of a contrary legislative

intent." Andrus v. Glover Const., Inc., 446 U.S. 608, 616-17, 100

S. Ct. 1905, 1910 (1980). This argument misses the mark. The

question here is not whether the EPA may create a new exception to

the CWA, but rather whether its plenary rulemaking authority under

the CWA includes the power to set different effluent limits for

different point sources in the same category or subcategory. If the

EPA has such authority, then no "general prohibition" exists, so

the Andrus canon is never implicated. Thus, while the structure of

the CWA    may   express   a   clear   congressional     intent     to   exclude

unenumerated exceptions, it does not speak to the scope of the

EPA’s plenary rulemaking authority under the CWA.

                                       C.

     The remaining question, then, is whether the EPA’s decision to

set more lenient effluent limits for Cook Inlet facilities than for

other members of the Coastal Subcategory reflects a permissible

interpretation of the CWA. We conclude that it does.

     As discussed above, nothing in the text, legislative history,

or structure of the CWA suggests that Congress intended to deny the

EPA discretion to set different effluent limits within a category

                                       33
or   subcategory   when     circumstances   so   require.   We   agree   that

Congress    intended   to    foreclose    plant-by-plant    evaluation     of

facilities within a subcategory. But this does not mean that

Congress wished to hamstring the EPA by requiring it to go through

formalistic   subcategorization      procedures    every    time   it    found

genuine differences between groups of point sources within a long-

established category or subcategory. In fact, precedent suggests

that Congress sought to avoid just this sort of administrative

headache.

      The Supreme Court has repeatedly emphasized the importance of

balancing the CWA’s uniformity interest with the practical reality

of differences within a category. These statements have most often

arisen in the context of after-the-fact variances, beginning with

E.I. du Pont de Nemours & Co. v. Train, 430 U.S. 112, 97 S. Ct. 965

(1977). In du Pont, the Supreme Court was faced with the issue of

whether the EPA was permitted to establish categorical effluent

limitations, or whether it was required to establish effluent

limitations for individual plants. The Court held that the EPA may

establish categorical limitations "so long as some allowance is

made for variations in individual plants, as EPA has done by

including a variance clause in its 1977 limitations." Id. at 128,

97 S. Ct. at 975. Notably, the Court did not hold that the EPA is

required to establish categorical effluent limitations, nor did it

hold that variances are the only appropriate way to account for

variations in individual plants. It merely stressed the importance

of balancing uniformity and individual variation.

                                     34
     The Court elaborated on this statement in Chem. Mfrs. Ass’n v.

Natural Resources Defense Council, 470 U.S. 116, 105 S. Ct. 1102

(1984),   where   it   approved     the    fundamentally-different-factor

("FDF") variance procedure "as a mechanism for insuring that [the

EPA’s] necessarily rough-hewn categories do not unfairly burden

atypical plants." Id. at 120, 105 S. Ct. at 1105. The Court again

emphasized the importance of tempering uniformity with flexibility:

     Acting under stringent timetables, EPA must collect and
     analyze large amounts of technical information concerning
     complex industrial categories. Understandably, EPA may not be
     apprised of and will fail to consider unique factors
     applicable to atypical plants during the categorical
     rulemaking process, and it is thus important that EPA’s
     nationally binding categorical pretreatment standards for
     indirect dischargers be tempered with the flexibility that the
     FDF variance mechanism offers . . . .

Id. at 132-33, 105 S. Ct. at 1111-12.

     Although the du Pont and Chem. Mfrs. Ass’n opinions confined

their analyses to the context of variances, the reasoning of those

two cases is applicable in the present case. The EPA is authorized-

-indeed, is required--to account for substantial variations within

an   existing     category     or    subcategory        of   point     sources.

Administrative    procedures      that    avoid   the    costs   and    burdens

associated with categorical rulemaking are a valuable tool in

fulfilling that obligation.         Where the variations are discovered

after rulemaking is complete, the Supreme Court has endorsed FDF

variances as the appropriate procedure. Where the variations are

discovered before rulemaking is complete, however, FDF variances

are inappropriate. In the absence of any clear congressional intent

to the contrary, we are satisfied under the facts of this case that

                                     35
the promulgation of different effluent limits within a single

category or subcategory of point sources provides an acceptable

alternative to subcategorization.

     Here, the EPA was faced with a situation in which one group of

point     sources   within   a     long-established          subcategory   was

dramatically different from all other point sources within that

subcategory. The EPA found, based on the different geography and

circumstances of Cook Inlet, that the cost of complying with a zero

discharge standard on produced water or drilling wastes would be

substantially higher for Cook Inlet facilities than for the rest of

the Coastal Subcategory. Thus, the EPA was faced with a stark

choice between conducting administratively burdensome and time-

consuming subcategorization procedures that would have disrupted a

well-established subcategorization scheme or exercising its plenary

rulemaking authority to set different effluent limits within the

Coastal    Subcategory.   Rather    than      disrupting     its   longstanding

subcategorization     scheme,      creating      needless      confusion   and

unnecessary    restructuring,    the    EPA    chose   the   administratively

efficient route. In doing so, the EPA did not in any way avoid its

ordinary procedural obligations: The Cook Inlet ELGs were subject

to the same notice and comment procedures as the other Coastal

Subcategory ELGs. In light of du Pont and Chem. Mfrs. Ass’n, we

cannot say that the EPA’s actions were unauthorized. As such,

pursuant to the Chevron test and under the unique facts of this

case, we uphold the EPA’s actions with respect to Cook Inlet.

                                    VI.

                                       36
     In light of our decision to uphold the ELGs’ zero discharge

limits, all issues pertaining to the General Permit are moot. A

case is moot where "the issues presented are no longer live or the

parties lack a legally cognizable interest in the outcome." Powell

v. McCormack, 395 U.S. 486, 496, 89 S. Ct. 1944, 1951 (1969). Here,

even if we were to review and remand the General Permit, any

subsequent NPDES permit determination would be governed by the

ELGs, 33 U.S.C. § 1311(b), so the final result would be unchanged.

Because the zero discharge limit contained in the General Permit is

thus not "susceptible to some judicial remedy," Texas Petitioners

no longer have a "legally cognizable interest" in the outcome of

the General Permit challenge. Baccus v. Parrish, 45 F.3d 958, 961

(5th Cir. 1995). Petitioners conceded as much at oral argument.10

We therefore need not, and do not, decide whether we have subject

matter jurisdiction to review Texas Petitioners’ delayed challenge

to the General Permit, nor whether Region 6 acted arbitrarily or

     10
      Attorney Liz Bills addressed this issue on behalf of the
Texas Petitioners:

     Q:   What difference does it make if we decide this general
          permit limitation question?
     A:   Well, Your Honor we believe-- one of the concerns we have
          is an anti-backsliding provision that’s found in the
          Clean Water Act that says that once somebody’s been
          subject to a certain level of limitations in a permit,
          then any subsequent permits that are ever issued can
          never have a less stringent limitation, and you can’t get
          less stringent than zero.
     Q:   Well, if we uphold the rules for the coastal category
          then our holding on [the General Permit] is moot--
     A:   Right. We have to overcome several obstacles, including
          the ELGs as well as the General Permit, to get to
          something less than zero discharge.

                                37
capriciously or abused its discretion when it issued the General

Permit.

                         VII. CONCLUSION

     We hold that the EPA did not act arbitrarily or capriciously

or abuse its discretion when it set zero discharge limits on

produced water and produced sand in the ELGs, that the EPA did not

act contrary to the intent of the CWA when it set separate

discharge limits on produced water and drilling wastes for Cook

Inlet without designating it a separate subcategory, and that Texas

Petitioners’ challenge to the General Permit is moot. For these

reasons, all petitioners’ Petitions for Review of Orders of the

Environmental Protection Agency are

DENIED.

                                38