ON Petition for Review of a Final Rule Issued by the United States Environmental Protection Agency
BEFORE: HUNTER, GARTH, and HIGGINBOTHAM, Circuit Judges.
These consolidated petitions challenge an amended final rule of the Environmental Protection Agency (EPA), known as the removal credit rule, 49 Fed. Reg. 31212 (1984) (codified at 40 C.F.R. § 403.7), promulgated pursuant to the Federal Water Pollution Control Act ("FWPCA" or "Clean Water Act") of 1977, Pub. L. No. 95-217, 91 Stat. 1566 (codified at 33 U.S.C. 1251 et seq.).
The Clean Water Act of 1972 set as a national goal the elimination, by 1985, of the discharge of pollutants into the nation's navigable waters. Pub. L. No. 92-500, 86 Stat. 816, § 101(a)(1)(codified at 33 U.S.C. § 1251 (a)(1)). In 1977, recognizing that the 1972 Act's regulatory mechanism for the control of toxics "had failed," Congress amended the Clean Water Act to clarify and strengthen its provisions for dealing with toxic pollutants. Leg. Hist. 326-27*fn1 (comments of the House manager of the bill, Rep. Roberts); see also id. at 369 (statement of Rep. Clausen) ; id. at 427 (statement of en. Muskie).
One aspect of the 1977 Act's strengthened program to control toxic pollutants was a requirement that an indirect discharge i.e. an industrial discharger whose wastes flow into a public sewage system rather than directly into navigable waters, had to "pretreat" its waste waters so as to achieve, together with the Publicly Owned Treatment Works (POTW) that treated the water before final discharge into navigable waters, the same level of toxics removal as was required of a direct discharger, which discharged directly into a river, lake, or ocean. At the same time, the Act allowed the indirect discharger to receive "removal credit" from the POTW for the amount of waste removed from the stream of waste water by the POTW itself. 33 U.S.C. § 1317 (b)(1). This provision, designed to avoid redundant treatment, permits an increased amount of pollutants to flow from the indirect discharger's plant to the municipal treatment plant provided that the additional pollutants are removed by the municipal plant. By this process, the amount of pollutants ultimately discharged by the combination of the indirect discharger and the POTW will be no greater than the amount discharged by the direct discharger.
The Act also required EPA to develop regulations for the disposal and utilization of POTW sewage sludge, so as to prevent contamination of the sludge with toxics removed from the effluent flowing through the POTW, and so as to encourage the productive recycling of sludge. In furtherance of this goal, the Act provided that POTWs could not grant removal credits to indirect dischargers for the POTW's removal of toxics from the liquid waste stream if this removal and consequent transfer of toxics of the POTW sludge would render the sludge toxic and thus prevent sludge disposal in accordance with those regulations. 33 U.S.C. § 1317(b)(1).
NRDC challenges four aspects of the removal credit rule. First, it argues that EPA's method of calculating waste removal by POTWs violates the statutory requirement that direct and indirect dischargers be held to the same standard. Second, it argues that EPA's decision to ignore sewer overflow events in calculating the amount of toxic waste removed by a POTW violates the same requirement. Third, NRDC claims that EPA's action in modifying the test for determining when a credit must be withdrawn violates the Administrative Procedure Act, 5 U.S.C. § 551 et seq., and the Clean Water Act, 33 U.S.C. § 1251 et seq. Fourth, NRDC questions whether EPA may put into effect a relaxed removal credit rule when the sludge regulations that are a precondition for the issuance of such credits have not been promulgated.
In each of these areas, we conclude that EPA's 1984 removal credit regulations fail to meet statutory requirements. Furthermore, eve extending the utmost deference to the Agency, we conclude that the promulgation of these regulations on the basis of the administrative record before us is arbitrary and capricious. Thus we grant NRDC's petition for review.
In Constrast to NRDC, petitioners Cerror Copper and Village of Sauget challenge the regulations as too strict and inflexible to take into account situations such as theirs. The petitions of Cerror Copper and the Village of Sauget will be denied.
In order to understand the issues presented on this appeal, it is helpful to trace the history of the statute and regulations which were designed to eliminate the discharge of pollutants into our waters.
The removal credit rule at issue here is a part of a complex regulatory framework mandated by the Federal Water Pollution Control Act Amendments of 1972 an 1977, 33 U.S.C. §§ 1251 et seq. The statute calls for a two-phrase program to limit discharges of effluents. Direct dischargers of toxic wastes were to comply with the best Practicable Control Technology (BPT) by July 1, 1977. 33 U.S.C. §§ 1311(b)(1)(A), 1314 (b)(1). Between 1983 and 1987, direct dischargers of toxic wastes were to meet the more stringent standards consistent with the Best Available Technology economically achievable (BAT). 33 U.S.C. § 1311(b)(2). The statute also mandated that the EPA set effluent limitations for POTWs engaged in the treatment of municipal sewage or industrial wastewater.*fn2 Id. §§ 1311 (b)(1)(B)-(C), 1314 (d)(1). Such limitations were to result in equal levels of treatment for all toxic discharges, whether issued directly into navigable waters or channelled by a sewage system through a POTW.
Because secondary treatment by POTWs cannot deal adequately with toxic pollutants, the statute required that EPA establish national pretreatment standards, i.e. standards to which an indirect discharger must conform in treating its water before such waste reaches the POTW. Those standards, applicable to indirect dischargers, provide for pretreatment which is equivalent to BAT standards. 33 U.S.C. 1317(b)(1).*fn3
In order to avoid redundant treatment by the indirect discharger and the POTW ("treatment for treatment's sake," Leg. Hist. 343), section 307(b)(1) of the 1977 Act, 33 U.S.C. § 1317(b)(1), requires that the POTW be authorized to give credit to the indirect discharger for removal of pollutants achieved by the POTW. The removal credit provision thereby equates the amount of pollutants removed by the combined treatment of the POTW and the indirect discharger with the amount of pollutants removed by the direct discharger operating under the relevant BAT standard. 33 U.S.C. § 1317(b)(1).
The removal credit provision was added to the statute by the Clean Water Act of 1977, Pub. L. No. 95-217, 91 Stat. 1589. That law was enacted in response to Congress's recognition of the growing seriousness of the problems of toxic pollution, and of the woeful inadequacy of the 1972 Act in dealing with them. Leg. Hist. 326-27, 454-55, 862-65.
The 1977 Act strengthened the controls over toxic pollutants in several ways. The 1977 Act explicitly codified the toxic consent decree issued by the the District court for the District of Columbia. That decree resulted from litigation brought by environmental groups to challenge EPA's failure to promulgate the effluent standards mandated for toxic substances by the 1972 Act. See NRDC v. Train, 8 Env't Rep. Cas. (BNA) 2120 (D.D.C. 1976), modified sub nom. NRDC v. Costle, 439 F. Supp. 980, 12 Env't Rep. Cas. (BNA) 1929 (D.D.C. 1979), modified sub nom. NRDC v. Gorsuch, No. 72-2153 (D.D.C. Oct. 26, 1982) modified sub nom. NRDC v. Ruckelshaus, No. 73-2153 (D.D.C. Aug. 2, 1983 and Jan. 6, 1984). Following that decree, Congress required that BAT effluent guidelines, applicable to direct dischargers, be developed by July 1, 1980 for the 65 toxic pollutants listed in the decree. Pub. L. No. 95-217, § 53(a), 91 Stat. 1589 (codified at 33 U.S.C. 1317(a)(2)). Also following the toxic decree, the 1977 Act amended section 307(b)(1) of the Act, 33 U.S.C. 1317(b)(1), to require EPA to promulgate pretreatment regulations for indirect discharges analogous to the BAT standards for direct dischargers.*fn4 Congress stressed that pretreatment standards had to be based on BAT or more stringent limits. See 33 U.S.C. § 1317(a); Leg. Hist. at 271, 342, 403, 461, 690.
While strengthening and clarifying the pretreatment requirements for toxics, Congress added the following provision to the statute, thus providing for removal credits to avoid redundant treatment:
If, in the case of any toxic pollutant under subsection(a) of this section introduced by a source into a publicly owned treatment works, the treatment by such works removes all or any part of such toxic pollutant and the discharge from such works does not violate that effluent limitation or standard which would be applicable to such toxic pollutant if it were discharged by such source other than through a public owned treatment works, and does not prevent sludge use or disposal by such works in accordance with section 1345 of this title, then the pretreatment requirements for the sources actually discharging such toxic pollutant into such publicly owned treatment works may be revised by the owner or operator of such works to reflect the removal of such toxic pollutant by such' works.
33 U.S.C. § 1317(b)(1).*fn5
In addition, Congress sought to ensure that sewage sludge, instead of becoming a depository for toxic pollutants, should be usable as fertilizer or for other productive purposes. It did so by amending section 405 of the Clean Water Act to require EPA to develop regulations for sludge use or disposal within one year of the statute's enactment. 33 U.S.C. § 1345(d).
In conjunction with this amendment to section 405, Congress also amended section 307(b)(1) of the Act to ensure that EPA did not, in the course of administering the removal credit program, undermine the objective of rendering sewage sludge nontoxic and usable. By the same amendment, quoted above, that provided for removal credits, Congress also prohibited the granting of removal credits if such credits would lead to sludge contamination that would prevent the use or disposal of sludge in conformity with the section 405 regulations. FWPCA307(b)(1), 33 U.S.C. 1317(b)(1).*fn6
The removal credit regulation at issue here allows POTWs to grant removal credits to indirect dischargers so that the indirect discharger may increase its discharges of the pollutant by the amount that the POTW removes. The statute mandates that such credits be equal to the amount of toxics consistently removed by the POTW.
The regulation requires that each POTW first determine its removal efficiency (or "consistent removal rate") for each regulated pollutant. This is generally done through a process of measuring the concentration of a given pollutant found in the waste flowing into a POTW (i.e., the influent) and then measuring its concentration in the waste flowing out of the POTW (i.e., the effluent). Removal is expressed as a percentage of the amount in the influent. If, for example, a POTW consistently removes 60% of a particular pollutant that flows into it, it can grant a 60% credit to the indirect discharger. The indirect discharger would then be permitted to discharge more than twice as much of that pollutant to the POTW than it would otherwise have been allowed to discharge.*fn7
The removal credit rule is one part of the General Pretreatment Regulations for Existing and New Sources of Pollution, 40 C.F.R. § 403.1-16 (1984). These pretreatment regulations provide the framework for implementation of another set of regulations, the Categorical Pretreatment Standards, which establish specific limits for the discharge of particular toxic pollutants.
The present removal credit rule is the fourth version of the rule promulgated by EPA on this subject. The first version, promulgated in 1973, was sketchy. It foreshadowed the statutory removal credit provision of section 1317(b)(1) enacted in 1977. 38 Fed. Reg. 30982-84 (1973). In 1977, EPA promulgated more complete regulations. Each of the two succeeding versions following the 1977 version has further relaxed the requirements that POTWs and indirect dischargers are required to meet. From the first regulations through all subsequent revisions, the regulations purport to require that indirect dischargers be held to the same standard as direct dischargers, subject to credit for removal of toxics by the POTW.
In 1977, following the issuance of the toxics consent decree in NRDC v. Train, 8 Env't Rep. Cas. (BNA) 2120, EPA proposed more developed pretreatment regulations. 42 Fed. Reg. 6176 (1977). While this proposal was pending, Congress enacted the Clean Water Act amendments of 1977, adding the removal credit provision to section 307(b)(1). After extensive comment and participation by interested parties, including four public hearings and sixteen public meetings, which generated testimony and comments from 400 individuals and groups, EPA, on June 26, 1978, promulgated its second removal credit regulation as a part of the General Pretreatment Regulations on June 26, 1978. 43 Fed. Reg. 27736 (1978).
Following adoption of these regulations, industry and environmental groups brought several actions challenging the second removal credit provision. A settlement agreement between EPA and the industry parties led EPA to propose amendments to these regulations. 44 Fed. Reg. 62260 (1979). A third regulation was promulgated on January 28, 1981. 46 Fed. Reg. 9404 (1981).
The revised rules made it substantially easier for POTWs to grant removal credits and to give larger credits for the same pollutant removals. Several industry parties nonetheless again brought suit, contending that the new rules did not go far enough. These actions were consolidated with the actions of environmental groups challenging the 1978 and 1981 regulations, all of which were heard by this Court in National Association of Metal Finishers v. EPA, 719 F.2d 624 (3d Cir. 1983) [hereinafter NAMF ] reversed in part sub nom. Chemical Manufacturers Ass'n v. NRDC 470 U.S. 116, 105 S. Ct. 1102, 84 L. Ed. 2d 90 (1985). in NAMF, this court upheld the 1981 removal credit rule, rejecting industry arguments similar to, or identical with, those made by EPA here.*fn8
At the same time that they were attacking the 1981 regulations in court, the industry petitioners also urged EPA to suspend these same regulations so that they could be reconsidered by the new Administration. See, e.g., letters form Chemical Manufacturers Ass'n. to EPA, Mar. 9, 1981 & Mar. 19, 1981, App. 145-51. In fact, EPA did defer the effective date of the 1981 regulations indefinitely, and subsequently proposed to developed yet another removal credits provision, 47 Fed. Reg. 4520 (1982).
In response to a suit brought by NRDC, this Court ruled that EPA's suspension of the pretreatment regulations without notice or opportunity for public comment violated the Administrative Procedure Act, 5 U.S.C. § 553(b)-(e), and that therefore both this initial suspension and a subsequent rulemaking proceeding, extending that suspension in part, were illegal. The EPA was therefore ordered to reinstate all of the amendments retroactively to March 10, 1981. Natural Resources Defense Council v. EPA, 683 F.2d 752, 768-69 (3d Cir. 1982).
EPA complied with this order on September 28, 1982. 47 Fed. Reg. 42688 (1982). However, on that same day, EPA proposed to amend the removal credit rule once again, on the grounds that it "has been criticized as being so burdensome and unwieldly as to discourage POTWs from applying for and obtaining authorization to grant removal credits." 47 Fed. Reg. 42698 (1982).
The fourth and ostensibly final removal credit rule, which is the one at issue here, was promulgated on August 3, 1984. 49 Fed. Reg. 31212 (1984)(codified at 40 C.F.R. § 403.7) (1985).*fn9 Among other changes, this rule adopted a new, more lenient, method of measuring the consistency of toxics removal by POTWs. The overall effect of the new rule is that it enables POTWs to grant more and larger credits than under the 1981 rule, which itself constituted a relaxation of the 1978 rule. As a consequence, the requirements for industrial pretreatment have been very significantly reduced.
Petitioner NRDC filed a timely petition for review of the 1984 (fourth) rule, claiming that whereas the 1981 rule was in compliance with the statute, the 1984 rule has relaxed the conditions for granting removal credits beyond the bounds permitted by the Clean Water Act. Petitioners Cerror Copper and Village of Sauget, in contrast, seek to have the 1984 rule set aside on the ground that, seek to have the 1984 rule set aside on the ground that, as applied to them, the rule is more severe than the statute allows. In addition, all petitioners present procedural arguments as to why the rule is invalid.
Our standard review of the Agency's informal rulemaking in this case is governed by section 10(e)(2) of the Administrative Procedure Act, 5 U.S.C. § 706(2), and in particular by subsections (A),(C), and (D), which provide that the reviewing court shall "hold unlawful and set aside agency action, findings, and conclusions found to be --(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;...(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; [or] (D) without observance of procedure required by law." 5 U.S.C. § 706(2)(A), (C), & (D).
We must first determine whether the regulations are in conformity with the statute. In making this determination, the "view of the agency charged with administering the statute is entitled to considerable deference; and to sustain it, we nee not find that it is the only permissible construction that EPA might have adopted but only that EPA's understanding of this 'very complex statute' is a sufficiently rational one to preclude a court from substituting its judgment for that of EPA." Chemical Manufacturers Association v. NRDC, 470 U.S. 116, 105 S. Ct. 1102, 84 L. Ed. 2d 90 (1985) (interpreting the Clean Water Act); see also Chevron v. NRDC, 467 U.S. 837, 104 S. Ct. 2778, 2781-83, 81 L. Ed. 2d 694 (1984); NAMF, 719 F.2d at 637.
On the other hand this court may not abdicate its responsibility to interpret the statute in accordance with traditional principles of statutory construction. "While reviewing courts should uphold reasonable and defensible constructions of an agency's enabling Act,...they must not 'rubber-stamp ...administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute.'" Bureau of Alcohol, Tobacco, and Firearms v. Federal labor Relations Authority, 464 U.S. 89, 97, 78 L. Ed. 2d 195, 104 S. Ct. 439 (1983) (quoting NLRB v. Brown, 380 U.S. 278, 13 L. Ed. 2d 839, 85 S. Ct. 980 (1965)); see also Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 120, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980); International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America v. Danil, 439 U.S. 551, 566 & n. 20, 58 L. Ed. 2d 808, 99 S. Ct. 790 (1979); Hi-Craft Clothing Co. v. NLRB, 660 F.2d 910, 915 (3d Cir. 1981).
Statutory interpretation is one of the traditional functions of courts. Of course, "if the intent of Congress is clear, that is the end of the matter; for the court as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron v. NRDC, 104 S. Ct. 2781-82 (1984). Furthermore, agency action in fulfillment of statutory mandate is entitled to a presumption of regularity. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). But this presumption is not "equivalent [to] the presumption of constitutionality afforded legislative drafted by Congress." Motor Vehicle Manufacturers Ass'n., 463 U.S. at 43 n.9. "The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent." Chevron v. NRDC, 467 U.S. 837, 104 S. Ct. 2778, 2782 n.9, 81 L. Ed. 2d 694 . We must, therefore, first determine whether EPA's position is at least "within the outer limits of its authority to interpret" the statute. Teamsters v. Daniel, 439 U.S. at 566.
Second, we must examine the challenged aspects of the rulemaking procedure carefully to determine independently that the Agency has not acted unfairly or in disregard of the statutorily prescribe procedures for notice and comment rulemaking. See, e.g., NAMF, 719 F.2d at 637-38; American Iron & Steel Institute v. EPA, 568 F.2d 284 (3d Cir. 1977).
Third, we must review the substantive aspects of agency action under the arbitrary and capricious standard of 5 U.S.C. § 706(2)(A). This standard has recently been described by the Supreme Court as follows:
The scope of review under the "arbitrary and capricious" standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a "rational connection between the facts found and the choice made." Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S. Ct. 239, 9 L. Ed. 2d 207 (1962). In reviewing that explanation, we must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Bowman Transportation, Inc., v. Arkansas-Best Feight System, Inc., supra, at 416. Normally, an agency rule would be arbitrary and capricious if the agency has relied on facts which Congress has not intended it to consider, 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. The reviewing court should not attempt itself to make up for such deficiencies; we may not supply a reasoned basis for the agency's action that the agency itself has not given. SEC v. Chenery Corp., 332 U.S. 194, 196, 91 L. Ed. 1995, 67 S. Ct. 1575 (1947). We will, however, "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Bowman Transportation, Inc., v. Arkansas-Best Freight System, Inc., supra, at 286. See also Camp v. Pitts, 411 U.S. 138, 142-43, 93 S. Ct. 1241, 36 L. Ed. 2d 106 (1973)(per curiam).
Motor Vehicle Manufacturers Ass'n v. State Farm Mutual, 463 U.S. 29, 43, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983). see also Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 42 L. Ed. 2d 447, 95 S. Ct. 438 (1974); Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971).
We must defer to an agency's expert judgment when it is acting within the scope of the statute, but we cannot allow expertise to shield an irrational decision-making process. "'Unless we make the requirements for administrative action strict and demanding , expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.' .... We have frequently reiterated that an agency must cogently explain why it has exercised its discretion in a given manner..." Motor Vehicle Manufacturers Ass'n, 463 U.S. at 48-49 (citations omitted).
Where, as here, an agency has reversed its established interpretation of a statute, the degree of deference accorded to the agency may be somewhat lessened. As this court has said, "sharp changes of agency course constitute 'danger signals' to which a reviewing court must be alert." NRDC v. EPA, 683 F.2d at 670 (citation omitted). See also Motor Vehicle Manufacturers Ass'n v. State Farm Mutual, 463 U.S. 29, 103 S. Ct. 2856, 77 L. Ed. 2d 443 ("A 'settled course of behavior embodies the agency's informed judgment that, by pursuing that course, it will carry out the policies committed to it by Congress. There is, then, at least a presumption that those policies will be carried out best if the settled rule is adhered to.'" (citation omitted); Sierra Club v. United States Army Corps of Engineers, 772 F.2d 1043, 1046 (2d Cir. 1985) ("A change in something from yesterday to today creates doubt, turns to disbelief.") An agency is, of course, free to change its position, but it must supply adequate data and a reasoned analysis to support the change.
We will apply these standards of review first to the challenges raised by NRDC (parts III-VI) and then to the issues raised by Cerror Copper and the Village of Sauget (part VII0.
EPA's 1984 removal credit rule provides that the combined amount of toxic removed by an indirect discharger and a POTW must equal the amount of toxics removed by the direct discharger. However, as we discuss in greater detail below, EPA's 1984 rule fails to require the same consistency in the removal of toxics by POTWs and indirect dischargers as is required of direct dischargers. It therefore violates the statutory requirement of section 307(b)(1) of the Clean Water Act that the indirect discharge of pollutants through a POTW must "not violate that effluent limitation or standard which would be applicable to such toxic pollutant if it were discharged by [a direct discharger]." 33 U.S.C. § 1317(b)(1)(1977).
The BAT (Best Available Technology) limitations and standards issued under the statute require direct dischargers to remove a certain amount of each toxic pollutant with a certain degree of consistency. BAT limitations and standards have at all times contained these two requirements.*fn10 Thus, the statutory mandate that the indirect discharger and the POTW together must achieve the same standard of treatment as is required of the direct discharger requires that the standard of treatment be the same both in total amount of toxics removed and in the consistency of such removal.
The BAT limits applicable to direct dischargers are based on empirical studies of the amount and consistency of removal that can be achieved by a well-designed and operated plant. These limits require consistency of removal in two important respects. First, they are set so that a discharger can be in compliance virtually all the time. See, e.g., General Pretreatment Regulations, 43 Fed. Reg. 27743 (1978). Pretreatment Regulations, 43 Fed. Reg. 27743 (1978). "Guidelines are generally calculated with a 99% confidence level. Therefore, if a discharger exceeds the effluent limitations established by the guideline regulation, there is a 99% certainty that it was caused by discharger error rather than statistical variation." National Pollutant Discharge Elimination System Permit Regulations, 49 Fed. Reg. 38019 (1984). Second, the limits fix precise daily maxima as well as monthly averages, neither of which may be exceeded by the direct discharger. The indirect discharger and the POTW must achieve an equivalent consistency in these two respects.
When Congress enacted the 1977 amendments, many of the BAT effluent limitations applicable to direct dischargers had already been promulgated and others were near promulgation. All of them were set so that they could be met 99% of the time, and all of them contained monthly averages and daily maxima. See, e.g., 40 C.F.R. §§ 129.102-129.104 (1984) (effluent standards for endrin, toxaphene, and benzidine); 40 C.F.R. pts. 405-469 (1984) (effluent limitations guidelines for various industrial categories). Congress, in its 1977 amendment to section 307(b)(1) of the Clean Water Act, used the term "effluent limitation or standard," thereby incorporating the consistency requirement and making the requirement applicable to POTWs and indirect dischargers.
As previously noted, the Clean Water Act of 1977 not only required indirect dischargers to meet standards equivalent to the BAT standards required of direct dischargers, but also provided for removal credits to avoid redundant treatment of wastes by the POTW and the indirect discharger. It is evident to us, from our reading of the statute, that such removal removal rate" to encompass POTW pollutant removal that is not consistent at all. Yet in promulgating the first full removal credit rule, in 1978, EPA stated:
Since direct dischargers are required to comply with their effluent limitations at all times, the EPA believes that the pollutant removal claimed by a POTW should be that removal which occurs virtually all of the time. As used in the regulation (§ 403.7), "consistent" removal is the removal capability that a POTW achieves in 95 % of the representative samples taken.
43 Fed. Reg. 27743 (1978). By permitting inconsistent removal, EPA also permits the granting of credits for treatment that is not redundant but mandatory under the statute.
The 1978 rule required the POTW to conduct 12 influent/effluent samplings each year. The consistent removal rate was defined as the lowest of the 12 removal rates in the sample, under the assumption that the POTW would be removing at least that amount 95% of the time. Because POTW removal is more variable than that of direct dischargers, and because EPA believed that it would be too burdensome for POTWs to determine whether they are removing a toxic with 99% consistency, EPA adopted the 95% consistency figure for POTWs as substantially equivalent to the 99% figure applicable to direct dischargers.
In response to complaints from indirect dischargers and POTWs that the 1978 removal credit provision was "unworkable" and that most POTWs would not apply for credits, this definition of consistent removal was amended in the 1981 rule to provided that the level of removal on which the credit would be based would be that achieved by a POTW 75% of the time. See 46 Fed. Reg. 9424 (1981). Seventh-five percent consistency was measured by averaging the lowest six of 12 POTW removal samplings. Id.
As noted above, regulated dischargers still claimed that the removal credit rule was "unworkable," and pressed successfully for a further relaxation of the measurement of consistent removal. The 1984 rule, in fact, provides that "consistent removal is calculated ...as the difference between the average influent and effluent concentrations in all of the sample data." 49 Fed. Reg. 31215 (1984). Instead of basing its measure of consistent removal on an average of the lowest six of the twelve samplings, as the 1981 rule required, the 1984 rule bases its measure on the average amount removed in all twelve samplings. According to this formulation, the amount of removal achieved by a POTW on average, that is, 50% of the time, will determine the amount of credit an indirect discharger will receive.
In short, EPA first changed the definition of "consistent" removal from its original meaning, i.e., removal that occurs 95% of the time, to a second meaning, i.e., removal that occurs 75% of the time, EPA, then, in its 1984 rule, revised its definition of consistency to refer to removal that occurs only 50% of the time. We find it difficult to fathom how a level of removal that is met one half of the time and exceeded one half of the time, and that contains no limit on the permissible amount of variability, can be termed "consistent."
EPA provides two justifications for the change in the definition of "consistent" removal from 75% consistency to 50% consistency. These justifications are the same ones advanced by EPA in 1981 for its shift from 95% to 75% consistency.
The first justification is that the approach used in the 1978 rule, which based the measure of consistent removal on the lowest of 12 sample removals, is "statistically unsound." Brief for Respondent at 32 (quoting 1981 Final Rule, 46 Fed. Reg. 9424 (1981)). In 1981, in justifying its shift from 95% consistency to 75% consistency, EPA outlined its thinking on this issue with commendable candor. EPA pointed out that using the lowest of the 12 samplings to define consistent removal might easily give rise to error, because "the data at the extremes of this 12 point distribution have the greatest chance of being in error. Thus, if the lowest level of Removal identified were unrepresentatively low, the POTW would be held to an unreasonably small level of Removal."*fn11 1981 Final rule, 46 Fed. Reg. 9424. It would be better, EPA said, to estimate the amount removed 75% of the time rather than trying to estimate the amount removed 95% of the time, because the amount removed with 75% consistency could be measured reliably without increasing the number of samplings.
EPA admitted, in 1981, that the choice between 95% consistency and 75% consistency was not a purely technical choice of the one statistically correct method. It stated frankly that it could estimate the amount of removal required to attain 95% consistency, and thus cure the "statistical unsoundness," by increasing the number of annual samplings required of POTWs. The choice of 75% level was "admittedly a compromise," id., between two policy considerations. Because POTWs generally have little incentive to apply for authorization to grant removal credits, EPA was concerned that POTWs would not apply for such authorization if the sampling and reporting requirements imposed upon them were too onerous.*fn12 On the other hand, EPA was concerned that the rule "ensure that a reasonable consistent level of removal is maintained." 46 Fed. Reg. 9424 (1981).
Even if EPA's reasoning might have justified a change from a 95% to a 75% consistency requirement, that same reasoning cannot justify a change from a 75% to a 50% consistency requirement if such a change violates the command of the statute. That command, as we have repeatedly observed, requires that the amount and variability of toxic discharges through a POTW not exceed those that would be discharged by a direct discharger operating under BAT-level controls.*fn13 The relevant question is not one of finding the one correct method of measuring consistent removal, nor of determining the easiest method of consistent removal, but rather whether a removal credit based on the amount a POTW removes 50% of the time conforms with the requirement of the Ac. We are convinced that it does not.
In its brief, EPA makes much of the fact that using all twelve samplings gives "'a more reliable estimate of the actual removal achieved than [did] the method employed in the 1981 amendments'." Brief for EPA at 34 (quoting Proposed Rule, 47 Fed. Reg. 42700 (1982) (emphasis added by EPA). EPA's definition may indeed provide a more reliable estimate of the actual removal on average. But both the statute and EPA's own previous regulations require that the indirect discharger, in combination with the POTW, meet the same standard as the direct discharger must meet. This means not only that the total amount removed by the POTW and the indirect discharger together must be at least equal to that removed by a direct discharger operating under BAT controls, but also that the POTW and the indirect discharger must consistently meet the monthly and daily limits that direct dischargers meet.
EPA's second justification for its new definition of consistency is that it gives full effect to Congress' desire to avoid redundant treatment while still complying with the mandate of section 307(b)(1) that the ultimate discharge from the POTW must not be greater than that which would be allowed from a direct discharger.
In its statement of basis and purpose accompanying the 1981 rule, EPA argued that although "[i]n most cases the proposed calculation will indeed resulting higher removal allowances and consequently less stringent....pretreamtnet limits," this would not lead to the discharge of "unacceptable amounts of pollutants...to navigable waters." 46 Fed. Reg. 9424. EPA explained why, in its view, the change in the definition of consistent removal would not lead to POTW dischargers in excess of BAT limits:
Industrial users are subject to "daily maximum" and "long term average" pretreatment limits. If the Industrial User is to meet the long term average, the User can only infrequently approach the daily maximum number in its daily discharger. For the joint treatment provided by the Industrial User and POTW to be less effective than that required of a direct discharger, a discharge by the User at the daily maximum level would have to coincide with abnormally lower removal at the POTW. The statistical complexities of the situation do not permit a numerical estimate of the number of times this might occur, but EPA expects it to be small. One comment received by EPA on this subject stated that a computer simulation of the problem showed that violations of the daily maximum would occur less than 2% of the time. This simulation made certain assumptions concerning the statistical distributions which EPA is unable to verify, and EPA did not rely on this result in reaching a decision on the final method of calculation of Consistent Removal.
1981 Final Rule, 46 Fed. Reg. 9424 (emphasis added). The same explanation is reiterated in EPA's Rebuttal to NRDC's Reply Brief. In essence, EPA's argument rests on the claims that the POTW will rarely perform below its average, that the indirect discharger will virtually never exceed its limit, and that the frequency with which these two events will occur simultaneously is even lower.
EPA is correct in asserting that the indirect discharger will rarely exceed its limit. That limit is set so that it can be complied with virtually all the time, and this remains true even when the limit is raised to credit the indirect discharger for the POTW's additional removal of pollutants.
But there is no evidence whatsoever to support the claim that the POTW will rarely perform below its average. In fact, this claim is blatantly contradicted by a wealth of evidence in the record, including repeated statements by EPA itself that POTW removal is extremely variable. In 1977, EPA cautioned that "extreme variability in pollutant removals experienced by POTWs" was among the factors to be taken into account in defining an approach to the granting of credits. Proposed Pretreatment Regulations, 42 Fed. Reg. 6485 (1977).
In promulgating the 1981 rule, EPA noted that "industrial pretreatment provides much superior removal of pollutants than does treatment at the POTW." 1981 Final Rule, 46 Fed. Reg. 9406. This is true, EPA said, first, because POTWs are not designed to recover toxic pollutants, and second, because "the dilution [by sewage, other industrial wastes, and, on some days, by rainwater] that occurs at the POTW causes less efficient removal...than would be achieved by the Industrial User with its more concentrated waste stream.... Partially because removal of toxic pollutants by the POTW is incidental to its normal operations, it is also ...