Texas Oil & Gas Ass'n v. United States Environmental Protection Agency

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. §
27706(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