WIDENER, Circuit Judge:
This action is brought under § 509(b)(1)
The regulations here under review implementing §§ 301, 304, and 306 were first issued in preliminary form on March 4, 1974.
The Act establishes as the national goal the elimination of discharges of pollutants into navigable waters by 1985.
In the instant case, the petitioners challenge the regulations generally and specifically.
STANDARD OF REVIEW
Before addressing the issues raised by the Industry, it is important to note that the standard of review imposed upon the court is narrowly prescribed by Section 706(2)(A) of the Administrative Procedure Act.
While the court may not substitute its judgment for that of the agency, the grounds upon which the agency acted must be clearly disclosed in, and substantiated by, the record. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); FTC v. Sperry and Hutchinson, 405 U.S. 233, 249, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972); duPont v. Train, 541 F.2d 1018, No. 74-1261, et al. (4th Cir. 1976). In evaluating the course of conduct employed by the EPA, we must, of course, bear in mind that Congress vested that agency with the power to choose among alternative strategies. South Terminal Corp. v. EPA, 504 F.2d 646, 655 (1st Cir.
Under the final regulations promulgated by EPA, all existing generating plants of 500 megawatts or more which came on line on or after January 1, 1970 must backfit closed-cycle cooling systems by July 1, 1981. All existing units, regardless of size, that began or will begin operation on or after January 1, 1974, are likewise subject to the backfit requirements. Limited exemptions are provided, however, based upon land availability, salt drift impact, and interference with commercial aviation.
There are presently three basic methods of closed-cycle cooling systems which may be employed to meet the requirements set forth in EPA's regulations. These are: (a) evaporative cooling systems such as wet cooling towers and spray systems; (b) cooling ponds and lakes; and (c) dry cooling towers. EPA itself has indicated, however, that this latter method of cooling, which employs huge radiator-like devices, cannot generally be applied to large electrical generating units due to the significant loss of plant efficiency which results.
The most commonly used form of evaporative cooling is the wet cooling tower, either natural or mechanical draft. Natural draft cooling towers are enormous concrete cylinders, which may be 350 to 550 feet in diameter and 300 to 600 feet tall.
Mechanical draft evaporative cooling towers are composed of modules (each a miniature tower) approximately 70 by 40 feet, placed side by side for distances up to 600 feet. Large top or side mounted fans on each cell provide the air movement for a forced draft to aid evaporation as the warm water drops to the bottom of the tower.
Spray ponds are also used for cooling. They consist of artificial ponds or canals into which water is sprayed. The water is cooled by evaporation resulting from the contact with the natural air currents during the spraying and after collection in the pond.
Cooling ponds and lakes represent the other practical systems. They normally
(a) The Act's Regulatory Scheme — Flexibility v. Uniformity
Petitioners argue that the steam electric regulations are excessively rigid in that EPA has prescribed nationally uniform effluent limitations rather than "guidelines for effluent limitations" as required by § 304 of the Act. In essence, they contend that there is no authority under the Act for the issuance of uniform effluent limitations. In large part, this controversy centers around whether the regulations in question were issued under § 301 or § 304. This issue was raised and considered by this court in the case of duPont v. Train, 541 F.2d 1018, Nos. 74-1261, et al. (4th Cir. 1976).
In that case, we concluded that the EPA was permitted to establish limitations under § 301 which would be generally applicable to point sources by categories. P. 1026 et seq. We further concluded that the agency could validly impose limitations in terms of single numbers rather than a range of numbers. P. 1027. We went on to state, however, that "[f]or all sources, both existing and new, we believe that the solution which most nearly satisfies congressional intent is recognition that the regulations are presumptively applicable to permit applications." P. 1028. Thus, the issuer of a permit under § 402 may consider whether a particular applicant is to be held strictly to the confines of the agency's regulations. The burden of proof remains upon the applicant, however. Only after he has established the inappropriateness of the regulations as applied to him, for example, employing the generic factors of §§ 304, 306 or any specific variance clauses promulgated thereunder, need the permit issuer go beyond the regulations. Of course, the permit issuer does not have unreviewable discretion in determining whether limitations prescribed under a particular regulation should be deemed inapplicable to any individual point source. Under § 402(d)(2), EPA may prevent the issuance of any permit to which it objects. Thus, through the exercise of this veto power, the agency may insure that the permit grantors give proper recognition to the need for uniformity in the application of the Act while at the same time recognizing variables which may exist from location to location and plant to plant.
Because we are of opinion that the regulations are only presumptively applicable, we think they are not so rigid as to compel an inflexible application of the Act. Accordingly, we reject this portion of the Industry's argument.
(b) The Variance Clause
The petitioners have also pressed a number of complaints about the adequacy of the variance clause in the steam electric regulations.
As we noted in duPont, 541 F.2d 1018, Nos. 74-1261, et al., provisions for variances are appropriate to the regulatory
Thus, it would appear that, unlike the case in duPont, the administration of these regulations is not a matter of speculation. As such, they are properly the subject of review at this time.
We begin with the observation that § 301(c) of the Act provides that EPA may grant a variance from the 1983 standards to any point source upon a showing that "such modified requirements (1) will represent the maximum use of technology within the economic capacity of the owner or operator; and (2) will result in reasonable further progress toward the elimination of the discharge of pollutants." Clearly, the Act, in its regulatory plan, contemplates increasingly stringent control measures for existing and new sources culminating in the elimination of the discharge of all pollutants into navigable waters by 1985. We are of opinion that the initial phase of these regulations, the 1977 standards and the subsequent new source limitations, were not intended to be applied any less flexibly than the final Phase II-1983 requirements. Thus, if such factors as the economic capacity of the owner or operator of a particular point source is relevant in determining whether a variance from the 1983 standards should be permitted, they should be equally relevant when applied to the less stringent 1977 standards as well as the new source requirements.
In addition, we note that both § 304 (1977) and § 306 (new sources) provide that the factors to be taken into consideration in determining the 1977 and new source standards include not only the engineering aspects of the various types of control technology, but also (1) the total cost of application of such technology (cost of achieving such effluent reduction) and (2) the resulting non-water quality environmental impact (including energy requirements). The EPA has offered no reasoned explanation for limiting the variance clause to considerations of technical and engineering factors only. Certainly the adverse non-water quality environmental impact which may result from the strict application of the agency's effluent limitations to a particular plant is as significant as the technological difficulties which may be encountered. The same may be said for a consideration of energy requirements.
Upon reconsideration, then, EPA should come forward with a meaningful variance clause applicable to existing as well as new sources, taking into consideration at least
(c) Section 315 Report
Industry next argues that § 301(b)(2)(A) precludes a no-discharge limitation as a 1983 standard absent achievability findings based upon available information including that developed pursuant to § 315(a). This latter provision creates a National Study Commission to review and report on "all of the technological aspects of achieving, and all aspects of the total economic, social, and environmental effects of achieving or not achieving the effluent limitations and goals . . . for 1983. . . ."
The legislative history of § 315 indicates, however, that Congress did not intend that the Commission report be a condition precedent to the establishment of the 1983 standards. It appears, rather, that the report was intended to provide an independent evaluation of the economic, social, and environmental aspects of the regulatory plan to be obviously used in Congressional review of the agency's functions. A part of the explanation of Senator Muskie filed with his filing of the Conference Report of the joint House-Senate conference concerning the Act is directly in point:
(d) Thermal Backfit Requirements
(1) 1983 Requirements — Reduction for Existing Units
Industry contends that EPA's 1983 thermal backfit requirements for existing units are invalid because the agency failed to balance the overall social benefits to be derived from its regulations against their social costs. In essence, these regulations, which purport to establish effluent reduction levels attainable by the application of the best available technology economically achievable, require all existing generating units placed in service after December 31, 1973, as well as all units of 500 megawatts or greater coming on line after December 31, 1969, to backfit closed cycle cooling.
EPA, on the other hand, takes the position that the language of the Act pertaining to the 1983 standards requires no balancing of social benefits against social costs. Moreover, the agency asserts that even if the Act were held to so require, it has, in its rulemaking, analyzed the benefits of the challenged regulations and found them to be worth the associated costs. It further asserts that it agrees with its environmental contractor, Energy Resources Company (ERCO), when it states that "benefits cannot be properly assessed within the present state of the Art." We disagree with EPA's (and partially with Industry's) assertions, and, accordingly, set aside and remand for further consideration § 423.13(l), (m).
In duPont, 541 F.2d 1018, Nos. 74-1261, et al., we rejected Industry's contention that benefits derived from a particular level of effluent reduction must be quantified in monetary terms, and such contention is rejected here. This reflects the simple fact that such benefits often cannot be reduced to dollars and cents. Nevertheless, EPA is under a statutory duty to determine whether, in fact, its regulations for 1983 will "result in reasonable further progress toward the national goal of eliminating the discharge of all pollutants . . . ." 33 U.S.C. § 1311(b)(2)(A). Accordingly, the agency must consider the benefits derived from the application of its effluent reduction requirements in relation to the associated costs in order to determine whether, in fact, the resulting progress is "economically achievable," and whether the progress is "reasonable."
EPA argues, however, that it has, in fact, assessed the benefits to be derived from its regulations and has therefore satisfied the requirements of 33 U.S.C. § 1311(b)(2)(A). In support of this contention, EPA refers to the table below.
Industry challenges EPA's reliance upon these figures on the ground that they do not indicate whether the regulations will result in reasonable further progress toward the national goal. We agree. EPA's study merely establishes the cost-effectiveness of installing mechanical draft cooling towers at individual plant sites. It in no way indicates whether, in light of the associated costs, application of such systems will result in reasonable effluent reduction levels.
In response to this, EPA cites the report of its environmental contractor, ERCO, which it claims satisfactorily analyzes the environmental benefits and risks associated with the various alternatives which were before it. The foundation of this report was apparently a random sample taken of various power companies throughout the country. Based upon this sample, the report concludes that if a generating unit uses less than 30% of a stream's flow, there will be no ecological danger. If as much as 70% of the stream flow is used more than five percent of the time, however, there will be a high risk of such danger. Between these two extremes, the report concludes that there is a medium risk of danger. Yet, nowhere in the report does ERCO state upon what basis it reached this conclusion. Moreover, ERCO goes on to assume that § 316(a) exemptions will issue to all low risk, half of the medium risk, and none of the high risk installations. Again, however, the reason why the exemption would apply to the assumed proportion of installations is not stated. Perhaps it is a result of ERCO or EPA site studies; perhaps not. We are left to guess. By the same token, we note that the low risk category, for example, does not take into consideration the effect of increases in the temperature of the water discharged into the river by the individual generating units. Is this an oversight or do the results of site by site studies justify the exclusion of the very element, temperature, with which the statute is concerned? Again, the record contains no answer. Simply stated, then, the ERCO report upon which EPA now seeks to rely fails to explain and document the basis for the numerous assumptions made and relied upon in its analysis. As such, we cannot say, based upon this report, whether, in fact, EPA's effluent reduction regulations will result in reasonable further progress toward the elimination of artificial sources of heat from the nation's waters.
Moreover, we further note, finding it to be of some significance, that the record is replete with allusions to the effect of heat upon aquatic life; damage to eggs; different effects on adults and juveniles; the growth of algae; interrupted migration; the thresholds of aquatic communities; differences between streams, lakes and estuaries; are to mention but a few. Yet, despite agreement that the literature is full of learned papers on the subject at hand, EPA contends that the state of the art is not such that the incremental benefits of heat removal from the discharge of generating plants can be predicted. The references throughout the record to the effects of heat on aquatic life, not unreasonably, cause us
Assuming that EPA's conclusion is correct, that the state of the art is such that the incremental effects of heat are not known with any degree of certainty, the least EPA could have done would have been to articulate what the state of the art was and why, according to scientific opinion, predictions could not be made. Even assuming that it might not be possible to articulate with reasonable certainty the achievability of the benefits to be derived from a specified amount of heat removal, it seems to us that the expectancy might be stated, for if there is no expectancy of benefits to aquatic life, is the expenditure of billions of dollars justified under any standard?
We, of course, recognize that EPA may fairly assume that a reduction in the amount of heat discharged will, as a general rule, result in some benefit to the environment. The question is, however, whether the reduction results in reasonable further progress toward the elimination of pollutants. This is ultimately a matter within the sound discretion of EPA itself. Yet, in determining whether a particular reduction level is, in fact, reasonable, EPA must compare the cost of achieving that level of reduction (which it has done) and the ecological benefits to be derived therefrom (which it has not done) with the benefits and costs associated with alternative levels of heat reduction.
At the very least, on the best information available, the ecological benefits expected from the ordered reduction should be stated, and, if impossible so to do, EPA should state why. It may well be, for example, that a 90% reduction in thermal pollution at a cost of $5 billion is entirely reasonable even when it is shown that an 80% reduction would cost but $2 billion, for it is possible that the elimination of the additional 10% in total heat discharged would have positive environmental effects which would far outweigh the additional $3 billion in cost. By the same token, if no tangible environmental benefits will accrue by increasing the thermal reduction level from 80% to 90%, the additional expenditure of $3 billion might be considered unjustified. Thus, in choosing among alternative strategies, EPA must not only set forth the cost of achieving a particular level of heat reduction but must also state the expected environmental benefits, that is to say the effect on the environment, which will take place as a result of reduction,
It should be made clear, however, that our remand here is very narrow in scope since we do not disapprove the general principle of requiring installation of cooling devices on a part of the planned and existing electrical generators in the country. EPA's conclusion that the size of the generator and the year of its first service operation offers the best means of determining which units will be required to backfit seems to us to be reasonable and subject to no infirmity now apparent calling for reconsideration. Moreover, we are not now prepared to say the particular sizes of generators and dates of service which EPA has adopted as the breaking points for ascertaining the necessity of backfitting cooling devices on existing or planned equipment are unreasonable on the record before us.
Yet, while we are unable to say that EPA has not acted reasonably, neither are we able to say it has not acted "perfunctorily or arbitrarily," Appalachian Power v. EPA, supra, p. 507, for the "criteria used in reaching . . . [the] result" has not been stated other than by way of assumptions rather than by the reasoning of those qualified in the field. As was the case in Tanner's Council of America v. Train, 540 F.2d 1188, No. 74-1740 (4th Cir. 1976), there is simply no evidence in the record that would reveal the reasonableness of EPA's conclusions. To sustain these regulations on the present record, this court would have to trust completely EPA's conclusions. Judicial review must be based on something more than trust and faith in EPA's expertise, however. duPont v. Train, 541 F.2d 1018, at p. 1036, Nos. 74-1261, et al. (4th Cir. 1976).
On remand, then, EPA must state the benefits especially to aquatic life, for the various alternatives considered if that can be done. If these benefits cannot be stated with any degree of certainty, EPA will state the expected benefits according to whatever scientific opinion it relies upon, fully explicating the basis, including the opinion, upon which it relies. If no expected benefits can be stated, EPA must state why they cannot be and the scientific opinion which supports that conclusion.
2) Economic Achievability of EPA's Thermal Backfit Requirements
Industry also attacks EPA's backfit requirements on the ground that they will impose a staggering burden on the power industry.
In addition, EPA suggests that the unique relationship that exists between government and the utilities lessens the degree to which Industry must contend with the vagaries of the marketplace. The agency points out that certain factors governing the industry's future growth such as cash flow, return on capital, and demand growth, are subject to direct manipulation by governmental agencies. EPA further asserts that:
Industry disputes both of these assertions. First, it contends that rate regulation is often, in practice, a constraint rather than an aid in efforts to compete for scarce capital. Moreover, Industry argues that despite EPA's contentions to the contrary, a reduction in demand brought on by the energy crisis and a general downward turn in the economy does not make available additional capital.
Since the EPA's backfit regulations have been set aside for further consideration, we find it unnecessary to pass on the validity of the agency's economic analysis. Before any revised regulations are promulgated, however, we direct that EPA fully consider any economic changes which may have occurred in the money market or in the demand projections for the electric utility industry since these regulations were issued, and afford Industry an opportunity to comment upon its analysis.
(e) Backfit Requirements for AEC Approved Nuclear Power Plants
Industry next contends that EPA's summary rejection of an Atomic Energy Commission proposal that fifty-five nuclear power units which had completed environmental impact statements be exempted from the backfit requirements was arbitrary and capricious. The National Environmental Policy Act
Following its NEPA review, the Commission concluded that there were approximately 70 units for which the environmental impacts of thermal effluents were not significant nor sufficiently serious to warrant the cost of closed-cycle cooling. Fifteen of these units were found not to come under EPA's backfit requirements due to either age or size. The remaining fifty-five units would, however, have been required to install closed-cycle systems unless exempted. Accordingly, Dr. Dixy Lee Ray, Chairman of the AEC, wrote EPA requesting:
In support of this request, Dr. Ray pointed out that the capital expenditures required to backfit closed-cycle cooling systems at these plants would approximate $2.1 billion in 1974 dollars. Escalation would increase that figure by 50% by the year 1983.
In response, Russell E. Train, Administrator of EPA, noted that a similar proposal was considered in preparing the preliminary guidelines but was rejected because "in the opinion of [EPA's] General Counsel, it would not be legally defensible." This is the only apparent explanation for EPA's action. The preamble to EPA's regulations does not discuss the question nor does EPA's Development Document or Economic Analysis.
Certainly, the bald assertion that AEC's proposal is "not legally defensible" is not a sufficient articulation of the criteria employed by EPA in reaching its decision. It does not permit the court to in any way satisfy itself that the agency engaged in reasoned decision-making. See, e. g., Appalachian Power Co. v. EPA, 477 F.2d 495, 507 (4th Cir. 1973). Accordingly, EPA is directed upon reconsideration of its backfit regulations to fully evaluate the AEC's proposal and set forth its reasons for rejecting or accepting the proposed category in its revised regulations.
In so directing, we do not imply that EPA must abdicate its authority over effluent reduction to the AEC or NRC. As the parties themselves point out, such abdication of authority has been repeatedly held invalid. See Calvert Cliffs Coordinating Committee v. AEC, 146 U.S.App.D.C. 33, 449 F.2d 1109 (1971); Greene Co. Planning Bd. v. FPC, 455 F.2d 412 (2d Cir. 1972). We do require, however, that EPA "explicate fully its course of inquiry." Appalachian, supra, at 507.
(f) Cooling Lakes as Best Available Technology
Under 40 CFR § 423.15(1) and 40 CFR § 423.25(1), the discharge of heat by steam-electric power plants classified as new sources is permitted only in "blowdown from recirculated cooling water systems,"
EPA has defined "cooling lakes" as any "manmade water impoundment which impedes the flow of a navigable stream and which is used to remove waste heat from heated condenser water prior to recirculating the water to the main condenser." 40 CFR § 423.11(n). Cooling ponds, by way of contrast, include "any manmade water impoundment which does not impede the flow of a navigable stream and which is used to remove waste heat from condenser water. . . . ." 40 CFR § 423.11(m).
This distinction takes on meaning when considered in light of EPA's interpretation of the term "navigable waters." According to the agency, all "[i]ntrastate lakes, rivers, and streams which are utilized by interstate travelers for recreational and other purposes; intrastate lakes, rivers and streams from which fish or shellfish are taken and sold in interstate commerce; and interstate lakes, rivers and streams which are utilized for industrial purposes by industries for interstate commerce"
We nevertheless recognize that virtually every natural stream falls within this narrower view as to what constitutes "navigable waters." According to EPA's regulations, any impoundment which impedes the natural flow of any such stream would constitute a cooling lake and thus preclude it from use for cooling purposes.
Despite EPA's restrictions upon the use of cooling lakes, the agency's own Development Document specifically identifies such lakes as a form of closed-cycle cooling. It states:
Moreover, that document lists cooling lakes as one of the available technologies for achieving waste heat removal in closed or recirculated cooling systems.
So we see that EPA has itself recognized that cooling lakes represent an achievable method of closed-cycle cooling. In addition, the agency has deemed them to be the best practicable technology for existing generating units presently employing such lakes.
The EPA has itself recognized this in the case of existing generating units employing cooling lakes. Due to the fact that "the addition of recirculating systems to [existing] lakes would substantially increase water consumption,"
EPA's § 104(t) report supports Industry's assertion that the use of cooling towers will result in a dramatic increase in water consumption. It concludes that "the evaporation resulting from a given thermal addition to a [cooling] lake is generally less than 50% of the evaporation that will result from similar thermal loading of a cooling tower."
EPA dismissed these concerns during the rulemaking process, however, on the ground that "much of the evaporated water would precipitate [again] through the natural water cycle."
It is clear that Congress intended such reductions in water supply to be taken into consideration by EPA in determining the best available technology to abate effluent discharges. The basic directive of the entire Act is set forth in § 102(a) of the Act and provides, in part, that EPA must give due regard to "the withdrawal of such waters for public supply, agricultural, industrial and other purposes."
We are of opinion, therefore, that EPA's ban on the use of new and existing cooling lakes is clearly not in accordance with the Congressional directive regarding the conservation of our water resources, probably in most areas of the country, and particularly as that ban applies to regions where fresh water is in short supply. It is evident from an examination of the record that EPA's regulations will result in needless water consumption and, thus, impede effective utilization of our fresh water resources. Accordingly, 40 CFR §§ 423.13(1), 423.15(1), and 423.25(1) are set aside and remanded to EPA for further consideration with directions that it fully evaluate the total environmental impact of any subsequent regulations which it may issue, particularly with reference to water usage and its effect on the more arid regions of the Nation.
On remand, EPA may find it difficult to avoid the logic of the statement of the General Counsel of the Department of Commerce (see, footnote 49, supra) where he concludes that subcategorization of the industry by locality should have been considered taking into account the availability of water for consumptive use. It is difficult
(g) Sea Water Cooling Towers as Best Available Technology for Open Ocean Dischargers
EPA's regulations also prohibit open ocean thermal discharges and require closed-cycle cooling at power plants located along the nation's coastlines.
Industry first challenges the forced construction of such cooling towers at new coastline plants on the ground that sea water cooling towers for full-sized power plants are not "currently available" and, thus, are not "demonstrated" as is required under § 306. We need not reach this question, however, since 40 CFR § 423.13(1), as amended by 40 Fed.Reg. 7095-96 (1975), has previously been set aside. Upon reconsideration of that portion of its effluent limitation guidelines, EPA should, nevertheless, allow industry the opportunity to comment upon any revised regulations insofar as they relate to sea water cooling towers and reconsider its position if industry's objections have merit. We especially note that the B. L. England Station may well be the only power station presently in existence which approaches the required technology. On remand, particular attention should be paid to data relating to the performance of that station. By emphasizing the B. L. England Station, we do not mean to exclude from consideration on remand other relevant information from legitimate sources.
(h) EPA's Implementation of § 316(a)
Section 316(a) of the Act provides that EPA may impose less stringent effluent limitations at any point source than might otherwise be required under either § 301 or § 306 "whenever the owner or operator of any such point source . . . can demonstrate that any effluent limitation proposed for the control of the thermal
Industry cites nothing in the Act or its legislative history which requires EPA to adopt its suggested test under § 316. We, of course, recognize that under the Act each state adopts water quality standards for inter- and intrastate water so as to "protect the public health or welfare, enhance the quality of water and serve the purpose of this chapter."
EPA points out that state water quality standards typically apply to an entire waterway or a relatively large segment of it. By way of contrast, EPA views § 316(a) as providing for consideration of specific site conditions in the setting of thermal limitations for individual power plants. Thus, while a greater level of thermal effluent by a generating unit might well fall within the general requirements of an approved state standard, EPA takes the position that such discharge might nevertheless cause serious harm to a particular spawning ground, for example located just below the plant's discharge point. It is such specific site conditions to which EPA contends § 316(a) is directed.
While both the position of Industry and EPA have force in logic, we are of opinion that Train v. NRDC, Inc., 421 U.S. 60, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975), is controlling here. There, the court indicated that while an agency's interpretation of its statutory authorization need not be "the only one it permissibly could have adopted . . [if] it was at least sufficiently reasonable . . . it should [be] accepted by the reviewing courts." 421 U.S. at 75, 95 S.Ct. at 1480. Moreover, the court went on to reiterate that where an agency's interpretation of a particular Act is not unreasonable, Courts of Appeals ought not substitute their judgment for that of the agency. Id. at 87, 95 S.Ct. 1470. Thus, in the absence of statutory language or legislative history indicating that compliance with state water quality standards should be deemed to satisfy the requirements of § 316(a), we think EPA's position is reasonable. Accordingly, we decline to set aside 40 CFR Part 122 implementing § 316(a) of the Act.
(i) Rainfall Runoff Regulations
EPA's regulations also limit suspended solids in rainfall runoff from areas disturbed by construction activity
(1) Applicability to Nonpoint Sources
Congress consciously distinguished between point source and nonpoint source discharges, giving EPA authority under the Act to regulate only the former.
Industry agreed throughout the rulemaking that contaminated runoff discharges from coal storage and chemical handling areas fell within this definition and should be subject to reasonable controls. It does not contest such application of the regulations. Contaminated runoff from these limited areas is, according to Industry, ordinarily collected into a "point source" and can reasonably be treated so as to remove any pollutants.
Industry asserts, however, that EPA's material storage runoff regulations purport to cover not only point sources such as coal storage areas, but also nonpoint sources as well. Rainfall runoff from areas such as those used to store construction material is, according to Industry, not normally routed into a "point source" collection system, and it is Industry's contention that EPA has no authority to compel such collection so as to transform a nonpoint source into a point source. EPA, on the other hand, argues that runoff from material storage sites, where channeled into a settling pond or other such collection system, is clearly subject to regulation. Thus, it takes the position that to exempt uncollected runoff from regulation would be to permit pollution by indirection which would otherwise be barred.
There is some logic in EPA's position, and we do not dismiss it lightly. Yet, Congress has limited the definition of "point source" to "any discernible, confined or discrete conveyance." Broad though this definition may be, we are of opinion that it does not include unchanneled and uncollected surface waters.
Industry also argues that while EPA's construction runoff regulations do purport to limit themselves to "point source" application, they fail to define the discharges to which they apply. This difficulty is allegedly brought about by the regulations' failure to define the area which they cover other than to say they include point source rainfall runoff from "any construction activity and any earth surface disturbed by such activity" related to power plants.
We agree. It is impossible to determine from the regulations whether the construction, for example, of chemical treatment plants, sewage lines, fuel storage and transportation facilities or other such units are subject to control. The only indication as to the breadth of these regulations is found in EPA's Development Document which states:
This limitation upon the applicability of the rainfall runoff controls is, however, not found in EPA's published regulations. While the regulation is limited to point sources, the all-embracing aspect is not supported by the development document, the limits in which cannot be deemed to provide the guidance necessary for either the enforcing authorities who must apply these regulations on a case-by-case basis or the dischargees who must conform their activities accordingly.
We are of opinion that EPA's rainfall runoff regulations must be set aside and remanded with directions that EPA clarify the scope of their applicability and properly limit any subsequent controls to "point sources" only.
(2) EPA's Consideration of Costs
Industry also argues that EPA, in arriving at its limitations, did not adequately consider the cost of controlling ash pile and construction site runoff. It appears from the record that in estimating the costs associated with such control, EPA relied entirely upon data relative to coal pile runoff. The agency concedes this fact but argues that, insofar as the regulations apply to ash piles, the omission of the data is immaterial due to their rarity.
If the agency by regulation controls the runoff from ash piles (however rare) and construction activity (concededly common), it must consider the cost. That is the command of the statute. §§ 304(b)(1)(B); 304(b)(2)(A); 306(b)(1)(B).
EPA's cost analysis is also deficient for another related reason. EPA's new source standards
Without the use of hydraulic transport for fly ash, it is obvious that the ash pile which EPA now describes as a rarity will become common in the immediate future, especially at coal burning installations. Indeed, it is mandatory that something be done with the ash. And so long as it is an acceptable alternative (as it must be since EPA wishes to control it), the cost of its maintenance and control must be considered.
Industry further contends that, in relation to the construction site runoff limitations, a 3,000 MW plant will require, exclusive of any coal storage area, 100 to 400 acres of land, much of which will be the location of some construction activity. Collecting and treating runoff from such large areas, according to Industry, will cost far more than EPA's coal pile cost estimate. Even if we were to assume that Industry has over-estimated the area affected by the regulations as well as the associated costs,
Accordingly, upon reconsideration of its rainfall runoff regulations, EPA is directed to evaluate the associated cost of controlling ash pile and construction site runoff (as well as the maintenance of ash piles which is later discussed) before establishing any new discharge limitation.
(3) Evidentiary Basis for the 50 mg./l Limitation
Finally, Industry takes the position that the record offers no support for EPA's conclusion that the 50 mg./l limit on suspended solids in rainfall runoff from construction activity or material storage areas (other than coal piles) is attainable by the treatment method identified by the agency as "best available." We agree. As has been noted, EPA did not evaluate any "controlled area" relative to construction site or ash pile runoff. While there is data in the record concerning control techniques for coal pile runoff, there is no indication that such technology is feasible in the context of construction site or ash pile runoff.
EPA states "[t]he rainfall runoff limitation was derived from runoff studies done for the Agency" citing a March 1975 study at a Pennsylvania strip mine. Although the study shows a 92.8% efficiency in removal of solids, it is not available support for the regulations because it was made after the regulations were promulgated. Tanners Council, 540 F.2d 1188, p. 1191, Nos. 74-1740, et al. (4th Cir. 1976). Industry additionally argues that even with 92.8% efficiency, if the runoff level of 10,000 mg./l TSS were encountered as was demonstrated at a Washington mine, the TSS discharged would be 720 mg./l, or more than 14 times the acceptable level of the regulations. EPA, of course, had no opportunity to reply to this argument, yet enough has been shown to require a remand for reconsideration of the whole problem. We add that no data is in the record on TSS concentrations from ash pile runoff or control of that problem.
We express no opinion as to whether, in fact, the limitation is appropriate or whether the technology (settling ponds) is acceptable. We merely conclude that the regulations are not supported by the record and that on remand EPA must establish that the required control techniques applicable to such sites can reasonably be expected to achieve the required effluent reduction which also must be supported by the record.
(j) EPA's No-Discharge Standard for Fly Ash Transport
As previously noted, EPA, in setting new source standards under § 306 of the Act, adopted a rule requiring no discharge of suspended solids from fly ash transport water.
In support of its no-discharge regulations, EPA asserts that the record shows the successful use of dry systems at nine geographically dispersed centers and that the agency thoroughly considered the data derived from these sites in developing the dry fly ash standard. An examination of those portions of the record cited to us by EPA, however, indicates that the agency engaged in no meaningful consideration of the cost of achieving the required effluent reduction or the non-water quality environmental impact and energy requirements associated with such systems as is required by § 306(b)(1)(B).
That, then, leaves only two plants which purportedly have dry fly ash systems — one in New York State and another at Turkey Point, Florida. The only indication in the report as to the manner in which fly ash is treated at Turkey Point is the assertion that:
There is no indication whether the plant is coal- or oil-fired;
The report on the New York station, located at Ludlowville, is no more complete in terms of satisfying the criteria set forth in § 306(b)(1)(B). That report indicates that the total generating capacity at the site is only 300 MW. There is no indication as to the amount of ash produced annually, but it appears that it is collected in silos and disposed of by trucking it away to land fill sites. While it appears that the dry collection system was installed in 1972 at a cost of $5.6 million, there is no indication as to the resulting effluent reduction which occurred, if any. Moreover, the report does not show the methods employed to stabilize the fly ash at the disposal area or the costs associated with such disposal. Finally, there is no indication as to the effect landfill disposal has upon the environment or the energy requirements for the transfer of the ash from the plant site, considerations mandated by § 306.
Thus, whether taken as a whole or read separately, the reports cited to us in the record belie EPA's assertion that dry fly ash systems have been used successfully in nine geographically dispersed areas of the country. Moreover, it is apparent that EPA has not adequately considered the costs associated with the required technology. The only cost data referred to in EPA's brief
Thus, based upon the present state of the record, we set aside the dry fly ash regulations, 40 CFR § 423.15(e) and § 423.25(e), for new sources and remand them for further consideration. On remand, EPA is directed to fully and systematically explicate the basis for its actions, giving full weight to the statutory factors set forth in § 306 of the Act. It should negate Industry's well taken complaint that "[t]here is no information in the record to show detailed studies of dry fly ash transport and disposal systems and techniques."
(k) Credit for the Intake of Pollutants
Industry next challenges EPA's chemical effluent limitations on the ground that the standards imposed are absolute and apply regardless of the pollutants in a plant's intake water. It is Industry's position that EPA has no jurisdiction under the Act to require removal of any pollutants which enter a plant through its intake stream. We agree.
Section 301(a) of the Act provides that "the discharge of any pollutant by any person shall be unlawful."
EPA asserts that the objection about which Industry complains has been remedied by recent amendments to the regulations. Specifically, 40 CFR § 125.28 provides that a discharger will be credited for pollutants in his intake water, but only if he "demonstrates . . . that specified pollutants which are present in the . . . intake systems designed to reduce process wastewater pollutants and other added pollutants to the levels required by applicable limitations or standards."
Industry would have us set aside the present utility industry regulations and remand them to EPA in order that they may be redrafted to cover only net as opposed to gross discharges of pollutants. We feel this is unnecessary, however. Instead, we are of opinion that the regulations here challenged may be brought into conformity with the Act by construing 40 CFR § 125.28(a)(2) to read as follows:
Thus, we construe the reference to a "treatment system" in § 125.28(a)(2) to mean those systems designed and used for the removal of process waste water pollutants.
(1) Unique Factors Affecting Consolidated Edison
Consolidated Edison seeks more flexible regulations due to its somewhat unique location in New York City. It cites the age of its buildings with the accompanying problems, the unavailability of land, the actual use for navigation of the already badly polluted New York harbor, and the extremely high costs; factors which it and other power companies physically located in highly populated industrialized areas must face.
While it must be acknowledged that the problems faced by Consolidated Edison are those of few, if any, of the other power companies in the country, so far as its petition may be read as a request for leniency because of the already polluted condition of the harbor, it must be rejected. The 1972 amendments to the statute changed the system from that of control of the quality of the body of water to effluent limitations as we have before noted.
But we have, we think, in providing for a more liberal variance provision, afforded this utility an avenue for relief. If it is doing all that the maximum use of technology within its economic capability will permit and if such use will result in reasonable further progress toward the elimination of the discharge of pollutants (which recitations are not meant to be taken as an inflexible standard in the preparation of a new variance provision), no reason appears why Consolidated Edison should not be able to procure such a variance should it comply with any other requirements of the variance. In so noting, we do not imply that Consolidated Edison is or may be entitled to any such variance. That question is not before us now and should await action for a variance.
We do not imply that such qualifications may be cost free; far from it, for economic capability of the applicant will be judged by the agency considering the variance application.
In summary, the following regulations are set aside and remanded to EPA for further consideration:
40 CFR § 423.12(a) — variance provision for effluent limitation guidelines representing the degree of effluent reduction attainable by the application of the best practicable technology currently available.
40 CFR § 423.13(1)(m), as amended by 40 Fed.Reg. 7095-96 — Thermal backfit requirements representing the degree of effluent reduction attainable by application of the best available technology economically achievable.
40 CFR § 423.13(1), as amended by 40 Fed.Reg. 7095-96, and 40 CFR § 423.15(1), and 40 CFR § 423.25(1) — EPA's ban on the use of new and existing cooling lakes as an acceptable form of closed-cycle cooling.
40 CFR §§ 423.40 through 423.43 — rainfall runoff limitations for material storage and construction site runoff.
40 CFR § 423.15(e) and 40 CFR § 423.25(e) — EPA's no-discharge limitation for fly ash transport water. In addition, we direct that EPA reevaluate (a) its requirements for closed-cycle cooling at generating units located along the nation's coastlines, and (b) its refusal to create a subcategory for AEC approved nuclear generating stations. We further direct EPA to include a variance provision for new sources in accordance with this opinion.
I concur in the majority opinion except for its rejection of the variance provision which is found in 40 C.F.R. § 423.12(a) and which applies to the limitations set for the 1977 step in the "Generating Unit Subcategory."
Section 423.12(a) is virtually identical to the variance provisions for the 1977 step found in the regulations for the "Inorganic Chemicals Manufacturing Point Source category." See e. g. § 415.62. Our decision in DuPont v. Train, 541 F.2d 1018, Nos. 74-1261, etc., dealt with the Inorganic Chemicals Category, recognized the regulatory variance applicable to the 1977 step and the statutory variance applicable to the 1983 step, and then said, p. 1028:
In Natural Resources Defense Council, Inc. v. Environmental Protection Agency, 537 F.2d 642, the Second Circuit rejected an attack on the variance clause pertaining to the 1977 step and followed our decision in DuPont v. Train. See p. 646. In so doing the Second Circuit said, p. 647:
In providing for a permissible variance in the 1977 step, EPA was properly exercising its § 501(a), 33 U.S.C. § 1361(a), power "to prescribe such regulations as are necessary to carry out his [the Administrator's] functions under this Act." The statute, § 301(c), 33 U.S.C. § 1311(c), provides a variance procedure pertaining to the 1983 step and refers to the "economic capability" to comply with the requirements of § 301(b)(2)(A). I agree that a regulatory variance applicable to 1977 should not be more stringent than the statutory variance provided for 1983. Properly construed and applied § 423.12(a) is not more stringent.
The regulation begins by saying in its first sentence that EPA in establishing limitations took into consideration specified factors, including "age and size of plant, utilization of facilities, * * * control and treatment technology available, energy requirements and costs." The third sentence says that a discharger may submit evidence:
The fourth sentence says that the permit issuer "will make a written finding that such factors are or are not fundamentally different."
The majority opinion construes the phrase "such factors" to apply only to "technical and engineering factors." The majority's attempt, fn. 22, to distinguish this case from DuPont v. Train does not convince me. The EPA interpretation mentioned in fn. 22 was before us when we decided DuPont v. Train. A reasonable interpretation of § 423.12(a) is to apply the word "such", as used in the third and fourth sentences, to the factors mentioned in the first sentence. That interpretation makes the regulatory variance for 1977 substantially conform with the statutory variance for 1983.
In any event I would not vacate and remand § 423.12(a) on the assumption that on a claim for variance EPA will give consideration only to "technical and engineering factors," and will ignore economic capability. The language of the regulation is "equipment or facilities involved." The regulation does not foreclose consideration of all the factors mentioned in the first sentence. If assumptions are to be made, I would assume that EPA would not apply the regulatory 1977 variance more stringently than the statutory variance for 1983.
I agree with the Second Circuit that the question should await "concrete factual controversies." My dissent is confined to the action of the court in setting aside and remanding § 423.12(a).
ORDER ON MOTION FOR CLARIFICATION AND MODIFICATION
We have considered the petitioners' motion for clarification and modification of our opinion in these cases decided July 16, 1976, and the respondent's opposition thereto.
It is accordingly ADJUDGED and ORDERED as follows:
I (Variance Clause)
A. Page 1378 is amended as follows: "40 CFR § 423.12(a)" shall be changed to read "40 CFR §§ 423.12(a), 423.22(a), and 423.32(a), (§ 423.42(a) having been set aside on other grounds)." See footnote 86.
B. We are of opinion that the 1977 and new source standards should not be more stringently applied than the 1983 standards, see duPont, No. 74-1261, 541 F.2d 1018, pp. 1028, 1031-1032, and that reference to the 1983 standards is necessary to determine whether or not the standards for 1977 and new sources have been more stringently applied. Accordingly the opinion, p. 1359, supra, column 2 line 33 is amended to add a comma following 304(b)(1)(B), delete the word "and", delete period at the end of line and add the following: "and § 304(b)(2)(B)."
We are further of opinion, however, that § 301(c) of the statute itself contains a variance clause for 1983 standards. No regulations issued under that section have been complained of. So far as we are advised, the administrator has not refused to issue regulations to give effect to § 301(c), and no variance applied for has been refused. So far as we are told, the administrator has taken no action under that section of the statute. Accordingly, we deny the motion to require EPA to insert a specific variance clause in the 1983 standards. At such time as the administrator acts or refuses to act under § 301(c), his action or non-action will be subject to review.
II (Sea Water Cooling Towers)
We are now asked by the parties to consider whether or not 40 CFR §§ 423.15(1) and 423.25(1) are valid regulations with respect to new sources using sea water cooling.
As those sections have previously been set aside on other grounds p. 1370, we direct that these sections, as well as § 423.13(1), be reconsidered in accordance with the directions in our opinion at page 1371.
III (Credit for the Intake of Pollutants)
The motion to amend part (k) of our opinion, pp. 1377-1378, is denied.
With the concurrence of Judge Rives, Judge Breitenstein concurring and dissenting in part in a separate opinion filed herewith.
BREITENSTEIN, Circuit Judge (concurring and dissenting in part):
I concur in the order disposing of petitioners' motion for clarification and modification of opinion except for those provisions of the order which set aside and remand for further consideration the variance clauses contained in 40 C.F.R. §§ 423.12(a), 423.22(a), 423.32(a) and 423.42. In my opinion the Administrator of the Environmental Agency acted within the authority delegated by § 501(a) of the Act when he promulgated these regulations. They apply only to the 1977 step. They violate no provision of the Act. We are concerned with informal rule-making, not with adjudication. The construction and effect of these regulations should await determination in some case presenting specific facts. See Natural Resources Defense Council, Inc. v. Environmental Protection Agency, 2 Cir., 537 F.2d 642, 647, and American Petroleum Institute v. Environmental Protection Agency, 10
INCREMENTAL COST OF APPLICATION OF MECHANICAL DRAFT EVAPORATIVE COOLING TOWERS TO NONNEW UNITS (BASIS 1970 DOLLARS) ----------------------------------------------------------------------- TYPE UNIT REMAINING | INCREMENTAL | INCREMENTAL LIFE | PRODUCTION COSTS | CAPITAL COSTS Years | ------------------ | -------------------- | % of Cost/Benefit | % of Cost/Benefit | Base $/[MWH][T] | Base $/[MWH][T] | Cost x10 | Cost x10 --------------------------- | ------------------ | -------------------- I. Nuclear 30-36 | 13 4 | 12 1 (All base-load) 24-30 | 14 5 | 12 1 18-24 | 15 5 | 12 2 12-18 | 16 6 | 12 2 6-12 | 19 7 | 12 5 0-6 | 30 11 | 12 10 | | Average excl. 0-6 | 15 5 | 12 2 --------------------------- | ------------------ | -------------------- II. Fossil-Fuel | | A. Base-Load 30-36 | 11 4 | 12 1 24-30 | 12 4 | 12 1 18-24 | 13 4 | 12 1 12-18 | 14 5 | 12 2 6-12 | 16 5 | 12 3 0-6 | 22 7 | 12 8 | | Average excl. 0-6 | 13 4 | 12 1.6 --------------------------- | ------------------ | -------------------- B. Cyclic 30-36 | 14 5 | 14 2 24-30 | 15 5 | 14 2 18-24 | 16 6 | 14 2 12-18 | 18 6 | 14 3 6-12 | 20 8 | 14 5 0-6 | 30 10 | 14 15 | | Average excl. 0-6 | 17 6 | 14 3 --------------------------- | ------------------ | -------------------- C. Peaking 30-36 | 40 20 | 16 7 24-30 | 40 20 | 16 8 18-24 | 45 20 | 16 10 12-18 | 50 30 | 16 13 6-12 | 60 30 | 16 21 0-6 | 100 60 | 16 61 | | Average excl. 0-6 | 47 24 | 16 10 ----------------------------------------------------------------------- -------------------------------------------------------- | ADDITIONAL FUEL | GENERATION CAPACITY | CONSUMPTION | REDUCTION | --------------------------- | ------------------------ | % of Base Cost/Benefit | % of Base Cost/Benefit | Fuel [MWH][F]/ | Generating MW/[MWH][T] | Consumption [MWH][T] x100 | Capacity x10 | --------------------------- | ------------------------ | 2 3 | 3 1 | 2 3 | 3 1 | 2 3 | 3 1 | 2 3 | 3 2 | 2 3 | 3 3 | 2 3 | 3 9 | | | 2 3 | 3 1.6 | --------------------------- | ------------------------ | | | 2 3 | 4 1 | 2 3 | 4 1 | 2 3 | 4 1 | 2 3 | 4 2 | 2 3 | 4 3 | 2 3 | 4 9 | | | 2 3 | 4 1.6 | --------------------------- | ------------------------ | 2 3 | 4 1 | 2 3 | 4 1 | 2 3 | 4 2 | 2 3 | 4 3 | 2 3 | 4 5 | 2 3 | 4 14 | | | 2 3 | 4 1.6 | --------------------------- | ------------------------ | 2 3 | 4 6 | 2 3 | 4 7 | 2 3 | 4 8 | 2 3 | 4 13 | 2 3 | 4 21 | 2 3 | 4 64 | | | 2 3 | 4 11 -------------------------------------------------------- ___________________________________________________________________________ Assumptions: TYPE UNIT | Base Prod. Cost | Base Cap. | Annual Boiler | | mills/kwh | Cost $/kw | Capacity Factor | ________________ | _______________ | _________ | _______________ | I. Nuclear | 6.50 | 150 | 0.70 | II. Fossil-Fuel | | | | A. Base-Load | 6.34 | 120 | 0.77 | B. Cyclic | 0.35 | 120 | 0.44 | C. Peaking | 12.5 | 120 | 0.09 | __________________________ | _______________ | _________ | _______________ | ___________________________________________________________________________ Heat Rate | Heat Loss | Heat Converted | Heat to Cooling | Cost Replacement Btu/kwh | Btu/kw | Btu/kwh | Water Btu/kwh | Capac. $/kw _________ | _________ | ______________ | _______________ | ________________ 10,500 | 200 | 3,500 | 6,000 | 90 | | | | 10,500 | 500 | 3,500 | 6,500 | 90 11,500 | 500 | 3,500 | 7,500 | 90 12,500 | 500 | 3,500 | 8,500 | 90 _________ | _________ | ______________ | _______________ | _________________ Subscripts: F indicates electrical equivalence of fuel consumed, and T indicates electrical equivalence of heat rejected to cooling water. Both are calculated at 0.293 x10[-6] [MWH]/Btu.
We are of opinion that sole reliance upon § 316(a) in assessing whether new discharges would be appropriate would effectively preempt consideration of the statutory factors set forth in §§ 304(b)(2) and 306 for "best available" technology.
Similarly, the Federal Power Commission recommended that the "best" technology in water deficient areas should reflect that form of cooling which is least water consumptive.
In response to an inquiry by the court made of all parties as to the effect of these proposed regulations upon the present controversy, the Brazos River Authority asserted that the new regulations did not alleviate the problem facing the more arid regions of the country since the definition of recirculating cooling bodies restricts the construction of new cooling lakes to smaller streams. Counsel for both the State of Texas and the United Water Act Group agreed. EPA did not respond directly to this contention but did agree that it would be appropriate to enter an order of remand as to the remaining cooling lake regulations.
Since EPA has chosen not to rescind the present regulations and since they apparently will not alleviate the problem facing Texas and other such states, this court is of opinion that the issuance of the proposed regulations does not render the present controversy moot. To the extent that EPA has retreated from its earlier position banning the use of all cooling lakes by new point sources, however, the court considers this a concession that its earlier position as to water consumption may have been in error.
[Footnotes 58, 59 and 60 are omitted.]