Southwestern Elec. Power Co. v. U.S. E.P.A.

920 F.3d 999

SOUTHWESTERN ELECTRIC POWER COMPANY; Utility Water Act Group; Union Electric Company, doing business as Ameren Missouri; Waterkeeper Alliance, Incorporated; Environmental Integrity Project; Sierra Club; American Water Works Association; National Association of Water Companies; City of Springfield, Missouri, by and through the Board of Public Utilities; Duke Energy Indiana, Incorporated, Petitioners

v.UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; Andrew Wheeler, in his official capacity as Acting Administrator of the United States Environmental Protection Agency, Respondents

No. 15-60821

United States Court of Appeals, Fifth Circuit.

FILED April 12, 2019

Kristy A. N. Bulleit, Esq., Counsel, Hunton Andrews Kurth, L.L.P., Washington, DC, Harry Margerum Johnson, III, Hunton Andrews Kurth, L.L.P., Richmond, VA, for Petitioners SOUTHWESTERN ELECTRIC POWER COMPANY, UNION ELECTRIC COMPANY.

Kristy A. N. Bulleit, Esq., Counsel, Hunton Andrews Kurth, L.L.P., Washington, DC, Harry Margerum Johnson, III, Timothy Louis McHugh, Hunton Andrews Kurth, L.L.P., Richmond, VA, for Petitioner UTILITY WATER ACT GROUP.

Thomas Joseph Cmar, Earthjustice, Oak Park, IL, Matthew Gerhart, Sierra Club, Environmental Law Program, Denver, CO, for Petitioners WATERKEEPER ALLIANCE, INCORPORATED, ENVIRONMENTAL INTEGRITY PROJECT.

Thomas Joseph Cmar, Earthjustice, Oak Park, IL, Matthew Gerhart, Casey Austin Roberts, Sierra Club, Environmental Law Program, Denver, CO, Joshua Smith, Sierra Club, Environmental Law Program, Oakland, CA, for Petitioner SIERRA CLUB.

John Andrew Sheehan, Michael Best & Friedrich, L.L.P., Washington, DC, for Petitioners AMERICAN WATER WORKS ASSOCIATION, NATIONAL ASSOCIATION OF WATER COMPANIES.

Thomas J. Grever, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, for Petitioner CITY OF SPRINGFIELD.

Sean Michael Sullivan, Troutman Sanders, L.L.P., Raleigh, NC, for Petitioner DUKE ENERGY INDIANA, INCORPORATED.

Martin Francis McDermott, Tsuki Hoshijima, U.S. Department of Justice, Avi S. Garbow, Environmental Protection Agency, Jessica O'Donnell, U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, for Respondent.

Before HAYNES, HO, and DUNCAN, Circuit Judges.

STUART KYLE DUNCAN, Circuit Judge:

Steam-electric power plants generate most of the electricity used in our nation and, sadly, an unhealthy share of the pollution discharged into our nation's waters. To control this pollution, the Clean Water Act, 33 U.S.C. § 1251 et seq. , empowers the Environmental Protection Agency to promulgate and enforce rules known as "effluent limitation guidelines" or "ELGs." Id. §§ 1311, 1314, 1362(11). For quite some time, ELGs for steam-electric power plants have been, in EPA's words, "out of date." 80 Fed. Reg. 67,838. That is a charitable understatement. The last time these guidelines were updated was during the second year of President Reagan's first term, the same year that saw the release of the first CD player, the Sony Watchman pocket television, and the Commodore 64 home computer. In other words, 1982. See id. (noting ELGs were "promulgated and revised in 1974, 1977, and 1982"). The guidelines from that bygone era were based on "surface impoundments," which are essentially pits where wastewater sits, solids (sometimes) settle out, and toxins leach into groundwater. Id. at 67,840, 67,851. Impoundments, EPA tells us, have been "largely ineffective at controlling discharges of toxic pollutants and nutrients." Id. at 67,840. Consequently, in 2005 the agency began a multi-year study to bring the steam-electric ELGs into the 21st century. Id. at 67,841.

In November 2015, EPA unveiled the final rule: the " Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category," 80 Fed. Reg. 67,838 (Nov. 3, 2015). The rule updates guidelines for six of the wastestreams that issue from plants and foul our waters. Importantly, the Clean Water Act requires setting new ELGs based on the "Best Available Technology Economically Available" or "BAT." 33 U.S.C. § 1314(b)(2)(B). BAT is the gold standard for controlling water pollution from existing sources. By requiring BAT, the Act forces implementation of increasingly stringent pollution control methods. See NRDC v. EPA , 822 F.2d 104, 123 (D.C. Cir. 1987) (describing the Act as "technology-forcing").

We consider a challenge to the final rule brought by various environmental petitioners.

They target two discrete parts of the rule: the new ELGs for "legacy wastewater" (wastewater from five of the six streams generated before a specific date) and for "combustion residual leachate" (liquid that percolates through landfills and impoundments). These two categories account for massive amounts of water pollution. For instance, leachate alone would qualify as the 18th-largest source of water pollution in the nation, producing more toxic-weighted pound equivalents than the entire coal mining industry. The environmental petitioners' basic complaint is that EPA set an unlawful BAT for these two categories. Whereas the BAT for the other streams adopts modern technologies, they claim the agency arbitrarily set BAT for legacy wastewater and leachate using the same archaic technology in place since 1982—namely, impoundments. It was as if Apple unveiled the new iMac, and it was a Commodore 64.

The environmental petitioners challenge those portions of the rule under the Administrative Procedure Act and the well-worn Chevron test governing review of agency action. See Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). For the reasons discussed below, we agree that the portions of the rule regulating legacy wastewater and combustion residual leachate are unlawful. Accordingly, we VACATE those portions of the rule and REMAND to the agency for reconsideration.

I. BACKGROUND

A. The Clean Water Act

The Clean Water Act ("CWA" or "Act"), 86 Stat. 833, as amended, 33 U.S.C. § 1251 et seq. , was enacted over President Nixon's veto in 1972. See Train v. City of New York , 420 U.S. 35, 40, 95 S.Ct. 839, 43 L.Ed.2d 1 (1975). Few laws have shouldered a weightier burden—namely, "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a) ; see also, e.g., City of Milwaukee v. States of Illinois and Michigan , 451 U.S. 304, 318, 101 S.Ct. 1784, 68 L.Ed.2d 114 (1981) ("Congress' intent in enacting [the CWA] was clearly to establish an all-encompassing program of water pollution regulation."); Am. Petroleum Inst. v. EPA , 661 F.2d 340, 343-44 (5th Cir. Unit A Nov. 13, 1981) (" API I ") (noting CWA's "ambitious purpose"). To that end, the Act makes "unlawful" the "discharge of any pollutant by any person" into the nation's "navigable waters," unless otherwise permitted. 33 U.S.C. §§ 1311(a), 1362(7), (12).¹

We have previously detailed the Act's "distinct, though interlocking, regulatory schemes." Chem. Mfrs. Ass'n v. EPA , 870 F.2d 177, 195 (5th Cir. 1989) (" CMA "), clarified on reh'g , 885 F.2d 253.² Here we focus on one of the Act's key regulatory tools: "effluent limitation guidelines" ("ELGs" or "guidelines"), which are nationwide standards set by the EPA Administrator to govern pollutant discharges from point sources. See 33 U.S.C. § 1314(b) (authorizing Administrator to set "effluent limitation guidelines" for "classes and categories of point sources"); Tex. Oil & Gas , 161 F.3d at 927 ("ELGs are the rulemaking device prescribed by the CWA to set national effluent limitations for categories and subcategories of point sources").³

The Act requires ELGs to be based on technological feasibility rather than on water quality. Id. at 927 (citing E.I. du Pont de Nemours & Co. v. Train , 430 U.S. 112, 130-31, 97 S.Ct. 965, 51 L.Ed.2d 204 (1977) ; API I , 661 F.2d at 343-44 ). That is, the Administrator must "require industry, regardless of a discharge's effect on water quality, to employ defined levels of technology to meet effluent limitations." API I , 661 F.2d at 344 ; see also Tex. Oil & Gas , 161 F.3d at 927 (ELGs are "technology-based rather than harm-based" insofar as 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"). The Act therefore mandates a system in which, as available pollution-control technology advances, pollution-discharge limits will tighten. See, e.g., Nat'l Crushed Stone , 449 U.S. at 69, 101 S.Ct. 295 (the Act "provides for increasingly stringent effluent limitations") (citing 33 U.S.C. § 1311(b) ); CMA , 870 F.2d at 196 (the Act requires compliance with "technology-based pollutant-effluent limitations that, in time, will become more stringent") (citing 33 U.S.C. §§ 1311(b), 1314(b) ). The D.C. Circuit accurately described this aspect of the Act's scheme as "technology-forcing," meaning it seeks to "press development of new, more efficient and effective [pollution-control] technologies." NRDC v. EPA , 822 F.2d 104, 123 (D.C. Cir. 1987) (" NRDC I " ); see also, e.g., NRDC v. EPA , 808 F.3d 556, 563-64 (2nd Cir. 2015) (" NRDC II ") (describing ELG scheme as "technology-forcing, meaning it should force agencies and permit applicants to adopt technologies that achieve the greatest reductions in pollution") (citing NRDC I ).⁴

The Act prescribes various technological standards to be used in setting effluent limitations. Two are relevant here: "best practicable control technology currently available" ("BPT") and "best available technology economically achievable" ("BAT"). Compare 33 U.S.C. §§ 1311(b)(1)(A) ; 1314(b)(1)(B) (BPT), with id. §§ 1311(b)(2)(A) ; 1314(b)(2)(B) (BAT). The less stringent of these two standards is BPT, which the Supreme Court has described as only "a first step toward [the Act's] goal." Nat'l Crushed Stone , 449 U.S. at 75 n.14, 101 S.Ct. 295 ; see also, e.g., BP Explor. & Oil, Inc. v....