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Natural Resources Defense Council v. United States Environmental Protection Agency

United States Court of Appeals, Second Circuit

October 5, 2015


Argued: January 30, 2015.

Amended: December 18, 2015.

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ON PETITION FOR REVIEW FROM THE ENVIRONMENTAL PROTECTION AGENCY. Four environmental organizations petition for review of a Vessel General Permit issued by the Environmental Protection Agency in 2013 under Section 509(b)(1) of the Clean Water Act, 33 U.S.C. § 1369(b)(1). The permit regulates the discharge of ballast water from ships, a primary cause of the spread of invasive species from one body of water to another. Petitioners contend that the Environmental Protection Agency acted arbitrarily and capriciously in issuing the permit, and request that it be set aside. We agree, in part. Accordingly, we grant the petition for review in part and deny it in part, andremand to the Environmental Protection Agency for further proceedings consistent with this opinion. We do not vacate the Vessel General Permit, but allow it to remain in effect until the issuance of a new Vessel General Permit.

ALLISON M. LAPLANTE, Earthrise Law Center, Lewis & Clark Law School, Portland, Oregon, and Deborah A. Sivas, Matthew J. Sanders, Environmental Law Clinic, Mills Legal Clinic at Stanford Law School, Stanford, California, for Petitioners Northwest Environmental Advocates and Center for Biological Diversity.

Rebecca J. Riley, Natural Resources Defense Council, Chicago, Illinois, for Petitioner Natural Resources Defense Council.

Neil S. Kagan, National Wildlife Federation, Ann Arbor, Michigan, for Petitioner National Wildlife Federation.

MARTIN FRANCIS MCDERMOTT (Sam Hirsch, Acting Assistant Attorney General, on the brief), Environmental Defense Section, Environmental & Natural Resources Division, United States Department of Justice, Washington, D.C., and Dawn M. Messier, Office of General Counsel, United States Environmental Protection Agency, Washington, D.C., for Respondent United States Environmental Protection Agency.

MATTHEW D. MELEWSKI, The Boutique Firm PLC, Minneapolis, Minnesota, for Intervenors Lake Carriers' Association and Canadian Shipowners Association.

Before: SACK, CHIN, and CARNEY, Circuit Judges.


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Chin, Circuit Judge.

This case arises from the efforts of the Environmental Protection Agency (" EPA" ) pursuant to section 402(a) of the Clean Water Act (the " CWA" ), 33 U.S.C. § 1342(a), to regulate the discharge of ballast water from ships.[1] A ship takes on and discharges ballast water to compensate for changes in its weight caused by activities such as loading and unloading cargo or consuming fuel or supplies. The amount of water can range from hundreds of gallons to as much as 25 million gallons -- enough to fill thirty-eight Olympic-sized swimming pools. More than 21 billion gallons of ballast water are released in the United States annually. See Nw. Envtl. Advocates v. EPA, 537 F.3d 1006, 1013 (9th Cir. 2008).

When a ship takes on ballast water, it can inadvertently pick up organisms and their eggs and larvae, as well as sediment and pollutants. When the ship discharges ballast water, often in a new place, these organisms and pollutants are ejected into the surrounding waterbody, enabling these organisms to establish new, non-native populations. As a result, ships have become one of the primary ways that invasive species are spread from one waterbody to another. Id. at 1012-13 (" All told, more than 10,000 marine species each day hitch rides around the globe in the ballast water of cargo ships." (quoting Nw. Envtl. Advocates v. EPA, No. C 03-05760 SI, 2006 WL 2669042, at *3 (N.D. Cal. Sept. 18, 2006)).

Invasive species cause severe economic and ecological harm, including by destroying native fish species and shellfish industries, creating algae blooms, and devastating tourism. Zebra mussels are a particularly destructive example. They were first introduced to Lake Erie in the 1980s by a freighter from Europe that discharged ballast water containing mussels.[2]

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These mussels have wreaked havoc in the Midwest and Northeast by blocking water intake and outtake at power plants and other industrial facilities, causing nearly $70 million in damage between 1989 and 1995. Nw. Envtl. Advocates, 537 F.3d at 1013. One study estimates the damage caused by invasive species collectively at " about $137 billion a year -- more than double the annual economic damage caused by all natural disasters in the United States." Id. (quoting Nw. Envtl. Advocates, 2006 WL 2669042, at *4).[3]

Ballast water discharge is particularly problematic in the Great Lakes. Vessels that sail exclusively in the Great Lakes, known as " Lakers," account for over ninety-five percent of ballast water volumes transferred in the Great Lakes. Unfortunately, Lakers are more likely than oceangoing vessels to spread invasive species because the short duration of their voyages allows organisms to survive in their ballast.

In April 2013, EPA issued a Vessel General Permit (the " 2013 VGP" ), pursuant to section 402 of the CWA, 33 U.S.C. § 1342, to regulate the discharge of ballast water from ships. In response, four environmental groups filed three Petitions for Review (" PFRs" ) alleging that EPA acted arbitrarily and capriciously in issuing the 2013 VGP: petitioner Natural Resources Defense Council (" NRDC" ) filed a PFR on May 3, 2013 in this Court; petitioners Northwest Environmental Advocates (" NWEA" ) and the Center for Biological Diversity jointly filed a PFR on May 3, 2013 in the United States Court of Appeals for the Ninth Circuit; and petitioner National Wildlife Federation (" NWF" ) filed a PFR on July 3, 2013 in the United States Court of Appeals for the D.C. Circuit.[4] In an order dated May 24, 2013, the Judicial Panel on Multidistrict Litigation issued a Consolidation Order and assigned final venue for the first two petitions, and any subsequently filed petition, to this Court.

On May 31, 2013, the Lake Carriers' Association and the Canadian Shipowners Association (the " CSA" ) filed a motion to intervene, which was granted on October 7, 2013. On January 1, 2014, the CSA filed a PFR in this case. EPA and the CSA jointly moved to sever the CSA PFR from this case and hold it in abeyance; the motion was granted on May 23, 2014.

We find that EPA acted arbitrarily and capriciously in issuing parts of the 2013 VGP, and therefore remand this matter to the EPA for further proceedings.


A. The CWA

Congress created the CWA to limit pollution in the waters of the United States. See 33 U.S.C. § 1251(a) (objective of CWA is to " restore and maintain the chemical, physical, and biological integrity of the Nation's waters" ); S. Fla. Water Mgmt. Dist. v. Miccosukee Tribe of Indians, 541 U.S. 95, 102, 124 S.Ct. 1537, 158 L.Ed.2d 264 (2004) (same); Waterkeeper All., Inc. v. EPA, 399 F.3d 486, 490-91 (2d

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Cir. 2005) (same). The CWA thus prohibits the " discharge of any pollutant" from a " point source" to the " navigable waters" of the United States, except as permitted by the CWA. 33 U.S.C. § § 1311(a), 1362 (emphasis added). The " discharge of a pollutant" includes " any addition of any pollutant to navigable waters from any point source." Id. § 1362(12)(A). A " pollutant" includes solid, industrial, agricultural, and biological waste. Id. § 1362(6). A " point source" is " any discernible, confined and discrete conveyance, including but not limited to any . . . vessel or other floating craft, from which pollutants are or may be discharged." Id. § 1362(14). " Navigable waters" is defined as " the waters of the United States, including the territorial seas." Id. § 1362(7). The discharge of polluted water from a vessel ballast tank is a point source discharge covered by the CWA. See Nw. Envtl. Advocates, 537 F.3d at 1021.

A key component of the statute is the establishment of water quality standards. Water quality standards are set by states for waters within their boundaries and are then reviewed for approval by EPA. See 33 U.S.C. § 1313; 40 C.F.R. § § 131.4, 131.10-.11; see also NRDC v. EPA, 279 F.3d 1180, 1183 (9th Cir. 2002) (" Under the CWA, each state sets its own water quality standards, subject to review and approval by the EPA." ). EPA must ensure that the standard proposed by the state will comply with the requirements of the CWA before approving it. See 33 U.S.C. § § 1311(b)(1)(C), 1313(a) 1342(a)(1); 40 C.F.R. § 122.4(d).

1. National Pollutant Discharge Elimination System Permits

An entity seeking to discharge a pollutant is required to obtain and comply with a permit that limits the amounts and kinds of pollutants being discharged. See NRDC v. EPA, 822 F.2d 104, 108, 261 U.S.App.D.C. 372 (D.C. Cir. 1987); see also Waterkeeper All., 399 F.3d at 498 (discharge allowed " where . . . permits ensure that every discharge of pollutants will comply with all applicable effluent limitations and standards" ). This permit, known as a National Pollutant Discharge Elimination System (" NPDES" ) permit, establishes enforceable effluent limitations, as well as monitoring and reporting requirements.

NPDES permits, which are issued either by EPA or a state in a federally approved permitting system, s ee 33 U.S.C. § 1342, may be individual (issued to a specific entity to discharge pollutants at a specific place) or general (issued to an entire class of dischargers in a geographic location), see 40 C.F.R. § § 122.21, 122.28(a)(2), 124.1-.21, 124.51-.66. The permit here is a general permit.

Permits can impose two different types of standards on discharges: (1) technology-based standards and (2) water quality-based standards. See 33 U.S.C. § § 1311(b)(1)(C) and (b)(2)(A), 1313, 1342(a). The 2013 VGP imposes both.

a. Technology-Based Effluent Limits

Technology-based effluent limits (" TBELs" ) set effluent limitations on a point source based on how effectively technology can reduce the pollutant being discharged. See 33 U.S.C. § § 1311(b), (e), 1314(b); see also PUD No. 1 of Jefferson Cty. v. Wash. Dep't of Ecology, 511 U.S. 700, 704, 114 S.Ct. 1900, 128 L.Ed.2d 716 (1994) (holding that, to achieve goals of CWA, EPA is required to " establish and enforce technology-based limitations on individual discharges into the country's navigable waters from point sources" ). Congress designed this standard to be technology-forcing, meaning it should force agencies and permit applicants to adopt technologies that achieve the greatest

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reductions in pollution. See NRDC, 822 F.2d at 124 (holding that CWA seeks " not only to stimulate but to press development of new, more efficient and effective technologies," which is " essential purpose of this series of progressively more demanding technology-based standards" ).[5]

In determining the standard for TBELs, EPA considers the source of the pollution (existing or new) and the type of pollutant. For nonconventional pollutants from existing sources, EPA is required to set effluent limits based on the " best available technology economically achievable" or " BAT." 33 U.S.C. § 1311(b)(2)(A).[6] BAT requires the " application of the best available technology economically achievable for such category or class, which will result in reasonable further progress toward the national goal of eliminating the discharge of all pollutants." Id.; see NRDC, 822 F.2d at 123 (CWA designed to progress " toward implementation of pollution controls to the full extent of the best technology which would become available" ). Because invasive species are a nonconventional pollutant from an existing source, ballast water discharges are subject to BAT.

EPA considers a number of factors in assessing whether a technology is BAT, including:

o the cost of achieving the effluent reductions,
o the age of equipment and facilities involved,
o the process employed,
o the engineering aspects of various control techniques,
o potential process changes,
o non-water-quality environmental impacts including energy requirements, and
o other factors as EPA " deems appropriate."

See 33 U.S.C. § 1314(b)(2)(B).

EPA can mandate that BAT requires the use of a technology that is not currently available within a particular industry when (1) the technology is available in another industry, (2) EPA finds that the technology is transferrable from that other industry, and (3) EPA can reasonably predict that such technology will adequately treat the effluent. See Kennecott v. EPA, 780 F.2d 445, 453 (4th Cir. 1986) (citing Tanners' Council of Am., Inc. v. Train, 540 F.2d 1188, 1192 (4th Cir. 1976)).

b. Water Quality-Based Effluent Limits

If the TBELs are insufficient to attain or maintain water quality standards, the CWA requires NPDES permits to include additional water quality-based effluent limits (" WQBELs" ). See 33 U.S.C. § § 1311(b)(1)(C), 1312(a); NRDC, 822 F.2d at 110 (" Whenever a technology-based effluent limitation is insufficient to make a particular body of water fit for the uses for which it is needed, the EPA is to devise a water-quality based limitation that

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will be sufficient to the task." ). WQBELs are designed to ensure that the discharges authorized by the permit do not violate water quality standards. See 33 U.S.C. § § 1313, 1342(a)(2).

The WQBELs, which supplement the TBELs, are based on the amount and kind of pollutants in the water. See id. § 1312(a). WQBELs are set without regard to cost or technology availability. See NRDC v. EPA, 859 F.2d 156, 208, 273 U.S.App.D.C. 180 (D.C. Cir. 1988) (" A technology-based standard discards its fundamental premise when it ignores the limits inherent in the technology. By contrast, a water quality-based permit limit begins with the premise that a certain level of water quality will be maintained, come what may, and places upon the permittee the responsibility for realizing that goal." (footnote omitted)). WQBELs may be narrative where the calculation of numeric limits is " infeasible." See 40 C.F.R. § 122.44(k)(3).

No permit may be issued when " the imposition of conditions cannot ensure compliance with the applicable water quality requirements of all affected States." Id. § 122.4(d). Thus, permits must establish limits on discharges that will lead to compliance with water quality standards. See Trs. for Alaska v. EPA, 749 F.2d 549, 556-57 (9th Cir. 1984) (holding that permit must translate state water quality standards into end-of-pipe effluent limitations necessary to achieve those standards).

Because no states have established numeric water quality criteria for invasive species, EPA is required to establish WQBELs that ensure compliance with narrative criteria, designated uses, and antidegradation policies that comprise state water quality standards. The permit may then mandate " best management practices" (" BMPs" ) to control pollution. See 40 C.F.R. § 122.44(k)(3).

c. Monitoring and Reporting Requirements

NPDES permits also require both monitoring and reporting of monitoring results of TBELs and WQBELs to assure compliance with permit limitations and facilitate enforcement. See 33 U.S.C. § § 1314, 1318, 1342(a)(2); 40 C.F.R. § 122.44(i)(1)-(2).

B. Regulatory History

When the CWA was first being implemented in the 1970s, EPA regulations exempted discharges that were " incidental" to the " normal operation" of vessels from NPDES permitting requirements. See National Pollutant Discharge Elimination System, 38 Fed.Reg. 13,528, 13,530 (May 22, 1973) (codified at 40 C.F.R. § 125.4); see also National Pollutant Discharge Elimination System; Revision of Regulations, 44 Fed.Reg. 32,854, 32,902 (June 7, 1979) (codified at 40 C.F.R. § 122.3(a)). This exemption included ballast water discharges.

In 1999, the NWEA and other environmental organizations submitted a rulemaking petition to EPA seeking to repeal this exemption, then codified at 40 C.F.R. § 122.3(a). See Final National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges Incidental to the Normal Operation of a Vessel, 73 Fed.Reg. 79,473, 79,475 (Dec. 29, 2008). EPA denied the petition. See Nw. Envtl. Advocates, 537 F.3d at 1013. The environmental groups challenged the denial in the United States District Court for the Northern District of California, while simultaneously filing a PFR in the United States Court of Appeals for the Ninth Circuit, in case the district court lacked jurisdiction. The district court issued an order vacating the exemption, see Nw. Envtl. Advocates, 2006 WL 2669042, at *15, and the Ninth Circuit upheld the decision. See Nw. Envtl. Advocates, 537 F.3d

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at 1027. EPA finally repealed the exemption and issued a Vessel General Permit in 2008 (the " 2008 VGP" ). Draft National Pollutant Discharge Elimination System (NPDES) General Permits for Discharges Incidental to the Normal Operation of a Vessel, 73 Fed.Reg. 34,296 (June 17, 2008).

1. The 2008 VGP

Environmental groups, industry groups, and the State of Michigan challenged the 2008 VGP in a PFR filed in the United States Court of Appeals for the D.C. Circuit, arguing primarily that the 2008 VGP was inadequate because it contained only narrative provisions, not specific numeric limitations on discharges. In March 2011, EPA settled this matter, agreeing to: (1) set " numeric concentration-based effluent limits for discharges of ballast water expressed as organisms per unit of ballast water volume" ; (2) set numeric effluent limits that " represent the applicable levels of technology-based control" ; and (3) " include more stringent water quality-based effluent limitations" if needed to satisfy applicable water quality standards. Settlement Agreement PP 9-13, NRDC v. EPA, No. 09-1089 (D.C. Cir. Mar. 8, 2011), ECF No. 1296922.

2. The Creation of New Standards

To create these new, more specific standards, EPA enlisted the help of its own Science Advisory Board (the " SAB" ) and the National Research Council/National Academy of Sciences Committee on Assessing Numeric Limits for Living Organisms in Ballast Water (the " NAS Committee" ). EPA posed a different question to each scientific body.

a. The SAB

In 2010, EPA asked the SAB to " provide advice on technologies and systems to minimize the impacts of invasive species in vessel ballast water discharge." App. at 599. Specifically, the SAB looked at four issues: (1) the performance of shipboard systems with available effluent testing data; (2) the potential performance of shipboard systems without reliable testing data; (3) system development for the shipboard systems identified in issues 1 and 2; and (4) the development of reliable information about the status of ballast water treatment technologies and system performance. In considering these questions, the SAB was to take into account The International Convention for the Control and Management of Ships' Ballast Water and Sediments (the " IMO Standard" ), adopted by the International Maritime Organization in 2004, which set certain concentration-based ballast water effluent limits. Id. at 610.[7]

In July 2011, the SAB issued its report Efficacy of Ballast Water Treatment Systems: A Report by the EPA Science Advisory Board (the " SAB Report" ). The SAB identified fifty-one ballast-water treatment systems, with five categories of shipboard systems that could reliably achieve the IMO Standard. Id. at 601.[8] The SAB found that none of the systems could ...

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