Gravel2Gavel Construction & Real Estate Law Blog
The U.S. Court of Appeals for the Second Circuit has issued a ruling that EPA’s Clean Water Act (CWA) Vessel General Permit (VGP), which regulates the discharge of ballast water from ships, was promulgated in violation of the Administrative Procedure Act (APA), and must be remanded to the agency. The case is National Resources Defense Council, et al. v. EPA, which was decided on October 5, 2015.
Although the Court of Appeals stated that it must extend “Chevron deference” to EPA’s interpretation of the CWA and deference to EPA’s interpretation of its own regulations, surprisingly, little deference was accorded to EPA and its decisions in this case.
Managing the discharge of ballast water is very challenging. The Court of Appeals notes that in the routine practice of discharging ballast water, “ships have become one of the primary ways that invasive species are spread from one waterbody to another”. However, for many years, EPA’s NPDES regulations exempted such discharges from the need to obtain and follow an National Pollutant Discharge Elimination System (NPDES) permit, on the theory that such discharges were incidental to the normal operation of the vessel.
In 2008, EPA changed its policy as a result of litigation, and issued a VGP, which was also challenged in court by environmental groups who argued that the VGP was inadequate because it contained only “narrative provisions”, and not specific numeric limits. EPA then entered into a settlement agreement in 2011, which obliged it to set numeric concentration-based effluent limits applicable to the discharge of ballast water and the resulting control of pernicious organisms, and included more stringent water quality based effluent limits, if needed. To create new specific standards, EPA called on the expertise of the agency’s Science Advisory Board (SAB) and the “National Research Council/National Academy of Science Committee on Assessing Numeric Limits for Living Organisms in Ballast Water” (the NAS Committee). The SAB identified five categories of shipboard systems that could attain the desired standard, but the NAS Committee reported that it could not establish a reliable numeric limit on discharges that could guarantee protection against invasive species, other than zero.
In 2013, EPA issued the new VGP, which allows vessels to discharge ballast water “subject to certain limitations on the living organisms in the discharge”. The 2013 VGP included “technology-based effluent limitations”, water-quality-based effluent limitations, and monitoring and reporting requirements. In addition, vessels known as “Lakers” that sail on the Great Lakes, were now subject to most of these limitations, although Lakers built after January 1, 2009, were also obliged to adhere to numeric ballast water discharges. EPA determined that vessels constructed before January 1, 2009 should be relieved as this requirement for technical reasons.
The 2013 VGP was also challenged in several Courts of Appeal, and the challenges were consolidated and heard by the Second Circuit Court of Appeals. The Court of Appeals, after reviewing the relevant provisions of the CWA, held that almost every decision made by EPA in developing this new permit was “arbitrary and capricious”. The determinations regarding technology-based effluent limitations, the failure to consider onshore ballast water treatment instead of relying on shipboard treatment (even though no such technology existed at the time EPA was making these decisions), exempting pre-2009 “Lakers” from numeric effluent limits, the use of certain ”narrative permit limits” instead of numeric limits, and certain monitoring and reporting requirements were set aside. The Court of Appeals’ review of the record convinced it that EPA ignored contrary evidence or failed to satisfactorily explain the choices it made, and thus compelled the Court of Appeals to reject EPA’s justifications. However, instead of vacating the VGP, the Court of Appeals left it in place until EPA issues a new VGP.