To: Supervising Attorneys, Environmental Enforcement Section

REDACTED OFFICE MEMORANDUM

To: Supervising Attorneys, Environmental Enforcement Section

From: Kelly Bitov, Law Clerk

Re: Extent of EPA’s authority under CWA Section 308

Date: Friday, March 25, 2011

On [DATE], the Environmental Protection Agency ("EPA") issued an Information Request requiring that [Facility] submit plans for completing [a series of tests] to determine [conditions at the site] pursuant to its 308 authority.[1] EPA requested this information to determine the circumstances under which the facility, once operational as a Concentrated Animal Feeding Operation ("CAFO"), may discharge pollutants into “waters of the United States”. [Facility] refuses to respond to this information request on the basis that the request exceeds the EPA’s authority. [Facility] claims that because its facilities are under construction it is not yet a CAFO or "point source" that can be regulated. It also claims that the request is unreasonable and unnecessary.

I. Questions Presented

What is the extent of the EPA’s authority to compel the production of information or reports with Information Requests under Section 308 of the Clean Water Act? Does the EPA have the authority to require [Facility], a CAFO under construction that proposes to be a "no discharge CAFO", to respond to its information request under Section 308 by performing [a series of tests]? Are these requests reasonable?

II. Brief Answer

The CWA authorizes the Administrator to require an owner or operator of any point source to provide information in order to carry out the objectives of the Act, including but not limited to developing effluent limitations and determining whether any person is in violation of those limitations, and carrying out a number of sections of the Act. In addition, the proposition that Section 308 constitutes a broad grant of authority to request information from entities that are not point sources is supported generally by case law and specifically through reasonable statutory interpretation. Regulations define CAFOs as point sources and therefore [Facility] is subject to 308, regardless of its intention to be a "no discharge CAFO" that will not and does not propose to discharge. The CAFO regulations include requirements for certain CAFOs to obtain permits more than 180 days before commencing operation, indicating that regulation of these point sources starts prior to having animals on site. However, recent cases in the federal circuit courts indicate that [Facility] cannot be compelled to apply for an NPDES permit prior to discharging, and if it later discharges cannot be penalized for failure of a "duty to apply" for a permit. This may make the 308 request "unreasonable", if the information cannot be used for any regulatory purposes. [Facility] may seek certification as a no discharge CAFO in order to reduce future liability, which is based on a technical analysis and therefore presents another opportunity to have the desired tests completed.

III. Relevant Statutory and Regulatory Language

[Citations to statute and regulations have been omitted here for brevity.]

IV. Discussion

Extent of EPA’s Authority Under CWA Section 308 to Obtain Information

A.Scope

The Clean Water Act allows the Administrator to request information from the owner or operator of any point source in order to carry out the objectives of the Act. 33 U.S.C. § 1318. There are four enumerated types of information the Administrator may require. Id. The Administrator may require the owner or operator of any point source to 1) establish and maintain records; 2) make reports; 3) install, use and maintain monitoring equipment or methods, and; 4) sample effluents. Id. In addition, the Act provides that the Administrator may require the owner or operator to provide any other information as he may reasonably require. Id. The statute is generally understood by courts to require facility owners and operators to monitor and report their discharge of pollutants and instances of non-compliance with permit standards, as well as require National Pollution Discharge Elimination System ("NPDES") permit applicants to provide information about the discharges of pollutants that may be expected once their facilities are operational.

The D.C. Circuit Court in Natural Resources Defense Council, Inc. v. U.S. EPA, 822 F.2d 104 (D.C.Cir.1987) considered the EPA’s 308 authority and held that since Section 308 gives the Administrator authority to make reasonable requests, he is not limited to requesting only that information that is expressly called for by regulation in the four enumerated categories. The scope of a 308 request may be broader. NRDC v. U.S. EPA concerned an industry challenge to an amendment to EPA regulations which created a requirement under the NPDES that permit applicants provide the EPA with a list of any toxic pollutants currently used or manufactured as immediate or final products or byproducts. Industry argued that EPA could not require information about toxic substances present in a facility because its authority was limited to requiring information about toxic substances which are actually discharged. NRDC v. U.S. EPA at 119(emphasis in original). The Court found that this interpretation was unduly restrictive and that since the Act charges the agency with "policing toxic pollutants", the new requirement was a valid exercise of 308 "reasonable" authority in service of that charge. The Court strongly affirmed that there is a broad grant of power present in 308, stating, "In our view, the statute's sweep is sufficient to justify broad information disclosure requirements relating to the Administrator's duties, as long as the disclosure demands which he imposes are "reasonable."" Id. The Administrator may also set reasonable timelines for the submission of requested information. U.S. v. Hartz Const. Co., Inc., 2000 WL 1220919, (N.D. Ill., 2000) at 5.

Perhaps because of this broad authority, there are few examples of cases where the Court has upheld the use of 308 to obtain information not enumerated in the statute. One example is U.S. Steel Corp. v. Train,556 F.2d 822, 850 (7th Cir. 1977), in which the Court found that requiring a company applying for an NPDES permit to conduct a study of the impact of the existing cooling-water intake structures on aquatic life in Lake Michigan as a condition of obtaining that permit was within the agency's 308 authority because the information requested was intended to assist the EPA in developing effluent limitations for the facility, as required by CWA 316. In a very different context, the U.S. District Court in the District of Colorado found that the EPA could use 308 to require the submission of studies containing information about economic benefits that accrued to a company as a result of alleged violations of the CWA. Gersh & Danielson v. U.S. E.P.A., 871 F.Supp. 407 (D. Colo., 1994) (Studies containing information about economic benefits that accrued to manufacturer as result of alleged violations were not "voluntarily submitted" because EPA had the authority to require their submission under 308, thus plaintiff could discover that information under the Freedom of Information Act for purpose of opposing proposed consent decree).

I have not been able to find any cases in which a court upheld the EPA’s use of an information request to compel an entity which was not an NPDES permitee and not applying for an NPDES permit to conduct a study as a valid exercise of 308 authority.

B.Section 308(a) applies to "point sources".

As noted above, Section 308 allows the Administrator to request information from the owner or operator of any point source in order to carry out the objectives of the Clean Water Act. 33 U.S.C. § 1318. The statute defines "point source" as "any discernible, confined and discrete conveyance, including but not limited to any . . . concentrated animal feeding operation . . . from which pollutants are or may bedischarged". 33 U. S. C. § 1362(14).

A recent Eighth Circuit opinion, Service Oil, Inc. v. Environmental Protection Agency, 590 F.3d 545 (8th Cir. 2009), considered the EPA’s interpretation of the statutory definition of 'point source' and found that a facility could be classified as a point source only after a discharge had occurred. This is stated quite plainly, "Before any discharge, there is no point source", Service Oil at 550, indicating that a non-discharging facility is not a point source and therefore is simply outside of any CWA regulation by the EPA, including a requirement to obtain an NPDES permit, and possibly including 308 information requests. This interpretation followed an earlier Second Circuit decision considering a similar matter, Waterkeeper Alliance v. U.S. EPA 399 F.3d 486 (2nd Cir. 2005), which found that the EPA could not require non-discharging CAFOs to obtain NPDES permits or demonstrate that they will not discharge, because they are not point sources. National Pork Producers v. U.S. EPA, --- F.3d ----, 2011 WL 871736 (5th Cir. 2011), decided last week in the Fifth Circuit, strongly affirmed Waterkeeper’s holdings.

The Service Oil Court’s statement that "before any discharge, there is no point source" conflicts sharply with the overall purpose of the Clean Water Act: to prevent pollution. Instead of allowing the Agency to administer a comprehensive permitting process that effectively prevents pollution, Service Oil forces the Agency into a reactive position in which it can only exercise enforcement powers after harm to the environment has occurred. The opinion also contradicts the plain language of the statute, which defines a point source as a conveyance from which pollutants are or may be discharged. Taken literally, the words "may be" in the statute mean that a point source can exist prior to an actual discharge occurring.

There are many opinions that correctly utilize the Clean Water Act’s "may be" language. The Eighth Circuit itself properly quotes the statutory definition of point source as including a discrete conveyance from which pollutants "may be" discharged, for example in State of Missouri et al v. Department of the Army, 672 F.2d 1297, 1303-04 (8th Cir. 1982). The Supreme Court has followed the plain language of the Act, stating "under the Act, a 'point source' is 'any discernible, confined and discrete conveyance . . . from which pollutants are or may be discharged . . .'". Weinberger v. Romero-Barcelo, 456 U.S. 305, 309 (1982) (emphasis in original). In addition, elsewhere in the Waterkeeper opinion the Court recognized that under the statute a facility can be a point source without having an actual discharge, stating that "point sources are statutorily defined to include potential dischargers." Waterkeeper Alliance v. US EPA 399 F.3d 486, 505 (2nd Cir. 2005).

The current CAFO regulations found at 40 C.F.R. § 122.23 define CAFOs as point sources. 40 C.F.R. § 122.23(a). The regulations both define CAFOs as point sources, and allow for a no discharge operation/no permit option. While the state of the law is unclear given Service Oil, Waterkeeper, National Pork Producers and possible en banc rehearing requests, following the statute and regulations, [Facility] is a CAFO that arguably is a point source to which 308 applies.

C.Facilities under construction that will be point sources when construction is complete may be subject to limited regulation by EPA prior to completion and commencement of operation.

[Facility] asserts that it is not subject to regulation because construction is not complete, there are no animals on site, and it is therefore not a CAFO. The regulatory permitting scheme however does indicate some regulation of CAFOs before they commence operation: "The owner or operator of a new source must seek to obtain coverage under a permit at least 180 days prior to the time that the CAFO commences operation." 40 C.F.R. § 122.23(f)(4). Ostensibly, the intent of this regulation is to get CAFOs covered early on such that when they do begin to operate, operation will not result in environmental harm.

Regulation prior to operation is consistent with the CWA’s certification scheme, in which a facility that might discharge into the waters of the U.S. must obtain certification from the State or interstate water pollution control agency that any discharge would not violate effluent limitations, and must allow the State or relevant permitting authority to inspect the facility and the way it will be operated. 33 U.S.C. § 1341. Therefore 40 C.F.R. § 122.23(f)(4) is simply an example of regulation under the CWA extending into the pre-operation period.

Looking outside the CWA context to Clean Air Act ("CAA") information requests, U.S. v. Xcel Energy, Inc., 2010 WL 5541033 (D. Minn. 2010) provides an example of a federal court granting a preliminary injunction for the EPA to obtain records from a facility that was under construction, and pre-operational. In Xcel, the EPA issued an information request seeking records and other documentation for projects at several power plants that were under construction. The EPA limited its request to a two-year time period, on the basis that permit processes take about two years. Although the facilities were not yet operational, the Court allowed the preliminary injunction as to the power plants' existing documents from this time period. The Court did not allow the EPA to require testing and the creation of new informational documents, such as the EPA has requested of [Facility].

Note that the language of the statute under which the EPA successfully obtained this information is nearly identical to CWA Section 308. However, unlike the CWA, the CAA explicitly grants the EPA regulatory authority to prevent the construction of nonconforming major facilities. "EPA’s subpoena power under the CAA is not limited to inquiring into whether permitting requirements have been violated, but includes preventing the construction or modification of a major emitting facility which does not conform to the prevention of significant deterioration requirements." 42 U.S.C. § 7477. Therefore, the CAA actually grants a much broader authority to the EPA than what is granted under CWA Section 308.

D.Section 308(a) may be construed to provide a broad grant of authority that extends beyond regulation of point sources.

While the plain language of Section 308 indicates that 308 requests only apply to "point sources", it is possible to read the statute to grant the EPA the authority to regulate entities that are not point sources. Specifically, one would consider language in Section 308(a) that authorizes EPA to collect information from entities that are not point sources. Making this argument requires an exercise in statutory construction, and Courts must give great deference to an agency's interpretation of the statute which it administers. Udall v. Tallman, 380 U.S. 1, 15 (1965); Public Service Co. of Indiana v. United States Environmental Protection Agency, 682 F.2d 626, 632 (7th Cir.1982).

Mobil Oil Corp. v. EPA, 716 F.2d 1187 (7th Cir. 1983) provides a favorable perspective on how courts may handle disputes regarding the extent of 308 authority. In this case, EPA entered Mobil’s property to sample untreated wastewater pursuant to its 308 authority. The company challenged EPA's authority to take these samples, arguing that its NPDES permit only required sampling at a point "representative of discharge", and the only waters "representative of discharge" were its treated wastewater. Mobil Oil Corp. v. EPA at 1188. The Court explained that all that was necessary to determine the boundaries of the EPA’s authority was to identify what interest Mobil had in preventing the EPA from sampling its untreated waste water, what interest the EPA had in obtaining those samples. After answering these queries, the Court would inquire whether Congress somehow balanced those interests when it enacted Section 308, or how Congress would likely have balanced them had it undertaken to do so. The Court held that Mobil’s interest in keeping the EPA in the dark about what pollutants are present in its discharges was not a protectable interest. Similarly, the Court in NRDC v. EPA stated, "The agency could reasonably determine that it could not regulate as effectively as Congress intended without information as to what in the realm of possible toxic substances could be present in a discharge. It also seems reasonable for EPA to assume that toxic pollutants which go into or are produced by a facility might potentially be discharged, if only by accident." NRDC v. EPA at 119 (emphasis in original). See also E.I. du Pont de Nemours & Co. v. Train, 430 U.S. 112, 133 (1977) (considering the scope of EPA authority under CWA regulations and stating, "We do not believe that Congress would have failed so conspicuously to provide EPA with the authority needed to achieve the statutory goals.")

1. Statutory Language: the EPA may request information from certain non-point sources in order to develop pretreatment regulations, to carry out its authority to regulate sludge under Section 405, and pursuant to emergency powers in order to abate imminent and substantial endangerment.
2. Pretreatment standards for publicly owned treatment works

Section 308 gives the Administrator authority to require information in aid of "developing . . . any . . . pretreatment standard . . . under this chapter" and "determining whether any person is in violation of any such . . . pretreatment standard." 33 U.S.C. § 1318. Pretreatment standards apply to those who introduce pollutants into publicly owned treatment works ("POTW"). 33 U.S.C. § 1317(b) and (c). Entities that discharge to POTWs are not point sources because they discharge to the intermediary of the POTW, as opposed to into the waters of the United States. Nonetheless, Congress has authorized regulation of these entities under Section 308, acknowledging that the EPA may require information about their discharges as described below, in order to effectively carry out its mandate under CWA.

1. Sewage sludge § 1345

Section 308 gives the Administrator authority to collect information in order to carry out Section 405, "Whenever required to carry out the objective of this chapter, including but not limited to . . . carrying out sections . . . 1345". 33 U.S.C. § 1318. This section contains the Act’s requirements for sewage sludge and directs EPA to set sludge management and disposal requirements. 33 U.S.C. § 1345. The regulations required by that section apply to "any person", not exclusively owners or operators of point sources: "it shall be unlawful for any person to dispose of sludge from a publicly owned treatment works". 33 U.S.C. § 1345.

1. Carrying out § 1321

Section 308 gives the Administrator authority to collect information in order to carry out Section 311, "Whenever required to carry out the objective of this chapter, including but not limited to . . . carrying out sections . . . 1321". 33 U.S.C. § 1318. This section contains the Act’s requirements for controlling discharges of oil and hazardous substances to the navigable waters and other areas listed in Section 311(b)(1). Such discharges are prohibited without limitation on whether the discharge is from a point source or from a non-point source. "The Congress hereby declares that it is the policy of the Unites States that there should be no discharges of oil or hazardous substances into or upon the navigable waters . . .". 33 U.S.C. § 1321(b)(1).