Caribbean Petroleum Corporation

Plain-English summary

Caribbean Petroleum Corporation challenged an NPDES permit for its petroleum refinery in Bayamón, Puerto Rico. The challenge concerned effluent limits from a Puerto Rico Environmental Quality Board water-quality certificate that had been incorporated into the federal permit while the state board was reconsidering the certificate. The Environmental Appeals Board held that the certificate remained legally effective because Puerto Rico had not stayed, vacated, or remanded it and had not sent EPA a modified certification or waiver. The Board denied review of the permit conditions and rejected the claim that the delay in deciding the evidentiary-hearing request caused prejudice.

Decision snapshot

• Cited authorities: Clean Water Act §§ 301(b)(1)(C) and 401(a)(1), (d); 40 C.F.R. §§ 124.53, 124.55, and 124.75.
• Outcome: Review was denied in its entirety.
• Key point: EPA may rely on an effective state certification while state reconsideration is pending unless the state sends EPA a modified certification or waiver.

Full text (EPA EAB public release)

CARIBBEAN PETROLEUM CORPORATION 491
IN THE MATTER OF CARIBBEAN PETROLEUM
CORPORATION
NPDES Appeal No. 91-25
ORDER DENYING REVIEW
Decided January 28, 1993
Syllabus

Caribbean Petroleum Corporation petitions for review of the denial of an evi-
dentiary hearing request by EPA Region II. The request sought to challenge the
incorporation of certain permit conditions from a May 10, 1989 Water Quality Certifi-
cate issued by the Commonwealth of Puerto Rico's Environmental Quality Board into
a proposed final National Pollutant Discharge Elimination System permit for Carib-
bean’s Bayamón, Puerto Rico refinery.

The crux of petitioner's argument is that, because the Environmental Quality
Board has undertaken to reconsider the terms of the May 1989 WQC, there is neither
an effective certification of Region II’s draft permit nor a waiver thereof upon which
Region II can act. Thus the Region could not lawfully incorporate conditions from
the WQC into a valid federal permit and, by purportedly doing so, the Region violated
the Clean Water Act (which forbids the issuance of an NPDES permit in the absence
of State certification or waiver of certification) and nullified the pending EQB reconsid-
eration proceedings in violation of Commonwealth and federal constitutional standards
of due process.

Held: The Regional Administrator properly denied the request for an evidentiary
hearing. Notwithstanding the availability of further review before EQB and ultimately,
perhaps, before the courts of the Commonwealth, the WQC was legally effective on
the date the NPDES permit was issued. Even after EQB granted petitioner’s request
for reconsideration, EPA never received a modified certification or a waiver of certifi-
cation from the Commonwealth, and was subject to no legal obligation, under the
terms of the Clean Water Act or its implementing regulations, to postpone the issuance
of the permit or to refrain from incorporating any of the conditions of the WQC.
In addition, petitioner’s substantive challenge to the WQC is proceeding in the appro-
priate forum and may yet result in modification of the federal permit, and there
has therefore been no denial of due process. For these reasons, the petition for review

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492 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Before Environmental Appeals Judges Nancy B. Firestone,
Ronald L. McCallum, and Edward E. Reich.

Opinion of the Board by Judge McCallum:

Petitioner Caribbean Petroleum Corporation (“Caribbean”) seeks
review of U.S. EPA Region II’s denial of an evidentiary hearing
request with respect to certain effluent limitations contained in an
NPDES permit governing Caribbean’s petroleum refinery at
Bayamón, Puerto Rico. The challenged effluent limitations appeared
in a May 1989 Water Quality Certificate (“WQC”) issued for the
Bayamón refinery by the Commonwealth of Puerto Rico’s Environ-
mental Quality Board (“EQB”), and were incorporated from the Com-
monwealth’s certificate into the proposed federal permit in accordance
with Section 401(d) of the Clean Water Act, 33 U.S.C. § 1341(d).
In its petition for review, Caribbean contends that the challenged
effluent limitations could not lawfully be incorporated into the federal
permit because EQB, some twelve months before the issuance of
the federal permit, had granted Caribbean’s request for reconsider-
ation of the May 1989 Water Quality Certificate and had so advised
the EPA Regional Administrator for Region II. For the reasons that
follow, we conclude that the Region properly denied Caribbean’s evi-
dentiary hearing request, and we therefore deny the petition for
review.

I. BACKGROUND

Caribbean’s Bayamón refinery discharges process wastewater and
stormwater runoff into a receiving water known as Las Lajas Creek,
which flows into Cucharillas Channel and thence into San Juan Bay.
EPA issued National Pollutant Discharge Elimination System permit
PR 0000370 for these discharges in September 1983, and the sched-
uled expiration of that permit as of October 31, 1988 prompted the
filing of the renewal application underlying this appeal.

Caribbean filed its renewal application with Region II on October
27, 1988. On or about November 10, 1988 the Region, acting in
accordance with 40 C.F.R. § 124.53(b), requested that EQB—as the
appropriate certifying agency for the State in which the discharges
were to have originated—grant, deny, or waive certification of compli-
ance with applicable Puerto Rican water quality standards. On Feb-
ruary 1, 1989, EQB issued a draft Water Quality Certificate, and
instructed the permittee and Region II that the limitations and mon-
itoring requirements set forth in the draft certificate “shall be incor-
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CARIBBEAN PETROLEUM CORPORATION 493
porated into [Caribbean’s] NPDES permit in order to satisfy the pro-
visions of Section 301(b)(1)(C) of the Act.”

Caribbean submitted comments on the draft certificate to EQB
on April 7, 1989, objecting to the proposed effluent limitations as
technologically unachievable and as grounded in an incorrect and
unscientific assessment of the quality of the receiving water. Notwith-
standing these objections, on May 10, 1989, EQB issued to Caribbean
a final Water Quality Certificate incorporating the challenged effluent
limitations in Tables designated A-1 and A-2, and declaring that
“it is certified that there is reasonable assurance as determined by
the Environmental Quality Board that [Caribbean’s] discharge will
not violate applicable water quality standards if the limitations on
Table A-1,2 are met.” The final WQC stated, once again, that “[t]he
conditions specified in the aforementioned table shall be incorporated
into the NPDES permit in order to satisfy the provisions of Section
301(b)(1)(C) of the Act.” On or about August 7, 1989, Region II issued
a draft NPDES permit incorporating the challenged limitations, and
on September 6, 1989, Caribbean submitted comments to the Region
in which it reiterated its view that compliance with those limitations
“would be unreasonable, impracticable and unfeasible under currently
available technology, and would cause [Caribbean] undue hardship.” 2

Meanwhile, on June 30, 1989, Caribbean filed a request with
EQB for reconsideration of the terms of the final Water Quality
Certificate. By letter dated October 13, 1989, EQB informed Region
II that it had undertaken to reconsider the final certificate, and
asked that the Region refrain from issuing a final NPDES permit

1Section 301(b)(1)(C) of the Clean Water Act, 33 U.S.C. §1311(b)(1)(C), mandates
that discharges of pollutants comply not only with federal standards but also with
“any more stringent limitation, including those necessary to meet water quality stand-
ards, * * * established pursuant to any State law or regulations.”
2This synopsis of Caribbean’s comments on the draft NPDES permit is quoted
from Caribbean’s petition for review (at page 4), because we have not been provided
with a copy of the draft permit or of the comments submitted by Caribbean in Septem-
ber 1989. Caribbean’s petition for review, and the contents of the administrative
record subsequent to September 1989, suggest that Caribbean’s comments on the
Region’s draft permit were no different, in substance, from its earlier comments on
EQB’s draft Water Quality Certificate. It appears that the thrust of Caribbean's argu-
ment in both instances was that the water quality-based effluent limitations proposed
by EQB (on the basis of the Commonwealth’s regulatory standards) were overly strin-
gent and impossible, or nearly impossible, to achieve by means of existing technology.
3As a matter of Commonwealth law, such a request for reconsideration is a
prerequisite to obtaining judicial review, in the courts of the Commonwealth, of a
decision of an administrative body such as EQB.
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494 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
until further notice. The Region honored this request for the follow-
ing eleven and one-half months, during which time EQB issued no
further pronouncements with respect to Caribbean’s motion for recon-
sideration 5; then, on September 28, 1990, the Region issued a final
permit based on the limitations, monitoring requirements and other
conditions in EQB’s May 1989 certificate. The Region notified EQB
of the issuance of the final NPDES permit by letter dated October
10, 1990. In its letter, the Region acknowledged EQB’s October 1989
correspondence setting forth the request that issuance of a final per-
mit be deferred until further notice, but explained:

The [October 1989] letter contains no statement that

EQB has stayed the final WQC. In the absence of

an explicit statement from EQB that the final WQC

has been stayed, EPA has proceeded with the permit-

ting process, including public notice and finalization,

based upon the certification granted by EQB on May

10, 1989 (40 CFR § 124.55(e)). Should EQB modify

the WQC as a result of the request for reconsider-

ation, EPA may modify the permit on request of the

permittee, but only to the extent necessary to delete

any conditions based on a condition in the certifi-

cation which has been invalidated by a court of com-

petent jurisdiction or by an appropriate State board

or agency (40 CFR § 124.55(b)).
On November 6, 1990, Caribbean submitted to Region II a request
for an evidentiary hearing to contest the Region’s incorporation of

4 Specifically, EQB’s October 13, 1989 letter to Region II stated, in relevant part:

This is to inform you that [Caribbean] has requested reconsider-

ation of the final Water Quality Certificate (WQC) issued by the

Environmental Quality Board (EQB) on May 10, 1989. This per-

mittee’s request is based on the fact that the comments submitted

by the permittee were received after public participation comment

period elapsed.

Representatives from [Caribbean] manifested concerns regarding

compliance with the present permit limits and considered that

it would not be practical to engage in a compliance plan to achieve

compliance with the present final WQC. EQB’s Governing Board

accepted [Caribbean’s] request for reconsideration. We request

that EPA delay issuance of the final NPDES permit until EQB

takes the corresponding action on the permittee’s petition for re-

consideration. As soon as a decision on this matter is taken, EQB

will notify EPA in writing.

5Indeed, so far as we are aware EQB has not issued any further decision or

order in connection with Caribbean’s request as of the date of this writing.
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CARIBBEAN PETROLEUM CORPORATION 495
fifteen specified effluent limitations from the May 1989 WQC into
the final NPDES permit. The Regional Administrator denied Carib-
bean’s evidentiary hearing request in its entirety on October 15,
1991, and this appeal followed.

II. DISCUSSION

Under the rules governing this proceeding, there is no appeal

as of right from the Regional Administrator's decision. Ordinarily
a petition for review is not granted unless the Regional Administra-
tor’s decision is clearly erroneous or involves an exercise of discretion
or policy that is important and should therefore be reviewed by the
Environmental Appeals Board. See, eg., General Electric Co.
(Hooksett, New Hampshire), NPDES Appeal No. 91-13, slip op. at
3 (EAB Jan. 5, 1993), and authorities cited therein. The petitioner
has the burden of demonstrating that review should be granted.
Petitioner’s principal contention on this appeal concerns the “fi-
nality” of the May 1989 Water Quality Certificate from which the
allegedly objectionable permit conditions were incorporated. Because
petitioner cannot substantively challenge permit conditions and limi-
tations attributable to State certification except through the certifying
State’s own procedures, see 40 C.F.R. § 124.55(e), petitioner frames
its appellate argument in terms of the validity and effectiveness
of EQB’s certification, rather than the contents of that certification.
Petitioner's argument in this regard is essentially twofold: First, be-
cause EQB granted petitioner’s request for reconsideration of the
May 1989 WQC, the WQC was no longer effective at the time the
Region issued petitioner’s final NPDES permit; and second, because
a substantive challenge to the terms of the May 1989 WQC is pending
in the appropriate State forum, the WQC has never become suffi-
ciently “final” to allow EPA to incorporate its terms into a federal
permit. For these reasons, the argument continues, Region II’s issu-
ance of a final NPDES permit (1) violated the Clean Water Act
prohibition against issuing any permit in the absence of the required
State certification or waiver of certification,® and (2) effectively de-
prived Caribbean of any meaningful review of the contested effluent
limitations by “voiding” and “mooting” the EQB reconsideration pro-
ceedings, in violation of the due process provisions of the Common-
wealth and United States Constitutions. We recently considered and
rejected the core elements of this argument, against the backdrop
of the very same State administrative procedures involved in the
6See 33 U.S.C. § 1341(aX1) (“No license or permit shall be granted until the
certification required by this section has been obtained or has been waived * * *.”).
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496 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
present appeal, in our decision in In re Puerto Rico Sun Oil Co.,
NPDES Appeal No. 92-20 (EAB Oct. 23, 1992).
As in Puerto Rico Sun, petitioner's argument fails to come to

grips with 40 C.F.R. § 124.55(b), which states:

If there is a change in the State law or regulation

upon which a certification is based, or if a court

of competent jurisdiction or appropriate State board

or agency stays, vacates, or remands a certification,

a State which has issued a certification under

§ 124.53 may issue a modified certification or notice

of waiver and forward it to EPA. If the modified

certification is received before final agency action on

the permit, the permit shall be consistent with the

more stringent conditions which are based upon

State law identified in such certification. If the cer-

tification or notice of waiver is received after final

agency action on the permit, the Regional Adminis-

trator may modify the permit on request of the per-

mittee only to the extent necessary to delete any

conditions based on a condition in a certification in-

validated by a court of competent jurisdiction or by

an appropriate State board or agency.
It is clear from the regulation that, once an effective certification
has been issued by the State and received by EPA, the federal permit-
ting process need not be held in abeyance pending further administra-
tive or judicial review of that certification at the State level. It is
also clear from the regulation that the federal permitting authorities
need not undertake to evaluate for themselves the impact of a change
in State law or regulations, or the impact of continuing State admin-
istrative or judicial proceedings, on the terms of an outstanding cer-
tification. Rather, once an effective certification is received by EPA,
the regulation is crafted so that the federal permitting process re-
mains unaffected by State-level statutory or regulatory changes, and
by State-level administrative or judicial review proceedings, until and
unless EPA receives from the State a modified certification or a
notice of waiver of certification.

The application of these principles in the present context is rel-
atively straightforward. As in Puerto Rico Sun, we continue to find
no support in the Clean Water Act or in EPA’s Part 124 regulations
for the view that a State certification remains ineffective until such
time as the permittee exhausts (or has forgone the opportunity to
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CARIBBEAN PETROLEUM CORPORATION 497
exhaust) all available administrative and judicial appeals at the State
level. To the contrary, we note again that 40 C.F.R. § 124.55(b) ex-
pressly contemplates a situation in which, upon further administra-
tive or judicial review of a final WQC at the State level, the State
issues a modified certification after EPA has already incorporated
the terms of the original WQC into a final federal permit. Such
a situation could never arise if the pendency of a challenge to a
WQC at the State level, without more, precluded EPA from incor-
porating the terms and conditions of the challenged WQC into an
enforceable federal permit. We observe that, in his denial of Carib-
bean’s evidentiary hearing request, the Regional Administrator cor-
rectly focused on this provision of the Part 124 regulations and prop-
erly concluded that “in the event EQB stays, vacates or remands
[Caribbean’s] certification and EQB modifies and changes certain
terms and conditions of the WQC per [Caribbean’s] reconsideration
request, * * * EPA’s Regional Administrator may modify the permit
upon [Caribbean’s] request,* * * to the extent necessary to delete
any conditions based on a WQC condition which EQB has invali-
dated.”

In Puerto Rico Sun we also recognized that, according to the
Puerto Rican statute governing EQB proceedings, a permit applicant’s
filing of a request for reconsideration with EQB does not, of its
own force, operate to stay or limit the effectiveness of an otherwise
final WQC. A provision of the Commonwealth’s Public Policy Environ-
mental Act, 12 L.P.R.A. §1134, provides that the mere filing of a
petition for reconsideration with EQB

will not exempt any person from complying with or
obeying any decision or order of the Board [ie.,
EQBI, neither shall it in any way operate as a sus-
pension or postponement of its effect, unless so or-
dered by the Board.
Id. §1134(d)(2) (emphasis added). Here, however, Caribbean points
to the fact that EQB had already granted its request for reconsider-
ation, and had so notified the Regional Administrator, many months
before EPA proceeded to issue a final NPDES permit based on the
terms and conditions of the contested Water Quality Certificate. We
are therefore called upon to determine whether, from the standpoint
of the federal permitting process, EQB’s decision to reconsider a final
WQC—either alone or in combination with notice to the Regional
Administrator—renders the WQC ineffective (and a federal permit
issued in reliance thereon invalid) until such time as the reconsider-
ation proceedings are completed. We are persuaded that it does not.
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498 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
As a preliminary matter, we perceive no justification for equating
each and every EQB decision to reconsider a WQC with the type
of action, described in 12 L.P.R.A. §1134(d)(2), through which EQB
may order a “suspension” or “postponement” of the WQC as a matter
of Commonwealth law. Absent a clear and unambiguous statement
to that effect, we are unwilling to infer that EQB intends to bring
about the withdrawal, even temporarily, of any conditions in a final
WQC that has already been issued and forwarded to the Regional
Administrator for incorporation into a final NPDES permit.
More fundamentally, however (and irrespective of State rules
of administrative law such as 12 L.P.R.A. § 1134), EPA’s Part 124
regulations simply will not allow a State certification to remain in-
definitely in an indeterminate status—either as an initial matter,”
pending reconsideration by the certifying agency, or pending the com-
pletion of appellate proceedings before the certifying agency or a
reviewing court. As we noted earlier, 40 C.F.R. § 124.55(b) provides
that even if a State court or agency explicitly “stays, vacates, or
remands a certification,” the State’s action does not by itself suspend,
postpone, or otherwise affect the federal permitting process. Once
an effective certification has been issued, a subsequent stay, remand,
or vacatur of that certification by the State authorities only affects
the federal permitting process when and if the State forwards to
EPA a modified certification or a notice of waiver of certification.
As a result, EPA need not speculate as to whether a particular
certification, once issued by the appropriate State agency, has or
has not become “final” as a matter of State law. The State itself
is left to determine whether the status of an outstanding certification
has been altered by subsequent events to such an extent that the
certification ought to be modified or waived.®
7See 33 U.S.C. § 1341(a(1) (State will be deemed to have waived its right to
certify unless that right is exercised within a reasonable period of time, not to exceed
one year); 40 C.F.R. § 124.53(c) (a “reasonable time” for State certification generally
means within sixty days after EPA’s issuance of a draft NPDES permit).
8In re Miners Advocacy Council, NPDES Appeal No. 91-23 (EAB May 29, 1992)
(Order Denying Review in Part and Granting Review in Part), addresses the limited
effect of a certifying State’s election to “stay” an already-certified permit condition
after EPA has incorporated that condition into a final NPDES permit:
The language of Section 124.55(b) clearly suggests that a mere
stay of a certified permit requirement does not authorize the Agen-
cy to remove that requirement from the permit. To undo a State
certification, Section 124.55(b) requires the Agency to wait until
the State takes a second step by forwarding a modified certifi-
cation or notice of waiver to the Agency. As a matter of policy,
this provision makes sense because the Agency should not undo
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CARIBBEAN PETROLEUM CORPORATION 499
Because EQB has never clearly and unambiguously stayed, va-
cated, or remanded any portion of its May 1989 WQC for Caribbean's
Bayamón facility, and because EQB has never, in any event, issued
a modified certification or a notice of waiver, we find that the entire
May 1989 WQC was effective on the date the federal permit was
issued, and that the Region’s incorporation of the challenged effluent
limitations into the federal permit was wholly consistent with Section
401(a)(1) of the Clean Water Act. Moreover, because Caribbean can
continue to pursue its substantive challenge to the WQC through
the appropriate State procedures—and, if it is successful, seek modi-
fication of the federal permit—the EQB proceedings are not mooted
and there is no denial of due process. See Puerto Rico Sun, slip
op. at 11-12. The Region’s denial of an evidentiary hearing as to
the validity of the Water Quality Certificate (and as to the propriety
of the permit conditions derived from it) was therefore correct. The
Region properly concluded that this was a legal issue, and review
of that issue is, for the reasons identified above, denied.®
Caribbean also argues that Region II did not act in a timely
manner in denying its request for an evidentiary hearing. Caribbean
‘a State certification unless it gets a clear authorization from the
State.
Miners Advocacy Council, slip op. at 7. By contrast, in this case we have no occasion
to consider whether a State’s mere election to stay a WQC, or any conditions therein,
before such conditions have been incorporated into an NPDES permit constitutes suffi-
cient authorization for the Region to exclude those conditions from the permit. We
simply hold that the Region need not exclude the stayed conditions from a final
NPDES permit in the absence of a modified certification, and that the Region does
not commit reversible error by incorporating the stayed conditions into the federal
permit in these circumstances.
© After presenting Caribbean's legal argument, the petition for review enumerates
the particular conditions of the WQC (as incorporated into the final NPDES permit)
to which Caribbean objects, and outlines the technical basis for the objections. It
is unclear to what extent this technical discussion has been presented to us merely
to illustrate the practical reasons for Caribbean's dissatisfaction with the WQC, and
to what extent it has been presented as an independent argument in favor of appellate
review. Each of the enumerated permit conditions (which are listed in Section II.D
of Caribbean’s petition) appears in EQB’s May 1989 Water Quality Certificate, and
the WQC states, in mandatory terms, that the conditions “shall be incorporated into
the NPDES permit in order to satisfy the provisions of Section 301(bX1XC) of the
[Clean Water] Act.” Each of the enumerated conditions is thus “attributable to State
certification” within the meaning of 40 C.F.R. § 124.55(e). See In re Boise Cascade
Corp., NPDES Appeal No. 91-20, slip op. at 10-11 n.7 (EAB Jan. 15, 1993). Therefore,
to the extent that the discussion in Section II.D of the petition is intended to set
forth independent grounds for this appeal, those grounds are beyond the proper scope
of our review and the appeal must be denied. See In re City of Denison, Texas,
NPDES Appeal No. 91-6, slip op. at 8 (EAB Dec. 8, 1992); Puerto Rico Sun, slip
op. at 14.
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500 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

points out, and the Region does not dispute, that the evidentiary
hearing request was filed in November 1990 but that the Region
did not respond by denying the request until October 1991, nearly
a full year later. This delay, petitioner observes, is inconsistent with
40 C.F.R. § 124.75(a)(1), which directs the Regional Administrator
to grant or deny such a request within thirty days after the expiration
of the time allowed for submission of the request, provided that
the request “conforms to the requirements of § 124.74, and sets forth
material issues of fact relevant to the issuance of the permit.”

Without in any way condoning dilatory conduct (if any) on the
part of the Region, we do not see how the Region’s failure to respond
within thirty days can, in the circumstances of this case, result in
an obligation to grant the evidentiary hearing request. The regulation
does not prescribe such a result generally, and there is no logic
whatever to commend it in this particular instance, given our conclu-
sion that the Region’s final permit decision was correct as a matter
of law and that no material issues of fact are presented for review.
Moreover, Caribbean identifies no untoward consequences of the
delay; the permit conditions to which Caribbean takes exception were
stayed pending the Region’s decision on the evidentiary hearing re-
quest, and have also been stayed pending our own consideration
of this appeal. Caribbean has attempted no showing of prejudice
resulting from the delay, and no such prejudice is apparent. Any
error is therefore harmless,}° and review of this issue, too, is denied.

III. CONCLUSION

For the foregoing reasons, the petition for review is denied in
its entirety.

So ordered.

10See In re Ashland Oil, Inc. (Floreffe, Pennsylvania), SPCC Appeal No. 91—

1, slip op. at 5-6 (EAB Sept. 15, 1992) (employing harmless error analysis in the
context of the thirty-day decisionmaking period provided in 40 C.F.R. $114.10). In
cases where an agency's procedural deadlines are missed, courts are loath to declare
a forfeiture of the agency’s decisionmaking authority. See United States v. Boccanfuso,
882 F.2d 666, 671-72 (2d Cir. 1989) (citing Brock v. Pierce County, 476 U.S. 253,
260 (1986)).

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