ALJDEC

99A-C159-DEQ · Department of Environmental Quality · 1999-09-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

On September 23, 1999, an oral argument was held to determine if the Arizona Department of Environmental Quality (the “Department”) had exceeded its statutory authority by imposing a registration fee in accordance with A.R.S. §49-209. Assistant Attorney General Nancy Stone Jamison appeared on behalf of the Department. Assistant City Attorney Blake Ashley appeared on behalf of the City of Tucson Thomas O. Price Service Center (“City of Tucson”). Based upon a review of the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Decision are made. FINDINGS OF FACT 1. The parties stipulated to the following facts:

A. The City of Tucson is a Significant Industrial User as defined in CFR §403.3(t)(1)(ii) and has a permit issued by the Pima County Wastewater Management Department for discharges into the community sewer system in accordance with the requirements of 40 CFR §403.8(f)(1)(iii). B. The City of Tucson is subject to national pretreatment standards under 40 CFR §403.5. C. The City of Tucson is not subject to the categorical pretreatment standards under 40 CFR §403.6 or 40 CFR parts 405 through 471.

See Stipulation and Request for Briefing Schedule (the “Stipulation”), dated August 23, 1999.

CONCLUSIONS OF LAW

1. The term “POTW” means a publicly owned treatment works. 40 CFR §403.3(o). The Pima County Wastewater Management Department is a POTW. The term “Industrial User” means a source of indirect discharge. 40 CFR §403.3(h). The City of Tucson is an Industrial User.

2. A “Significant Industrial User” means: (i) All industrial users subject to Categorical Pretreatment Standards under 40 CFR 403.6 and 40 CFR chapter I, subchapter N; and ii) Any other industrial user that: discharges an average of 25,000 gallons or more per day of process wastewater to the POTW treatment plant (excluding sanitary, non-contact cooling and boiler blowdown wastewater); . . . or . . . has the reasonable potential for adversely affecting the POTW’s operation . . .

CFR §403.3(t)(1)(i)(ii). The City of Tucson is not a Significant Industrial User pursuant to 40 CFR §403.3(t)(1)(i) because it is not subject to the Categorical Pretreatment Standards under 40 CFR §403.6 and CFR chapter I, subchapter N. However, the City of Tucson is a Significant Industrial User pursuant to 40 CFR §403.3(t)(1)(ii) because it either discharges over 25,000 gallons of process wastewater to the POTW or it has the reasonable potential to adversely affect the POTW’s operation.

3. 40 CFR §403.5 is entitled “National pretreatment standards: Prohibited discharges.” It provides a list of general prohibitions and specific prohibitions (e.g., an Industrial User cannot discharge specific pollutants into a POTW) that apply to all Industrial Users. 40 CFR §403.5(a)(b). The purpose of the national pretreatment standards is to prevent the introduction of pollutants into POTWs which would interfere with (or pass through and be incompatible with) the POTW. 40 CFR §403.2. The City of Tucson is subject to the national pretreatment standards under 40 CFR §403.5. See Stipulation, page 1.

4. 40 CFR §403.6 is entitled “National pretreatment standards: Categorical standards.” It provides: National pretreatment standards specifying quantities or concentrations of pollutants or pollutant properties which may be discharged to a POTW by existing or new industrial users in specific industrial subcategories will be established as separate regulations under the appropriate subpart of CFR chapter I, subchapter N. These standards, unless specifically

noted otherwise, shall be in addition to all applicable pretreatment standards and requirements set forth in this part.

CFR §403.6 (emphasis added). The City of Tucson is subject to the national pretreatment standards pursuant to 40 CFR §403.5. However, it is not subject to the categorical pretreatment standards under 40 CFR §403.6 or 40 CFR parts 405 through 471. See Stipulation, page 1.

5. 40 CFR §403.8 is entitled, “Pretreatment Program Requirements: Development and Implementation by POTW.” 40 CFR §403.8 enables the POTW to:

“(iii) Control through permit, order, or similar means, the contribution to the POTW by each Industrial User to ensure compliance with the applicable Pretreatment Standards and Requirements. In the case of Industrial Users identified as significant, under 40 CFR 403.3(t), this control shall be achieved through permits or equivalent individual control mechanisms issued to each such user. Such control mechanisms must be enforceable and contain at a minimum, the following conditions: … (C) Effluent limits based on applicable general pretreatment standards in part 403 of this chapter, categorical pretreatment standards, local limits and State and local law:”

CFR §403.8(f)(1)(iii)(C)(emphasis added). The POTW (i.e., the Pima County Wastewater Management Department) has issued a permit to the City of Tucson pursuant to 40 CFR §403.8(f)(1)(iii). However, the City of Tucson is not subject to categorical pretreatment standards. See Stipulation, page 1. Accordingly, the undersigned Administrative Law Judge can only conclude that the POTW issued the permit to the City of Tucson to control “effluent limits” based upon applicable “general pretreatment standards” or “local limits and State and local law.” See 40 CFR §403.8(f)(1)(iii)(C).

6. A.R.S. §49-209 provides: A. Each person that is required to obtain a permit for discharges into a community sewer system under federal categorical industrial pretreatment regulations and standards shall register each year with the director and pay an annual registration fee of two hundred fifty dollars.

B. On or before January 31 each year each public or private entity that issues a permit for discharges into a community sewer system shall transmit to the director a list of current permittees and their addresses. The director shall prescribe a procedure for notifying permittees of the registration requirements of this section and collecting the prescribed fee.

A.R.S. §49-209 (emphasis added). The Department has adopted a rule providing that “the fee for a significant industrial user registration shall be $250.00 per year.” A.A.C. R18-14-103(B)(2). The Department argued that the authority for A.A.C. R18-14-103(B)(2) can be found in A.R.S. §49-209.

7. The City of Tucson argued that A.R.S. §49-209(A) is clear and unambiguous. See City of Tucson’s Opening Brief, pages 1-2. The City of Tucson argued that the plain language of A.R.S. §49-209(A) clearly limits the registration fee imposed by the Department to persons subject to the federal categorical regulations and standards set forth in 40 CFR §403.6 or CFR parts 405 through 471. Id. The City of Tucson argued that it is not subject to federal categorical regulations and standards. Id. Rather, it is only subject to the national pretreatment standards pursuant to 40 CFR 403.5. Id. Accordingly, the City of Tucson argued that the Department does not have the statutory authority to assess a registration fee against the City of Tucson pursuant to A.R.S. §49-209(A). Id.

8. The Department argued that the POTW must use either a permit system or some mechanism that provides individual controls of pollutants discharged into the POTW by each Significant Industrial User. See 40 CFR §403.8(f)(1)(iii)(C). The Department argued that since A.R.S. §49-209(A) applies the annual registration fee to “[e]ach person that is required to obtain a permit,” then this subsection should apply to all Significant Industrial Users that obtain pretreatment permits for discharging process wastewater (in accordance with those permits) into community sewer systems. See Department’s Response Brief, page 4. Accordingly, the Department argued that the City of Tucson should have to pay the $250.00 annual registration fee pursuant to A.R.S. §49-209(A) because it is a Significant Industrial User that is required to obtain a permit pursuant to 40 CFR §403.8(f)(1)(iii)(C). However, the undersigned Administrative Law Judge cannot ignore the plain language of A.R.S. §49-209(A) which states: A. Each person that is required to obtain a permit for discharges into a community sewer system under federal categorical industrial pretreatment regulations and standards shall register each year with the director and pay an annual registration fee of two hundred fifty dollars.

A.R.S. §49-209(A)(emphasis added). This statute refers to persons that obtain permits for discharges into community systems under federal categorical industrial pretreatment regulations and standards. The Code of Federal Regulations provides categorical pretreatment regulations and standards for industrial users in specific industrial subcategories. See CFR §403.6 and 40 CFR parts 405 through 471. More importantly, the City of Tucson does not fall within these categorical pretreatment regulations and standards. See Stipulation, page 1. Rather, it is only subject to the national pretreatment standards pursuant to 40 CFR §403.5. Id.

9. If the Arizona Legislature had intended that A.R.S. §49-209(A) apply to all Significant Industrial Users, then it could have drafted A.R.S. §49- 209(A) as follows:

A. Each person that is required to obtain a permit for discharges into a community sewer system under national pretreatment standards shall register each year with the director and pay an annual registration fee of two hundred fifty dollars.

or possibly: A. Each Significant Industrial User pursuant to 40 CFR §403.3(t)(1)(i)(ii) that is required to obtain a permit for discharges into a community sewer system under federal industrial pretreatment regulations and standards shall register each year with the director and pay an annual registration fee of two hundred fifty dollars.

10. The Department also argued that A.R.S. §49-209(A) refers to "federal categorical industrial pretreatment regulations and standards." See Department’s Response Brief, page 4. The Department argued that "while there are separate categorical standards applicable only to various industrial categories and subcategories of dischargers identified in 40 CFR Parts 405 through 471, there are no separate categorical regulations for permitting such dischargers." Id. The Department argued that "[t]hose regulations are found in the general pretreatment regulations in 40 CFR 403 and apply to all significant industrial users." Id. However, 40 CFR §403.6 states the following: National pretreatment standards specifying quantities or concentrations of pollutants or pollutant properties which may be discharged to a POTW by existing or new industrial users in specific industrial subcategories will be established as separate regulations under the appropriate subpart of CFR chapter I, subchapter N. These standards, unless specifically

noted otherwise, shall be in addition to all applicable pretreatment standards and requirements set forth in this part.

CFR §403.6 (emphasis added). Accordingly, the undersigned ALJ concludes that the Arizona Legislature included the language "categorical industrial pretreatment regulations and standards" in A.R.S. §49-209(A) because the national pretreatment standards that pertain to specific industrial subcategories under 40 CFR §403.6 are set forth as separate regulations in CFR chapter I, subchapter N (and are in addition to the pretreatment standards set forth in 40 CFR Part 403).

11. The Department next argued that A.R.S. §49-209(B) requires annual notice to the Department of all current holders of industrial discharge permits. See Department’s Response Brief, page 5. The Department argued that this statutory directive to supply the Department with the names of all current permittees supports the view that this is the class of dischargers that must pay the $250.00 registration fee. Id. The Department argued that “it is presumed that the Legislature does not intend to do a futile act by including a provision that is ‘inert and trivial.’’’ Id. (citing Campbell v. Superior Court, County of Maricopa). The Department argued that:

A provision that required compilation of a list of all current permit

holders where only some of the permit holders were necessary to implementation of the statute would certainly be a provision that was, in part, inert and trivial. Such an interpretation can be readily avoided by reading the two subsections together and giving effect to the phrase "each person that is required to obtain a permit." A.R.S. §49- 209(A).

Id. However, it should be noted that the list of current permittees received by the Director under A.R.S. §49-209(B) includes discharge permittees that are not Significant Industrial Users. See City of Tucson’s Reply Brief, pages 3-4. In fact, the City of Tucson argued that the set of Significant Industrial Users is actually a very small subset of the entire list of discharge permittees required to report under A.R.S. §49-209(B). Id. The Department does not require an annual registration fee of $250.00 from the discharge permittees that are not Significant Industrial Users. Accordingly, the undersigned Administrative Law Judge concludes that the “list of current permittees” submitted to the Director under A.R.S. §49- 209(B) does not automatically mean that each listed permittee is required to pay the registration fee of $250.00 under A.R.S. §49-209(A).

12. The City of Tucson argued that a more plausible interpretation of A.R.S. §49-209(B) is that the Pima County Wastewater Management Department is required to submit a list of all permittees (including all Industry Users) to the Department. The Director must then send a letter to each listed permittee stating that the permittee must register with the Director (and pay the annual registration fee) if the permittee is subject to the federal categorical industrial pretreatment regulations and standards. The undersigned Administrative Law Judge concludes that the City of Tucson’s interpretation of A.R.S. §49-209(B) is logical and sufficiently consistent with A.R.S. §49-209(A). In essence, A.R.S. §49-209(B) allows the Director to: (1) receive a list of all permittees; (2) notify the permittees of the registration requirements of A.R.S. §49-209(A); (3) inform the permittees that are subject to the federal categorical industrial pretreatment regulations and standards on how to register and pay the registration fee; and (4) identify the permittees (for enforcement purposes) that failed to register and pay the registration fee.

13. Finally, the Department argued that it is illogical that the Arizona Legislature would enact a statute that requires certain Significant Industrial Users to pay a registration fee while exempting certain other Significant Industrial Users (e.g., the City of Tucson) that are not subject to categorical pretreatment standards and regulations. However, the City of Tucson argued that the purpose of A.R.S. §49-209(A) is to finance the Water Quality Assurance Revolving Fund (“WQARF”) which is a fund for the cleanup of hazardous substances that may impact water quality. The City of Tucson argued that the Significant Industrial Users that are subject to the categorical pretreatment standards are Industrial Users that have been specifically identified (and categorized) as dischargers of potentially hazardous substances and contaminants. Accordingly, the City of Tucson argued that these “categorized” Significant Industrial Users should have to pay a registration fee.

14. The City of Tucson has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). The undersigned Administrative Law Judge concludes that the City of Tucson has met its burden of showing that under A.R.S. §49-209(A), the Department may only collect a $250.00 registration fee from Industrial Users that are subject to categorical pretreatment standards under 40 CFR §403.6 and 40 CFR parts 405 through 471. RECOMMENDED DECISION

In view of the foregoing, it is recommended that the Department’s assessment of a $250.00 registration fee be reversed. A.R.S. §49-209(A) does not apply to a Significant Industrial User that is not subject to categorical industrial pretreatment standards and regulations.

Done this day, October 5, 1999.

______________________________________ Casey J. Newcomb Administrative Law Judge

Original transmitted by mail this ____ day of October, 1999, to:

Jacqueline E. Schafer, Director Department of Environmental Quality 3033 North Central Avenue ATTN: Lavonne Watkins Phoenix, AZ 85012

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826