
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-2359                             PUERTO RICO SUN OIL COMPANY,                                     Petitioner,                                          v.                    UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,                                     Respondent.                                 ____________________                        ON PETITION FOR REVIEW OF AN ORDER OF                  THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY                                 ____________________                                        Before                                Selya, Cyr and Boudin,                                   Circuit Judges.                                   ______________                                 ____________________            Robert Brager with whom Richard S.  Davis, Joseph C. Stanko,  Jr.,            _____________           _________________  ______________________        Patricia Ross  McCubbin, Beveridge & Diamond,  P.C., Leonardo Andrade-        _______________________  __________________________  _________________        Lugo, Jose A. Cepeda-Rodriguez,  Carlos A. Rodriguez-Vidal, Eli Matos-        ____  ________________________   _________________________  __________        Alicea, Goldman Antonetti Cordova & Axtmayer and Edward J. Ciechon Jr.        ______  ____________________________________     _____________________        were on brief for petitioner.            Alan  D.  Greenberg, Environment  &  Natural  Resources  Division,            ___________________        Environmental Defense Section, Department  of Justice, with whom Myles                                                                         _____        E.  Flint,  Acting Assistant  Attorney General,  Randolph L.  Hill and        _________                                        _________________        Meyer Scolnick,  Assistant Regional Counsel,  Environmental Protection        ______________        Agency, were on brief for respondent.                                 ____________________                                   October 21, 1993                                 ____________________                 BOUDIN,   Circuit   Judge.      In  August   1990,   the                           _______________            Environmental Protection Agency issued a  pollution discharge            permit  to Puerto Rico Sun  Oil Company ("the  Company").  In            doing so  EPA complied  with the substantive  requirements of            the governing  statute and  the procedures  set forth  in the            statute and EPA regulations.  Only the result gives cause for            concern,  and that  concern is  not allayed  by  the agency's            explanation for its decision.  In our judgment, the result is            so  odd that either  the EPA has abused  its discretion or it            has  explained  itself  so   poorly  as  to  require  further            justification.  On  either view, we must vacate  the agency's            order adopting the permit and remand for further proceedings.                                     I. THE FACTS                                     I. THE FACTS                 The  Clean  Water  Act,  33  U.S.C.     1251,  et  seq.,                                                                ________            prohibits  the  discharge   into  protected  waters  of   any            pollutant by any  person, id.    1311(a), unless a  discharge                                      ___            permit  has  been  secured  from  EPA.   Id.     1342.    The                                                     ___            permitting regime is  a hybrid one in which  both EPA and the            counterpart  state  agency play  a  role.   The  precise role            depends on whether EPA has delegated permit issuing authority            to the state; but no such delegation is present here.  Puerto            Rico is  treated as a state  for purposes of the  Clean Water            Act, id.   1362(3), and its local agency is the Environmental                 ___            Quality Board ("EQB").                                           -2-                                         -2-                 To obtain a permit, the applicant must satisfy a variety            of substantive requirements under the Clean Water Act but, in            addition, no EPA permit  can issue unless the state  in which            the  discharge  will occur  gives  its  own approval  (called            "certification") or waives its right to  do so.  33 U.S.C.               1341(a)(1).   Further,  the  state  certification may  impose            discharge  limitations  or requirements  more  stringent than            federal law requires,  and those  more stringent  obligations            are  incorporated into  the  federal permit  as  a matter  of            course.  See generally  United States v. Marathon Development                     _____________  _____________    ____________________            Corp.,  867 F.2d  96, 99  (1st  Cir. 1989)  (describing state            _____            role).  What  lies at the heart of this  case is EQB's effort            to  impose,  and then  back  away from,  such  more stringent            obligations.                 For some years before this case began, the  Company held            a  discharge permit for its  oil refining facility at Yabucoa            Bay,  Puerto Rico,  where it  discharges pollutants  from two            different sources.  On May 27, 1988, the Company submitted to            EPA an application to  renew the permit for its facility.  On            October  31,  1988, EPA  forwarded  the  application to  EQB,            requesting that  a draft certification be  prepared promptly.                               _____            EPA also warned EQB that under EPA regulations, Puerto Rico's            right to impose obligations  by certification would be waived            if a  final certification were  not received  within 60  days                                         -3-                                         -3-            after EPA sent a copy of a (yet to be  prepared) draft permit            to EQB.  40 C.F.R.   124.53(c)(3) (60 day time limit).1                   On   January  25,   1989,   EQB  released   a  tentative            certification--essentially a draft document  that facilitates            public  comment  on  the  proposed  state  certification  and            proposed  federal permit.   The  draft certification  in this            case probably came as a surprise to the Company.  The earlier            permit had employed a "mixing  zone" analysis in setting  the            pollution limitations for  the Company's discharged effluent;            the draft certificate did not include a mixing zone analysis.            The difference, which is  central to this case, needs  a word            of explanation.                 A discharge permit under the Clean Water Act may include            several  types  of  requirements.     One  set  concerns  the            technology used to limit pollution;  another, pertinent here,            requires that  the amount of specified  pollutants not exceed            certain percentage levels.   In theory, the percentage levels            could  be  measured in  the  effluent  itself--such as  storm            runoff or waste  water--just as  it drains  into the  stream,            river  or  bay which  is protected  by  the Clean  Water Act;            alternatively,  it could be measured at the edge of a defined                                                        ____                                            ____________________                 1The Clean Water Act provides  that the state waives its            certification  rights if  it  fails to  issue  or to  deny  a            certification  "within a  reasonable  period  of time  (which            shall  not exceed one year) after receipt of such request . .            . ."  33 U.S.C.   1341(a(1).                                         -4-                                         -4-            area of the receiving  body of water after the  pollutant has            been diluted by that water.                 Such  a defined  area is  called a  mixing zone,  and it            appears that  measuring pollutants at the edge  of the mixing            zone is widespread in the application of the Clean Water Act.            According to an EPA publication, "[w]hether to establish such            a mixing zone policy is a matter of State discretion."   EPA,            Mixing  Zones--Water Quality Standards  Criteria Summaries: A            _____________________________________________________________            Compilation  of  State/Federal  Criteria 2  (September  1988)            ________________________________________            ("Mixing Zones").   Practically  every state and  Puerto Rico              ____________            have adopted mixing zone criteria, id., although the criteria                                               ___            appear  to differ widely.  Id. at 70-78 (Puerto Rico criteria                                       ___            as  of  1988).   The  mixing  zone  concept  is described  in            Marathon Oil Co. v. EPA, 830 F.2d 1346, 1349 (5th Cir. 1987),            ________________    ___            which concludes with the  observation that "the `mixing zone'            determination is basically a cost-benefit judgment on a given            set  of   environmental  facts,  rather  than   any  sort  of            `scientific' determination."  Id. at 1351.                                          ___                 When in January 1989  EQB issued its draft certification            for the Company's requested permit, the EQB was reformulating            its mixing zone criteria.   EQB's draft certification for the            Company  neither  continued  in  force the  old  mixing  zone            criteria temporarily nor made  the certificate subject to the            new  criteria still  under development.   Instead,  the draft            certification simply set further pollutant limitations which,                                         -5-                                         -5-            absent  the  mixing  zone  analysis, apply  directly  to  the            effluent  as it enters  the receiving waters.   Mixing Zones,                                                            ____________            supra,  at 2  ("If no  such mixing  zone is  recognized by  a            _____            State, then the waters must meet the criteria at the point of            discharge.").                 The  next event was EPA's release on August 11, 1989, of            a draft permit  and request  for public comment.   The  draft            permit   incorporated   the   requirements   of   the   draft            certification issued by EQB and therefore used no mixing zone            analysis.  Although issuance  of the draft permit  meant that            final EQB certification  was now due in 60 days,  40 C.F.R.              124.53(c)(2),  EQB   apparently  paid  no  attention  to  the            deadline or to EPA's earlier warning that failure to meet the            deadline  would   waive  Puerto  Rico's  right   to  certify.            Nevertheless,  in  October   1989  EPA  told  the   Company's            attorneys that  it was  extending the  comment period on  the            draft permit  "indefinitely" while awaiting  the EQB's  final            certification.  When the  certification arrived, said EPA, it            would set a "prompt" close to the comment period.                 On  July 24,  1990, almost  a  year after  receiving the            draft permit,  EQB issued  what it  called its  "final" water            quality  certification  for the  Company,  again  eschewing a            mixing  zone analysis.  Both the timing and substance of this            action  are puzzling because, only four  days before, on July            20, 1990, EQB had promulgated new regulations to be effective                                         -6-                                         -6-            on  August  20, 1990,  adopting a  new method  of determining            mixing zones.    But  if  EQB's  behavior  was  slothful  and            careless, EPA's reaction was even stranger.                 At this  point the  EQB's final certification  must have            appeared a  probable candidate for administrative or judicial            revision in Puerto Rico.  EQB had used a mixing zone analysis            in the past and was proposing to do so in the future, and the            use of such an analysis was likely to be significant; indeed,            the Company later represented,  and EPA has not disputed  the            claim, that its refinery cannot operate if forced to meet the            pollution  standards  without  the  help  of  a  mixing  zone            analysis.   Yet just as the  Company moved to correct the EQB            certification, EPA  moved even more swiftly to  adopt a final            permit based  on the  EQB certificate  that omitted  a mixing            zone analysis.                 The  chronology can be compressed.   On August 17, 1990,            the  Company asked  EQB to  reconsider its  certification and            include  a mixing  zone analysis.   On  August 21,  1990, EPA            published  a  new  draft  permit  incorporating  EQB's  final            certification requirements, and it  offered 30 days to submit            comments.  On September 7, 1990, EQB wrote to EPA saying that            it was evaluating  the Company's comments on  reconsideration            and that it might  alter its certification.  On  September 10            and on September  21, 1990,  the Company asked  EPA to  delay            action  on  the  permit to  allow  the  EQB  to complete  its                                         -7-                                         -7-            reconsideration.   On September 28, 1990, EPA  issued a final            permit, based  on the  then July 1990  EQB certification  and            without provision for a mixing zone.                 On November 7,  1990, the Company  sought administrative            review within  EPA, an  action that automatically  stayed the            new permit, 40 C.F.R.   124.15(b)(2), and left the old one in            force  on a  temporary  basis.   On  November 28,  1990,  EQB            adopted  a  resolution  staying  its   certification  pending            reconsideration and announcing, for  the benefit of EPA, that            the  certificate    was  "not  to  become  final"  until  the            reconsideration was  completed.  In February  1991, EQB wrote            formally  to  EPA  stating  that the  certificate  should  be            treated  as not final and  urging EPA to  leave the Company's            previous permit in  effect for the time being.   In June 1992            EPA's  regional administrator  issued a  decision reaffirming            the new permit without a mixing zone provision but continuing            the stay of the new  permit pending a further  administrative            appeal.                 In  July 1992,  the Company  duly appealed  the regional            administrator's  decision  to  EPA's   Environmental  Appeals            Board, urging a number of  the arguments discussed below, and            making one further contention of note: the Company said  that            unless EPA modified the permit  on direct review, the Company            would  likely   be  unable  get  the   mixing  zone  analysis            incorporated  into the permit through subsequent proceedings.                                         -8-                                         -8-            The reason,  said the Company, was  "the probable application            of  the anti-backsliding policy"  of the Clean  Water Act, 33            U.S.C.   1342(o).  On October 26, 1992, the EPA Environmental            Appeals  Board  issued a  lengthy  decision refusing  further            review.  The  Company's appeal  to this court  followed.   33            U.S.C.   1369(b)(1)(F).                                         -9-                                         -9-                                    II. DISCUSSION                                    II. DISCUSSION                 Faced with  what may  be a disastrous  outcome from  its            standpoint, the Company  has offered this court  a variety of            procedural  challenges to EPA.  They range from a broad claim            that  EQB's  final  certification  was  ineffective  (because            Puerto  Rico's time  to  certify had  expired)  to a  trivial            complaint  that the EPA did  not allow a  15-day extension to            the comment period at  one phase of the proceeding.  We think            virtually  all  of  the  procedural claims  fail  and,  while            addressing them at  the close  of the opinion,  we prefer  to            begin by discussing EPA's central error.                 EPA's  action in adopting the permit in this case is not            flawed by procedural  mistake.   On the contrary,  EPA did  a            commendable  job of  dotting i's  and crossing  t's.   Nor is            there any  violation of  substantive provisions of  the Clean            Water Act;  for example,  nothing in that  statute explicitly            requires EPA to use mixing zone analyses in its permits.  The            problem  with  EPA's  decision  is simply  that  the  outcome            appears  on its  face to  make no  sense.   We  say "appears"            because  we cannot rule out the possibility that some further            explanation could shore up the EPA's result.  Either way, the            EPA's present action cannot stand.                 It may  come as  a surprise  that agency  decisions must            make sense  to reviewing courts.   Agencies,  after all,  are            normally entitled  to substantial deference so  long as their                                         -10-                                         -10-            decisions do not collide directly  with substantive statutory            commands  and  so long  as  procedural  corners are  squarely            turned.   This  deference is  especially marked  in technical            areas.    But in  the  end an  agency  decision must  also be            rational--technically speaking,  it must not be "arbitrary or            capricious,"  Administrative   Procedure  Act,  5   U.S.C.               706(2)(A)--and  that requirement  exists  even  in  technical            areas of  regulation.  E.g., Public  Citizens Health Research                                   ____  ________________________________            Group, v. Tyson, 796 F.2d  1479, 1505 (D.C. Cir. 1986).   The            _____     _____            requirement is not very hard to meet, but it has not been met            here.                 The "arbitrary and capricious" concept, needless to say,            is  not easy  to  encapsulate in  a  single list  of  rubrics            because it embraces  a myriad of possible  faults and depends            heavily upon the circumstances of the case.  Still, there are            rules of thumb, e.g., Motor Vehicle Mfrs. Ass'n v. State Farm                            ____  _________________________    __________            Mutual Ins. Co., 463 U.S.  29, 43 (1983) (listing  examples).            _______________            In addressing  individual aspects of EPA's  decision, we cite            to   those   requirements--discussion  of   relevant  issues,            consistency  with  past  practice,  avoidance  of unexplained            discrimination--that are pertinent to  EPA's decision in this            case.                 On  the  surface  of  the  administrative   record,  the            following  scene presents itself.  EQB,  having used a mixing            zone  analysis in  past cases,  neglected to  include  such a                                         -11-                                         -11-            provision in its latest certification for this facility.  EQB            had  previously used  a mixing  zone  analysis for  this very            facility; and far from abandoning the concept, EQB was in the            process  of revising  its  regulations to  prescribe such  an            analysis  at the  very time  it was  preparing the  Company's            certification.    Four  days   before  it  issued  the  final                                           ______            certification in this case, omitting a mixing zone provision,            it formally promulgated its new mixing zone regulations.                 It is not clear  whether in August 1990 EPA  appreciated            that  EQB  had  probably  misstepped.   The  Company's  brief            implies   that   the  EPA,   having   obtained  EQB's   final            certification, then  proceeded with sinister  speed--surely a            rare  accusation  in  administrative  law--to  mousetrap  the            Company by issuing a  final permit before EQB's certification            could be revised.  An alternative explanation, to us entirely            plausible,  is  that the  EPA's  patience with  EQB  had been            exhausted  and  it wanted,  as it  had  warned almost  a year            before, simply to get done with  the permit as soon as it had            EQB's final certification.                 However this may be, both the Company and EQB made clear            to  the EPA at once, and before the final permit issued, that            reconsideration was  under way.  EPA published  its new draft            permit for  comment in  August 1990;  and in  September 1990,            before the EPA issued the final permit on September 28, 1990,            ______            EQB advised EPA  (on September 7)  that it was  reconsidering                                         -12-                                         -12-            its certification and might  alter it, and the  Company wrote            letters (on September  10 and  21) begging the  EPA to  defer            final  action until  the  EQB acted.    The EPA  nevertheless            proceeded to  issue the final permit with  no explanation for            its refusal to wait.                 Even  at this  stage, it  appears that  EPA was  free to            correct the problem on administrative review.  There being no            fixed  timetable, the  regional administrator  presumably had            discretion to defer action  until EQB acted on the  Company's            reconsideration request  and, if a mixing  zone analysis were            adopted  by   EQB  in   a  revised  certification,   then  to            incorporate  this revision into the new permit.  One of EPA's            regulations, 40 C.F.R.   124.55(b), which is discussed below,            seems to contemplate just such a situation.  During this same            period EQB made crystal clear, by its resolution  of November            28, 1990, and its formal letter of February 25, 1991, that it            was planning to reexamine its certification and  did not want            the  certification  treated  as   final.    Once  again,  EPA            proceeded to reject the  pleas and reaffirm the  permit, sans            mixing zone.                 EPA has now explained its  position at least three times            administratively and for a  fourth time in this court.   Each            time   EPA  deals  deftly   with  the   Company's  procedural            objections  by showing  why  some regulation  allowed EPA  to            await EQB's final certification, but to refuse to await EQB's                                         -13-                                         -13-            attempt to repair the certification, and allowed EPA to adopt            EQB's certification, but to reject EQB's  retroactive attempt            to brand  it as non-final.   The only thing that  is missing,            among  this  array of  finely  wrought  explanations, is  any            reason why the EPA should want to frustrate the EQB's clumsy,                   ___            long-delayed but increasingly evident  desire to reconsider a            mixing zone analysis for this permit.                 Assuredly, some explanation  is called  for. The  mixing            zone analysis is not some freakish idea or whim of the Puerto            Rico   authorities.     According   to  EPA's   Mixing  Zones                                                            _____________            publication, it is available for use in at least 49 states in            varying situations; and the Company said that the refinery in            question  cannot  operate  if   the  permit  limitations  are            applied, without  a mixing zone  analysis, at the  point that            the   effluent   enters   the   water.      Patently,   these            considerations of  history and  practical effect would,  in a            rational decision,  warrant at least some  discussion.  Motor                                                                    _____            Vehicle Mfrs. Ass'n, 463 U.S. at 43 (agency may not "entirely            ___________________            fail[] to consider an important aspect of the problem").                 At oral  argument, we  inquired of  counsel representing            the  EPA whether there were other situations in which EPA had            refused  to  use a  mixing  zone analysis  despite  a state's            desire that  such an analysis  be used.   Yes, we  were told,            counsel for EPA knew of several such instances.  On rebuttal,            the Company's counsel responded  that there were indeed other                                         -14-                                         -14-            instances but they were limited to  EPA's issuance of permits            in Puerto  Rico, in the same  time frame as this  case and to            other  applicants whose  situations  paralleled that  of  the            Company.   If this is the situation  (counsel for EPA made no            later effort  to respond), then  EPA's current posture  is in            some  measure  at odds  with precedent.    Cf. Atchison,  T &                                                       ___ ________   ___            S.F.R.R.  v. Wichita Bd. of  Trade, 412 U.S.  800, 808 (1973)            ________     _____________________            ("departure from prior norms" must be explained).                 The point is not that EPA has some overriding obligation            under the Clean Water Act to do whatever it is that the state            wants to  do.  On the  contrary, EPA was entirely  free, once            Puerto  Rico had  ignored  the clear  deadlines  for a  final            certification,  to treat  the Commonwealth  as an  interested            bystander with  no further  veto authority.   What  is beyond            explanation,  or  at least  wholly  unexplained,  is why  EPA            should be intent  on adopting half  of what the  Commonwealth            wanted while systematically frustrating its attempt to secure            the  other half.   The obligation, we  repeat, is not  one of            deference to local authorities but of making sense.                 There  is  also in  this  case  an  element of  apparent            irrational   discrimination.     See,  e.g.,   Green  Country                                             ___   ____    ______________            Mobilephone,  Inc.  v. FCC,  765  F.2d 235  (D.C.  Cir. 1985)            __________________     ___            (obligation to treat similar cases  similarly).  For all that            appears,  similarly situated  facilities  in Puerto  Rico, if            permitted for the first time next year, are likely to receive                                         -15-                                         -15-            permits including a mixing zone analysis.  Like facilities in            other states, permitted in September 1990 at the same time as            the  Company, probably  received the  benefit of  mixing zone            analyses.   Only Puerto Rican facilities that  happened to be            permitted or  re-permitted in  this strange "window,"  during            which  EQB was  reformulating its  mixing zone  criteria, are            left  out   in  the  cold--possibly  forever   if  the  anti-            backsliding provisions apply.2                 Perhaps there is some explanation for EPA's action other            than a mechanical desire to reach  a rapid conclusion without            regard  to whether the result  is sound.   Indeed, we suspect            that  there  is  an  explanation.    As  noted,  the  Company            insinuates  that EPA  deliberately  took  advantage of  EQB's            carelessness  to mousetrap  the Company  into standards  that            could not  later be  relaxed because of  the anti-backsliding            provisions  previously mentioned.    Such a  result would  at            least explain what happened, although it is doubtful that the            explanation,  if adopted  by EPA,  would commend itself  to a            reviewing court.                 Or, there may  be more benign reasons for  EPA's action.            Perhaps  the  Company's science  is  faulty  and very  slight            adjustments  in  technology  would  permit  it  to  meet  the                                            ____________________                 2Needless  to say,  we  do not  know  whether the  anti-            backsliding  provisions  would  produce  this  result.    The            provisions  are complicated  and contain  certain exceptions.            33  U.S.C.   1342(o).  The Company's prediction is qualified,            and EPA's brief is silent on this issue.                                         -16-                                         -16-            pollution limitations, and  improve the environment to  boot,            without any mixing zone  analysis.  In all events,  until EPA            emerges from  its fortress of  procedural-rule citations  and            adopts  a  rationale for  its  action,  any speculations  are            beside the point:  the  agency's decision cannot be supported            on reasoning that the agency has not yet adopted.  See SEC v.                                                               ___ ___            Chenery Corp., 332 U.S. 194, 196 (1947).            ____________                 We turn now to the  Company's other arguments on  appeal            because  some of them, if  adopted, would alter  the terms of            the  remand.    The  main  thrust of  the  Company's  various            arguments is  that, for  various procedural reasons,  EPA was                                             __________            not  entitled  to rely  on the  EQB  certification.   On this            premise,  the  Company  argues   that  EPA  was  required  to            formulate  its  own  permit  standards based  upon  the  real            requirements of  Puerto Rico law, which  the Company believes            requires the use  of a mixing zone analysis.  Since we reject            the Company's premise of  procedural error, the further steps            in the Company's argument need not concern us.                 The  Company's  broadest  procedural  argument  is  that            Puerto Rico's final certification came too late and therefore            could not furnish the  basis for EPA's own final  permit.  As            already noted, the  Clean Water Act  required Puerto Rico  to            provide  its  certificate,  or  announce a  decision  not  to            certify,  within a  reasonable  time not  to exceed  one year            after  the  application,  33  U.S.C.     1341(a)(1);  and  by                                         -17-                                         -17-            regulation EPA required  a certification  decision within  60            days  of  the  issuance  of a  draft  permit.    40 C.F.R.               124.53(c)(3).  Here, EQB apparently ignored both time limits,            failing both to meet the statutory one-year deadline and  the            regulation-based 60-day deadline.                 Under  the  statute and  the  regulation,  the price  of            failing to meet the deadlines is that the state agency waives            its right to  dictate permit  terms that go  beyond what  EPA            would  do on its  own.   Based on  this waiver  language, the            Company argues  that a  state certification issued  after the            deadline is  without legal effect.   In reply EPA says  it is            free  either to declare a  waiver or, instead,  to follow the            course  taken  in  this  case  and  await  the  final, though            belated, certification.   The statute itself  merely provides            that  the state must act  within a reasonable  period, not to            exceed  a  year, or  the  certification  requirement will  be            deemed "waived."  33 U.S.C.   1341(a)(1).                 Although  we  are   provided  no  useful   precedent  or            legislative  history, our  reading  of  the  statute  largely            coincides with that of EPA.  The statutory time limit and the            word  "waived" do not tell us the answer; Congress could have            meant that  a state  certification issued after  the deadline            had to  be ignored by EPA,  or it could have  meant only that            EPA was  free to do so.   EPA interprets the  statute to mean            the latter  and under  the Chevron doctrine,  Chevron U.S.A.,                                       _______            _______________                                         -18-                                         -18-            Inc. v.  NRDC, 467 U.S.  837 (1984), its view  is entitled to            ____     ____            weight.  State of California v. FERC, 966 F.2d 1541 (9th Cir.                     ___________________    ____            1992),  cited by  the Company  as holding  that the  deadline            cannot be waived, holds no such thing.3                 Further,  EPA's  reading both  of  the  statute and  its            regulation seems  to  us  a  sensibly flexible  one.    EPA's            reading  gives it the practical  benefit of the state process            even  if that benefit comes a little  late.  Indeed, where no            one  complains  (e.g.,  because  the applicant  is  happy  to                             ____            operate  under an  earlier permit),  it could  be pointlessly            rigid to  insist  that EPA  begin  its own  calculations  the            moment the certification deadline expires for the state.  The            concern on the other side  is that without a deadline,  a new            applicant could be left  dangling forever.  But we  think the            courts have  adequate power  to assure that  flexibility does            not become an excuse for permanent inaction.4                                             ____________________                 3EPA's interpretation  of its  own 60-day  regulation is            even  more   compelling  since  it   wrote  the   regulation.            Gardebring v. Jenkins, 485 U.S. 415, 430 (1988)  In addition,            __________    _______            agencies can  usually (although  not always) waive  their own            procedural  regulations  even  where  there   is  no  express            provision  for waiver.    American Farm  Lines v.  Black Ball                                      ____________________     __________            Freight Service, 397 U.S. 532, 538 (1970).            _______________                 4See  Administrative Procedure  Act,  5 U.S.C.    706(1)                  ___            (power to compel agency action  unduly delayed).  The  courts            are normally deferential to  the agency in such cases.   See,                                                                     ___            e.g., Telecommunications Research & Action Center v. FCC, 750            ____  ___________________________________________    ___            F.2d  70  (D.C. Cir.  1984).    Here, however,  Congress  has            expressed its  intent that the state  proceeding be completed            in a year.  If EPA wants to waive the state's failure to meet            a deadline, and  wait longer for its certification,  we think            that  the propriety of its deferral might be open to judicial                                         -19-                                         -19-                 The   Company's   remaining   arguments   require   less            discussion.  The claim that EQB's certification was not final            when EPA adopted it is unpersuasive.  "Finality" is a concept            with  several shades  of meaning  in administrative  law; but            where, as here, the agency  itself (rather than a subordinate            body)  has  spoken  and  has explicitly  labeled  its  action            "final,"  we think that is enough, even though the agency may            choose to reconsider or may  be reversed on judicial  review.            The Company failed  to get  a stay of  the EQB  certification            before EPA acted in reliance upon it.  We agree with EPA that            the   subsequent  decision  of  EQB  to  re-characterize  its                  __________            certification order as non-final cannot affect the procedural            validity of EPA's decision to grant the permit.                 In fact, EPA has regulations that govern the effect of a            state stay or modification of a certification after  a permit            has issued.  The  pertinent regulation permits EPA's regional            administrator under certain circumstances to  incorporate the            modifications  into the  permit so  long as the  state agency            stays  or modifies the old certificate and forwards a new one                                                   ___            to  EPA as a  substitute.  40  C.F.R.   124.55(b).   But this            regulation does not apply in this case because EQB never sent            a substitute certificate to the EPA.                 The Company  relies upon a different  EPA regulation, 40            C.F.R.   122.44(d)(3).  This provides in part that if a state                                            ____________________            review that is somewhat more searching than customary.                                         -20-                                         -20-            court or board  stays a certification,  EPA shall notify  the            state  that  certification will  be  deemed  waived unless  a            finally  effective  certificate  is  issued  within  60 days;            absent such a new certification, the regulation says that EPA            shall  impose  its  own  requirements  in  the  permit.    In            agreement  with EPA, we read this regulation to apply only to            stays that occur before EPA has issued its own permit.   Once            again, the agency's reading of its own regulation is entitled            to deference.  Gardebring, 485 U.S. at 430.  Its reading also                           __________            has  the benefit  of making  this regulation,  governing pre-            permit  stays,  dovetail  with  section  124.55(b), governing            post-permit stays.                 In an attempt to bolster the importance of the EQB stay,            the  Company reminds us of  the central role  that the states            were intended to  play under the  Clean Water Act.   Yet that            role is to be  played within the framework of  the procedures            fixed by the statute and EPA regulations.   Indeed, precisely            because   two  different   jurisdictions   are  expected   to            collaborate  on  a  permit,  there  is  a  special  need  for            compliance  with the rules  of the road.   Here, the EQB stay            came  after  the  permit   and--strictly  from  a  procedural                  _____            standpoint--EPA  was  entitled to  disregard  it,  unless and            until  EPA's  regulation  governing  a  post-permit stay  was            satisfied.                                         -21-                                         -21-                 In  summing up, we stress  again that the  flaw in EPA's            action   is  not  a  procedural  defect.    EPA's  result  is            irrational, or  at least inadequately  explained, not because                                                              ___            of  EQB's hapless stay, but  because of the  substance of the            EPA's  permitting  decision.   To  restate  the gist  of  the            matter, EPA has  failed to explain why  it makes sense, as  a            matter  of substantive  policy,  to  frustrate Puerto  Rico's            incipient  desire to use  the mixing  zone analysis,  and why            those  companies who  fall  in this  "window" between  Puerto            Rico's old and  new regulations  should alone  be denied  the            benefits of  a  mixing analysis.    Those concerns  would  be            virtually  the same  even  if EQB  had  never used  the  word            "stay."5                                   III. CONCLUSION                                   III. CONCLUSION                 In  framing the remand, we begin  by emphasizing what we            have not decided.   Whether the final certification issued by                 ___            the EQB in August  1989 is vulnerable to attack  under Puerto            Rican  law, if not altered  by EQB on  reconsideration, is an            issue not  before this  court.  Although  state certification            provisions are incorporated into federal permits, review of a                                            ____________________                 5We have not discussed the Company's separate claim that            EPA abused its discretion by not extending the comment period            for 15 days, as requested by the Company, to permit more time            for comment  on technical  issues.  This  argument, summarily            stated in a paragraph at  the end of the Company's brief,  is            not seriously  supported and  is therefore not  preserved for            review.  United States v. Zannino, 895 F.2d 1, 27 (1st Cir.),                     _____________    _______            cert. denied, 494 U.S. 1082 (1990).            ____________                                         -22-                                         -22-            state certification is a matter for  local courts.  Roosevelt                                                                _________            Campobello Int'l Park Comm'n v. EPA, 684 F.2d 1041, (1st Cir.            ____________________________    ___            1982).   The apparent past  and future inclination  of EQB to            employ mixing zone analyses is part of the background of this            case, but nothing we have said should be taken to declare the            law of Puerto Rico on this subject.                 Similarly, we  do not suggest that  mixing zone analysis            has  a  sacrosanct  role under  the  Clean  Water  Act.   Our            impression from EPA's own publication is that the use of such            analysis is widespread.   But that  impression is subject  to            correction.  In any  event, sound reasons may dictate  that a            mixing  zone analysis not be used in certain cases or certain            classes  of cases, despite a possible hint to the contrary in            Marathon  Oil Co.,  830  F.2d at  1349  ("By definition,  the            _________________            effluent  itself  does  not  meet  water  quality  standards;            otherwise, it would not be considered polluted.").  There may            even be reasons why, apart  from EQB's procedural default,  a            mixing zone analysis is improper in this case.                 All that we hold  here is that EPA's decision to issue a            permit in  September 1990,  adopting EQB's  certification but            refusing to await EQB's decision on reconsideration, produces            a  result  that  on  the present  record  appears  manifestly            arbitrary and  capricious.   If legitimate reasons  exist for            such  an outcome,  then EPA is  free to provide  them and re-            adopt the present permit (and the  Company in turn is free to                                         -23-                                         -23-            challenge those reasons and  that action by petitioning again            for judicial  review).  EPA, EQB, and the Company may find it            possible to chart a more constructive course and make further            litigation unnecessary.                 The  EPA order adopting the permit at issue in this case            is  vacated and  the matter  is remanded  to EPA  for further                _______                     ________            proceedings in accordance with this opinion.  Costs are taxed            in favor of the petitioner.                                         -24-                                         -24-
