                                                 FILED
FOR PUBLICATION                               May 17 2012, 9:41 am


                                                      CLERK
                                                    of the supreme court,
                                                    court of appeals and
                                                           tax court




ATTORNEYS FOR APPELLANTS:           ATTORNEYS FOR APPELLEE INDIANA
                                    DEPARTMENT OF ENVIRONMENTAL
E. SEAN GRIGGS                      MANAGEMENT:
FREDRIC P. ANDES
DAVID T. BALLARD                    GREGORY F. ZOELLER
Barnes & Thornburg, LLP             Attorney General of Indiana
Indianapolis, Indiana
                                    FRANCES BARROW
                                    Deputy Attorney General
                                    Indianapolis, Indiana

                                    ATTORNEYS FOR APPELLEE CITY OF
                                    HOBART:

                                    JOSEPH P. ALLEGRETTI
                                    Dyer, Indiana

                                    ADAM J. SEDIA
                                    Rubino, Ruman, Crosmer, Smith, Sersic &
                                    Polen
                                    Dyer, Indiana



                           IN THE
                 COURT OF APPEALS OF INDIANA

CITY OF GARY AND GARY SANITATION,   )
DISTRICT,                           )
      Appellants,                   )
                                    )
          vs.                       )      No. 49A02-1106-MI-553
                                    )
INDIANA DEPARTMENT OF               )
ENVIRONMENTAL MANAGEMENT and        )
CITY OF HOBART                      )
      Appellees.                               )

                   APPEAL FROM THE MARION SUPERIOR COURT
                         The Honorable David J. Certo, Judge
                          Cause No. 49F12-1002-MI-007318


                                    May 17, 2012

                           OPINION FOR PUBLICATION

MATHIAS, Judge

      The City of Gary and the Gary Sanitation District (collectively “Gary”) appeal the

Marion Superior Court’s order affirming the order of the Office of Environmental

Adjudication, which upheld the Indiana Department of Environmental Management’s

(“IDEM”) decision to issue a permit to the City of Hobart to operate a new wastewater

treatment plant. Gary appeals and raises several issues, which we consolidate into the

following two:

      I. Whether IDEM’s interpretation of 327 Indiana Administrative Code section 5-2-
      11.7 is reasonable; and,

      II. Whether IDEM’s decision to issue the permit was arbitrary, capricious, and
      otherwise not in accordance with the law or is unsupported by substantial evidence.

We affirm.

                            Facts and Procedural History

      The City of Hobart’s wastewater is currently treated both at Gary’s wastewater

treatment facility and at its own, aging Nob Hill wastewater treatment facility. Hobart

pays Gary for its use of Gary’s facility. Hobart’s Nob Hill facility discharges into a




                                           2
tributary of the Deep River and consistently struggles to stay within its permit limits.

Deep River is an impaired water source for mercury.

        Gary utilizes a collection system of stormwater and sanitary sewers that are

combined in part. The system is designed with a number of combined sewer overflows

which routinely discharge untreated wastewater into the Grand Calumet and Little

Calumet rivers during wet weather. Both rivers are tributaries to Lake Michigan, as is the

Deep River.

        On some date prior to April 1, 2004, Hobart requested a permit to construct a new

4.8 million gallon per day wastewater treatment plant. The proposed plant would allow it

to shut down the Nob Hill facility and disconnect from the Gary facility. On April 1,

2004, IDEM issued the requested National Pollutant Discharge Elimination System

Permit (“the Hobart permit”)1 granting Hobart permission to operate a new wastewater

treatment plant to be constructed along the Deep River.

        The permitted mercury limits for the proposed Hobart facility are a daily

maximum limit of 3.2 parts per trillion (“ppt”) and a monthly average of 1.3 ppt per day.

These limits are substantially less than the limits currently permitted at the Gary facility.

Because the new Hobart facility will not utilize combined sewer overflows, it would

completely avoid the discharge of untreated sewage.


1
 “The Federal Clean Water Act (“CWA”) prohibits ‘the discharge of any pollutant’ into ‘waters of the
United States’ without a permit. Similarly, Indiana state environmental law generally requires a permit to
discharge pollutants into ‘waters of the state.’” Ind. Dept. of Envtl. Mgmt. v. Twin Eagle, LLC, 798
N.E.2d 839 (Ind. 2003) (citing 327 Ind. Admin. Code 5–2–2 (2001) (“Any discharge of pollutants into
waters of the state as a point source discharge, . . . is prohibited unless in conformity with a valid NPDES
permit obtained prior to the discharge.”).

                                                     3
          Shortly after IDEM issued a permit for the construction of the Hobart facility,

Gary filed a petition for administrative review of the Hobart permit with the Indiana

Office of Environmental Adjudication. On January 19, 2010, the environmental law

judge issued its findings of fact, conclusions of law, and final order in favor of IDEM and

Hobart. The environmental law judge concluded that the mercury discharge limits in the

Hobart permit would result in an overall improvement in water quality, and IDEM’s

decision to issue the permit complied with applicable law.

          Gary then filed a verified petition for judicial review in Marion Superior Court.

After briefing and oral argument, the trial court issued its findings of fact and conclusions

of law on March 26, 2011. As is noted in the trial court’s findings and conclusions, the

paramount issue in this case is the parties’ interpretation of IDEM’s antidegradation

requirement for outstanding state resource waters (“OSRWs”)2 found in 327 Indiana

Administrative Code 5-2-11.7(a)(2):

          (2) For a new or increased discharge of a pollutant or pollutant parameter
          from a new or existing Great Lakes discharger into a tributary of an OSRW
          for which a new or increased permit limit would be required:
                 (A) section 11.3(a) and 11.3(b) of this rule (327 IAC 5-2-11.3) apply
                 to the new or increased discharge of a pollutant or pollutant
                 parameter into the tributary; and
                 (B) the discharge shall not cause a significant lowering of water
                 quality in the OSRW.
                 (C) The requirements of this subdivision will be considered to have
                 been met when:
                 (i) one (1) or more of the items listed in section 11.3(b)(1)(C)(i),
                 11.3(b)(1)(C)(ii), 11.3(b)(1)(C)(iii)(BB), 11.3(b)(1)(C)(iii)(FF), or
                 11.3(b)(1)(C)(iii)(II) of this rule (327 IAC 5-2-11.3) apply; or
                 (ii) all three (3) of the following are met:


2
    Lake Michigan is classified as an OSRW.

                                               4
                       (AA) one (1) or more of the subitems in section
                       11.3(b)(1)(C)(iii)(AA),
                       11.3(b)(1)(C)(iii)(CC),11.3(b)(1)(C)(iii)(EE),11.3(b)(1)(C)(iii
                       )(GG), 11.3(b)(1)(C)(iii)(HH), or 11.3(b)(1)(C)(iii)(LL) of
                       this rule (327 IAC 5-2-11.3) apply;
                       (BB) the applicant demonstrates that the increase is
                       necessary; and
                       (CC) the public notice requirements in subsection (c)(6) are
                       met; or
              (iii) all four (4) of the following are met:
                       (AA) one (1) or more of the subitems in section
                       11.3(b)(1)(C)(iii)(DD),11.3(b)(1)(C)(iii)(JJ),              or
                       11.3(b)(1)(C)(iii)(KK) of this rule (327 IAC 5-2-11.3) apply;
                       (BB) the applicant demonstrates that the increase is
                       necessary;
                       (CC) the applicant demonstrates that it will result in a net
                       environmental improvement; and
                       (DD) the public notice requirements in subsection (c)(6) are
                       met.
              (D) As used in this subdivision, “tributary of an OSRW” includes
              the upstream segments of a receiving waterbody when some or all of
              the downstream segments of the receiving waterbody are designated
              as an OSRW.

Throughout these proceedings, Gary has argued that subsections 11.7(a)(2)(A), (B), and

(C) must be read in the conjunctive, but IDEM and Hobart have argued that clause 2(C)

should be read independently of 2(A) and (B).

       The trial court affirmed the environmental law judge’s final order, and in doing so,

issued its own conclusions of law concerning the parties’ interpretations of the regulation.

Specifically, the court concluded:

       12. 327 IAC 5-2-11.7(a)(2) is written to ensure that the water quality of an
       OSRW is maintained and protected by applying certain requirements on
       new or increased discharges into the tributary of the OSRW. It states that
       for such discharges for which a new or increased permit limit would be
       required, clauses (A) and (B) will apply.
       13. The “and” between (A) and (B) clearly reflects that for such discharges
       for which a new permit limit would be required both (A) and (B) will apply.

                                             5
      There is no “and” connecting clauses (C) and (D) to clauses (A) and (B).
      Therefore, clauses (C) and (D) must be read independently of (A) and (B).
      14. 327 IAC 5-2-11.7(a)(2)(C) simply states that the requirements of
      subdivision (2) will be considered met by the items listed in clause (C).
      The items in clause (C) are not the exclusive means for meeting the
      requirements of subdivision (2). Clause (C) refers to subdivision (2), not to
      clause (B).
      15. IDEM and the [Environmental Law Judge] interpreted subdivision (2)
      to mean that a new discharge into a tributary of an OSRW for which a new
      permit limit would be required will have to satisfy clauses (A) and (B), or it
      can satisfy this rule by meeting the requirements listed in clause (C). The
      rule does not preclude IDEM from granting a new permit limit if clauses
      (A) and (B) are met independent of the items listed in clause (C).
      16. The [Environmental Law Judge] reasonably concluded that the express
      language of 327 IAC 5-2-11.7(a)(2)(C) supports IDEM’s interpretation.
      Clause (C) is stated in clear and unambiguous terms. Those terms do not
      state that clause (C) is the exclusive means by which to determine that 327
      IAC 5-2-11.7(a)(2) is met but that satisfying clause (C) is one way to meet
      the rule requirements.
      17. The [Environmental Law Judge] reasonably concluded that Gary’s
      “interpretation of 327 IAC 5-2-11.7(a)(2) would require stricter
      requirements for discharge into an OSRW tributary than for discharge
      directly into an OSRW, contrary to the express, clear terms of the
      applicable regulations . . . .“

Appellant’s App. pp. 13-14.

      The trial court also concluded that the Environmental Law Judge reasonably found

that the new wastewater treatment plant authorized in the Hobart Permit would comply

with more stringent standards than those limits established in the permit governing the

operation of the Gary facility as it processes its own wastewater and that of Hobart. And

the new Hobart wastewater treatment plant will divert Hobart’s raw sewage away from

Gary’s combined system, thereby preventing the release of Hobart’s raw sewage in the

effluent that Gary currently discharges during wet weather. Both the Environmental Law

Judge and the trial court ultimately concluded that Hobart’s construction of a new


                                            6
wastewater treatment plant will result in significant overall environmental benefit to Lake

Michigan.     Therefore, the trial court affirmed the Final Order of the Office of

Environmental Adjudication, and Gary now appeals. Additional facts will be provided as

necessary.

                                   Standard of Review

       Gary argues that the trial court erroneously affirmed IDEM’s decision to issue the

Hobart Permit. The Administrative Orders and Procedures Act governs judicial review

of an administrative action and is the exclusive means for judicial review of an agency

action. Ind. Code § 4-21.5-5-1. A trial court may provide relief from an administrative

decision only if the agency action is: (1) arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law; (2) contrary to constitutional right, power,

privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or

short of statutory right; (4) without observance of procedure required by law; or (5)

unsupported by substantial evidence. I.C. § 4-21.5-5-14. Importantly, our court grants

“‘deference to the administrative agency’s findings of fact, [but] no such deference is

accorded to the agency’s conclusions of law.’” Soames v. Ind. Dep’t of Natural Res., 934

N.E.2d 1154, 1158 (Ind. Ct. App. 2010), trans. denied (quoting LTV Steel Co. v. Griffin,

730 N.E.2d 1251, 1257 (Ind. 2000)).

        I. Interpreting 327 Indiana Administrative Code section 5-2-11.7(a)(2)

       When we interpret administrative regulations, our court applies the same rules of

construction that apply to statutes. Dev. Servs. Alts., Inc. v. Ind. Family & Social Servs.

Admin., 915 N.E.2d 169, 181 (Ind. Ct. App. 2009), trans. denied.

                                              7
       An interpretation of a statute by an administrative agency charged with the
       duty of enforcing the statute is entitled to great weight, unless this
       interpretation would be inconsistent with the statute itself . . . . Deference
       to an agency’s interpretation of a statute becomes a consideration when a
       statute is ambiguous and susceptible of more than one reasonable
       interpretation. When a court is faced with two reasonable interpretations
       of a statute, one of which is supplied by an administrative agency charged
       with enforcing the statute, the court should defer to the agency. If a court
       determines that an agency’s interpretation is reasonable, it should
       terminate its analysis and not address the reasonableness of the other
       party’s proposed interpretation. Terminating the analysis recognizes
       the general policies of acknowledging the expertise of agencies
       empowered to interpret and enforce statutes and increasing public reliance
       on agency interpretations. However, an agency’s incorrect interpretation of
       a statute is entitled to no weight. If an agency misconstrues a statute, there
       is no reasonable basis for the agency’s ultimate action and the trial court is
       required to reverse the agency’s action as being arbitrary and capricious.

Id. (quoting Pierce v. Ind. Dep’t of Correction, 885 N.E.2d 77, 89 (Ind. Ct. App. 2008))

(citations and quotation marks omitted and emphasis added).

       The threshold issue in this case is whether IDEM reasonably interpreted the

antidegradation requirement for OSRWs found in 327 Indiana Administrative Code 5-2-

11.7(a)(2):

       (2) For a new or increased discharge of a pollutant or pollutant parameter
       from a new or existing Great Lakes discharger into a tributary of an OSRW
       for which a new or increased permit limit would be required:
              (A) section 11.3(a) and 11.3(b) of this rule (327 IAC 5-2-11.3) apply
              to the new or increased discharge of a pollutant or pollutant
              parameter into the tributary; and
              (B) the discharge shall not cause a significant lowering of water
              quality in the OSRW.
              (C) The requirements of this subdivision will be considered to have
              been met when:
                     (i) one (1) or more of the items listed in section
                     11.3(b)(1)(C)(i), 11.3(b)(1)(C)(ii), 11.3(b)(1)(C)(iii)(BB),
                     11.3(b)(1)(C)(iii)(FF), or 11.3(b)(1)(C)(iii)(II) of this rule
                     (327 IAC 5-2-11.3) apply; or
                     (ii) all three (3) of the following are met:

                                             8
                             (AA) one (1) or more of the subitems in section
                             11.3(b)(1)(C)(iii)(AA),
                             11.3(b)(1)(C)(iii)(CC),11.3(b)(1)(C)(iii)(EE),11.3(b)(1
                             )(C)(iii)(GG),            11.3(b)(1)(C)(iii)(HH),     or
                             11.3(b)(1)(C)(iii)(LL) of this rule (327 IAC 5-2-11.3)
                             apply;
                             (BB) the applicant demonstrates that the increase is
                             necessary; and
                             (CC) the public notice requirements in subsection
                             (c)(6) are met; or
                    (iii) all four (4) of the following are met:
                             (AA) one (1) or more of the subitems in section
                             11.3(b)(1)(C)(iii)(DD),11.3(b)(1)(C)(iii)(JJ),        or
                             11.3(b)(1)(C)(iii)(KK) of this rule (327 IAC 5-2-11.3)
                             apply;
                             (BB) the applicant demonstrates that the increase is
                             necessary;
                             (CC) the applicant demonstrates that it will result in a
                             net environmental improvement; and
                             (DD) the public notice requirements in subsection
                             (c)(6) are met.
             (D) As used in this subdivision, “tributary of an OSRW” includes
             the upstream segments of a receiving waterbody when some or all of
             the downstream segments of the receiving waterbody are designated
             as an OSRW.

      When IDEM issued the Hobart Permit, it applied only subsections 11.7(a)(2)(A)

and (B) and determined that the Hobart Permit met those requirements. IDEM declined

to apply subsection 11.7(a)(2)(C) and argues that clause (C) should be read independently

of clauses 2(A) and (B). Under IDEM’s interpretation of the regulation, satisfying clause

(C) is simply one of two ways to meet the regulation’s requirements.

      IDEM’s interpretation is consistent with the plain language of the regulation.

Clauses (A) and (B) are connected by an “and.”           Therefore, a “new or increased

discharge of a pollutant” for which a new or increased permit limit would be required

must comply with both clauses (A) and (B) of the regulation if applied. There is no

                                            9
conjunctive language connecting clauses (A) and (B) to clause (C). And clause (C)’s

opening phrase, i.e. “[t]he requirements of this subdivision will be considered to have

been met when,” implies that the requirements of the subdivision may be satisfied by

other means particularly in the absence of any language stating that clause (C) is the

exclusive means to determine whether the requirements of subdivision 11.7(a)(2) are met.

      In addition, in this particular case, the antidegradation factors cited in clause (C)

do not apply to the Hobart Permit’s mercury discharges.             Clause (C) cites to

antidegradation factors listed in 327 Indiana Administrative Code 5-2-11.3(b).         But

section 11.3(b) applies only to “high quality waters that are not designated as an” OSRW.

Because the Deep River is not a “high quality water” to begin with, due to existing levels

of mercury pollution, section 11.3(b) is inapplicable to the Hobart Permit. Because the

requirements of subdivision 11.7(a)(2)(C) can only be satisfied by applying the

specifically cited antidegradation factors enumerated in section 11.3(b), it would be

impossible to apply clause (C) to the Hobart Permit. Therefore, it was reasonable for

IDEM to conclude that it could satisfy subdivision 11.7(a)(2) by meeting the

requirements of clauses (A) and (B) in its consideration of whether to award the Hobart

Permit.

      Ultimately, IDEM concluded that it must, at a minimum, satisfy subdivision

11.7(a)(2) by meeting the requirements of clauses (A) and (B) or by meeting the

requirements in clause (C). Because we conclude that IDEM’s interpretation of 327

Indiana Administrative Code 5-2-11.7(a)(2) is reasonable, we conclude our analysis and



                                           10
need not address the reasonableness of Gary’s proposed interpretation. See Dev. Servs.

Alts., Inc., 915 N.E.2d at 181.

                                  II. The Hobart Permit

       Gary also argues that even if IDEM’s interpretation of 327 Indiana Administrative

Code subdivision 5-2-11.7(a)(2) is reasonable, its decision to issue the Hobart Permit

“violated antidegradation regulations” and “will cause a significant lowering of water

quality” in violation of 327 Indiana Administrative Code sections 5-2-11.3(a) and 5-2-

11.7(a)(2). Appellant’s Br. at 30, 35. Specifically, Gary argues that its own permitted

mercury discharges into an OSRW remain unchanged, and therefore, once Hobart begins

discharging mercury from its new wastewater treatment plant “there will be a significant

increase of permitted mercury discharges into Lake Michigan[.]” Id. at 30.

       Before we specifically consider Gary’s argument, we observe that, within the

language at issue, “degradation” means:

       (1) With respect to an outstanding national resource water, any new or
       increased discharge of a pollutant or a pollutant parameter, except for a
       short term, temporary increase.
       (2) With respect to an outstanding state resource water, any new or
       increased discharge of a pollutant or pollutant parameter that results in a
       significant lowering of water quality for that pollutant or pollutant
       parameter, unless:
               (A) the activity causing the increased discharge:
                      (i) results in an overall improvement in water quality in the
                      outstanding state resource water; and
                      (ii) meets the applicable requirements of 327 IAC 2-1-2(1)
                      and (2) and 327 IAC 2-1.5-4(a) and (b)[.]




                                           11
Ind. Code § 13-11-2-50.5 (2009). Moreover, the Water Pollution Control Board3 is

required to promulgate rule procedures that will “prevent degradation” and

        allow for increases and additions in pollutant loadings from an existing or
        new discharge if:
              (A) there will be an overall improvement in water quality for the
              outstanding state resource water as described in this section; and
              (B) the applicable requirements of 327 IAC 2-1-2(1) and 327 IAC 2-
              1-2(2) and 327 IAC 2-1.5-4(a) and 327 IAC 2-1.5-4(b) are met.

I.C. § 13-18-3-2(k) (2009).

                    A. 327 Indiana Administrative Code section 5-2-11.3(a)

        Consistent with these statutory mandates, in its issuance of the Hobart Permit,

IDEM was required to comply with the regulations set forth in 327 Indiana

Administrative Code section 5-2-11.3(a) and (b) and establish that the new discharge

would “not cause a significant lowering of water quality in the OSRW.” See 327 I.A.C. §

5-2-11.7. As we noted above, section 5-2-11.3(b) applies only to “high quality waters

that are not designated as an outstanding state resource water.” Due to existing levels of

mercury pollution, the Deep River, which empties into an OSRW, is not considered a

high quality water. Therefore, only subsection 11.3(a) applies to our consideration of the

Hobart Permit.

        327 Indiana Administrative Code section 5-2-11.3(a) applies to all waters in the

Great Lakes system4 and provides in pertinent part:


3
  The Water Pollution Control Board operates under IDEM’s umbrella but “with separate and distinct
statutory authority. The [Board] in particular is assigned the duties of adopting rules ‘for the control and
prevention of pollution’ in Indiana’s waters.” Twin Eagle, 798 N.E.2d at 845 (citing I.C. § 13-18-3-1).
4
 Indiana’s antidegradation policy, which is partially implemented by 327 Indiana Administrative Code
section 5-2-11.3, provides:

                                                    12
        the commissioner shall ensure that the level of water quality necessary to
        protect existing uses is maintained. In order to achieve this requirement,
        and consistent with 40 CFR 131.10, water quality standards use
        designations must include all existing uses. Controls shall be established as
        necessary on point and nonpoint sources of pollutants to ensure that the
        criteria applicable to the designated use are achieved in the water and that
        any designated use of a downstream water is protected. Where water
        quality does not support the designated uses of a waterbody or ambient
        pollutant concentrations are greater than water quality criteria applicable to
        that waterbody, the commissioner shall not allow a lowering of water
        quality for the pollutant or pollutants that prevents the attainment of such
        uses or the water quality criterion.

        The environmental law judge specifically found that IDEM’s determination that

the Hobart Permit met regulations enumerated in 327 Indiana Administrative Code

section 5-2-11.3(a) was supported by the guidance provided by the Environmental

Protection Agency (“EPA”) for new discharges into an impaired water in that agency’s

Supplementary Information Document.

        IDEM interpreted 327 IAC 5-2-11.3(a)’s “lowering of water quality” in
        conformation with [the] EPA’s view that a wasteload allocation set equal to
        the most stringent criterion applied “end-of-pipe” is permissible. “End-of-
        pipe” criteria provide no mixing zone for dilution, will contain a lower
        concentration of the pollutant than the receiving water, and will thus not
        increase a waterway’s pollutant concentration, if not cause the
        concentration to decrease.

Appellant’s App. p. 289.




        For all surface waters of the state within the Great Lakes system, existing instream water
        uses and the level of water quality necessary to protect existing uses shall be maintained
        and protected. Where designated uses of the waterbody are impaired, there shall be no
        lowering of the water quality with respect to the pollutant or pollutants that are causing
        the impairment.
327 I.A.C. § 2-1.5-4(a).

                                                    13
       The environmental law judge’s finding is consistent with the EPA’s Water Quality

Guidance for the Great Lakes System: Supplementary Information Document (hereinafter

“the SID”). Specifically, the SID provides in pertinent part:

       . . . [The] EPA believes that limiting discharges from point sources to
       criteria end-of-pipe is nonetheless appropriate in these circumstances, as
       discussed below.
               Numeric criteria are concentration-based standards designed to
       protect the aquatic ecosystem and humans from the adverse affects of
       pollutant discharges that would occur at levels above the criteria. Where
       the background level of the pollutant in the receiving water is greater than
       the criteria, the stream is in non-attainment and the aquatic environment or
       human health is adversely impacted. A point source discharging at criteria
       end-of-pipe in such situations, however, will contain a lower concentration
       of the pollutant than the receiving water, and therefore will not increase the
       pollutant concentration in the waterway. Such a discharge may, in fact,
       cause the ultimate pollutant concentration in the receiving water to decrease.
       Where the environmental effects of a pollutant on the aquatic ecosystem or
       on human health are associated with the concentration of the pollutant in
       the waterway, limiting discharges from point sources to criteria end-of-pipe
       in these circumstances should therefore result in no further degradation of
       the waterbody, and may in fact improve the water quality of the
       waterbody. . . . The Agency therefore believes that establishing limits on
       point sources under these circumstances at criteria end-of-pipe is consistent
       with the underlying environmental objectives of the [Clean Water Act].

Id. at 107.

       Although the SID also states that “special environmental considerations are

present with regard to bioaccumulative [persistent] compounds,” which would include

mercury discharges, the EPA has authorized the permitting authority to “require more

stringent limitations than criteria end-of-pipe in order to provide a requisite level of

protection” Id.   Gary argues therefore that “IDEM should have considered additional

means to limit new mass discharges of BCCs into an impaired waterbody such as Deep

River, but failed to do so in this case.” Appellant’s Br. at 39. But there is no evidence in

                                            14
the record establishing whether there were “additional means” available to IDEM to limit

new mass discharges of mercury into the Deep River. And in the SID, the EPA does not

require the permitting authority to apply further limitations to address mass loading, but

leaves that decision to the permitting authority’s discretion. Appellant’s App. p. 107.

Therefore, although IDEM could have imposed an end-of-pipe limit more stringent than

the 1.3 ppt wildlife criterion to specifically address mercury as a bioaccumulative

chemical of concern, it was not explicitly required to do so.

        IDEM’s decision to issue the Hobart Permit with an end-of-pipe limit of 1.3 ppt

wildlife criterion is consistent with the guidance provided by the EPA in the SID because

applying the stringent end-of-pipe criteria for measuring mercury concentrations will

result in the addition of mercury to the Deep River at a concentration lower than that of

the receiving water.5 For all of these reasons we conclude that the limits established in

the Hobart Permit will not lower the water quality in the Deep River, and therefore does

not run afoul of section 5-1-11.3(a).

                B. 327 Indiana Administrative Code section 5-2-11.7(a)(2)(B)

        Gary also argues that “the new mercury discharge allowed under the Hobart

Permit will cause a significant lowering of water quality in violation of” the anti-


5
  Gary argues that the section of the SID discussed above does not support IDEM’s arguments “because
that section does not relate to antidegradation.” Appellant’s Br. at 37. Contrary to Gary’s assertion,
application of that section of the SID is relevant to determining whether the new discharge of mercury
into the Deep River will result in a significant lowering of water quality. Because the environmental law
judge correctly determined that issuance of the Hobart Permit will not result in a lowering of water
quality, but will result in a significant overall environmental benefit, an antidegradation analysis is not
required. Only section 5-2-11.3(b) requires an anti-degradation analysis before an action causing a
“significant lowering of water quality occurs.” But as we have previously held, section 11.3(b) does not
apply in the case before us.

                                                    15
degradation rule enumerated in 327 Indiana Administrative Code section 5-2-

11.7(a)(2)(B). See Appellant’s Br. at 32.

        (2) For a new or increased discharge of a pollutant or pollutant parameter
        from a new or existing Great Lakes discharger into a tributary of an OSRW
        for which a new or increased permit limit would be required: . . . (B) the
        discharge shall not cause a significant lowering of water quality in the
        OSRW.

        To determine whether issuance of the Hobart Permit violates section 11.7(a)(2)(B),

IDEM applied its 1998 Nonrule Policy Document,6 which provides guidance as to what

constitutes a “significant lowering of water quality.” The document states in pertinent

part:

        A new or increased discharge into a tributary of Lake Michigan will not
        cause a significant lowering of water quality in Lake Michigan if any of the
        following are met: . . . The new or increased discharge into a tributary of
        Lake Michigan is the result of an activity that will result in a significant
        overall environmental benefit to Lake Michigan.

Appellant’s App. p. 305.

        With this standard in mind, IDEM presented evidence that the new discharge of

mercury was the result of an activity that would result in a significant overall

environmental benefit to Lake Michigan. First, we observe that the Hobart Permit’s

effluent limits for mercury are lower than the existing or ambient levels of mercury in the

waterbody. Further, IDEM and the City of Hobart established that the new wastewater

treatment plant will treat mercury discharge significantly more effectively than it is


6
 We reject Gary’s argument that the Nonrule Policy document was no longer valid after 327 Indiana
Administrative Code 5-2-11.7(a) was amended to add clause 5-2-11.7(a)(2)(C). IDEM’s use of the
document was proper as its contents were superseded only to the extent that it conflicts with 11.7(a)(2)(C),
which IDEM appropriately did not apply in its decision to issue the Hobart Permit.

                                                    16
currently treated at Hobart’s aging Nob Hill plant or at the Gary wastewater treatment

plant.

         We may reasonably assume, absent contrary evidence in the record, that Gary’s

mercury discharges will decrease when Hobart’s sewage is no longer treated at Gary’s

wastewater facility. But Gary suggests that it might add new sources of wastewater after

it ceases treating Hobart’s wastewater. Gary correctly observes that if Gary continues to

discharge mercury at its current permit limits, i.e. a monthly average of 30 ppt, the

additional mercury discharge allowed from the Hobart wastewater treatment plant will

increase the amount of mercury discharged into the OSRW, i.e. Lake Michigan. This

would result in a lowering a water quality, but only as it pertains to the amount of

mercury discharged into the OSRW and its tributaries.

         Even though Gary may continue to discharge mercury at its current permit limits,

the environmental law judge concluded that the Hobart Permit will result in significant

overall environmental benefit to the OSRW, and the evidence supports that conclusion.

In addition to treating mercury discharge more effectively, construction of Hobart’s new

wastewater treatment facility will allow the city to close the Nob Hill wastewater

treatment plant, a facility that has consistently not met its permit obligations.7 And


7
  Gary argues that IDEM’s argument concerning the closure of the Nob Hill facility was a post hoc
agency rationalization because IDEM “did not raise this reasoning in support of the Hobart Permit at the
time of its issuance.” Appellant’s Br. at 33. We disagree. Closure of the Nob Hill facility was referenced
in the Hobart Permit. Appellant’s App. p. 155. Further, IDEM necessarily discussed the benefits of
closing the Nob Hill facility before the Environmental Law Judge because her findings of facts and
conclusions of law specifically discuss the Nob Hill facility, and its closure and accompanying beneficial
environmental impact are cited as reasons for sustaining IDEM’s decision to issue the permit. For these
reasons, we conclude that citing the closure of the Nob Hill facility to support IDEM’s decision to issue
the permit was not a post hoc agency rationalization. See Dev. Servs. Alts., Inc., 915 N.E.2d at 184
                                                   17
Hobart’s raw sewage will no longer utilize Gary’s combined sewer overflows, which will

avoid the discharge of untreated sewage during wet weather. The discharge of untreated

sewage releases pollutants such as mercury, E. Coli, copper, and ammonia-nitrogen into

the waterways. The issued permit will require the new Hobart wastewater treatment plant

to apply more stringent standards when treating sewage than the standards in effect at

Gary’s facility.

                                              Conclusion

        We conclude that IDEM’s decision to issue the Hobart Permit was neither

arbitrary nor capricious, and that the decision was in accordance with the law and

supported by substantial evidence.               First, IDEM’s interpretation of 327 Indiana

Administrative Code section 5-2-11.7(a)(2) was reasonable in that it only required Hobart

to comply with subdivision 11.7(a)(2)(A) and (B), but not 11.7(a)(2)(C), in its decision to

issue the Hobart Permit. And, although the Hobart Permit allows a new source for

discharge of mercury, because Hobart will be able to close its non-compliant Nob Hill

Plant and treat its wastewater more effectively than it is currently treated by Gary’s

facility, the Hobart Permit will result in an overall environmental benefit to and will not

cause a significant lowering of water quality in Lake Michigan and its tributary, the Deep

River. Therefore, IDEM’s decision to issue the Hobart Permit does not violate the

regulations set forth in 327 Indiana Administrative Code sections 5-2-11.3(a) and

11.7(a)(2)(A) and (B).


(stating “that it is the reviewing court, and not the administrative agency, that is barred from considering
post hoc rationalizations”).

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      Affirmed.

FRIEDLANDER, J., and RILEY, J., concur.




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