## Facts

- Puerto Rico Sun Oil Co. operated a petroleum refinery in Puerto Rico and sought renewed authorization to discharge effluent to coastal waters.
- The Clean Water Act required Sun to obtain (1) a Puerto Rico § 401 water quality certification and (2) an EPA-issued NPDES permit; Puerto Rico is treated as a “state” for these purposes.
- Sun historically relied on a “mixing zone” approach, allowing compliance with water quality standards to be measured after initial dilution rather than strictly at the discharge pipe.
- After a prolonged administrative process, Puerto Rico issued an initial § 401 certification that omitted any express mixing-zone provision, leaving unclear whether the omission reflected a policy change or error.
- Sun requested clarification and possible revision; Puerto Rico indicated it was reviewing mixing-zone policy and might revise the certification, and it communicated this to EPA.
- EPA issued the NPDES permit tracking the initial state certification and omitted any mixing-zone provision.
- After permit issuance, Puerto Rico revised Sun’s certification to allow mixing-zone measurement.
- Sun asked EPA to modify the NPDES permit to reflect the revised certification; EPA refused, and Sun petitioned for judicial review.

## Issues

1. Whether EPA lawfully refused to modify an NPDES permit to incorporate a later revised § 401 certification allowing mixing-zone measurement.
2. Whether the Clean Water Act’s allocation of water-quality authority to the “state” required EPA, absent adequate grounds, to conform the federal permit to the revised certification.
3. Whether EPA’s refusal was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

## Decision

- The First Circuit granted the petition in substantial part and set aside EPA’s refusal to revise the permit.
- The court remanded to EPA to reconsider the permit in light of Puerto Rico’s revised § 401 certification.
- The court held that EPA could not disregard the revised certification without a legally sufficient, reasoned explanation supported by the record.

## Legal Principles

- Section 401 certifications are central to the Clean Water Act’s state role in setting and implementing water quality requirements; Puerto Rico’s certification functions as a state certification.
- EPA generally must incorporate and respect valid state certification conditions in an NPDES permit unless federal law provides a basis to reject or depart from them.
- EPA may impose more stringent requirements than a state certification in principle, but any departure must be justified through reasoned decision-making and record support.
- Under arbitrary-and-capricious review, an agency must explain why it maintains a permit position that conflicts with a clarified and revised state certification, particularly where the agency was aware the state position was under review.

## Conclusion

The First Circuit required EPA to revisit an NPDES permit when Puerto Rico revised its § 401 certification to allow a mixing zone, holding that EPA’s refusal to modify the permit lacked an adequate, reasoned justification and therefore required remand for reconsideration consistent with the revised state certification or a lawful explanation for departing from it.


P.R. Sun Oil Co. v. U.S. Env't Prot. Agency, 3 F.3d 73 (1st Cir. 1993)