Full opinion text
REVISED OPINION SOFAER, District Judge. The City of New York dumps approximately 260 dry tons of sewage sludge each day into an area of the ocean known as the New York Bight Apex. The material dumped is the product of primary and secondary treatment of the City’s sewage at various municipal sewage treatment facilities. The dumping is authorized by an interim permit issued by the Environmental Protection Administration (“EPA”). That permit requires the City to devise and implement an alternative method of disposal by December 31, 1981. At EPA’s behest, the City has developed a two-stage plan for alternative disposal of sewage sludge. As a short-term alternative to ocean dumping, the City proposes to compost the sludge (together with bulking material) and to spread the materials as ground cover and fill on various landsites throughout the City. The supply of such land is limited, however, and the City will therefore need to implement a long-term alternative by 1988 or 1989. No long-term alternative has yet been devised, although the City’s consultants are now preparing recommendations. The City contends that the adverse consequences and costs of the short-term land disposal scheme greatly exceed the effects of continued dumping in the heavily polluted Bight, and it has urged EPA to renew its interim permit. EPA, however, has refused to hear the City’s contentions, and the City has brought this lawsuit to compel EPA to consider its evidence. The agency contends that, in a 1977 amendment of the Marine Protection, Research and Sanctuaries Act of 1972, 33 U.S.C. §§ 1401-1444 (the “Act”), Congress absolutely barred all ocean dumping after December 31, 1981 of sewage sludge found harmful to the marine environment. The City, on the other hand, argues that Congress has barred only that dumping which “unreasonably” degrades the marine environment, and that in determining whether particular dumping is unreasonable, EPA must evaluate the cost and potential hazards of land-based alternatives and the effects of the proposed dumping upon the particular dump site. The City has adduced considerable evidence that its dumping in the Bight has relatively inconsequential effects; that cessation of the dumping would result in no discernible improvement in the Bight in the foreseeable future; that the interim land disposal plan would be extremely costly (over $200 million) and could only be used for about eight years; and that the interim land-based plan poses its own environmental and health hazards, which might later prove to be far more deleterious than the known and potential hazards of the ocean dumping. EPA concedes that, under the 1972 Act, it was required to consider the relative consequences of ocean and land-based disposal in formulating the criteria by which permits would be issued; but it contends that it was not required to consider those factors in evaluating individual permit applications. The Agency claims that, prior to 1977, it was free to adopt criteria pursuant to which a permit application was automatically denied — irrespective of all other considerations — if the particular sludge failed certain bioassay tests. Since 1977, EPA argues, it is required to apply the statute in this manner, because in adopting the 1977 amendment, Congress embodied EPA’s approach in a statutory command. The language and history of the 1972 Act, however, demonstrate that EPA’s interpretation of the statute is wrong. The Act as originally adopted required EPA to consider, in connection with each application for dumping, whether that particular dumping would unreasonably degrade the marine environment in light of a number of factors, including those pressed by the City. EPA could not lawfully adopt a policy of denying all permits without examining and weighing an applicant’s evidence that ocean dumping is the most reasonable alternative. The 1977 amendment to the Act provides little support for EPA’s present position; it prohibits only unreasonable dumping, without providing any substitute for the definition of “unreasonable” provided in the original statute. Although Congress might be empowered to order an end to all ocean dumping, in this case the amendment is properly construed to prevent the issuance of permits only for dumping that EPA in fact finds is unreasonable. The Agency’s conclusive presumption that materials that fail to satisfy the environmental impact criteria will unreasonably degrade the environment is arbitrary and capricious, and not in accordance with the governing statute. I. JURISDICTION TO CHALLENGE EPA’S POLICY A challenge to an agency’s refusal to act, standing alone, could pose serious jurisdictional problems. In this case, however, EPA has made clear in its regulations and dealings with the City that it will not grant any type of permit for sludge dumping after December 31, 1981. In October 1979, the City asked EPA for an interim permit with a target date of sometime in the late 1980’s for implementing a land-based alternative. Although the City was confident that it could meet the 1981 deadline, it feared the environmental consequences of the alternative disposal plan. It contended, moreover, that the 1981 deadline should not be applied to the City’s sludge, because the volume being dumped did not unreasonably degrade the New York Bight. See Affidavit of J. Kevin Healy (General Counsel, New York City Department of Environmental Protection), Exhibit D, at 3-5. On November 1, 1979, the Hearing Officer recommended issuance of an interim permit until December 31,1981 and suggested that, because the dumping appeared not to degrade the ocean environment unreasonably, a further extension should be granted if necessary. Id., Exhibit E. The EPA Staff objected to the Hearing Officer’s recommendation, contending that the Act barred all dumping that failed to comply with the criteria. Id., Exhibit F. On March 13, 1980, without commenting on the City’s request for an extension, the Regional Administrator issued an interim permit with a December 31, 1981 deadline. The City again requested an extension of the 1981 deadline on March 24,1980, in an application for certain technical modifications, and on June 27, 1980 the City petitioned the Administrator to commence proceedings to amend the ocean dumping criteria so that the City could dump beyond the deadline. No action has been taken on the application, and EPA has sought no delay in this litigation to enable it to pass upon the City’s petition. At the same time that it brought this suit, the City filed a new application for permission to dump after 1981. EPA has not sought to defer a judicial ruling on the Agency’s interpretation, indicating its resolve prior to January 1981 to deny the City’s application. See id. ¶ 6 (“[EPA] officials have been unanimous in their view that the EPA cannot legally issue an ‘interim’ ocean dumping permit” for dumping after 1981). Accordingly, the doctrines of primary jurisdiction and exhaustion of administrative remedies do not bar this lawsuit. See Diapulse Corp. v. FDA, 500 F.2d 75, 77 (2d Cir. 1974); Wolff v. Selective Service Local Board No. 16, 372 F.2d 817, 825 (2d Cir. 1967); Mobil Oil Corp. v. Department of Energy, 469 F.Supp. 1119, 1123-24 (S.D.N.Y.1979). Here, as in Connecticut v. EPA, 656 F.2d 902 at 905-06 (2d Cir. 1981), “[t]o defer the exercise of our jurisdiction until such time as EPA renders its final decision on those petitions would thus effectively moot this entire dispute.” The only jurisdictional argument made by EPA is its rather casually advanced suggestion that the City should be estopped from challenging the regulations. The City, EPA contends, has had notice of the 1981 deadline since 1977 and has accepted EPA funds to achieve compliance. Furthermore, the City has filed the necessary plans and has indicated that it is ready to comply with the first stage of its planned alternative. This suit, the Agency claims, is a last-minute attempt to delay or thwart a long-term commitment. Defendant’s Memorandum at 27 n. *. No basis exists in this case for an estoppel. The City has made no misrepresentations. It has always opposed EPA’s interpretation of the 1972 Act. The City did not attack the Agency’s regulations pri- or to this lawsuit because, despite EPA’s refusal to issue the City a special permit, the City annually received interim permits. Moreover, as counsel for the City explained at oral argument, the City did not file suit earlier because it genuinely expected to be able to develop acceptable alternatives before the 1981 deadline; the dangers of the composting scheme were not immediately evident and necessitated additional studies. The full cost of the City’s first phase only recently became known with accuracy. Data concerning the relative safety with which the City could continue dumping in the near future have become available only within the last few years, and the City contends that the most recent evidence indicates that its dumping has a minimal adverse effect at the approved disposal site. Only recently has it become apparent that an acceptable long-term alternative may presently be unavailable. EPA has long been aware of the City’s opposition to the Agency’s interpretation; it cannot claim to have detrimentally relied upon the City’s forbearance from suit. The Agency’s only suggestion of injury is that the City has accepted and spent federal funds to implement the disposal program that it now seeks to abandon. According to the responsible EPA official, however, only $6 million in federal grants have been spent for planning and design. Another $25 million have been contractually committed, but not irrevocably. Nearly $180 million in grants are as yet uncommitted. Affidavit of Leonard J. Romino (Chief, Eastern Section, New York Water Programs Branch, EPA Region II). Under these circumstances, the City cannot be estopped on the ground that it has wasted federal funds. The funds already spent enabled the City to appraise its first-phase plan in detail. Although some funds had to be committed early in the planning process, the great bulk of the planned expenditures have not been made. EPA’s position — that it would be better to spend at least an additional $180 million, even if that expenditure would be environmentally unsound, than to sacrifice the relatively small amount (at most $31 million) already committed — is untenable and irresponsible. Indeed, literally billions of dollars in public funds are at stake in this litigation, since Westchester and Nassau Counties have suits before this Court concerning the same basic issue presented by the City’s complaint. The combined cost, over time, of depriving these three entities of access to the ocean for sludge dumping renders insignificant the funds spent to date in studying alternatives to ocean disposal. II. THE 1972 ACT’S PROHIBITION OF UNREASONABLE DUMPING A. The Statutory Language Prior to 1972, the United States had no law that comprehensively controlled the dumping of wastes into the ocean. A 1970 report by the Council on Environmental Quality focused public attention on the dangers of unregulated ocean dumping. In response to that concern, Congress adopted the Marine Protection, Research and Sanctuaries Act, Pub.L. 92-532, 86 Stat. 1052 (1972). The stated purpose of the Act is “to prevent or strictly limit the dumping into ocean waters of any material which would adversely affect human health, welfare, or amenities, or the marine environment, ecological systems, or economic potentialities.” 33 U.S.C. § 1401(b). Rather than proscribing all ocean dumping, the Act uses a permit system: dumping is prohibited except as authorized by permit. Id. § 1411. The Act authorizes the Administrator of EPA to issue permits for the dumping of nondredged materials “where the Administrator determines that such dumping will not unreasonably degrade or endanger human health, welfare, or amenities, or the marine environment, ecological systems, or economic potentialities.” Id. § 1412(a). The test for whether ocean dumping may continue or must cease, therefore, is whether it will unreasonably degrade the marine environment. The decision in individual cases is to be made by the Administrator, but Congress did not grant unfettered discretion in defining the statutory test. The Act requires applications for permits to be reviewed and evaluated in accordance with criteria based upon all relevant considerations: [T]he Administrator may issue permits ... for the dumping of material into the waters described in section 1411(b) of this title, where the Administrator determines that such dumping will not unreasonably degrade or endanger human health, welfare, or amenities, or the marine environment, ecological systems, or economic potentialities. The Administrator shall establish and apply criteria for reviewing and evaluating such permit applications, and, in establishing or revising such criteria, shall consider, but not be limited in his consideration to, the following: (A) The need for the proposed dumping. (B) The effect of such dumping on human health and welfare, including economic, esthetic, and recreational values. (C) The effect of such dumping on fisheries resources, plankton, fish, shellfish, wildlife, shore lines and beaches. (D) The effect of such dumping on marine ecosystems, particularly with respect to— (i) the transfer, concentration, and dispersion of such material and its byproducts through biological, physical, and chemical processes, (ii) potential changes in marine ecosystem diversity, productivity, and stability, and (iii) species and community population dynamics. (E) The persistence and permanence of the effects of the dumping. (F) The effect of dumping particular volumes and concentrations of such materials. (G) Appropriate locations and methods of disposal or recycling, including land-based alternatives and the probable impact of requiring use of such alternate locations or methods upon considerations affecting the public interest. (H) The effect on alternate uses of oceans, such as scientific study, fishing, and other living resource exploitation, and nonliving resource exploitation. (I) In designating recommended sites, the Administrator shall utilize wherever feasible locations beyond the edge of the Continental Shelf. Id. § 1412(a). The controlling language in this section is that, “in establishing or revising” criteria for evaluating permit applications, the Administrator “shall consider, but not be limited in his consideration to, the following [nine factors].” Id. This provision is mandatory: the Administrator “shall” — not “may” — consider the enumerated factors. By its terms, section 1412(a) appears to impose upon EPA a balancing requirement. The section proscribes, not all dumping, but rather only such dumping as unreasonably endangers the environment. The term “reasonable” inherently connotes a weighing of all the relevant circumstances. By enumerating several factors that inevitably conflict — such as the need for dumping and its effect upon the environment — and requiring the Administrator to consider them, the Act forces EPA to balance the statutory factors. Cf. Industrial Union Department, AFL-CIO v. American Petroleum Institute, 448 U.S. 607, 667-71, 100 S.Ct. 2844, 2876-79, 65 L.Ed.2d 1010 (1980) (Powell, J., concurring in part); Appalachian Power Co. v. Train, 620 F.2d 1040, 1046 (4th Cir. 1980); D. D. Bean & Sons Co. v. Consumer Product Safety Commission, 574 F.2d 643, 649 (1st Cir. 1978); Aqua Slide ‘N’ Dive Corp. v. Consumer Product Safety Commission, 569 F.2d 831, 844 (5th Cir. 1978); Appalachian Power Co. v. Train, 545 F.2d 1351, 1364 (4th Cir. 1976). B. The Legislative History The debate over the Act’s adoption strongly supports the two propositions suggested by the statutory language: (1) that the Act banned, not all ocean dumping, but only such dumping as on balance is unreasonably harmful; and (2) that EPA must establish criteria that lead the Agency to consider the statutory factors on a case-by-case basis. With respect to the first proposition, the Senate Report explained: [A]s emphasized by various professional witnesses from the waste management field, all ocean dumping need not be banned outright. Ocean dumping of selected types of wastes is permissible and may be quite desirable.... [As one consultant stated:] “If we can recognize the ocean’s ability to accept enormous volumes of waste, then the key decision is simplified. It becomes what type of waste can we put into the sea safely and what must be disposed of elsewhere.... There is a need to recognize in the bill that . . . the wastes assimilative capacity of the sea is enormous.” Senate Report No. 92-451, 92d Cong., 1st Sess. (1971), reprinted in [1972] U.S.Code Cong. & Ad.News 4234, 4239 [hereinafter cited as 1972 Senate Report], The legislative history reflects a recognition that some areas of the ocean are well-suited for waste disposal, and that in some cases no appropriate alternatives to ocean dumping would be available. When Congress sought to ban certain types of dumping absolutely, it did so expressly. With respect to other types of material, Congress conditioned the ban on an overall evaluation of the environmental consequences. As Representative Dingell (Chairman of the Subcommittee on Fisheries and Wildlife Conservation and a floor manager of the bill) stated: “Section 102 provides general authority to the Environmental Protection Agency to issue permits ... where permit applicants show him that the environmental and economic impact of that dumping will not be unreasonably harmful.” 117 Cong. Rec. 30,851-52 (1971) (emphasis added). Similarly, Representative Harrington had proposed that the bill ban absolutely “dumping of any material which would damage the environment”; but he conceded that Congress preferred the less stringent standard of “unreasonably degrades.” 117 Cong.Rec. 31,155 (1971). Key legislators viewed the bill as requiring a balancing of competing interests. Representative Garmatz, Chairman of the Committee on Merchant Marine and Fisheries, stated that the bill “attempts to guard against over-reaction to pollution problems by establishing a sensible and essential balance between the need to protect our environment and the need to maintain and promote industrial and economic development.” 117 Cong.Rec. 30,856 (1971). Accord, id. at 36,045 (remarks of Rep. Downing). Representative Lennon, Chairman of the Subcommittee on Oceanography, after reviewing the statutory criteria in section 1412(a), concluded: “the result is a reasonable balance between the demonstrated needs to protect our marine environment, and the economic needs of our domestic and foreign water commerce.” 117 Cong.Rec. 30,857 (1971). The second proposition that emerges from the legislative history is that EPA must seek to achieve the requisite balance in establishing or revising the statutory criteria. The Agency itself explained in a section-by-section analysis of the legislation prior to adoption that: In establishing or revising the criteria, the Administrator is required to consider the likely impact of the proposed dumping along with alternative locations and methods of disposal, including those based on land, the probable impact of using such alternatives on considerations affecting the public interest, and the probable impact of issuing or denying permits on such considerations. 1972 Senate Report, U.S.Code Cong. & Admin.News 1972, at 4256; House Report No. 92-361, 92d Cong., 1st Sess. 33 (1971) [hereinafter cited as 1972 House Report]. The manner in which EPA phrased the factors that it would be “required to consider” indicates that these factors would be meaningfully incorporated into the criteria, not merely mentioned and then ignored. The factors referred to by EPA, moreover, could not meaningfully be applied in advance to all cases. The Interior Department’s analysis of the legislation similarly reflected the Administration’s view that the bill required consideration of these factors (when applicable) in the actual decision on permit applications, not merely in promulgating the regulations. The final committee reports from both houses of Congress also adopted this understanding of section 1412. The Senate Commerce Committee stated: In order to make the determination [as to whether the proposed dumping will unreasonably degrade the marine environment], the Administrator is required to establish and apply certain criteria for reviewing and evaluating permit applications .... The criteria as established or revised must take into account, but need not be limited to, the need for the proposed dumping, the effect of such dumping on human health and welfare, .. . and the effect of dumping on marine ecosystems (including marine plant life), as well as the persistence and permanence of the effects, the effect of particular volumes and concentrations of materials, an evaluation of appropriate alternative locations and methods of disposal or recycling, the effect on other uses of the oceans, and the possible effects of denying a requested permit. 1972 Senate Report at, U.S.Code Cong. & Admin.News 1972, 4246 (emphasis added). The House Committee on Merchant Marine and Fisheries similarly viewed the statutory factors as obligatory upon EPA: “In determining whether to approve a permit application, the Administrator would be required to consider (1) the impact of dumping on the marine environment and human welfare and (2) other possible locations and methods of disposal, including land-based alternatives.... ” 1972 House Report at 10. “The criteria as established or revised must take into account [the factors enumerated in section 1412(a) ]....” Id. at 18. Statements of the bill’s sponsors during the respective debates are precisely in accord with the language of the committee reports. Senator Hollings, floor manager of the legislation in the Senate, stated: [W]ritten into the bill in section 102 are stringent criteria which the administrator must meet in reviewing permit applications. Properly applied, these criteria will provide the Administrator with adequate information to minimize or eliminate any adverse impact that any given ocean dumping of materials might have. The Administrator must consider [the factors enumerated in section 1412(a)] 117 Cong.Rec. 43,068 (1971). In the House, Representative Lennon (Chairman of the Subcommittee on Oceanography) presented a series of questions and answers to clarify the bill: Q. Is there a standard established under which permits are issued? A. Yes. The standards for reviewing and evaluating permit applications are based upon criteria to be established by the Administrator which will take into account the need for the proposed dumping, its effect upon the area in which it is to take place, including the living resources and the marine ecosystem, as well as the permanence of those effects and the volume and concentration of the particular proposed dumping. The criteria also cover appropriate locations for the dumping and available alternative methods of disposal, including the availability of land based alternatives. 117 Cong.Rec. 31,156 (1971). The remarks of other legislators were to the same effect. EPA can point to nothing in the legislative history that contradicts this universal understanding of section 1412(a). Congress gave the agency leeway in enforcing section 1412; it did not foreclose EPA from considering additional factors, nor did it specify the particular balance that EPA must strike in weighing these factors or the procedure by which applications should be decided. But no legislator suggested that EPA could ignore the statutory factors in evaluating individual permit applications. On the contrary, the Congress clearly intended that EPA adopt and apply criteria that would lead the Agency to consider all relevant statutory factors in evaluating each proposed dumping. EPA contests this construction. It contends that the Act requires the Agency to consider the statutory factors in formulating or revising the criteria, but not in applying the criteria in specific cases. In essence, EPA claims that it may adopt criteria that ignore the statutory factors, so long as it considered those factors in adopting the criteria. Of course, EPA need not build into its criteria consideration of factors that are unnecessary in particular cases. But neither the statutory language nor the legislative history supports the view that EPA may use its authority to develop criteria in such a manner as to allow it to exclude any factor whose consideration is necessary for rational decisionmaking. Nothing in Chief Judge J. Skelly Wright’s recent opinion in National Wildlife Federation v. Costle, 629 F.2d 118 (D.C.Cir.1980), is inconsistent with this proposition. III. VALIDITY OF THE OCEAN-DUMPING REGULATIONS The overriding question in this litigation is whether EPA’s ocean-dumping regulations, 40 C.F.R. Ch. 1, Subch. H (Parts 220-229) (1979), are consistent with the governing statute. To address that question, the background of the regulations and the operation of the substantive ecological standards must first be examined. A. Background of the Regulations EPA’s construction of the 1972 Act has been ambivalent from the outset; in fact, the Agency’s interpretation of the Act prior to 1978 was in many respects consistent with the City’s present position. Nevertheless, the Agency early adopted a series of questionable regulatory assumptions. In particular, EPA decided to work toward the absolute prohibition of all dumping of materials that could conceivably be detrimental to the ocean environment. The Agency presumed that dumping of materials it deemed to be potentially harmful constituted a threat to the ocean environment — even if the dumping might not constitute unreasonable degradation under the Act. EPA issued only interim permits for such dumping, and those permits required the dumper to prepare and implement a plan for complete cessation of the dumping. At the same time, EPA also used the interim permit to allow dumping that in particular cases could well have resulted in unreasonable degradation. In particular, the Agency granted interim permits to municipalities on a showing that they had attempted in good faith to obtain funding to end their reliance upon ocean disposal. This exemption from EPA’s normal rules was often granted to a municipal dumper irrespective of the damage that its particular dumping might cause and without a thorough inquiry into the factors that the Act required the Agency to consider. An examination of the regulatory history shows how both these questionable practices developed. EPA began enforcing the Act by relying, temporarily, upon “the factors set forth in section 102(a)” until criteria based upon those factors could be formulated. 38 Fed. Reg. 8727 (1973), § 222.1. As soon as the Agency was able to formulate criteria, however, it signalled its intention to refuse to issue regular permits for the dumping of any material potentially detrimental to the ocean environment. In its “Interim Criteria,” issued on May 9,1973, EPA announced that it would not issue permits for materials that Congress had prohibited from being dumped, and that (subject to exceptions) it would not approve the dumping of more than “trace” concentrations of a number of substances, including mercury and cadmium. 38 Fed.Reg. 12,872-73 (1973), § 227.-22. Special permits could be issued to dump these “prohibited” materials, but only in quantities that were demonstrably harmless to the marine environment. Id. § 227.-22(e). The dumping of other potentially harmful materials was to be “strictly regulated,” id. § 227.30, and these materials, too, could only be dumped in harmless quantities, id. § 227.31. The interim criteria were thus based solely upon the nature of the material proposed to be dumped; the initial set of regulations ignored the factors upon which the Act required the criteria to be based. Consequently, the regulations enabled EPA to deny special permits in situations in which, on balance, the proposed dumping would not unreasonably degrade the ocean environment. Yet EPA established exceptions to these provisions that made less significant its failure to balance the statutory factors. The effect of these exceptions was to enable some applicants who in effect passed the statutory test for reasonable dumping to obtain permission to dump even prohibited materials — but only on an interim basis, and only in exchange for a commitment to reduce or eliminate such dumping. The exceptions enabled applicants, such as New York City, to continue to dump legally with no absolute deadline and thereby mitigated the need for such applicants to challenge EPA’s regulatory scheme. On October 2, 1973, EPA issued “Final Regulations and Criteria on Ocean Dumping.” Once again, the Agency manifested a determination to terminate all dumping of any materials that could conceivably be harmful to the ocean environment, irrespective of whether a particular applicant could demonstrate that its dumping would not unreasonably degrade the ocean environment if judged by the statutory factors. “General permits,” with no expiration date, were available for dumping that was demonstrably harmless. 38 Fed.Reg. 28,613 (1973), § 220.3(a). Any dumping not covered by a general permit had to be authorized by “special permit”, which would have a fixed expiration date and a duration of up to three years. But special permits could not be “granted for any material which does not meet the criteria of §§ 227.22 and 227.31,” provisions that carried over from the interim criteria EPA’s decision to prohibit or strictly regulate a long list of substances deemed potentially hazardous. Unless the dumping of these listed substances posed no danger to the environment, they could be disposed of in the ocean only pursuant to an “interim permit.” As in the proposed regulations, the conditions under which an interim permit could be obtained involved a case-by-case balancing of the “factors” spelled out in the Act. The applicant for an interim permit would have to engage in an environmental assessment of the proposed dumping, including a thorough review of the “actual need” for the dumping and the “possible alternatives.” The Agency’s decision would essentially be based upon consideration of the factors specified by Congress as the proper bases for EPA’s criteria. Although the regulations appeared to require applicants, even for interim permits, to demonstrate that their proposed dumping would not unreasonably degrade the ocean environment, EPA developed exceptions based upon less stringent standards. Municipalities that sought to dump sludge containing excessive amounts of proscribed materials were granted interim permits on a showing that they had attempted in good faith to implement a plan to end the dumping entirely — for example, by attempting to raise the necessary funds for an alternative disposal system. This practice resulted in EPA’s allowing some dumping that violated the Act, for the Act provided that an applicant’s good faith efforts could at most be one factor among many — not the sole factor — that the Agency must balance in establishing the criteria. Furthermore, EPA set no absolute deadline on dumping by such municipalities pursuant to interim permits; unreasonably degrading activity could therefore continue indefinitely. Many municipalities apparently received interim permits on the basis of this exception. These regulations remained in effect until 1976. On June 18, 1976, EPA issued a “Proposed Revision of Regulations and Criteria” for ocean dumping. In it, the Agency proposed some major changes that remain at the heart of the regulatory structure. EPA’s fundamental purpose remained the same: “to eliminate ocean dumping of unacceptable materials as rapidly as possible,” 41 Fed.Reg. 26,644 (1976), not merely to eliminate dumping found to degrade the ocean unreasonably. The Agency stated that interim permits “have been an effective tool into [sic] prodding ocean dumpers into more acceptable alternatives.” Id. at 26,646. It proposed to stop issuing such permits by April 23,1978. Yet the proposed regulations excepted municipal sludge dumping from that deadline in cases in which “the applicant has exercised his best efforts to comply with all requirements of a special permit . ... ” Id. at 26,649, § 220.3(d)(1). To be eligible for a special permit, an applicant was still required to demonstrate that the materials that it proposed to discharge posed no substantial risk of harming the marine environment. But the process for making this demonstration was changed, and these changes have been carried forward to the regulations presently in force. The newly proposed criteria for evaluating permit applications contain seven sub-parts, designated A through G. Subpart A states the general rule to govern all applications and turns strictly upon the material proposed to be dumped. The pivotal portion is Subpart B, which contains the “environmental impact criteria.” To obtain a special permit, the applicant must prove that the material to be dumped satisfies the impact criteria; if it does, then the applicant must also demonstrate that the dumping meets the requirements of Subpart C (need to dump and lack of alternatives), Subpart D (no unacceptable adverse effects on esthetic, recreational, or economic values), and Subpart E (no unacceptable adverse effects on other values). Id. at 26,-656, § 227.2(a). Sludge that satisfies the impact criteria of Subpart B, but fails to satisfy some other criterion, may be dumped pursuant to an interim permit, if the applicant makes a strong showing of need. Id. § 227.2(b). Of particular significance to this litigation are the rules governing sludge that does not satisfy the impact criteria of Sub-part B. Id. at 26,656-57, § 227.3. EPA will deny a special-permit application for the dumping of such sludge irrespective of the applicant’s capacity to satisfy the criteria set forth in Subparts C through E. Such sludge may be dumped only pursuant to an interim permit-: - As in the prior regulations, the interim permit is available only upon a strong showing that the dumping satisfies the criteria governing need, alternatives, and effect on other values. No matter how strong an applicant’s case for dumping a given substance, if the material violates — even marginally — the impact criteria, then it can be dumped only pursuant to a temporary and discretionary license — a license that will not be issued unless the applicant adopts a plan either to stop dumping the material involved or to bring the dumping into compliance with the impact criteria. EPA’s approach in its final regulations to ascertaining environmental impact became more sophisticated than its prior approach, but it remained conservative. EPA’s original approach under the Act was to base a finding of unacceptable environmental impact upon the presence of certain amounts of specific constituents; among the proscribed constituents were several heavy metals, including mercury and cadmium. By 1977, the Agency had concluded that the “criteria should be based, wherever possible, on impacts of dumped materials on marine ecosystems, and that these impacts could be measured best by bioassays rather than by relying on determination of total amounts of specific constituents present in a waste.” 42 Fed.Reg. 2466 (1977). The Agency therefore revised its criteria to define trace contaminants as “amounts and forms” of a constituent that “will cause no significant undesirable effects through either toxicity or bioaccummulation.” Id. As the proper test of whether a particular waste would cause undesirable effects, the Agency decided to rely upon “the direct determination of the impact of these constituents present in a waste on the marine ecosystem, as measured by bioassay techniques.” Id. Bioassay techniques, EPA explained, would enable the Agency to ascertain the impact of materials on the marine environment more reliably than its practice of inferring damage from the mere presence of certain quantities of “strictly regulated” materials. Id. at 2466-67. In the final regulations of January 1977, EPA implemented this new approach in principle. Several materials, including mercury and cadmium, were deemed “constituents prohibited as other than trace contaminants.” Id. at 2477, § 227.6. Whether an unacceptable effect had been caused by such a constituent “shall be determined by application of results of bioassays of liquid, suspended particulate, and solid phases of wastes according to procedures acceptable to EPA. . . . ” Id. § 227.6(c). The Agency established stringent conditions of environmental acceptability for the liquid, suspended-particulate, and solid phases of substances proposed to be dumped. The high degree of protection afforded by these criteria is reflected by the requirement that, when no criteria are available for a given constituent, the limiting permissible concentration (“LPC”) in the liquid phase is that concentration which, after initial mixing, “will not exceed a toxicity threshold defined as 0.01[1%] of a concentration shown to be acutely toxic to appropriate sensitive marine organisms in a bioassay.” Id. at 2481, § 227.27(a)(1), (2). The Final Regulations establish similarly conservative standards for the suspended-particulate and solid phases of wastes. Because bioassay tests were initially unavailable for any but the liquid phase, id at 2467, EPA continued to rely upon numerical limitations on the discharge of strictly regulated constituents in the suspended-particulate or solid phases. Subsequently, however, EPA developed bioassay techniques for all three phases, and it no longer uses the interim numerical limitations. See 42 Fed.Reg. 44,835 (1977); 43 Fed.Reg. 28,249 (1978). The revised regulations proposed in June 1976 established an April 23, 1978 termination date for industrial dumping. EPA proposed not to impose such a deadline, however, “for the dumping of wastes from sewage treatment works of municipalities presently under interim permits when the applicant has made a showing of good faith effort to comply with requirements of a special permit....” 41 Fed.Reg. 26,644 (1976). Such dumpers did not even have to propose a schedule for termination of dumping by a particular date. The exception for these dumpers was based entirely on their public status, not on the overall impact of their dumping on the marine environment. EPA subsequently acknowledged that, with respect to municipal dumpers, it had allowed financial considerations to overcome environmental considerations. The proposed regulations authorized issuance of interim permits for sewage treatment works on a showing that the dumper had exercised best efforts to comply with the requirements of a special permit. They did not require the dumper to have an implementation schedule adequate to permit compliance or phasing out by a specific date. No deadline was imposed on municipal dumpers because of their often complicated dependence on public agency funding sources. 42 Fed.Reg. 2463 (1977). Some of the public comments on the proposed regulations opposed such lenient treatment of municipal dumpers. In particular, four members of the House Subcommittee on Fisheries and Wildlife Conservation and the Environment (Representatives Leggett, Breaux, Forsythe, and Mosher) criticized EPA for continuing “to allow a substantial volume of dangerous, toxic materials to be dumped under ‘interim permit’ arrangements”; the Congressmen contended “that such ‘interim permits’ should be summarily phased out without continued exceptions.” Id at 2464 (quoting letter). The Agency defended its use of interim permits. In essence, EPA reasoned that the impact criteria of Subpart B were so stringent that interim permits were necessary to provide flexibility. To establish the impact criteria, EPA had estimated “those levels of pollutants which may be expected to cause environmental harm” and then applied a safety factor to those levels. Absent interim permits, EPA would be forced to surrender the “conservative limits on special permits” and to adopt “lenient definitions of trace contaminants or special permit criteria.” Id at 2464. EPA contended that, given the stringent impact criteria, issuance of interim permits would not result in unreasonable degradation. Interim permits are not illegal under the Act, since they do not authorize dumping which would “unreasonably” degrade or endanger the marine environment. The Act lists need for ocean dumping as one factor to be considered in issuing permits. The “need factor” has outweighed other considerations due to the lack of alternative methods of disposal and technology necessary to meet environmental criteria. .. . [I]n no event does this section authorize dumping of materials that are absolutely barred by the Act or the Convention, or authorize dumping above trace contaminant levels of materials proscribed. ... Id at 2462-63. Despite the Agency’s defense of interim permits, the final regulations published in early 1977 required all dumping that violated the impact criteria to end by December 31, 1981. EPA imposed the deadline on municipal dumpers in response to criticism of the proposed regulations. “Technology exists to permit municipalities to meet this deadline; and all interim permits currently held by municipalities provide for compliance or phasing out by the end of 1981.” Id at 2463. The Agency's statements made clear that the sole factor that it had weighed in imposing the absolute deadline was technological feasibility, and that it interpreted the Act to require cessation of all potentially harmful dumping irrespective of its reasonableness under the circumstances: The deadlines contained in this section are based on current projections of technological feasibility, and it is reasonable to expect dumpers to meet them. The primary purpose of the Act is to protect the marine environment, and dumping in violation of environmental criteria [j.e., Subchapter B] cannot be allowed to continue indefinitely. The EPA therefore will not retain discretion to issue interim permits to applicants who do not meet the requirements of this section. Id. The background of the ocean-dumping regulations thus demonstrates two contradictory strands in EPA’s enforcement of the Act. On the one hand, the Agency was excessively lenient in tolerating municipal sludge dumping: the key factor in obtaining an interim permit was the dumper’s good faith in attempting to obtain funding for an alternative sludge-disposal program. EPA was responsive to municipalities’ fiscal pleas without fully ascertaining the need for, or impact of, their dumping. On the other hand, EPA adopted very stringent impact criteria and made them the dispositive factor in determining whether particular dumping was unreasonable — irrespective of the need for ocean dumping or the consequences of alternative disposal. Only the availability of interim permits mitigated this rigidity in the impact criteria. In effect, EPA was both too lenient and too harsh — and in neither respect did it consider the panoply of factors specified by the Act. B. Defects of the Regulations EPA contends that its imposition of a 1981 deadline on municipal sludge dumping is reasonable and consistent with the 1972 Act. EPA’s position is in substance as follows. The Act authorized the Agency to adopt criteria for ruling on permits, but did not require EPA to consider all the statutory factors in passing upon every permit application. The policy of focusing initially upon the environmental impact of proposed dumping is reasonable and consistent with the Act’s protective purpose, and the decision to prohibit all dumping of potentially hazardous substances in sewage sludge after 1981 is within EPA’s discretion. The statutory deadline as applied to New York City is reasonable because EPA has found that the first phase of the plan for land-based disposal is technologically feasible, and because the City has not established that composting pursuant to the first phase would create unacceptable environmental risks. Several of EPA’s contentions as to its authority are correct. The Act delegated broad discretion to the Agency, and its determinations — of policy, of law, and of fact — are all entitled to deference. Thus, EPA may lawfully adopt criteria, instead of relying directly upon the factors described in the Act, and the criteria may permit EPA reasonably to treat some factors as inapplicable in specified situations. See National Wildlife Federation v. Costle, supra, 629 F.2d at 131-32. Nothing in the Act requires that EPA engage in a comprehensive balancing of the factors in deciding every permit application. The notion that some applications may be denied solely because of the projected environmental impact of substances to be dumped might be justified in light of the Act’s purposes. Even the decision to pressure municipalities to end dumping of materials that are only potentially hazardous might be appropriate. These principles fail, however, to authorize EPA’s regulatory approach in its entirety. Nor do they provide an adequate basis for the findings and conclusions underlying EPA’s refusal to consider the City’s application for an extension. The deference accorded an administrative agency is not limitless: the agency may not act arbitrarily or capriciously in light of the statutory purpose. See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971); Starr v. FAA, 589 F.2d 307, 311 (7th Cir. 1978); Ethyl Corp. v. EPA, 541 F.2d 1, 34-36 (D.C.Cir.) (en banc), cert. denied, 426 U.S. 941, 96 S.Ct. 2663, 49 L.Ed.2d 394 (1976). Moreover, the agency is entitled to less deference when it has changed its position without adequate explanation. See, e.g., Local 777, Democratic Union Organizing Committee v. NLRB, 603 F.2d 862, 871-72 (D.C.Cir.1978); Mukadam v. United States Department of Labor, 458 F.Supp. 164, 168 (S.D.N.Y.1978). Even if accurate, the proposition that section 1412 of the Act merely obligates EPA to consider the statutory factors in formulating criteria does not free the Agency to disregard any factor entirely. EPA could in principle adopt criteria that require denial of a permit solely because of an anticipated adverse environmental impact. The Agency’s position — and the apparent rationale behind Subpart B — is that an absolute prohibition is permissible under the Act, at least with respect to substances shown to be harmful in the amounts proposed for dumping. Yet Congress expressly addressed whether certain substances are so dangerous to the ocean environment that their dumping should be absolutely prohibited: the Act did absolutely proscribe dumping of several particular substances. All other materials, by contrast — including mercury and heavy metals — were left to be “strictly regulated.” When Congress has intended to preclude consideration of cost or conflicting policies, thus elevating environmental impact to dispositive status, it has done so explicitly. See, e.g., EPA v. National Crushed Stone Association, 449 U.S. 64, 101 S.Ct. 295, 66 L.Ed.2d 268 (1980); TVA v. Hill, 437 U.S. 153, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978). Here, with the exception of a few specific materials, Congress has done the opposite. Both the language of the Act and its legislative history establish that EPA must balance the relevant statutory factors in evaluating permit applications. Even assuming that EPA could lawfully prohibit the dumping of certain materials without balancing other considerations, it could do so only if the substances were so potentially damaging, in the amounts actually disposed of and at the particular dump-site, that they must be prohibited irrespective of the cost, difficulty, or dangerousness of alternative remedies. To comply with the Act, EPA must have undertaken an informed balancing process at least in its formulation of the criteria, if the Agency is to be allowed to dispense with such a balancing process in the case-by-case application of the criteria. EPA’s final regulations are deficient in several respects. EPA has acted unreasonably (1) in establishing Subpart B’s conclusive presumption of unacceptable harm; (2) in assuming that technologically practicable alternatives to the ocean dumping of sludge exist in all cases; and (3) in forcing the City to proceed with the interim steps of a land-based alternative without evaluating and finding acceptable the actual and potential environmental effects of land disposal. 1. The Conclusive Presumption of Unreasonable Degradation The Act undoubtedly contemplates that, as the potential dangerousness of particular materials increases, the burden of justifying dumping of those materials will increase correspondingly. The underlying approach of Subpart B is to determine in advance that the potential adverse effects of some proposed dumpings are so substantial as to be beyond justification. The Administrator underscored the extreme nature of EPA’s approach in his evaluation of Philadelphia’s permit application. He explained that the decision to force Philadelphia to terminate ocean dumping by 1981 is based not so much on significant evidence of actual harm at the site but on the general concern of the scientific community over continued addition of heavy metals and other pollutants to the ocean. ... It is obvious that even assuming no harm has occurred at this point in time, the City has not shown that its continued dumping will not contribute to a general deterioration of the ocean or that such deterioration will not eventually cause adverse effects. In the Matter of the Interim Ocean Disposal Permit No. PA-010 Granted to the City of Philadelphia 2, 4 (EPA Sep. 25, 1975) [hereinafter cited as Philadelphia Decision]. However defensible this approach may be in theory, its application by EPA in its final regulations is unreasonably conservative. Even assuming that the environmental impact criteria are reasonable in the abstract, they ignore the characteristics of the particular dumpsite for which a permit is sought. As the Agency acknowledges, “the conclusive presumption of unreasonable degradation associated with 40 C.F.R. 227.6-8 attaches based on testing of the materials proposed for dumping, with an allowance-for initial mixing, rather than an assessment of actual environmental impacts at a site.” Defendants’ Post-Opinion Memorandum at 10 n.*. The Agency’s emphasis, as expressly stated in the Philadelphia Decision, is “not so much on significant evidence of actual harm at the site but on the general concern .. . over continued addition of heavy metals and other pollutants to the ocean.” Philadelphia Decision at 2. EPA’s interpretation contradicts the Act’s requirement that the criteria “take into account .. . [the proposed dumping’s] effect upon the area in which it is to take place.” 117 Cong.Rec. 31,156 (1971) (statement of Rep. Lennon, Chairman of the Subcommittee on Oceanography) (emphasis added). In fact, the EPA Hearing Officer who evaluated the City’s permit application recognized that the “regulatory language must be read in conjunction with the statutory provision it was designed to implément.... Therefore, unless there is some unreasonable degredation or endangerment from the continued use of the 12-mile site for the dumping of sewage sludge, there is no statutory compulsion to stop it even after December 31, 1981.” Healy Affidavit, Ex. E, at 2. This exclusion of the characteristics of the actual dumpsite might be permissible in some circumstances. For example, if the particular dumping were unnecessary, or if safe alternative methods of disposal were readily available, then it might be reasonable for EPA to proscribe dumping of materials that are judged harmful in the abstract. But EPA-uses the failure of the particular sludge to satisfy these abstract impact criteria to preclude consideration of all other factors, including the need for dumping and the availability of alternative disposal methods. As a result, EPA bans dumping of particular sludge that violates the general standards, even if that dumping would not lead to significant additional deterioration at the dumpsite and even if immediate cessation of the dumping would not result in significant environmental improvement of that area of the ocean in the future. Under these circumstances, the regulations’ conclusive presumption of unacceptability — to the automatic exclusion of all other factors — violates the Act’s requirement that the Agency prevent only unreasonable degradation. The arbitrariness of EPA’s conclusive presumption is illustrated by the circumstances of this case. The City contends that the actual condition of the New York Bight is such that continued dumping (pending development of safe alternatives) would not result in unreasonable degradation. For example, the City points to evidence that the presence of heavy metals in the Bight is so great that continued sludge dumping would generate little incremental deterioration; conversely, cessation of sludge dumping, the City contends, would result in no discernible improvement in the area of the ocean around the dumpsite. The City’s sludge contributes only a small portion of the contaminants that now reach, and that will for many years continue to reach, the Bight. Sources other than sewage sludge, especially wastes and dredged spoils, have accounted for more than 94% of the heavy metals contaminating the Bight. Although these characteristics of the Bight do not preclude EPA from seeking to prevent the dumping of additional heavy metals, they do constitute a factor that the Act requires EPA to consider. EPA cannot determine whether dumping will be unreasonable without at least some consideration of the sludge’s actual effects at the dumpsite. EPA’s past actions with respect to location of New York City’s dumpsite underscore the unreasonableness of its current refusal to take the Bight’s characteristics into account. After investigating fears that sludge dumping in the Bight was responsible for contamination of local beaches, EPA concluded in 1978 that “continued use of the existing site is not a threat to public health or to water quality along the Long Island or New Jersey beaches.” EPA found that “the quality of the existing site and its surrounding area could not be expected to improve significantly, even if sludge dumping were terminated, because the bottom is severely contaminated and pollutants from other sources will continue to flow into the Bight apex.” Healy Affidavit, Exhibit D, at 5 (quoting EPA’s Environmental Impact Statement on the Ocean Dumping of Sewage Sludge in the New York Bight). These conclusions are consistent with the findings of the National Oceanic and Atmospheric Administration (“NOAA”): “the impacts of dumping of the wastes appear to be localized and temporary in the Bight and ... [it appears] that water quality conditions in the vicinity of the dumping area return to normal within hours of dumping events.” Id, Exhibit D, at 4 (quoting NOAA, Report to Congress on Ocean Dumping Research, January through December, 1977 at 13). At that time, NOAA opposed any change in the dumping site: The sewage sludge dumpsite should not be relocated. The responsible public health agencies still have no evidence that the existing dumpsite poses a threat to the health and well-being of people using the beaches. There is also no evidence of massive migration of dumped sewage sludge toward the beaches of Long Island or New Jersey. Additionally, moving the dumpsite would not result in any significant overall improvement of the water quality of the Bight apex because the effects of the dumped sewage sludge are masked by the larger mass-emission rates of pollutants from shoreline outfalls, rivers, and embayments. 42 Fed.Reg. 23,164 (1977) (quoting NOAA report). EPA accepted NOAA’s recommendation and refused to require the City to dump sludge at a particular site that was much farther off-shore, had much deeper waters, and had “neither significant commercial benthic biological resources (shellfish) nor known potential mineral resources (oil and gas, sand and gravel).” 43 Fed. Reg. 56,061-62 (1978). EPA ruled that the alternative site could be used “only upon a finding by EPA that the existing site cannot safely accommodate any more sewage sludge without endangering public health or degrading coastal water quality.” 44 Fed.Reg. 29,052-53 (1979). EPA’s decision to retain the New York Bight as the area’s sludge dumpsite is significant in two respects. First, although the decision was premised upon the expectation that sludge dumping would cease by the end of 1981, it nevertheless suggested that the dumping had relatively benign short-term consequences and that termination of the dumping would not result in significant immediate improvement. These findings are at odds with those that implicitly underlie EPA’s use of the Subpart B criteria to presume significant adverse effects. Although the Agency might be able — in the face of contrary evidence — to justify treating the results of its presumptions as conclusive, it has offered no such justification. Second, despite the availability of an alternative site well-suited for dumping, EPA decided to allow dumping to continue at the same site in the Bight, “until sludge dumping could be replaced by environmentally, technically, and economically viable land-based disposal methods.” 43 Fed.Reg. 56,061 (1978). If EPA were properly to conclude that the City’s dumping in the Bight caused unreasonable degradation, the Agency would need to explain why the alternative site could not safely be used. Yet the Agency has not suggested why dumping of the alternative site would result in unreasonable degradation. Instead, EPA has chosen to evaluate the sludge’s environmental impact in a manner that makes largely irrelevant the characteristics of the proposed disposal site. EPA contests many of the City’s assertions as to the actual effects of sludge dumping on the New York Bight; for example, the Agency insists that continued dumping is causing further deterioration, while other sources of pollution in the area are diminishing. The validity of the City’s claims as to the dumping’s actual effects on the Bight is for EPA to consider in the first instance, and this opinion does not endeavor to resolve those factual disputes. But it is precisely EPA’s avowed refusal to consider these claims that renders its treatment of the City’s permit application arbitrary and capricious. Even if EPA’s interpretation of the Act as allowing environmental effects to be dispositive were correct, the Agency would still be required to consider actual and likely dumpsite characteristics in gauging those environmental effects. Accordingly, Subpart B’s conclusive presumption of unreasonable degradation is arbitrary and capricious, and it may not lawfully form the basis for an order that the City terminate its sludge dumping at the end of 1981. 2. Evaluation of the Need to Dump Sludge The 1972 Act lists “need for the proposed dumping” as the very first factor upon which EPA’s criteria must be based. 33 U.S.C. § 1412(a)(A). In addition, in formulating its criteria, EPA must consider “[appropriate locations and methods of disposal or recycling, including land-based alternatives ... . ” Id. % 1412(a)(G). EPA’s interpretation of the Act, prior to 1977, emphasized the Agency’s obligation to consider all the statutory factors in evaluating permit applications. In explaining its proposed regulations in 1976, EPA stated: Subpart A of the revised criteria states the terms of reference which the Re