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Sierra Club v. Union Oil Co. of Cal.

Citation: 17 ELR 20547
No. No. 85-2868, 813 F.2d 1480/25 ERC 1801/(9th Cir., 04/03/1987) Rev'd in part, aff'd in part

The court holds that the district court improperly allowed the violator of a Federal Water Pollution Control Act (FWPCA) national pollutant discharge elimination system (NPDES) permit to assert an upset defense, the FWPCA does not provide for a de minimis exception, and sampling error in one's discharge monitoring reports (DMRs) is not a valid excuse for exceedances under the FWPCA. The court first holds that defendant was not entitled to raise the upset defense in this enforcement proceeding since there was no provision in the permit for the defense. The court holds that defendant failed to exhaust its administrative remedies in seeking review of the permit's terms. Defendant could have petitioned the state agency that issued the permit, or the EPA Administrator when that agency failed to object to the permit, for review, but chose not to do so. The court holds that the upset defense is not automatically available to the holder of a state-issued NPDES permit under either the applicable case law or the Environmental Protection Agency's (EPA's) regulations. Although case law from this circuit requires permits issued by EPA to include the upset defense, the FWPCA allows a state to impose standards more stringent than the federal ones, and the state's denial of an upset provision in defendant's permit in this case is an example of a state doing just that. EPA's regulations do not provide defendant with an automatic upset defense either, since the regulations require that the defense be incorporated, either expressly or by reference to the regulations, into the permit. Moreover, the regulations specifically allow states to omit upset defenses from permits. The court holds that the state agency did not violate California law by issuing a permit without making findings that the more stringent limitation of not allowing the upset defense was necessary. In a note, the court disagrees with defendant's argument that the relevant statutory provision requires such findings. Even if such findings were required, the agency's noncompliance would not implicitly insert the upset provision into defendant's permit.

The court next holds that the district court erred in applying the upset defense to the types of violations incurred by defendant. The court holds that the district court erred in applying the defense to defendant's exceedances of water quality-based permit limitations, since the defense is only available for technology-based standards. The lower court also erred in allowing defendant to use the defense for exceedances caused by human operational error and improperly designed or inadequate treatment facilities. The court holds that the district court is required to make findings as to whether a defendant has complied with the procedural requirements for the upset defense, and that the district court did not make such findings. The court holds that the district court also failed to place the burden of proof on defendant to show compliance with these requirements, as mandated by EPA's regulations. The court holds that the FWPCA makes no exceptions for de minimis violations. The court then holds that sampling error is not a valid excuse for exceedances under the FWPCA and that DMRs are conclusive evidence of a permit violation. The NPDES program relies on self-monitoring by permittees, and allowing violations to be excused on the grounds of sampling error would create a whole new complex field of factual questions that district courts would have to resolve. The legislative history indicates that Congress intended to limit such lengthy fact-finding. In addition, excusing exceedances on this ground would have the effect of rewarding the violator for sloppy laboratory practices.

The court holds that the district court improperly denied plaintiff's request to amend its complaint to include unreported violations by defendant prior to March 1979. Plaintiff has raised factual questions concerning whether the statute of limitations has been tolled in its claims that it did not learn of these violations until after it had filed the original complaint and that defendant fraudulently concealed the violations. The court holds that plaintiff was not entitled to amendment of the complaint to include certain violations about which plaintiff had access to information when it filed the original complaint. The court also holds that the district court abused its discretion in denying certain requested amendments on the grounds of delay and prejudice. Mere delay in asking for an amendment does not justify denying leave to amend, and the record indicates there was no prejudice to defendant. Moreover, the violations included in the proposed amendment concern the same subject and set of facts as the original complaint, and allowing amendment would further the policy of judicial economy.

[Decisions from the district court appear at 15 ELR 20890 and 16 ELR 20005 and 20007. Briefs in this case are digested at ELR PEND. LIT. 65913.]

Counsel for Appellant
Roger Beers
380 Hayes St., Suite 1, San Francisco CA 94102
(415) 972-1401

Stephan C. Volker, Elizabeth M. Dodd
Sierra Club Legal Defense Fund, Inc.
2044 Fillmore St., San Francisco CA 94115
(415) 567-6100

Counsel for Appellee
Patrick J. Cafferty Jr., John F. Barg
Landels, Ripley & Diamond
450 Pacific Ave., San Francisco CA 94133
(415) 788-5000

Before Choy and Goodwin, JJ.