Sierra Club v. Kerr-McGee Corp.

No. 84-1764-S (W.D. La. October 29, 1985)

In a Federal Water Pollution Control Act § 505 citizen suit to enforce a national pollutant discharge elimination system permit, the court holds that plaintiff has standing, that an Environmental Protection Agency (EPA) administrative enforcement action was not a "court" proceeding within the meaning of § 505(b)(1)(B), that plaintiff must allege violations occurring at the time the complaint was filed, and that evidence of violations in defendant's discharge monitoring reports (DMRs) and noncompliance reports (NCRs) is conclusive unless the defendant can establish its affirmative defense of "upset."

The court first holds that plaintiff satisfied the standing requirement for environmental groups by alleging injury to the aesthetic, recreational, and environmental interests of its members, including specified individuals, in the area affected by the defendant's discharges. Next, the court rules that the citizen suit is not barred by a completed EPA administrative action. EPA orders are not court proceedings and do not provide equivalent rights to the parties involved. Third, the court rules based upon case law and statutory interpretation, that civil penalties cannot be imposed for violations corrected before the suit is filed and defendant is entitled to summary judgment for such prior violations. The court declines to grant summary judgment to defendant, however, because there are issues of fact as to whether certain violations were occurring when plaintiff filed suit. Finally, the court holds that the plaintiff is not entitled to summary judgment on defendant's liability based on the violations reported in its DMRs and NCRs as the defendant has asserted the affirmative defense of upset to excuse its noncompliance.

Counsel for Plaintiff
Katherine P. Ransel
Advocates for the Public Interest
1575 Eye St. NW, Washington DC 20005
(202) 371-0199

Michael Osborne
Osborne, McComiskey & Richardson-Harp
3420 Prytania St., New Orleans LA 70115
(504) 891-4418

Counsel for Defendant
Theodore L. Garrett
Covington & Burling
1201 Pennsylvania Ave. NW, P.O. Box 7566, Washington DC 20044
(202) 662-6000

Alex F. Smith Jr.
Mayer, Smith & Roberts
1700 Buckner Square, Suite 240, Shreveport LA 71101
(318) 222-2135

[16 ELR 20083]

Walter, J.:

Memorandum Ruling

Kerr-McGee Refining Corporation (hereinafter "Kerr-McGee"), defendant, operates a crude oil topping refinery in Cotton Valley, Webster Parish, Louisiana, pursuant to National Pollutant Discharge Elimination System ("NPDES") permit number LA0005312, which authorized defendant to discharge enumerated pollutants¹ in limited quantities from two discharge points. These discharge points emptied into a tributary of Davis Slough which flows into Bayou Dorcheat and then into Lake Bistineau.

NPDES permit number LA0005312 (hereinafter "permit") was effective from March 22, 1980, until September 30, 1980. However, because a new permit was not issued until August 30, 1983, this permit remained in effect by operation of law until the new permit became effective. 40 C.F.R. 122.6(a), (b) (1980). Student Public Interest Group of New Jersey v. Monsanto Co., 600 F. Supp. 1479, 1485 [15 ELR 20297] (D.N.J. 1985).

The Clean Water Act (hereinafter the "Act"), as a permit enforcement mechanism, requires all industrial dischargers to monitor and report emissions from their facilities. 33 U.S.C. § 1318. Kerr-McGee, pursuant to these regulations, submitted Discharge Monitoring Reports (DMR's) and Noncompliance Reports (NCR's) reporting all discharges and exceedences of permit limits, respectively. These reports show various exceedences of defendant's NPDES permits occurring from December, 1980, through July, 1984.

During the aforementioned period, on May 1, 1983, the Environmental Protection Agency (hereinafter "EPA") issued Administrative Order VI-83-109. The order required defendant to update its pollution control system at the Cotton Valley refinery to bring it into compliance with the new NPDES permit which was to go into effect on August 31, 1983. On August 1, 1984, this updated system was in full operation.

The Sierra Club (plaintiff), on January 24, 1984, gave defendant notice of its intent to sue under the Citizen Suit provision of the Act. 33 U.S.C. § 1365. On June 29, 1984, plaintiff followed through with its warning, filing this action seeking declaratory and injunctive relief, the imposition of civil penalties and the award of costs. Thereafter, the Sierra Club filed this motion for partial summary judgment on the issue of liability, seeking only a declaration that Kerr-McGee violated the Act. See 33 U.S.C. §§ 1311 and 1342.

In response to Sierra Club's motion, defendant moved to have the case dismissed for lack of subject matter jurisdiction, for failure to state a claim for which relief could be granted, and for plaintiff's lack of standing. Also, defendant made its own motion for partial summary judgment.

The issues presented to the Court are as follows:

(1) Has plaintiff alleged sufficient personal injury fairly traceable to the alleged violations to allow it standing to bring that action?

(2) Was EPA's enforcement action and administrative order of May, 1983, "diligently prosecut[ed] . . . in a court of the United States" within the meaning of 33 U.S.C. § 1365(b)(1)(B)?

(3) Are citizen suits limited to "violations" of a permit currently "in effect" under the Clean Water Act?

(4) Is summary judgment appropriate on the issue of liability relying on data supplied in DMRs and NCRs, when defendant has asserted the affirmative defense of "upset."

Addressing the threshold inquiry of standing, the Court answers this question in the affirmative. Section 1365(a) provides, in pertinent part, that "any citizen may commence a civil action on his own behalf" against a person alleged to have violated the Act. 33 U.S.C. § 1365(a). Section 1365(g) provides that the term "citizen," as used above, "means a person or persons having an interest which is or may be adversely affected." 33 U.S.C. § 1365(g). The legislative history of this provision reveals that Congress intended these provisions to confer standing in accordance with the principles set out by the Supreme Court in Sierra Club v. Morton, 405 U.S. 727 [2 ELR 20192] (1972). RITE — Research Improves the Environment, Inc. v. Costle, 650 F.2d 1312, 1321 [11 ELR 20825] (5th Cir. 1981).

The Second Circuit, in Sierra Club v. SCM Corp., 747 F.2d 99 [14 ELR 20890] (2d Cir. 1984), following RITE — Research, supra, found standing when the plaintiff set out his interests as follows:

Members of the Sierra Club reside in New York, in the vicinity of the unnamed tributary of Wolcott Creek into which defendant's wastes are discharged, or own property or recreate in, on or near the unnamed tributary of Wolcott Creek. The quality of the Nation's waters and the waters of the State of New York directly affects the health, economic, recreational, aesthetic and environmental interest of the Sierra Club's members. The interests of Sierra Club's members have been, are being and will be, adversely affected by the defendant SCM Corporation-Durkee Famous Foods Division's failure to comply with its NPDES/SPDES permit requirements."

[16 ELR 20084]

SCM, at 101. Contrasting this complaint with Sierra Club's in the case at bar, similar elements of residence, use, and adverse affects are included. Here, the Sierra Club, in their complaint, state that:

Members of the Sierra Club, Delta Chapter reside in, or own property in, or recreate in the vicinity of Bayou Dorcheat, a designated Louisiana Scenic Stream. These members use and enjoy the resources in and around Bayou Dorcheat and Lake Bistineau for sport fishing, wildlife viewing, boating, photography, seimming, recreation, other water-related activities, and general aesthetic and spiritual enjoyment. The quality of the waters of the State of Louisiana including the waters impacted by Defendant's illegal discharge directly affects these interests of Sierra Club members. Plaintiffs and its members have been, are being, and will be adversely affected by Defendant's failure to comply with its NPDES permit requirements.

Complaint, at 3.

In addition to the above complaint, plaintiff also submitted the declarations of two of its members, both Dr. Patrick Sewell and Dr. Ronald Martin, who claim actual injuries resulting from the pollution in Bayou Dorcheat and Lake Bistinerau. When presented two similar affidavits setting forth specific injury in Friends of the Earth v. Consolidated Rail Corp., 768 F.2d 57 [15 ELR 20674] (2d Cir. 1985), the Second Circuit found standing. Following RITE — Research, supra, the Sierra Club has standing to assert the present claim.

Kerr-McGee makes two arguments suggesting that Sierra Club has failed to meet this threshold inquiry. Defendant first argues that plaintiff has failed to allege an injury "fairly traceable" to the violations in question. Citing Allen v. Wright, 104 S. Ct. 3315 (1984), defendant states that the standing requirement has "a core component derived directly from [Article III of] the Constitution. A plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Allen, at 3325. Applying this rule to the incident at hand, defendant asserts that plaintiff has failed to trace any injury it claims to pollution caused by Kerr-McGee's alleged violations of the Act.

An identical argument to that stated above was addressed and dismissed by the district court in Student Public Interest Research Group of New Jersey v. Tenneco Polymers, Inc., 602 F. Supp. 1394 [15 ELR 20309] (D.N.J. 1985). Rejecting the need for a traceable injury, the court held:

Obviously, the pollution of a portion of a major, interstate waterway such as the Delaware River, is caused by the combination of discharges from many different sources. The effect of the defendant's argument would be to prohibit any citizens' suits against violators of the FWPCA unless the violation was so great or the waterway so small that the direct impact of the discharges could be pinpointed. This interpretation of the FWPCA would be directly contrary to its intent.

Id. at 1397. This reasoning is adopted by the Court to apply to Kerr-McGee's alleged violations in this case. To require such a tracing would render the Act unenforceable.

Second, defendant argues that plaintiff has failed to identify a specific interest affected such as to afford it standing. This argument fails in light of Morton, supra, where the Supreme Court noted that economic injury was not necessary for standing, holding that injury to aesthetic and environmental interests would be sufficient. Reviewing the aforementioned complaint and declarations, Sierra Club has sufficiently identified a specific injury.

II.

Federal district courts have jurisdiction over suits by private citizens to enforce standards or limitations under the Clean Water Act against violators. 33 U.S.C. § 1365(a). However, 33 U.S.C. § 1365(b)(1)(B) provides that no such action may be commenced "if the Administrator or State has commenced and is diligently prosecuting a civil or criminal action in a court of the United States, or a State to require compliance with the standard. . . ." Kerr-McGee argues that EPA's May 1, 1983, administrative order is such a civil action that bars subsequent citizen suits, thus barring Sierra Club's present action.

In Monsanto Co., 600 F. Supp. at 1482 (D.N.J. 1985), the court, following Baughman v. Bradford Coal Co., Inc., 592 F.2d 215 [9 ELR 20147] (3d Cir. 1979), cert. denied, 441 U.S. 961, stated that "Congress did contemplate the possibility that agency action, if adequate, might serve as a bar to a citizen action" under the Clean Water Act. This approach was also extended by the Third Circuit to the Clean Water Act in Student Public Interest Research Group of New Jersey, Inc. v. Fritzsche Dodge and Olcott, Inc. (F.D.O.), 759 F.2d 1131 [15 ELR 20427] (3d Cir. 1985). Nevertheless, in both instances, the courts found that EPA action was not sufficient to bar a citizen suit.

Outlining the dual inquiry of the Baughman test, the Third Circuit stated:

The first question to be answered is whether the coercive powers that the administrative agency possesses compel compliance with effluent limitations (to determine whether the agency has "the power to accord relief which is the substantial equivalent to that available to the EPA in federal court"). The second inquiry concerns the procedural similarities the agency proceeding might have to a suit in federal court) to determine, among other things, whether citizens have a right to intervene in the agency proceeding).

F.D.O., supra, at 1137. (Emphasis added.) Continuing, the court applied this test to agency action by the EPA. The court held that the EPA could not accord relief substantially equivalent to a federal district court and that the EPA's enforcement procedures did not resemble a suit in federal court. Id. at 1137-39.

Courts have held that action by the EPA does not meet the above test. F.D.O., supra; Monsanto, supra; Tenneco Polymers, supra. Further supporting this conclusion, courts have noted that the EPA cannot enforce its compliance or consent orders without filing a separate enforcement action in district court. 33 U.S.C. § 1319(b), (d); F.D.O., at 1138. More importantly, the EPA cannot impose civil penalties through its agency enforcement proceedings, whereas the district court has "statutory authority to fine up to $10,000 per day" for violations of the Act. Id.

Finally, looking at the procedures afforded by EPA, it seems apparent that EPA's administrative action does not constitute a "court" action. First, as to procedure, "the EPA does not afford citizens the right to intervene in its enforcement and negotiation process." Id. Moreover, "[t]he EPA enforcement process does not incorporate an independent decision maker or administrative law judge to weigh the evidence, nor does it allow for opposing parties to present such evidence." Id. at 1139. The Court also points out that no hearing is held, no witnesses are called, and no federal records are maintained. Id.

The Second Circuit, in Friends of the Earth, 768 F.2d 57 suggested even more assertively that agency action by the EPA was not equivalent to an action in "court" under 33 U.S.C. § 1365(b)(1)(B). The court, addressing the issue of "whether enforcement actions by the New York State Department of Environmental Conservation . . . that culminated in consent orders preclude the institution of citizen suits. . . .," held:

The Clean Water Act citizen suit provision unambiguously and without qualification refers to an "action in a court of the United States, or a State" § 505(b)(1)(B). It would be inappropriate to expand this language to include administrative enforcement actions.

Id. at 62. Undoubtedly, under the Second Circuit's approach, action by the EPA would not bar a subsequent citizen suit.

Noting both the Second and Third Circuit's approaches, EPA action has not been held to bar citizens' suits. The EPA has itself maintained that "its administrative enforcement action was not a 'court' proceeding within the meaning of the citizen suit provision of the Clean Water Act." F.D.O., 759 F.2d at 1135 fn. 3. The Fifth Circuit has not addressed the issue of agency action barring citizens' suits. Nevertheless, the overwhelming authority from other circuits has held that EPA action will not act as a bar. Therefore, the Court holds that the EPA order issued to Kerr-McGee does not bar Sierra's citizen suit.

III.

A citizen, under the Clean Water Act, may sue anyone "who is alleged to be in violation of an effluent standard. . . ." 33 U.S.C. § 1365(a)(1). The "violation of an effluent standard" means the violation [16 ELR 20085] of "a permit or condition thereof issued under Section 1342 of this title, which is in effect. . . ." 33 U.S.C. § 1365(f)(6). (Emphasis added.) The later language of Section 1365(a), however, creates some ambiguity by giving district courts authority to impose "any appropriate civil penalties under Section 1319(d) of this title." 33 U.S.C. § 1365(a). Section 1319(d) states that "[a]ny person who violates . . . any permit condition or limitation . . . shall be subject to a civil penalty not to exceed $10,000 per day of such violation." 33 U.S.C. § 1319(d).

Relying on the Fifth Circuit's recent opinion in Hamker v. Diamond Shamrock Chemical Co., 756 F.2d 392 [15 ELR 20385] (5th Cir. 1985), Kerr-McGee argues that the Sierra Club seeks relief in their citizen suit not allowed under the act. Citing Hamker, defendant states that the citizen suit provision authorizes only "prospective relief." Id. Continuing, he asserts not only is plaintiff seeking relief for past violations, since suit was filed on June 29, 1984, they are also seeking relief under a permit to longer in effect.²

In Hamker, supra, plaintiff filed suit under the Clean Water Act seeking an injunction and civil penalties for violations of the Act involving a single incident. The incident involved was a single spil of 2,400 barrels of oil; once detected, the leak was corrected, and defendant made efforts to clean up the spill. Affirming the district court, the Fifth Circuit held:

[T]he ordinary meaning of the words of the statute, the statute's structure and its prior Supreme Court interpretation indicate that Section 1365 does not authorize citizen suits seeking either injunctive relief or the imposition of civil penalties where the defendant is not alleged to be in violation of an effluent standard, limitation or order. The Section "authorizes only prospective relief" even though "civil penalties . . . may be ordered by the court."

Id., at 396. Although the Fifth Circuit recognized that the imposition of civil penalties is authorized under the Act, the court rejected the Hamker's suit to impose under penalties for the one alleged violation. The court asserts that the role of the citizen under this provision is supplemental, and, as such, they can file suits "only to remedy an ongoing violation." Hamker, 756 F.2d at 395. Continuing, the court summarized its findings:

[T]he Act is structured to concentrate enforcement authority in the Administrator and the states, with supplementary power given to citizens under Section 1365(a). This supplementary power may be exercised only where neither the authorities nor the polluter acts to terminate the ongoing violation.

Id., at 396. Kerr-McGee asserts the applicability of Hamker, supra, to the case at bar, thus disallowing an imposition of civil penalties for violations occurring before June, 1984.

In spite of the narrow holding in Hamker, supra, the Fifth Circuit apparently intended to preclude citizens from suing for the imposition of civil penalties for past violations; however, the Court does indicate that penalties for an "ongoing violation" may be imposed via a citizens' suit. Id. at 395. Beginning on January 3, 1984, and lasting through July 24, 1984, Kerr-McGee reported a continuous series of exceedences³ allegedly caused by shutdown to allow for a mandated updating of their pollution control facilities.⁴ These violations occurred in a continuous fashion and were attributed to the same cause; the Court holds these exceedences present a factual question as to a possible "ongoing violation" within the meaning of the Hamker decision. Following the Fifth Circuit's guidance, the Court holds that civil penalties for violations occurring before January 3, 1984, cannot be imposed on Kerr-McGee by means of a citizens' suit. Therefore, defendant's motion for summary judgment is GRANTED insofar as it relates to violations occurring before January 3, 1984; however, this conclusion has no bearing as to the possibility of a subsequent ongoing violation.

IV.

Summary judgment may be granted "only if it appears from pleadings, depositions, admissions and affidavits, considered in the light most favorable to the non-moving party, that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); United States v. An Article of Drug Consisting of 4,680 Pails, More or Less, Each Pail Containing 60 Packets, 725 F.2d 976, 984 (5th Cir. 1984). The party seeking summary judgment must establish the lack of dispute as to material facts, and he must demonstrate that from these facts he is entitled to judgment as a matter of law. Impossible Electronics Technique, Inc. v. Wackenhut Protective Systems, Inc., 669 F.2d 1026, 1030 (5th Cir. 1982). In the case at bar, this exacting burden falls upon the Sierra Club to demonstrate that Kerr-McGee violated the Act.

Summary judgment is appropriate here on the issue of liability for violations of the Clean Water Act, particularly since "liability imposed for permit violations under the Clean Water Act is a variety of strict liability where neither fault nor intent is relevant to determination thereof." See United States v. Earth Sciences, Inc., St. Bernard Parish, 589 F. Supp. 617, 619 (E.D. La. 1984). Under the Act, the law is clear that any discharge whichexceeds the limitations set forth in the NPDES permit violates the Clean water Act. 33 U.S.C. §§ 1311(a) and 1342; E.P.A. v. State Water Resource Control Board, 426 U.S. 200, 205 [6 ELR 20563] (1976); Natural Resources Defense Council v. Costle, 568 F.2d 1369, 1374-77 [8 ELR 20028] (D.C. Cir. 1977). The evidence of such exceedences will be found in defendant's DMRs and NCRs.⁵

Under the Act, dischargers are required to monitor and report all discharges. The monthly reports mentioned take form in DMRs and NCRs, both of which can be used as admissions to establish a defendant's civil liability. Ward, 448 U.S. 242; Monsanto, citing 600 F. Supp. at 1485. In the case at bar, Kerr-McGee prepared and submitted such reports as were required by law. These DMRs and NCRs show a possible ongoing violation of defendant's NPDES permit lasting from January 3, 1984, through July 24, 1984.

Defendant neither contests the existence nor the information contained in these DMRs and NCRs; however, Kerr-McGee does contest the sufficiency of the reports alone as determinable of violations. Defendant asserts that the scientific procedures involved in making these reports must be considered in determining whether a violation has occurred; the reports alone are at most "a link in the chain of evidence leading to prosecution and conviction."

The test procedures which Kerr-McGee challenge are their own. Moreover, defendant produces no evidence that the information contained in these DMRs and NCRs is inaccurate. Addressing a similar argument as to analytic error, the court in Tenneco Polymers, 602 F. Supp. at 1400 noted, "the affidavits do not raise a question of fact that there were errors in the actual tests performed which showed permit violations." The tests performed by Kerr-McGee also show permit violations; moreover, no affidavits were submitted here contesting the validity of these results. Following a well settled line of jurisprudence, "[r]eports or records which are required to be kept by law (such as DMRs and NCRs) may be used to establish a defendant's civil liability." Monsanto, 600 F. Supp. at 1485. The NCR submitted showing violation on July 24, 1984, establish a prima facie case of Kerr-McGee's liability under the Act.

The above review shows that the Sierra Club fulfilled their burden in showing that no dispute as to a material fact exists, and that they are entitled to judgment as a matter of law. An Article of Drug, 725 F.2d at 984. In that plaintiff has fulfilled its burden, "the burden shifts to [Kerr-McGee] to show that summary judgment is not appropriate." Id. To fulfill this burden, defendant asserts the affirmative defense of upset to excuse their noncompliance with the NPDES permits. 40 C.F.R. § 122.41(n)(2) (1984).

"Upset," as used in this provision, means "an exceptional incident in which there is unintentional and temporary noncompliance with technology based permit effluent limitations because of factors beyond the reasonable control of the permittee. An upset does not include noncompliance to the extent caused by operational error, [16 ELR 20086] improperly designed treatment facilities, inadequate treatment facilities, lack of preventive maintenance, or careless or improper operations." 40 C.F.R. § 122.41(n)(1) (1984). The upset defense may create an issue of fact as to Kerr-McGee's violation.

Kerr-McGee hs the burden of proving the occurrence of an upset. 40 C.F.R. § 122.41(n)(4) (1984). To meet this burden, defendant must establish the following conditions through its property kept operating logs or by other relevant evidence:

(i) An upset occurred and that the permittee can identify the specific cause(s) of the upset;

(ii) The permitted facility was at the time being properly operated;

(iii) The permittee submitted notice of the upset as required . . .; and

(iv) The permittee complied with any remedial measures required under paragraph (d) of this Section. 409 C.F.R. § 122.41(n)(3) (1984).

As to element (i) above, McGee alleges that the potential ongoing violation occurred when the new wastewater treatment system required by the EPA's administrative order was being tested. To prove elements (ii-iv), defendant asserts that it was their normal procedure to provide written and oral notice of upset circumstances as required by regulation. The factual dispute as to the occurrence of an upset suggested here precludes the granting of summary judgment as to defendant's liability. This issue can only be resolved after a complete determination of the facts surrounding the exceedences lasting from January 3, 1984, through July 24, 1984. The Court herein DENIES plaintiff's motion for summary judgment.

In conclusion, the Court holds that the Sierra Club has standing to bring the present action under § 1365(a) against Kerr-McGee, and this action is not barred by EPA's previous action. However, the Sierra Club cannot utilize the citizens suit provision of the Act to impose civil penalties on Kerr-McGee for past violations. Kerr-McGee's motion for summary judgment as to the alleged violations occurring before January 3, 1984, is GRANTED. As to the potential ongoing violation, summary judgment is not appropriate because issues of material fact exist as to the occurrence of an ongoing violation and its possible upset; thus, plaintiff's motion for summary judgment is DENIED.

1. Pollutants covered in the permit are as follows: phenol compounds, oil and grease, sulfides, ammonia, suspended solids, biochemical oxygen demand, chemical oxygen demand, organic carbons and pH.

2. Plaintiff alleges violations to August 31, 1983, which was the effective date of the new NPDES permit.

3. Exceedences occurred on the following dates: January 3, 10, 17, 24, 16 and 31, 1984; March 6, 1984; April 3 and 24, 1984; May 1 and 22, 1984; and July 24, 1984. Kerr-McGee attributed those violations to the same cause, a shutdown to complete updating of their facilities as ordered in Administrative Order VI-83-109.

4. On May 1, 1983, the EPA issued an adminstrative order requiring Kerr-McGee to update its pollution control system at the Cotton Valley refinery to bring it into compliance with the new NPDES permit which was to go into effect on August 31, 1983.

5. The Supreme Court in United States v. Ward, 448 U.S. 242 (1980), held that "defendant's monthly reports may be used to establish civil liability under the Act."