United States Environmental Protection Agency v. Alyeska Pipeline Service Co.

No. A86-583 Civil (D. Alaska December 9, 1986)

The court holds that Toxic Substances Control Act (TSCA) § 11(c) authorizes the Environmental Protection Agency (EPA) to issue administrative subpoenas to determine whether an operator (Alyeska) has discharged polychlorinated biphenyls from its Trans-Alaska Pipeline oil loading facility at Valdez. Although the EPA provided little basis for its suspicion that Alyeska violated TSCA, the court holds that its appropriately limited judicial scrutiny warrants approval of the TSCA subpoenas. The court thus rejects Alyeska's claim that EPA is circumventing the lawby using TSCA to obtain testimony unavailable under the Federal Water Pollution Control Act. Applying a tripartite test to determine the validity of EPA's subpoenas, the court first rules that Congress did authorize the issuance of administrative subpoenas to determine whether a TSCA violation has occurred. Next, the court holds that EPA need not comply with the procedural requirements for bringing an action under TSCA § 9 before it studies what risks exist and which TSCA actions should be taken. Finally, the court holds that the subpoenas need not be proven relevant to specific TSCA violations, only that they are relevant to a lawful purpose under TSCA. Because EPA, and not Alyeska, has the authority to determine whether specific chemical discharges might present a TSCA § 6 imminent hazard, the court holds that EPA's requests for information about chemical substances or mixtures and about oil spills were generally relevant to its lawful investigation of Alyeska's Valdez operation. Requests for information concerning discharges at sea or in foreign countries, insufficiently related to EPA's specific investigation of Alyeska's Valdez terminal, however, are not authorized by TSCA.

Counsel for Petitioner
Michael Walker
Environmental Protection Agency
401 M St. SW, Washington DC 20024
(202) 475-8040

Counsel for Respondent
Clifford Groh
Groh, Eggers & Price
550 W. 7th Ave., Suite 1250, Anchorage AK 99501
(907) 272-6474

[17 ELR 20650]

Fitzgerald, J.:

Opinion

On September 15, 1986 petitioner, the Administrator of the United States Environmental Protection Agency (EPA), by and through his representatives, the Regional Administrator, EPA Region 10, issued a subpoena duces tecum and subpoena ad testificandum to respondents Alyeska Pipeline Service Company, Inc., and its President, George M. Nelson. The subpoenas, issued pursuant to 15 U.S.C. § 2610(c) (1982) [The Toxic Substances Control Act] commanded respondents to appear before EPA on October 7, 1986. The subpoenas request specific documents and testimony under oath concerning the on and off loading of tankers and operations of Alyeska's ballast water treatment (BWT) facility located at the Valdez terminal. The respondents failed to comply with the subpoenas.

On October 21, 1986, the Administrator petitioned this court, ex parte, for an order requiring respondents to show cause why an order enforcing the EPA subpoena should not issue against them. I granted the petition to show cause and ordered respondents to file written memorandum and to appear for oral argument on November 6, 1986. The Administrator also petitioned this court for an order enforcing the subpoenas. After extensive written and oral arguments concerning subpoena enforcement I make the following findings.

Alyeska Pipeline Service Company (Alyeska), a management company, oversees the operation of the Trans-Alaska Pipeline Systems (TAPS). Crude oil from Alaska's North Slope oil fields is pumped through TAPS to the Valdez terminal where it is pumped onto oil tankers. Alyeska operates the BWT facility at the terminal where it removes ballast water from the holds of tankers waiting to receive crude oil. The ballast water is then treated to remove oil, grease, aromatics, and petroleum hydrocarbons before it is discharged into Valdez Bay. The BWT facility operates through the use of various physical separation processes which allow adequate time for the pollutants to rise to the surface or sink to the bottom from where they are removed. The facility was not designed or built to remove chemical substances or mixtures which are soluble in water.

The Clean Water Act, 33 U.S.C. §§ 1251-1376 (1982) regulates the ballast water discharge into Valdez Bay. The Act requires Alyeska to comply with the requirement of the National Pollution Discharge Elimination System (NPDES) program. Any discharge of pollutants into Valdez Bay, including spills of oil or other substances, is prohibited under the Clean Water Act, 33 U.S.C. Section 1311(a), except as allowed by the NPDES permit. EPA issued Alyeska permit no. AK-002324-8 on August 11, 1980.

During early April 1985 Mr. Charles Hammel notified the Administrator that he intended to file a "citizens suit" against Alyeska under the Clean Water Act. Mr. Hammel alleged that Alyeska was violating the NPDES permit by discharging pollutants into Valdez Bay. In response, EPA began an investigation to determine whether the BWT facility discharge contained pollutants in violation of federal environmental laws. At the same time EPA also began processing Alyeska's request to renew its NPDES permit and ultimately issued a compliance order under Section 1319 of the Clean Water Act, 33 U.S.C. § 1319.

Over the last eighteen months Alyeska has cooperated with EPA in the discharge investigation, the Section 1319 compliance order, and the NPDES permit renewal process. During 1985 both Alyeska and EPA conducted tests of BWT facility discharge. EPA analyzed eighteen samples of sludges and marine sediments for priority pollutants, including polychlorinated biphenyls (PCBs). None of the analyses indicated the presence of PCBs at the time and location the samples were taken. Further, Alyeska conducted studies that indicated that the BWT facility discharges do not have a detrimental effect on the environment. Alyeska also provided EPA with all requested documents concerning the operation of the BWT facility and permitted inspections. Finally, Alyeska has spent over six million dollars to comply with the Clean Water Act and to develop the new permit.

EPA now believes that chemical substances, other than those allowed by the NPDES permit, have been off loaded with ballast water from tankers into the BWT facility. The non-water-soluble chemical substances would sink to the sludge pit at the bottom of the BWT facility or rise to the top where it would be recovered as "crude" "product." If water soluble, these chemical substances would not sink or float. Instead, they would be discharged directly into Valdez Bay. Specifically, EPA is investigating whether Alyeska may have or may be discharging imminently hazardous chemical substances/mixtures, or PCBs, at or through the BWT facility. If so, EPA seeks to determine whether such disposal is addressed by or violates the Toxic Substance Control Act (TSCA), 15 U.S.C. §§ 2601-2629. To aid the investigation the Administrator, relying on TSCA § 2610(c),¹ issued the administrative subpoenas in controversy here.

Shortly after the subpoenas issued EPA and Alyeska met to discuss them. There, Alyeska contended that the BWT inquiry was a Clean Water Act investigation. Thus the TSCA subpoenas were issued for an improper and unlawful purpose. Alyeska refused to comply and make any employees available for sworn testimony or to provide any of the subpoenaed documents and records. However, Alyeska agreed to continue to cooperate with the Clean Water Act investigation and to comply with Clean Air Act subpoenas for any documents or records.² The Clean Water Act, 33 U.S.C. § 1318 does not authorize the Administrator to subpoena sworn testimony as does TSCA § 2610(c). This difference is at the heart of the controversy here. Alyeska believes that EPA is circumventing the law by using TSCA to attain testimony otherwise unattainable under the Clean Water Act. Of course, EPA disagrees and maintains that this is a TSCA investigation. EPA suggests that the sworn testimony is crucial because documents can be shredded or falsified while the truth lingers on in an individual's memory.

EPA argues that the agency must use the TSCA granted administrative subpoena power to carry out TSCA. EPA needs to investigate [17 ELR 20651] the BWT facility to determine what, if any, appropriate action must be taken under relevant TSCA provisions. These include:

1. 15 U.S.C. § 2606 which authorizes EPA to bring a civil action for appropriate relief whenever ". . . a chemical substance or mixture which presents an imminent and unreasonable risk of serious or widespread injury to health or the environment[.]" is manufactured, processed, distributed in commerce, used, or disposed of. 15 U.S.C. § 2606(a)(1)(B), (f);

2. 15 U.S.C. § 2614 which prohibits various conduct including the violation of regulations promulgated under TSCA. 15 U.S.C. § 2614(1)(C). Such regulations include 40 C.F.R. part 761 (1986) which regulates the manufacture, handling, storage, and disposal of PCBs and PCB related items;

3. 15 U.S.C. Section 2615(a) and (b) which imposes administrative civil penalty liability to EPA and criminal liability for violations of section 2614. 15 U.S.C. § 2615(a)(1), (b);

Accordingly, EPA argues, it is entitled to use an administrative subpoena to inquire first about whether the BWT discharge has or does violate the PCB regulations, 40 C.F.R. Part 761, and, second, whether chemical substances or mixtures which may have been imminently hazardous have been processed, used, or disposed of at or through the BWT facility so that the agency can pursue appropriate judicial relief under TSCA Section 2606. Finally, EPA asks this court to order Alyeska's compliance with the administrative subpoenas.

Turning to the controlling law, I conclude that the EPA subpoena is not self-enforcing. A recipient of an EPA subpoena may refrain from complying with it, without penalty, until directed otherwise by a federal court order. See, I.C.C. v. Brimson, 154 U.S. 485 (1894); SEC v. Jerry T. O'Brien Corp., 467 U.S. 735, 741 (1984). The Administrator is authorized under TSCA, 15 U.S.C. § 2610(c), to petition a federal district court to order subpoena compliance.³

The Supreme Court has ruled in several cases that the district court has a strictly limited role in an administrative subpoena enforcement proceeding. Endicott Johnson Corp. v. Perkins, 317 U.S. 501 (1943), the seminal case, established the scope of judicial inquiry. In Endicott the Secretary of Labor sought judicial enforcement of an administrative subpoena issued under the Walsh-Healy Public Contracts Act. The court held that the district court lacked authority to determine whether the petitioner corporation's activities were covered by the statute. Instead, the court said that "Congress submitted the administration of the act to the judgment of the Secretary of Labor, not to the judgment of the courts." Id. at 507. The Court set the parameters of judicial inquiry holding that it was the district court's duty to order compliance if the evidence sought by the subpoena was not "plainly incompetent or irrelevant to any lawful purpose." Endicott, 317 U.S. at 509. This same standard was applied in subsequent cases. E.g., Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 209 (1946); United States v. Morton Salt Co., 388 U.S. 632, 652 (1950); United States v. Powell, 379 U.S. 48 (1964). In Morton Salt the Court distinguished the judicial investigative process, which can not conduct "fishing expeditions" to determine if violations of law have occurred, from the administrative investigative process:

The only power that is involved here is the power to get information from those who best can give it and who are most interested in not doing so. Because judicial power is reluctant if not unable to summon evidence until it is shown to be relevant to issues in litigations, it does not follow that an administrative agency charged with seeing that the laws are enforced may not have and exercise powers of original inquiry. It has a power of inquisition, if one chooses to call it that, which is not derived from the judicial function. It is more analogous to the Grand Jury, which does not depend on a case or controversy for power to get evidence but can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not. When investigative and accusatory duties are delegated by statute to an administrative body, it, too, may take steps to inform itself as to whether there is probable violation of the law. (emphasis added).

Morton Salt, 388 U.S. at 642-43.

The Ninth Circuit Court of Appeals consistently follows these principles that clearly favor the agency. E.g., Mines and Metals Corp. v. Securities and Exchange Commission, 200 F.2d 317 (9th Cir. 1952) cert. denied, 345 U.S. 941 (1953), United States v. Litton Industries, Inc., 462 F.2d 14 (9th Cir. 1972), Pacific Maritime Association v. Quinn, 491 F.2d 1294, 1296 (9th Cir. 1974), Federal Maritime Commission v. Port of Seattle, 521 F.2d 431, 434 (9th Cir. 1975), Casey v. FTC, 578 F.2d 793, 799 (9th Cir. 1978), EEOC v. Dean Witter Co., 643 F.2d 1334, 1338 (9th Cir. 1980); EEOC v. Children's Hospital Medical Center, 719 F.2d 1426, 1430-31 (9th Cir. 1983) (en banc); I.C.C. v. Peninsula Shippers Association, Inc., 789 F.2d 1401 (9th Cir. 1986). The court in Port of Seattle said that an extremely narrow scope of judicial inquiry is essential because "the very backbone of an administrative agency's effectiveness in carrying out its congressionally mandated duties is . . . the rapid exercise of the power to investigate the activities of the entities over which it has jurisdiction and the right under the appropriate conditions to have district courts enforce its subpoena." Port of Seattle, 521 F.2d at 433. In EEOC v. Children's Hospital Medical Center, 719 F.2d at 1428 (9th Cir. 1983) (en banc), the court articulated a three part test to determine when a court should enforce administrative investigative subpoenas: 1.) has Congress granted the agency authority to investigate, 2.) have procedural requirements been followed, and 3.) is the evidence sought relevant and material to the investigation?

Both parties have filed affidavits in support of their arguments. The EPA's affidavit states that EPA is conducting a TSCA investigation of Alyeska. EPA has also provided the court with documentation, presumably garnered from Alyeska's records pursuant to the Clean Water Act investigation, that some chemical substance was off loaded from an Alyeska tanker into the BWT facility in 1982. However, EPA doesn't reveal any facts indicating that this chemical substance was PCBs or imminently hazardous. EPA also fails to allege that such facts exist or that they even have reason to suspect Alyeska. EPA also fails to reveal facts indicating that Alyeska has discharged imminently hazardous chemical substances or PCBs at or through the BWT facility. Nor does the agency even claim that such facts exist or that they even have any reason to suspect Alyeska. Actually EPA provides this court with no basis in fact for justifying their suspicion that Alyeska processes, uses, or disposes of PCBs or imminently hazardous chemical substances. Further, Alyeska's uncontroverted affidavits state that it does not dispose of chemical substances in violation of TSCA. These affidavits also report negative results from EPA and Alyeska testing that attempted to determine whether PCBs and other pollutants were present in the BWT discharge. Finally, the EPA's affidavit says that the 1982 chemical mixture off-loading incident indicates "obvious" potential for "surreptitious" use of the Alyeska Valdez terminal facilities for the unlawful disposal of hazardous chemical substances. This can hardly be true given the fact that Alyeska officially recorded the 1982 incident in some kind of log book and EPA had access to those records under the Clean Water Act.

Nevertheless, the controlling authorities make it very clear that this court has an extremely limited role in administrative subpoena enforcement proceedings. The Children's Hospital test requires minimal judicial scrutiny and comes very close to rendering this court a "rubber stamp" of the agency's decision to subpoena Alyeska. The court there relied on Morton Salt and mandated judicial enforcement of administrative subpoena merely on the agency's ". . . suspicion that the law is being violated, or even just because it wants assurance that it is not." Children's Hospital, 719 F.2d at 1428-29 quoting Morton Salt, 338 U.S. at 642-43. Thus, the agency does not have to allege that it has a suspicion or has knowledge of any facts indicating that the law has been violated. It is enough that EPA alleges awareness of the 1982 off-loading incident and is investigating to assure itself that the law was not or is not being violated. Applying the narrow standard of judicial inquiry and the Children's Hospital test to the facts before me I conclude that the EPA investigative subpoenas were lawfully issued pursuant to TSCA § 2610(c).

Under the first prong of the Children's Hospital test Alyeska argues that Congress has not granted EPA authority to investigate Alyeska under TSCA. According to Alyeska TSCA does not apply because they do not process, use, or dispose of PCBs or imminently hazardous chemical substances. I disagree. Congress, under TSCA, clearly grants EPA authority to investigate and regulate processors, users, and disposers of imminently hazardous chemical [17 ELR 20652] substances and PCBs. EPA is unable at this point to determine if Alyeska is disposing of imminently hazardous substances. It has long been settled that an agency has jurisdiction to investigate an activity or party to determine whether the agency in fact has jurisdiction over the activity or party. Port of Seattle, 521 F.2d at 426; SEC v. Brigadoon Scotch Distributing Co., 480 F.2d 1047 (2d Cir. 1973). Whether TSCA applies to Alyeska and conclusively vests EPA with TSCA jurisdiction over Alyeska is a question the agency must determine in the first instance and may not be decided in a subpoena enforcement proceeding. Id. I conclude that Congress has granted EPA authority, under TSCA, to investigate Alyeska concerning the disposal of imminently hazardous chemical substances and PCBs.

Under the second prong of the test Alyeska argues that the Administrator failed to file a determination required under TSCA § 2608(b). I disagree. 15 U.S.C. § 2608(b) provides:

The Administrator shall coordinate actions taken under this chapter with actions taken under other Federal laws administered in whole or in part by the Administrator. If the Administrator determines that a risk to health or the environment associated with a chemical substance or mixture could be eliminated or reduced to a sufficient extent by actions taken under the authorities contained in such other Federal laws, the Administrator shall use such authorities to protect against such risk unless the Administrator determines, in the Administrator's discretion, that it is in the public interest to protect against such risk by actions taken under this chapter.

Without deciding whether the Administrator must formally report his determination to proceed under TSCA I think Alyeska's argument is incorrect and premature. Here, the Administrator requests enforcement of a subpoena that will enable the agency to know and assess the risks. The statute by its terms suggests that the Administrator must determine which statute to proceed under only after determining that a risk to health or the environment associated with a chemical substance exists. Further, TSCA legislative history suggests that Congress intended that the Administrator present his findings only when he undertakes TSCA regulatory action.⁴ H. Cong. Rep. No. 1679, 94th Cong., 2d Sess. 85 reprinted in 1976 U.S. Code Cong. & Ad. News 4539, 4570. Thus, I find Section 2608(b) inapplicable at this early stage.

Under the relevancy requirement, the third prong of the Children's Hospital test, Alyeska argues that the subpoena requests documents that are irrelevant to a TSCA action or investigation. I disagree. The United States Supreme Court extends agencies wide latitude when formulating subpoena information requests. The Morton Salt court said that an agency ". . . has the power of inquisition" and can choose to investigate ". . . merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." Morton Salt, 338 U.S. at 642-43 (emphasis added). The Court, however, does not lend an agency unbridled inquisitory powers. Instead, the Court requires that the requested information be relevant to a lawful purpose. Endicott Johnson Corp., 317 U.S. at 509; Oklahoma Press Publishing Co., 327 U.S. at 216; United States v. Powell, 379 U.S. at 57; see, EEOC v. Children's Hospital, 719 F.2d at 1428.

Whether the requested information is relevant and satisfies that the third prong is measured against the general purposes of the agency's investigation. F.T.C. v. Texaco, Inc., 555 F.2d 862, 873-74 (1977), cert. denied, 431 U.S. 974 (1977), reh'g denied, 434 U.S. 883 (1977); Civil Aeronautics Board v. United Airlines, 542 F.2d 394, 402-03 (7th Cir. 1976). Here, EPA's affidavit sets out the agency's general investigatory purposes. The affidavit relates that EPA is investigating to determine whether (if at all, and if so, when and by whom) chemical substances or mixtures [which might have been imminently hazardous under 15 U.S.C. § 2606(f)] or PCBs have been processed, used, or disposed of at or through the said Valdez facility.

Specifically, Alyeska contends that requests 1 through 5, 7, 9, 10, and 11 exceed the scope of any TSCA investigation because these requests seek information about any chemical substance or mixture. I disagree. The Administrator, not Alyeska, has the authority to determine whether a chemical mixture is imminently hazardous under TSCA. To do so, the Administrator needs information about the chemical mixture or substance. I find these requests reasonably relevant.

The request in 7 for information concerning oil spills, according to Alyeska, is also irrelevant as TSCA does not apply to oil spills. I disagree. TSCA doesn't categorically apply to oil spills but it does regulate imminently hazardous chemical substances and PCBs which could be found in crude oil that was recovered from the BWT facility. I find this request reasonably relevant.

Next, Alyeska argues that requests 4, 7, 9, 10(b), 10(d), 10(f) and 11(b) are irrelevant and have no connection with TSCA because they concern discharges at sea or in foreign countries, and also concern loading and off loading of tankers anywhere in the world. I agree. Requests 4, 7, 9, 11(b) and 10(f) seek information about tankers that may have no connection with the Valdez terminal or BWT facility. I conclude that information about a tanker that has no connection with the Valdez terminal is not reasonably relevant to this investigation. Thus, Alyeska need only produce records and documents requested in 4, 7, 9, 11(b) and 10(f) to the extent that such documents concern tankers that moored, berthed, anchored, loaded or off loaded at the Valdez terminal. However, I find requests 10(b) and 10(d) relevant. They have a sufficient nexus with the Valdez terminal.

Alyeska also maintains that the information sought in request 8 is irrelevant to TSCA. Request 8 asks for each memo, report, letter, note, document, record, or minutes of meetings of the corporate directors or a committee thereof which discusses in any way an aspect of any federal governmental environmentally oriented investigations into occurrences or operations at the Valdez terminal during one or more of the years 1978 through 1986. I agree. Alyeska need only produce the requested information to the extent that the documents are related to a federal environmental law investigation: and, the BWT facility; loading or off-loading of tankers having a nexus with the Valdez terminal; or chemical mixture discharges from tankers having a Valdez terminal nexus.

For the reasons stated it is now ORDERED that consistent with the rulings which I have made, Alyeska shall promptly comply with the EPA subpoenas issued on September 11, 1986.

1. 15 U.S.C. § 2610(c) provides: "In carrying out this chapter, the Administrator may by subpoena require the attendance and testimony of witnesses and the production of reports, papers, documents, answers to questions, and other information that the Administrator deems necessary."

2. The Clean Water Act, 33 U.S.C. § 1318, provides the Administrator with power to subpoena documents and records and with the right to enter and inspect premises.

3. 15 U.S.C. § 2610(c) provides: ". . . [i]n the event of contumacy, failure, or refusal of any person to obey any such subpoena, any district court of the United States in which venue is proper shall have jurisdiction to order any such person to comply with such subpoena."

4. H. Conf. Rep. No. 1679, 94th Cong., 2d Sess. 85 reprinted in 1976 U.S. Code Cong. & Ad. News 4539, 4570 provides:

While the Administrator's decision to use this Act, notwithstanding the other authorities, is unreviewable by any court, a reviewing court is expected to require that the Administrator have examined the other authorities and present the results of that examination when making the finding that it is in the public interest to use this Act. Of course, the requirement to examine other EPA laws and to make determinations applies only when the Administrator takes regulatory action to protect against an unreasonable risk under this Act.

(emphasis added).