Exxon Shipping Co. v. U.S. Dept. of Interior

Decision Date29 August 1994
Docket NumberNo. 94-35140,94-35140
Citation34 F.3d 774
Parties, 63 USLW 2161, 29 Fed.R.Serv.3d 971, 24 Envtl. L. Rep. 21,380 EXXON SHIPPING CO.; Exxon Corporation, Plaintiffs-Appellants, and Alyeska Pipeline Service Company, Plaintiff, v. UNITED STATES DEPARTMENT OF INTERIOR; Department of Agriculture; Secretary of Health & Human Services; United States Department of Commerce; National Marine Fisheries Service; National Oceanic and Atmospheric Administration, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

E. Edward Bruce, Robert A. Long, Jr., John F. Duffy, Covington & Burling, Washington, DC, for plaintiffs-appellants.

Andrew C. Mergen, U.S. Dept. of Justice, Washington, DC, for defendants-appellees.

Appeal from the United States District Court for the District of Alaska.

Before: A. GOODWIN, D.W. NELSON, and HALL, Circuit Judges.

GOODWIN, Circuit Judge:

Exxon Corp. and Exxon Shipping Co. ("Exxon") appeal the dismissal of their complaint against five federal administrative agencies and their employees seeking to compel discovery. Exxon made the discovery requests as part of its defense in an underlying damage action arising out of the Exxon Valdez oil spill.

The government instructed eight federal employees not to submit to depositions and restricted the testimony of two others. Exxon contends that the government's action violated the Federal Housekeeping Statute, 5 U.S.C. Sec. 301, and the Administrative Procedure Act (APA), 5 U.S.C. Sec. 706(2)(A). The district court found that Sec. 301 authorized the agencies' actions, and that the actions were not arbitrary or capricious under Sec. 706(2)(A). We reverse and remand.

I.

In 1989, commercial fishermen, landowners, local governments, businesses, and others sued Exxon seeking compensatory and punitive damages for injuries they allegedly suffered as a result of the Exxon Valdez oil spill. SeaHawk Seafoods, Inc. v. Exxon Corp., No. A89-0095-CV (D. Alaska); Exxon Valdez Litigation, 3AN-89-2533CI (Alaska Sup.Ct.).

Between June and November 1992, Exxon issued a notice of deposition and subpoena to ten federal employees who work for five federal agencies. 1 Exxon claimed that the employees through their work with the federal government, had obtained information central to the underlying litigation. Such information purportedly included the extent of damage to Alaska's natural resources, including bird and animal populations, as a result of the spill. 2 However, the government did not comply with Exxon's discovery requests, nor did it file a motion to quash the subpoenas. Instead, the agencies simply instructed eight of the ten employees not to submit to a deposition. Two other employees appeared at the scheduled depositions and gave testimony on certain topics, but were instructed not to answer questions on other matters.

In February 1993, Exxon filed this complaint, alleging that: 1) the government's refusal to provide the requested discovery violated the Federal Rules of Civil Procedure and the U.S. Constitution because the United States was a de facto party to the action; 2) the agencies' actions were not authorized by 5 U.S.C. Sec. 301, or federal regulations promulgated pursuant to that statute; and 3) the agencies' actions were unlawful under the APA, 5 U.S.C. Sec. 702 et seq. In January 1994, the district court rendered judgment for the United States on all three claims. Exxon appeals on its second and third claim. Trial in federal district court began on May 2, 1994 in the underlying civil suit and was still ongoing as of this writing.

II.

In declining the deposition requests, the five federal agencies relied on regulations promulgated under 5 U.S.C. Sec. 301. These internal regulations generally provide that an employee may not be deposed unless an agency head authorizes it. 3

The government argues, and the district court agreed, that Sec. 301 authorizes agency heads to prohibit their employees from testifying in litigation in which the United States is not a party. 4 As authority, the court cited United States ex. rel. Touhy v. Ragen, 340 U.S. 462, 71 S.Ct. 416, 95 L.Ed. 417 (1951). However, Touhy does not support as broad a reading as the agencies seek. In Touhy, the Supreme Court ruled that an FBI agent could not be held in contempt for refusing to obey a subpoena duces tecum when the Attorney General, acting pursuant to valid federal regulations governing the release of official documents, had ordered him to refuse to comply. Id. at 469, 71 S.Ct. at 420. However, the Court specifically refused to reach the question of the agency head's power to withhold evidence from a court without a specific claim of privilege. Id. at 472, 71 S.Ct. at 421 ("We find it unnecessary ... to consider the ultimate reach of the authority of the Attorney General to refuse to produce at a court's order the government papers in his possession."); see also id. at 471, 71 S.Ct. at 421 (Frankfurter, J., concurring); In re Recalcitrant Witness Richard Boeh v. Daryl Gates, 25 F.3d 761, 764 & n. 4 (9th Cir.1994) (noting that Touhy did not decide the legality of agency heads' executive privilege claim).

At issue in Touhy was whether lower federal officials could be held in contempt for refusing to comply with a subpoena when agency regulations prohibited them from disclosing relevant documents. Here, unlike in Touhy, the agencies themselves are named defendants. Thus, the ultimate question of federal agencies' authority to withhold discovery, including deposition testimony, is squarely at issue.

Section 301 does not, by its own force, authorize federal agency heads to withhold evidence sought under a valid federal court subpoena. Section 301 reads:

The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.

5 U.S.C. Sec. 301 (1982) (emphasis added). The second sentence of Sec. 301 was added by Congress in 1958. According to the legislative history, Congress was concerned that the statute had been "twisted from its original purpose as a 'housekeeping' statute into a claim of authority to keep information from the public and, even, from the Congress." 2 U.S.Code Cong. & Admin.News 3352 (1958); see Chrysler Corp. v. Brown, 441 U.S. 281, 310, 99 S.Ct. 1705, 1721-22, 60 L.Ed.2d 208 (1978). The House Report accompanying the 1958 amendment explained that the proposed amendment would "correct" a situation that had arisen in which the executive branch was using the housekeeping statute as a substantive basis to withhold information from the public. H.R. No. 1461, 85th Cong., 2d Sess. (1958), reprinted in 1958 U.S.C.C.A.N. 3352, 3353.

The Report noted that the original housekeeping statute, enacted in 1789, was enacted "to help General Washington get his administration underway by spelling out the authority for executive officials to set up offices and file Government documents." Id. at 3352. The statute was apparently first used to deny information to the public in 1877, when a California newspaperman sought politically sensitive files from the Hayes Administration. Id. Over the years, executive officers "gradually moved in" and the housekeeping statute became a "convenient blanket to hide anything Congress may have neglected or refused to include under specific secrecy laws." Id. at 3353. According to the House Report, the purpose of the 1958 amendment was to "correct that situation." Id.

In Chrysler Corp. v. Brown, 441 U.S. at 310, 99 S.Ct. at 1722, the Supreme Court acknowledged that Sec. 301 did not provide "substantive rules" regulating disclosure of government information. The Court held that the statute is simply "a 'housekeeping statute,' authorizing what the APA terms 'rules of agency organization, procedure or practice' as opposed to 'substantive rules.' " Id. The Court noted that nothing in Sec. 301's legislative history indicated that Congress intended the statute to be a grant of authority to withhold information from the public. Id. Subsequent judicial decisions interpreting Sec. 301 have noted that the 1958 amendment explicitly sought to eliminate any perception that the section created an executive privilege. Harvey Aluminum v. NLRB, 335 F.2d 749, 755 (9th Cir.1964); NLRB v. Capitol Fish Co., 294 F.2d 868, 875 (5th Cir.1961). 5

The government also argues that Sec. 301 authorizes it to instruct its employees not to testify in judicial proceedings because Sec. 301 grants it authority to control "the conduct of its employees." However, we have already held that in interpreting Sec. 301, we will not distinguish between subpoenas seeking testimony and documentary evidence. In re Recalcitrant Witness Boeh, 25 F.3d at 766 (holding that Touhy applies in cases involving a subpoena ad testificandum ). "There is no difference ... between the power of an agency head to specify what records a subordinate may release and the power to specify what information a subordinate may release through testimony." Id. Furthermore, the 1958 amendment's legislative history supports the argument that Congress intended the statute to cover government employees who are subpoenaed to testify. See H.R.Rep. No. 1461 at 2.

Thus, neither the statute's text, its legislative history, nor Supreme Court case law supports the government's argument that Sec. 301 authorizes agency heads to withhold documents or testimony from federal courts. 6

III.

The government also contends that the authority of agency heads to conclusively determine whether government employees may testify is "at bottom" controlled by principles of sovereign immunity. Appellee's Br. at 18. The government...

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