Shell Oil Co. v. Train, C-75-1291 RFP.
| Decision Date | 22 March 1976 |
| Docket Number | No. C-75-1291 RFP.,C-75-1291 RFP. |
| Citation | 415 F. Supp. 70 |
| Parties | SHELL OIL COMPANY, Plaintiff, v. Russell E. TRAIN and the Environmental Protection Agency, Defendants. |
| Court | U.S. District Court — Northern District of California |
William D. Maer, Houston, Tex., Richard C. Brautigam, McCutchen, Doyle, Brown & Enerson, San Francisco, Cal., for plaintiff.
Charles M. O'Connor, Asst. U.S. Atty., San Francisco, Cal., for defendants.
This is a complex environmental protection action arising under the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. § 1251 et seq. ("the Act"). Plaintiff Shell Oil Company has filed suit against the Environmental Protection Agency and its Administrator, Russell Train, to challenge the promulgation of administrative regulations governing the petroleum industry, and to challenge the issuance of a water pollution permit and denial of a variance from the specific regulations governing plaintiff's refinery at Martinez, California.
Presently before the court is defendant's motion to dismiss the entire action for lack of subject matter jurisdiction. From our review of the applicable legislation, we conclude that the district court lacks jurisdiction to consider any of the matters raised in plaintiff's complaint.
Prior to 1972, the Federal Water Pollution Control Act of 1965 was keyed to a system of water standards: to enjoin a suspected polluter, the government was required to prove that water near an industrial source had fallen below the applicable standards, and that the defendant had proximately caused the deterioration in water quality. Enforcement was entrusted to the states, which were chronically under-funded and thus unable to deter or prosecute violations of the statute. As characterized by one legislator, the elaborate statutory procedure never resulted in improved water quality anywhere.1
The 1972 legislation, while technically amending the Federal Water Pollution Control Act of 1965, in effect restructures and replaces all existing water pollution statutes. The Act establishes a comprehensive program designed "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters" in pursuit of a "national goal that discharge of pollutants into navigable waters be eliminated by 1985." 33 U.S.C. § 1251(a). In achieving the ultimate objective of water purity, the statute relies primarily on a permit system. The permit regulatory device requires any entity seeking to discharge pollutant to obtain a permit; the permit restricts the entity to designated maximum "effluent limitations," or "quantities, rates, and concentrations of chemical, physical, biological, and other constituents dischargeable into from point sources navigable waters." 33 U.S.C. § 1362.
Establishing a timetable for industry compliance, the Act mandates that water pollution standards become increasingly stringent, and that each pollutor be required to maintain a progressively higher degree of effluent quality.2 Effective immediately, the statute prohibits discharge of any pollutant into navigable waters unless the polluter holds a permit specifying effluent limitations legally dischargeable. Section 402(a) of the Act authorizes the Administrator of the Environmental Protection Agency to issue such permits nationwide.3 However, the Act contemplates a gradual decentralization of permit-issuing authority; section 402(b) of the statute authorizes a state to administer the program in lieu of the Administrator provided that the state program satisfies minimum federal criteria.4 To prevent lax enforcement of states fearing industrial relocation, the Administrator retains a veto power over all state-issued permits.5
On May 14, 1973, the Administrator authorized the State of California to administer a permit program for waters within its boundaries. 39 Fed.Reg. 26061. The designated state administering body is the State Water Quality Control Board ("State Regional Board"). Pursuant to a Memorandum of Understanding Regarding Permit and Enforcement Programs executed between the state and the Administrator, all permit applications are routinely transmitted to EPA's regional office in San Francisco for review and comment before decision by the State Regional Board.
Plaintiff Shell Oil Company owns and operates a petroleum refinery and organic chemical plant near Martinez, California ("Martinez plant").6 In compliance with the Act, plaintiff applied to the State Regional Board for a permit to discharge polluting material into the local waters near Martinez. The State Regional Board, applying the national effluent regulations promulgated for petroleum refining,7 prepared a proposed permit for plaintiff's refinery and transmitted a copy to the EPA regional office on October 15, 1974. With EPA approval, the State Regional Board issued a permit designating the Martinez plant a "Class E" refinery and applying the effluent limitations promulgated for Class E facilities.8
Since effluent limitations are formulated from evaluation of a representative sampling of petroleum refineries, and since individual refineries exist with processes fundamentally different from the sample facilities, the regulations authorize a petitioner to obtain a variance from the effluent limitations applicable to a designated category of refineries. 39 Fed.Reg. 16572. Plaintiff, contending that its Martinez facility is fundamentally different from the sample facilities used in formulating limitations for the petroleum industry, petitioned the State Regional Board on November 13, 1974, for a variance for its facility. The State Regional Board forwarded plaintiff's application to EPA's regional office on November 25, 1974, for comment. The EPA regional office wrote a letter in February, 1975, recommending denial of plaintiff's application. Following a public hearing on plaintiff's permit, the State Regional Board denied the requested variance.
Plaintiff filed the present action on June 20, 1975, against defendants EPA and Russell Train; no state officers are joined as defendants. Plaintiff alleges that although the State Regional Board has formal authority to issue permits, and did technically issue the Martinez permit and deny the petition for a variance, the Administrator "made all the material decisions" and the State Regional Board functioned as a rubber stamp for the federal decisions.
Plaintiff's complaint attacks application of the Federal Water Pollution Control Act to the petroleum industry generally and to the Martinez facility specifically:
1. Plaintiff claims that the effluent regulations promulgated for petroleum refineries 39 Fed.Reg. 16560 and 40 Fed.Reg. 21939 are beyond the scope of the Administrator's statutory authority, are based on invalid methodology, and are formulated in disregard of statutory factors.
2. Plaintiff claims that its Martinez facility should properly be designated a Class D and not a Class E refinery, or, alternatively, that plaintiff should be granted a variance from the Class E effluent limitations.
Plaintiff seeks a judicial declaration invalidating the effluent limitations promulgated for petroleum refineries and further seeks an injunction ordering the Administrator to issue plaintiff's Martinez facility a Class D permit, or, alternatively, ordering the Administrator to grant plaintiff a variance from the Class E effluent limitations.
Concurrently with the present action, plaintiff filed similar challenges to the Administrator's determinations in two other tribunals: the Ninth Circuit Court of Appeals9 and the California Regional Water Quality Control Board.10 Defendants moved to dismiss the petition in the Court of Appeals. On September 22, 1975, the Ninth Circuit, granting defendants' motion, issued the following order:
The interpretation of this order — which of course controls our decision in the present case — is vigorously disputed by the parties. Plaintiff contends that denial of jurisdiction by the appellate court necessarily implies that review of agency action lies in the district court under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. Defendants contend that: part (a) of the circuit court order establishes that no federal forum has jurisdiction over the permit and variance processes, which were entirely controlled by state officials; and part (b) of the circuit court order holds that jurisdiction to review effluent regulations is properly in the appellate courts, but that plaintiff's challenge in the present case was untimely.
In determining the proper forum for review of regulations promulgated for the petroleum industry 39 Fed.Reg. 16560, 40 Fed.Reg. 21939 our inquiry commences with the judicial review provision of the Federal Water Pollution Control Act. Section 509 of the Act states:
(b)(1) Review of the Administrator's action (A) in promulgating any standard of performance under section 1316 of this title, (B) in making any determination pursuant to section 1316(...
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Shell Oil Co. v. Train
...permit and variance applications, the district court dismissed Shell's complaint for lack of subject matter jurisdiction. (415 F.Supp. 70, 77-78 (N.D.Cal.1976).) Shell's complaint must be read against the background of the cooperative federal-state scheme for the control of water pollution.......
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