Bp Exploration & Oil, Inc. v. U.S. Dept. of Trans.

• Decision Date: 26 March 1999
• Docket Number: No. Civ.A. 97-1206(PLF).,Civ.A. 97-1206(PLF).
• Citation: 44 F.Supp.2d 34
• Court: U.S. District Court — District of Columbia
• Parties: BP EXPLORATION & OIL, INC., Plaintiff, v. U.S. DEPARTMENT OF TRANSPORTATION and U.S. Coast Guard, Defendants.

44 F.Supp.2d 34

BP EXPLORATION & OIL, INC., Plaintiff, v. U.S. DEPARTMENT OF TRANSPORTATION and U.S. Coast Guard, Defendants.

No. Civ.A. 97-1206(PLF).

United States District Court, District of Columbia.

March 26, 1999.

Scott Thomas Kragie, Squire Sanders & Dempsey, Washington, DC, for plaintiff.

Scott Sutherland Harris, U.S. Attorney's Office, Washington, DC, for defendants.

OPINION

PAUL L. FRIEDMAN, District Judge.

This matter is before the Court on the parties' cross-motions for summary judgment. BP Exploration & Oil, Inc. ("BP") challenges the Coast Guard's assessment of a $5,000 penalty against it under the Clean Water Act for the discharge of a harmful quantity of oil into Curtis Bay in Baltimore, Maryland. Because the Court concludes that the Coast Guard's determination that BP is liable for the discharge is supported by substantial evidence in the administrative record and was not an abuse of discretion, it upholds the Coast Guard's decision.

I. BACKGROUND

BP operates an oil terminal facility on the banks of Curtis Bay in Baltimore, Maryland. BP's terminal includes an Oil Water Separator ("OWS"), a storm-sewer line, storage tanks, and a truck loading rack. The storm-sewer line carries storm water and entrained oil from nearby storage tanks and the truck loading rack to the OWS. The OWS, in turn, treats the water in three stages or compartments to ensure removal of oil and sediment before the water is discharged into Curtis Bay. BP possesses a valid permit under the National Pollution Discharge Elimination System ("NPDES") to discharge the treated storm water into the bay.

During the night of July 27, 1994, the Baltimore area received heavy rain, which flooded BP's storage tank areas. Early the next morning, BP began draining four storage tank areas through its OWS. At the same time, a BP customer spilled approximately 10 gallons of oil on the truck loading rack, which also empties into the OWS. While the storage tanks were draining, the storm water flowed through the OWS at a rate of approximately 1,865 gallons per minute ("gpm"). It is undisputed that the OWS functions most efficiently at a flow rate of 300 gpm or less and that, at that rate, oil will not collect in the third compartment of the OWS and will not discharge into the Bay. Plaintiff's Motion for Summary Judgment at 5; Defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment at 22-23. As the flow rate increases above 300 gpm, however, the water has less retention time in the OWS.

On July 28, 1994, BP was draining its storage tanks. About 1:40 p.m., the Coast Guard received a call from Star Enterprises, which is located just to the east of BP's facility, reporting that oil and debris had accumulated on the west-northwest side of Star's boom.¹ Coast Guard investigators arrived at Star Enterprises around 3:00 p.m. and found that a patch of oil had in fact accumulated against the western side of Star's boom. The investigators confirmed that the oil had not come from Star and proceeded to BP's facility, where for about thirty minutes BP employees had been using sorbent pads manipulated by long poles to remove oil from within OWS stage three. Coast Guard investigators inspected OWS discharge pipes and determined that intermittent patches of a light sheen were being discharged from stage three into Curtis Bay. The Coast Guard concluded that the sheen was oil that had been discharged. U.S. Coast Guard Investigator's Report at 1, Administrative Record ("A.R.") at 300.

On February 21, 1995, the Coast Guard notified BP that the agency was initiating civil proceedings against BP for discharging oil into Curtis Bay in violation of the Clean Water Act. On September 25, 1995, the Coast Guard held a hearing, at which BP argued that the discharge resulted from "operator error" when BP employees disturbed already-separated oil in the OWS during their attempt to clean it up with sorbent pads.² Although the hearing officer found that BP's clean-up attempts did contribute to the problem, he also concluded that the increased flow rate caused the oil spill and therefore assessed a Class I administrative penalty of $5,000. Letter from R.H. Smoyer, Coast Guard Hearing Officer to Jeffrey Conrad, BP Oil Company ("Smoyer Letter") at 1, A.R. at 23. BP appealed the hearing officer's decision to the Coast Guard Commandant, who found through his designee that "waste oil in a quantity that may be harmful was discharged from an oily [sic] water separator (OWS), causing a sheen on the water," in violation of the Clean Water Act, and that the statutory exemption on which BP relied did not apply because "the record [did] not indicate that BP's OWS at the facility was designed to, nor was it capable of, processing the spilled oil and rainwater." Letter from Michael L. Emge, Commander, U.S. Coast Guard, Office of Maritime and International Law, to Jeffrey C. Conrad, Esq., BP America, Inc. ("Emge Letter") at 1, 2, A.R. at 4, 5. BP submitted a $5,000 check in payment of the penalty and filed this action seeking a refund. A.R. at 1, 2.

II. DISCUSSION

A. Jurisdiction and Mootness

The Coast Guard asserts that the Court lacks jurisdiction because the Clean Water Act has no refund provision and BP has failed to identify any waiver of sovereign immunity that would permit its refund suit. The Administrative Procedure Act, however, provides a mechanism for review of a final agency action. Both agency actions made reviewable by statute and final agency actions for which there is no other adequate remedy are subject to judicial review. See 5 U.S.C. § 704. While the APA may not allow an action at law for damages against the United States without a specific waiver of sovereign immunity, it does authorize "an equitable action for specific relief," which may in some cases include "the recovery of specific property or monies ...." Bowen v. Massachusetts, 487 U.S. 879, 893, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988) (citing Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 688, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949)) (emphasis in original); see Maryland Dep't of Human Resources v. Dep't of Health and Human Services, 763 F.2d 1441, 1446 (D.C.Cir.1985) (contrasting the term "money damages" in 5 U.S.C. § 702, a term "normally refer[ring] to a sum of money used as compensatory relief," with "equitable relief" which may occasionally include "a money award").

In this case, the Commandant stated that his decision to impose a Class I penalty in the amount of $5,000 "constitutes final agency action," see Emge Letter at 1, 2, A.R. at 4, 5, and BP subsequently filed a notice of appeal in this Court as directed by the statute. See 33 U.S.C. § 1321(b)(6)(G)(i). BP therefore is entitled to a review of the Coast Guard's final determination under the APA. In addition, the relevant statute, the Clean Water Act, expressly permits "any person against whom a civil penalty is assessed" to obtain review of such assessment in the United States District Court for the District of Columbia or in any district in which the violation allegedly occurred. See 33 U.S.C. § 1321(b)(6)(G). BP properly followed the requirements of the statute in order to obtain review of the Coast Guard's administrative decision, and this Court therefore has jurisdiction.

The Coast Guard also suggests that BP's action is moot because BP already has paid its $5,000 penalty. This is a specious argument. BP was under a statutory and regulatory duty to pay the fine immediately, see 33 U.S.C. § 1321(b)(6)(H); 33 C.F.R. § 1.07-85(b), but that does not preclude it from taking steps to seek judicial review and a refund. Indeed, as already noted, the Clean Water Act expressly provides for judicial review of the assessment of a Class I penalty. See 33 U.S.C. § 1321(b)(6)(G). Whether BP is entitled to a refund is a very real issue that directly affects BP's rights, as is the issue of the binding nature of the Marine Safety Manual. The case therefore is not moot. See, e.g., Northwest Pipeline Corp. v. FERC, 863 F.2d 73, 76 (D.C.Cir.1988) (A case is moot if it "decid[es] questions that cannot affect the rights of litigants in the case before [the Court]") (quoting Better Gov't Ass'n v. Dep't of State, 780 F.2d 86, 90-91 (D.C.Cir. 1986)).

B. Challenges to the Coast Guard's Decision

1. Marine Safety Manual

BP first argues that the Coast Guard's reliance on the Marine Safety Manual both in its administrative decision and in this Court are impermissible because the Manual is an invalid rule or regulation that was not promulgated in accordance with the notice and comment requirements of the Administrative Procedure Act. While Section 553 of the APA expressly requires agencies to afford notice of a proposed rule-making and an opportunity for public comment prior to promulgating a substantive rule, 5 U.S.C. § 553(b), (c), the issuance of interpretive rules and policy statements and guidance is not so constrained. See 5 U.S.C. § 553(b)(3)(A). Although the distinction between a substantive rule and an interpretive one is not always clear, an interpretive rule is usually non-binding, instructional and explanatory, whereas a substantive rule grants rights, imposes obligations or effects a change in existing law. See American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1045 (D.C.Cir.1987) (citations omitted); Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 94-95 (D.C.Cir.1997). "An agency pronouncement is not deemed a binding regulation merely because it may have `some substantive impact,' as long as it `leave[s] the administrator free to exercise his informed discretion.'" Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533, 537 (D.C.Cir.1986) (quoting Guardian Fed. Sav. & Loan Ass'n v. Federal Sav. & Loan Ins. Corp., 589 F.2d 658, 666, 668 (D.C.Cir.1978)).

An agency must act consistently with its own pronouncements, procedures and policies only when "the agency intended to establish a `substantive' rule, one which is not merely...