Marathon Oil Co. v. E.P.A., Nos. 75-3794

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore WALLACE and SNEED; SNEED; WALLACE
Citation564 F.2d 1253
Docket NumberNos. 75-3794
Decision Date21 November 1977
PartiesMARATHON OIL COMPANY, Union Oil Company of California, Atlantic Richfield Company, and Mobil Oil Corporation, Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. SHELL OIL COMPANY, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. MARATHON OIL COMPANY et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. to 75-3796.

Page 1253

564 F.2d 1253
12 ERC 1098
MARATHON OIL COMPANY, Union Oil Company of California,
Atlantic Richfield Company, and Mobil Oil
Corporation, Petitioners,
v.
ENVIRONMENTAL PROTECTION AGENCY, Respondent.
SHELL OIL COMPANY, Petitioner,
v.
ENVIRONMENTAL PROTECTION AGENCY, Respondent.
MARATHON OIL COMPANY et al., Petitioners,
v.
ENVIRONMENTAL PROTECTION AGENCY, Respondent.
Nos. 75-3794 to 75-3796.
United States Court of Appeals, Ninth Circuit.
Nov. 21, 1977.

Page 1256

John H. Bradbury (argued), of Bradbury & Bliss, Anchorage, Alaska, for petitioner.

Alan W. Eckert (argued), Washington, D.C., for respondent.

Petition For Review of Decision of the Administrator of the United States Environmental Protection Agency.

Before WALLACE and SNEED, Circuit Judges, and ZIRPOLI, * District Judge.

SNEED, Circuit Judge:

In these consolidated cases, petitioning oil companies challenge effluent limitations contained in permits issued to them under section 402 of the Federal Water Pollution Control Act. 1 In cases 75-3794 and 75-3796, the permits provide for the limited discharge of deck drainage, produced water, and sanitary wastes from the companies' offshore oil and gas platforms. The permits in case 75-3795 allow the limited discharge of produced water from onshore facilities designed to separate gas and crude oil from the produced water. Petitioners contend that the permits require a greater level of pollution control than is achievable through the use of "the best practicable control technology currently available," Federal Water Pollution Control Act §§ 301(b)(1) and 304(b)(1). 2 More specifically, petitioners argue that the permit standards are the result of an invalid statistical analysis and, moreover, do not provide for currently inevitable upsets and malfunctions. Petitioners also raise significant statutory and constitutional objections to the procedure followed by the Environmental Protection Agency (EPA) in issuing permits under section 402 of the Act. We conclude that while the petitioners miss the mark with certain of their complaints there is sufficient merit in several of them to require that we remand this proceeding to the EPA for the limited purpose of considering certain specific matters delineated in the course of this opinion.

I.

History of the Dispute.

A. Offshore Oil Drilling and Waste Problems.

Petitioners in cases 75-3794 and 75-3796 operate offshore platforms in Cook Inlet,

Page 1257

Alaska. 3 The platforms are self-contained structures with live-on crews that can number up to 50 men during drilling operations. In addition to drilling, a number of related and necessary operations are conducted regularly on board the platforms and contribute to the platforms' waste. Particularly relevant to this dispute are cleaning activities, rig moving, and rig conditioning.

Three forms of waste must be disposed of from the platforms and are the subject of the permit provisions under challenge deck drainage, produced water, and sanitary wastes. Deck drainage collects on the curbed platform decks from a variety of sources such as platform equipment, drilling equipment, deck washings, and rain; the drainage is composed of a shifting composite of substances that include fresh water, salt water, oil, grease, drilling muds, and soaps. Produced water rises inescapably along with the desired oil and gas from their subsurface formations. Sanitary wastes pass from the lavatories, showers, etc., used by the workers stationed on the platforms. The wastes can either be disposed of offshore or be pumped to shore and then disposed of. At present, only sanitary wastes are disposed of offshore by all the platforms in Cook Inlet. Some of the platforms pump their deck drainage to shore. 4 All of the platforms pump their produced water to shore for treatment before disposal. However, onshore disposal of deck drainage and produced water is not expected to continue indefinitely. Ultimately all of the platforms expect to discharge all three of the wastes offshore. 5 Thus, with the exception of Shell's permits, 6 the permits were requested to cover and do cover all three forms of waste.

Petitioners in case 75-3795 operate three onshore facilities which separate gas and crude oil from produced water. As noted earlier, offshore platforms in Cook Inlet currently pump their produced water to shore for treatment and disposal at these facilities.

B. Statutory Scheme.

Under the Federal Water Pollution Control Act, as amended in 1972 (hereinafter the Control Act), 7 it is unlawful to discharge any pollutant into a navigable water without first obtaining a permit under section 402 of the Control Act. 8 33 U.S.C.A. § 1311(a) (1977 Supp.). Section 402(a) of the Control Act 9 authorizes the Administrator to issue a permit if he determines, inter alia, that the discharge would meet the requirements of section 301 of the Control Act. 10 Section 301(b)(1)(A), 11 in turn, limits discharges prior to July 1, 1983, to those achievable by use of "the best practicable control technology currently available" (hereinafter referred to as BPCTCA), as defined by section 304(b)(1) of the Control Act. 12

Page 1258

It is the practice of the EPA, before issuing a permit under section 402, to obtain from the appropriate state government a certificate stating that the permit limitations will comply with relevant state law. See 40 C.F.R. § 125.32(e)(8). A state can waive its certification right either explicitly or by failing to respond to a certification request within 30 days. Id. In summary, before an effluent limit is set by the EPA, the Agency must determine that the limit is representative of BPCTCA and obtain a certification by the state government.

As to the proper procedure to be followed in drafting and issuing the permits, section 402 of the Control Act requires the Administrator to provide an "opportunity for public hearing." The EPA has not interpreted this mandate as requiring a full adjudicatory hearing under sections 554, 556, and 557 of the Administrative Procedure Act (hereinafter the APA). 13 However, pursuant to 40 C.F.R. § 125.36, "interested persons" may request and the Administrator, in his discretion, may grant an adjudicatory hearing. This adjudicatory hearing, however, will not necessarily incorporate all of the procedural requirements of sections 554, 556, and 557 of the APA.

C. Administrative Proceedings.

1. Cases 75-3794 and 75-3796: Offshore platforms.

In late 1971 and early 1972, petitioners applied for discharge permits from the Army Corps of Engineers pursuant to the Federal Refuse Act. 14 Before the Corps could take action on petitioners' applications, however, the Refuse Act was superseded by the Federal Water Pollution Control Act Amendments of 1972. 15 Therefore, in mid-1973 petitioners applied to the EPA for permits under section 402 of the Control Act. Draft permits were circulated by the Seattle Regional Administrator in September of 1973; after informal public hearings in October, the permits were tentatively issued in December of 1973.

These initial permits contained limits on the discharge of deck drainage of 25 milligrams per liter (mg/1) daily average and 75 mg/1 daily maximum (typically expressed as a combined limit of "25. mg/1"). 16 The permits made no provision for upsets or malfunctions in the pollution control system. The permits also prohibited bypassing of the control system "except (i) where unavoidable to prevent loss of life or severe property damage, or (ii) where excessive storm drainage or runoff would damage any facilities necessary for compliance with the effluent limitations and prohibitions of their permit." See, e.g., J.R. 17 23.

Pursuant to petitioners' request under 40 C.F.R. § 125.36, the Administrator granted further consideration of the proposed permits, including an adjudicatory hearing with the right of cross-examination. Shell Oil Company requested and was granted a hearing separate from the other petitioners. Both the Shell hearing and the "consolidated" hearing were held in August of 1974.

All petitioners argued that the discharge standards had been set at too low a level. Petitioners in the consolidated hearing contended that their permits should contain a produced water limit of 750 mg/1 and a deck drainage limit of 850 mg/1. Shell argued for an even higher deck drainage limit of 1000 mg/1. One of Shell's witnesses also computed recommended deck drainage limits based on pounds of pollutants

Page 1259

discharged per day. In addition, petitioners in both hearings attacked the failure of the permits to provide for malfunctions and upsets in the pollution control system and argued for more liberal bypass provisions that would cover prolonged but necessary periods of equipment repair and maintenance.

After reviewing the record certified by the Administrative Law Judge, the Regional Administrator reaffirmed his 25. mg/1 limit with respect to deck drainage and refused to enact any limit with respect to produced water due to a paucity of data and the "uncertainty" of petitioners' plans to begin discharging produced water offshore. 18 The Regional Administrator also declined to add upset provisions to the permits or to liberalize the bypass provisions already contained in the permits.

The petitioners thereupon requested and were granted direct review by the Administrator pursuant to 40 C.F.R. § 125.36(n). The Administrator accepted written briefs and held oral argument in August of 1975. The Administrator, with the aid of a Chief Judicial Officer and EPA technical personnel, issued his decisions on September 25, 1975, raising the limits for deck drainage to 65/90 mg/1, setting an alternative standard for deck drainage of 5/9.25 pounds per day, 19 and setting limits for produced water of 48/72 mg/1. 20 The Administrator affirmed the Regional Administrator's decision to deny upset provisions and liberalized bypass provisions.

This action followed. Since the filing of...

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  • Water pollution control: Program regulations streamlining; Round Two,
    • United States
    • Federal Register May 15, 2000
    • May 15, 2000
    ...of Appeals, the Seacoast v. Anti-Pollution League v. Costle, 572 F.2d 872 (1st Cir. 1978)(``Seacoast''), and Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977) (``Marathon'') decisions are no longer good law. To briefly restate its position, EPA has revisited the hearing requirements of......
  • Gallagher & Ascher Co. v. Simon, No. 81-2244
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 3, 1982
    ...Engineer, U. S. Army Corps of Engineers, 567 F.2d 1332, 1337 (5th Cir. 1978); Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253, 1260-61 n.25 (9th Cir. 1977); see also Lincoln Transit Co. v. U. S., 256 F.Supp. 990, 994 (S.D.N.Y.1966) (three-judge court); 2 K. Davis, Adminis......
  • TELE TECH v. DEPT. OF PUBLIC UTILITY, No. 17105.
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    • Supreme Court of Connecticut
    • August 31, 2004
    ...("we do not read [5 U.S.C.] § 558 as requiring a [5 U.S.C.] § 556 hearing"); Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253, 1260-61 n. 25 (9th Cir.1977) (5 U.S.C. § 558[c] "does not independently provide that full adjudicatory hearings must be held"). But cf. Air North ......
  • Seacoast Anti-Pollution League v. Costle, ANTI-POLLUTION
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • February 23, 1978
    ...Ninth Circuit and the Seventh Circuit have each found that the APA does apply to proceedings pursuant to § 402. Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977); United States Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977). We At the outset we reject the position of intervenor PSC......
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63 cases
  • Gallagher & Ascher Co. v. Simon, No. 81-2244
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 3, 1982
    ...Engineer, U. S. Army Corps of Engineers, 567 F.2d 1332, 1337 (5th Cir. 1978); Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253, 1260-61 n.25 (9th Cir. 1977); see also Lincoln Transit Co. v. U. S., 256 F.Supp. 990, 994 (S.D.N.Y.1966) (three-judge court); 2 K. Davis, Adminis......
  • TELE TECH v. DEPT. OF PUBLIC UTILITY, No. 17105.
    • United States
    • Supreme Court of Connecticut
    • August 31, 2004
    ...("we do not read [5 U.S.C.] § 558 as requiring a [5 U.S.C.] § 556 hearing"); Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253, 1260-61 n. 25 (9th Cir.1977) (5 U.S.C. § 558[c] "does not independently provide that full adjudicatory hearings must be held"). But cf. Air North ......
  • Seacoast Anti-Pollution League v. Costle, ANTI-POLLUTION
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • February 23, 1978
    ...Ninth Circuit and the Seventh Circuit have each found that the APA does apply to proceedings pursuant to § 402. Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977); United States Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977). We At the outset we reject the position of intervenor PSC......
  • Buttrey v. U.S., No. 81-3234
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 8, 1982
    ...opportunity for public hearing"), to require a trial-type hearing, Seacoast, supra; Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253 (9th Cir. 1977); United States Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977). The question, then, is whether section 402 can be disting......
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1 books & journal articles
  • THE REDISCOVERED STAGES OF AGENCY ADJUDICATION.
    • United States
    • Washington University Law Review Vol. 99 Nbr. 2, October 2021
    • October 1, 2021
    ...A New Test for Formal Adjudication Under the Administrative Procedure Act, 56 HASTINGS L.J. 1067 (2005). (67.) See Marathon Oil v. EPA, 564 F.2d 1253,1261-64 (9th Cir. 1977). The First Circuit initially took this approach, see Seacoast Anti-Pollution League v. Costle (Seacoast), 572 F.2d 87......

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