Sierra Club v. Union Oil Co. of California

• Decision Date: 03 April 1987
• Docket Number: No. 85-2868,85-2868
• Citation: 813 F.2d 1480
• Parties: , 55 USLW 2598, 17 Envtl. L. Rep. 20,547 SIERRA CLUB, a California non-profit corporation, Plaintiff-Appellant, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, et al., Defendants- Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1480

813 F.2d 1480

25 ERC 1801, 55 USLW 2598, 17 Envtl.

L. Rep. 20,547

SIERRA CLUB, a California non-profit corporation, Plaintiff-Appellant, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation et al., Defendants- Appellees.

No. 85-2868.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 10, 1986.

Decided April 3, 1987.

Roger Beers, Stephan Volker, San Francisco, Cal., for plaintiff-appellant.

Patrick J. Cafferty, Jr., San Francisco, Cal., for defendants-appellees.

Amelia S. Salzman, Washington, D.C., for amicus curiae.

Appeal from the United States District Court for the Northern District of California.

Before CHOY, GOODWIN and PREGERSON, Circuit Judges.

PREGERSON, Circuit Judge:

The Sierra Club brought a citizen enforcement action against Union Oil Company of California ("Union Oil") alleging that Union Oil violated the terms of its National Pollutant Discharge Elimination System ("NPDES") permit on seventy-six occasions. After a five-day trial, the district court found no violations of the permit. The court excused some of the reported exceedances of permit limitations by application of an upset defense (an excuse for permit violations when circumstances occur that are beyond the reasonable control of the permittee), some on the ground that reports of exceedances were mistakes caused by sampling error, and some by application of a purported de minimus exception to the Federal Water Pollution Control Act ("the Act"). Sierra Club appeals from these rulings and from the district court's denial of its motion for leave to file an amended complaint before trial. We reverse.

Sierra Club's original complaint alleged that Union Oil exceeded its permit limitations on seventy-six occasions during the period between 1979 and 1983. Union Oil's principal defense is that approximately fifty of the exceedances were due to circumstances beyond Union Oil's reasonable control: unusually high levels of rainfall during the winters of 1981-1982 and 1982-1983. Union Oil argues that because these exceedances were caused by exceptional circumstances, Union Oil is entitled to assert an upset defense. Although Union Oil's permit contained no upset defense, Union Oil argues that Marathon Oil Co. v. Environmental Protection Agency, 564 F.2d 1253 (9th Cir.1977), and 40 C.F.R. Sec. 122.41 (1986), necessitate the inclusion of an upset defense in the permit. Sierra Club counters by asserting that because Union Oil did not contest the terms of its permit when issued and reissued, Union Oil is barred by the doctrine of exhaustion of administrative remedies from seeking to amend the permit during this enforcement proceeding.

Union Oil's second major defense is that several of the permit exceedances were caused by sampling error, meaning that although reported as exceedances, they were in fact not exceedances. Sierra Club and the Environmental Protection Agency ("EPA") as amicus curiae argue that because accurate self-monitoring is critical to the effectiveness of the Federal Water Pollution Control Act, sampling errors should not be recognized as valid excuses for asserted exceedances of NPDES permits.

This case raises significant questions about the operation of the Federal Water Pollution Control Act. In particular, we must consider the issue of the states' power under the Act to impose more stringent water regulations than those imposed by the Environmental Protection Agency. We must also consider the level to which the viability of a self-monitoring system such as the NPDES requires courts to hold permittees accountable for all errors in reporting.

BACKGROUND

I. Statutory Scheme

The objective of the Federal Water Pollution Control Act, 33 U.S.C. Secs. 1251-1376 (1986), is "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. Sec. 1251(a). As amended in 1972, the Act declares that "it is the national goal that the discharge of pollutants into the navigable waters be eliminated by 1985." 33 U.S.C. Sec. 125(a)(1). In furtherance of these goals, the Act prohibits the discharge of all pollutants except as authorized by the Environmental Protection Agency. 33 U.S.C. Sec. 1311(a).

The Act requires that the EPA promulgate "effluent limitation" standards ¹ for numerous categories of industrial polluters. These standards are principally technology-based, limiting discharges to levels achievable by use of "the best practicable control technology currently available." 33 U.S.C. Sec. 1311(b)(1)(A). Water quality standards are used as a supplementary basis for effluent limitations, so that numerous dischargers, despite their individual compliance with technology-based limitations, can be regulated to prevent water quality from falling below acceptable levels. Environmental Protection Agency v. California ex rel. State Water Resources Control Board, 426 U.S. 200, 205 n. 12, 96 S.Ct. 2022, 2025 n. 12, 48 L.Ed.2d 578 (1976).

Under the National Pollutant Discharge Elimination System, 33 U.S.C. Sec. 1342, the EPA issues permits to individual dischargers. Under the permit, the generally applicable effluent limitations and other standards become the obligation of the individual discharger. Environmental Protection Agency v. California, 426 U.S. at 205, 96 S.Ct. at 2025. The Act requires that each discharger holding a NPDES permit monitor and report on its compliance with its permit. Each discharger must install, use, and maintain monitoring equipment and must sample its effluents. 33 U.S.C. Sec. 1318(a)(4)(A). The discharger must report the results of its self-monitoring to the EPA and the state agency that issues the permit. These self-monitoring reports are to be submitted at intervals specified in the permit. 40 C.F.R. Sec. 122.41(1)(4).

In accordance with the Act's policy "to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution," 33 U.S.C. Sec. 1251(b), states that follow the procedures outlined in the Act are authorized to issue NPDES permits to discharging entities within the state. 33 U.S.C. Secs. 1251(b), 1342(b). All states must comply with the Act and with the EPA's regulations, but a state may adopt its own effluent limitations and standards so long as they are not less stringent than the EPA's correlative limitations and standards. 33 U.S.C. Sec. 1370. Before a state issues any NPDES permit, it must transmit a copy of the proposed permit to the federal EPA Administrator. The EPA Administrator may object within ninety days to the issuance of the proposed permit and subject it to a review process. 33 U.S.C. Sec. 1342(d)(2).

Actions to enforce the permit terms against the permittee may be brought by the EPA, 33 U.S.C. Sec. 1319, or by concerned citizens, 33 U.S.C. Sec. 1365. The Act provides for criminal and civil penalties to be imposed, with civil fines ranging as high as $10,000 per day for each violation. 33 U.S.C. Sec. 1319(d).

The original regulations promulgated under the Act did not provide for any exceptions to NPDES permit terms when permit exceedances occurred because of conditions outside of the reasonable control of the discharger. In 1977, however, this court determined that, under some circumstances, the Act requires that an upset defense be made available to permittees. In Marathon Oil, 564 F.2d at 1272-73, the EPA issued a permit to Marathon Oil for its After Marathon Oil was decided, the EPA amended 40 C.F.R. Sec. 122.41 to include a formal upset provision. The section provides for incorporating the upset defense into all NPDES permits, either explicitly or by reference to the relevant regulations. It defines "upset" as "an exceptional incident in which there is unintentional and temporary noncompliance with technology based permit effluent limitations because of factors beyond the reasonable control of the permittee." 40 C.F.R. Sec. 122.41(n). The scope of the upset defense under the section does not include noncompliance caused by "operational error, improperly designed treatment facilities, inadequate treatment facilities, lack of preventive maintenance, or careless or improper operation." Id. The regulation also imposes stringent procedural requirements for asserting the upset defense and places the burden of proof upon the party claiming the defense. Id.

                offshore oil platforms and onshore facilities, but, in accordance with normal policy, did not include any upset provision in the permit.  Marathon requested review by the EPA Regional Administrator and then by the EPA Administrator, challenging the terms of the permit and complaining, inter alia, of the absence of an upset provision.  When the EPA Administrators affirmed the permit containing no upset provision, Marathon appealed to this court, as allowed under 33 U.S.C. Sec. 1369(b).  We remanded the case with instruction to the EPA to insert an upset provision in Marathon's permit. 2   Marathon Oil, 564 F.2d at 1272-73
                

The states' role relative to the conditions (one of which is the upset defense) described in 40 C.F.R. Sec. 122.41 is set out in 40 C.F.R. Sec. 123.25. That section provides that states may omit or modify any of section 122.41's conditions to impose more stringent requirements. 40 C.F.R. Sec. 123.25(a)(12). The section concludes by stating:

NOTE: States need not implement provisions identical to the above listed provisions. Implemented provisions must, however, establish requirements at least as stringent as the corresponding listed provisions.

....

For example, a State may impose more stringent requirements in an NPDES program by omitting the upset provision of Sec. 122.41 or by requiring more prompt notice of an upset.

40 C.F.R. Sec. 123.25(a) (emphasis added).

II. Facts

Union Oil operates an oil refinery that discharges treated wastewater into the San Pablo Bay (at the north end of San Francisco Bay) from two onshore monitoring stations, referred to as E-001...