U.S. v. M/V Sanctuary

• Decision Date: 25 August 2008
• Docket Number: No. 07-2123.,07-2123.
• Citation: 540 F.3d 295
• Parties: UNITED STATES of America, Party in Interest-Appellee, and Maryland Port Administration; State of Maryland Central Collection Unit, Plaintiffs, v. M/V SANCTUARY, her engines, tackle equipment, boilers, furniture, and all other necessaries thereunto appertaining and belonging, in rem; Potomac Navigation, Incorporated; Project Life, Incorporated, Defendants-Appellants, and John Chamberlain, Claimant.
• Court: U.S. Court of Appeals — Fourth Circuit

540 F.3d 295

UNITED STATES of America, Party in Interest-Appellee, and Maryland Port Administration; State of Maryland Central Collection Unit, Plaintiffs, v. M/V SANCTUARY, her engines, tackle equipment, boilers, furniture, and all other necessaries thereunto appertaining and belonging, in rem; Potomac Navigation, Incorporated; Project Life, Incorporated, Defendants-Appellants, and John Chamberlain, Claimant.

No. 07-2123.

United States Court of Appeals, Fourth Circuit.

Argued: May 13, 2008.

Decided: August 25, 2008.

ARGUED: Lawrence Jay Kahn, Freehill, Hogan & Mahar, New York, New York, for Appellants. Ryan Douglas Nelson, United States Department of Justice, Washington, D.C., for Appellee. ON BRIEF: Alexander M. Giles, Semmes, Bowen & Semmes, Baltimore, Maryland, for Appellants. Ronald J. Tenpas, Assistant Attorney General, Environment & Natural Resources Division, Michael T. Gray, United States Department of Justice, Washington, D.C., for Appellee.

Before MICHAEL and DUNCAN, Circuit Judges, and JACKSON L. KISER, Senior United States District Judge for the Western District of Virginia, sitting by designation.

Affirmed by published opinion. Judge MICHAEL wrote the opinion, in which Judge DUNCAN and Senior Judge KISER joined.

OPINION

MICHAEL, Circuit Judge:

The main issue in this appeal is whether the Environmental Protection Agency (EPA) may obtain an administrative warrant to carry out its authority under the Toxic Substances Control Act (TSCA), 15 U.S.C. § 2601 et seq., to inspect places containing regulated chemical substances. We hold that EPA has such authority, and we therefore affirm the district court's issuance of a warrant authorizing the agency to inspect the M/V Sanctuary for polychlorinated biphenyls (PCBs). We also affirm the district court's preliminary injunction order preventing the Sanctuary's owner, Potomac Navigation, Inc., from moving the ship from the pier in Baltimore where it is docked.

I.

A.

The health and environmental risks associated with PCBs are undisputed. EPA has determined that PCBs are "toxic and persistent," may be oncogenic, and "may cause reproductive effects and developmental toxicity in humans." Disposal of Polychlorinated Biphenyls (PCBs), Part IV, 63 Fed.Reg. 35,385 (June 29, 1998). Since 1979 TSCA has banned the manufacture, processing, distribution in commerce, or use of PCBs, except "in a totally enclosed manner." 15 U.S.C. § 2605(e)(2)(A)-(B). ("`[T]otally enclosed manner' means any manner which will ensure that any exposure of human beings or the environment to a [PCB] will be insignificant as determined by the [EPA] Administrator by rule." Id. § 2605(e)(2)(C)). PCBs may not be exported for distribution in commerce without an exemption. 15 U.S.C. §§ 2605(e)(2)(A), 2611(a)(2); 40 C.F.R. § 761.20(c). In addition, TSCA regulations prohibit the export, for purposes of disposal, of PCBs in concentrations of fifty parts per million (ppm) or greater without an exemption. 40 C.F.R. § 761.97(a).

TSCA provides EPA with inspection authority. Specifically, "[f]or purposes of administering [TSCA]," EPA "may inspect any establishment, facility, or other premises in which" substances regulated by the Act "are manufactured, processed, stored, or held before or after their distribution in commerce." 15 U.S.C. § 2610(a). In addition, this inspection authority reaches "any conveyance being used to transport" a regulated substance "in connection with distribution in commerce." Id. EPA's inspection powers "extend to all things within the premises or conveyance inspected" that "bear[ ] on whether the requirements of [TSCA]" have been met with respect to regulated substances "within such premises or conveyance." Id. § 2610(b).

B.

The Sanctuary, built in 1944, was once a U.S. Navy hospital ship. The ship was stricken from the Naval Vessel Reports in 1989, and the government sold the ship later that year to Project Life, Inc. (formerly Life International) for $10, with the stipulation that the ship would be used to provide humanitarian services. Project Life docked the Sanctuary at a Maryland Port Authority (MPA) pier in Baltimore, with the announced purpose of converting the ship into a facility for women suffering from addiction. The conversion was never accomplished, and Project Life failed to pay MPA dockage and related charges that became due.

On March 9, 2007, in an effort to recover the unpaid charges, the MPA sued the Sanctuary and Project Life in the District of Maryland. A warrant for the arrest of the ship was issued and executed. After a default judgment was entered against the Sanctuary and Project Life, Potomac bought the ship for $50,000 at a court-ordered public auction. The October 4, 2007, order confirming the sale gave Potomac sixty days to tow the ship away from Baltimore, and Potomac advised the court that the ship would be moved to Piraeus, Greece, or another location for refurbishment, "most likely as a storage unit, a hotel platform, or other similar use." J.A. 760. On October 30, 2007, shortly before the Sanctuary's planned towage, the Basel Action Network (BAN), an environmental watchdog group, e-mailed Kelly L. Bunker, PCB Coordinator for EPA's Region III, which includes Baltimore. According to its e-mail, BAN believed that the Sanctuary contained PCBs and would likely be towed to another location and dismantled in violation of TSCA's ban on the export of PCBs.

BAN's e-mail prompted Bunker to research the Sanctuary's history to assess whether it was likely to contain PCBs. Bunker learned from EPA technical guidance documents that PCBs are most likely to be present in ships built before the 1979 PCB ban. She learned from a 2001 RAND Corporation report that PCBs were present "in many plastics, rubbers, adhesives, gaskets, and other commercial nonmetal products used in Navy ships" and that testing of retired ships indicated that "up to 98% of all the Navy ships awaiting disposal may contain regulated amounts of PCBs in solid materials." J.A. 487, 517-18. The Sanctuary's potential for containing PCBs was also assessed by Laura A. Casey, a chemist employed in EPA's Office of Solid Waste, Hazardous Waste Identification Division, International and Transportation Branch, who had over nine years' experience dealing with PCBs in connection with the disposal of ships. Casey reviewed data regarding the presence of PCBs on numerous non-combatant ships similar to the Sanctuary, built between the 1940s and 1970s. She compiled a list of items and materials on these ships that have been found to contain PCBs, including electrical cable, rubber and felt gaskets, insulation material, paints, caulking, and numerous rubber applications. Casey concluded that the Sanctuary likely contained materials with PCBs, which are regulated under TSCA.

After Bunker and Casey completed their analyses, EPA learned that PCBs were in fact present on the Sanctuary. This information came from Kevin J. McCabe, managing member of a ship recycling firm that considered bidding for the Sanctuary. McCabe reported that four out of the five paint samples his company took from the Sanctuary tested positive for PCBs in concentrations well over fifty ppm. EPA also obtained information from Polly Parks, a ship recycling consultant, who was familiar with deceptive practices occurring in connection with the disposal of PCB-laden ships built in the same era as the Sanctuary. According to Parks, the buyer of such a ship often claims that it will be repaired and refurbished; instead the ship is towed to a third world country where it is dismantled and sold at a huge profit on the scrap metal market.

In early November 2007, pursuant to its authority under TSCA, EPA requested permission from Potomac to inspect the Sanctuary for materials containing PCBs. Potomac denied EPA's request. Shortly thereafter, EPA (1) applied to the district court for an administrative warrant authorizing the inspection, and (2) moved for a preliminary injunction to prohibit Potomac from moving the Sanctuary from the Baltimore pier until EPA could complete the inspection and determine whether enforcement action was necessary. EPA's application and motion were supported in part by the information in the preceding two paragraphs, which was submitted in the declarations of Bunker, Casey, McCabe, and Parks. The district court issued the warrant for the inspection of the Sanctuary and granted the preliminary injunction. The court also denied Potomac's request for a Franks hearing on the integrity of the declarations supporting the warrant.

Potomac appeals, contending that the district court erred in (1) concluding that EPA has warrant authority under TSCA, (2) finding probable cause to support issuance of the administrative warrant, (3) concluding that the Sanctuary was a proper location for inspection under TSCA, (4) denying Potomac's request for a Franks hearing, and (5) granting the preliminary injunction that enjoined the towage of the Sanctuary from Baltimore.

II.

Potomac argues that EPA lacks warrant authority because TSCA does not specifically confer it. We review this legal issue de novo, United States v. Deaton, 332 F.3d 698, 703-04 (4th Cir.2003), and hold that EPA's inspection authority under TSCA carries with it the authority to obtain a warrant.

TSCA explicitly authorizes EPA to inspect a premises or conveyance where there are substances regulated by the Act. 15 U.S.C. § 2610(a). The scope of this inspection authority "extend[s] to all things within the premises or conveyance" that "bear[ ] on whether the requirements" of TSCA are met. Id. § 2610(b). "When Congress invests an agency with enforcement and investigatory authority, it is not necessary [for Congress] to identify explicitly each and every technique that may be used in executing the statutory mission." Dow Chemical Co. v. United States, 476 U.S. 227, 233, 106 S.Ct. 1819, 90 L.Ed.2d 226 (1986). Instead, "[r]egulatory or enforcement authority generally...