United States v. Texas Pipe Line Co.

• Decision Date: 17 February 1978
• Docket Number: No. 77-83-C.,77-83-C.
• Citation: 528 F. Supp. 728
• Parties: UNITED STATES of America, Plaintiff, v. The TEXAS PIPE LINE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Oklahoma

528 F. Supp. 728

UNITED STATES of America, Plaintiff, v. The TEXAS PIPE LINE COMPANY, Defendant.

No. 77-83-C.

United States District Court, E. D. Oklahoma.

February 17, 1978.

John Osgood, Asst. U. S. Atty., Muskogee, Okl., for plaintiff.

Jack Short, Tulsa, Okl., for defendant.

MEMORANDUM OPINION

DAUGHERTY, District Judge.

This is an action by the Plaintiff to collect a penalty assessed against Defendant for discharging a harmful quantity of oil into an unnamed tributary of Caney Creek in Atoka County, Oklahoma, in violation of § 311(b)(3) of the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. § 1321(b)(3). It is asserted that the Court has subject matter jurisdiction of this action pursuant to 28 U.S.C. §§ 1345 and 1355.¹

From the record before the Court in this case, it appears without dispute that a crude oil pipeline owned by Defendant was damaged on May 12, 1975, by a bulldozer operating on the land covering the pipeline and six hundred barrels of oil were spilled, of which five hundred seventy-five barrels entered the unnamed tributary of Caney Creek. Immediately upon receiving notification of the break in its pipeline and the escape of the oil into the tributary, Defendant notified the appropriate governmental agencies and began recovery operations. Defendant was able to recover about five hundred ten barrels of the spilled oil. The United States Environmental Protection Agency (EPA) referred this matter to a Coast Guard Hearing Officer and Defendant was subsequently notified of the reported violation and applicable provisions of the Federal Water Pollution Control Act (FWPCA) and was offered the opportunity for a hearing at which Defendant could be represented by counsel. However, Defendant chose to submit written material in lieu of a hearing.² On May 17, 1976, the Hearing Officer issued his decision which assessed a penalty of $2,500 against Defendant and this penalty was upheld upon administrative appeal. Defendant did not pay the penalty and Plaintiff brought this action seeking a judgment in the amount of $2,500.

Pursuant to Rule 56, Federal Rules of Civil Procedure, Plaintiff has filed herein a Motion for Summary Judgment as to liability and a Brief in support thereof. Defendant has filed a Motion to Dismiss Plaintiff's Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure, and an alternative Motion for Summary Judgment pursuant to Rule 56, supra. Said Motions are supported by a Brief and Plaintiff has filed a Brief in opposition thereto.

In support of its Motion for Summary Judgment, Plaintiff contends that in an action for collection of a civil penalty assessed pursuant to 33 U.S.C. § 1321(b)(6), the matter is subject to de novo review under 5 U.S.C. § 706(2)(F) as to both liability and the size of the penalty; that summary judgment is appropriate in this case on the issue of Defendant's liability for a penalty as there are only questions of law to be decided concerning this issue; that the oil discharge in this case was into water subject to the FWPCA; that the penalty system established by 33 U.S.C. § 1321(b)(6) is based on strict liability with no exception insofar as liability for civil penalties is concerned for those cases caused by third persons; that third party causation is one factor to be considered in determining the size of the penalty; and that the Hearing Officer considered all of the relevant facts before him and properly applied the facts and law in reaching a penalty level which reflected all of the evidence.

In support of its Motion to Dismiss, Defendant contends that the Court's review in this case should be limited to the administrative record under 5 U.S.C. § 706(2)(C) and not a trial de novo; that there was no discharge of oil into "navigable waters of the United States" within the meaning of the FWPCA; that the penalty involved in this case is criminal in nature so that the reporting provisions of the FWPCA absolve Defendant of liability; that if there has been a technical violation of the FWPCA, the penalty assessed is excessive; and that as the spill in this case was caused by the act of a third party, nothing more than a token penalty is proper.

JURISDICTIONAL ISSUE

33 U.S.C. § 1321(b)(3) prohibits the discharge of oil into "the navigable waters of the United States" in "harmful quantities" as determined by the President under 33 U.S.C. § 1321(b)(4). Pursuant to § 1321(b)(4), 40 C.F.R. § 110.4 was enacted and provides that a "harmful quantity" of oil is one which violates the applicable water quality standards of the United States, causes a film or sheen upon or discoloration of the surface water or adjoining shorelines, or causes a sludge or emulsion to be deposited beneath the surface of the water or upon adjoining shorelines. 33 U.S.C. § 1362(7) defines "navigable waters" as "the waters of the United States, including the territorial seas." 33 U.S.C. § 1321(b)(6)³ establishes penalties for violations of § 1321(b)(3) and the United States Coast Guard is charged with the execution of the provisions of § 1321(b)(6).

In the instant case, the oil discharge at issue was into an unnamed tributary of Caney Creek, which joins Clear Boggy Creek, which drains into the Red River, a navigable stream. There is evidence in the record before the Court and the parties do not dispute that the unnamed tributary was flowing a small amount of water at the time the discharge occurred. The record does not establish whether Caney Creek, Clear Boggy Creek or the Red River were flowing at the time of the spill. Defendant contends that in order for the Coast Guard to have jurisdiction over the oil discharge in this case, a showing that the unnamed tributary was flowing into Caney Creek and that Caney Creek was flowing into Clear Boggy Creek and that Clear Boggy Creek was flowing into the Red River at the time of the spill was required. In the legislative history of the FWPCA Amendments of 1972, Congress noted that "water moves in hydrologic cycles and it is essential that discharge of pollutants be controlled at the source." S.Rep.No.92-414, 92d Cong., 2d Sess. (1972), reprinted in 1972 U.S.Code Cong. & Ad.News 3668 at 3742. Accordingly, Congress intended that said Amendments apply "to the navigable waters, portions thereof, and their tributaries." Id. at 3743; see United States v. Ashland Oil and Transportation Co., 504 F.2d 1317 (Sixth Cir. 1974). In view of the foregoing, the Court is of the opinion that the FWPCA Amendments of 1972 are applicable to the tributaries of navigable waters and this is so regardless of whether there is a continuous flow of water from the point of an oil spill, through any intermediate tributaries and eventually into navigable waters at the specific time of an oil spill. Water was flowing in the unnamed tributary at the time of the spill involved in this case, the unnamed tributary was a part of an overall tributary of the Red River, a navigable river, was clearly one of "the waters of the United States" within the meaning of § 1362(7) and was therefore one of the "navigable waters of the United States" under § 1321(b)(3). Thus, the Coast Guard's decision in this case finding Defendant had violated § 1321(b)(3) was not void for lack of jurisdiction and Defendant's contention that the Court lacks subject matter jurisdiction over this action is without merit. Accordingly, Defendant's Motion to Dismiss should be overruled.

SCOPE OF JUDICIAL REVIEW

The imposition of a penalty under 33 U.S.C. § 1321(b)(6) is subject to judicial review in a proceeding for judicial enforcement. 5 U.S.C. § 703; United States v. Atlantic Richfield Co., 429 F.Supp. 830 (E.D.Pa.1977). As mentioned previously, Plaintiff contends that the administrative decision in this case is subject to de novo review under 5 U.S.C. § 706(2)(F), whereas, Defendant asserts that judicial review is limited to the administrative record under 5 U.S.C. § 706(2)(C).

In reviewing an administrative decision under 5 U.S.C. § 706, a court must:

"(2) hold unlawful and set aside agency action, findings, and conclusions found to be —

....

(F) unwarranted by the facts to the extent that the facts are subject to a trial de novo by the reviewing court."

Relying on the House hearings explaining the above section, the Supreme Court pointed out in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), that de novo review under § 706(2)(F) is appropriate in only two situations: (1) where there are inadequate factfinding procedures in an adjudicatory proceeding; and (2) where issues that were not before the agency were raised in a proceeding to enforce nonadjudicatory agency action. See also Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973). In this regard, it has been noted that a penalty assessment under 33 U.S.C. § 1321(b)(6) "would never be appropriate for de novo review because the statute mandates adequate factfinding procedures."⁴ United States v. Atlantic Richfield Co., supra at 835, n. 8; see United States v. Independent Bulk Transport, Inc., 394 F.Supp. 1319 at 1323, n. 8 (S.D.N.Y. 1975). Furthermore, this case does not come within the second situation listed above as the instant case is a proceeding to enforce adjudicatory rather than nonadjudicatory agency action. Moreover, the House hearings relied on by the Supreme Court in Overton Park make clear that de novo review is not available when the relevant statute requires that an order be issued only after an administrative hearing. United States v. Cheramie Bo-Truc # 5, Inc., 538 F.2d 696 (Fifth Cir. 1976); see United States v. Independent Bulk Transport, Inc., supra; H.R.Rep.No.1980, 79th Cong., 2d Sess. 45-46 (1946). 33 U.S.C. § 1321(b)(6) states that "no penalty shall be assessed unless the owner or operator charged shall have been given notice and opportunity for a hearing on such charge." Therefore, the...