US Env'l Prot. v. General Electric Co.

• Decision Date: 01 August 1998
• Docket Number: Docket No. 98-6279
• Citation: 197 F.3d 592
• Parties: (2nd Cir. 1999) UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee, v. GENERAL ELECTRIC COMPANY, Defendant-Appellant, GRAND STREET ARTISTS, Plaintiff
• Court: U.S. Court of Appeals — Second Circuit

Page 592

197 F.3d 592 (2nd Cir. 1999)

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee, v. GENERAL ELECTRIC COMPANY, Defendant-Appellant, GRAND STREET ARTISTS, Plaintiff.

Docket No. 98-6279

August Term, 1998

UNITED STATES COURT OF APPEALS SECOND CIRCUIT

Argued: June 22, 1999

Decided: Dec.14, 1999

Appeal from an order of the United States District Court for the Southern District of New York (Rakoff, J.) denying a motion to enforce, and granting a motion to quash, a subpoena duces tecum addressed to the United States Environmental Protection Agency for the production of documents for use in a lawsuit to which the Agency is not a party, the district court having applied the doctrine of sovereign immunity and provisions of the Administrative Procedure Act in arriving at its decision.

Vacated and remanded.

DAVID S. JONES, Assistant United States Attorney for the Southern District of New York, New York, NY (Mary Jo White, United States Attorney; Gideon A. Schor, Assistant United States Attorney, on the brief), for Appellee.

VIRGINIA A. SEITZ, Sidley & Austin, Washington, DC (Samuel I. Gutter, Margaret B. Demers, on the brief); Kirk R. MacFarlane, Of Counsel for General Electric Co., King of Prussia, PA, for Defendant-Appellant.

Before: MINER, JACOBS and SACK, Circuit Judges.

MINER, Circuit Judge:

Appellant General Electric Company appeals from an order entered in the United States District Court for the Southern District of New York (Rakoff, J.) denying a motion to enforce, and granting a motion to quash, a subpoena duces tecum addressed to the United States Environmental Protection Agency ("EPA"). The subpoena called for the production of certain documents for discovery in a lawsuit entitled "Grand Street Artists, et al. v. General Electric Co., et al." pending in the United States District Court for the District of New Jersey (the "New Jersey Action.") The subpoena was addressed to a named individual in the office of the EPA Regional Counsel in New York City and was issued by an attorney for General Electric in New York City. When the EPA refused to honor the subpoena, General Electric brought a proceeding in the form of a motion in the Southern District of New York to compel compliance, and the EPA cross-moved to quash.

In granting the cross-motion and denying the motion, the district court determined that the EPA is protected by sovereign immunity as an agency of the United States, that the United States waived its sovereign immunity from proceedings of this type by enactment of the Administrative Procedure Act ("APA"), and that General Electric failed to properly invoke the benefits of the APA by moving to enforce the subpoena rather than filing an independent lawsuit seeking to compel compliance. Disagreeing with the district court only in respect of the need for an independent lawsuit, we vacate the judgment of the district court and remand for further proceedings consistent herewith.

BACKGROUND

The New Jersey Action arises out of the purchase, made over a half century ago, of a former General Electric factory at 720-732 Grand Street, Hoboken, New Jersey, by a group of artists known as the Grand Street Artists Partnership. Some time after the facility was converted to residential condominiums for sale to members of the partnership, mercury was found inside the building. The residents of the site were constrained to vacate in January of 1996, and the EPA asserted jurisdiction over the building under the federal Superfund program, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. 9601, et seq. The EPA is providing for the permanent relocation of the residents. The Partnership and its members have pleaded various claims under state and federal law against General Electric and others in the New Jersey Action.

Contending that the documents sought from the EPA in discovery were "highly relevant" to the claims in the New Jersey Action, General Electric caused a subpoena duces tecum to issue out of the Southern District for the following documents relating to the premises in Hoboken:

1. All records reflecting communications by and between, and/or among USEPA, the Army Corps of Engineers, and the owners or former residents of the Premises regarding the Premises, which were not previously disclosed to GE; and

2. Any records reflecting real estate appraisals of the Premises including any re-appraisals, updated, or supplemental appraisals of the Premises, which were not previously disclosed to GE.

The subpoena was addressed to "Walter Mugd[a]n, Office of Regional Counsel, U.S. Environmental Protection Agency, 26 Federal Plaza, New York, New York 10007."

Following service of the subpoena, Catherine Garypie, Assistant Regional Counsel for the EPA, contacted counsel for General Electric and asked that the scope of the subpoena be narrowed. In response, counsel for General Electric agreed not to require the production of documents already produced in response to a Freedom of Information Act ("FOIA") request, see 5 U.S.C. 552, and further agreed not to seek certain documents withheld in whole or in part in the EPA's FOIA response. Thereafter, Eric Schaaf, Acting Regional Counsel for the EPA, wrote a detailed letter to counsel for General Electric responding to the subpoena as narrowed.

In the letter, Schaaf first noted that Walter Mugdan was not assigned to the Office of Regional Counsel and therefore did not have custody of the records sought. Schaaf then wrote that he was refusing to produce the records because it would not be in the interest of the EPA to do so. He opined that providing the documents would be an inappropriate use of resources and could be seen as a failure to maintain impartiality in the litigation. He went on to identify a number of "concerns" raised by the document demand. The first related to matters of deliberative process, attorney-client and attorney work product privileges. The second was the possibility of interference with enforcement proceedings. Third, the EPA was concerned that many of the documents represented confidential research. Finally, Schaaf objected to furnishing appraisal reports, asserting, among other things, that the appraisals were made by outside appraisers, did not represent EPA policy and decisions, and, if released, might serve to complicate ongoing negotiations with property owners at the Grand Street site. Accordingly, the EPA rejected the subpoena as narrowed and refused to produce any other documents pursuant to it. Proceeding to treat the subpoena as a request under FOIA in accordance with EPA regulations, Schaaf noted that EPA already had responded to General Electric's FOIA request but had since decided "that it is appropriate to release several additional documents." We assume that those documents were released.

General Electric remained dissatisfied with the EPA response. There followed the motion to compel enforcement of the subpoena duces tecum and the cross-motion to quash it which, according to the district court, "rais[ed] numerous objections ranging from the substantial to the invisible." Grand St. Artists v. General Elec. Co., 22 F. Supp. 2d 299, 300 (S.D.N.Y. 1998). The district court found one "substantial" basis for denying the motion to compel and for granting the cross-motion to quash. Noting that sovereign immunity insulates the United States Government and its agencies from judicial proceedings in the absence of an express waiver of that immunity, the court observed that

[a] proceeding is "against the sovereign" in this sense if, among other things, the result could serve "'to restrain the Government from acting, or to compel it to act.'" Dugan v. Rank, 372 U.S. 609, 620, 83 S. Ct. 999, 10 L. Ed. 2d 15 (1963) (citations omitted). Since enforcement of the instant subpoena would compel EPA to act, such enforcement is therefore barred by sovereign immunity absent an express waiver. See Boron Oil Co. v. Downie, 873 F.2d 67, 71 (4th Cir. 1989).

Id.

In accordance with the foregoing, the district court determined that a proceeding to compel the government to produce information cannot be instituted without express statutory authority. It found there was no specific statute authorizing a lawsuit to gain access to government information for use in litigation to which the government is not a party through the service of a subpoena. The court did find that the Administrative Procedure Act, see 5 U.S.C. 702, which allows an action to be brought in the United States District Court against the United States for relief other than money damages, provides a means by which private litigants may seek access to government information. However, the district court concluded that

[t]here is nothing in the pertinent language of [the Administrative Procedure Act] to suggest that Congress remotely intended to stretch the ordinary meaning of "action" to encompass an ancillary motion against a non-party commenced, as here, not by filing an independent lawsuit but simply by moving to compel enforcement of a subpoena.

Id. Accordingly, the court denied the motion to compel and granted the motion to quash General Electric's subpoena for the discovery of government documents not provided pursuant to its FOIA request. This appeal followed.

DISCUSSION

I. Of the Application of EPA's "Housekeeping Regulations" to the Subpoena at Issue

Relying on the doctrine enunciated by the Supreme Court in United States ex rel. Touhy v. Ragen, 340 U.S. 462, 468 (1951), the EPA asserts that Walter Mugdan, to whom the subpoena at issue was addressed, was not authorized to produce the requested documents and that the subpoena therefore was unenforceable. The Federal Housekeeping Statute, 5 U.S.C. 301, authorizes government agencies such as the EPA to adopt regulations regarding "the custody, use, and preservation of [agency] records, papers, and property." In Touhy, a state prisoner who had instituted a federal habeas corpus...