Sierra Club, Lone Star Chapter v. Cedar Point Oil Co. , 73 F.3d 546 ( 1996 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-20461
_____________________
SIERRA CLUB, LONE STAR CHAPTER,
Plaintiff-Counter
Defendant-Appellee,
v.
CEDAR POINT OIL COMPANY INC.,
Defendant-Counter
Claimant-Appellant.
_____________________
No. 95-20227
_____________________
SIERRA CLUB, LONE STAR CHAPTER,
Plaintiff-Counter
Defendant-Appellant,
v.
CEDAR POINT OIL COMPANY INC.,
Defendant-Counter
Claimant-Appellee.
_________________________________________________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________________________________________________
January 11, 1996
Before REYNALDO G. GARZA, KING and HIGGINBOTHAM, Circuit Judges.
KING, Circuit Judge:
These consolidated appeals arise from an action brought by
Sierra Club, Lone Star Chapter ("Sierra Club"), against Cedar
Point Oil Company ("Cedar Point") under the citizen suit
provision of the Clean Water Act ("CWA"), 33 U.S.C. § 1365.
Sierra Club alleged that Cedar Point was violating the CWA by
discharging produced water into Galveston Bay without a permit
and sought civil penalties and an order enjoining the unpermitted
discharge. Cedar Point counterclaimed for abuse of process.
Before trial, the district court granted summary judgment in
favor of Sierra Club on the issue of Cedar Point's liability
under the CWA and dismissed Cedar Point's counterclaim. After a
bench trial, the district court assessed a civil penalty of
$186,070. Cedar Point appeals. The district court also enjoined
the discharge of produced water from Cedar Point's oil and gas
production operations without a permit; however, the court later
modified this injunction to allow Cedar Point to continue the
unpermitted discharge. Sierra Club appeals this modification.
We affirm in all respects the judgment of the district court.
I. BACKGROUND
A. Facts
1. "Produced Water"
This lawsuit concerns the legality of the disposal of a by-
product of the oil and gas production process: "produced water."
Produced water originates as source water trapped in underground
geological formations with oil and gas. When a well is drilled
2
into a formation, the extraction of oil and gas also brings the
water to the surface. During extraction, chemicals used in the
drilling process become mixed with the water. The result is
produced water.1
Part of the production process involves the separation of
the produced water from the extracted oil and gas. After
separation, the operator must dispose of the produced water. The
available methods of disposal include reinjection into an
underground reservoir, land disposal, evaporation, and discharge
into surface waters. Produced water is the highest volume waste
source in offshore oil and gas production operations.2
2. Cedar Point's Operations
Cedar Point is a Mississippi corporation that owns and
operates an oil and gas well and associated facilities in the
Cedar Point field ("the field"), which is located in Galveston
1
The Environmental Protection Agency has defined produced
water as "water and particulate matter associated with oil and
gas producing formations. Produced water includes small volumes
of source water and treatment chemicals that return to the
surface with the produced formation fluids and pass through the
produced water treating systems currently used by many oil and
gas operators." 57 Fed. Reg. 60,926, 60,951 (1992). For
discussions of the origin and composition of produced water, see
BP Exploration & Oil, Inc. v. U.S.E.P.A., 66 F.3d 784, 792 (6th
Cir. 1995); Natural Resources Defense Council v. U.S.E.P.A., 863
F.2d 1420, 1425 (9th Cir. 1988); American Petroleum Inst. v.
E.P.A., 661 F.2d 340, 343 (5th Cir. 1981).
2
BP Exploration & Oil, 66 F.3d at 792; Natural Resources
Defense Council v. U.S.E.P.A., 863 F.2d at 1425.
3
Bay in Chambers County, Texas.3 John McGowan ("McGowan"), Cedar
Point's principal shareholder, purchased the field from Chevron
Corporation ("Chevron") on July 1, 1989. At that time, the field
contained twenty-two abandoned wells and three producing wells.
McGowan shut down the producing wells approximately one month
after he purchased the field. On January 1, 1991, McGowan
transferred the field to Cedar Point.4 Later that year, Cedar
Point drilled its first well since acquiring the field: state
well 1876.5 Cedar Point began producing oil and gas from this
well on September 10, 1991.
Cedar Point began to discharge produced water into Galveston
Bay at approximately the same time that it began production from
state well 1876. This discharge continued through the trial of
this action in May 1994, except that the discharge was
temporarily suspended between April and August of 1992.
Throughout this period, the average daily discharge ranged
between 500 to 1200 barrels per day.6 Cedar Point's produced
3
The field and associated facilities are Cedar Point's only
assets. Cedar Point itself has no regular employees, but
contracts for necessary services with McGowan Working Partners, a
Mississippi partnership that conducts oil and gas operations in
Louisiana, Mississippi, and Texas. While most of the contractors
who do work for Cedar Point hold interests in McGowan Working
Partners, the partnership is not a party to this action.
4
This transfer is characterized as a "purchase" in some of
the documents in the record on appeal; however, David Russell,
Cedar Point's vice-president, testified that Cedar Point acquired
the field from McGowan at no cost.
5
At the time this action commenced, Cedar Point had
apparently not drilled any other wells in the field.
6
A barrel contains 42 gallons.
4
water contained, inter alia, barium, benzene, zinc, chlorides,
sulfate, bicarbonate, ammonia, naphthalene, phenolic, radium, oil
and grease. Cedar Point disposed of its produced water in the
following manner: (1) the oil, gas, and water mixture produced
from state well 1876 was piped to a platform in Galveston Bay for
the first phase of separation; (2) after the initial separation,
the remaining mixture was then piped to shore where more oil was
separated in a series of tanks; (3) the produced water was then
transferred to settling pits so that some constituents could
settle out of the water; and (4) the remaining produced water was
drained out of the pits and discharged through a pipe over the
bulkhead into Galveston Bay.7
3. The Permits
Between August 1971 and July 1989, Chevron discharged
produced water from the onshore separating facility pursuant to a
permit issued by the Texas Railroad Commission ("the Railroad
Commission"). This permit set limitations only on the oil and
grease content of the produced water that was being discharged.
After McGowan purchased the field, the Railroad Commission
transferred Chevron's Commission permit to McGowan. The letter
from the Railroad Commission authorizing this transfer stated
that a permit from the Environmental Protection Agency ("EPA")
may be required for the discharge of produced water under the
7
Originally, the produced water had been discharged into a
marsh near the shore facility. In modifying the separation
system, Cedar Point changed the discharge point to Galveston Bay.
5
National Pollutant Discharge Elimination System ("NPDES"). David
Russell ("Russell"), who reviewed the transferred permit for
McGowan, testified that he did not read this sentence in the
letter; however, he did review Chevron's files, which did not
reveal any NPDES permit or NPDES permit application in the
twenty-year period of Chevron's ownership of the field. Based on
this review, Russell did not apply for a NPDES permit for McGowan
at that time.
After McGowan transferred the field to Cedar Point in 1991,
Russell commenced negotiations with the Railroad Commission to
transfer McGowan's Commission permit to Cedar Point. This
negotiation took several months, apparently because Cedar Point
and the Railroad Commission disputed the terms of the Commission
permit that Cedar Point would ultimately receive. Cedar Point
finally obtained a Commission permit in September 1992, again
establishing limitations only on the oil and grease content of
the produced water that was being discharged.8 According to
Russell, while he was negotiating the terms of this permit,
Railroad Commission employees informed him that oil and gas
operators in Galveston Bay were being sued for discharging
produced water into the bay without a NPDES permit. Also, the
8
Because Cedar Point began discharging produced water into
Galveston Bay in September 1991, it had been discharging without
a Commission permit of its own for twelve months. Russell
testified that he assumed that Cedar Point could discharge
pursuant to McGowan's Commission permit pending the approval of
Cedar Point's transfer application. Although Sierra Club
apparently questioned the legal basis of this assumption at
trial, the legality of Cedar Point's discharges under Texas law
is not an issue in this lawsuit.
6
final Commission permit that Cedar Point received in September
1992 advised that a NPDES permit may be required for the
discharge of produced water and that EPA was considering
prohibiting such discharges. Accordingly, on October 15, 1992,
Cedar Point applied to EPA for a NPDES permit for its produced
water discharges.
By letter dated November 5, 1992, EPA informed Cedar Point
that its application for a NPDES permit had been reviewed and
determined to be administratively complete. Since this
acknowledgment, however, EPA has failed to act on the
application. On December 30, 1992, Russell submitted a request
to EPA under the Freedom of Information Act ("FOIA"),9 asking
whether EPA had ever issued a permit for the discharge of
produced water in Texas. On February 4, 1993, EPA responded that
it had issued two such permits. The first permit was a general
permit10 that applied to oil and gas operators in the "Offshore
Subcategory" in Louisiana and Texas and established limitations
on the oil and grease content of discharged produced water.11
9
5 U.S.C. § 552.
10
There are two types of NPDES permits: individual and
general. Typically, EPA will promulgate a nationally uniform
"effluent limitation" on the discharge of a particular pollutant
and implement that limitation in the form of individual NPDES
permits issued to entities discharging that pollutant. See 33
U.S.C. §§ 1311, 1342. Where EPA has not yet promulgated such an
effluent limitation, however, it may regulate the discharge of
pollutants by issuing a general NPDES permit that applies to a
class of similar entities located in a particular geographical
region. See Natural Resources Defense Council v. Costle, 568
F.2d 1369, 1380-82 (D.C. Cir. 1977); 40 C.F.R. § 122.28.
11
46 Fed. Reg. 20,284 (1981).
7
The second permit was also a general permit that applied to oil
and gas operators in the "Onshore Subcategory" in Louisiana, New
Mexico, Oklahoma, and Texas; this permit established an absolute
prohibition on the discharge of produced water by these
entities.12 Neither of these permits applied to Cedar Point
because Cedar Point is in the "Coastal Subcategory."13 In fact,
at that time the only regulation that EPA had promulgated that
applied to the discharge of produced water by Coastal Subcategory
operators was an effluent limitation on the oil and grease
content of discharged produced water;14 however, EPA had never
implemented this limitation through a general permit or
individual permits. As a result, none of Cedar Point's produced
water discharges was authorized by a NPDES permit.
B. Procedural History
1. Cedar Point's Collateral Action
By letter dated December 16, 1992, Sierra Club informed Cedar
Point that the discharge of produced water without a NPDES permit
12
56 Fed. Reg. 7698 (1991).
13
EPA has divided the category of "Oil and Gas Extraction
Point Sources" into several subcategories for the purpose of
regulating discharges: "Offshore," "Onshore," "Coastal,"
"Stripper," and "Agricultural and Wildlife Water Use." 40 C.F.R.
§ 435. The "Coastal Subcategory" includes facilities engaged in
oil and gas production, field exploration, drilling, and well
completion and treatment in "any body of water landward of the
territorial seas as defined in 40 C.F.R. 125.1(gg), or any
wetlands adjacent to such waters." 40 C.F.R. §§ 435.31(e),
435.40.
14
40 C.F.R. § 435.42.
8
violated the CWA and that Sierra Club planned to seek monetary
penalties and an order enjoining Cedar Point's unpermitted
discharges.15 In response to this letter, Cedar Point filed an
action against Sierra Club and EPA in the United States District
Court for the Southern District of Mississippi. In its
complaint, Cedar Point alleged, inter alia, that Sierra Club had
"threatened" Cedar Point with a citizen suit and, impliedly, that
EPA and Sierra Club were conspiring to deprive Cedar Point of
unspecified constitutional rights. Specifically, Cedar Point
requested the district court to issue an order that: (1) required
EPA to respond to Cedar Point's then-unanswered FOIA request; (2)
required EPA to rule upon Cedar Point's application for a NPDES
permit; and, (3) enjoined Sierra Club from filing a citizen suit
against Cedar Point. On July 12, 1993, the district court
dismissed Cedar Point's claims against Sierra Club.16
2. Sierra Club's Citizen Suit
Sierra Club filed the present action against Cedar Point on
April 20, 1993, in the United States District Court for the
Southern District of Texas. In its complaint, Sierra Club prayed
15
The CWA requires that a person bringing an action under
the citizen suit provision send an "intent to sue" letter to the
EPA, the alleged violator, and the state in which the alleged
violation occurs at least 60 days prior to the commencement of
the action. 33 U.S.C. § 1365(b)(1).
16
The court apparently has not disposed of Cedar Point's
claims against EPA. The last docket entry in the case indicates
that the court held a hearing on EPA's motion to dismiss on
September 19, 1994, "with written opinion to follow in about a
week."
9
for: (1) a judgment declaring that Cedar Point's unpermitted
discharges of produced water into Galveston Bay violated the CWA;
(2) a permanent injunction prohibiting future unpermitted
discharges; and (3) penalties for past unpermitted discharges.
The district court immediately entered an Order for Accelerated
Discovery, requiring the parties to make certain disclosures
without waiting for discovery requests. This order directed,
inter alia, that the parties disclose at least ninety days prior
to trial the expert testimony that they would offer at trial.
Cedar Point filed its answer and a counterclaim against
Sierra Club on August 18, 1993. The counterclaim alleged that
Sierra Club's lawsuits against Cedar Point and other oil and gas
operators in the bay constituted an abuse of process. Cedar
Point sought compensatory damages for the emotional distress
suffered by its officers and directors and $10,000,000 in
punitive damages. Sierra Club moved to dismiss this
counterclaim. The district court ultimately entered an order
granting Sierra Club's motion on the grounds that, because Sierra
Club's citizen suit was not frivolous, it could not be the basis
for a claim for abuse of process.
Sierra Club then filed a motion for partial summary judgment
on the issue of Cedar Point's liability under the CWA. In
response, Cedar Point filed a cross-motion for partial summary
judgment on the issues of its liability, Sierra Club's ability to
state a claim under the CWA, and Sierra Club's standing to sue.
The district court entered an order granting Sierra Club's motion
10
for partial summary judgment and denying Cedar Point's similar
motion on the liability issue. Specifically, the court found as
a matter of law that Cedar Point had discharged pollutants
without a NPDES permit in violation of the CWA. The court also
denied Cedar Point's motion on the issue of Sierra Club's
standing to sue. In this regard, the court found that the
affidavits submitted by Sierra Club established that some of its
members had suffered injuries in fact that were fairly traceable
to Cedar Point's discharge of produced water, and therefore were
sufficient to defeat a motion for summary judgment.
Sierra Club also filed a motion to strike Cedar Point's
designation of experts that it would offer at trial. In this
motion, Sierra Club alleged that Cedar Point had failed to comply
with that part of the district court's discovery order requiring
"written report[s] prepared and signed by the witness[es] which
include[] a complete statement of all opinions to be expressed
and the basis and the reasons therefor." Specifically, Sierra
Club complained that the reports submitted by Cedar Point were so
substantively inadequate that Sierra Club would be substantially
prejudiced if the court allowed these witnesses to testify. The
court granted Sierra Club's motion to strike Cedar Point's
experts, finding that Cedar Point had failed to comply with its
discovery order.
The issues of the penalties to be assessed against Cedar
Point for its past violations and Sierra Club's request for
injunctive relief were tried to the bench. The court issued its
11
opinion and judgment on May 27, 1994. First, the court imposed a
civil penalty of $186,070 based on the economic benefit that
accrued to Cedar Point because of its failure to comply with the
CWA -- i.e., the money it saved by not constructing a disposal
system that would have resulted in zero discharge. Second, the
court enjoined Cedar Point from discharging produced water from
its operations at the field into Galveston Bay until it obtained
a NPDES permit.17 Finally, the court awarded Sierra Club $60,000
in attorneys' fees as the prevailing party in the litigation.18
The court later increased this award to $82,956.86. Cedar Point
timely filed its notice of appeal from this judgment as well as
the court's pretrial rulings, including the dismissal of Cedar
Point's counterclaim and the partial summary judgment on the
issue of Cedar Point's liability under the CWA.
3. Amendment of the Injunction
On January 9, 1995, EPA published a final NPDES general
permit covering the discharge of produced water by operators in
the "Coastal Subcategory" in Louisiana and Texas, including Cedar
Point.19 This permit imposed, inter alia, an absolute
prohibition on the discharge of produced water, effective
17
The court also imposed a penalty for each day Cedar Point
violated the injunction after August 31, 1994.
18
See 33 U.S.C. § 1365(d).
19
60 Fed. Reg. 2387 (1995). A draft version of this permit
had been published on December 22, 1992, five months before the
trial in this action. 57 Fed. Reg. 60,926 (1992).
12
February 8, 1995. Along with the permit, however, EPA issued an
administrative compliance order that qualified somewhat this
effective date.20 The compliance order recognized that many
operators would have to reinject their produced water in order to
comply with the permit's "No Discharge" provision. Because
existing reinjection well operators, state permitting
authorities, and drilling contractors would probably be unable to
meet the demand for reinjection occasioned by the terms of the
permit, complete compliance by all covered operators would
necessarily be delayed until well after the February 8 effective
date. Accordingly, the order directed the permittees to
"[c]omplete all activities necessary to attain full and
continuance [sic] compliance with [the "No Discharge"
requirement] as soon as possible, but in no case later than
January 1, 1997;" however, this order only applied to operators
covered by the permit who would be discharging produced water on
the effective date of the permit, February 8, 1995.21
Cedar Point could not discharge produced water on February 8
because the district court's injunction order prevented it from
doing so without penalty. Accordingly, on January 30, 1995,
Cedar Point filed a motion to amend or supplement the court's
final judgment to allow it to discharge produced water without
20
60 Fed. Reg. at 2393.
21
The order also required covered operators to prepare a
Compliance Plan. The order states that "[a] Compliance Plan
shall include a description of the measures to be taken, along
with a schedule, to cease discharge of produced water to waters
of the United States as expeditiously as possible."
13
penalty on the effective date of the permit and thereafter so
that it could take advantage of the two-year "grace period." The
district court granted this motion and amended its May 27, 1994
opinion to allow the requested discharge. Sierra Club timely
filed a notice of appeal from the court's order amending the
injunction.
II. DISCUSSION
A. Cedar Point's Appeal
In its appeal from the judgment of the district court, Cedar
Point raises the following points of error: (1) Sierra Club lacks
standing to bring this action; (2) Sierra Club has failed to
state a claim under the citizen suit provision of the CWA; (3)
Cedar Point's discharges of produced water into Galveston Bay do
not violate the CWA; (4) the district court erred in striking
Cedar Point's designation of experts and excluding their
testimony; (5) the district court erred in calculating the amount
of the penalty imposed and in awarding attorneys' fees to Sierra
Club; and (6) the district court erred in dismissing Cedar
Point's counterclaim for abuse of process. We address each of
these arguments in turn.
1. Standing
Cedar Point's first argument on appeal is that Sierra Club
lacks standing to bring this citizen suit. Specifically, Cedar
Point argues that Sierra Club members have not shown the
14
requisite "injury in fact" nor have they demonstrated that the
alleged injury is "fairly traceable" to Cedar Point's discharge.
Rather, Cedar Point claims that the affidavits submitted by
Sierra Club members showed only a concern over produced water
discharges into Galveston Bay, but not an injury from those
discharges, much less an injury traceable to Cedar Point's
discharges in particular. We review a district court's holding
on the issue of standing de novo.22 MD II Entertainment, Inc. v.
City of Dallas, 28 F.3d 492, 497 (5th Cir. 1994); United States
v. $38,570 U.S. Currency, 950 F.2d 1108, 1111 (5th Cir. 1992).
An organization such as Sierra Club has standing to bring an
action on behalf of its members where: (1) the organization's
members would have standing to sue individually; (2) the
organization is seeking to protect interests that are germane to
its purpose; and (3) neither the claim asserted nor the relief
22
It is unclear what the district court's rulings on Sierra
Club's standing were, or indeed, whether the court held anything
at all on this issue. Cedar Point had moved for partial summary
judgment on the issues of statutory and constitutional standing.
In denying this motion, the court did not comment on the
statutory standing issue and stated only that the affidavits
submitted by Sierra Club's members were sufficient to defeat
summary judgment as to constitutional standing. The effect of
this ruling was to leave the standing issues to be tried, and
indeed, one of Sierra Club's affiants did testify at trial as a
fact witness on the issue of constitutional standing. In its
Memorandum Opinion, however, the court stated that it had
"specifically held that Sierra Club had standing to pursue
enforcement of this Clean Water Act claim" in its Partial Summary
Judgment Order. Therefore, it is questionable whether the
district court ever actually ruled on the standing issues.
Nevertheless, because our review is de novo, this discrepancy
does not affect our treatment of the issues. In addition,
standing is a jurisdictional requirement, and may always be
addressed for the first time on appeal. In re Taxable Mun. Bond
Sec. Litig., 51 F.3d 518, 521 (5th Cir. 1995).
15
requested requires the organization's members to participate in
the lawsuit. Hunt v. Washington State Apple Advertising Comm'n,
432 U.S. 333, 343 (1977); National Treasury Employees Union v.
U.S. Dep't of Treasury, 25 F.3d 237, 241 (5th Cir. 1994); Save
Our Community v. U.S.E.P.A., 971 F.2d 1155, 1160 (5th Cir. 1992).
The parties do not dispute that Sierra Club satisfies the second
and third prongs of this test. Rather, it is the standing of
individual members of Sierra Club that is at issue.
In order to establish individual standing, a person must
show that: (1) he has suffered an actual or threatened injury as
a result of the actions of the defendant; (2) the injury is
"fairly traceable" to the defendant's actions; and (3) the injury
will likely be redressed if he prevails in his lawsuit. Save Our
Community, 971 F.2d at 1160 (quoting Valley Forge Christian
College v. Americans United for Separation of Church and State,
Inc., 454 U.S. 464, 472 (1982)). There is no question that an
injunction would redress the injuries allegedly suffered by
Sierra Club members who visit and recreate in Galveston Bay.
Therefore, we focus on the "injury in fact" and "fairly
traceable" requirements.
a. "Injury in Fact"
Sierra Club submitted affidavits from three of its members
in response to Cedar Point's standing challenge. These affiants
described how they use Galveston Bay for various recreational
activities, including swimming, canoeing, and bird watching.
16
Also, two of the affiants commented that they live near the Bay.
With respect to produced water, each affiant made the following
statement:
I am familiar with "produced water" that is
being discharged into Galveston Bay by oil
and gas production facilities located on the
Bay. I am concerned that the discharge of
produced water adversely affects the water
quality and the wildlife of the Bay.
Therefore, I am concerned that the continued
discharge of produced water will impair my
ability to enjoy the activities in which I
participate.
Only one of the affiants, Tommy Douglas ("Douglas"), indicated
that he had participated in activities in the vicinity of Cedar
Point's discharge. None of the affiants stated that Cedar
Point's produced water in particular had impaired or threatened
to impair his use of the Bay.
Cedar Point makes much of the fact that the affiants
expressed "concern" that the discharge of produced water will
impair their ability to engage in recreational activities. Such
language, Cedar Point argues, stated only an interest in
eliminating produced water discharges into Galveston Bay, and not
an injury in fact. We find no merit in this contention. Whether
the affiants were "concerned" or "believed" or "knew to a moral
certainty" that produced water would adversely affect their
activities on the Bay is a semantic distinction that makes little
difference in the standing analysis. The requirement that a
party demonstrate an injury in fact is designed to limit access
to the courts to those "who have a direct stake in the outcome,"
Valley Forge Christian College, 454 U.S. at 473 (quoting Sierra
17
Club v. Morton, 405 U.S. 727, 740 (1972)), as opposed to those
who "would convert the judicial process into ``no more than a
vehicle for the vindication of the value interests of concerned
bystanders.'" Id. (quoting United States v. SCRAP, 412 U.S. 669,
687 (1973)). Sierra Club's affiants are concerned, but they are
not mere "bystanders." Two of the affiants live near Galveston
Bay and all of them use the Bay for recreational activities. All
of the affiants expressed fear that the discharge of produced
water will impair their enjoyment of these activities because
these activities are dependent upon good water quality. Clearly,
Sierra Club's affiants have a "direct stake" in the outcome of
this lawsuit.
That this injury is couched in terms of future impairment
rather than past impairment is of no moment. The Supreme Court
has expressly held that a "threatened injury" will satisfy the
"injury in fact" requirement for standing. Id. at 472 (quoting
Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99
(1979)); see also Sierra Club v. Simkins Indus., Inc., 847 F.2d
1109, 1113 & n.4 (4th Cir. 1988) (noting that affidavit
establishing threat of future injury met Article III standing
requirements), cert. denied, 491 U.S. 904 (1989). Also, at least
one of the affiants did claim to have suffered a past injury:
Mark Muhich ("Muhich") stated that, during a number of his bird
watching trips in Galveston Bay, he had observed discolored
water, oil, and grease, and had detected unpleasant odors; he
also asserted that polluted water impaired his enjoyment of bird
18
watching. The Third Circuit has held that this precise sort of
injury satisfies the "injury in fact" requirement for standing.
Public Interest Research Group of New Jersey, Inc. v. Powell
Duffryn Terminals, Inc., 913 F.2d 64, 71 (3rd Cir. 1990) (finding
sufficient injury where plaintiff organization submitted
affidavit of member who stated that he was offended by brown
color and bad odor of water body adjacent to park where he went
bird watching), cert. denied, 498 U.S. 1109 (1991).
Moreover, we have held that affidavits similar to those
submitted by Sierra Club were sufficient to satisfy the "injury
in fact" requirement in a citizen's suit brought under the CWA.
In Save Our Community, the plaintiff organization supported its
standing argument with affidavits by some of its members who
owned property or lived in the vicinity of the wetlands that were
being drained by the defendant. These affiants stated that they
enjoyed "the wildlife, aesthetics, open space, ecological and
other values of the wetlands, . . . and [were] directly and
beneficially interested in the continued protection,
preservation, and enhancement of these values." Id. at 1160-61.
In holding that these affidavits demonstrated a constitutionally
sufficient injury in fact, we noted that "harm to aesthetic,
environmental, or recreational interests is sufficient to confer
standing, provided that the party seeking review is among the
injured." Id. at 1161 (citing Sierra Club v. Morton, 405 U.S. at
734-35). We also recognized that "[t]hese injuries need not be
large, an identifiable trifle will suffice." Id. at 1161
19
(quoting Powell Duffryn, 913 F.2d at 71 (internal quotations
omitted)). Given this low threshold requirement,23 we hold that
the affidavits submitted by Sierra Club are sufficient to satisfy
the "injury in fact" prong of the test for standing.
b. "Fairly Traceable"
Cedar Point further argues that, even if the affidavits
submitted by Sierra Club do establish an injury, they do not
establish that the injury is fairly traceable to Cedar Point's
discharge of produced water. In this regard, Cedar Point focuses
on the affidavits of Douglas and Muhich. Cedar Point notes that
Douglas, the only affiant who stated that he engaged in activity
in the vicinity of Cedar Point's discharge, failed to assert that
Cedar Point's produced water in particular injured him in any
way. Cedar Point also notes that Muhich, the only affiant who
claimed to observe discolored water and foul odors, did not
allege that he made these observations in that part of Galveston
23
CWA cases from other circuits corroborate our observation
that the threshold for the injury requirement is fairly low.
See, e.g., United States v. Metropolitan St. Louis Sewer Dist.
(MSD), 883 F.2d 54, 56 (8th Cir. 1989) (finding sufficient injury
where complaint alleged that defendant had discharged pollutants
into Mississippi River without a permit, that many of the
intervenor organization's members used the river for recreational
purposes, and that pollution of the water adversely affected this
recreational interest); Simkins Indus., 847 F.2d at 1112 n.3 &
1113 (finding sufficient injury where the affidavit of a single
group member who regularly hiked along river alleged that
defendant's activities adversely affected his activities and
interests); Friends of the Earth v. Consolidated Rail Corp., 768
F.2d 57, 61 (2nd Cir. 1985) (finding sufficient injury where
organization submitted affidavit of member who regularly drove on
bridge over river and was offended by pollution in the river).
20
Bay near Cedar Point's discharge. Accordingly, Cedar Point urges
that Sierra Club has not met the "fairly traceable" requirement
of standing.
The Third Circuit has articulated a three-part test for
establishing that an injury is "fairly traceable" to a
defendant's discharge in a citizen suit under the CWA. Powell
Duffryn, 913 F.2d at 72. According to this test, the plaintiff
must "show[] that a defendant has (1) discharged some pollutant
in concentrations greater than allowed by its permit (2) into a
waterway in which the plaintiffs have an interest that is or may
be adversely affected by the pollutant and that (3) the pollutant
causes or contributes to the kinds of injuries alleged by the
plaintiffs." Id. While an overly broad application of this test
may be problematic, see infra n.24, its application to this case
is useful.
Applying this test to Douglas, we find that Sierra Club has
established that his injury is fairly traceable to Cedar Point's
discharge. First, because Cedar Point does not even have a
permit for its discharges of produced water, any discharge
exceeds that which is allowed under the CWA. Second, Douglas
asserted in his affidavit and testified that he has canoed and
participated in educational trips in the vicinity of Cedar
Point's discharge, and that he intends to continue these
activities in this area in the future. These assertions
establish Douglas's interest in that part of Galveston Bay around
Cedar Point's discharge. With respect to whether produced water
21
does or may adversely affect Galveston Bay, Sierra Club presented
expert testimony that Cedar Point's produced water was typical in
many respects, and that typical produced water has harmful
effects on water quality and marine life.
Finally, produced water contributes to the types of injuries
alleged by Douglas, including his fear that the harmful effects
on water quality and the ecosystem will impair his ability to
enjoy canoeing and observing wildlife. Contrary to Cedar Point's
suggestion, the Constitution does not require Sierra Club to
produce an affiant who claims that Cedar Point's discharge in
particular injured him in some way. We have noted that "the
fairly traceable element does not require that the plaintiffs
``show to a scientific certainty that [the] defendant's effluent,
and [the] defendant's effluent alone, caused the precise harm
suffered by the plaintiffs.'" Save Our Community, 971 F.2d at
1161 (quoting Powell Duffryn, 913 F.2d at 72). Given the number
of entities discharging chemicals into Galveston Bay, it would be
virtually impossible for any of Sierra Club's members to trace
his injuries to Cedar Point's discharge in particular. Rather,
it is sufficient for Sierra Club to show that Cedar Point's
discharge of produced water contributes to the pollution that
impairs Douglas's use of the Bay. See Natural Resources Defense
Council, Inc. v. Watkins, 954 F.2d 974, 980 (4th Cir. 1992);
Powell Duffryn, 913 F.2d at 72 n.8. Therefore, we hold that
22
Sierra Club has, by Douglas's affidavit, met the "fairly
traceable" requirement for standing.24
2. Stating a Claim Under the CWA
Cedar Point also contends that Sierra Club has failed to
state a claim under the citizen suit provision of the CWA because
Sierra Club has not alleged that Cedar Point is violating an
24
Because we hold that Douglas's affidavit establishes an
injury in fact that is fairly traceable to Cedar Point's
discharge, we need not decide whether Sierra Club's other
affiants also meet the "fairly traceable" requirement. See,
e.g., Simkins Indus., 847 F.2d at 1113 (4th Cir. 1988) (finding
organizational standing where one member's affidavit established
individual standing), cited with approval in Save Our Community,
971 F.2d at 1161.
We note, however, that Douglas was the only affiant who
expressed an interest in that part of Galveston Bay where Cedar
Point's discharge is located. It is true that a strict
application of the Powell Duffryn test does not demand that sort
of specificity, because the plaintiff need only show an interest
in the "waterway" into which the defendant is discharging a
pollutant; nevertheless, such a literal reading of Powell Duffryn
may produce results incongruous with our usual understanding of
the Article III standing requirements. For example, some
"waterways" covered by the CWA may be so large that plaintiffs
should rightfully demonstrate a more specific geographic or other
causative nexus in order to satisfy the "fairly traceable"
element of standing. Cf. Lujan v. National Wildlife Fed'n, 497
U.S. 871, 889 (1990) (holding that an affidavit alleging general
use of a two million-acre land area was not specific enough to
preclude summary judgment on the issue of statutory standing
where the challenged action affected only 4500 of the two million
acres); Natural Resources Defense Council, Inc. v. Watkins, 954
F.2d at 979 (4th Cir. 1992) (reversing district court's finding
of no standing in a CWA case where affiants alleged use of river
near the discharge site because the affidavits did not require
the court "to assume any particularized geographic usage by the
affiants to establish the injury necessary to confer standing").
Therefore, while we find the Powell Duffryn test useful for
analyzing whether Douglas's affidavit meets the "fairly
traceable" requirement, we recognize that it may not be an
appropriate standard in other CWA cases.
23
effluent limitation or permit provision promulgated by EPA.25 We
review the issue of whether a plaintiff has stated a claim under
the same standard used by the district court: A claim may not be
dismissed unless it appears certain that the plaintiff cannot
prove any set of facts in support of his claim that would entitle
him to relief. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th
Cir. 1994); Carney v. RTC, 19 F.3d 950, 954 (5th Cir. 1994).
As authority for its position, Cedar Point cites to the
following language from our decision in Save Our Community v.
U.S.E.P.A., 971 F.2d 1155 (5th Cir. 1992) (per curiam):
Without the violation of either (1) an
effluent standard or limitation under the
CWA, or (2) an order issued with respect to
these standards and limitations, the district
court lacks jurisdiction to act.
Id. at 1162. With respect to the constituents of Cedar Point's
produced water, EPA has only promulgated an effluent limitation
on the oil and grease content.26 Because Cedar Point's
discharges have always complied with this limitation, Cedar Point
argues that Sierra Club has failed to state a claim.
25
The parties sometimes mistakenly refer to this issue as
"statutory standing." The thrust of Cedar Point's argument,
however, is that Sierra Club has failed to state a claim under
the citizen suit provision of the CWA. "Statutory standing" is
an administrative law concept that arises in the context of
challenges to agency actions in which a court must determine
whether the interest sought to be protected is within the "zone
of interests" protected by the relevant statute. See Association
of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153-
54 (1970).
26
40 C.F.R. § 435.42.
24
Also, Cedar Point contends that Sierra Club has failed to
state a claim with respect to the discharges of the other
constituents of Cedar Point's produced water separately or for
the discharge of produced water as a whole because EPA has not
established an applicable effluent limitation or permit for those
discharges. Cedar Point reasons that, because there is no
effluent limitation or permit in place for these discharges,
there can be no violation of a limitation, as required by Save
Our Community. In support of this contention, Cedar Point notes
that the Southern District of Texas has held that the discharge
of a pollutant without a permit is not unlawful under the CWA
unless EPA has adopted a relevant effluent standard or permit
limitation. United States v. GAF Corp., 389 F. Supp. 1379, 1386
(S.D. Tex. 1975). Cedar Point emphatically asserts that this
interpretation represents the way that Congress intended the CWA
to work.
We find Cedar Point's arguments to be without merit. First,
Cedar Point urges a result contrary to the plain language of the
CWA. As we noted in Save Our Community, the citizen suit
provision of the CWA states that:
[A]ny citizen may commence a civil action on
his own behalf . . . against any person . . .
who is alleged to be in violation of (A) an
effluent standard or limitation under this
chapter or (B) an order issued by the
Administrator or a State with respect to such
a standard or limitation . . . .
33 U.S.C. § 1365(a)(1). The term "effluent standard or
limitation," however, is expanded in a later subsection:
25
For purposes of this section, the term
"effluent standard or limitation under this
chapter" means (1) effective July 1, 1973, an
unlawful act under subsection (a) of section
1311 of this title . . . .
33 U.S.C. § 1365(f). Section 1311(a) provides:
Except as in compliance with this section
and sections 1312, 1316, 1317, 1328, 1342,
and 1344 of this title, the discharge of any
pollutant by any person shall be unlawful.
33 U.S.C. § 1311(a). Among those sections listed for which
compliance is necessary to make the discharge of a pollutant
lawful, § 1342 provides for NPDES permits that regulate the
discharge of pollutants. Therefore, the discharge of any
pollutant without a NPDES permit is an unlawful act under
§ 1311(a). The Supreme Court has interpreted § 1311 and § 1342
in this way. City of Milwaukee v. Illinois, 451 U.S. 304, 310-11
(1981) ("[I]t is illegal to discharge pollutants into the
Nation's waters except pursuant to a permit."). Reading these
sections together with § 1365(a) and (f), it is clear that a
citizen may bring an action under the CWA against any person who
is allegedly discharging a pollutant without a NPDES permit.
We agree with Cedar Point that Congress initially intended
that a citizen suit based on a violation of § 1311(a) for
discharging pollutants without a permit would only lie where EPA
had issued a relevant effluent limitation or permit; that is,
where the defendant was discharging pollutants without a permit
because he had failed to obtain a permit that was available,
rather than because EPA had failed to issue such permits. This
26
intent is clearly established by the inclusion of particular
dates in the statute, as explained by the legislative history.
First, the citizen suit provision states that a citizen may
bring an action against a person allegedly committing an unlawful
act under § 1311(a) "effective July 1, 1973." 33 U.S.C. §
1365(f)(1). The CWA was enacted on October 18, 1972. Federal
Water Pollution Control Act Amendments of 1972, Pub. L. No. 92-
500, 86 Stat. 816 (1972). The legislative history expressly
states that Congress delayed the availability of a citizen suit
based on an allegedly unlawful act under § 1311(a) in order to
give EPA and the states time to issue all of the permits required
by the CWA.27 Of course, EPA and the states have yet to achieve
this ambitious goal. Nevertheless, Congress has not amended the
statute to account for the fact that, since July 1, 1973,
numerous entities have violated § 1311(a) by discharging
pollutants without a permit because EPA and the states have not
issued the necessary permits.
27
Authority granted to citizens to bring
enforcement actions under this section is
limited to effluent standards or limitations
established administratively under the Act.
Such standards or limitations are defined in
subsection (f) of [§ 1365] to include the
enforcement of an unlawful discharge under
[§ 1311(a)], effective after July 1, 1973.
By limiting the effective date of citizens
suits for violation of this provision the
Committee believes sufficient time is
available for the State and Federal
governments to develop fully, and execute the
authority contained in [§ 1342, which
provides for NPDES permits].
S. Rep. No. 414, 92d Cong., 1st Sess. 81 (1971) (emphasis added).
27
In a similar vein, § 1342(k) provides that:
Until December 31, 1974, in any case where a
permit for discharge has been applied for
pursuant to this section, but final
administrative disposition of such
application has not been made, such discharge
shall not be a violation of (1) section 1311,
1316, or 1342 of this title, or (2) section
407 of this title, unless the Administrator
or other plaintiff proves that final
administrative disposition of such
application has not been made because of the
failure of the applicant to furnish
information reasonably required or requested
in order to process the application.
33 U.S.C. § 1342(k). Again, the purpose of this provision was to
provide a "liability shield" to dischargers for a limited time so
that they would not be exposed to legal action because of
administrative delays in implementing the permit provisions of
the CWA; apparently, Congress expected all permit applications to
be processed by December 31, 1974. For example, in the House
debates on the conference report, Representative Clark commented:
Section 402(k) states that until December 31,
1974, a discharge shall not be in violation
of law if a permit has been applied for, and
the applicant has furnished all information
reasonably required or requested. Hopefully,
the program will be in the hands of the
States by December 31, 1974, and permits will
be issued. But, if not, Congress may have to
extend this date.
1 A Legislative History of the Water Pollution Control Act
Amendments of 1972 274 (Environmental Policy Div., Congressional
Research Serv. ed., 1973) (House consideration of the conference
report) (emphasis added). As with § 1365(f)(1), however,
Congress has not extended the availability of this liability
shield beyond its original expiration date, despite the fact that
28
applications for permits are continually filed and many remain
pending.
The result of Congress's failure to extend these exceptions
for cases of administrative delay or default is that, "[u]nless
the Administrator issues an NPDES permit, ``the discharge of any
pollutant by any person [is] unlawful [under § 1311(a)].'"
National Wildlife Fed'n v. Gorsuch, 693 F.2d 156, 165 (D.C. Cir.
1982); see also Natural Resources Defense Council, Inc. v.
Costle, 568 F.2d 1369, 1375 (D.C. Cir. 1977) ("[T]he
Administrator has discretion either to issue a permit or to leave
the discharger subject to the total proscription of [§ 1311].").
As stated previously, the CWA explicitly provides that a citizen
may sue persons allegedly committing unlawful acts under
§ 1311(a). 33 U.S.C. § 1365(f)(1). Therefore, a citizen may
bring an action against a person allegedly discharging a
pollutant without a permit, even if the discharger's illegal
behavior results from EPA's failure or refusal to issue the
necessary permit.
This result is supported by Supreme Court precedent
involving an analogous administrative default in the context of
an environmental enforcement action. General Motors Corp. v.
United States, 496 U.S. 530 (1990). General Motors involved a
state implementation plan ("SIP") that regulated emissions from
automobile painting operations under the Clean Air Act ("CAA").
Id. at 534. The original SIP required General Motors to comply
fully with certain emission limits by December 31, 1985. Id. at
29
535. One day before this deadline passed, the state submitted to
EPA a proposed revision of the SIP that would have extended the
compliance deadline to summer 1987. Id. The CAA authorizes a
state to propose a revised SIP and requires EPA to approve the
revised SIP if it meets certain statutory requirements. Id. at
533. EPA did not act on the proposed SIP revision until
September 4, 1988. Id. In the meantime, however, EPA filed an
enforcement action against General Motors on August 17, 1987,
alleging that General Motors violated the compliance deadline
contained in the old SIP. Id.
On appeal, General Motors contended that EPA could not, on
the one hand, bring an enforcement action for violation of the
original compliance deadline, while at the same time unreasonably
delay acting on a proposal to extend that deadline. Id. at 540.
The Court rejected this argument:
There is nothing in the statute that
limits EPA's authority to enforce the
[existing SIP] solely to those cases where
EPA has not unreasonably delayed action on a
proposed SIP revision. Moreover, we find it
significant that Congress expressly enacted
an enforcement bar elsewhere in the statute.
See § 113(d)(10); 42 U.S.C. § 7413(d)(10)
(1982 ed.) ("During the period of the order .
. . no Federal enforcement action pursuant to
this section and no action under section 304
of this Act shall be pursued against such
owner . . . ."). The fact that Congress
explicitly enacted an enforcement bar similar
to the one proposed by petitioner in one
section of the statute, but failed to do so
in the section at issue in this case
reinforces our refusal to import such a bar
here.
Id. at 541 (citations omitted).
30
Our analysis of the citizen suit provision of the CWA tracks
the Court's reasoning in General Motors. Nothing in the CWA
limits a citizen's right to bring an action against a person who
is allegedly discharging a pollutant without a permit solely to
those cases where EPA has promulgated an effluent limitation or
issued a permit that covers the discharge. We note that Congress
did explicitly enact limitations on citizen suits for the purpose
of protecting putative defendants whose violations could be
attributed to administrative delay in promulgating regulations;
however, these limitations have expired by their own terms. 33
U.S.C. §§ 1342(k), 1365(f)(1). Further, although these
limitations may have been based on unrealistic expectations
regarding EPA's ability to carry out fully its statutory mandate,
it is significant that Congress has not in twenty-three years
amended these sections to conform to the realities of EPA's
regulatory burden and the attendant administrative delay.
Therefore, while Congress's original intent may have been to
limit citizen suits based on unpermitted discharges to those
instances where an applicable permit was available from the state
or EPA, Congress's subsequent inaction evinces an intent to allow
such citizen suits even where the discharger's failure to obtain
a permit can be explained by administrative default.
We are also not convinced that other courts have qualified
the right to sue a person allegedly discharging pollutants
without a permit by limiting that right to situations where EPA
has promulgated a relevant effluent limitation or permit. The
31
only authority that Cedar Point can cite for this proposition is
the district court opinion in GAF Corp., which we find to have
little persuasive value. First, the language in GAF Corp. cited
by Cedar Point is dicta. Also, GAF Corp. involved a suit for
injunctive relief by the government, rather than a citizen suit
for damages; the court may have found it inequitable to allow the
government to sue when it had not promulgated regulations to
guide the defendant's behavior. Yet, even with respect to
actions brought by the government, this language in GAF Corp. has
been criticized. In United States v. Frezzo Bros., Inc., 602
F.2d 1123 (3rd Cir. 1979), cert. denied, 444 U.S. 1074 (1980),
the Third Circuit specifically rejected GAF Corp.'s
interpretation of the CWA:
We see nothing impermissible with allowing
the Government to enforce the Act by invoking
§ 1311(a), even if no effluent limitations
have been promulgated for the particular
business charged with polluting. Without
this flexibility, numerous industries not yet
considered as serious threats to the
environment may escape administrative, civil,
or criminal sanctions merely because the EPA
has not established effluent limitations.
Thus, dangerous pollutants could be
continually injected into the water solely
because the administrative process has not
yet had the opportunity to fix specific
effluent limitations. Such a result would be
inconsistent with the policy of the Act.
We do not believe, as did the court in
GAF, that the permit procedure urged by the
government is unduly burdensome on business.
Frezzo Bros., 602 F.2d at 1128.
Moreover, we have held that obtaining a permit is a
requirement separate and distinct from the requirement that a
32
discharger comply with any applicable effluent limitations.
Carr. v. Alta Verde Indus., Inc., 931 F.2d 1055, 1060 n.3 (5th
Cir. 1991). Indeed, numerous courts have allowed suits by
citizens against persons allegedly discharging pollutants without
a permit, despite the fact that the discharger was complying with
applicable effluent limitations or that no applicable effluent
limitation was in place. See, e.g., Concerned Area Residents for
Env't v. Southview Farm, 34 F.3d 114, 117 (2nd Cir. 1994), cert.
denied, 115 S. Ct. 1793 (1995); Carr, 931 F.2d at 1061; Menzel v.
County Utils. Corp., 712 F.2d 91, 94 (4th Cir. 1983); Washington
Wilderness Coalition v. Hecla Min. Co., 870 F. Supp. 983, 986
(E.D. Wash. 1994); Hawaii's Thousand Friends, Life of the Land,
Inc. v. City and County of Honolulu, 806 F. Supp. 225, 230 (D.
Hawaii 1992); Hudson River Fishermen's Ass'n v. County of
Westchester, 686 F. Supp. 1044, 1050 (S.D.N.Y. 1988); O'Leary v.
Moyer's Landfill, Inc., 523 F. Supp. 642, 646 (E.D. Pa. 1981).
Finally, EPA itself, whose expertise in enforcing the CWA is
entitled to some deference,28 has recognized that citizens have
the right to sue "Coastal Subcategory" operators who are
discharging produced water without a permit. 57 Fed. Reg.
60,926, 60,944-45 (1992). At the time EPA made this statement,
it had never issued such permits and had only issued effluent
limitations on the oil and grease content of produced water.
28
We generally give deference to an agency's interpretation
of a statute that it administers. Kershaw v. Resolution Trust
Corp., 987 F.2d 1206, 1208 (5th Cir. 1993).
33
Accordingly, we hold that Sierra Club has stated a claim under
the citizen suit provision of the CWA.
3. Violation of the CWA
Cedar Point's third argument on appeal is that the district
court erred in granting Sierra Club's motion for partial summary
judgment on the issue of whether Cedar Point's discharges of
produced water violated the CWA. We review the granting of
summary judgment de novo, applying the same criteria used by the
district court in the first instance. Norman v. Apache Corp., 19
F.3d 1017, 1021 (5th Cir. 1994); Conkling v. Turner, 18 F.3d
1285, 1295 (5th Cir. 1994). First, we consult the applicable law
to ascertain the material factual issues. King v. Chide, 974
F.2d 653, 655-56 (5th Cir. 1992). We then review the evidence
bearing on those issues, viewing the facts and inferences to be
drawn therefrom in the light most favorable to the nonmoving
party. Lemelle v. Universal Mfg. Corp., 18 F.3d 1268, 1272 (5th
Cir. 1994); FDIC v. Dawson, 4 F.3d 1303, 1306 (5th Cir. 1993),
cert. denied, 114 S. Ct. 2673 (1994). Summary judgment is proper
"if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(c).
Cedar Point maintains that the discharge of produced water
without a permit does not violate the CWA because the statute
34
only prohibits the discharge of a "pollutant," and, it argues,
neither produced water nor any of its constituents is a pollutant
within the meaning of the CWA. First, Cedar Point contends that
its produced water and the components thereof are not pollutants
"per se" because they are not specifically enumerated in the
CWA's definition of "pollutant." That provision states:
The term "pollutant" means dredged spoil,
solid waste, incinerator residue, sewage,
garbage, sewage sludge, munitions, chemical
wastes, biological materials, radioactive
materials, heat, wrecked or discarded
equipment, rock, sand, cellar dirt and
industrial, municipal, and agricultural waste
discharged into water. This term does not
mean (A) "sewage from vessels" within the
meaning of section 1322 of this title; or (B)
water, gas, or other material which is
injected into a well to facilitate production
of oil or gas, or water derived in
association with oil or gas production and
disposed of in a well, if the well used
either to facilitate production or for
disposal purposes is approved by authority of
the State in which the well is located, and
if such State determines that such injection
or disposal will not result in the
degradation of ground or surface water
resources.
33 U.S.C. § 1362(6). Cedar Point then argues that courts may not
expand this definition to include substances not explicitly
listed, citing as authority National Wildlife Fed'n v. Gorsuch,
693 F.2d 156 (D.C. Cir. 1982). In this opinion, the court noted
its reservations about adding terms to the definition of
pollutant because "Congress used restrictive phrasing--``[t]he
term "pollutant" means dredged spoil, [etc.]'--rather than the
looser phrase ``includes,' used elsewhere in the Act." Id. at
171-72. The court elaborated that the use of the term "means"
35
indicates an intent to exclude any meaning not expressly stated.
Id. at 172 (citing Colautti v. Franklin, 439 U.S. 379, 392 n.10
(1979)).
Further, the court relied on the legislative history of the
CWA in determining that "Congress did not intend the term
``pollutant' to be all inclusive." Id. at 173. The court pointed
out that the purpose of listing specific items in the definition
was "so that litigable issues are avoided over the question of
whether the addition of a particular material is subject to
control requirements." Id. (quoting S. Rep. No. 414, 92d Cong.,
1st Sess. 76 (1971) (internal quotation omitted)). Also, the
court noted that earlier draft versions of the CWA used more
inclusive phrasing: "The term ``pollutant' means, but is not
limited to, dredged spoil, . . ., and industrial, municipal,
agricultural, and other waste discharged into water." Id.
(quoting H.R. 11,896, 92d Cong., 2d Sess. § 502(6) (1972)
(emphasis added) (internal quotation omitted) and citing S. 2770,
92d Cong., 1st Sess. § 502(f) (1971)). The conference committee
deleted the more inclusive phrases "but is not limited to" and
"other waste," but offered no explanation for the change. Id.
(citing S. Rep. No. 1236 (Conf. Rep.), 92d Cong., 2d Sess. 143-44
(1972)).
Cedar Point concedes that a discharged substance may still
be subject to regulation under the CWA even though it is not
specifically listed in the definition of pollutant; however,
Cedar Point contends that only EPA, and not the courts, may make
36
the determination that a "non-listed" substance is a pollutant.
Again, Cedar Point relies principally on National Wildlife Fed'n
v. Gorsuch. In its review of the legislative history of the CWA,
the court found "strong signals" that Congress "entrusted EPA
with at least some discretion over which ``pollutants' and sources
of pollutants were to be regulated under the NPDES program." Id.
at 173. First, the court recognized a general intent to give EPA
"substantial discretion" in interpreting the CWA:
In the administration of the Act, EPA will be
required to establish numerous guidelines,
standards and limitations. . . . [T]he Act
provides Congressional guidance to the
Administrator in as much detail as could be
contrived. Virtually every action required
of the Administrator by the Act, however,
involves some degree of agency discretion,
judgments involving a complex balancing of
factors that include technological
considerations, economic considerations, and
others.
Id. at 173 (quoting S. Rep. No. 1236 (Conf. Rep.), 92d Cong., 2d
Sess. 149 (1972)). The court then quoted Senator Muskie's
comments, made during a debate over the Senate version of the
CWA, as evidence of a specific intent to give EPA discretion in
defining what constitutes a pollutant:
Again, I do not get into the business of
defining or applying these definitions to
particular kinds of pollutants. That is an
administrative decision to be made by the
Administrator. Sometimes a particular kind
of matter is a pollutant in one circumstance,
and not in another.
Id. at 173-74 (quoting 117 Cong. Rec. 38,838 (1971)).
Cedar Point argues that Senator Muskie's comments in
particular make it clear that only EPA may define what
37
constitutes a pollutant under the CWA. First, Cedar Point notes
that the above language expressly commits the definitional
question to the Administrator of the EPA. Also, Cedar Point
emphasizes Senator Muskie's statement that a substance may be a
pollutant in some situations and not in others. Specifically,
Cedar Point contends that whether a substance is a pollutant
depends upon, inter alia, the quantity in which it is discharged,
the characteristics of the receiving waters, and the proportion
of the amount of the substance in the discharge to the amount
that exists in nature. For example, a substance may be very
harmful when discharged in large quantities into a fresh water
stream, but may have no measurable effect when a smaller quantity
is discharged into a salt water bay. EPA takes these factors
into account when promulgating effluent limitations and issuing
NPDES permits. Therefore, Cedar Point argues, EPA defines a
substance as a pollutant by prohibiting its discharge at certain
levels through an effluent limitation or a permit. Stated
differently, if EPA has not regulated the discharge of a
substance in an effluent limitation or a permit applicable to
that discharge, that substance is not a pollutant in the context
of that discharge. Accordingly, Cedar Point maintains that it is
not discharging a pollutant in violation of the CWA because: (1)
neither produced water nor any of its constituents is
specifically listed under the CWA's definition of a pollutant;
(2) EPA has not promulgated an effluent limitation or issued a
permit that regulates Cedar Point's produced water or any of its
38
constituents except oil and grease; and (3) Cedar Point has
always complied with the effluent limitation on oil and grease.
Finally, Cedar Point advances a policy argument for its
position that a court may not determine that a discharged
substance is a pollutant where the substance is not specifically
listed in the CWA and is not regulated by a limitation or permit
applicable to the discharge in question. Cedar Point argues
that, if courts are allowed to make such decisions, chaos will
result because courts will reach different results regarding what
substances are pollutants and at what levels such substances may
be discharged without causing harm to the environment.
An analysis of Cedar Point's arguments requires us to engage
in a two-step inquiry. First, we must determine whether the CWA
allows a court to find that a particular substance is a pollutant
where it is not specifically listed under the CWA's definition of
a pollutant and EPA has not promulgated an effluent limitation or
permit regulating the discharge of the substance. If a court may
make such a finding, we must then determine whether Cedar Point's
produced water, or any of its constituents, is a pollutant under
the CWA.
We begin our analysis with the statute itself.29 When a
litigant's rights turn on whether his conduct falls within the
proscriptions of a statute containing terms of art, a court will
29
"When courts interpret statutes, the initial inquiry is
the language of the statute itself." Hightower v. Texas Hosp.
Ass'n, 65 F.3d 443, 448 (5th Cir. 1995); see also Matter of
Stone, 10 F.3d 285, 289 (5th Cir. 1994).
39
naturally seek guidance on the meanings of those terms by
reference to definitions provided in the statute. As stated
above, the CWA defines the term "pollutant" as "meaning" a list
of various items and "not meaning" a couple of discrete
substances. 33 U.S.C. § 1362(6). We do not disagree with the
D.C. Circuit's assessment that the use of the word "means"
manifests an intent to restrict the definition of pollutant to
the terms listed. National Wildlife Fed'n v. Gorsuch, 693 F.2d
at 172. As that court recognized, however, the breadth of many
of the items in the list of "pollutants" tends to eviscerate any
restrictive effect. See id. at 173 n.52. Characterizing the
list as "haphazard," the court noted that it contains materials
as specific as "``cellar dirt' (but not ``dirt' as such) and as
general as ``industrial, municipal, and agricultural wastes.'"
Id. at 174 n.56. It is scarcely disputable that many substances
discharged into the waters of the United States could be
characterized as "industrial waste," or even as "chemical waste,"
another listed material. Therefore, the statutory definition of
pollutant at least appears to invite the inclusion of discharged
substances that are not specifically listed into these broad
categories. Otherwise, these terms would be meaningless; that
is, there would be no such thing as "industrial waste" because
any such discharge could always be described in more specific
terms that are not listed in the statute.
As the D.C. Circuit acknowledged, the legislative history of
the CWA provides little guidance on how inclusive Congress
40
intended the definition of pollutant to be. Id. at 173 n.52.
For example, although Congress clearly stated that the rationale
for listing pollutants was to avoid "litigable issues" over
whether a particular material is subject to the statute, the
inclusion in the list of such imprecise terms as "industrial,
municipal, and agricultural waste" generates more litigable
issues than it resolves. Id. Also, while the conference
committee's elimination of the phrases "but not limited to" and
"other waste" from the definition of pollutant may be interpreted
as an attempt to limit the scope of the definition, the committee
did not explain the change. Id. at 173. Further, we think that
the retention of such broad terms in the definition suggests that
the committee may have determined that the eliminated phrases
were simply redundant. For instance, a list that includes "solid
waste," "chemical wastes," "biological materials," "radioactive
materials," and "industrial, municipal, and agricultural waste"
hardly needs to be amplified by the phrase "other waste."
Finally, the D.C. Circuit noted that the House Report is "of
little help in determining how inclusive Congress meant the term
``pollutant' to be" because it does not discuss particular terms
within the definition. Id. at 173 n.52.
In addition, one commentator has suggested that the CWA's
definition of pollutant is considerably inclusive:
This laundry list of "bads" endorses an
understanding of a pollutant as a "resource
out of place." The congressional purpose was
to identify expansively and anticipate all
the physical "stuff" that could end up in the
41
wrong place to the detriment of water
quality. . . .
Despite the absence of an indisputable
catch-all (e.g., "any other waste whatever"),
there is little doubt that the recitation of
categories in the definition of "pollutant"
is designed to be suggestive not exclusive.
In the 1972 amendments, Congress meant to
carry on the tradition of the Refuse Act, and
that tradition was to construe the word
"refuse" as condemning each and every
variation of damage-inducing wastes that
changing technologies could invent. This
interpretation is endorsed by United States
v. Hamel, [551 F.2d 107 (6th Cir. 1977),]
which condemns a discharge of gasoline as
within a generic understanding of
"pollutant," rather than stretch the less
inclusive "biological materials" to cover
organically-based petroleum compounds.
That the definition of "pollutant" is
meant to leave out very little is confirmed
by the statutory definition of "pollution,"
which means nothing less than the "man-made
or man-induced alteration of the chemical,
physical, biological, and radiological
integrity of water." [33 U.S.C. § 1362(19).]
2 William H. Rodgers, Jr., Environmental Law: Air and Water 144
(1986).
Given these observations, it seems clear that, while the
listing of a specific substance in the definition of pollutant
may be significant,30 the fact that a substance is not
specifically included does not remove it from the coverage of the
statute. The next question, then, is who makes the determination
that a substance that is not listed fits into the definition.
Cedar Point argues that only EPA may make such a determination,
to the exclusion of the courts.
30
Indeed, if a person were to be so bold as to discharge
"cellar dirt," he could hardly be heard to complain when the full
force of the CWA was brought upon him.
42
As an initial matter, we note that only in rare
circumstances will a court be called upon to decide in a citizen
suit whether a particular substance is a pollutant. Typically,
citizen suits are brought against persons who are violating
effluent limitations or permits issued by EPA. In such cases,
the question of whether the discharged substance is a pollutant
is not in issue because EPA will have already made that
determination through the effluent limitation or permit.31 As
our earlier discussion confirms, however, a citizen may also
bring an action against a person that is discharging an alleged
pollutant without a permit even where EPA has failed to issue a
permit or promulgate an effluent limitation to cover the
discharge. In these cases, EPA will necessarily have not made a
determination that the discharged substance is a pollutant.
Therefore, logic dictates that the court must be able to decide
whether the discharged substance is a pollutant in order to
determine whether the defendant is violating the statute. It
would make little sense to allow a citizen to bring an action
that the court could not adjudicate.32 We find that this logic
31
If the discharger disputed EPA's determination that a
particular substance was a pollutant, its recourse would be to
seek judicial review of the determination. In such a case, the
court would not be deciding whether a particular substance was a
pollutant, but rather whether EPA's determination was a
reasonable interpretation of the statute. See, e.g., National
Wildlife Fed'n v. Gorsuch, 693 F.2d at 174 n.56.
32
This logical flaw could be avoided by characterizing the
question of whether a substance is a pollutant as part of stating
a claim; that is, by requiring the citizen to demonstrate as an
element of his claim that the defendant is discharging a
pollutant. Such a characterization is plausible, given that the
43
compels a holding that a court may determine in a citizen suit
whether a discharged substance is a pollutant, notwithstanding
the fact that EPA has failed to issue a permit or to promulgate
an effluent limitation that regulates the discharge.
Cedar Point does not direct us to any statutory authority to
the contrary. First, we note that neither the statute nor the
legislative history expressly grants EPA the exclusive authority
to decide that a substance falls within the statutory definition
of pollutant or divests the courts of the same. The D.C. Circuit
has interpreted the legislative history of the CWA to mean that
Congress has invested EPA with "at least some power" to define
the term "pollutant," National Wildlife Fed'n v. Gorsuch, 693
F.2d at 167. While we agree with this assessment, we find no
support for the logical leap that this delegation of power
necessarily deprives the federal courts of similar authority
where EPA has not spoken. It is true that Congress intended EPA
to apply the definition of pollutant to particular substances and
to regulate those substances through effluent standards and
permits. Nevertheless, as explained in our discussion regarding
stating a claim, Congress also made it unlawful for a person to
discharge a pollutant without a permit even where EPA has not
issue of stating a claim is somewhat intertwined with the
question of whether there has been a substantive violation of the
CWA. Even under this reading, however, a court would still have
to decide whether a substance being discharged was a pollutant in
citizen suits where EPA had not issued a permit or effluent
limitation.
44
applied the definition to the substance being discharged. In
such a case, the courts must apply the definition.
Further, these rare cases where courts are called upon to
determine whether a substance is a pollutant do not require a
"complex balancing" of biological, technological and economic
factors, such as EPA must undertake when promulgating effluent
standards. That is, the court will not be asked to analyze the
level of discharge, the character of the receiving waterway, and
the cost of achieving various permit limitations. Rather,
Congress has already set the permit limitation in such cases--
zero discharge. A court need only apply the statutory definition
to determine if the substance in question is a pollutant. If it
determines that the substance is a pollutant, and the defendant
is discharging it at all without a permit, then there has been a
violation of § 1311(a). We do not think that this task is beyond
the competence of a court.
Cedar Point also fails to direct us to any judicial
authority contrary to our holding. In this regard, we point out
that Cedar Point's reliance on National Wildlife Fed'n v. Gorsuch
for this proposition is misplaced. The court's reservations
regarding adding terms to the statute did not arise in the
context of it being asked to add those terms. Rather, the court
was reviewing a decision by EPA not to regulate through a permit
the low dissolved oxygen, cold, and supersaturation caused by
dams. Id. at 171. The court expressly stated that it was not
deciding whether the definition of pollutant necessarily excluded
45
those elements, but only whether EPA could so interpret the
definition. Id. at 174 n.56.
Moreover, our holding breaks no new ground in the case law.
Rather, it is consistent with numerous CWA cases in which courts
have made an independent determination that a particular
substance is a pollutant without reference to any applicable
effluent standard or permit limitation. See, e.g., Concerned
Area Residents for Env't v. Southview Farm, 34 F.3d 114, 117 (2nd
Cir. 1994) (finding that liquid manure is a pollutant because
definitional list includes solid waste, sewage, biological
materials, and agricultural waste), cert. denied, 115 S. Ct. 1793
(1995); United States v. Plaza Health Labs., Inc., 3 F.3d 643,
645 (2nd Cir. 1993) (finding that human blood is a pollutant
because definitional list includes biological materials), cert.
denied, 114 S. Ct. 2764 (1994); United States v. Schallom, 998
F.2d 196, 199 (4th Cir.) (finding that "shotcrete" and cement are
pollutants because definitional list includes solid waste,
chemical waste, and sand), cert. denied, 114 S. Ct. 277 (1993);
National Wildlife Fed'n v. Consumers Power Co., 862 F.2d 580, 583
(6th Cir. 1988) (finding that dead fish and fish remains are
pollutants because definitional list includes biological
materials); United States v. M.C.C. of Florida, Inc., 772 F.2d
1501, 1505-06 (11th Cir. 1985) (finding that redeposited
vegetation and sediment are pollutants because definitional list
includes dredged spoil), vacated and remanded on other grounds,
481 U.S. 1034 (1987); United States v. Hamel, 551 F.2d 107, 110
46
(6th Cir. 1977) (finding that gasoline is a pollutant because
generic terms of definitional list evince congressional intent to
encompass substances covered under the Refuse Act of 1899, and
Supreme Court had held that gasoline was covered by the earlier
statute); Higbee v. Starr, 598 F. Supp. 323, 330 (E.D. Ark. 1984)
(finding that hog waste is a pollutant because definitional list
includes agricultural waste), aff'd, 782 F.2d 1048 (8th Cir.
1985).33 The fact that courts have been making these
determinations since the enactment of the CWA tends to deflate
Cedar Point's concerns that the exercise this authority will
result in chaos.
Having held that we have the authority in a citizen suit
under the CWA to determine whether a discharged substance is a
pollutant, we now turn to the question of whether Cedar Point's
produced water, or any of its constituents, is a pollutant under
the CWA. Examining the statutory definition of pollutant first,
we think that produced water is clearly subsumed by the phrases
"chemical wastes" and "industrial waste." 33 U.S.C. § 1362(6).
The exclusions under this definition also provide some guidance.
Specifically, the definition states that the term "pollutant"
does not mean
water derived in association with oil or gas
production and disposed of in a well, if the
33
We recognize that some of these cases are not completely
analogous to the case sub judice because they involve civil or
criminal enforcement actions brought by the government; however,
we see no reason why a court may determine that a substance is a
pollutant in such cases but may not make that determination in a
citizen suit.
47
well used . . . for disposal purposes is
approved by authority of the State in which
the well is located, and if such State
determines that such injection or disposal
will not result in the degradation of ground
or surface water resources.
33 U.S.C. § 1362(6)(B).34 Although this exclusion of produced
water from the meaning of pollutant in very limited circumstances
does not necessarily mean that produced water is a pollutant
under all other circumstances,35 we nevertheless consider it a
strong indicator of Congress's concern over the effects of
produced water on the environment. Furthermore, if Congress felt
that it was necessary to draft a detailed exemption for produced
water that has been disposed of in a state-approved reinjection
34
Inexplicably, neither party brought this provision to our
attention. This failure is all the more remarkable because this
provision is the unmistakable fingerprint of the oil and gas
industry on the CWA -- in the definition of "pollutant" no less.
35
But cf. United States Steel Corp. v. Train, 556 F.2d 822
(7th Cir. 1977). In this case, U.S. Steel challenged EPA's
authority to regulate its disposal of acid wastes in a well. Id.
at 851. With respect to whether the acid wastes were a
pollutant, the court quoted the exemption in § 1362(6)(B) and
stated:
Applying the canon expressio unius est
exclusio alterius to the quoted language, we
conclude that the listed materials are
"pollutants" when injected into wells under
any other circumstances.
Id. at 852. We do not apply that canon here. The legislative
history makes clear that Congress was distinguishing between the
disposal of produced water into wells by the oil industry and the
disposal of other materials into wells by other industries,
rather than between the disposal of produced water into wells and
the disposal of produced water by other means. 1 A Legislative
History of the Water Pollution Control Act Amendments of 1972
589-97 (Environmental Policy Div., Congressional Research Serv.
ed., 1973) (House debate on amendment offered by Rep. Aspin that
would have eliminated the exemption).
48
well, it may be that Congress believed that such produced water
would otherwise be a pollutant. If, absent an exemption,
produced water reinjected into a state-approved well is a
pollutant, then it is hardly a stretch to say that produced water
deposited directly into a bay is also a pollutant.36
Aside from this statutory support, we also find substantial
guidance from EPA on the question of whether Cedar Point's
produced water is a pollutant. As we noted in our discussion of
stating a claim under the CWA, EPA has recognized that citizens
have the right to sue "Coastal Subcategory" operators who are
discharging produced water without a permit. 57 Fed. Reg.
60,926, 60,944-45 (1992). The ability to bring such an action
necessarily implies that produced water is a pollutant. In
addition, EPA has issued permits regulating produced water
discharges by oil and gas operators in the "Onshore Subcategory"
and the "Offshore Category" in Texas. 56 Fed. Reg. 7698 (1991);
46 Fed. Reg. 20,284 (1981). In these permits, EPA has explicitly
referred to produced water as a "pollutant." See, e.g., 56 Fed.
Reg. 7698, 7701 (1991) ("[T]he permits prohibit the discharge of
all wastewater pollutants from Onshore Subcategory facilities,
including . . . produced water." (emphasis added)). Finally,
several of the components of Cedar Point's produced water,
including benzene, naphthalene, and zinc, are listed as "toxic
36
We also think it significant that, although Congress
provided this clear avenue for oil and gas producers to avoid
regulation by the CWA, Cedar Point chose not to avail itself of
it.
49
pollutants" in regulations promulgated by EPA. 40 C.F.R.
§ 401.15 (1994); cf. Dague v. City of Burlington, 732 F. Supp.
458, 469-70 (D. Vt. 1989) (finding substances discharged by
defendants to be pollutants by reference to the toxic pollutant
list). Similarly, oil and grease are listed as "conventional
pollutants." 40 C.F.R. § 401.16 (1994).
Given this support in the statute, as reinforced by EPA's
own regulations, we conclude that Cedar Point's produced water is
a pollutant within the meaning of the CWA.37 Cedar Point does
not dispute that it discharged this produced water into Galveston
Bay without a NPDES permit. Accordingly, we conclude that the
district court correctly held that Cedar Point violated § 1311(a)
of the CWA.
4. Striking of Cedar Point's Experts
Cedar Point's fourth argument on appeal is that the district
court erred in striking Cedar Point's designation of experts and
excluding them from testifying at trial as a sanction for
37
We recognize that the overwhelming evidence from the
statute and the regulations makes our determination that produced
water is a pollutant an easy one. We note, however, that the
conditions that give rise to the need for a court to determine
whether a substance is a pollutant may lead to more difficult
cases. Where EPA has not promulgated a permit or limitation for
a particular discharge, it may be because EPA lacks the resources
to do so or because the discharge is not a priority.
Occasionally, however, it may be because EPA questions whether
the discharged substance is a pollutant at all. In such a case,
it is likely that the substance may not clearly fit within the
statutory definition and that there will be little regulatory
guidance from EPA. In a citizen suit brought under these
circumstances, courts should exercise restraint to avoid
stretching the term "pollutant" too far.
50
violating the court's accelerated discovery order. In this
regard, we are asked to review two separate determinations by the
district court: (1) whether Cedar Point actually violated the
discovery order; and (2) if there was a violation, whether the
striking of Cedar Point's experts was an appropriate sanction.
We review the court's finding that Cedar Point violated the
discovery order for an abuse of discretion. See Scott v.
Monsanto Co., 868 F.2d 786, 793 (5th Cir. 1989) (district court's
rulings on discovery matters will only be reversed for abuse of
discretion). We apply the same standard in reviewing a sanction
for violating a discovery order. Chilcutt v. United States, 4
F.3d 1313, 1320 (5th Cir. 1993), cert. denied, 115 S. Ct. 460
(1994).38 The district court's discretion in such matters has
been described as "broad", id.; Landry v. Air Line Pilots Ass'n
Int'l AFL-CIO, 901 F.2d 404, 436 n.114 (5th Cir.), cert. denied,
498 U.S. 895 (1990), and "considerable", Murphy v. Magnolia Elec.
Power Ass'n, 639 F.2d 232, 234 (5th Cir. 1981). Accordingly,
"[i]t is unusual for an appellate court to find abuse of
38
But see Alldread v. City of Grenada, 988 F.2d 1425, 1436
(5th Cir. 1993). Alldread applied a "manifest error" standard in
reviewing a trial court's exclusion of expert testimony as a
sanction for failing to comply with a discovery order. As
authority for this proposition, the Alldread court cited Page v.
Barko Hydraulics, 673 F.2d 134, 139 (5th Cir. 1982). Page,
however, involved an evidentiary ruling on the admissibility of
an expert's testimony at trial. It is true that the exclusion of
expert testimony as an evidentiary matter is reviewable for
manifest error. United States v. Willey, 57 F.3d 1374, 1389 (5th
Cir. 1995), cert. denied, 1995 WL 668887 (U.S. Dec. 11, 1995).
When expert testimony is excluded as a sanction, however, we
review the trial court's ruling for abuse of discretion.
Chilcutt, 4 F.3d at 1320; Bradley v. United States, 866 F.2d 120,
124 (5th Cir. 1989).
51
discretion in these matters." O'Malley v. United States Fidelity
and Guar. Co., 776 F.2d 494, 499 (5th Cir. 1985). Generally, we
will only reverse the trial court's discovery rulings in "unusual
and exceptional case[s]." Id. (quoting Brown v. Thompson, 430
F.2d 1214, 1216 (5th Cir. 1970) (internal quotations omitted)).
Immediately after Sierra Club filed its complaint on April
20, 1993, the district court entered an order setting an
accelerated discovery schedule for this case, rather than
proceeding under a traditional discovery plan.39 The order first
required the parties to make certain "initial disclosures"
without waiting for discovery requests. These initial
disclosures were to include copies of "all documents, data
compilations, and tangible things . . . that are likely to bear
significantly on any claim or defense."
In addition to these disclosures, the court's order required
the parties to make disclosures regarding the expert testimony
that they intended to present at trial. With respect to each
expert witness, each party had to submit to the other the
following:
a written report prepared and signed by the
witness which includes a complete statement
of all opinions to be expressed and the basis
and reasons therefor; the data or other
information relied upon in forming such
opinions; any exhibits to be used as a
39
The authority for such an order is found in paragraph 6 of
the Cost and Delay Reduction Plan under the Civil Justice Reform
Act of 1990, 28 U.S.C. §§ 471-482, as adopted by the Southern
District of Texas on October 24, 1991. The order tracks the
language of the new Rule 26(a) of the Federal Rules of Civil
Procedure, with slight modifications.
52
summary of or support for such opinions; the
qualifications of the witness; and a listing
of any other cases in which the witness has
testified as an expert at trial or in
deposition within the preceding four years.
The order required the parties to submit these reports ninety
days prior to the trial date.40 The order appears to call for
"simultaneous" disclosure of the reports; that is, the order did
not direct one party to submit its reports first, but only
required each party's reports to be submitted by the ninety-day
deadline.41 After this deadline, the order allowed the parties
to make additional expert submissions in only two situations.
First, the parties could submit reports "to contradict or rebut
evidence on the same subject matter identified by another party"
in its initial expert disclosures. The order directed that such
a report be made within thirty days after the disclosure of the
report being rebutted. Second, the parties had a duty to
40
In a telephone conference on September 29, 1993, the
district court set this case for trial-docket call on May 2,
1994; accordingly, the expert disclosure deadline fell on
February 1, 1994.
41
The Advisory Committee Notes to Rule 26 recommend
disclosure of these reports seriatim, but leave such a decision
to the discretion of the trial court:
[I]n most cases the party with the burden of
proof on an issue should disclose its expert
testimony on that issue before other parties
are required to make their disclosures with
respect to that issue. In the absence of
such a direction, the disclosures are to be
made by all parties at least 90 days before
the trial date or the date by which the case
is to be ready for trial . . . .
Fed. R. Civ. P. 26 advisory committee's note.
53
supplement these reports if necessary.42 Such supplementation
was required to be made at least thirty days prior to trial.43
On January 24, 1994, Cedar Point filed a corrected
designation of its expert witnesses: Don Harper, Carl
Oppenheimer, John McGowan, and Stanley Pier. Two days later,
Cedar Point supplemented this list with the designation of Joe
Haney. Cedar Point served the required reports from these
experts around the deadline set by the court's order.44 Cedar
Point later timely served Sierra Club with "rebuttal" expert
reports from Don Harper, John McGowan, and Stanley Pier.
42
The scope of this duty to supplement is outlined in Rule
26(e). Specifically, a party is required to supplement its
expert disclosures if the court so orders or if "the party learns
that in some material respect the information disclosed is
incomplete or incorrect and if the additional or corrective
information has not otherwise been made known to the other
parties during the discovery process or in writing." Fed. R.
Civ. P. 26(e)(1).
43
Rule 26(e)(1) requires that supplementation of expert
disclosures be made by the time the supplementing party's
"Pretrial Disclosures" are due. Fed. R. Civ. P. 26(e)(1). The
court's accelerated discovery order directed that the "Pretrial
Disclosures" would be due at least thirty days before trial.
44
Cedar Point maintains that its submission of expert
reports was timely, citing as evidence a letter to the Clerk of
the Southern District of Texas that was copied to counsel
opposite. This letter was a cover letter to the expert reports
and was dated February 2, 1994. The deadline for service of
these reports, however, was February 1, 1994, ninety days before
the docket-call date of May 2, 1994. The court's order directed
that the parties serve the reports in accordance with Rule 5 of
the Federal Rules of Civil Procedure. Assuming that Cedar Point
mailed these reports to Sierra Club, it would have had to do so
by February 1, as Rule 5 provides that service by mail is
complete upon mailing. Fed. R. Civ. P. 5(b). In any event,
Sierra Club's motion to strike Cedar Point's experts was not
predicated on a failure to comply with deadlines.
54
Finally, Cedar Point timely supplemented Don Harper's reports
before trial.45
On February 14, 1994, Sierra Club filed a motion to strike
Cedar Point's designation of experts as a sanction for failure to
comply with the court's accelerated discovery order.
Specifically, Sierra Club argued that the initial expert reports
filed by Cedar Point were so incomplete and insubstantial that
they failed to meet the requirements of the discovery order. On
April 19, 1994, the court entered an order granting this motion.
The court found that Cedar Point had not complied with its order
regarding expert reports and ordered that Cedar Point's
designation of experts was stricken, with instructions that none
of Cedar Point's experts would be allowed to testify at trial.
Cedar Point maintains that, between its initial expert
disclosures and its rebuttal and supplementary disclosures, it
did provide enough information to comply with the district
court's discovery order. Also, Cedar Point asserts that it
cannot be sanctioned for failure to comply with a discovery order
because Sierra Club never filed a motion to compel. Finally,
Cedar Point argues that the sanction of striking Cedar Point's
experts was an abuse of discretion. In this regard, Cedar Point
contends that: (1) the subject of its experts' testimony--the
45
Cedar Point also filed an untimely supplement to Carl
Oppenheimer's report on April 25, 1994; however, Cedar Point's
only purpose in doing so was to ensure the inclusion of this
report in the record--the district court had already entered an
order striking Carl Oppenheimer as a witness a week earlier.
Accordingly, we will not consider the untimeliness of this filing
in adjudicating Cedar Point's appeal on this issue.
55
harm caused by Cedar Point's produced water--was crucial to the
court's assessment of penalties against Cedar Point; (2) even if
Cedar Point's initial expert disclosures were inadequate, there
was no prejudice to Sierra Club because Sierra Club received the
required information through rebuttal and supplementary
disclosures with enough time to prepare for trial; (3) any
prejudice to Sierra Club because of untimely disclosures could
have been cured through a continuance; and (4) Cedar Point's
failure to comply was justified because Sierra Club's complaint
and initial disclosures were so vague, general, and irrelevant
that the issues in the lawsuit were not sufficiently defined to
put Cedar Point on notice of what expert testimony would be
needed.
The district court's discovery order required that the
parties' initial expert disclosures "include a complete statement
of all opinions to be expressed and the basis and reasons
therefor" and "the data or other information relied upon in
forming such opinions." The Advisory Committee Notes to Rule 26
of the Federal Rules of Civil Procedure state that such reports
must be "detailed and complete." Fed. R. Civ. P. 26 advisory
committee's note. These Notes also explain that the purpose of
the reports is to avoid the disclosure of "sketchy and vague"
expert information, as was the practice under the former rule.
See id.
The district court's finding that Cedar Point's initial
expert disclosures did not meet this standard does not constitute
56
an abuse of discretion. A review of the disclosures bears out
this assessment. Don Harper's statement of opinions and reasons
was a one-and-a-half page outline listing his "points of
testimony." Carl Oppenheimer offered two one-paragraph
descriptions of his opinions. Stanley Pier and John McGowan also
provided only one-paragraph statements relating to their
opinions. Finally, Joe Haney's statement included no substantive
opinions, but only declared what subjects he intended to research
and to discuss at trial. Although Cedar Point later reinforced
these statements with rebuttal and supplementary disclosures, the
discovery order and Rule 26(a) clearly require that the initial
disclosures be complete and detailed. The purpose of rebuttal
and supplementary disclosures is just that--to rebut and to
supplement. These disclosures are not intended to provide an
extension of the deadline by which a party must deliver the
lion's share of its expert information. Therefore, we hold that
the district court did not abuse its discretion in finding that
Cedar Point failed to comply with the expert disclosure
provisions of its accelerated discovery order.46
46
Cedar Point even appears at times to admit that it did not
comply with the discovery order by stating that it was
"impossible" to comply and that their experts "did all they could
do" under the circumstances. The reasons for noncompliance,
however, are relevant to the separate issue of whether the
sanction imposed was appropriate. On the other hand, a violation
of an order is a violation of an order, regardless of the reasons
therefor.
In this regard, we note that the question of whether a party
has violated a discovery order will typically not be in dispute,
as when a party fails to attend a deposition or refuses to
produce certain documents. Where the standard of compliance is a
matter of degree, however, such as the degree to which an initial
57
As authority for its argument that Sierra Club was required
to file a motion to compel before seeking sanctions, Cedar Point
cites our decision in Broadcast Music, Inc. v. Xanthas, Inc., 855
F.2d 233 (5th Cir. 1988). In Broadcast Music, the plaintiff
argued that the defendant should have been estopped from denying
certain facts when it failed to produce documents relevant to
those facts. Id. at 238. We held that the sanction of estoppel
was not available because the plaintiff had not first sought a
motion to compel production of the relevant documents. Id. Our
rationale, however, was that the pretrial order did not
explicitly compel the production of those documents in the first
place; rather, the order only stated that "immediate receipt of
such documents would expedite plaintiff's preparation of this
case for trial or preparation of a motion for summary judgment."
Id. In other words, it would have been unfair to sanction the
defendant for failure to produce documents that it was never
under any clear obligation to produce. In the present case,
however, Cedar Point was compelled to produce the initial expert
disclosures from the moment the court entered the accelerated
discovery order. It was not necessary for Sierra Club to create
a obligation to produce by filing a motion to compel; the
obligation was already present.
expert disclosure is "complete," disagreement is more likely to
occur. The resolution of such disputes is more appropriately
left to the discretion of the trial court, and only in an unusual
case of clear abuse should an appellate court reverse. See
O'Malley, 776 F.2d at 499.
58
Moreover, Rule 37 of the Federal Rules of Civil Procedure,
which governs the imposition of sanctions for failure to make
disclosures, does not require that a party file a motion to
compel before moving for sanctions. Instead, the rule states
only that, "[i]f a party fails to make a disclosure required by
Rule 26(a), any other party may move to compel disclosure and for
appropriate sanctions." Fed. R. Civ. P. 37(a)(2)(a). Indeed,
the Advisory Committee Notes to Rule 37 contemplate that it may
be more effective in some situations to impose a sanction of
excluding evidence instead of an order compelling production:
[A] motion [to compel] may be needed when the
information to be disclosed might be helpful
to the party seeking the disclosure but not
to the party required to make the disclosure.
If the party required to make the disclosure
would need the material to support its own
contentions, the more effective enforcement
of the disclosure requirement will be to
exclude the evidence not disclosed . . . .
Fed. R. Civ. P. 37 advisory committee's note. Because Cedar
Point intended to use its expert testimony to support its own
contentions regarding harm to the environment, the district court
could have concluded that excluding this testimony was the most
appropriate sanction. Accordingly, we hold that the district
court did not abuse its discretion in sanctioning Cedar Point for
violating the discovery order without requiring Sierra Club to
file a motion to compel.
Finally, we review the sanction itself. When a district
court strikes a party's designation of expert witnesses and
excludes their testimony as a sanction for violation of a
59
discovery order, we determine whether the court's action is an
abuse of discretion by examining four factors:
(1) the importance of the witnesses'
testimony;
(2) the prejudice to the opposing party of
allowing the witness to testify;
(3) the possibility of curing such prejudice
by granting a continuance; and
(4) the explanation, if any, for the party's
failure to comply with the discovery
order.
See Bradley v. United States, 866 F.2d 120, 125 (5th Cir. 1989)
(citing Murphy, 639 F.2d at 235).
With respect to the importance of Cedar Point's witnesses,
it is clear that the bulk of their expected testimony concerned
the degree of harm caused by Cedar Point's discharge of produced
water. Although the district court made findings regarding harm
to the environment in assessing the civil penalty against Cedar
Point, the court based the amount of the penalty only on the
economic benefit accruing to Cedar Point from the violation.
Therefore, the stricken testimony ultimately proved to be
unimportant to Cedar Point's case.
As to any prejudice to Sierra Club that would result from
allowing Cedar Point's witnesses to testify, we note that Sierra
Club did receive more detailed information from three of the
witnesses in the form of rebuttal reports. While these
disclosures were made approximately two months before trial,
Sierra Club should have received most of this information in
initial expert disclosures a month earlier. Such a delay would
have likely resulted in some prejudice to Sierra Club. While a
60
continuance would have given Sierra Club more time to review the
late disclosures, such a measure "would neither punish [Cedar
Point] for its conduct nor deter similar behavior in the future."
Bradley, 866 F.2d at 126.
Finally, Cedar Point's reasons for failure to comply with
the district court's discovery order are not persuasive. That
harm to the environment would be an issue in this lawsuit was
clear from the filing of the action in April 1993. Cedar Point
had over nine months to solicit experts and prepare reports on
this issue by the February 1, 1994 deadline. Regardless of the
specificity of Sierra Club's complaint and initial disclosures,
Cedar Point should have been able to produce more information
regarding its defense of lack of harm than it did in its initial
expert disclosures.
In light of Cedar Point's failure to adhere to discovery
deadlines and the fact that the expected testimony ultimately
proved to be relatively unimportant, we find that the district
court did not abuse its discretion in striking Cedar Point's
experts and excluding their testimony.
5. The Penalty and Attorneys' Fees
Cedar Point's fifth argument on appeal is that the district
court erred in assessing a penalty of $186,070 against Cedar
Point for violating the CWA and in awarding attorneys' fees to
Sierra Club. We review the district court's findings of fact in
support of the penalty under the clearly erroneous standard. See
61
Public Interest Research Group of New Jersey, Inc. v. Powell
Duffryn Terminals, Inc., 913 F.2d 64, 79 (3rd Cir. 1990), cert.
denied, 498 U.S. 1109 (1991). With respect to the court's
weighing of those facts and determination of the penalty,
however, we review for abuse of discretion. See Atlantic States
Legal Found., Inc. v. Tyson Foods, Inc., 897 F.2d 1128, 1142
(11th Cir. 1990). Similarly, we review an award of attorneys'
fees for abuse of discretion. Bode v. United States, 919 F.2d
1044, 1047 (5th Cir. 1990).
a. The Penalty
The CWA directs district courts to assess civil penalties
for violations of the CWA. 33 U.S.C. § 1319(d). Specifically,
the statute states that violators "shall be subject to a civil
penalty not to exceed $25,000 per day for each violation." Id.
Aside from this maximum amount, the statute guides the court's
discretion in setting the penalty as follows:
In determining the amount of a civil penalty
the court shall consider the seriousness of
the violation or violations, the economic
benefit (if any) resulting from the
violation, any history of such violations,
any good-faith efforts to comply with the
applicable requirements, the economic impact
of the penalty on the violator, and such
other matters as justice may require.
Id. The Eleventh Circuit has taken these statutory directives
and developed a procedural framework for calculating penalties
under the CWA. Tyson Foods, 897 F.2d at 1142. First, the court
is to calculate the maximum penalty that could be assessed
62
against the violator. Id. Using that maximum as a starting
point, the court should then determine if the penalty should be
reduced from the maximum by reference to the statutory factors.
Id.
The district court followed the Tyson Foods framework in
this case. The parties had stipulated that there were 797 days
of unpermitted discharge of produced water prior to trial. The
judgment was entered twelve days later, during which time the
discharge presumedly continued. Accordingly, the court
multiplied the statutory figure of $25,000 per day by 809 days of
unpermitted discharge to arrive a maximum penalty of $20,225,000.
The district court then made findings of fact with respect
to the statutory factors. First, the court found that the
violation was moderately serious because of the effect of the
discharge on benthic organisms47 and the lack of monitoring and
reporting with respect to the discharge. Second, the court found
that the economic benefit to Cedar Point from the violation was
$186,070, which the court determined was the amount that Cedar
Point saved by not disposing of its produced water in a
reinjection well. Third, the court found that Cedar Point had
been violating the CWA since it began operating state well 1876.
Fourth, the court found that Cedar Point had not demonstrated
good faith in attempting to comply with the CWA. In this regard,
the court noted that, although Cedar Point had attempted to
47
"Benthic" organisms are those that live on the bottom of a
water body.
63
obtain a NPDES permit for its discharge, it had not explored
other ways to comply with the CWA. Finally, the court reviewed
Cedar Point's financial position and expected future profits from
the Cedar Point field and determined that Cedar Point could at
least afford a penalty equal to the economic benefit attained
from the violation.
In weighing these facts and calculating the penalty, the
district court held that the maximum penalty of $20,225,000 was
inappropriate. The court determined, however, that the penalty
should at a minimum recapture the savings realized by Cedar Point
because of the violation. Although the court's findings with
respect to the other statutory factors were also not favorable to
Cedar Point, the court apparently chose not to accord these
factors any weight because it did not increase the penalty beyond
what it found to be the economic benefit to Cedar Point.
Accordingly, the court assessed a penalty of $186,070.
In reviewing the district court's findings of fact, we note
that the court adopted Sierra Club's proposed findings and
conclusions with minimal revision. Under such circumstances, we
review the court's findings of fact with caution. FDIC v.
Texarkana Nat'l Bank, 874 F.2d 264, 267 (5th Cir. 1989) ("[W]e
have shown caution in reviewing district court findings which are
essentially verbatim recitals of the prevailing party's proposed
findings and conclusions."), cert. denied, 493 U.S. 1043 (1990).
The district court chose to calculate the economic benefit
to Cedar Point by reference to the money Cedar Point saved by not
64
disposing of its produced water in a reinjection well. In this
regard, the court made the following findings of fact in its
Memorandum Opinion:
According to the testimony of Cedar Point's
witnesses, operating an injection well would
add $60,000 per year to the operating cost of
the Cedar Point field. Consequently, the
economic benefit to Cedar Point of its
violation of the Clean Water Act is at least
$60,000 for each full year of operation.
According to other Cedar Point testimony, the
cost of brine injection is in the range of
$.10 to $.20 per barrel. Thus, for 1993, the
economic benefit could be determined to be
between $42,000 and $84,000.
The court had found that the average daily discharge during the
period of violation was 1,150 barrels per day, and there were 809
days of unpermitted discharge at the time the court entered
judgment. Using a figure of $.20 per barrel for cost of
reinjection, the court thus found that the economic benefit to
Cedar Point was $186,070.48
On June 6, 1994, Sierra Club filed a motion to alter or
amend the district court's findings and conclusions pursuant to
Rule 52(b) of the Federal Rules of Civil Procedure.49 The
impetus for this motion, by Sierra Club's admission, was that
some of the court's findings and conclusions did not strictly
reflect the evidence that was introduced at trial. With respect
48
$.20/barrel x 1,150 barrels/day x 809 days = $186,070.
49
At the time of Sierra Club's motion, Rule 52(b) stated, in
pertinent part: "Upon motion of a party made not later than 10
days after entry of judgment the court may amend its findings or
make additional findings and amend the judgment accordingly."
Fed. R. Civ. P. 52(b) (1994).
65
to the court's findings regarding the economic benefit to Cedar
Point, Sierra Club made the following statement:
The Sierra Club believes that the Court's
finding that the cost of injection of
produced water would be approximately $0.10
to $0.20 per barrel is adequately supported
based on David Russell's testimony that a
disposal well would cost approximately
$300,000 to outfit initially, and $900 per
year to operate, as well as Mr. Russell's
admission that a Cedar Point representative
had testified that one type of injection well
would add approximately $60,000 per year in
operating costs. In addition, this finding
is supported by Sierra Club Exhibit 9, which
is the Federal Register notice published by
the Environmental Protection Agency when it
proposed its zero discharge permit for
produced water. This notice specifically
states that studies performed for the EPA
showed that cost of brine disposal per barrel
to be between $0.15 and $1.02 per barrel.
See 57 F.R. 60931. The Court's figure of
$.020 [sic] per barrel is hence on the
conservative end of this spectrum.
In granting this motion, the court did not alter its previous
findings, but supplemented those findings with the following
paragraph:
David Russell testified that the cost of
injection of produced water would be
approximately $.10 to $.20 per barrel and
that a disposal well would cost approximately
$300,000 to outfit and $900 per year to
operate. Further, EPA studies show that the
cost of brine disposal is between $.15 and
$1.02 per barrel. On this basis, $.20 per
barrel for disposal of produced water is a
reasonable figure within the range found.
See (Sierra Club Exhibit #9); 57 F.R. 60931.
Accordingly, the court let its original calculation of the
penalty stand.
66
Some of the district court's findings do not appear to be
supported by the evidence. For example, there was no testimony
from any of Cedar Point's witnesses to the effect that a
reinjection well would add $60,000 per year to the operating
costs of the Cedar Point field. Apparently, John McGowan had
mentioned this figure in his deposition, but neither party
introduced that deposition into evidence and the court did not
allow McGowan to testify at trial. On cross-examination, David
Russell testified that, if Cedar Point constructed its own
reinjection well, it would not add $60,000 per year to operating
costs. Later, on redirect, Russell testified that he had read
McGowan's deposition and that the $60,000 figure referred to a
type of well that Cedar Point would not use to dispose of its
produced water. Also, Russell never testified that the cost of
reinjecting produced water would be $0.10 to $0.20 per barrel,
nor did he testify that it would cost $900 per year to operate a
disposal well.
The EPA cost studies cited in the court's supplementary
findings, however, appeared in an exhibit introduced by both
Sierra Club and Cedar Point. This exhibit was the draft NPDES
general permit for produced water discharges by Coastal
Subcategory operators, appearing at 57 Fed. Reg. 60,926 (1992).
In this draft permit, EPA made reference to studies of the costs
of reinjection of produced water. Id. at 60,931. The most
recent study found that the costs of reinjection of produced
water ranged from $0.15 to $1.02 per barrel. Id. Although the
67
court's finding that the cost of reinjection is $.20 per barrel
falls within the range stated in the draft permit, Cedar Point
argues that this range is not sufficiently specific to be a
reliable indicator of what it would have cost to reinject its
produced water. Specifically, Cedar Point contends that the
permit does not indicate whether this range reflects the costs of
paying a commercial reinjection well operator to dispose of
produced water or the costs of an oil and gas operator
constructing its own reinjection well and disposing of produced
water itself. Russell testified that Cedar Point would not have
paid a commercial injection well operator to dispose of its
produced water because that would have been too expensive.
Instead, Russell testified that Cedar Point would have built its
own reinjection well and that such a well would have cost
$300,000 to outfit initially and $0.0025 per barrel to operate.
Notwithstanding Cedar Point's challenge to the relevance of
the EPA cost figures, we do not think that the district court's
use of the $0.20 per barrel cost figure and subsequent
calculation of an economic benefit to Cedar Point in the amount
of $186,070 are clearly erroneous. The district court may have
simply chosen to credit the objective evidence from the EPA
studies over the testimony of Russell, one of Cedar Point's
officers. Also, the court may have resolved any doubts about the
accuracy of the EPA studies by choosing a cost figure near the
low end of the prescribed range. Finally, and perhaps most
importantly, we note that a court need only make a "reasonable
68
approximation" of economic benefit when calculating a penalty
under the CWA. Powell Duffryn, 913 F.2d at 80 (citing S. Rep.
No. 50, 99th Cong., 1st Sess. 25 (1985)). We are satisfied that
the court's approximation of economic benefit is reasonable under
the facts of this case.
Further, we do not think that the district court abused its
discretion in assessing a penalty in an amount that reflected
only the economic benefit to Cedar Point.50 The Supreme Court
has described the process of weighing the statutory factors in
calculating civil penalties under the CWA as "highly
discretionary" with the trial court. Tull v. United States, 481
U.S. 412, 427 (1987). It is clear from the district court's
Memorandum Opinion that it considered all of the statutory
factors before settling on an amount based only on economic
benefit. Considering that the court could have imposed a penalty
as high as $20,225,000, this appears to be a fair and just
result. As such, we perceive no abuse of discretion. Therefore,
we affirm the district court's assessment of a penalty in the
amount of $186,070 for Cedar Point's violation of the CWA.
b. Attorneys' Fees
Cedar Point's sole argument with respect to attorneys' fees
is that, if we hold that Sierra Club lacks standing to bring this
action or that Cedar Point has not violated the CWA, Sierra Club
50
Accordingly, we think it unnecessary to review the
district court's findings of fact with respect to the other
statutory factors.
69
would not be entitled to attorneys' fees as the "prevailing
party" in this action. See 33 U.S.C. § 1365(d). Because we have
held otherwise, we affirm the district court's award of
attorneys' fees.
6. Cedar Point's Counterclaim
Finally, Cedar Point appeals the district court's dismissal
of its counterclaim against Sierra Club for abuse of process.
The court dismissed Cedar Point's counterclaim pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim. We review a dismissal for failure to state a claim under
the same standard used by the district court: A claim may not be
dismissed unless it appears certain that the plaintiff cannot
prove any set of facts in support of his claim that would entitle
him to relief. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th
Cir. 1994); Carney v. RTC, 19 F.3d 950, 954 (5th Cir. 1994).
As the basis for its counterclaim, Cedar Point alleges the
following facts: (1) Sierra Club either threatened to sue, or
actually sued, all or a number of oil and gas operators in
Galveston Bay under the CWA for the stated purpose of stopping
unpermitted discharges of produced water; (2) in settling these
disputes with the operators, Sierra Club allowed them to continue
the allegedly illegal discharges in exchange for monetary
consideration; (3) Sierra Club Legal Defense Fund realized
substantial profits from these settlements in the form of
attorneys' fees, which Sierra Club is using to finance more
70
litigation against oil and gas operators in Galveston Bay; (4)
Sierra Club realized some of the monetary consideration; and (5)
Sierra Club threatened Cedar Point with a similar suit with the
intent to obtain monetary consideration. Cedar Point argues that
this pattern of suing and settling with oil and gas operators
establishes Sierra Club's intent to use the citizen suit
provision of the CWA to extort money from Cedar Point. In this
regard, Cedar Point notes that the purpose of a citizen suit is
to stop putatively illegal conduct, and yet the terms of Sierra
Club's settlements allow this conduct to continue.
Under Texas law, the elements of an action for abuse of
process are:
(1) that the defendant made an illegal,
improper or perverted use of the process, a
use neither warranted nor authorized by the
process; (2) that the defendant had an
ulterior motive or purpose in exercising such
illegal, perverted or improper use of the
process; and (3) that damage resulted to the
plaintiff as a result of such illegal act.
Baubles & Beads v. Louis Vuitton, S.A., 766 S.W.2d 377, 378 (Tex.
App.--Texarkana, no writ). "When the process is used for the
purpose for which it is intended, even though accompanied by an
ulterior motive, no abuse of process occurs." Id. (citing
Restatement (Second) of Torts § 682 cmt. b (1977)).
The facts alleged by Cedar Point do not demonstrate an
"illegal, improper or perverted" use of the citizen suit
provision of the CWA. First, the "intent to sue" letter sent by
Sierra Club to Cedar Point was not a "threat"; rather, the CWA
requires such letters to be sent at least sixty days prior to the
71
commencement of a civil suit. 33 U.S.C. § 1365(b)(1). Further,
the fact that Sierra Club has brought suits against other oil and
gas operators in Galveston Bay, and that some of these suits were
resolved through settlement, does not indicate that Sierra Club
was making an illegal use of the citizen suit provision. The
consent judgments generally directed the operators to cease
discharging produced water after a certain grace period.
Allowing such a grace period does not create an inference that
Sierra Club's citizen suits were pretext for coercing monetary
settlements; EPA itself will provide for grace periods in order
to allow dischargers time for compliance. See, e.g., 60 Fed.
Reg. 2387, 2394 (1995); see also United States v. Metropolitan
St. Louis Sewer Dist. (MSD), 952 F.2d 1040, 1044 (8th Cir. 1992)
(holding that district court did not abuse its discretion in
approving consent decree that allowed for delay in compliance).
In addition, the operators agreed to make payments to
environmental interest organizations other than Sierra Club,
provided that such payments would be used for conservation and
education, and not for litigation. There is nothing illegal or
improper about this sort of provision; indeed, "Congress
encourages settlements of this type which preserve the punitive
nature of enforcement actions while putting the funds collected
to use on behalf of environmental protection." Sierra Club v.
Electronic Controls Design, Inc., 909 F.2d 1350, 1355 (9th Cir.
1990) (internal quotations and citations omitted). The consent
judgments did provide for the payment of attorneys' fees and
72
costs incurred by Sierra Club in the litigation; however, we find
nothing improper here, as such provisions frequently appear in
consent judgments. Finally, we note that these settlement
agreements were reviewed and approved by the Department of
Justice and EPA, as required by the CWA. 33 U.S.C. § 1365(c)(3).
In light of these observations regarding Sierra Club's
settlements with other oil and gas operators, and our holding
today that Sierra Club's suit against Cedar Point is meritorious,
we conclude that Cedar Point has failed to state a claim for
abuse of process. Therefore, we affirm the district court's
dismissal of Cedar Point's counterclaim.
B. Sierra Club's Appeal
In its appeal from the district court's order amending the
injunction, Sierra Club raises the following points of error:
(1) the district court lacked jurisdiction to amend the
injunction; and (2) the district court abused its discretion in
amending the injunction. We address each of these arguments in
turn.
1. Jurisdiction
We review a district court's exercise of subject matter
jurisdiction de novo. Price v. United States, 69 F.3d 46, 49
(5th Cir. 1995); In re Moody, 41 F.3d 1024, 1026 (5th Cir. 1995).
Sierra Club contends that the district court lacked jurisdiction
to amend its earlier injunction because Cedar Point's notice of
73
appeal from the final judgment divested the district court of
jurisdiction over the action. Sierra Club recognizes that there
are exceptions to the divestment of jurisdiction under Rule 60(b)
and Rule 62(c) of the Federal Rules of Civil Procedure, but
argues that those exceptions do not apply.
The district court did not cite either rule as authority for
its order amending the injunction, but Sierra Club addresses each
possibility. If we hold that the authority for the amendment of
the injunction was Rule 60(b), Sierra Club argues that the
district court lacked jurisdiction because the court did not
misinterpret or misapply the law and EPA's administrative order
did not moot the court's initial injunction. On the other hand,
if Rule 62(c) is the relevant authority, Sierra Club contends
that a district court lacks jurisdiction under that rule to
dissolve an injunction once its validity has been appealed.
Generally, a notice of appeal divests the district court of
jurisdiction over the judgment or order that is the subject of
the appeal. Henry v. Independent Am. Sav. Ass'n, 857 F.2d 995,
997 (5th Cir. 1988). Rule 62(c) provides an exception to this
principle. That rule provides, in part:
When an appeal is taken from an interlocutory
or final judgment granting, dissolving, or
denying an injunction, the court in its
discretion may suspend, modify, restore, or
grant an injunction during the pendency of
the appeal upon such terms as to bond or
otherwise as it considers proper for the
security of the rights of the adverse party.
Fed. R. Civ. P. 62(c). We have held, however, that the authority
granted by Rule 62(c) does not extend to the dissolution of an
74
injunction. Coastal Corp. v. Texas Eastern Corp., 869 F.2d 817,
819 (5th Cir. 1989). In addition, we have held that the district
court's power to alter an injunction pending appeal is limited to
"maintaining the status quo." Id. at 820.
In the present case, the district court's amending order is
more appropriately characterized as a modification--as opposed to
a dissolution--of the original injunction, bringing the court's
action within the ambit of Rule 62(c). A "dissolution" would
imply that the amending order altered the original injunction so
that it no longer had any effect. That is not the case here.
The amending order stated that Cedar Point was not enjoined from
discharging produced water as of the effective date of the final
NPDES general permit and compliance order "so long as it complies
with the terms of said General Permit and Compliance Order." The
permit and compliance order contain several conditions, including
the submission of a compliance plan, operating and maintenance
requirements, and notification procedures. 60 Fed. Reg. 2387,
2389-94 (1995). If Cedar Point fails to comply with any of these
terms, the court's order will act to enjoin the discharge of
produced water and to impose a penalty for such discharge.
Therefore, we hold that the district court's amending order had
the effect of modifying the injunction under Rule 62(c), rather
than completely dissolving it.
Further, we do not think that the modification exceeded the
district court's limited authority to alter an injunction to
"maintain the status quo." The court's original order stated
75
that "Cedar Point Oil is enjoined from any further discharges of
produced water from the Cedar Point Field to the waters of
Galveston Bay, until such time as it secures an NPDES permit for
such discharges." Strictly speaking, the NPDES general permit
issued by EPA on January 9, 1995, is a permit for the discharge
of produced water by Coastal Subcategory operators, including
Cedar Point; the limitation contained in the permit, however,
requires zero discharge. The effect of the compliance order is
that operators covered by the general permit who were discharging
produced water on the effective date of the permit are allowed to
discharge produced water until January 1, 1997, so long as they
continue to take affirmative steps to comply with the zero
discharge limitation. The district court could have reasonably
read the permit and order together as creating an opportunity for
Cedar Point to be covered by a NPDES permit and to discharge
produced water while covered by that permit. Accordingly, the
district court modified its injunction to allow Cedar Point to
take advantage of that opportunity.
With respect to the jurisdictional question, it is
significant that the injunction by its own terms created the
possibility for a change in its operation. Stated differently,
part of the "status quo" of this action is that the court's
injunction has ongoing effect, and that effect was subject to
change depending upon subsequent developments. The court did not
exceed its authority in stepping in to supervise this change
through an amendment of its original order. Accordingly, we hold
76
that the district court had jurisdiction under Rule 62(c) to
amend its original order with respect to the injunction.
2. Modification of the Injunction
We review a district court's orders under Rule 62(c) for
abuse of discretion. See Wildmon v. Berwick Universal Pictures,
983 F.2d 21, 23 (5th Cir. 1992). Sierra Club contends that the
district court abused its discretion in modifying the injunction
because the modification was contrary to the original purpose of
the injunction. Specifically, Sierra Club argues that the
general NPDES permit does not give Cedar Point the authority to
discharge produced water, and therefore does not trigger a change
in the injunction's effect. To the contrary, Sierra Club points
out that the permit prohibits Cedar Point from discharging
produced water and that only after the court altered its
injunction was Cedar Point eligible for the two-year grace period
established by the compliance order. Consequently, Sierra Club
concludes that the court misread the permit and order as creating
a "carte blanche" for oil and gas operators in Galveston Bay to
discharge produced water until 1997.
Generally, a court should only modify an injunction to
achieve the original purposes of the injunction, if those
purposes have not been fully achieved. See United States v.
United Shoe Machinery Corp., 391 U.S. 244, 248-49 (1968). We do
not dispute Sierra Club's reading of the final general NPDES
77
permit and compliance order; nevertheless, we do not think that
the district court's modification of the injunction deviated from
the original purpose of the injunction. That purpose was to
prohibit the unpermitted discharge of produced water into
Galveston Bay. Under the injunction as modified, Cedar Point is
subject to a general permit applying to all produced water
discharges by Coastal Subcategory operators in Louisiana and
Texas and is legally discharging produced water according to the
terms of the compliance order. Meanwhile, the injunction remains
in effect and provides for penalties against Cedar Point if it
violates the terms of the general permit or compliance order.
Also, under the terms of the compliance order, Cedar Point will
have to take affirmative steps to eliminate its produced water
discharges and, in any event, will have to cease such discharges
by January 1, 1997. Finally, we note that the ordering of Cedar
Point's legal obligations effected by the modified injunction is
highly preferable; that is, it is more appropriate that Cedar
Point's produced water discharges are primarily regulated by a
permit and order issued by EPA than by a continuing injunction
supervised by a federal district court. Accordingly, we hold
that the district court did not abuse its discretion in modifying
the original injunction.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
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