ELR Citation: ELR 20216
No(s). s. C 94-0712 TEH, -0713 TEH (N.D. Cal. Jul 8, 1994)

The court denies a motion to dismiss a group of environmental organizations' citizen suit against an oil company for alleged violations of the Federal Water Pollution Control Act (FWPCA) resulting from the company's exceeding the selenium discharge levels in its national pollutant discharge elimination system (NPDES) permit. The company was a party to a settlement agreement under which a regional water board agreed to extend by five years the deadline for three oil companies to comply with final selenium discharge limits in their NPDES permits and issued a cease and desist order (CDO). The companies agreed to pay $2 million and to refrain from challenging the board's final selenium limits unless they were unable to comply with the new deadlines. The environmental organizations sued two of the companies for permit violations. The court first orders the transfer of the environmental organizations' action against one of the companies to the U.S. District Court for the Eastern District of California. FWPCA §505(c)(1) provides that actions for discharge violations may be brought only in the judicial district in which the violating source is located. The company's refinery is located in Solano County, which is in the geographic region covered by the U.S. District Court for the Eastern District of California. The court holds that on the facts of the case, transfer, rather than dismissal, of the action is appropriate.

Turning to the other company's motion to dismiss, the court notes that the company concedes that the settlement agreement did not purport to modify the company's permit and that even if it did, such a modification would not have been valid. The court next addresses the company's argument that the settlement, although not modifying the company's permit, in effect suspended the permit requirement, shielding the company from citizen suits that seek to enforce permit compliance. The court holds that the company's interpretation would render superfluous the specific requirements that Congress established for permit modifications and preclusion of citizen suits. The court, therefore, holds that an administrative enforcement action by a state agency charged with enforcing the FWPCA that purports to extend a deadline in an NPDES permit for compliance with the permit's discharge limits does not suspend the permit's deadlines such that they may not be enforced through a citizen suit. Such an extension, unless it satisfies the requirements to qualify as a modification, is simply a statement by the agency as to how it plans to exercise its prosecutorial discretion.

The court next holds that FWPCA §309(g)(6)(A)(iii) does not bar the environmental organizations' action against the company. The court declines to reach the question whether the settlement agreement and the CDO constitute a final order not subject to further judicial review under §309(g)(6)(A)(iii). The court holds that the settlement agreement and the CDO were not actions taken under state law comparable to §309(g). The CDO expressly states that it was issued under California Water Code §13301, and the regional water board's categorization of its action is dispositive. The court holds that under FWPCA §309(g), the comparability assessment must be made by looking to the particular state enforcement provision at issue, not the state scheme as a whole. Whether an a U.S. Environmental Protection Agency (EPA) enforcement action triggers the preclusive bar depends on the particular enforcement provision under which EPA proceeded. It logically follows that only where a state has proceeded (and assessed a penalty) under a state enforcement provision comparable to §309(g) is the preclusive bar triggered. Construing the statute to require provision comparability is consistent with sensible policy and the FWPCA's goals. The court's conclusion as to application of the comparability requirement is also in accord with EPA's own administrative interpretation of the statute. The court next holds that FWPCA §309(g) and California Water Code §13301 are not comparable, because §13301 does not authorize imposition of civil penalties and lacks penalty assessment factors comparable to those enumerated in §309(g). The court further holds that the $2 million payment that the oil companies agreed to make was not a penalty within the meaning of §309(g)(6)(A)(iii). This conclusion is reinforced by the fact that the regional water board specifically avoided characterizing the payment as a penalty.

The court holds that the environmental organizations satisfied §505(b)(1)(A)'s 60-day notice of intent to sue requirement. The court notes that only one environmental organization gave notice more than 60 days before filing suit, and that organization gave notice before the deadline for the oil company to come into compliance with the final selenium limits. The court holds, however, that allowing previolation notice serves the purpose of ensuring that the defendant and/or government enforcement authorities are given some presuit notice so that they have an opportunity to address the matter before a lawsuit is filed. The court also holds that the statute does not require that every plaintiff must give 60 days' notice, because §505(b)(1)(A) attaches to the lawsuit, not the plaintiff, and the requirement is satisfied so long as at least one plaintiff has given statutorily adequate notice.

The court dismisses the environmental organizations' claim that the oil company violated the water quality standards of the NPDES permit, because the Ninth Circuit has ruled that such standards are not enforceable in FWPCA citizen suits and the environmental organizations concede that they failed to state a claim. The court denies, however, the company's motion to dismiss the environmental organizations' claims that by not meeting the deadline in its permit, the company engaged in an unfair business practice in violation of the California Business and Professions Code. The company based its motion on the argument that the organizations' federal law claims must be dismissed.

Counsel for Plaintiffs
Margaret N. Rosegay, Sarah G. Flanagan
Pillsbury, Madison & Sutro
225 Bush St., San Francisco CA 94104
(415) 983-1000

Counsel for Defendant
Mari Mayeda, David E. Pesonen
Saperstein, Mayeda & Goldstein
1300 Clay St., 11th Fl., Oakland CA 94612
(510) 763-9800