UNITED STATES v. CHEVRON OIL CO., 583 F.2d 1357 (5th Cir. 1978)

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE, v. CHEVRON OIL COMPANY, THE CALIFORNIA DIVISION, DEFENDANT-APPELLANT.

No. 76-4083.United States Court of Appeals, Fifth Circuit.
November 16, 1978.

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Lawrence K. Benson, John C. Christian, W. Richard House, Jr., New Orleans, La., for defendant-appellant.

Leonard P. Avery, Asst. U.S. Atty., Gerald J. Gallinghouse, U.S. Atty., New Orleans, La., Michael D. Graves, Atty., Peter R. Taft, Asst. Atty. Gen., Land Natural Resources Div., Dept. of Justice, Bruce M. Diamond, Gen. Counsel, E.P.A., Edward J. Shawaker, Edmund B. Clark, Attys., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern Division of Louisiana.

Before RONEY, TJOFLAT and HILL, Circuit Judges.

RONEY, Circuit Judge:

[1] This appears to be the first appellate case concerning harm to the environment within the context of the penalty provisions of the Federal Water Pollution Control Act Amendments of 1972. In this case the issue is clearly presented as to whether or not the definition of harm to the environment promulgated by the Executive Branch pursuant to the statute must yield in a particular situation when the evidence shows that no harm in fact resulted to the environment from the spill in question.

[2] In this action brought by the United States against defendant Chevron Oil Company to enforce a civil penalty for discharging oil into the navigable waters, the district court granted summary judgment for the Government. We reverse and remand for entry of summary judgment for Chevron. The statutory scheme in question prohibits discharges of “harmful quantities” of oil, and the administrative regulations state that any spill that causes a “sheen” on the water is harmful. While we hold that the regulation establishing the “sheen test” is generally valid, it is invalid as applied to the facts of this case in which the uncontradicted evidence at the administrative hearing showed that although this spill produced a sheen, it did not have a harmful effect.

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[3] Statutory Scheme: 33 U.S.C.A. § 1321(b) and the “Sheen Test”
[4] The statutory section in question, presently codified at 33 U.S.C.A. § 1321(b), was added by Congress in 1970 as part of the Water Quality Improvement Act of 1970 [Pub.L. No. 91-224, 84 Stat. 91], and amended in 1972 by the Federal Water Pollution Control Act Amendments of 1972 [Pub.L. No. 92-500, 86 Stat. 862]. It was most recently amended by the Clean Water Act of 1977 [Pub.L. No. 95-217, 91 Stat. 1593, codified at 33 U.S.C.A. § 1251 et seq.]. Since the changes made by the 1977 Amendment do not affect this case, we will refer in this opinion to the current version of § 1321(b).

[5] Section 1321(b)(3) prohibits the discharge of oil “in harmful quantities as determined by the President under” § 1321(b)(4).[1] Section 1321(b)(4) instructs the President to issue regulations indicating “those quantities of oil . . . the discharge of which, at such times, locations, circumstances, and conditions, will be harmful . . . .”[2]

[6] Enforcement of these provisions is provided for by § 1321(b)(6). When a discharge of oil in violation of § 1321(b)(3) occurs, the Coast Guard may assess the owner, operator, or person in charge of the vessel or facility a civil penalty of up to $5,000, provided that notice and an opportunity for a hearing is provided. 33 U.S.C.A. § 1321(b)(6).[3] Finally to aid in the detection of oil spills, § 1321(b)(5) requires any “person in charge” of a vessel or facility to immediately report any discharge in violation of § 1321(b)(3) to the appropriate agency. The section also provides criminal penalties for a failure to so notify.[4]

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[7] From this summary of the statutory scheme, it is apparent that the entire regulatory structure of the Act hinges on the term “harmful quantities as determined by the President.” The President exercised the authority given him by Congress and determined that “at all times and locations and under all circumstances and conditions,” discharges of oil which cause “a film or sheen upon or discoloration of the surface of the water” are determined to be harmful. 40 C.F.R. § 110.3 (1977).[5]
Chevron challenges the validity of this regulation known as the “sheen test” as applied to the facts of this case in which the uncontradicted evidence showed that Chevron’s oil spill caused a sheen but was not “harmful.”

[8] Chevron’s Oil Spill
[9] The facts concerning this spill were developed at an administrative hearing before the Coast Guard, a transcript of which is in the record, and are not in dispute.

[10] Chevron is the owner-operator of an oil and gas producing structure located in Lake Salvadore in St. Charles Parish, Louisiana. This structure stands in about eleven feet of water and is approximately two miles from the nearest shore. A vent or flare pipe is found some 150 feet away. On November 7, 1972, a malfunction resulted in the discharge through the vent pipe of approximately one-half to one barrel of crude oil. Since a barrel of crude oil contains 42 gallons, 21 to 42 gallons of oil were spilled.[6] A Chevron employee corrected the malfunction and recovered about one-half barrel of the discharged oil which had remained within the casing surrounding the vent pipe. He also noticed a “slight sheen” on the water which he estimated was about 20 feet in width and 50 feet in length. Chevron notified the Coast Guard of the spill as required by § 1321(b)(5).

[11] The Coast Guard proposed that Chevron be fined $1,000 for the oil spill pursuant to § 1321(b)(6). The statutorily guaranteed hearing was held at Chevron’s request. At that hearing, the above facts were elicited from Chevron personnel, and Chevron called Dr. John Mackin as an expert witness. He was accepted by the Coast Guard “as an expert biologist in the field of marine life and marine organisms and as an expert in the effect of oil in such marine life and organisms.” He testified that under the circumstances of the spill as testified to at the hearing, it was his opinion that this spill did not have a harmful effect on the environment of Lake Salvadore, despite the presence of a “sheen” upon the water. Dr. Mackin also testified that the toxicity of oil is a function of its concentration, and a sheen does not show quantity or concentration. He felt that the sheen test of 40 C.F.R. § 110.3 was inappropriate for determining the harmful effects of an oil Spill.[7]

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[12] The Government did not produce any evidence at the hearing.

[13] After the hearing, the Coast Guard confirmed the $1,000 penalty assessment, and Chevron exhausted its administrative remedies. The Government then brought this suit in district court to collect the penalty. 28 U.S.C.A. § 1355. Both sides moved for summary judgment on the basis of the undisputed facts set out above.

[14] In addition, over Chevron’s objections, the Government submitted to the district court an affidavit of Kenneth Biglane, the Director of the Division of Oil and Special Materials Control for the Environmental Protection Agency. The affidavit dealt not with the specific facts of the present spill but with the reasons for the sheen test’s adoption. Mr. Biglane stated that “smaller spills [of 10 barrels or less] have a seriously degrading effect on the environment.” He averred that the “environmental damage caused by discharges of oil in quantities sufficient to produce a sheen on the surface of the water has been widely recognized,” and he mentioned several scientific studies and reports which supported that statement. Therefore, it was his opinion “that an oil spill sufficient to produce a film or sheen on the surface of the water is large enough to cause harm to the environment.” Based on this premise and the “enforcement workability of the sheen test,” he concluded that the test “is well suited to define a discharge which damages the environment . . . .”

[15] The district court found that the differences of opinion between Chevron’s expert, Dr. Mackin, and those who promulgated the sheen test regulation “would appear to be inevitable and unavoidable in any determination as subjective as the definition of harmful quantities of oil” and that these differences did not make the regulation unreasonable

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or arbitrary. The judge therefore granted summary judgment for the Government, relying primarily on the Ninth Circuit case o United States v. Boyd, 491 F.2d 1163 (9th Cir. 1973).

[16] United States v. Boyd and Its Progeny
[17] Boyd involved a criminal prosecution for failure to report a spill of “approximately thirty gallons” in which the validity of the sheen test was challenged as applied to the § 1321(b)(5) duty to report harmful discharges. Boyd challenged the sheen test on the ground that it “defines as `harmful’ a broader class of oil discharges than Congress intended . . ..” Id. at 1166.

[18] The Ninth Circuit upheld the sheen test on the facts of the case before it. It relied on the legislative history and the same Biglane affidavit which was submitted to the district court in the case sub judice. Id. at 1167-1169. One factor which the court found persuasive in the reporting context was the “workability” and “simplicity” of application of the sheen test:

[O]ne salutary aspect of the sheen test is the simplicity of its application. The statute and Regulation read together amount to a clear command to a ship captain: “If you can see the spill, report it!”

[19] Id. at 1169. The court also relied on Biglane’s conclusion that a discharge large enough to cause a sheen is large enough to cause harm to the environment, noting that this statement was supported by the scientific studies cited in the affidavit and was not refuted by Boyd. Id. The court upheld the sheen test, concluding that “[n]othing has been shown, on the facts in this case, to indicate that the Department’s Regulations determining harmfulness go beyond the statutory mandate.” Id. at 1170.

[20] Several district courts have upheld the sheen test’s validity as a definition of harmfulness in suits brought by the Government to collect § 1321(b)(6) civil penalties. See Ward v. Coleman, 423 F. Supp. 1352, 1357-1359 (W.D.Okla. 1976); United States v. Beatty, Inc., 401 F. Supp. 1040, 1043-1044 (W.D.Ky. 1975); United States v. Eureka Pipeline Co., 401 F. Supp. 934, 942-943 (N.D. W.Va. 1975). Those cases rely on Boyd and its reasoning without discussion of any possible distinctions between § 1321(b)(5) reporting cases and § 1321(b)(6) penalty cases. In addition, lik Boyd, there was no proof in any of these cases that the sheen test might cover de minimis oil spills.[8]

[21] These cases merely followed Boyd without adding anything to it. The present case requires us to analyze Boyd and to determine whether its reasoning is still controlling where there is evidence that the spill was not harmful even though it caused a “sheen” on the water.

[22] Validity of the Sheen Test as a Basis for Imposing a Civil Penalty for Chevron’s Spill
[23] Congress could have prohibited all oil spills in the navigable waters of the United States. Indeed, the Senate version of the Water Quality Improvement Act of

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1970 prohibited all discharges. See [1970] U.S. Code Cong.
Admin.News, p. 2691, at 2719. The House version of the bill prohibited only “substantial” discharges. Id. at 2692-2693, 2700, 2713-2714. The conference committee substituted the present prohibition on “harmful quantities as determined by the President.” Id. at 2722-2723.[9] It is clear from this that certain de minimis discharges are not prohibited by § 1321(b).[10] Congress delegated to the President the authority to enact regulations to separate these nonprohibite de minimis quantities from prohibited “harmful” quantities.

[24] Of course, instead of allowing the President to define “harmful quantities,” Congress could have enacted the “sheen test” as part of § 1321(b). Had Congress done so, Chevron concedes that the sheen test would have been valid even as applied to the facts of this case. For the reasons given in the Biglane affidavit and in the Boyd opinion, there is a reasonable basis for the sheen test even if the test is somewhat broader than necessary to achieve the congressional objective of prohibiting only harmful oil spills.

[25] As a regulation, however, the sheen test cannot be any broader than congressionally authorized. Boyd and its progeny upheld the sheen test because there was no evidence in those cases that the test exceeded the statutory mandate. The court i Boyd refused to hypothesize such a situation in the absence of proof in the record:

Arguing against validity, Boyd asks the Court to judicially notice that not every quantity of oil creating a sheen or discoloration on a water surface is “harmful”; that, for example, a single drop is not harmful. Here the prosecution was for a spill of some thirty gallons. The facts in this case, not hypothetical situations, should govern our decision. Even assuming that Boyd might have standing to complain of hypothetical applications of the sheen test, he cannot rely upon judicial notice as to the effect of oil spills. Boyd’s argument is, therefore, speculation, unsupported by the record.

[26] 491 F.2d at 1168 (citations omitted).

[27] In the case sub judice, the “hypothetical” situation mentioned in Boyd has become a reality. According to the uncontradicted evidence of Chevron’s expert, Dr. Mackin, Chevron’s spill was not harmful despite the fact that it caused a sheen. Thus it would appear that the sheen test as applied to the facts of this case exceeds the scope of the congressionally delegated authority.

[28] We need not, however, strike down the regulation. As the court in Boyd found, the sheen test is very workable, and there is
a proven scientific connection between a sheen and harmful quantities of oil. The sheen test provides a useful general criterion, but one which will occasionally cover nonprohibite de minimis spills. Any quantification adopted in an area such as this is liable to hit nonharmful spills in certain circumstances.

[29] The solution to the problem can be found in the hearing provided by § 1321(b)(6). A defendant must be allowed to offer proof at that hearing that its spill was not harmful despite the presence of a sheen. By “not harmful” we mean only that the quantity of oil spilled was de minimis, not that a harmful quantity was spilled but fortunately did not actually cause any harm.[11] Because the sheen test provides a generally valid and useful standard, it creates a rebuttable presumption

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that any spill which causes a sheen is “harmful” and therefore prohibited by § 1321(b)(3). Evidence of a sheen thus provides a sufficient basis for the Government to assess the § 1321(b)(6) civil penalty unless a defendant proves that its spill was not harmful under the circumstances. If a defendant introduces such evidence, as Chevron did here through Dr. Mackin, the Government must rebut with evidence that defendant’s spill was of a harmful quantity under the circumstances.[12] Since the Government in the case sub judice did not come forward with any evidence at the administrative hearing, the penalty cannot be enforced.

[30] Accordingly, the district court’s grant of summary judgment is reversed, and the case is remanded for entry of summary judgment for defendant Chevron.

[31] REVERSED AND REMANDED.