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American Petroleum Institute v. Johnson

March 31, 2008

AMERICAN PETROLEUM INSTITUTE, PLAINTIFF,
v.
STEPHEN L. JOHNSON, ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ET AL., DEFENDANTS.
MARATHON OIL COMPANY, PLAINTIFF,
v.
STEPHEN L. JOHNSON, ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION

This matter is before the Court on plaintiffs' two motions for summary judgment and defendant's and defendant-intervenors' (collectively, "defendants") three cross-motions for summary judgment in two consolidated cases: American Petroleum Institute v. Johnson,Civil Action No. 02-2247, and Marathon Oil Co. v. Johnson,Civil Action No. 02-2254.*fn1 Plaintiffs bring suit under the Clean Water Act ("the Act"), 33 U.S.C. §§ 1251 et seq., the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201. Plaintiff American Petroleum Institute ("API") is a non-profit, nationwide trade association representing nearly 400 companies engaged in the petroleum and natural gas industry. Plaintiff Marathon Oil Company is a for-profit company that, among other things, refines, markets, and transports petroleum products. Marathon is a member of API.

Plaintiffs challenge the substantive and procedural validity of a new regulation promulgated by the Environmental Protection Agency. Plaintiffs contend that (1) EPA's new regulation includes an impermissibly broad definition of the statutory term "navigable waters," which definition (according to plaintiffs) purports to extend EPA's regulatory authority beyond the limits established by the Clean Water Act and Congress' Commerce Clause authority, and (2) EPA failed to offer a rational explanation for its new definition of "navigable waters," rendering it arbitrary and capricious under the APA.*fn2 Because the Court concludes that EPA's promulgation of the new definition of "navigable waters" violated the APA, it does not reach plaintiffs' statutory or constitutional claims.

I. PROCEDURAL HISTORY

API and Marathon filed these lawsuits on November 14, 2002. The Court permitted the Natural Resources Defense Council and the Sierra Club (collectively, the "Environmental Intervenors") and the State of New York to intervene as defendants on November 13, 2003.

In January and February 2006, the United States Supreme Court heard oral argument in Rapanos v. United States, No. 04-1034, and Carabell v. Army Corps of Engineers, No. 04-1834 (collectively, "Rapanos"). Those consolidated cases addressed the meaning and scope of the term "navigable waters" as used in the Clean Water Act. Because that issue is of considerable significance to these cases, this Court ordered these cases stayed pending the Supreme Court's decision. This Court also denied the parties' pending cross-motions for summary judgment without prejudice to their being refiled after that decision. The Supreme Court issued its decision on June 19, 2006. See Rapanos v. United States, 547 U.S. 715 (2006). This Court then lifted the stay in these consolidated cases, and the parties filed the motions now before it. The Court heard oral argument on these motions on February 4, 2008.

II. BACKGROUND

A. The Clean Water Act

The purpose of the Clean Water Act is to "restore and maintain the physical, biological and chemical integrity of the Nation's waters." Clean Water Act § 101(a), 33 U.S.C. § 1251(a). In pursuit of this goal, and subject to certain exceptions, the Act prohibits the "discharge of any pollutant." Id. § 301(a), 33 U.S.C. § 1311(a). A "pollutant" is defined as "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." Id. § 502(6), 33 U.S.C. § 1362(6). "Discharge of a pollutant" means "any addition of any pollutant to navigable waters . . . ." Id. § 502(12), 33 U.S.C. § 1362(12) (emphasis added). Thus, the Clean Water Act protects only those waters that are "navigable waters" for purposes of the Act, and administrative agencies charged with enforcing the Act -- primarily the EPA and the Army Corps of Engineers -- may exert regulatory authority only over such "navigable waters." Section 502(7) of the Act defines "navigable waters" to mean "the waters of the United States, including the territorial seas." Id. § 502(7), 33 U.S.C. § 1362(7).

B. The Challenged Definition

Section 311(j) of the Clean Water Act, in relevant part, authorizes the President, through the EPA, to "issue regulations . . . establishing procedures, methods, and equipment and other requirements for equipment to prevent discharges of oil and hazardous substances from vessels and from onshore and offshore facilities [into navigable waters of the United States], and to contain such discharges." Clean Water Act § 311(j)(1)(C), 33 U.S.C. § 1321(j)(1)(C). In 1973, EPA promulgated a regulation pursuant to its Section 311(j) authority which, among other things, required oil-producing facilities that could reasonably be expected to discharge oil into navigable waters to develop spill prevention, control and counter-measure ("SPCC") plans. See Non-Transportation Related Onshore and Offshore Facilities, 38 Fed. Reg. 34,164 (Dec. 11, 1973) ("1973 SPCC Rule").*fn3 The 1973 SPCC Rule included a regulatory definition of the statutory term "navigable waters." The purpose of this definition was to clarify which waters -- and thus, which oil-producing facilities near such waters -- were subject to EPA's regulatory authority under Section 311(j). The 1973 SPCC Rule defined "navigable waters" as follows:

The term "navigable waters" of the United States means "navigable waters" as defined in Section 502(7) of the [Clean Water Act], and includes:

(1) all navigable waters of the United States, as defined in judicial decisions prior to passage of the 1972 Amendments of the [Clean Water Act] and tributaries of such waters;

(2) interstate waters;

(3) intrastate lakes, rivers, and streams which are utilized by interstate travelers for recreational or other purposes; and

(4) intrastate lakes, rivers, and streams from which fish or shellfish are taken and sold in interstate commerce. 1973 SPCC Rule, 38 Fed. Reg. at 34,165.

EPA proposed substantial revisions to the 1973 SPCC Rule in 1991; it largely adopted those revisions in 2002. See Oil Pollution Prevention & Response; Non-Transportation- Related Onshore & Offshore Facilities, 67 Fed. Reg. 47,042 (July 17, 2002), codified at 40 C.F.R. § 112 ("2002 SPCC Rule"). Like the 1973 SPCC Rule, the 2002 SPCC Rule includes a regulatory definition of the statutory term "navigable waters." That definition provides:

Navigable waters means the waters of the United States, including the territorial seas.

(1) The term includes:

(i) All waters that are currently used, were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters subject to the ebb and flow of the tide;

(ii) All interstate waters, including interstate wetlands;

(iii) All other waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation, or destruction of which could affect interstate or foreign commerce including any such waters:

(A) That are or could be used by interstate or foreign travelers for recreational or other purposes; or

(B) From which fish or shellfish are or could be taken and sold in interstate or foreign commerce; or,

(C) That are or could be used for industrial purposes by industries in interstate commerce;

(iv) All impoundments of waters otherwise defined as waters of the United States under this section;

(v) Tributaries of waters identified in paragraphs (1)(i) through (iv) of this definition;

(vi) The territorial sea; and

(vii) Wetlands adjacent to waters (other than waters that are themselves wetlands) identified in paragraph (1) of this definition.

2002 SPCC Rule, 40 C.F.R. § 112.2(1).

API and Marathon argue that EPA violated the APA by failing to provide a rational explanation for this new definition -- and in particular the expansive breadth of regulatory authority contemplated by the new definition -- in view of the limits on Clean Water Act jurisdiction imposed by the Commerce Clause and by the Clean Water Act itself. In response, EPA argues that its explanation is short but sufficiently clear and rational to satisfy the APA's requirement of reasoned decisionmaking. The Environmental Intervenors argue that plaintiffs lack standing to challenge the new regulatory definition of "navigable waters," and that, even if they have standing, their claims are not ripe. As discussed below, the Court concludes that plaintiffs have standing, that plaintiffs' claims are ripe, and that EPA violated the APA by failing to provide a sufficiently clear, cogent and reasoned explanation for its decision to promulgate such a broad definition of "navigable waters."

III. DISCUSSION

The Court begins by addressing the two threshold issues: (1) whether plaintiffs have standing to challenge EPA's new regulatory definition of "navigable waters," ...


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