Pepperell Associates v. United States Environmental Protection Agency
52 ERC (BNA) 1261, 246 F.3d 15, 31 Envtl. L. Rep. (Envtl. Law Inst.) 20594 (2001)
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Rule of Law:
A facility is required to have a Spill Prevention Control and Countermeasures (SPCC) plan if, due to its location, a discharge of oil into navigable waters is reasonably foreseeable, even if the exact pathway is unpredictable. A court will grant substantial deference to an agency's interpretation of its own regulations regarding what constitutes foreseeability and how to calculate storage capacity.
Facts:
- Pepperell Associates owned and operated a business in a former textile mill in Lewiston, Maine.
- The facility utilized three underground heating oil storage tanks, each with a 30,000-gallon capacity.
- The mill was located approximately 500 feet from Gully Brook, a tributary of the Androscoggin River, both of which are navigable U.S. waters.
- The building's drainage connected to a city sewer system which was known to overflow into Gully Brook during periods of high water, a fact of which Pepperell's owners were aware.
- On October 17, 1996, a boiler gasket ruptured, causing 350-400 gallons of oil to spill onto the boiler room floor.
- The oil flowed through a pipe tunnel into the city sewer and, because of high water conditions, discharged into Gully Brook and the Androscoggin River.
- Prior to and at the time of the spill, Pepperell had not prepared or implemented an SPCC plan.
- On October 31, 1996, Pepperell disconnected one of the three underground tanks from the boiler but did not empty, clean, or permanently seal it.
Procedural Posture:
- The Environmental Protection Agency (EPA) filed a three-count administrative complaint against Pepperell Associates.
- An administrative law judge (ALJ) conducted a hearing and issued an initial decision finding Pepperell liable but limiting the scope of that liability and reducing the proposed penalty.
- Both the EPA (as appellant) and Pepperell (as appellant) appealed the ALJ's decision to the EPA's Environmental Appeals Board (EAB).
- The EAB issued a final decision that reversed the ALJ in part, found Pepperell liable on all counts for the full duration alleged by the EPA, and increased the total penalty to $43,643.
- Pepperell Associates (as petitioner) sought judicial review of the EAB's final order in the U.S. Court of Appeals for the First Circuit.
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Issue:
Does a facility, due to its location, have a reasonable expectation of discharging oil into navigable waters, thereby requiring a Spill Prevention Control and Countermeasures (SPCC) plan, even if the specific path of the spill was unforeseeable and its entry into the water depended on intermittent conditions like sewer overflows?
Opinions:
Majority - Lynch, Circuit Judge.
Yes. A facility is subject to SPCC regulations if a discharge into navigable waters is reasonably foreseeable based on the facility's locational aspects, and this foreseeability determination does not require predicting the exact pathway a spill might take. The court reasoned that substantial deference is owed to the Environmental Protection Agency's (EPA) interpretation of its own regulations. The foreseeability test considers not just geography but also man-made features like sewer drains. The court found it was foreseeable that a spill in the boiler room could enter the sewer via a floor drain, and since sewer overflows into Gully Brook were regular occurrences during heavy rain or high morning flow, it was also foreseeable that the oil could reach navigable waters. The court also upheld the EPA's two-part test for SPCC applicability: first assessing foreseeability, and second, determining storage capacity. Under this test, simply disconnecting a tank does not reduce the facility's total 'storage capacity' for regulatory purposes; the tank must be properly taken out of service. Finally, the court agreed that replacing the underground tanks with a new above-ground tank was a 'modification' of an existing facility, not the creation of a new one, thereby subjecting Pepperell to the shorter compliance deadlines for amendments.
Analysis:
This decision reinforces the significant deference courts give to administrative agencies in interpreting their own complex regulatory schemes, particularly in technical environmental law. It establishes that the 'reasonably be expected' standard for oil spill foreseeability is broad, encompassing indirect pathways like municipal sewers and intermittent conditions. The ruling solidifies the principle that a facility's regulated 'storage capacity' is based on its total physical potential, not its operational use at any given moment, placing a high burden on owners to formally decommission tanks to escape regulation. This precedent makes it more difficult for regulated entities to challenge EPA enforcement actions by arguing for narrow interpretations of foreseeability or by making minor operational changes.
