Sierra Club, Lone Star Chapter v. Cedar Point Oil Co.

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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