The opinion of the court was delivered by: THELTON E. HENDERSON
The two above-captioned related cases are identical citizen suits brought by non-governmental environmental conservation organizations against defendant oil companies. The suits challenge each defendant's discharge into portions of the San Francisco Bay of waste water containing the chemical selenium from oil refineries owned by each defendant located in the San Francisco Bay area. The first suit is brought against defendant Union Oil Company of California ("Unocal") and concerns Unocal's refinery at Rodeo, California, which discharges waste water containing selenium into the San Pablo Bay. The second is against the Exxon Corporation ("Exxon") and concerns Exxon's refinery at Benicia, California, which discharges selenium into Suisan Bay. Plaintiffs allege that the selenium levels in the effluent discharged from Unocal and Exxon's refineries violate the federal Water Pollution Control Act ("Clean Water Act" or "Act"), 33 U.S.C. § 1251 et seq.
In these two actions brought pursuant to the citizen suit provision of the Clean Water Act, 33 U.S.C. § 1365, the plaintiff environmental groups seek to enforce effluent discharge standards and deadlines contained in certain pollution permits issued to defendants Unocal and Exxon pursuant to the Clean Water Act. These suits are undertaken in the face of an administrative order, issued by a state agency charged with enforcing the Clean Water Act, which purports to grant defendants a five-year extension of the deadline by which they must come into compliance with the pollution discharge standards contained in their permits. The issue central to these motions is what effect the state administrative order has on the enforceability of the standards contained in defendants' pollution permits.
A. THE REGULATORY FRAME-WORK
The Clean Water Act regulates the discharge of pollutants into navigable waters. The statute is structured such that all discharge of pollutants is prohibited except insofar as one of several enumerated statutory exceptions applies. See 33 U.S.C. § 1311(a). One such exception obtains where a polluter has been issued a permit pursuant to the National Pollution Discharge Elimination System ("NPDES permit" or "permit"), authorizing it to discharge designated pollutants at certain levels subject to certain conditions. See 33 U.S.C. § 1342. The effluent discharge standards or limitations specified in an NPDES permit define the scope of the authorized exception to the 33 U.S.C. § 1311(a) prohibition, such that violation of a permit limit places a polluter in violation of 33 U.S.C. § 1311(a). Private parties may bring citizen suits pursuant to 33 U.S.C. § 1365 to enforce effluent standards or limitations, which are defined as including violations of 33 U.S.C. § 1311(a). 33 U.S.C. § 1365(f)(1).
The Act provides that, in any given state or region, authority to administer the NPDES permitting system can be delegated by the federal Environmental Protection Agency ("EPA") to a state or regional regulatory agency, provided that the applicable state or regional regulatory scheme under which the local agency operates satisfies certain criteria. See 33 U.S.C. § 1342(b). In California, EPA has granted authorization to a state regulatory apparatus, comprised of the State Water Resources Control Board ("State Board") and several subsidiary Regional Water Quality Control Boards, to issue NPDES permits. The entity responsible for issuing NPDES permits and otherwise regulating discharges in the region at issue in these cases is the California Regional Water Quality Control Board, San Francisco Region ("Regional Board" or "Board").
B. HISTORY OF UNOCAL AND EXXON'S NPDES PERMITS
Exercising its delegated authority under the Clean Water Act, the Regional Board in 1989 and 1990 issued NPDES permits for Unocal, Exxon, and four other Bay Area oil refineries, specifying certain limits on the amount of pollutants that the refineries could discharge into the San Francisco Bay and its estuary ("Bay"). Selenium, a toxic element, occurs in high concentrations in the relatively low grade crude oil from the San Joaquin Valley that is refined at the six Bay Area refineries. Selenium passes through the refineries and is present in the wastes that they discharge into the Bay.
On February 3, 1989, when the California Water Resources Control Board published its list required pursuant to the 1987 Clean Water Act Amendments, the State Board did not identify several portions of the upper San Francisco Bay Estuary -- San Pablo Bay, Carquinez Strait, and Suisan Bay -- as "toxic hot spots" for selenium, nor did it specify oil refinery selenium discharges as a substantial cause of selenium pollution in the Bay. EPA took issue with these omissions, among other things. Exercising its regulatory authority under the Clean Water Act, EPA issued a final listing on September 28, 1990, designating these portions of the Bay as "impaired waters" due to selenium pollution, and attributing that selenium substantially to the discharges from the six Bay Area refineries: Unocal's refinery in Rodeo, Exxon's refinery in Benicia, Shell Oil Company's manufacturing complex in Martinez, Tosco Corporation's refinery in Avon, Chevron U.S.A.'s refinery in Richmond, and Pacific Refining Company's facility in Hercules. EPA stated that it disapproved of the ICS's then in effect for Unocal, Exxon, and the other dischargers, and made known its intention to issue its own ICS's not later than December 31, 1990, which would require compliance with specified effluent limits, calculated based on state water quality standards, within three years of the date of issuance.
Responding to EPA's rebuke, on February 20, 1991, the Board issued an order listing San Pablo Bay, Carquinez Strait, and Suisan Bay as "hot spots" under 33 U.S.C. § 1314(l), and amending Unocal, Exxon, and the other refineries' NPDES permits to specify certain concentration-and mass-based limits on the amount of selenium that each refinery could discharge. By the terms of the amended permits, these new limits ("final limits") would become effective on December 12, 1993. On June 16, 1991, the Board issued an additional order, amending the permits of Unocal, Exxon, and the other refineries to include interim selenium discharge limits ("interim limits"), significantly less stringent than the final limits. The interim limits went into effect immediately on that date and were to remain in force until the final limits took effect.
C. STATE COURT LAWSUIT BY REFINERIES
Unocal, Exxon, and the other Bay Area refineries sought unsuccessfully to challenge the Regional Board's listing of San Pablo Bay, Carquinez Strait, and Suisan Bay as impaired waters, each filing applications for review with the State Water Resources Control Board. On October 16, 1992, shortly after those applications were dismissed by the State Board, the Bay Area refineries and their trade association, the Western States Petroleum Association ("WSPA"), filed a petition for writ of mandate in Solano County Superior Court seeking to set aside the Regional Board's orders imposing the final limits and the interim limits on the ground that the listing of the above-noted regions of the Bay as impaired bodies of water was in violation of various provisions of the Clean Water Act and of EPA administrative regulations promulgated under the Act.
D. SETTLEMENT OF LAWSUIT AND REGIONAL BOARD ENFORCEMENT ACTION
The refineries and WSPA did not press for a hearing on the merits of their state court suit but instead initiated settlement negotiations with the Regional Board and the California Attorney General's Office, which proceeded over the course of 1993. Three of the Bay Area refineries, Chevron, Tosco, and Pacific Refining, reduced their discharge levels, such that they would be in compliance with the final limits when they took effect. Unocal, Exxon, and Shell, however, contended that they could not comply with the final limits. Although the other three refineries had succeeded in reducing their effluent levels to meet the final limits, Unocal, Exxon, and Shell maintained that, due to technological constraints, they could not reduce their selenium discharge levels sufficiently to comply with the final limits scheduled to take effect on December 12, 1993.
On November 8, 1993, the six refineries, the state, and the Regional Board agreed on a settlement pursuant to which the refineries and WSPA would consent to dismissal of their state court action, and the Board would issue a Cease and Desist Order ("CDO"). The Board published the proposed settlement and CDO in the days that followed, and noticed public hearings on them.
The principal terms of the settlement were that the three refineries that had not complied with their final selenium limits -- Unocal, Exxon, and Shell -- would receive a nearly five year extension until July 31, 1998 of their deadline for complying with their final limits, and in exchange would pay the state $ 2 million and, along with the other refineries, would drop their state court action. Oddly, however, neither the settlement agreement nor the CDO expressly state that Unocal, Exxon, and Shell are relieved from having to comply with the final limits contained in their NPDES permits until July 31, 1998. Rather, the CDO effects this purported extension by providing that Unocal, Exxon, and Shell
shall cease and desist from discharging waste in violation of [their NPDES permits] by complying with the following:
3. Compliance with this Order shall be in accordance with the following tasks and time schedules:
c. The dischargers shall implement a removal technology or technologies, or an alternate control strategy, which has been determined by the dischargers to be capable of achieving compliance with the discharge limitations as specified in [the NPDES permits] and shall comply with these limits, no later than July 31, 1998.
CDO at 7. The settlement agreement stated that the above-quoted provision of the CDO "effectively modified" the deadlines specified in defendants' NPDES permits for complying with the final selenium limits. The CDO also provided that Unocal, Exxon, and Shell would implement a study to identify technologies for reducing selenium discharge levels, and would carry out pilot tests and source reduction studies.
The terms of the settlement agreement dismissing the refineries' state court suit specified that the dismissal was to be "without prejudice" and expressly provided that nothing in the agreement waived the refineries' right to challenge the validity of the final limits contained in their NPDES permits. The refineries agreed only to refrain from challenging the final limits unless and until the refineries should find in 1998 that they are unable to identify or implement a workable removal technology or other control strategy that would enable them to meet the limits, and the Board declines to extend the July 31, 1998 deadline further. Thus, in effect, the refineries merely agreed to drop their challenge to the final limits so long as the limits are not being enforced, but retained the right to challenge them once they are.
On November 19, 1993, and December 15, 1993, public hearings on the CDO were held at which the instant plaintiffs and other members of the public testified. The Board made some minor modifications to the CDO in response to comments received from the public and from EPA, and issued a final CDO on January 19, 1994. Plaintiffs filed these lawsuits on March 2, 1994.
Dismissal is appropriate under Fed. R. Civ. P. ("Rule") 12(b)(6) when a plaintiff's complaint fails to state a claim upon which relief can be granted. The Court must accept as true the factual allegations of the complaint and indulge all reasonable inferences to be drawn from them, construing the complaint in the light most favorable to the plaintiff. Dodd v. Spokane County, 393 F.2d 330, 334 (9th Cir. 1968); NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). Unless the Court converts the Rule 12(b)(6) motion into a motion for summary judgment, the court may not consider material outside of the complaint. Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir. 1981). However, "on a motion to dismiss a court may properly look beyond the complaint to matters of public record and doing so does not convert a Rule 12(b)(6) motion to one for summary judgment." Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Matters of public record include court and agency orders and agency regulations. Id. Thus, this Court may take judicial notice on this motion of rulings and regulations issued or published by the Regional Board or by EPA, regardless whether such documents were filed as attachments to the complaint.
The Court must construe the complaint liberally, and dismissal should not be granted unless "it appears to a certainty that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Intake Water Co. v. Yellowstone River Compact Comm'n, 769 F.2d 568, 569 (9th Cir. 1985), cert. denied, 476 U.S. 1163, 90 L. Ed. 2d 729, 106 S. Ct. 2288 (1986). However, legal issues on which the actionability of the claim depends can and should be resolved at this stage. Dismissal is appropriate if, as a consequence of such resolution, the court determines that, as a matter of law, the complaint's allegations fail to state a claim.
Dismissal is appropriate under Rule 12(b)(3) where venue in a case does not properly lie in the court in which it is filed. However, where the court deems it to be "in the interest of justice," the court may instead transfer an improperly venued case to a court in which it could have been brought. 28 U.S.C. § 1406(a).
In their complaints in each of these two related cases, plaintiffs allege three causes of action: that defendant has not complied with an applicable effluent standard or limitation -- to wit, the final selenium limits and accompanying compliance deadline contained in their NPDES permits -- in violation of the Clean Water Act, 33 U.S.C. § 1311(a); that defendant has not complied with an applicable water quality standard, also in violation of the Clean Water Act; and that defendant has engaged in an unfair business practice in violation of California Business & Professions Code § 17200 et seq.
As to the first cause of action, defendants contend that the CDO issued by the Regional Board properly extended the deadline by which defendants are required to comply with the selenium discharge limits specified in their NPDES permits, such that their present failure to meet that limit does not violate the federal Clean Water Act. Alternatively, defendants argue that, in any event, plaintiffs may not bring a citizen suit to enforce the effluent standards specified in defendants' NPDES permits because the Regional Board has already taken enforcement action as to that violation and defendants have paid a penalty, thereby precluding a parallel citizen enforcement suit under 33 U.S.C. § 1319(g)(6)(A)(iii). Finally, defendants charge that plaintiffs' suits are barred for failure to satisfy the notice requirements imposed under 33 U.S.C. § 1365(b)(1)(A) for citizen suits.
As to the second cause of action, defendants urge that water quality standards -- as distinct from effluent standards -- are not enforceable in citizen suits under the Clean Water Act and that the count must consequently be dismissed. As for the third cause of action, defendants contend that dismissal of the first two claims necessitates dismissal of the third state law claim as well. Finally, defendant Exxon charges that the suit against it must be dismissed for improper venue since its refinery is not located within the geographic area for which venue properly lies in this Court.
A. VENUE IN CITIZENS FOR A BETTER ENVIRONMENT V. EXXON
The citizen suit provision of the Clean Water Act, 33 U.S.C. § 1365, under which plaintiffs have brought these suits, contains a special venue provision stating that
33 U.S.C. § 1365(c)(1) (emphasis added). As is clear on the face of the complaint, Exxon's refinery is located in the City of Benicia, see Complaint P 9, which is within the County of Solano. Solano County is in the geographic region covered by the U.S. District Court for the Eastern District of California, not this Court. 28 U.S.C. § 84(b). The Eastern District is therefore the only district in which venue is proper under the Act. On this basis, Exxon urges that the Court dismiss the suit for improper venue pursuant to Rule 12(b)(1). Conceding this venue error in their opposition papers, plaintiffs urge that the Court transfer the case to the Eastern District rather than dismiss it.
28 U.S.C. § 1406(a) instructs that:
The district court of a district in which is filed a case laying venue in the wrong . . . district shall dismiss, or if it be in the interest of justice, transfer such case to any district . . . in which it could have been brought.
Whether the interest of justice militates in favor of transfer rather than dismissal is a judgment committed to the sound discretion of the district court. "Transfer is generally . . . consistent with the 'interest of justice' . . . because it eliminates the delay and additional expense associated with reinstituting suit in another forum." Banque de la Mediterranee-France, S.A. v. Thergen, Inc., 780 F. Supp. 92, 95 (D.R.I. 1992). On the facts of this case, the Court holds that transfer rather than dismissal is appropriate. Accordingly, it is hereby ordered that Citizens for a Better Environment-California v. Exxon, No. C 94-0713 TEH, shall be TRANSFERRED FORTHWITH from this Court to the U.S. District Court for the Eastern District of California. In view of this ruling, the remainder of this opinion and order shall address only the motion to dismiss filed by the defendant in the Unocal case.
B. FIRST CAUSE OF ACTION: VIOLATION OF EFFLUENT STANDARD OR LIMITATION
Under the Clean Water Act, dischargers are strictly liable for any violation of the terms of an NPDES permit. California Public Interest Research Group v. Shell, 840 F. Supp. 712, 714 (N.D. Cal. 1993). As explained above, the Act authorizes private parties to bring citizen suit enforcement actions, and provides, in pertinent part, that such actions may be brought against
any person . . . who is alleged to be in violation of . . . an effluent standard or ...