Case 2:11-cv FMO-SS Document 254 Filed 03/16/17 Page 1 of 31 Page ID #:11238

Transcription

1 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 STEPHEN G. LARSON (SBN ) slarson@larsonobrienlaw.com ROBERT C. O'BRIEN (SBN ) robrien@larsonobrienlaw.com STEVEN E. BLEDSOE (SBN ) sbledsoe@larsonobrienlaw.com LARSON O'BRIEN LLP South Flower Street, Suite 00 Los Angeles, CA 00 Telephone:.. Facsimile:..000 Attorneys for Defendant HVI CAT CANYON, INC. f/k/a GREKA OIL & GAS, INC. UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, ET AL., v. Plaintiffs, HVI CAT CANYON, INC. f/k/a GREKA OIL & GAS, INC., Defendant. WESTERN DIVISION Case No. CV-00 FMO (PLAx) HVI CAT CANYON, INC. S EX PARTE APPLICATION FOR AN ORDER STAYING PROCEEDINGS PENDING OUTCOME OF CURRENT ADMINISTRATIVE RULEMAKING REGARDING NAVIGABLE WATERS PURSUANT TO EXECUTIVE ORDER [Filed concurrently with the Declaration of Steven E. Bledsoe and [Proposed] Order] Complaint Filed: June, 0 Judge: Hon. Fernando M. Olguin PROCEEDINGS; NO. CV-00 FMO (SSx)

2 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 By this ex parte application made pursuant to Central District Local Civil Rule -, Defendant HVI CAT CANYON, INC. f/k/a GREKA OIL & GAS, INC. ( HVI-CC ) will and hereby does seek an order from the District Court staying all further proceedings in this matter pending the outcome of administrative proceedings directed by Executive Order issued by the President of the United States on February, 0. HVI-CC seeks ex parte relief because the President s Executive Order has set in motion an administrative review process that is likely to () change the law applicable to this case and cause the work and resources to be expended by the parties and the Court through the end of the upcoming June 0, 0 trial to be wasted, () result in the need for a retrial if a stay is not granted, or () result in the dismissal of the United States claims altogether once the administrative review is completed. Under these circumstances, and given HVI- CC s limited financial resources, the continued litigation of this matter before the current administrative review process is completed will inflict irreparable harm on HVI-CC and needlessly waste both the parties and this Court s resources. Plaintiffs United States (through its trial counsel) and the State of California ex rel. California Department of Fish and Wildlife, and the State of California ex rel. California Regional Water Quality Board, Central Coast Region oppose this motion. The opposing parties are represented by the following counsel: Mark Sabath, Esq. Richard Gldstein, Esq. Stefan J. Bachman, Esq. Angela Mo, Esq. Davis H. Forsythe, Esq. Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice P.O. Box Washington, DC 00- Telephone: (0) - Facsimile: (0) - -- PROCEEDINGS; NO. CV-00 FMO (SSx)

3 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: mark.sabath@usdoj.gov richard.gladstein@usdoj.gov stefan.bachman@usdoj.gov angela.mo@usdoj.gov davis.forsythe@usdoj.gov Michael Zarro, Esq. Alex Fisch, Esq. Ross Hirsch, Esq. Attorney General s Office California Department of Justice 00 South Spring Street Suite 0 Los Angeles, CA 00 Michael.Zarro@doj.ca.gov Alex.Fisch@doj.ca.gov' ross.hirsch@doj.ca.gov This Application is based on the concurrently filed memorandum of points and authorities and declaration of Steven E. Bledsoe. Dated: March, 0 LARSON O BRIEN LLP By: /s/ Robert C. O Brien ROBERT C. O BRIEN STEPHEN G. LARSON STEVEN E. BLEDSOE Attorneys for Defendant HVI Cat Canyon, Inc. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

4 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 TABLE OF CONTENTS i PROCEEDINGS; NO. CV-00 FMO (SSx) Page I. INTRODUCTION... II. PROCEDURAL HISTORY... III. FACTS... IV. LEGAL STANDARD... A. Motion to Stay... B. Ex Parte Applications... 0 V. DISCUSSION... 0 A. The Executive Order Has Serious Implications for This Case... B. The Court Should Exercise Its Discretion and Stay This Case... i. A Stay Will Not Prejudice the Government... ii. iii. Absent a Stay, HVI-CC Will Be Severely Prejudiced... A Stay Would Promote the Orderly Administration of Justice... C. HVI-CC Is Entitled to Ex Parte Relief... VI. CONCLUSION...

5 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 Federal Cases TABLE OF AUTHORITIES ii PROCEEDINGS; NO. CV-00 FMO (SSx) Page(s) Benjamin v. Douglas Ridge Rifle Club F. Supp. d (D. Or. 00)... Chronicle Pub. Co. v. Nat l Broad. Co. F.d (th Cir. )..., 0 Clark v. Time Warner Cable F.d 0 (th Cir. 00)... CMAX, Inc. v. Hall 00 F.d (th Cir. )... passim In re E.P.A. 0 F.d 0 (th Cir. 0)... Elec. Frontier Found. v. Office of Dir. of Nat. Intelligence No. C 0-00 JSW, 00 WL 0 (N.D. Cal. Mar., 00)... 0,,, Garfias-Rodriguez v. Holder 0 F.d 0 (th Cir. 0)... Kane v. Chobani, LLC F. App x (th Cir. 0)...,, Landis v. N. Am. Co. U.S. ()... Larsen v. City of Los Angeles No. CV0GAFAJWX, 0 WL (C.D. Cal. Aug., 0)... passim Leyva v. Certified Grocers of California, Ltd. F.d (th Cir. )...,, Lockyer v. Mirant Corp. F.d 0 (th Cir. 00)...

6 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 Mission Power Eng g Co. v. Cont l Cas. Co. F. Supp. (C.D. Cal. )... 0, Rapanos v. United States U.S. (00)... passim San Francisco Baykeeper v. Cargill Salt Div. F.d 00 (th Cir. 00)... United States v. Chevron Pipe Line Co. F. Supp. d 0 (N.D. Tex. 00)... United States v. Gerke Excavating, Inc. F.d (th Cir. 00)... United States v. Johnson U.S. F.d, (st Cir. 00)... Other State Cases Dister v. Apple-Bay E., Inc. No. C 0-0 SBA, 00 WL 0, at * (N.D. Cal. Nov., 00)... 0 Federal Statutes U.S.C. ()... Other Authorities 0 C.F.R. 0.(s)... FR Local Rule iii- PROCEEDINGS; NO. CV-00 FMO (SSx)

7 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION On February, 0, the President of the United States issued an Executive Order titled: Restoring The Rule Of Law, Federalism, And Economic Growth By Reviewing The Waters Of The United States Rule (the Executive Order ). Bledsoe Decl. Ex.. In light of the Executive Order, the proceedings in this case should be stayed pending the resolution of the further administrative proceedings and review ordered by the President regarding the interpretation of the term navigable waters. This case arises under the Clean Water Act ( CWA ). The United States argues that it has jurisdiction over the events at issue due to the alleged discharge, or substantial threat of discharge, of oil into navigable waters. From the inception of this case, HVI-CC has argued that the United States attempt to apply the CWA to the alleged navigable waters at issue which are, in fact, inland rainfall drainages that carry water for, at most, a handful of days a year was a regulatory overreach unsupported by law. In short, the issue of what constitutes a navigable water within the meaning of the CWA is at the very heart of this case. Now, pursuant to the Executive Order and a Notice of Intent published by the Environmental Protection Agency ( EPA ) and the Army Corps of Engineers ( Corps ), the EPA and Corps are preparing to substantially revise the definition of navigable waters likely in a manner that would dispose of the United States claims in HVI-CC s favor. Despite the fact that its own agencies are preparing to change the substantive law governing the most important issue in this case, the United States trial counsel have ignored the implications of the Executive Order At bottom, this case is about whether the discharge of heavy, tar-like oil (mainly used to make asphalt for roads in California) into dry drainage ditches dozens of miles inland that only cary water a handful of days a year are subject to jurisdiction under the CWA through an expansive construction of the term navigable waters. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

8 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 and have refused to stay the prosecution of this matter pending completion of the forthcoming administrative rulemaking process. Instead, the United States trial counsel insists that the parties move forward with this litigation under soon-to-beoutdated law, risking both extreme prejudice to HVI-CC and a significant waste of judicial resources. Due to the intransigence of trial counsel for the United States and the myriad of fast-approaching deadlines in this case that will severely tax HVI-CC s limited financial resources, HVI-CC applies to this Court for an order staying this case pending new administrative rulemaking regarding the definition of the term navigable waters. Because proceeding on the current schedule would both prejudice HVI-CC and create a substantial risk that both the parties and the Court s resources will be utterly wasted, the Court should grant HVI-CC s request and stay this case until the EPA and the Corps complete the rulemaking process initiated by the President s Executive Order and the Notice of Intent. II. PROCEDURAL HISTORY The United States and the State of California (collectively, the Government ) filed this action on June, 0. ECF. The Government s claims arise out of a series of inland discharges of oil from HVI-CC s facilities located in Santa Barbra County. ECF No. at -. The events relevant to the Government s claims occurred between 00 and 00. Id. The Court has previously stayed this action on three separate occasions. On March, 0, the Court stayed proceedings in this case through May 0, 0 in order to facilitate mediation of the dispute. ECF No.. On September, 0, the Court stayed proceedings through December, 0; then, on October, 0, the Court extended the stay through January, 0. ECF Nos.,. On November, 0, HVI-CC moved for terminating sanctions against the Government on the ground that the State of California had engaged in substantial -- PROCEEDINGS; NO. CV-00 FMO (SSx)

9 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 spoliation of evidence. ECF -. On December, 0, after finding that HVI-CC s allegations regarding spoliation were serious, the Court stayed proceedings pending the resolution of the motion for terminating sanctions. ECF No. ; see also ECF Nos.,,, (extending stay). After the Court sanctioned the State of California for spoliation of evidence, the stay expired on June 0, 0. See ECF Nos. 0,. Since the expiration of the stay, the parties have aggressively moved this matter toward trial. Fact discovery closed on January, 0. The United States and HVI-CC have completed opening briefing on the United States motion for partial summary judgment. See ECF -. Expert reports and rebuttal reports have been served, and expert discovery will move forward soon, at significant cost to HVI-CC. Bledsoe Decl. at. Under the current schedule, HVI-CC and the Government will be required to take and defend up to expert depositions throughout the country between the date this motion is filed and the April, 0 deadline for expert discovery. Id. Trial is set to begin on June 0, 0, and the parties will, in short order, be forced to expend even more resources and attorney time preparing for trial. For instance, by April, the parties must meet and confer regarding pre-trial matters, including trial exhibits and motions and limine. ECF. HVI-CC anticipates that trial will require weeks of testimony, including in-depth expert testimony regarding the ecological features of the rainfall drainages at issue and quantification of the alleged discharges of oil. Bledsoe Decl. at. In summary, this case is rapidly accelerating toward a complex bench trial that will require significant party and judicial resources. In light of the Executive Order, all of this time and effort is likely to be wasted. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

10 Case :-cv-00-fmo-ss Document Filed 0// Page 0 of Page ID #: 0 0 III. FACTS The United States assertion of jurisdiction over the facilities and alleged discharges at issue hinges on the meaning of the term navigable waters. The CWA defines navigable waters as the waters of the United States. U.S.C. (). Perhaps unsurprisingly, this term has been the subject of significant litigation throughout the history of the CWA. Despite this history of litigation, the definition of navigable waters remains remarkably unsettled. In Rapanos v. United States, U.S. (00), the United States Supreme Court invalidated a Corps regulation that interpreted: the waters of the United States to include, in addition to traditional interstate navigable waters... [a]ll interstate waters including interstate wetlands... [a]ll other waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation or destruction of which could affect interstate or foreign commerce... [t]ributaries of [such] waters... and [w]etlands adjacent to [such] waters [and tributaries] (other than waters that are themselves wetlands).... Id. at (plurality opinion) (citations omitted). But Rapanos did not produce a majority opinion. A plurality of four justices joined Justice Scalia s opinion, which invalidated the Corps regulation as overbroad when applied to tributaries and their adjacent wetlands, and held that the waters of the United States include only relatively permanent, standing or flowing bodies of water. Id. at. The Rapanos plurality did not necessarily exclude streams, rivers, or lakes that might dry up in extraordinary circumstances or seasonal rivers, which contain continuous flow during some months of the year but no flow during dry months. Id. at n. (emphasis in the original). But the plurality did categorically exclude from regulation intermittent and ephemeral streams... that is, streams whose flow is [c]oming and going at intervals... [b]roken, fitful... or existing only, or no longer than, a day; diurnal... short-lived.... Id. It is undisputed that the types of streams excluded by Justice Scalia s plurality opinion are the very types -- PROCEEDINGS; NO. CV-00 FMO (SSx)

11 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 of streams that are at issue in this case. Justice Kennedy concurred in the result reached by the plurality, but wrote separately to articulate a different theory of CWA jurisdiction. Specifically, Justice Kennedy stated that, with respect to wetlands, he would limit jurisdiction to those wetlands that shared a significant nexus with a traditional navigable water. Id. at (Kennedy, J. Concurring) ( [T]he Corps jurisdiction over wetlands depends upon the existence of a significant nexus between the wetlands in question and navigable waters in the traditional sense. ). Four dissenters, led by Justice Stevens, would have upheld the Corps regulations. See generally id. at -. In the wake of Rapanos, federal courts have struggled to discern the proper test for determining whether a particular waterbody qualifies as a navigable water within the meaning of the CWA. Some federal courts have rejected Rapanos entirely and applied the law of their circuit, while other have applied Justice Kennedy s opinion, applied Justice Kennedy s opinion to wetlands and left open the possibility of applying the plurality opinion to tributaries, or applied both Justice Kennedy s opinion and the plurality opinion concurrently. See, e.g., United States v. Gerke Excavating, Inc., F.d, (th Cir. 00) (applying Justice Kennedy s opinion); United States v. Chevron Pipe Line Co., F. Supp. d 0, (N.D. Tex. 00) (rejecting Rapanos and applying the law of the Fifth Circuit); United States v. Johnson, U.S. F.d, (st Cir. 00) (applying both Justice Kennedy s standard and the standard articulated by the plurality); San Francisco Baykeeper v. Cargill Salt Div., F.d 00, 0 (th Cir. 00) (holding that Justice Kennedy s concurrence explained that only wetlands with a significant nexus to a navigable-in-fact waterway are covered by the Act. [ ] No Justice, even in dictum, addressed the question of whether all waterbodies with a A traditional navigable water is one that is navigable in fact, or susceptible to being rendered so. Rapanos, U.S. at 0 (quoting The Daniel Ball, U.S., (0)). -- PROCEEDINGS; NO. CV-00 FMO (SSx)

12 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 significant nexus to navigable waters are covered by the Act ); Benjamin v. Douglas Ridge Rifle Club, F. Supp. d, n. (D. Or. 00) (holding Kennedy s test does not apply to tributaries). The confusion in the federal courts led the EPA and the Corps to seek to clarify the meaning of the term navigable waters via notice and comment rulemaking. In 0, the EPA and Corps published the Waters of the United States Rule (WOTUS Rule). See 0 C.F.R. 0.(s). Shortly after the WOTUS Rule was finalized, however, the Sixth Circuit Court of Appeals enjoined enforcement of the Rule. See In re E.P.A., 0 F.d 0 (th Cir. 0). Consequently, to date, there is no uniformly accepted definition of navigable waters that applies to this case. On February, 0, the President of the United States issued an Executive Order directing the Administrator of the Environmental Protection Agency (the Administrator ) and the Assistant Secretary of the Army for Civil Works (the Assistant Secretary ) to review the regulations defining the term navigable waters and to publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and consistent with the law. Bledsoe Decl. Ex.. The Executive Order further directs the Administrator and Assistant Secretary to consider defining the term navigable waters in a manner consistent with the Due to the Sixth Circuit s stay, the United States has never claimed that the WOTUS Rule provides binding authority in this case. Nonetheless, the United States and its experts have crafted their theory of jurisdiction in this case by relying on novel principles first articulated in the WOTUS Rule. For instance, the United States jurisdictional expert, Dr. Lyndon Lee, contends that ecological significance of the rainfall drainages at issue should not be analyzed on a drainage-by-drainage or tributary-by-tributary basis. See ECF - at -0. Instead, Dr. Lee contends that the court should analyze the aggregate ecological effect of each drainage at issue and all similarly situated drainages in the watershed. See id. While the WOTUS Rule allowed for the aggregation of similarly situated tributaries, the United States has yet to produce any other authority employing such an aggregation theory. See id. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

13 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #:0 0 0 plurality opinion authored by Justice Scalia in Rapanos. Id. Shortly thereafter, the Administrator and the Assistant Secretary published a notice of Intention to Review and Rescind or Revise the Clean Water Rule (the Notice of Intent ) in the Federal Register, providing advanced notice of a forthcoming proposed rulemaking consistent with the Executive Order and reiterating the agencies commitment to consider[ing] interpreting the term navigable waters, as defined in the CWA in a manner consistent with the opinion of Justice Scalia in Rapanos. Intention To Review and Rescind or Revise the Clean Water Rule, FR - 0. If the Administrator and Assistant Secretary adopt this interpretation, all of the United States claims in this case will fail. The President s Executive Order also directed the Administrator and Assistant Secretary to promptly notify the Attorney General of the pending review [of the WOTUS Rule] so that the Attorney General may, as he deems appropriate, inform any court of such review and take such measures as he deems appropriate concerning any such litigation pending the completion of further administrative proceedings related to the rule. Bledsoe Decl. Ex.. On March, 0, the Acting General Counsel of the EPA provided the required notice to the Attorney General. Bledsoe Decl. Ex.. In light of the Executive Order s directive, HVI-CC contacted the United States via letter on March, 0, notifying the United States trial counsel of the Executive Order and explaining the Executive Order s implications for the instant litigation. Bledsoe Decl. Ex.. Because the Executive Order contemplates significant changes to the substantive law applicable to this case, HVI-CC requested that the United States suspend its prosecution of this matter pending the outcome of the rulemaking initiated by the Executive Order. Id. The United States rebuffed HVI-CC s request on March, 0. Bledsoe Decl. Ex.. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

14 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 On March, 0, HVI-CC sent a letter to both the United States and the State of California outlining its anticipated motion for an order staying the proceedings in this case. Bledsoe Decl. Ex.. During a March, 0, telephonic meet-and-confer with the Government, both the United States trial counsel and the State of California stated they would oppose HVI-CC s application for a stay and refused to accommodate HVI-CC s request that its motion be heard on shortened time. Bledsoe Decl. 0, Ex. at :-:. During the meet-and-confer process, HVI-CC expressed concern that that the position taken in this litigation by trial counsel for the United States was at odds with the position taken by the President s Administration through its Executive Order and Notice of Intent. Based on these concerns, HVI-CC asked trial counsel for the United States to identify the highest ranking official at the EPA and/or Department of Justice who had been consulted regarding the decision by trial counsel for the United States to ignore the implications of the Executive Order and oppose HVI-CC s request for a stay. Bledsoe Decl. Ex. at 0:-:. Counsel for the United States refused to specify which EPA or Department of Justice officials, beyond the trial team, if any, had been consulted regarding the decision to reject HVI-CC s request for a stay. Id. To HVI-CC s knowledge, the EPA and Department of Justice officials who would be involved in deciding to take a position that contradicts the Executive Order and Notice of Intent are: Sylvia Quast (EPA Region, Regional Counsel), Alexis Strauss (EPA Region, Acting Regional Administrator), Debbie Jordan (EPA Region, Acting Deputy Regional Administrator), Thomas Mariani (Section Chief, Department of Justice Environmental Enforcement Section), and Henry S. Friedman (Assistant Section Chief, Department of Justice Environmental Enforcement Section). Bledsoe Decl. at -. Trial counsel for the United States refused to indicate whether any of these individuals were consulted or participated in the decision to take a position at odds with the Executive Order and Notice of Intent. Bledsoe Decl. Ex. at 0:-:. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

15 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 IV. LEGAL STANDARD A. Motion to Stay It is fundamental that a district court has the discretionary power to stay the cases before it. Landis v. N. Am. Co., U.S., - (); Lockyer v. Mirant Corp., F.d 0, 0- (th Cir. 00). This power arises from the district court s inherent power to control the disposition of the causes on its docket in a manner which will promote economy of time and effort for itself, for counsel, and for litigants. Landis, U.S. at -; CMAX, Inc. v. Hall, 00 F.d, (th Cir. ). The exertion of this power calls for the exercise of a sound discretion. CMAX, Inc., 00 F.d at. A district court s power to stay the proceedings before it includes the power to stay proceedings pending resolution of independent proceedings which bear upon the case. Leyva v. Certified Grocers of California, Ltd., F.d, (th Cir. ). Indeed, [t]he existence of another proceeding that may have a substantial impact on a pending case is a particularly compelling reason to grant a stay. Larsen v. City of Los Angeles, No. CV0GAFAJWX, 0 WL, at * (C.D. Cal. Aug., 0). This rule applies whether the separate proceedings are judicial, administrative, or arbitral in character, and does not require that the issues in such proceedings are necessarily controlling of the action before the court. Id. at - (emphasis added). Courts in the Ninth Circuit have repeatedly issued stays pending the completion of administrative proceedings. See, e.g., Chronicle Pub. Co. v. Nat l Broad. Co., F.d (th Cir. ) (affirming a stay of an antitrust action pending administrative review of a merger proposal that could take months, if not years ); CMAX, Inc., 00 F.d at -0 (affirming a stay of proceedings pending the outcome of an administrative enforcement action); Kane v. Chobani, LLC, F. App x, (th Cir. 0) (remanding to the district court with instructions to stay proceedings pending the -- PROCEEDINGS; NO. CV-00 FMO (SSx)

16 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 outcome of notice and comment rulemaking); Elec. Frontier Found. v. Office of Dir. of Nat. Intelligence, No. C 0-00 JSW, 00 WL 0, at * (N.D. Cal. Mar., 00) (staying proceedings pending the implementation of new administrative guidance). When a district court considers whether to grant a stay, it must weigh the competing interests which will be affected by the granting or refusal to grant [the] stay. CMAX, Inc., 00 F.d at. These interests include: ) the possible damage which may result from the granting of a stay, ) the hardship or inequity which a party may suffer in being required to go forward, and ) the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay. Dister v. Apple-Bay E., Inc., No. C 0-0 SBA, 00 WL 0, at * (N.D. Cal. Nov., 00) (citing CMAX, Inc., 00 F.d at ). B. Ex Parte Applications In the Central District of California, applications for an ex parte order are authorized by Local Rule -. In order to obtain ex parte relief, the moving party must make two showings. First, the moving party must show that it will be irreparably prejudiced if the underlying motion is heard according to regular noticed motion procedures. Mission Power Eng g Co. v. Cont l Cas. Co., F. Supp., (C.D. Cal. ). Second, it must be established that the moving party is without fault in creating the crisis that requires ex parte relief, or that the crisis occurred as a result of excusable neglect. Id. V. DISCUSSION The Court should exercise its discretion and stay this case pending the outcome of the administrative proceedings set in motion by the President s recent Executive Order and the Notice of Intent filed by the EPA and the Corps. The Executive Order and the Notice of Intent are the first steps toward what promises to -0- PROCEEDINGS; NO. CV-00 FMO (SSx)

17 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 be a significant change in the substantive law applicable to the most important issue in this case. Proceeding toward and through trial before the new rules defining the term navigable waters have been established would both severely prejudice HVI-CC and risk the waste of substantial judicial resources. On the other hand, a stay will not prejudice the Government, nor otherwise be detrimental to the interests of justice. It would be a perversion of the judicial process to force HVI-CC to spend more than a million dollars over the next several months going to trial on a case under a legal standard that the EPA itself will likely disavow during the administrative review process. Not only is a stay the appropriate remedy in this situation, but the Court should grant that remedy on an ex parte basis. This case is at a critical juncture. Barring urgent intervention from this Court, the parties and the Court will needlessly expend a massive amount of resources in preparation for a potentially unnecessary trial. In short, the circumstances presented by this case are precisely the sort that require the exercise of the sound discretion of the district court. The Court should exercise the broad discretion inherent in its power to manage its docket and stay this case pending the resolution of the administrative proceedings directed by the Executive Order. A. The Executive Order Has Serious Implications for This Case The President s Executive Order has set in motion an administrative process that may be dispositive in this case. As discussed above, the definition of navigable waters is the single most important issue in this litigation. The United States basis for jurisdiction over the facilities and alleged discharges in question is based on the fact that the facilities at issue are located near, and the discharges allegedly reached, various rainfall drainages that the United States contends are navigable waters within the meaning of the CWA. In reality, these rainfall -- PROCEEDINGS; NO. CV-00 FMO (SSx)

18 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 drainages carry water for, at most, a handful of days out of the year and, when they do flow, make a negligible contribution to the nearest traditional navigable water. See ECF - at 0-. In light these circumstances, HVI-CC has consistently argued that the United States assertion CWA jurisdiction in this case is a regulatory overreach unsupported by law or fact. Despite this, the United States has continued to pursue its claims, relying at various times on the framework articulated in Justice Anthony Kennedy s concurring opinion in Rapanos v. United States, U.S. (00) and the principles underlying the WOTUS Rule enacted by the Corps and EPA in 0 and stayed by the Sixth Circuit. But the Executive Order specifically disavows the WOTUS Rule and casts serious doubt on the future viability of the significant nexus test articulated by Justice Kennedy in Rapanos. Indeed, the Executive Order specifically directs the Corps and the EPA to consider implementing a definition of navigable waters that is consistent with Justice Scalia s plurality opinion from Rapanos. It is beyond dispute that the drainages at issue in this case are not navigable waters under the test articulated by Justice Scalia in Rapanos. Justice Scalia unequivocally stated that navigable waters did not include intermittent and ephemeral streams... that is, streams whose flow is [c]oming and going at intervals... [b]roken, fitful... or existing only, or no longer than, a day; diurnal... short-lived.... Rapanos, U.S. at n.. The drainages at issue here As noted previously, the United States has been careful not to explicitly rely on the WOTUS Rule. However, its theory of jurisdiction is clearly based on the same substantive principle as the WOTUS Rule such as the aggregation of similarly situated tributaries and the United States has failed to provide any other source of law supporting its theory in this case. See ECF - at -0. In fact, the United States aggregation of the ecological effect of similarly situated tributaries contradicts its own agency guidance issued after Rapanos, but before the WOTUS Rule was enacted. See id. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

19 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 only flow with water following rainfall events; typically flow for only two to five days a year; and, even when they do flow, contribute a negligible percentage of the water in the nearest traditional navigable water. ECF - at 0-. These drainages are unquestionably ephemeral streams, and, by definition, not navigable waters within the meaning of Justice Scalia s opinion. Thus, if the Corps and the EPA implement a rule defining navigable waters in a manner that is consistent with Justice Scalia s opinion, the United States would have no jurisdiction over HVI-CC in this case. But even if the Corps and EPA adopt a different rule, the rulemaking process set in motion by the Executive Order carries serious implications for this case. Given the confusion in the federal courts and the ambiguous state of the law, any administrative rule will clarify the rule of law applicable to this case. Further, unless the Corps and EPA adopt a rule essentially identical to Justice Kennedy s opinion from Rapanos and/or the WOTUS Rule (outcomes that seem highly unlikely in light of the language of the Executive Order and Notice of Intent), the new administrative rule will force the United States to fundamentally alter its theory of jurisdiction. Simply put, the definition of navigable waters is the single most important issue in this case. The recent Executive Order and the Notice of Intent have set in motion an administrative process that will fundamentally alter the definition of navigable waters applicable to this case. Not only will the current administrative process change the law that applies to this case, it may do so in a manner that disposes of the United States claims altogether. Consequently, this administrative process will have serious ramifications for the present litigation. B. The Court Should Exercise Its Discretion and Stay This Case All three factors outlined by the Ninth Circuit in CMAX, Inc. the possible harm that would result if the case were stayed, the prejudice to HVI-CC if the case is not stayed, and the orderly administration of justice weigh strongly in favor of -- PROCEEDINGS; NO. CV-00 FMO (SSx)

20 Case :-cv-00-fmo-ss Document Filed 0// Page 0 of Page ID #: 0 0 granting a stay. i. A Stay Will Not Prejudice the Government The first factor the Court must consider is the harm or prejudice the nonmoving parties would suffer if the Court stays this case. See CMAX, Inc., 00 F.d at. Here, the Government will not suffer serious prejudice if the case is stayed. To begin with, fact discovery in this matter is already closed. As a result, a stay will not prejudice the preservation of evidence related to this case. See id. at (finding that a stay would not cause prejudice because all discovery proceedings have been concluded, and hence there is presumably no problem of preserving evidence ). Importantly, this case has already been stayed in the past. By far the longest of the prior stays which lasted over a year and a half was a direct result of misconduct by the State of California. See discussion supra at -. The Government has stipulated to other stays and extensions of stays throughout the course of this case. See, e.g., ECF No.. These prior delays, either caused by or stipulated to by the Government, belie any claim that entering a stay at this stage of the proceedings would prejudice the Government. See Larsen v. City of Los Angeles, No. CV0GAFAJWX, 0 WL, at *0 (C.D. Cal. Aug., 0). Additionally, the Government s primary claims in this matter are for money damages, reimbursement of response costs, and civil monetary penalties. A delay in recovering potential monetary damages is not sufficient prejudice to warrant denial of a stay. Larsen, 0 WL, at * (citing CMAX, Inc., 00 F.d To the extent the Government contends that a stay would be prejudicial because the case is near trial, the Government is incorrect. Courts in the Ninth Circuit have stayed proceedings even when briefing on cross-motions for summary judgment was nearly complete essentially the same stage that this litigation is in. See Elec. Frontier Found., 00 WL 0, at *. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

21 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 at -). This is true even when the party seeking monetary damages is a private party. See id. Such a delay should be considered even less prejudicial here, where the parties at interest are the federal government and one of the largest state governments in the nation. Indeed, rather than prejudicing the Government, it is likely that a stay will benefit the Government by promoting the conservation of scarce prosecutorial resources. A stay would promote certainty with respect to the substantive law applicable to this case. Following the administrative rulemaking set in motion by the Executive Order, the United States could consider whether to continue pursuing this case. If it ultimately decides to proceed to trial, the United States would be assured that the correct substantive law would be applied, drastically reducing the likelihood of a second trial or further proceedings. If, on the other hand, the United States decides not to proceed to trial, it would preserve the prosecutorial resources it would have otherwise wasted. Although the State s claims are not directly impacted by the outcome of the administrative process contemplated by the Executive Order, the State too may benefit from a stay. In the event the United States claims against HVI-CC are resolved as a result of the new administrative rules, it is possible that the State s claims would be more appropriately addressed to a State forum. Further, the State s claims are smaller than the claims asserted by the United States. Consequently, a resolution of the United States claims against HVI-CC could allow HVI-CC and the State to resolve the State s claims without the need for a trial. Critically, it is the conduct of the United States, not HVI-CC, which has given rise to the need for a stay in this matter. The President of the United States, the head of the very executive branch that brought this action against HVI-CC, is the one who issued the Executive Order. Similarly, the EPA and Corps, the agencies responsible for enforcing the CWA, are the agencies that have published -- PROCEEDINGS; NO. CV-00 FMO (SSx)

22 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 their Notice of Intent to change the substantive law applicable to this case. Trial counsel for the United States cannot complain of prejudice associated with a stay when it is the conduct of the United States government that has created the need for a stay. ii. Absent a Stay, HVI-CC Will Be Severely Prejudiced Next, the Court must consider the hardship or inequity which a party may suffer in being required to go forward. CMAX, Inc., 00 F.d at. In this case, HVI-CC will suffer severe and inequitable prejudice if it is required to move forward with this litigation without a stay. Most importantly, HVI-CC will be severely prejudiced if it is required to proceed through summary judgment and trial under a soon-to-be-defunct legal standard. This is particularly true here because both the Executive Order and Notice of Intent strongly suggest that the Corps and EPA should adopt an administrative rule that would definitively resolve the United States claims in HVI-CC s favor. Forcing this case to proceed despite the clear and present risk that HVI-CC could be held liable under a legal standard that will soon be changed would be both prejudicial and inequitable to HVI-CC. Such a ruling could lead to HVI-CC being held liable under federal law for actions that will soon be deemed not to be violations of federal law at all. The Ninth Circuit has previously held that a stay may be an appropriate remedy to ensure the uniform treatment of like suits. CMAX, Inc., 00 F.d at. Recognizing that it would be prejudicial and wasteful to require litigation to proceed under current law when an impending regulatory rule or guidance could change the substantive law applicable to the case at hand, courts within the Ninth Circuit have previously (and recently) stayed proceedings in anticipation of regulatory rulemaking and guidance. See, e.g., Kane v. Chobani, LLC, F. App x, (th Cir. 0) (remanding to the district court with instructions to stay proceedings pending the outcome of notice and -- PROCEEDINGS; NO. CV-00 FMO (SSx)

23 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #:0 0 0 comment rulemaking); Elec. Frontier Found., 00 WL 0, at *- (staying proceedings pending the implementation of new administrative guidance). Additionally, HVI-CC will be prejudiced by the continuing and substantial costs of this litigation if a stay is not issued. Where the proposed stay does not harm the parties opposing the stay, courts have considered the moving party's burden in litigating the case to be a legitimate form of hardship. Larsen, 0 WL, at *0. The burden of litigating this case, when combined with market factors, has pushed HVI-CC to the brink of financial ruin. Bledsoe Decl. Ex. at 0:0-: (noting uncertainty as to whether HVI-CC has a viable future as a going concern). The Government s more than decade-long campaign to regulate and litigate HVI-CC out of existence has inflicted serious financial harm on HVI-CC s operations. It would be both patently unfair and severely prejudicial to require HVI-CC to expend its scarce resources preparing for and participating in trial when a new administrative rule will almost certainly change the substantive law applicable to this case and may definitively resolve the United States claims in HVI-CC s favor. iii. A Stay Would Promote the Orderly Administration of Justice The Court must also consider whether granting a stay would promote the orderly administration of justice. CMAX, Inc., 00 F.d at. This factor weighs in favor of granting a stay when the orderly course of justice will be advanced through the simplifying of issues, proof, and questions of law. Elec. Frontier Found., 00 WL 0, at *. Courts regularly issue stays in cases when there are independent proceedings whether other litigation, arbitration, or regulatory matters that bear upon the case. Leyva, F.d at. Indeed, [t]he existence of another proceeding that may have a substantial impact on a pending case is a particularly compelling reason to grant a stay. Larsen, 0 WL, at *. This rule applies regardless of whether the independent -- PROCEEDINGS; NO. CV-00 FMO (SSx)

24 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 proceedings are necessarily controlling of the action before the court. Leyva, F.d at -. Here, the orderly administration of justice weighs heavily in favor of granting a stay for several reasons. First, as discussed above, there is substantial uncertainty in the federal courts regarding what standard to apply when determining whether or not a given waterbody is a navigable water. See discussion supra at -. An administrative rule defining the term navigable waters will significantly simplify issues, proof, and questions of law relevant to this case. See Elec. Frontier Found., 00 WL 0, at *. Indeed, if the rulemaking process follows the substantive suggestions of the Executive Order and Notice of Intent, it is possible that the new administrative rule will completely obviate the need for a trial on the United States claims. See discussion supra at -. Courts have repeatedly stayed cases in order to reap the judicial efficiency benefits associated with the implementation of valuable administrative guidance on critical issues. See Kane, Fed.App x at (staying proceedings under the primary jurisdiction doctrine pending notice and comment rulemaking on a key issue); Clark v. Time Warner Cable, F.d 0, - (th Cir. 00) (same); Elec. Frontier Found., 00 WL 0, at *- (staying proceedings pending review and implementation of new administrative guidance). On this basis alone, a stay would be justified. Second, and just as importantly, proceeding without a stay creates a very real risk that judicial resources will be wasted. This case is at a key juncture. The Court will soon be contemplating the United States motion for partial summary judgment and the parties will be earnestly preparing for trial. But the forthcoming expenditure of substantial judicial and party resources could be rendered useless by the rulemaking procedure set in motion by the Executive Order. The EPA and the Corps have already published their Notice of Intent to pursue rulemaking regarding the term navigable waters. Thus, it is likely that the -- PROCEEDINGS; NO. CV-00 FMO (SSx)

25 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 EPA and Corps will provide administrative guidance on this point while this case is pending, either before this Court or on appeal. If this case is adjudicated without the benefit of the new regulatory rule, rulings issued prior to the new administrative guidance will need to be reevaluated. Every ruling from this Court s determinations on summary judgment, to a potential trial verdict would be subject to review. Such a scenario could necessitate further proceedings and, perhaps, even a second trial. The Court should exercise its discretion to stay these proceedings in order to avoid this potentially significant waste of the parties and the Court s resources. Third, the orderly administration of justice weighs in favor of a stay because like cases should be treated alike. CMAX, Inc., 00 F.d at. If this case proceeds to trial before the new regulatory rules are promulgated, HVI-CC could be held liable under federal law for activities that, in short order, may no longer be deemed to be violations of federal law. Counsel for the United States in this action HVI-CC would almost certainly be entitled to retroactive application of a favorable administrative rule published while its appeal is pending. Admittedly, this is a somewhat unique situation in that the agencies promulgating the new rule that would benefit HVI-CC would be seeking to proceed without consideration of their own rule. Nonetheless, even if the United States continued to oppose the application of a new rule on appeal, HVI-CC would be entitled to retroactive application of the rule under Ninth Circuit precedent. The Ninth Circuit considers a five-factor balancing test when deciding whether to give retroactive effect to an administrative rule or decision that is released while a case is pending on appeal. Garfias-Rodriguez v. Holder, 0 F.d 0, -0 (th Cir. 0). The five factors are: () whether the case is one of first impression, () whether the new rule is an abrupt departure from prior practice or merely fills a void in an unsettled area of the law, () the extent to which the party to whom the new rule will be applied relied on the previous rule, () the burden imposed by retroactive application, and () the statutory interest in applying the new rule. Id. at. Here, the first, second, and fifth factors would weigh in favor of retroactive application. Additionally, the third and fourth factors would weigh in favor of application because HVI-CC, the party to which the new rule would apply, would be the party seeking the retroactive application. -- PROCEEDINGS; NO. CV-00 FMO (SSx)

26 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 have advanced a theory of jurisdiction based on principles that have been explicitly disavowed by the United States federal government. The decision of counsel for the United States to press forward with their case even when their own government s view on CWA jurisdiction is, at best, in flux and, at worst, directly contradicts the positions counsel have advanced in this case may lead to disparate treatment of similarly situated cases by both the United States and the courts. The orderly administration of justice, and the strong policy in favor of uniform treatment of like cases, weighs in favor of a stay. Finally, the fact that HVI-CC is requesting an indefinite stay, and the fact that the stay may last for an extended period of time, do not weigh against issuing a stay in order to promote the orderly administration of justice. The Ninth Circuit has approved stays pending the outcome of independent proceedings even when those proceedings could last for months, if not years. Chronicle Pub. Co. v. Nat l Broad. Co., F.d, (th Cir. ). If this stay, limited only to the duration of notice and comment rulemaking contemplated by the Executive Order and Notice of Intent, becomes a protracted [stay], it is only because the subject matter of the proceedings is highly complex and it is the avoidance of a duplication of that very complexity that serves in part to justify the stay. Id. at. In summary, the Government will not be prejudiced by a stay because the evidence in this case has been preserved, prior delays belie any claim of prejudice, and the stay may lead to preservation of scarce prosecutorial resources. HVI-CC, on the other hand, will be suffer severe prejudice, both to its substantive rights and its finances, if a stay is not issued. Finally, a stay would promote the orderly administration of justice by simplifying the issues in the case, reducing the risk that judicial and party resources will be wasted, and ensuring the uniform treatment of like cases. In these circumstances, even if there is no explicit doctrinal bar against proceeding with his claims, prudence and the wise conservation of judicial -0- PROCEEDINGS; NO. CV-00 FMO (SSx)

27 Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 resources weigh strongly in favor of granting a stay. Larsen, 0 WL at *. C. HVI-CC Is Entitled to Ex Parte Relief Ex parte relief is appropriate in this case. The President s Executive Order and the Notice of Intent filed by the EPA and the Corps clearly indicate that the substantive law regarding the most important issue in this case will likely change soon. Despite this fact, trial counsel for the United States have refused to stay the prosecution of this case, and insist on pushing forward with costly expert discovery and trial preparation. As discussed above, HVI-CC will be severely prejudiced if this case proceeds without a stay. HVI-CC will also be irreparably harmed if this motion is heard on regular time. Mission Power Eng g Co. v. Cont l Cas. Co., F. Supp., (C.D. Cal. ). Under the current schedule, the parties must take and defend up to expert depositions over the next four weeks. Additionally, the United States motion for partial summary judgment is scheduled to be heard on April, 0. Had HVI-CC noticed this motion on regular time following the parties meet and confer on March, 0, the first available hearing date would have been April 0, 0. Thus, this motion would not have been heard until one week after the Court had already heard argument on the United States motion for partial summary judgment (which is based, in large part, on arguments the EPA itself is considering invalidate through rulemaking) and would not have been heard until weeks after the parties had expended significant resources on expert discovery. Consequently, HVI-CC will suffer irreparable harm to both its substantive rights and finances without emergency intervention from this Court. Further, HVI-CC is without fault in creating the crisis that requires ex parte relief. Mission Power Eng g Co., F. Supp. at. Indeed, if any party is at fault for the circumstances necessitating ex parte relief, it is the United States. The -- PROCEEDINGS; NO. CV-00 FMO (SSx)