Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 JEFFREY H. WOOD Acting Assistant Attorney General Environment and Natural Resources Division MARK SABATH E-mail: mark.sabath@usdoj.gov Massachusetts Bar Number: RICHARD GLADSTEIN E-mail: richard.gladstein@usdoj.gov District of Columbia Bar Number: 0 ANGELA MO E-mail: angela.mo@usdoj.gov California Bar Number: DAVIS H. FORSYTHE E-mail: davis.forsythe@usdoj.gov Massachusetts Bar Number: STEFAN J. BACHMAN E-mail: stefan.bachman@usdoj.gov South Carolina Bar Number: 0 Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice P.O. Box Washington, DC 00- Telephone: (0) - Facsimile: (0) - Attorneys for Plaintiff the United States of America UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ) UNITED STATES OF AMERICA ) and PEOPLE OF THE STATE OF ) CALIFORNIA, ex rel. CALIFORNIA ) DEPARTMENT OF FISH AND ) WILDLIFE and CALIFORNIA ) REGIONAL WATER QUALITY ) CONTROL BOARD, CENTRAL ) COAST REGION, ) ) Plaintiffs, ) v. ) ) HVI CAT CANYON, INC., f/k/a ) GREKA OIL & GAS, INC., ) ) Defendant. ) ) CV -00 FMO (SSx) UNITED STATES OPPOSITION TO 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
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #:0 0 TABLE OF CONTENTS I. PROCEDURAL HISTORY... II. FACTS... III. ARGUMENT... A. Ex Parte Applications Are Disfavored, and HVI-CC Fails to Show That Its Application Could Not Have Been Pursued Through Ordinary Motion Practice... B. An Indefinite Stay of Litigation Is Not Justified, and Would Substantially Prejudice the United States and the Public Interest.... Plaintiffs Will be Damaged If a Stay Is Granted and Necessary Injunctive Relief Is Indefinitely Delayed.... HVI-CC s Alleged Hardship If a Stay Is Denied Is Highly Speculative, and Its Cost of Continuing to Defend This Litigation Cannot Outweigh the Damage to Plaintiffs if Injunctive Relief Is Indefinitely Delayed.... An Indefinite Stay Will Not Advance the Orderly Course of Justice... 0. Indefinite Stays of Litigation Are Especially Disfavored... IV. CONCLUSION... 0 ii UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 TABLE OF AUTHORITIES Cases Aldapa v. Flower Packing Co., 0 WL (E.D. Cal. Oct., 0)... 0 CMAX, Inc. v. Hall, 00 F.d (th Cir. )... Dependable Highway Exp., Inc. v. Navigators Ins. Co., F.d 0 (th Cir. 00)... In re Toys R US-Delaware, Inc. Fair and Accurate Credit Transactions Act (FACTA) Litigation, 00 WL 0 (C.D. Cal. Aug., 00)... Landis v. N. Am. Co., U.S. ()...,, Larsen v. City of L.A., 0 WL (C.D. Cal. Aug., 0)... Leyva v. Certified Grocers of Cal., Ltd., F.d (th Cir. )... Lockyer v. Mirant Corp., F.d 0 (th Cir. 00)...,,, 0, Mediterranean Enters., Inc. v. Ssangyong Corp., 0 F.d (th Cir. )... Mission Power Eng g Co. v. Cont l Cas. Co., F. Supp. (C.D. Cal. )... Wild Fish Conservancy v. Irving, 0 WL (E.D. Wash. Apr., 0)... Yong v. Ins, 0 F.d (th Cir. 000)..., Statutes Clean Water Act, U.S.C. to ( CWA ) CWA Section 0(a), U.S.C. (a)... CWA Section 0(b), U.S.C. (b)... iii UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: Regulations Fed. Reg., (Apr., 0)... 0 Fed. Reg.,0 (June, 0)... Fed. Reg., (Mar., 0)... Other Authorities Executive Order No., Fed. Reg., (Feb., 0)..., 0 0 iv UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 Plaintiff the United States of America ( United States ) hereby opposes Defendant HVI Cat Canyon, Inc. s ( HVI-CC s ) Ex Parte Application for an Order Staying Proceedings Pending Outcome of Current Administrative Rulemaking Regarding Navigable Waters Pursuant to Executive Order. ECF No. ( Ex Parte Application ). This case under the Clean Water Act ( CWA ) and the Oil Pollution Act of 0 ( OPA ) concerning HVI-CC s numerous oil spills from, and inadequate spill prevention measures at, its oil production facilities was initially filed in June 0. Now, nearly six years into litigation and less than four months from trial, HVI-CC seeks to indefinitely stay these already lengthy proceedings. HVI-CC fails to justify making this demand on an ex parte basis rather than complying with the Court s ordinary motion practice procedures. HVI-CC also cannot show that an indefinite stay is warranted based on the United States pending review of a CWA regulation regarding waters of the United States, a regulation which the United States has never relied on and need not rely on to prevail at trial in the instant action. Moreover, even if relevant, HVI-CC offers only speculation regarding the potential outcome of the new rulemaking. And HVI-CC s cost of defending this case does not constitute a hardship sufficient to justify a stay. Accordingly, the United States respectfully requests that the Court deny the Ex Parte Application. I. PROCEDURAL HISTORY Plaintiffs the United States and the People of the State of California, ex rel. the California Department of Fish and Wildlife and the California Regional Water Quality Control Board, Central Coast Region (collectively, Plaintiffs ) filed their Complaint in this case on June, 0. ECF No.. The Complaint was titled Complaint for Civil Penalties, Injunctive Relief, Cost Recovery, and Damages Under the Clean Water Act, Oil Pollution Act of 0, California Water Code, and UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 California Fish and Game Code (emphasis added). The Complaint alleged that, [s]ubject to a reasonable opportunity for further investigation or discovery, violations of Section 0(a) of the CWA, U.S.C. (a) [i.e. oil spills of the type alleged in the Complaint], are likely to continue unless enjoined by an order of the Court. Id.. The Complaint further alleged that Defendant is subject to appropriate injunctive relief pursuant to Section 0(b) of the CWA, U.S.C. (b), to prevent further discharges from its facilities into waters of the United States. Id.. The First Amended Complaint was filed February, 0, was similarly titled, and contained identical allegations regarding injunctive relief. ECF No.,. In 0 and 0, the United States joined the other parties in seeking several brief, time-limited stays of litigation to allow pursuit of settlement negotiations, which were ultimately unsuccessful. ECF Nos., and. Over the United States objection, the Court also stayed this litigation for nearly a year, between December 0 and November 0, pending resolution of HVI-CC s motion for terminating sanctions, which the Court denied in substantial part. ECF Nos., 0,. On February, 0, the United States disclosed to HVI-CC the expert opinion of Michael Kinworthy, which included a detailed appendix specifying actions that HVI-CC must undertake at its oil production facilities to come into compliance with the Clean Water Act and prevent future oil spills. Forsythe Decl.. On March, 0, the United States filed a Joint Memorandum of Points and Authorities Re United States Motion for Partial Summary Judgment, in which the United States seeks a judgment as to HVI-CC s liability under the CWA and OPA, and in connection with its oil spills and threatened spills, as to the amount of the United States recoverable response costs. ECF No. ( Partial Summary Judgment Motion ). Among the issues the United States reserved for trial is the UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 appropriate scope of injunctive relief. Id. at :-0. II. FACTS HVI-CC s Facts section starts with a lengthy argument regarding the legal definition of the term navigable waters. Ex Parte Application :-:0. The United States has explained its position that the receiving waters for HVI-CC s oil spills are navigable waters under controlling Supreme Court and Ninth Circuit law. See Partial Summary Judgment Motion (ECF No. -) at -0,, -. Even prior to the United States Partial Summary Judgment Motion, the Court set forth the legal basis for finding navigable waters in its September 0, 0 opinion denying in substantial part HVI-CC s own motion for partial summary judgment, and finding that three of the receiving waters for HVI-CC s oil spills are navigable waters within the meaning of the CWA. See ECF No. 0 at -. On February, 0, the President of the United States signed Executive Order No., Fed. Reg., (Feb., 0) ( Executive Order ), directing the United States Environmental Protection Agency ( EPA ) and the United States Army Corps of Engineers ( Corps ) to review a recent Clean Water Act rule concerning navigable waters determinations ( 0 Rule ), and publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and consistent with the law. Executive Order. Section of the Executive Order stated: Definition of Navigable Waters in Future Rulemaking. In connection with the proposed rule described in section (a) of this order [rescinding or revising the 0 Rule], the Administrator [of EPA] and the Assistant Secretary [of the Army for Civil Works] shall consider interpreting the term navigable waters in a manner consistent with the opinion of Antonin Scalia in Rapanos v. United States. Id.. The Executive Order, by its terms, is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Id. (c). Shortly following issuance of the Executive Order, EPA and the Corps published a Federal Register notice indicating their intent, in accordance with the Executive Order, to review and rescind or revise the 0 Rule consistent with the principles outlined in the Executive Order and the agencies legal authority. Fed. Reg., (Mar., 0) ( Notice of Intent ). In the Notice of Intent, EPA and the Army stated that in a forthcoming proposed rulemaking [to review the 0 Rule] consistent with the Executive Order the agencies will consider interpreting the term navigable waters, as defined in the CWA in a manner consistent with the opinion of Justice Scalia in Rapanos. Id. As HVI-CC concedes, the United States has never relied on the 0 Rule to establish that the receiving waters for HVI-CC s spills were navigable waters. Ex Parte Motion at n.. Indeed, the United States position has consistently been that [f]or purposes of this case, the regulation in place at the time of [HVI-CC s oil] spills controls. Partial Summary Judgment Motion (ECF No., at n.). This case was filed in 0; the 0 Rule was proposed in 0, Fed. Reg., (Apr., 0), and finalized in 0, 0 Fed. Reg.,0 (June, 0). On March, 0, HVI-CC wrote to the United States requesting that it indefinitely suspend the prosecution of this case pending resolution of the rulemaking required under the Executive Order. Bledsoe Decl. & Ex.. On March, 0, the United States responded that it was aware of the Executive Order, that there has been no change in the position of the United States related to this case, and that it intended to continue complying with existing case deadlines. Id. & Ex.. On March, 0, HVI-CC requested that the parties meet and confer regarding this issue, which they did on March, 0. Id., & Exs.,. UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 On March, 0, in response to an email from the United States requesting a discussion of the scheduling of expert witness depositions in light of the pending April, 0 expert discovery deadline, counsel for HVI-CC stated that we intend to defer addressing the issue of expert depositions until the Court has ruled on our motion to stay proceedings. Forsythe Decl.. III. ARGUMENT A. Ex Parte Applications Are Disfavored, and HVI-CC Fails to Show That Its Application Could Not Have Been Pursued Through Ordinary Motion Practice. HVI-CC fails to show that ex parte relief is warranted here. The Ex Parte Application should be denied, and HVI-CC should be directed to pursue any request for a further stay of this litigation as a regularly noticed motion under Local Rule. The Court has stated that ex parte applications are entertained only in extraordinary circumstances, 0 Initial Standing Order, at https://www.cacd.uscourts.gov/sites/default/files/documents/fmo/ad/ InitialStandingOrder.0.pdf (accessed Mar., 0). As this Court held in Toys R US, a party seeking ex parte relief bears the burden of demonstrating the irreparable harm it will suffer by not having its [ex parte application] heard according to regular noticed motion procedures. In re Toys R US-Delaware, Inc. Fair and Accurate Credit Transactions Act (FACTA) Litigation, 00 WL 0 at * (C.D. Cal. Aug., 00) (citing Mission Power Eng g Co. v. Continental Cas. Co., F. Supp., (C.D. Cal. )). An ex parte motion is the forensic equivalent of standing in a crowded theater and shouting, Fire! There had better be a fire. Mission Power, F. Supp. at. There is no fire here. HVI-CC fails to demonstrate irreparable harm because, as outlined below, it cannot establish that an indefinite stay of this litigation is warranted at all, much less on an emergency, ex parte basis. Under UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page 0 of Page ID #: 0 0 these circumstances, HVI-CC s costs of continuing to defend this case for an additional few weeks pending hearing on a conventional motion cannot justify ex parte consideration of HVI-CC s page brief, which Plaintiffs received on short notice and with minimal opportunity to respond. If the Court elects to further entertain HVI-CC s request for an indefinite stay of litigation, HVI-CC should be directed to pursue normal motion practice under the Local Rules, and in the meantime to comply with the existing case schedule, including scheduling and conduct of expert discovery. B. An Indefinite Stay of Litigation Is Not Justified, and Would Substantially Prejudice the United States and the Public Interest. HVI-CC s request for an indefinite stay is unwarranted, and could delay resolution of this case for years while the parties and the Court await the final outcome of agency revised rulemaking that took several years to complete originally and was subject to challenge and stay in more than one federal court a rule that was never relied upon by the United States in this action. HVI-CC speculates that it may benefit from future changes to the 0 Rule under the Executive Order, but mere speculation cannot justify an indefinite stay. And the ongoing costs to HVI-CC of defending this action if a stay is not granted are not the type of harm necessary to justify a stay. The Ex Parte Motion should therefore be denied, and the parties should be directed to carry on with litigation under the existing case management orders. A district court possesses the inherent power to control its own docket and calendar, and accordingly has discretion to stay litigation before it. Mediterranean Enterprises, Inc. v. Ssangyong Corp., 0 F.d, (th Cir. ). In evaluating a request to stay pending litigation, the competing interests As described in Section II, above, HVI-CC has refused to discuss scheduling of expert witness depositions with the United States until this motion is resolved. Forsythe Decl.. UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 which will be affected by the granting or refusal to grant a stay must be weighed. Lockyer v. Mirant Corp., F.d 0, 0 (th Cir. 00) (quoting CMAX Inc. v. Hall, 00 F.d, (th Cir. )). Under the Supreme Court case Landis v. North American Co., U.S. (), among the competing interests to be considered are: [] the possible damages which may result from the granting of a stay, [] the hardship or inequality 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. Lockyer, F.d at 0 (quoting CMAX, 00 F.d at ) (citing Landis) (numbers added). In addition to these factors, the Court must also consider the length of the proposed stay. Wild Fish Conservancy v. Irving, et al., 0 WL (E.D. Wash. Apr., 0) (citing Yong v. INS, 0 F.d, (th Cir. 000) ( If a stay is especially long or its term is indefinite, we require a greater showing to justify it. )). As set forth below, the competing interests identified in Landis and related cases weigh against HVI-CC s request for an indefinite stay. The Ex Parte Application should accordingly be denied.. Plaintiffs Will Be Damaged If A Stay Is Granted and Necessary Injunctive Relief Is Indefinitely Delayed. As to the first Landis factor, the possible damages which may result from the granting of a stay, the Plaintiffs brought this action in June 0 to hold HVI-CC responsible for its chronic violations of federal and state clean water law and to obtain injunctive relief to ensure future compliance. See Compl., ECF No. ; First Am. Compl., ECF No.. Beyond the interest all parties have in the prompt and timely resolution of litigation, the Plaintiffs seek and expect to obtain at trial substantial injunctive relief that will require HVI-CC to bring its oil UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #:0 0 0 production operations into compliance with the Clean Water Act. Compliance with the law here is more than a matter of correcting minor paperwork violations the Plaintiffs will establish at trial that HVI-CC must substantively modify its operations to improve its capacity to prevent, detect, and respond to future oil spills at the affected facilities. Delayed implementation of injunctive relief is precisely the kind of harm courts look for in weighing potential damage granting a stay may cause. See Lockyer, F.d at (stay not justified where plaintiff sought injunctive relief against ongoing and future harm, though stays were granted in other cases where plaintiffs sought only [money] damages for past harm ). In fact, if there is even a fair possibility that the stay will work damage to someone else, the party seeking the stay must make out a clear case of hardship or inequity. Id. (quoting Landis, U.S. at ) (emphasis added). HVI-CC asserts, without citation or explanation, that the United States primary claims in this matter are for money damages, reimbursement of response costs, and civil monetary penalties. Ex Parte Application at :0-. This is incorrect. HVI-CC need look no further than the Complaint itself to ascertain that the Plaintiffs allege ongoing violations and seek appropriate injunctive relief. First Am. Compl., (ECF No. ). Moreover, HVI-CC was recently served with the expert report of Michael Kinworthy, which includes a detailed list of corrective actions necessary to address ongoing issues at its facilities. Forsythe Decl.. Yet HVI-CC does not address the Plaintiffs demands for injunctive relief, perhaps because it cannot establish hardship sufficient to offset the potential environmental harm an indefinite stay would cause. While HVI-CC does not discuss injunctive relief, it argues that, given the prior stays in the case, the United States cannot now complain that a new, indefinite stay on the eve of trial will damage it. Ex Parte Application at :-. The United States stipulated to several brief stays only in furtherance of settlement negotiations, which it hoped would speed resolution of the case and implementation of necessary injunctive relief. And HVI-CC does not and cannot UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0. HVI-CC s Alleged Hardship If a Stay Is Denied Is Highly Speculative, and Its Cost of Continuing to Defend This Litigation Cannot Outweigh the Damage to Plaintiffs if Injunctive Relief Is Indefinitely Delayed. As to the second Landis factor, the hardship or inequity which a party may suffer in being required to go forward, Lockyer, F.d at 0, HVI-CC argues that it would be unfair to require it to expend resources defending this case 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, and the substantive law regarding the most important issue in this case will likely change soon. Ex Parte Application at :-; :-. (emphasis added). HVI-CC s entire argument for harm is premised on a string of speculation about a rulemaking process. Even if the Court were to entertain HVI-CC s speculation, any injury HVI-CC may suffer in continued costs of litigation cannot, as a matter of law, constitute the clear case of hardship or inequity necessary to offset the damage to the Plaintiffs and the public interest if necessary injunctive relief is indefinitely delayed. Lockyer, F.d at (quoting Landis, U.S. at ). HVI-CC concedes that the United States has never relied on the 0 Rule to support its case. Ex Parte Motion at n.. Instead, the United States has relied upon controlling Supreme Court and Ninth Circuit law, see (ECF No. -) at - 0,, -, just as this Court has in interpreting the term navigable waters under the CWA. See ECF No. 0 at -. This is unsurprising given that the spills at issue in this case occurred between 00 and 00, and the initial complaint was filed in 0, years before the 0 Rule was proposed or finalized. allege that the United States was a cause of or in agreement with the lengthy stay pending resolution of HVI-CC s motion for terminating sanctions, which it did not obtain. Id. In this context, Larsen v. City of Los Angeles, 0 WL (C.D. Cal. Aug., 0), is inapposite. UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 HVI-CC s request for a stay should also be denied because its alleged harm comes down to the cost of continuing to defend this case through trial and any subsequent appeal. But the law is clear that being required to defend a suit, without more, does not constitute a clear case of hardship or inequity within the meaning of Landis, as would be necessary to justify a stay in face of the Plaintiffs established interest in obtaining meaningful injunctive relief. Lockyer, F.d at. See also Aldapa v. Flower Packing Co., 0 WL at * (E.D. Cal. Oct., 0) ( the increased harm a stay would cause to individuals who seek injunctive relief for ongoing violations has been recognized ). HVI-CC provides no meaningful argument to offset the increased harm Plaintiffs and the public would suffer if injunctive relief is indefinitely delayed.. An Indefinite Stay Will Not Advance the Orderly Course of Justice. As to the third factor, 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, HVI-CC again falls back on speculation and conclusory statements regarding the potential outcome of a rulemaking process. See Ex Parte Application at :- ( An administrative rule defining the term navigable waters will significantly simplify issues, proof and questions of law relevant to the case [and] it is possible that the new administrative rule will completely obviate the need for trial ) (emphasis added). See also id. at :- : ( it is likely that the EPA and Corps will provide administrative guidance on this point while this case is pending, either before this Court or on appeal. ) (emphasis added). Again, the prospect of judicial economy is too speculative here to support imposition of an open-ended stay, especially when weighed against the real hardship to Plaintiffs and the public if injunctive relief is further delayed. 0 UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0. Indefinite Stays of Litigation Are Especially Disfavored. In addition to the three Landis factors discussed above, the law is clear that [g]enerally, stays should not be indefinite in nature. Dependable Highway Exp., Inc. v. Navigators Ins. Co., F.d 0, 0 (th Cir. 00) ( the district court erred by issuing a stay without any indication that it would last only for a reasonable time ). See also Lockyer, F.d at (quoting Leyva v. Certified Grocers of California, Ltd., F.d, (th Cir. ) for proposition that [a] stay should not be granted unless it appears likely the other proceedings will be concluded within a reasonable time in relation to the urgency of the claims presented to the court. ); Yong, 0 F.d at ( If a stay is especially long or its term is indefinite, we require a greater showing to justify it. ). For the reasons stated above, HVI-CC cannot make the greater showing necessary to obtain the stay it seeks, or otherwise justify departure from the general presumption against indefinite stays. IV. CONCLUSION HVI-CC fails to establish that its costs in continuing litigation while pursuing its request for a stay through routine motion practice would constitute irreparable harm sufficient to justify extraordinary ex parte relief. HVI-CC likewise cannot show that the ongoing costs of defending this case through trial outweigh the potential damage to the Plaintiffs and the public interest if an indefinite stay is granted. Accordingly, the Ex Parte Application should be denied. HVI-CC cites Chronicle Publishing Co. v. National Broadcasting Co., F.d, (th Cir. ), for the proposition that a case may be stayed for months, if not years pending resolution of agency action. The case is readily distinguishable, both on the nature of the administrative proceedings and the fact the plaintiff sought money damages, and the court expressly left open the possibility that, if injunctive relief were later sought, the stay might be lifted. Id. at. UNITED STATES OPPOSITION TO
Case :-cv-00-fmo-ss Document Filed 0// Page of Page ID #: 0 0 Dated: March, 0 Respectfully submitted, THE UNITED STATES OF AMERICA /s/ Davis H. Forsythe DAVIS H. FORSYTHE MARK SABATH RICHARD GLADSTEIN ANGELA MO STEFAN J. BACHMAN Environmental Enforcement Section U.S. Department of Justice UNITED STATES OPPOSITION TO