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UNITED STATES v. INDEPENDENT BULK TRANSP.

October 4, 1979

UNITED STATES of America, Plaintiff
v.
INDEPENDENT BULK TRANSPORT, INC., Defendant.



The opinion of the court was delivered by: SWEET

The cross motions for summary judgment now before this court present an issue of administrative procedural law made perplexing by the need to determine Congressional intent. What must be determined is whether the applicable procedural requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 Et seq., apply to a Coast Guard proceeding held pursuant to § 311(b) of the Federal Water Pollution Control Act Amendments of 1972 ("FWPCA"), 33 U.S.C. § 1321(b)(6).

The facts underlying the motion are not significantly disputed. On May 16, 1973, the Tì INDEPENDENT, (the "INDEPENDENT"), a tank barge owned by defendant Independent Bulk Transport, Inc. ("Independent Bulk"), was loading fuel oil in Bayonne, New Jersey. Because of a tank overflow, oil spilled into the surrounding waters. Pursuant to section 311(b)(6) of the FWPCA, on July 1, 1976 the United States Coast Guard conducted a hearing with respect to the spill and found that approximately 30 to 70 gallons of No. 6 fuel oil had been discharged into the waters of the Kill Van Kull. The hearing officer therefore assessed a $ 1,200 penalty pursuant to section 311(b)(6) of the FWPCA. Independent Bulk appealed to the Commandant of the Coast Guard who affirmed the hearing officer's findings.

 The United States then brought an action in this court to enforce the civil penalties assessed by the Coast Guard. Independent Bulk challenged the validity of the Coast Guard proceeding, and both parties moved for summary judgment. In that action the Honorable Marvin E. Frankel dismissed the United States' complaint on two grounds: (1) the Coast Guard failed to disclose the administrative record prior to assessment of the penalties; and (2) the hearing officer failed to state fully the basis for his decision. United States v. Independent Bulk Transport, Inc., 394 F. Supp. 1319 (S.D.N.Y.1975). Judge Frankel concluded that the Coast Guard had not complied with the notice and hearing requirements of section 311(b)(6) of the FWPCA and therefore remanded the action to the Coast Guard. Judge Frankel specifically stated, however, "No claim is made that the penalty assessment procedure of 33 U.S.C. § 1321(b) (6) is subject to all the requirements of the Administrative Procedure Act." Id. at 1321. While the decision intimated no opinion regarding that issue, Judge Frankel's ruling clearly rested upon the statutory language of the FWPCA, rather than the statutory requirements of the APA. Id.

 The Coast Guard renewed proceedings against defendant in accordance with Judge Frankel's opinion in April, 1976. Independent Bulk requested a hearing and obtained a copy of the Coast Guard's penalty file concerning the alleged violations of the FWPCA. The Coast Guard held a hearing on July 1, 1976, at which Independent Bulk's attorney appeared. The Coast Guard's hearing officer read the alleged facts comprising the violation to Independent Bulk. The officer had before him a report of a Coast Guard investigation which concluded, based on interviews with employees of the terminal at which defendant's barge had been loading, that oil had been discharged from the barge due to a tank overflow. The hearing officer made a handwritten record of the proceeding.

 Independent Bulk contested the factual claim that the oil spill had resulted from an overflow of the INDEPENDENT's tanks; rather it contended that the spill resulted from the failure of employees of the oil terminal to cap a hose. No witnesses, affidavits or written statements were presented to the hearing officer in support of defendant's allegations. Defendant had, however, submitted information pertaining to its financial condition at the time of the alleged overspill. Independent Bulk also protested that the adjudicatory proceeding was not conducted in accordance with the APA.

 The Coast Guard officer found that between 30 and 70 gallons of No. 6 fuel oil had overflowed from the INDEPENDENT's tanks into the Kill Van Kull and notified Independent Bulk that a $ 600 civil penalty had been assessed against it. Independent Bulk appealed this decision to the Commandant of the Coast Guard, raising issues similar to those asserted at the hearing. The Commandant affirmed the hearing officer's decision.

 Plaintiff, the United States, filed this action and has moved pursuant to Rule 56, Fed.R.Civ.P., for summary judgment to enforce the $ 600 penalty. Independent Bulk cross-moves for summary judgment, urging that the hearing conducted by the Coast Guard did not comply with the procedural mandates of the APA, 5 U.S.C. §§ 551 Et seq. Independent Bulk also contends that even if the APA does not apply to assessments under 33 U.S.C. § 1321(b)(6), the hearing accorded by the Coast Guard did not comport with the requirements of the Due Process Clause of the Fifth Amendment to the United States Constitution.

 The courts have consistently held that section 1321(b)(6) does not provide for De novo review by the district court of findings of fact made by the Coast Guard, following notice and a hearing, that support penalty assessments. United States v. Slade, Inc., 447 F. Supp. 638, 646 (E.D.Tex.1978); United States v. Texas Pipe Line Co., No. 77-83-C (D.Okl.1978)c; United States v. Atlantic Richfield, 429 F. Supp. 830, 834-35 (E.D.Pa.1977), Aff'd, 573 F.2d 1303 (3d Cir. 1978); United States v. Independent Bulk Transport, Inc., supra at 1322-1324, 1323 n.8. But see United States v. General Motors Corp., 403 F. Supp. 1151, 1163-64 (D.Conn.1975). Therefore, if the Coast Guard's findings are supported by substantial evidence and if the assessment is neither arbitrary nor capricious, this court has no power to alter the Coast Guard's determination. 5 U.S.C. § 706(2)(A), (E) (1976). Matter of Vest Transport Co., Inc., 434 F. Supp. 748 (N.D.Miss.1977); United States v. Atlantic Richfield Co., supra at 837. Here, there is substantial evidence in the record to support the Coast Guard's conclusion that the oil spill was caused by a tank overflow from the INDEPENDENT. See Consolo v. Federal Maritime Commission, 383 U.S. 607, 619-21, 86 S. Ct. 1018, 16 L. Ed. 2d 131 (1966). The mere presence of conflicting evidence in the record does not preclude an agency's determination from being supported by substantial evidence. Illinois Central Railroad Co. v. Norfolk & Western Railway Co., 385 U.S. 57, 69, 87 S. Ct. 255, 17 L. Ed. 2d 162 (1966). Furthermore, the Coast Guard's assessment of a $ 600 civil penalty, based as it was on a consideration of relevant statutory criteria and information on the record, was not arbitrary and capricious. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971); Whelan v. Brinegar, 538 F.2d 924, 927 (2d Cir. 1976). Accordingly, if the Coast Guard hearing in this case was not tainted by procedural defects, its decision must stand.

 What is at issue is the applicability of the APA to an assessment of a civil penalty against defendant Independent Bulk under section 1321(b)(6). Upon the conclusion that the APA does not apply, the Coast Guard's decision below is affirmed and summary judgment is granted in favor of the United States.

 Section 554 of the APA "applies . . . in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing . . ." 5 U.S.C. § 554(a) (1976). The provisions of the APA only apply if another statute requires that they be utilized. United States v. Allegheny-Ludlum Steel, 406 U.S. 742, 756-57, 92 S. Ct. 1941, 32 L. Ed. 2d 453 (1972); K. Davis, Administrative Law Treatise § 12:10 at 447 (2d Ed. 1978). If a statute does require an adjudicatory hearing to be conducted in accordance with section 554, then the procedural formalities of sections 556 and 557, concerning presentation of evidence, cross-examination, and fact-finding, are applicable. 5 U.S.C. §§ 556, 557 (1976).

 The issue before the court is whether 33 U.S.C. § 1321(b)(6) (1976) *fn1" invokes the procedural formalities of the APA. Section 1321(b)(6) provides in pertinent part:

 
Any owner, operator, or person in charge of any vessel from which oil or a hazardous substance is discharged in violation of paragraph (3)(i) of this subsection *fn2" who is otherwise subject to the jurisdiction of the United States at the time of the discharge, shall be assessed a civil penalty by the Secretary of the department in which the Coast Guard is operating of not more than $ 5,000 for each offense. No penalty shall be assessed unless the owner or operator charged shall have been given notice and opportunity for a hearing on such charge. Each violation is a separate offense. . . . In determining the amount of the penalty . . . the appropriateness of such penalty to the size of the business of the owner or operator charged, the effect on the owner or operator's ability to continue in business, and the gravity of the violation, shall be considered by such Secretary. . . .
 
Civil penalties assessed under section 1321(b)(6) clearly constitute "adjudications," as the government apparently concedes. 5 U.S.C. § 551(6)-(7) (1976). Adjudicatory proceedings, unlike rulemaking proceedings, involve determinations of contested facts in applying rules to specific circumstances. See United States v. Florida East Coast Railway Co., 410 U.S. 224, 244-45, 93 S. Ct. 810, 35 L. Ed. 2d 223 (1973); International Telephone & Telegraph Corp. v. Local 134, International Brotherhood of Electrical Workers, 419 U.S. 428, 442-43, 95 S. Ct. 600, 42 L. Ed. 2d 558 (1975).
 
Nevertheless, although section 1321(b)(6) mandates notice and a hearing prior to imposition of a penalty, it does not require that the hearing be "on the record" ...

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