United States Environmental Protection Agency v. General Electric Company, Grand Street Artists
Docket: 1998
Court: Court of Appeals for the Second Circuit; June 22, 1999; Federal Appellate Court
General Electric Company (GE) appealed a decision from the U.S. District Court for the Southern District of New York, which denied its motion to enforce a subpoena duces tecum directed at the U.S. Environmental Protection Agency (EPA) and granted the EPA's motion to quash the subpoena. The subpoena sought documents for a lawsuit titled "Grand Street Artists, et al. v. General Electric Co. et al." pending in New Jersey. The district court ruled that the EPA, as a federal agency, was protected by sovereign immunity, and while the United States waived this immunity under the Administrative Procedure Act (APA), GE did not properly invoke the APA's provisions by filing a motion instead of an independent lawsuit. The appellate court vacated the district court's judgment, stating it disagreed only with the requirement for an independent lawsuit, and remanded the case for further proceedings. The underlying New Jersey Action relates to mercury contamination found in a former GE factory, leading to the evacuation of residents and EPA involvement under the Superfund program. The Grand Street Artists Partnership and its members have filed various claims against GE and others.
General Electric issued a subpoena duces tecum in the Southern District to the EPA for documents related to a New Jersey action, claiming these documents were "highly relevant." The requested documents included communications among the EPA, Army Corps of Engineers, and property owners or former residents, as well as real estate appraisals of the premises in Hoboken that had not been previously disclosed to GE. After the subpoena was served to Walter Mugdan at the EPA, Assistant Regional Counsel Catherine Garypie requested to narrow its scope. GE's counsel agreed to exclude documents already provided in response to a FOIA request and certain withheld documents.
Subsequently, Acting Regional Counsel Eric Schaaf responded, indicating that Mugdan did not possess the records and refused to produce the documents due to concerns about resource allocation, potential bias in litigation, and various legal privileges. Schaaf cited issues like deliberative process, attorney-client privilege, interference with enforcement actions, and the confidentiality of research, specifically objecting to appraisal reports as they did not reflect EPA policy and could complicate negotiations with property owners.
The EPA rejected the subpoena, treating it as a FOIA request, and stated that additional documents would be released following prior FOIA responses. GE was dissatisfied and moved to compel compliance with the subpoena, while the EPA cross-moved to quash it. The district court found a substantial basis for denying GE's motion and granting the EPA's cross-motion, citing sovereign immunity which protects the government from judicial proceedings unless there is an express waiver. The court noted that enforcing the subpoena would compel the EPA to act, thus falling under the protections of sovereign immunity.
The district court ruled that a lawsuit to compel the government to produce information cannot be initiated without specific statutory authorization, finding no statute that allows access to government information for litigation purposes when the government is not a party. It identified the Administrative Procedure Act (APA) as a potential avenue for private litigants to seek government information, but concluded that the APA does not support the notion of using an ancillary motion against a non-party to compel compliance with a subpoena. Consequently, the court denied General Electric's motion to compel and granted the government's motion to quash the subpoena for documents not provided under the Freedom of Information Act (FOIA).
The Environmental Protection Agency (EPA) argued that the subpoena directed at Walter Mugdan was unenforceable, citing the Supreme Court's ruling in United States ex rel. Touhy v. Ragen, which allowed government agencies to create regulations on the management of agency records. In this case, the Supreme Court upheld a Department of Justice regulation requiring its employees to disobey subpoenas as instructed by the Attorney General. The Court emphasized the importance of centralized decision-making regarding the compliance with subpoenas to prevent potential harm from unrestricted disclosures of sensitive government information.
The document addresses the constitutional authority of the Attorney General concerning the refusal to produce government documents, indicating that a definitive ruling is contingent upon a specific factual scenario. It outlines relevant EPA regulations which prohibit employees from providing testimony or documents related to their official duties unless authorized by the General Counsel or a designee. In this case, authority was delegated to Acting Regional Counsel Eric Schaaf for EPA's Region II. Although a subpoena was directed to Walter Mugdan, who was not in the Regional Counsel's office at the time of the subpoena, the subpoena was received by Eric Schaaf, who responded with a detailed letter explaining the refusal to produce the requested documents based on regulatory standards. The government’s argument for quashing the subpoena due to improper service was rejected, as the subpoena was considered validly addressed to the appropriate office despite the individual named being incorrect. The court held that the response from the Acting Regional Counsel sufficed under EPA regulations, and the government waived any objection regarding the service of the subpoena. The document also clarifies that prior case law (Touhy) does not contradict this conclusion, as it dealt with the contempt of an employee rather than the authority of a decision-maker to refuse document production.
Sovereign immunity prevents the United States and its agencies from being subject to judicial proceedings unless there is an express waiver of that immunity. Judicial proceedings against the sovereign are considered to occur if the outcome could restrain or compel government action. The enforcement of a subpoena issued by General Electric to the EPA is deemed to compel action from the EPA, thus falling under the protection of sovereign immunity unless waived.
The Federal Rules of Civil Procedure (FRCP) allow for discovery from non-parties but do not specifically address service on the government. Rule 34(c) permits a person not a party to be compelled to produce documents as outlined in Rule 45, which governs subpoenas. A party can move to compel production if there is an objection to the subpoena. Additionally, individuals served can move to quash or modify subpoenas if they require privileged information, impose undue burden, or seek confidential research data.
General Electric cites the Ninth Circuit's ruling in Exxon Shipping Co. v. United States Department of Interior, which stated that denial of discovery by the government is not justified under the Federal Housekeeping Statute. The Ninth Circuit held that this statute does not provide a privilege against valid subpoenas, advocating that federal rules should govern discovery against government agencies, regardless of the government’s involvement in the underlying action. The court emphasized that district courts have the authority to limit discovery while balancing the government's interests and any testimonial privileges that may apply. The Ninth Circuit also noted concerns regarding the cost and inconvenience of collateral Administrative Procedure Act (APA) proceedings.
Disagreement with the Ninth Circuit's ruling is expressed, asserting that the only recognized waiver of sovereign immunity enabling a court to enforce a subpoena against the government in non-party litigation is found in the Administrative Procedure Act (APA). The government is not subject to judicial proceedings without an express waiver of its sovereign immunity, which is not provided in the rules governing third-party discovery. The APA allows judicial review of final agency actions when a claim involves an agency's official conduct, excluding money damages. The district court correctly held that the APA is the sole express waiver facilitating General Electric's document request in the case with Grand Street Artists and affirmed the reviewability of the EPA's actions under the APA.
However, the district court erred in interpreting the term "action" in 5 U.S.C. § 702 too narrowly, as the APA permits enforcement of a non-party subpoena through a motion to compel compliance rather than requiring a separate legal proceeding. The APA supports judicial review of agency actions in both civil and criminal proceedings for enforcement, and a separate lawsuit for judicial review would not provide an adequate or prior opportunity for such review. Therefore, the EPA's refusal to comply with General Electric's subpoena can be addressed through a motion in the ongoing civil case, promoting judicial efficiency by allowing the original litigation to proceed without unnecessary delays.
On remand, the district court will evaluate the EPA's refusal to comply with a subpoena based on the standards set by the Administrative Procedure Act (APA). The court will determine if the EPA’s decision to withhold documents is arbitrary, capricious, an abuse of discretion, or otherwise unlawful. It may also take into account the EPA's claims of privilege and undue burden. This evaluation aims to balance the government's interests in resource conservation, confidentiality, and preventing interference with its functions against the interests of litigants in accessing critical information. The district court's previous judgment is vacated, and the case is remanded for further proceedings consistent with these considerations. Additionally, the court has the authority to limit discovery methods based on factors such as redundancy, availability of information from other sources, the opportunity for the requesting party to obtain information, and the overall burden versus benefit of the proposed discovery.
