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Davis Enterprises v. United States Environmental Protection Agency and Bruce Diamond

argued: February 6, 1989.


On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 87-5315.

Sloviter, Becker, and Weis, Circuit Judges.

Author: Sloviter


SLOVITER, Circuit Judge


The appellants before us, Davis Enterprises et al., who are the defendants in private civil litigation, sought permission from the Environmental Protection Agency (EPA) to take the deposition of an agency employee as a fact witness for use in refuting damage claims brought by homeowners as a result of a gasoline spill. The EPA refused, and Davis Enterprises et al. filed suit. The district court, on the basis of a stipulation as to the relevant facts, granted summary judgment for the EPA, holding that the EPA's decision was unreviewable and, alternatively, that even if the decision were reviewable, the EPA did not abuse its discretion.


This appeal arose as a by-product of litigation over liability for an underground gasoline spill in Newtown, Pennsylvania. A contractor installing underground television cable punctured an underground petroleum pipeline owned and operated by one of the Appellants before us. Unleaded gasoline leaked from the puncture, and gasoline vapors entered the basements of homes in a nearby housing development. The homeowners filed a class action in a Pennsylvania state court. Homeowners who opted out of the class action have filed individual suits against Appellants, which are still pending. In the class action, the liability and damages phases were bifurcated, and Appellants were found liable for causing the spill. The state litigation is now in the damage phase, in which the homeowners must establish their individual damages.

After the incident, the homeowners, not wanting to rely on air quality tests performed at the behest of defendant Sun Pipe Line Company (the owner of the pipeline), requested independent testing through the Pennsylvania Department of Health (DOH). The DOH arranged to have the tests performed by the EPA, and Theodore Erdman was one of the EPA employees who participated in the EPA's air monitoring process.

Appellants, who allege that the results of the EPA testing are favorable to their position that the homeowners suffered little or no damage, seek Erdman's testimony for use at trial on the homeowners' individual damages. They have received the results of the EPA's air monitoring in documentary form, but they claim that Erdman's testimony is necessary because the homeowners have refused to admit the truthfulness of the EPA results without the opportunity to cross-examine Erdman. Appellants assert the concern that the test results may not be admissible under the Pennsylvania law of evidence in light of the homeowners' objections.

It is not our function on this appeal to decide whether the EPA's reports are or are not admissible under Pennsylvania law absent Erdman's testimony. Appellants represented to us at oral argument that they requested an in limine ruling on the admissibility of the EPA data from the Pennsylvania trial court, but that court refused to make such a ruling. Of course, that determination, if favorable to Appellants, would have made this tangential federal litigation unnecessary and would have spared all parties the delay attendant to the federal courts' determination of the issue before us on appeal. For purposes of this appeal, we accept Appellants' representation that if they are unable to have the EPA results admitted, it could hamper their own experts' attempts to prove that the spill did not cause damage to the homeowners or their property because Pennsylvania law requires that expert opinion testimony be based on facts admitted in evidence. See Murray v. Siegal, 413 Pa. 23, 195 A.2d 790 (1963).

Several times Appellants sought permission from the EPA to take a videotape deposition of Erdman at his office which any interested homeowner could attend. In denying the request, the EPA's Regional Counsel (Region III) Bruce Diamond, referring to the applicable EPA regulations governing such requests, 40 C.F.R. ยง 2.401 et seq. (1988), advised Appellants that he had determined that allowing the testimony was not clearly in the EPA's interest, that the EPA would appear to be taking sides in a litigation in which it was not a party, and that the cumulative effect of granting such requests could have an impact on the agency's resources. In making this decision, the EPA's Regional Counsel had before him Erdman's supervisor's letter stating that Erdman's services were necessary to help clear up a backlog of chemical plant and refinery inspections. The EPA did offer to have Erdman submit an affidavit in lieu of his requested testimony, but this was not satisfactory to Appellants because it would not provide the homeowners with the desired opportunity for cross-examination, and the concomitant assurance of the admissibility of the report.

Appellants made a similar request for the testimony of an EPA employee from Region I who was also involved in the monitoring process at issue. This request was denied in Region I, and litigation seeking to compel the EPA to produce the employee was unsuccessful. See Appeal of Sun Pipe Line Co., 831 F.2d 22 (1st Cir. 1987), cert. denied, 486 U.S. 1055, 108 S. Ct. 2821, 100 L. Ed. 2d 922 (1988).*fn1

Following the EPA's refusal to permit the Erdman deposition, Appellants brought suit against the EPA and Diamond in the United States District Court for the Eastern District of Pennsylvania, alleging that the EPA's decision refusing to permit the requested deposition was invalid as an abuse of its discretion. The parties stipulated the facts and the case was decided on cross motions for summary judgment. The district court concluded that judicial review was "not available pursuant to 5 U.S.C. 701(a)(2)." App. at 252. It held further that even if judicial review were available, "the EPA's decision . . . was not arbitrary, capricious or an abuse of discretion and was rationally connected to the facts and in accordance with law." Id. Our scope of review of the district court's decisions on both issues is plenary.


We consider first the EPA's contention that the decision to prohibit Appellants from deposing Erdman during working hours is not reviewable. Appellants have not challenged the validity of the EPA's power to promulgate regulations which grant the agency discretion to determine whether to comply with subpoenas or requests for employee testimony in private litigation. See United States ex rel. Touhy v. Ragen, 340 U.S. 462, 95 L. Ed. 417, 71 S. Ct. 416 (1951) (sustaining Attorney General's power to issue order governing protection of department's records in response to subpoena).

The EPA's authority to govern its internal affairs is derived from 5 U.S.C. 301, which provides that:

The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.

5 U.S.C. 301 (1982).

Pursuant to this statutory provision, the EPA has promulgated regulations governing the testimony of its employees in private suits. When voluntary testimony of an employee is sought, the regulations provide that:

A request for testimony by an EPA employee under 2.402(b) must be in writing and must state the nature of the requested testimony and the reasons why the testimony would be in the interests of EPA. Such requests are immediately sent to the General Counsel or his designee . . . [who] determines whether compliance with the ...

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