944 F.2d 301 (6th Cir. 1991), 90-6085, United States v. Winchester Mun. Utilities

Docket Nº:90-6085.
Citation:944 F.2d 301
Party Name:UNITED STATES of America, Plaintiff-Appellant, v. WINCHESTER MUNICIPAL UTILITIES, Defendant-Appellee, The Commonwealth of Kentucky, Defendant.
Case Date:September 19, 1991
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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944 F.2d 301 (6th Cir. 1991)

UNITED STATES of America, Plaintiff-Appellant,



The Commonwealth of Kentucky, Defendant.

No. 90-6085.

United States Court of Appeals, Sixth Circuit

September 19, 1991

Argued Aug. 1, 1991.

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Louis DeFalaise, U.S. Atty., Lexington, Ky., Andrew C. Mergen (argued and briefed), Phillip A. Brooks, U.S. Dept. of Justice, Land & Natural Resources Div., Richard B. Stewart, U.S. Dept. of Justice, Environmental Defense Section, Washington, D.C., for the U.S.

Stephen R. Mysliwiec (argued and briefed), Piper & Marbury, Washington, D.C., Edsel T. Jones, Winchester, Ky., for Winchester Mun. Utilities.

Before NELSON and SUHRHEINRICH, Circuit Judges, and HOLSCHUH, Chief District Judge. [*]


The issue presented in this appeal is whether the district court abused its discretion in ordering the United States to pay substantial attorney fees to a municipal utility found to have been violating the environmental protection laws. The district court awarded the fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, and drew additional support for the award from Rule 11, Fed.R.Civ.P., and 28 U.S.C. § 1927. The court held,

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among other things, that the utility had prevailed in the litigation against it and that the government's insistence that the utility pay a civil penalty was not substantially justified. We disagree, and we shall reverse the fee award.


Defendant Winchester Municipal Utilities operates a wastewater treatment plant in Winchester, Kentucky. Alleging that the plant was being operated in violation of the terms of a permit issued by the U.S. Environmental Protection Agency, the United States sued Winchester in 1984 pursuant to the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq. The complaint asked for civil penalties and injunctive relief.

The district court entered summary judgment in favor of the United States on the liability issue, noting that the case would proceed to trial "on the question of remedies, and more particularly whether or not a civil penalty would be an appropriate remedy." The utility did not contest the summary judgment motion.

Before the summary judgment was entered, the utility sought a protective order limiting discovery on the civil penalty issue. The utility argued, in this connection, that (1) the government was not entitled to any such penalties, and (2) the government had stated in a status report that "it appears that the sole question in this action is the nature of repairs, alterations, or modifications to ... [the] wastewater treatment plant."

The district court granted the protective order, and the United States moved for reconsideration. In its motion the United States cited 33 U.S.C. § 1319(d) and Stoddard v. Western Carolina Regional Sewer Authority, 784 F.2d 1200 (4th Cir.1986), as indicating that it would be error not to award any penalties. (Section 1319(d) says that any person who violates specified sections of the Act "shall" be subject to a civil penalty; the Stoddard court held that this language "mandated" a penalty in some form.) The United States disclosed that it had offered to settle for $40,000 in civil penalties, notwithstanding that the statutory maximum was on the order of $50,000,000. The utility subsequently filed a pretrial memorandum in which it acknowledged the government's $40,000 proposal and argued that neither 33 U.S.C. § 1319(d) nor Stoddard supported the government's contention that civil penalties were mandatory.

On May 30, 1986, two days after summary judgment was entered, the parties filed a stipulation of facts in which it was agreed that the utility's failure to comply with federal standards did not result from willful misconduct on the part of the utility. In May of 1988, almost two years later, the district court approved a consent decree in which, among other things, the utility agreed to pay a $10,000 civil penalty. (The government had reduced its penalty proposal from $40,000 to $10,000 in May of 1986; it is most unlikely that the government's insistence on this relatively small penalty contributed in any major degree to the delay in negotiating a settlement.) The utility also undertook to make costly modifications to its treatment facility. The consent decree--which recited that "[t]he failure of Winchester's wastewater treatment system to meet effluent limitations has not been attributed to negligence on the part of Winchester"--contained a provision permitting the utility to apply for an award of attorney fees.

The utility made such an application...

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