Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 88-1317

• Decision Date: 30 November 1989
• Docket Number: No. 88-1317,88-1317
• Citation: 890 F.2d 690
• Parties: , 58 USLW 2350, 20 Envtl. L. Rep. 20,341 CHESAPEAKE BAY FOUNDATION, INC.; Natural Resources Defense Council, Inc., Plaintiffs-Appellees, v. GWALTNEY OF SMITHFIELD, LTD., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 690

890 F.2d 690

30 ERC 1593, 58 USLW 2350, 20 Envtl.

L. Rep. 20,341

CHESAPEAKE BAY FOUNDATION, INC.; Natural Resources Defense Council, Inc., Plaintiffs-Appellees, v. GWALTNEY OF SMITHFIELD, LTD., Defendant-Appellant.

No. 88-1317.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1989.

Decided Nov. 30, 1989.

E. Barrett Prettyman, Jr. (Patrick M. Raher, John G. Roberts, Jr., Catherine J. LaCroix, Hogan & Hartson, Washington, D.C., Anthony F. Troy, George A. Somerville, Mays & Valentine, Richmond, Va., on brief), for defendant-appellant.

James Kevin Thornton (James F. Simon, Natural Resources Defense Council, Inc., Patrick M. McSweeney, McSweeney, Burtch & Crump, Richmond, Va., Ann Powers, Chesapeake Bay Foundation, Inc., Annapolis, Md., on brief), for plaintiffs-appellees.

Before RUSSELL and SPROUSE, Circuit Judges, and KAUFMAN, Senior District Court Judge for the District of Maryland, sitting by designation.

SPROUSE, Circuit Judge:

This case, a frequent visitor in this court, continues to present serious issues concerning the interpretation of Sec. 505 of the Clean Water Act (the Act). Gwaltney of Smithfield, Ltd. (Gwaltney), appeals the finding of the district court that plaintiffs-appellees Chesapeake Bay Foundation, Inc. (CBF), and Natural Resources Defense Council, Inc. (NRDC), proved ongoing violations by Gwaltney at the time suit was brought. Gwaltney also raises standing and mootness objections to this action. We affirm in part and reverse in part.

I Facts and Procedural History

The original action was brought by CBF ¹ under the citizen suit provisions of 33 U.S.C. Sec. 1365 (Sec. 505 of the Act). CBF based its claims on violations by Gwaltney of its National Pollutant Discharge Elimination System (NPDES) permit, and requested both injunctive relief and civil penalties under 33 U.S.C. Secs. 1365(a) and 1319(d) (Secs. 505(a) and 309(d) of the Act). The district court found that CBF had standing to bring the suit, that the court had subject matter jurisdiction, and that Gwaltney was liable for its violations. Chesapeake Bay Foundation v. Gwaltney of Smithfield, Ltd., 611 F.Supp. 1542 (E.D.Va.1985). Using the Environmental Protection Agency Civil Penalty Policy as a guideline, the court imposed upon Gwaltney a civil penalty of $1,285,322, with interest, of which $289,822 was for violations of Gwaltney's total Kjeldahl nitrogen (TKN) limit, and $995,500 was for violations of the chlorine limit. ² Id. at 1565.

Gwaltney appealed to this court, challenging the district court's subject matter jurisdiction and its method of calculating penalties. The facts affecting the first issue were largely undisputed, but the parties disagreed on the application of the statute to the facts. Gwaltney reported more than 150 violations of its NPDES permit between 1981 and 1984, the last violation occurring on May 15, 1984. The two environmental groups had sent notice of intent to sue in February 1984, and filed suit on June 15, 1984, one month after Gwaltney's last recorded violation. The Act permits citizen suits against any person "who is alleged to be in violation" of NPDES permit limitations, 33 U.S.C. Sec. 1365(a); Gwaltney contended this meant there must be continuing violations at the time of suit in order for the court to have jurisdiction. We found that the statute, although ambiguous, also conferred jurisdiction for citizen suits based on wholly past violations, and so affirmed the district court without reaching the question of whether CBF had made a good-faith allegation of ongoing violations. Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 791 F.2d 304, 308 n. 9, 316-17 (4th Cir.1986). We also affirmed the district court with regard to its methodology for assessing penalties.

The United States Supreme Court granted certiorari on the issue of jurisdiction in order to resolve a split among the circuits and subsequently held that Sec. 1365(a) does not permit citizen suits for wholly past violations. It remanded the case to us to consider whether CBF's complaint had made a good-faith allegation of ongoing violations, holding that such allegation would be sufficient to establish subject matter jurisdiction. Gwaltney of Smithfield v. Chesapeake Bay Foundation, 484 U.S. 49, 108 S.Ct. 376, 384-85, 98 L.Ed.2d 306 (1987). The district court, in its initial consideration, had suggested as an alternative holding that CBF had made sufficient good faith allegations of continuing violations to establish jurisdiction. 611 F.Supp. at 1549 n. 8. On remand from the Supreme Court, we held that this finding was not clearly erroneous, and remanded the case to the district court "for further findings as to whether, on the merits, plaintiffs proved at trial an ongoing violation." Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 844 F.2d 170, 171 (4th Cir.1988).

After remand to the district court, Gwaltney again challenged the subject matter jurisdiction of the court, moving to dismiss the case as moot and, alternatively, to dismiss because the plaintiffs did not have standing. Gwaltney also asserted that even if the court did have jurisdiction to hear the case, it did not have jurisdiction as to Gwaltney's chlorine violations, because no reasonable person could in good faith allege that the chlorine violations were ongoing at the time of trial. Finally, Gwaltney asserted that CBF had failed to meet its burden of proving that there were ongoing violations, even of TKN, at the time of trial.

The district court interpreted our mandate to foreclose any consideration of mootness, standing, or severability of the chlorine and TKN violations, instructing it only to determine whether CBF had proved ongoing violations. Finding that CBF had done so, the court reinstated its original judgment of $1,285,322 in civil penalties. Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 688 F.Supp. 1078, 1080 (E.D.Va.1988).

Gwaltney now appeals to this court, claiming there was insufficient evidence to support the district court's finding of ongoing violations. Gwaltney claims that even if there was sufficient evidence the district court erred in reinstating penalties for chlorine as well as TKN violations. Gwaltney also appeals on the standing and mootness issues. Normally, because they are jurisdictional, we would consider the standing and mootness questions first. In this case, however, the jurisdictional issues are intertwined with the finding of ongoing violations; therefore, we address the substantive dispute first.

II Whether There Was An Ongoing Violation

Gwaltney asserts that the district court erred in finding that there was an ongoing violation at the time suit was brought. As we now know, essentially the last violation occurred on May 15, 1984. ³ Gwaltney claims that at the remand hearing the district court should have considered the evidence of its compliance since that time. Gwaltney also asserts that there was not sufficient evidence adduced at the time of trial to permit a finding of ongoing violation.

In its opinion in this case, the Supreme Court stated that, at trial, the citizen-plaintiff must prove its allegations of ongoing violation in order to prevail. Id. 108 S.Ct. at 386. The Court defined a Sec. 1365 ongoing violation to be "a reasonable likelihood that a past polluter will continue to pollute in the future." 108 S.Ct. 381. In our remand to the district court, we instructed that the citizen-plaintiffs could prove an ongoing violation

either (1) by proving violations that continue on or after the date the complaint is filed, or (2) by adducing evidence from which a reasonable trier of fact could find a continuing likelihood of a recurrence in intermittent or sporadic violations. Intermittent or sporadic violations do not cease to be ongoing until the date when there is no real likelihood of repetition....

.... [T]he district court may wish to consider whether remedial actions were taken to cure violations, the ex ante probability that such remedial measures would be effective, and any other evidence presented during the proceedings that bears on whether the risk of defendant's continued violation had been completely eradicated when citizen-plaintiffs filed suit.

844 F.2d at 171-72.

There is no doubt that Gwaltney was a past polluter. Its discharge monitoring reports revealed violations in almost every month from the time Gwaltney purchased the plant in 1981 until one month before suit was filed. ⁴ The question is whether, at the time suit was brought, there was a reasonable likelihood that this past polluter would continue to pollute in the future.

Gwaltney points to its record of near-perfect compliance after May 15, 1984 as conclusive evidence that there was no ongoing violation at the time of trial. However, the proper point from which to assess the likelihood of continuing violations is not the present, with its advantage of hindsight, but the time of the original suit. That is, did CBF carry its burden at trial of proving ongoing violations, either by proving actual violations after the date of filing suit, or by proving a reasonable likelihood that intermittent or sporadic violations would recur at Gwaltney?

The testimony at trial showed the following. Gwaltney purchased the meat processing plant in October of 1981. In June of 1982, it hired a consulting engineer to design modifications so the wastewater treatment facility would adequately treat the plant waste. After various delays, a final plan was approved, and the modifications were completed in October of 1983. Nevertheless, violations of Gwaltney's TKN permit limitation occurred during the winter of 1983-84.

CBF sent notice of intention to sue in February 1984. The last violation of Gwaltney's permit occurred on May 15, 1984. CBF filed suit on June 15, 1984. Trial was held on December 19, 1984. CBF put on as its only witness Dr. Bruce A. Bell. Gwaltney put on, inter alia, the...