Sierra Club v. Electronic Controls Design, Civ. No. 87-905-MA.

• Decision Date: 06 January 1989
• Docket Number: Civ. No. 87-905-MA.
• Parties: SIERRA CLUB, INC., Plaintiff, v. ELECTRONIC CONTROLS DESIGN, INC., Defendant.
• Court: U.S. District Court — District of Oregon

703 F. Supp. 875

SIERRA CLUB, INC., Plaintiff, v. ELECTRONIC CONTROLS DESIGN, INC., Defendant.

Civ. No. 87-905-MA.

United States District Court, D. Oregon.

January 6, 1989.

Victor M. Sher, Todd D. True, Corrie J. Yackulic, Sierra Club Legal Defense Fund, Inc., Seattle, Wash., Richard A. Parrish, Portland, Or., for plaintiff.

Richard S. Gleason, Steven L. Pfeiffer, Stoel, Rives, Boley, Jones & Grey, Portland, Or., for defendant.

Roger J. Marzulla, Asst. Atty. Gen., Charles J. Sheehan, Atty., Land & Natural Resources Div., Policy, Legislation and Sp. Litigation Section, Washington, D.C., Charles H. Turner, Thomas C. Lee, U.S. Atty.'s Office, Portland, Or., for U.S.

OPINION

MARSH, District Judge.

INTRODUCTION

This action was filed by the Sierra Club pursuant to the citizen suit provision of the Federal Water Pollution Control Act ("Clean Water Act" or "Act"), 33 U.S.C. § 1365(a). This section states that "any citizen may commence a civil action on his own behalf" against any person who is in violation of the Act. The Sierra Club alleges that Electronic Controls Design ("ECD") violated § 301(a) of the Clean Water Act, 33 U.S.C. § 1311(a), by discharging pollutants from its printed circuit board manufacturing plant into the Molalla River via Milk Creek. These discharges were allegedly in violation of the terms of their National Pollutant Discharge Elimination System (NPDES) permit. The complaint requests declaratory and injunctive relief, the imposition of civil penalties of $25,000 per day of violation, and litigation costs, which include reasonable attorney fees.

Shortly after filing this suit, ECD's permit performance improved and the parties entered into settlement negotiations. These negotiations led to the creation and submission of the Consent Judgment, which is the subject of this dispute.

The Consent Judgment provides that the ECD is to pay a total of $45,000 to the Sierra Club Legal Defense Fund (as trustee), which will in turn distribute the money to designated private, nonprofit environmental organizations. The money will go to support projects dedicated to maintaining and protecting water quality in Oregon. The Consent Judgment also provides that ECD will pay liquidated damages to these same organizations for all future violations (if any) occurring between September 1, 1988 and June 1, 1989. If the permit is violated thereafter, ECD must immediately terminate all discharges.

In accordance with § 505(c)(3) of the Clean Water Act, 33 U.S.C. § 1365(c)(3), the United States was served with this proposed Consent Judgment. On November 15, 1988, the United States objected to the proposed Judgment, claiming that it is "at odds with the Clean Water Act," because the money to be paid by ECD under the settlement goes to private organizations rather than the federal Treasury.

STANDARD OF REVIEW

The parties to a case may always compromise their dispute. See United States v. Armour & Co., 402 U.S. 673, 681, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971). However, where the parties wish to incorporate their settlement into a judicial decree, the court must give the agreement more careful scrutiny. United States v. City of Miami, 664 F.2d 435, 441 (5th Cir. 1981). "The court must assure itself that the proposed consent decree is fair, reasonable, and equitable ... and that the decree does not violate the law or public policy." Sierra Club v. Coca-Cola Corp., 673 F.Supp. 1555, 1556 (M.D.Fla.1987) (reviewing consent decree proposed by government under Clean Water Act). Moreover, where the claim seeks to enforce a statute, "the most important factor as to public policy is whether the decree comports with the goals of Congress." Id., citing City of Miami, 664 F.2d at 441.

DISCUSSION

Application of this standard requires an analysis of the citizen suit provision of the Clean Water Act. "Section 505 33 U.S.C. § 1365(a) evidences a congressional intent to carefully channel public participation in the enforcement of the Act." City of Evansville, Ind. v. Kentucky Liquid Recycling, Inc., 604 F.2d 1008, 1015 (7th Cir.1979) (footnote omitted). An examination of the language of the provision, as well as the legislative history, demonstrates conclusively that its sole purpose is to provide private parties with a mechanism to compel enforcement of effluent standards promulgated pursuant to the Act. Id. at 1014. Moreover, the district court's jurisdiction to entertain a citizen action "is limited to enforcing the effluent standard or limitation, ordering the administrator to perform a nondiscretionary act, and imposing civil penalties under 33 U.S.C. § 1319(d)." City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135, 1145-46 (E.D.Pa.1982). Thus, the relief authorized by the Act under the citizen suit provision is purely prospective. Nowhere does it authorize a private party to recover damages for violations of the Act. Id.; City of Evansville, Ind., 604 F.2d at 1014-15.

The legislative history surrounding the Clean Water Act also makes it clear that civil penalties under 33 U.S.C. § 1319(d) are to be paid to the federal Treasury. "The civil penalties imposed are to be deposited as miscellaneous receipts in the treasury and are not to be recovered by the citizen bringing the suit." H.R.Rep. No. 92-911, 92d Con., 2d Sess. 133, U.S.Code Cong. & Admin.News 1972, p. 3668, reprinted in 1 A LEGISLATIVE HISTORY OF THE WATER POLLUTION CONTROL ACT AMENDMENTS OF 1972 753, 820 (1973).¹ This assures that citizen suits are brought to vindicate the public health and welfare rather than promote purely private interests. See Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 18 n. 27, 101 S.Ct. 2615, 2625 n. 27, 69 L.Ed.2d 435 (1981).

In view of these unequivocal expressions of legislative intent, it appears that all civil penalties imposed under the Act are to be paid to the Treasury.² The Sierra Club claims, however, that the money to be paid under the Consent Judgment is not "intended to be a fine or other penalty." Proposed Consent Judgment, para. VII n. 5. "Because this Consent Judgment arises before trial of any fact and without adjudication of liability in this case, payments by ECD simply are not `civil penalties.'" Sierra Club's Response, 10.

This assertion is without merit. The Consent Judgment specifically notes that the basis for this claim is the Clean Water Act. Under the Act, a private citizen's remedies are strictly limited to injunctive relief and civil penalties. The Sierra Club has failed to explain why a settling plaintiff should be entitled to collect money from a defendant when a private plaintiff who proceeds to litigate his claim under the Clean Water Act may not. On the contrary, the unambiguous legislative history associated with the disposition of civil penalties implies that the Act proscribes the remedies available in both settlement and litigation.

Furthermore, if the money to be paid under the settlement is not a penalty or fine, it must be some form of damages. In City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135, 1146 (E.D.Pa.1982), the City brought a citizen suit under the Clean Water Act to recover its "costs of removal" related to the discharge of hazardous substances by the defendant. The court held that "however it chooses to characterize its remedy, the simple truth is that the City wants damages and section 505(a) does not authorize such a claim." The "labelling" of the remedy, therefore, clearly does not control. Id.

The fact that the Sierra Club specifically requests litigation costs in the Consent Judgment also indicates that the money to be paid by ECD is a civil penalty. Under the Act, litigation costs may only go to the "substantially prevailing party." 33 U.S.C. § 1365(d). If the Club is indeed the prevailing party in a citizen suit based on the Clean Water Act, clearly the money received must be a civil penalty, the only monetary penalty permitted under the Act.

There is also evidence, however, that Congress encourages settlements that put money directly to use in protecting the environment. In the legislative history of the 1987 amendments to the Clean Water Act, Congress stated that:

In certain instances settlements of fines and penalties levied due to NPDES permit and other violations have been used to fund research, development and other related projects which further the goals of the Act.

H.R.Conf.Rep. No. 1004, 99th Cong., 2d Sess. 139 (1986), reprinted at 132 Cong. Rec. Hl0,571 (daily ed. Oct. 15, 1986). In fact, Congress "encourages" settlements of this type "which preserve the punitive nature of enforcement actions while putting the funds collected to use on behalf of environmental protection." Id.

This provision appears to authorize consent decrees such as the one before this court. However, this legislative history does not explicitly say that civil penalties may be paid directly to private organizations who have complete discretion as to how those funds should be spent. Such an interpretation would be in direct conflict with previous legislative history which clearly states that such penalties may not go to private persons. It does indicate, however, that there is some flexibility in fashioning a settlement wherein penalty monies can be directly channeled towards environmental projects, but perhaps not through private entities.

The Sierra Club also argues that in reaching a consent agreement, the parties have considerable latitude in deciding their own terms and are not limited to relief that a court could provide on the merits. See Local Number 93, International Ass'n of Firefighters, AFL-CIO v. Cleveland, 478 U.S. 501, 525, 106 S.Ct. 3063, 3077, 92 L.Ed. 2d 405 (1986). While the parties are given some latitude in fashioning their own remedy, where the suit seeks to enforce a statute, the settlement terms must be in accordance with congressional goals. United States v. City of Miami, 664 F.2d 435, 441 (5th Cir.1981)....