U.S. v. Bay-Houston Towing Co., Inc.

• Decision Date: 13 March 2002
• Docket Number: No. 98-CV-73252.,98-CV-73252.
• Citation: 197 F.Supp.2d 788
• Parties: UNITED STATES of America, Plaintiff, v. BAY-HOUSTON TOWING CO., INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

197 F.Supp.2d 788

UNITED STATES of America, Plaintiff, v. BAY-HOUSTON TOWING CO., INC., Defendant.

No. 98-CV-73252.

United States District Court, E.D. Michigan, Southern Division.

March 13, 2002.

Geneva S. Halliday, United States Attorney's Office, Detroit, MI, Elliot Rockler, U.S. Department of Justice, Environmental Enforcement Section, Washington, DC, Joshua M. Levin, Andrew J. Doyle, U.S. Department of Justice, Environmental Defense Section, Washington, DC, Jacqueline S. Kline, U.S. Environmental Protection Agency, Chicago, IL, for United States of America, plaintiffs.

John H. Dudley, Jr., Butzel Long, Richard E. Rassel, Butzel, Long, Detroit, MI, Steven D. Weyhing, Kelley Cawthorne, Lansing, MI, for Bay-Houston Towing Company, Incorporated, defendants.

DECISION ON CIVIL PENALTIES

COHN, District Judge.

                TABLE OF CONTENTS
                I. Introduction ........................................................ 790
                      A. Nature of the Case ............................................... 790
                      B. The Claims of the Parties ........................................ 791
                      C. The Issues ....................................................... 794
                  II. Overview of Decision on Civil Penalties ............................. 794
                      A. General .......................................................... 794
                      B. Summary .......................................................... 795
                      C. Guiding Lines of Precedent ....................................... 795
                III. The Declaratory Judgment Action ..................................... 796
                      A. Background ....................................................... 796
                      B. Filing of the Declaratory Judgment Action ........................ 797
                  IV. Orders Prior to Trial ............................................... 798
                      A. Memorandum and Order of January 14, 1999 ......................... 798
                      B. Order of June 18, 1999 and Memorandum of June 22, 1999 ........... 798
                      C. Corrected Memorandum and Order of March 21, 2000 ................. 799
                   V. Orders and Events Following Trial and Prior to Decision on Civil
                        Penalties ......................................................... 799
                      A. Summary .......................................................... 799
                      B. Corps of Engineers ............................................... 800
                  VI. The Regulatory Scheme and the Permitting Process .................... 800
                      A. The Clean Water Act .............................................. 800
                      B. Code of Federal Regulations; Federal Register; Agreements ........ 801
                      C. The Corps of Engineers ........................................... 803
                      D. The Permitting Process in Michigan ............................... 804
                 VII. The Trial ........................................................... 805
                      A. Overview ......................................................... 805
                      B. Witnesses ........................................................ 806
                      C. The Exhibits ..................................................... 808
                VIII. Michigan Peat's Operations in the Minden Bog ........................ 808
                      A. Land Acquisition ................................................. 808
                      B. Peat Mining Activity ............................................. 808
                  IX. Penalty Decision on the NPDES (§ 402) Permit ................... 810
                      A. Chronology ....................................................... 810
                      B. Discussion ....................................................... 811
                      C. Case Law ......................................................... 813
                   X. Penalty Decision on the § 404 Permit ........................... 814
                      A. The 1991 Application ............................................. 814
                

                      B. The 1994 Application ...................................................... 815
                      C. Activity Subsequent to the Initial Proffer of the § 404 Permit ....... 819
                      D. Testimony at Trial on the § 404 Issue ................................ 820
                      E. The Cromwell, Minnesota § 404 Permit ................................. 821
                      F. Other § 404 Peat Mining Permits ...................................... 821
                      G. Discussion ................................................................ 821
                  XI. Other Issues ................................................................. 823
                 XII. Conclusion ................................................................... 824
                      A. Overview .................................................................. 824
                      B. The EPA's Position on Penalties ........................................... 824
                      C. Findings .................................................................. 825
                      D. Final Observations ........................................................ 826
                

LIST OF EXHIBITS

                A. Layout of Minden North and South Displaying Dates of Parcel Acquisitions
                B. Layout of Minden North and South Displaying 1995 Draft Permit Categories
                C. Results of Telephone Survey on Regulatory Consistency
                D. North Display of Layout of Cells in Minden North
                E. Display of Road Construction Development in Minden North
                F. Minden Bog Typical Cross Section
                G. Display of Acreage Categories in Minden North
                

I. Introduction

A. Nature of the Case

This is the civil penalty phase of an environmental action brought by the United States at the request of the Environmental Protection Agency (EPA) pursuant to § 309 of the Clean Water Act (CWA), 33 U.S.C. § 1251, et seq. EPA seeks injunctive relief and civil penalties relating to defendant Bay-Houston Towing Company, Inc.'s Michigan Peat Division's (Michigan Peat)¹ peat mining² activities on 950 acres of land in Minden Township, Sanilac County, Michigan on a parcel known as Minden North, which is part of a 20,000 acre wetland known as the Minden Bog. EPA claims that Michigan Peat has discharged peat bog drainage water containing pollutants³ through ditch outfalls into the Black River Drain without a permit under § 402 of the CWA (Count I); discharged dredged or fill material into wetlands without a permit under § 404 of the CWA (Count II); and violated an administrative compliance order issued by EPA under § 309 of the CWA, requiring, among other things, that Michigan Peat cease unpermitted discharges and submit a wetlands restoration plan (Count III). EPA seeks to impose a three million dollar civil penalty against Michigan Peat.

For the reasons which follow, which constitute the findings of fact and conclusions of law as required by Fed.R.Civ.P. 52, no civil penalty will be assessed.

B. The Claims of the Parties

1.

a.

The Joint Final Pretrial Order filed March 5, 2001, generally describes the claims of the parties as follows:

EPA:

1. From 1977 to the present, in its peat mining [Michigan Peat] has discharged pollutants into waters of the United States in violation of § 301 and § 404 by

a. placing field windrows (or piles) of peat at Minden Bog without a permit;

b. placing peat and other materials, dredged and removed from drainage ditches on Minden Bog without a permit; and

c. placing fill materials on Minden Bog, for the purpose of constructing and/or maintaining roads for moving mining equipment without a permit.

2. Michigan Peat has discharged pollutants into the waters of the United States in violation of § 301 and § 402 by

a. discharging effluent waste water without an individual National Pollution Discharge Elimination System (NPDES) permit prior to July 1998.

3. Michigan Peat has violated § 309 by failing to observe the requirements of a February 1998 administrative compliance order that it "immediately cease further discharges" of dredged and fill material, except in compliance with a permit issued under § 404.

As to remedy:

EPA is entitled to injunctive relief and a civil penalty for Michigan Peat's violations of the CWA. By way of injunctive relief, EPA is entitled to an order requiring Michigan Peat to implement and observe a restoration plan intended (except as otherwise agreed upon by EPA to reestablish peatland conditions at Minden North), in such a way that natural succession will eventually reproduce the objective ombrotrophic bog that previously existed in the mined area of Minden Bog. As for a penalty the CWA authorizes a maximum penalty of $25,000 per day per violation. For violations which take place after January 30, 1997, the maximum civil penalty under § 309(d) is $27,500 per day. The factors the Court should take into account in assessing a penalty are set forth in § 1319(b). The factors the Court should take into account in approving an appropriate restoration plan are whether: (1) the plan will confer maximum environmental benefits; (2) the proposed plan is achievable as a practical matter; and (3) he proposed plan bears an equitable relationship to the degree and kind of wrong it is intended to remedy.

b.

Michigan Peat:

1. Its peat extraction operations were initially covered by nationwide permit 26 as adjacent to headwaters. As to its drainage ditch and temporary haul roads, they were installed prior to any permit required under § 404 or were covered by nationwide permit 26. In any event, the construction and maintenance of the existing temporary haul roads was and is exempt from a § 404 permit requirement. The maintenance of existing ditches is also exempt.

2. Its storm water management drains do not require an individual § 402 permit and its peat operations do not result in the generation of any process wastewater or the addition of a pollutant to any navigable water of the United States. It received timely coverage of its storm water discharge under § 402 in 1994. At the request of the State of Michigan, the issuing agency for § 402 permits, it also applied for an individual point source § 402 permit early in 1995. Although the permit process was intentionally frozen by the issuing agency in 1997 for no environmental reason, it ultimately received a permit in July of ...