U.S. v. Lexington-Fayette Urban County Government, 08-6296.

• Decision Date: 07 January 2010
• Docket Number: No. 08-6296.,08-6296.
• Citation: 591 F.3d 484
• Parties: UNITED STATES of America, Plaintiff-Appellant, Fayette County Neighborhood Council; Walter E. Gaffield; John Tucker; Mark W. Lowry; Stanley Williams; Jena Kemplin; Arthur Bryson; Kathleen C. Bryson; William Reynolds; Barbara Reynolds; Jim Lavorgna; Cheryl Lavorgna; Robert Scott; Celeste Scott et al., Intervenors-Appellees, Commonwealth of Kentucky, Plaintiff, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

591 F.3d 484

UNITED STATES of America, Plaintiff-Appellant Fayette County Neighborhood Council; Walter E. Gaffield; John Tucker; Mark W. Lowry; Stanley Williams; Jena Kemplin; Arthur Bryson; Kathleen C. Bryson; William Reynolds; Barbara Reynolds; Jim Lavorgna; Cheryl Lavorgna; Robert Scott; Celeste Scott et al., Intervenors-Appellees Commonwealth of Kentucky, Plaintiff, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, Defendant-Appellee.

No. 08-6296.

United States Court of Appeals, Sixth Circuit.

Argued: December 3, 2009.

Decided and Filed: January 7, 2010.

ARGUED:

Michael T. Gray, United States Department of Justice, Washington, D.C., for Appellant. Scott White, Morgan & Pottinger, P.S.C., Lexington, Kentucky, for Appellees.

ON BRIEF:

Michael T. Gray, United States Department of Justice, Washington, D.C., for Appellant. Scott White, Morgan & Pottinger, P.S.C., Lexington, Kentucky, John C. Bender, Kelly D. Bartley, Greenebaum Doll & McDonald PLLC, Lexington, Kentucky, for Appellees.

Before SILER, GILMAN, and ROGERS, Circuit Judges.

ROGERS, J., delivered the opinion of the court, in which SILER, J., joined. GILMAN, J. (p. 491), delivered a separate opinion concurring with the lead opinion's analysis.

OPINION

ROGERS, Circuit Judge.

The district court in this case refused to approve a proposed settlement of a Clean Water Act suit brought by the United States and the Commonwealth of Kentucky against the Lexington-Fayette Urban County Government. The sticking point was a proposed civil penalty of $425,000 that the district court found could be better directed toward alleviating the conditions that violated the Clean Water Act. Such a concern by itself cannot support rejection of an otherwise proper settlement, in light of the express provision for civil penalties in the Clean Water Act. Remand is therefore required.

The United States, subsequently joined by the Commonwealth of Kentucky, brought this Clean Water Act civil enforcement action against the Urban County Government (hereinafter "Lexington") pursuant to 33 U.S.C. § 1319. The United States and the Commonwealth advanced five claims for relief based on Lexington's operation of both a sanitary sewer system and a separate storm sewer system in ways that allegedly violate Lexington's permits and the Clean Water Act.

The Fayette County Neighborhood Council and twenty-nine individuals, referred to collectively as "the Citizens," intervened as plaintiffs. The Citizens alleged that, since 1998, the Fayette County Neighborhood Council had tried to work with Lexington, without success, to resolve Lexington's Clean Water Act violations. The Citizens further allege that on September 26, 2006, and again on October 4, 2006, they had served Lexington and the appropriate federal and Commonwealth authorities with formal notice of their intent to bring a Clean Water Act enforcement action against Lexington within the next sixty days. After the Citizens gave notice of their intent to sue, the Fayette County Neighborhood Council apparently participated in negotiations with Lexington, the United States, and the Commonwealth in an effort to resolve Lexington's alleged Clean Water Act violations. But the Council's involvement in the negotiations ended on May 4, 2007, and the Citizens moved to intervene as plaintiffs shortly thereafter. The Citizens' intervening complaint seeks not only injunctive relief, but also civil penalties in an amount "commensurate with the duration and magnitude of the [Clean Water Act] violations, taking into consideration the lack of progress that [Lexington] has made until this enforcement action was initiated." The district court granted the Citizens' motion to intervene.

The United States, the Commonwealth, and Lexington ultimately reached a settlement agreement, embodied in a proposed consent decree, that would require Lexington to bring its sanitary and storm sewer systems into compliance with the Clean Water Act at an estimated cost, according to the United States, of $250 million to $300 million. The proposed consent decree also would require Lexington to complete two Supplemental Environmental Projects (estimated to cost $1.23 million) and two Commonwealth environmental projects (estimated to cost $1.50 million) and to pay the United States a $425,000 civil penalty. The parties assert that they negotiated the proposed consent decree in good faith. Although Lexington agreed to the entry of the proposed consent decree "without further notice," Lexington maintains that its agreement to the terms of the proposed consent decree is neither "an admission of liability" nor "an adjudication or admission of any fact or law."

The United States lodged the proposed consent decree with the district court on March 14, 2008. Pursuant to 28 C.F.R. § 50.7, the United States then published notice of the lodging of the consent decree in the Federal Register and solicited public comments on the proposed decree for a period of thirty days. Eighteen public comments were received; four comments remarked that the $425,000 civil penalty was too high and that the money could be better used to bring Lexington's sewer systems into compliance with the Clean Water Act. For example, one comment stated,

[A]lthough punitive action against the city of Lexington is certainly warranted for allowing the situation to get out of hand, the $425,000 fine does seem excessive. A substantial reduction in this amount would enable us to use the funds collected to begin to address sooner a serious problem that has been neglected for far too long.¹

On July 25, 2008, the United States moved to enter the proposed consent decree as the judgment of the district court. In a memorandum in support of the motion to enter, the United States acknowledged and responded to public comments. In response to the four public comments concerning the amount of the civil penalty, the United States explained,

It is customary to include substantial penalties for past non-compliance in consent decrees as an important component of enforcement and to operate as a deterrent to future non-compliance by the defendant and by others. It sends an important message to all municipal dischargers that non-compliance is far from free, and that expeditious efforts to improve [a] system are worth the cost.

The Citizens had yet to submit a response to the United States' motion to enter when the district court denied the motion and rejected the proposed consent decree on August 7, 2008. After noting that the "Clean Water Act requires that a civil penalty be imposed for violation thereof," the district court ruled: "The Court agrees with the commenters who were concerned that the [civil] penalties were too high and that the penalty money could be better applied to the work required under the Consent Decree." The district court added:

Present day taxpayers and sewer services users should not be severely penalized for longstanding neglect on the part of the defendant. A large portion of the penalty money could be better utilized by additional [Supplemental Environmental Projects] or by application of a portion of the penalty money to remedial work required by the Consent Decree.

On August 21, 2008, the United States moved the district court to reconsider its decision to reject the decree. The district court denied the United States' motion for reconsideration, and the United States now appeals. Lexington takes no position on the merits of this appeal.

The only stated basis for the conclusion that the proposed penalty was too high was that the money would be better used by Lexington for remediation of "longstanding" violations. While this may be so, such a consideration conflicts with the determination of Congress that civil penalties are appropriate in the case of Clean Water Act violations. Rejecting a civil penalty as too high because of the greater seriousness of the violation, or because the penalty money could be used for remediation, is in tension with, rather than in accordance with, the statutory purpose behind civil penalties. In most Clean Water Act cases, the more serious the violation, the more that penalty money could be used for remediation. If Congress thought a violator's money would be better spent that way, Congress would hardly have provided for civil penalties.

When Congress enacted the Clean Water Act, the stated objective was "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a). Civil penalties play an important part in achieving this goal because they "deter future violations" of the Clean Water Act. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Indeed, the Clean Water Act's legislative history indicates that Congress intended a district court imposing a civil penalty after trial "`to consider the need for retribution and deterrence, in addition to restitution.'" Id. (quoting Tull v. United States, 481 U.S. 412, 422-23, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987)). The language of the Clean Water Act provides more specific guidance by requiring a district court imposing a civil penalty after trial to "consider the seriousness of the violation or violations, the economic benefit (if any) resulting from the violation, any history of such violations, any good-faith efforts to comply with the applicable requirements, the economic impact of the penalty on the violator, and such other matters as justice may require." 33 U.S.C. § 1319(d). Although a district court need not necessarily consider each of these factors when considering a proposed consent decree, see United States v. Metro. St. Louis Sewer Dist., 952 F.2d 1040, 1044 (8th Cir.1992), these factors nonetheless show the role that civil penalties are meant to play in achieving the goal of the Clean Water Act.

The stated basis for rejecting the civil penalty as too high was therefore statutorily...