U.S. v. Sheyenne Tooling & Mfg. Co., Inc., A3-95-110.
| Decision Date | 30 December 1996 |
| Docket Number | No. A3-95-110.,A3-95-110. |
| Citation | 952 F.Supp. 1420 |
| Parties | UNITED STATES of America, Plaintiff, v. SHEYENNE TOOLING & MANUFACTURING CO., INC., Defendant. |
| Court | U.S. District Court — District of North Dakota |
John T. Schneider, U.S. Atty., Fargo, ND, Lois J. Schiffer, Matthew W. Morrison, U.S. Dept. of Justice, Washington, DC, for Plaintiff.
John H. Moosbrugger, Moosbrugger, Ohlsen, Dvorak & Carter, Grand Forks, ND, for Defendant.
This is an action brought by the United States of America on behalf of the Environmental Protection Agency (EPA) for damages for the failure of Sheyenne Tooling & Manufacturing Co., Inc. (Sheyenne) to comply with the Clean Water Act (Act), 33 U.S.C. §§ 1317, 1318, and 1319. The action is brought by the Administrator of the EPA pursuant to 33 U.S.C. § 1251(d), after the EPA issued an order for compliance pursuant to 33 U.S.C. § 1319(a)(2)(A). Upon Sheyenne's claimed failure to comply with that order, the Administrator brought this civil action for damages pursuant to 33 U.S.C. § 1319(a)(2)(B), (a)(6).
As described by the Supreme Court, Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U.S. 49, 51, 108 S.Ct. 376, 379, 98 L.Ed.2d 306 (1987).
The Act is a strict liability statute; and thus, there need be no showing of maliciousness, willfulness, or fault to support a finding of liability under the Act. See, e.g., U.S. v. Texas Pipe Line Company, 611 F.2d 345, 347 (10th Cir.1979); U.S. v. Winchester Municipal Utilities, 944 F.2d 301, 304 (6th Cir.1991); U.S. v. CPS Chemical Company Inc., 779 F.Supp. 437, 442 (E.D.Ark.1991). A finding of liability under the Act may be supported simply by the establishment of its violation.
Reports and records that are required to be kept under the Act, serve as admissions towards the establishment of its violation, and thus serve to establish the liability of a polluting defendant. Atlantic States Legal Foundation, Inc. v. Tyson Foods, Inc., 897 F.2d 1128, 1135 (11th Cir. 1990). See also, Student Public Interest Research Group of New Jersey, Inc., v. Monsanto Co., 600 F.Supp. 1479, 1485 (D.N.J. 1985); CPS Chemical Company, 779 F.Supp. at 442. This reporting requirement may be fairly characterized then, as Mr. Justice Stevens put it in his dissent in U.S. v. Ward, 448 U.S. 242, 100 S.Ct. 2636, 65 L.Ed.2d 742, reh'g denied, 448 U.S. 916, 101 S.Ct. 37, 65 L.Ed.2d 1179 (1980), as "a form of compelled self-incrimination." Id., 448 U.S. at 259, 100 S.Ct. at 2646.
This action seeks civil penalties against the defendant for its failure to meet its obligations under the Act, specifically its failure to control its discharge of pollutants in violation of effluent limitations contained in national Categorical Pretreatment Standards regulations found at 40 C.F.R. ch. 433, a failure to submit timely and complete reports as required by 40 C.F.R. ch. 403, and a failure to sample and analyze its regulated waste water prior to discharge into a publicly owned treatment works (POTW) as required by 40 C.F.R. §§ 433.15 and 403.12.
The United States acknowledges that the maximum penalty of approximately $108 million which it calculates could be levied against Sheyenne is not an appropriate sum, and, at trial, requested instead a penalty of $336,000.00. The United States alleges that the amount represents the economic benefit Sheyenne obtained by noncompliance, and an additional penalty of approximately $100,000.00. At closing argument the United States suggested that was a reasonable amount because it represents a mere $.03/$1.00 of the maximum penalty which could be levied against Sheyenne. Both parties presented questionable figures concerning the economic benefit to Sheyenne. This Court will utilize the statutory factors contained within Section 309(d), 33 U.S.C. § 1319(d), in determining the penalty to be assessed.
In the course of preparation for trial the following issues were resolved:
1. Liability of the defendant was established under the Act, 33 U.S.C. §§ 1317 and 1318, and the pretreatment regulations promulgated thereunder.
2. The affirmative defenses of laches and equitable estoppel against the United States were denied as a matter of law.
The disclosures and admissions of the defendant did establish that the defendant had committed the violations claimed. That is, it was established before trial that:
1. Sheyenne failed to submit a baseline monitoring report (BMR) as required by 40 C.F.R. § 403.12(b).
2. Between April 1993 and November 1993, Sheyenne did, at least occasionally, exceed the monthly average effluent limitations for zinc.
3. Sheyenne failed to submit 90-day compliance reports as required by 40 C.F.R. § 403.12(d).
4. Sheyenne failed to submit periodic compliance reports every July and December, beginning July, 1986, but did begin to submit periodic reports in May, 1993.
5. Sheyenne periodically failed to sample, analyze and report on its regulated waste water streams for, inter alia, zinc, prior to the wastewater discharges to the Cooperstown POTW in violation of 40 C.F.R. §§ 433.15 and 403.12(g).
These failures carry a maximum penalty of $25,000.00 per day.
We begin our consideration of this case by recognizing that failure to know the law is no excuse; that federal regulations properly created and published are the law, and that these regulations were properly created and published.
Once the factual issue of violation, and concomitantly, of liability, is established, the district court is charged with the task of assigning the penalties to be assessed under the Act. In so doing, the court is granted great discretion in affixing the price of the penalty that the defendant shall pay, as is evidenced both by the language of the Act, as drafted by Congress, and by light shed upon such determinations, as enumerated by the Supreme Court in Tull v. United States, 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), where the Court stated,
Congress [made the] assignment of the determination of the amount of civil penalties to trial judges.... Since Congress itself may fix the civil penalties, it may delegate that determination to trial judges. In this case, highly discretionary calculations that take into account multiple factors are necessary in order to set civil penalties under the Clean Water Act.
Id., 481 U.S. at 426-27, 107 S.Ct. at 1839. As indicated by the language in Tull v. United States supra, the product of the court's exercise of discretion under the Act, must be shaped by considerations contained within the Act; it is not a wholly unconstrained discretion that is contemplated by the Act.
It must be understood, however, that despite the directional aid and guidance that the six enumerated factors in § 1319(d) provide, the calculation of a final penalty may often be imprecise and approximate at best. Indeed, the accuracy of the final calculations, and the figure of penalty that they produce, is as dependant, or even more so, upon the provision of complete and accurate evidence, as introduced, developed, and explained at trial, as it is upon a good evaluation of this information by the court. In the context of a district court's calculations of economic benefit and its weighing of the objective evidence, or its resolving of doubts over the accuracy of studies, tile Court of Appeals for the Fifth Circuit, in Sierra Club v. Cedar Point Oil Co., 73 F.3d 546 (5th Cir.), cert. denied, ___ U.S. ___, 117 S.Ct. 57, 136 L.Ed.2d 20 (1996), has noted, as to these imprecise and subjective measurements, that "most importantly, ... a court need only make a `reasonable approximation' of economic benefit when calculating a penalty under the CWA" Id. at 576 (citing Public Interest Research Group v. Powell Duffryn Terminals, 913 F.2d 64, 80 (3rd Cir.1990)) (citing S.Rep. No. 50, 99th Cong., 1st Sess. 25 (1985)).
In determining the amount of the civil penalty, pursuant to Section 309(d) of the Act, 33 U.S.C. § 1319(d), the court shall consider,
1. the seriousness of the violations;
2. the economic benefit resulting (to the violator) from the violations;
3. any history of such violations;
4. any good faith efforts to comply with tile applicable requirements;
5. the economic impact of the penalty on the violator;
6. such other matters as justice may require.
Plaintiff therefore undertook by its evidence to show,
1. that Sheyenne's conduct was seriously damaging to tile environment;
2. that Sheyenne gained an unlawful and unfair benefit as against other potential polluters by not maintaining waste disposal until compelled to by the EPA;
3. that Sheyenne has an extended history of violations; and
4. what efforts, if any, Sheyenne took to comply with the applicable regulations. The EPA abandoned its effort to show damage to the environment, and instead concentrated on Sheyenne's failure to comply with the regulation.
Cooperstown is the county seat of Griggs County, North Dakota. It is a city of 1200 residents, according to the 1990 census. It is about six miles west of the Sheyenne River, which is a navigable water of the United States, 33 U.S.C. § 1362(7), and a Class I waterway of the State of North Dakota.
The defendant, Sheyenne, is a North Dakota corporation and a metal production facility located in Cooperstown. The corporation has three stockholders: Stokkeland, Broten, and Larson. Curt Stokkeland is the founder and general manager. Broten assists in management, and has available finds for the corporation, if necessary. Larson is...
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