Opinion ID: 785944
Heading Depth: 4
Heading Rank: 1

Heading: the statutory interest rate (6%)

Text: 50 (2) the risk-free rate represented by the short-term U.S. treasury rates during the relevant time period 51 (3) the actual average rate of ALC's return of capital from 1990-2000 52 (4) the actual average rate of ALC's return of capital from 1990-2001 53 Each of the rates suggested by ALC results in approximately the same interest rate, hovering between 5.2% and 6%, which is less than half the rate that the District Court actually used. 8 ALC adds that the theoretical WACC has been rejected consistently when applied to companies and industries that are not achieving such theoretical rates of return. 9 54 The government responds with a number of arguments. First, the government correctly notes that the economic benefit calculation need not be precise. In Dean Dairy, we recognized that economic benefit may not be capable of ready determination, and the Court gave the district court's award of a penalty wide discretion, even though it represents an approximation. 150 F.3d at 264 (citing Tull, 481 U.S. at 426-27, 107 S.Ct. 1831). The government couples this deference accorded to district court awards with the suggestion that, since the statutory maximum penalty for ALC's violations was $28.05 million, the District Court gave ALC a break. The government advocated taking other statutory factors into account and trebling the economic benefit to yield a penalty of approximately $12.3 million, see supra note 6, but the District Court only doubled the economic benefit and ordered ALC to pay $8,244,670. The government points to this discrepancy between what it asked for and what the Court actually did as proof that the District Court really does have, and should have, a great amount of discretion in determining these types of penalties. 55 The government also points to the decisions of other courts that have approved the use of WACC to discount economic benefit when calculating CWA penalties, particularly Smithfield Foods where the District Court, crediting expert testimony, used the WACC to discount the defendant's economic benefit. See United States v. Smithfield Foods, Inc., 972 F.Supp. 338, 349 & n. 17 (E.D.Va.1997), cited with approval in Dean Dairy, 150 F.3d at 266.