Opinion ID: 785944
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Heading Rank: 2

Heading: The Laboratory Error Defense

Text: 15 The Clean Water Act (CWA) was enacted by Congress in 1972 to restore and maintain the chemical, physical, and biological integrity of the Nation's waters. 33 U.S.C. § 1251(a). In order to achieve this goal, the CWA prohibits the discharge of any pollutant into waters of the United States except as expressly authorized under the Act. See 33 U.S.C. § 1311(a). In order to discharge pollutants into navigable waters, one must obtain a National Pollution Discharge Elimination System (NPDES) permit. 33 U.S.C. § 1342. Discharges that comply with the limits and conditions in an NPDES permit are deemed to comply with the Act. 33 U.S.C. § 1342(k). The CWA requires NPDES permittees to test their effluent and report the results to the EPA in Discharge Monitoring Reports (DMRs). 33 U.S.C. § 1318(a); 40 C.F.R. §§ 122.41(j), 122.48. Section 307 of the CWA authorizes the EPA to promulgate regulations prohibiting the discharge of any pollutant into a Publicly Owned Treatment Works (POTW) that interferes with, passes through, or otherwise is incompatible with the POTW. 33 U.S.C. § 1371(b)(1). The Act prohibits discharges to POTWs that are in excess of those pretreatment standards. 33 U.S.C. § 1317(d). The EPA has issued general pretreatment standards and national categorical pretreatment standards for the iron and steel manufacturing industry. See 40 C.F.R. Pts. 403, 420. 16 The Act authorizes the EPA to bring civil enforcement actions for injunctive relief and penalties, at times relevant, to up to $25,000 per day for each violation. See 33 U.S.C. § 1319(d). A violation of the Act can be established by showing that the defendant is a person who discharged pollutants from a point source into navigable waters in violation of the terms of the applicable NPDES permit or into a POTW in violation of a pretreatment standard. See 33 U.S.C. §§ 1311, 1317(d). In assessing a civil penalty for a violation of § 1311 or § 1317, the court must 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).
17 The government argues that the CWA establishes a scheme of strict liability aimed at facilitating enforcement. It first notes that Congress gave the EPA the authority to require information, data, and reports, as well as establish monitoring requirements, recognizing that such an authority is a necessary adjunct to the establishment of effective water pollution requirements and the enforcement of such requirements. Government Br. at 16 (citing S. Rep. 92-414, at 62 (1971)). Furthermore, it points out that Congress intended these new requirements to avoid the necessity of lengthy fact finding, investigations, and negotiations at the time of enforcement. Id. (citing S. Rep. 92-414, at 62 (1971)). The government then argues that, consistent with the Act's requirement for accurate self-reporting, courts should treat DMRs, which must be certified by the discharger, as admissions that are sufficient to establish liability under the CWA. 18 The government relies in this respect on Sierra Club v. Union Oil Co., 813 F.2d 1480, 1491-92 (9th Cir.1987), vacated on other grounds, 485 U.S. 931, 108 S.Ct. 1102, 99 L.Ed.2d 264 (1988), where the Court of Appeals held that a CWA defendant could not escape liability based on alleged sampling violations. The Court noted that the NPDES program fundamentally relies on self-monitoring and that Congress deemed accurate DMRs critical to effective operation of the Act. Id. It opined that allowing CWA permittees to impeach their own DMRs would be sanctioning countless additional hours of NPDES litigation and creating new, complicated factual questions for district courts to resolve. Id. at 1492. The Court further reasoned that if permittees could impeach their own reported violations with claims of laboratory error, it would create the perverse result of rewarding permittees for sloppy laboratory practices and undermine the efficacy of the self-monitoring program. Id.; accord Conn. Fund for the Env't, Inc. v. Upjohn Co., 660 F.Supp. 1397 (D.Conn.1987). 19 Relying on this reasoning, the government submits that we should reject ALC's laboratory error defense. Because the regulations require dischargers to amend their sworn DMRs whenever they discover an error in their reporting, and because failure to do so constitutes a criminal violation in and of itself, the government contends that allowing dischargers to contest their own DMRs conflicts with the statute and the applicable regulations. See 40 C.F.R. §§ 122.41(k)(2), (1)(8). The government further argues that allowing a laboratory error defense would frustrate congressional intent, would reward companies for inaccurate monitoring practices, and would give them an incentive to wait until they are sued to ensure the accuracy of their DMRs.
20 ALC first counters the government's arguments by citing a number of cases from district courts within this Circuit that have recognized-either explicitly or implicitly-the availability of the laboratory error defense. While no defendant in these cases has actually made it past the summary judgment stage based on the laboratory error defense, that lack of success has been due to district courts finding that the defendants failed to raise a genuine issue of material fact as to the existence of a laboratory error, and not because the defendants were precluded from raising the defense as a matter of law. 21 In Public Interest Research Group, Inc. v. Elf Atochem North America, Inc., 817 F.Supp. 1164 (D.N.J.1993), a similar case of potential overreporting came before the District Court. The defendant claimed that errors in its laboratory testing had resulted in the overreporting of toxic discharges. Split sampling over a six-month period revealed large discrepancies between the defendant's results and those from outside laboratories, though no consistent pattern could be detected in those discrepancies (sometimes the defendant's results were higher, and sometimes they were lower than the outside laboratories' results). 22 The Court explained that if a defendant wishes to contest the accuracy of its DMRs, it `has a heavy burden to establish faulty analysis.' Id. at 1178 (quoting Student Pub. Interest Research Group, Inc. v. Georgia-Pacific Corp., 615 F.Supp. 1419, 1429 (D.N.J.1985)). The `defendant must present direct evidence of reporting inaccuracies' and `may not rely on unsupported speculation of measurement error.' Id. (quoting Georgia-Pacific Corp., 615 F.Supp. at 1429). The fact that no court in this district ha[d] thus far found a defendant to have met this heavy burden, id., however, did not preclude the possibility of the defense as a matter of law. 23 The Elf Atochem Court, in discussing the reasoning in Upjohn, quotes Chesapeake Bay Foundation v. Bethlehem Steel Corp., 608 F.Supp. 440, 452 (D.Md.1985), which stated that `[g]iven the heavy emphasis on accuracy in the Act and the clear Congressional policy that DMRs should be used for enforcement purposes, the court will not accept claims of inaccurate monitoring as a defense.' Elf Atochem, 817 F.Supp. at 1179. The Elf Atochem Court agreed that the Act places the burden of accurately monitoring the levels of pollutants in their effluent squarely on the shoulders of permit holders, and that we must hold them to that obligation, but it ultimately held that 24 while we agree with the [ Upjohn ] court that it is inconsistent with the structure and purpose of the Act to allow permit holders to escape liability altogether on the basis of laboratory error, we find it more accurate, where laboratory error has been shown, to hold a defendant liable for a monitoring violation rather than a discharge violation. Elf Atochem, 817 F.Supp. at 1179 (emphasis added). 25 Similarly, in Public Interest Research Group, Inc. v. Yates Industries, Inc., 757 F.Supp. 438, 447 (D.N.J.1991), the Court expressly recognized the laboratory error defense, noting that DMRs may be deemed admissions when establishing liability in summary judgment motions, but are not conclusive proof of liability. The Court held that under some circumstances, a defendant may avoid liability at the summary judgment stage on the basis of inaccurate data in DMRs. Id. While the Yates Court also recognized the heavy burden on the defendant to prove laboratory error, it stated that a showing of `errors in the actual tests performed which showed a permit violations [sic]' may defeat a summary judgment motion. Id. (quoting Student Pub. Interest Research Group, Inc. v. Tenneco Polymers, Inc., 602 F.Supp. 1394, 1400 (D.N.J.1985)). Thus, while the Court ultimately granted summary judgment against the defendant-based on the fact that the cover letters the defendant submitted to the Court were too speculative in that they merely asserted that the defendant felt and believed that laboratory errors had occurred-it clearly implied that had the factual situation been different, Yates could have survived a summary judgment motion based on a laboratory error defense. See id.
26 We find the reasoning of the Elf Atochem Court persuasive. The violations at issue here alleged that ALC discharged pollutants in violation of the terms of its permit. In order to prove these violations, it was necessary for the government to establish that ALC did in fact violate the permit terms. If a permittee reports that it has violated a permit limit, the report is sufficient to discharge the government's burden of production, but neither the CWA itself nor any regulation of which we are aware makes such a report conclusive. 2 The trier of fact must still be convinced that the permit was in fact violated. Evidence that the reports inaccurately overreported the level of discharge are certainly relevant to show that no violation occurred. 3 27 The government stresses the fact that the civil liability provisions of the CWA create a regime of strict liability, but this argument misses the mark. Strict liability relieves the government of the obligation to show mens rea, not the actus reus. See, e.g., W. Fuels-Utah, Inc. v. Fed. Mine Safety & Health Review Comm'n, 870 F.2d 711, 713-14 (D.C.Cir. 1989). In the context of the present case, strict liability means that the CWA is violated if a permittee discharges pollutants in violation of its permit, regardless of the permittee's mens rea. Strict liability does not mean that a permittee may be held liable for violating its permit even if it does not in fact do so. 28 While the government's policy arguments are certainly forceful in the case of a permittee under reporting levels of toxic waste and then claiming a laboratory error defense, we are unpersuaded that they prove compelling in a case like this where the permittee alleges that the laboratory error resulted in the over reporting of the levels of toxic waste. 4 From a public policy perspective, a polluter should not be given the opportunity to underreport levels of toxic waste, thereby dumping in excess of its permit, and then, when caught, cry laboratory error kept me from knowing that I was in violation! But in the case at bar, the opposite apparently occurred: ALC was conducting its sampling but a contaminated reagent used in the ALC laboratory's analysis was causing the laboratory systematically to overreport the amount of toxic zinc that was dumped into the water. We fail to see what incentive ALC could have had to overreport how much zinc it was dumping into the river when it knew that such amounts would result in fines. We do not believe that a scheme assigning strict liability for discharge violations in the case of overreporting errors makes sense, nor do we infer from the CWA that such was Congress's intent. 29 In citing United States v. Pozsgai, 999 F.2d 719, 725 (3d Cir.1993), the government correctly asserts that a discharge that is not in compliance with a permit is the archetypal Clean Water Act violation, and subjects the discharger to strict liability. But in Pozsgai, strict liability was imposed based upon an unlawful discharge, not the mistaken report of a discharge. The government seems to be aware of this difference when it argues that strict liability should be imposed on reporting requirements, as it writes about the conjunction of the CWA's reporting requirements and imposition of strict liability for permit violations. (emphasis added). So, while the CWA unambiguously imposes strict liability for unlawful discharges, it is by no means obvious that a similar strict liability regime has been imposed on faulty reporting. 30 In fact, the existence of a mechanism to correct erroneous DMRs suggests the opposite. See 40 C.F.R. § 122.41(1)(8) (requiring a permittee who becomes aware of any inaccuracy in a DMR to promptly notify the EPA). That regulation was promulgated pursuant to the Administrator's authority under 33 U.S.C. § 1318(a) to impose reporting requirements. Since 33 U.S.C. § 1319 authorizes administrative, civil, and even criminal penalties for violations of § 1318, the failure to correct an inaccurate DMR is an independent violation of the CWA and regulations thereunder. Moreover the very circumstances that would support a laboratory error defense would also likely support the finding of a monitoring violation. See 40 C.F.R. § 122.41(j). In light of these direct sanctions on inaccurate DMRs, we find wanting the government's argument that CWA provisions addressed to actual discharges ought to be made surrogate enforcers of the reporting requirements. In sum, barring the assertion of a laboratory error defense seems unfair and at odds with the overall plan of the CWA, especially in a case such as this where the alleged laboratory error caused overreporting rather than underreporting. 31 We have considered the arguments of the government and the Union Oil Court that recognizing a laboratory error defense would reward sloppy practices and undermine the self-monitoring program by giving companies an invitation to wait until they are sued. But these arguments do not apply to overreporting, which is almost certainly involuntary. We also suspect that overreporting is rare, for only the most penny-wise and pound-foolish of permittees would expose itself to the cost of a decade of litigation (as here) if it had any chance of clearing the matter up with improved laboratory testing and amended NPDES reports. Concomitantly, we are underwhelmed by the government's argument that permitting the defense will add time to NPDES litigation. At bottom, we do not believe that efficiency should override fairness in administration. Thus, while we do not gainsay the validity of the government's argument that, consistent with the Act's requirement for accurate self-reporting, courts should treat DMRs, which must be certified by the discharger, as admissions that are sufficient to establish liability under the CWA, we hold that the presence of certified DMRs does not preclude the laboratory error defense in cases of overreporting. 32 The government has argued that even if the laboratory defense is recognized, there is insufficient evidence in this record to support it. The District Court did appear to endorse this position in a post-trial opinion: Nothing in ALC's proffer or testimony on this issue persuades the court that these violations arise solely from laboratory error. But that statement followed a trial at which the laboratory error defense had been excluded. More specifically, while the District Court did have available some of ALC's laboratory error evidence in the penalty phase, having already determined that ALC was liable for discharge claims, this after-the-fact consideration of the evidence for penalty purposes does not cure the error in precluding the laboratory error defense in the liability jury trial. Arguably the District Court's evaluation of ALC's laboratory error evidence in the penalty phase strengthens ALC's argument that it was entitled to have the jury evaluate such evidence because, what the District Court was doing was to assess the credibility to that evidence ([I]t is not credible that laboratory error would persist .... ), normally a jury function. 33 Since the District Court did not consider the sufficiency of laboratory error defense argument in the proper light, it, not this Court, should consider the defense in the first instance. We will therefore vacate and remand so that the laboratory error defense can be considered and adjudicated with respect to the claims that it affected. 34