Opinion ID: 547478
Heading Depth: 1
Heading Rank: 5

Heading: Calculation of Civil Penalties

Text: 55 The Act sets forth several factors a district court must consider when imposing civil penalties. These factors are enumerated in section 309(d) of the Act: 56 In determining the amount of a civil penalty the court shall 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. 57 33 U.S.C. Sec. 1319(d). 58 After a bench trial on the issue of penalties, the district court assessed the maximum penalty for each of PDT's violations. The court then reduced the total by $1,000,000 because the EPA and NJDEP failed to diligently prosecute PDT. PDT argues that the district court's factual findings on the seriousness of the violations and the economic benefit of noncompliance to PDT were clearly erroneous. PIRG argues that the district court erred as a matter of law by reducing the penalty because of the nonfeasance of governmental agencies. We will consider each contention in turn. 59
60 In considering the seriousness of PDT's violations, the district court stressed that there were a very large number of violations and that many violations exceeded the permit limits by 100 to 1000 percent. PIRG II, 720 F.Supp. at 1161, 1163. The court also noted that at least ten violations involved toxic substances and many others involved pollutants known to harm marine life. Based on these factors, the court concluded that PDT's 386 violations were very serious in nature. PIRG II, 720 F.Supp. at 1163. 61 PDT argues that the district court's factual finding of seriousness was clearly erroneous. Under the clearly erroneous standard, a finding of fact may be reversed only if it is completely devoid of a credible evidentiary basis or bears no rational relationship to the supporting data. American Home Products Corp. v. Barr Laboratories, Inc., 834 F.2d 368, 370-71 (3d Cir.1987). 30 Despite this extremely limited standard of review, PDT contends that the district court's finding is erroneous because there was no particularized showing of the harm PDT's effluent caused in the Kill Van Kull. 62 The district court's finding is amply supported by the record. PDT's argument that its discharges did not seriously harm the Kill Van Kull is contradicted by EPA and NJDEP documents detailing the environmental harm caused by each pollutant PDT discharged. The district court properly relied upon these reports, PIRG II, 720 F.Supp. at 1161-62, and the large number of gross exceedances in concluding that PDT's violations were serious.
63 PIRG offered several theories for calculating how PDT profited by not complying with the Act; all based on the argument that PDT could have hauled its wastewater off-site for treatment while it constructed a treatment facility. In considering the economic benefit to PDT, the district court concluded that PDT's benefit under any proposed theory was far in excess of the statutory maximum [penalty]. PIRG II, 720 F.Supp. at 1163. PDT argues that this finding is clearly erroneous. 64 Precise economic benefit to a polluter may be difficult to prove. The Senate Report accompanying the 1987 amendment that added the economic benefit factor to section 309(d) recognized that a reasonable approximation of economic benefit is sufficient to meet plaintiff's burden for this factor. 65 Violators should not be able to obtain an economic benefit vis-a-vis their competitors due to their noncompliance with environmental laws. The determination of economic benefit or other factors will not require an elaborate or burdensome evidentiary showing. Reasonable approximations of economic benefit will suffice. 66 S.Rep. No. 50, 99th Cong., 1st Sess. 25 (1985) (emphasis supplied). 67 In determining economic benefit, the district court found as a matter of fact that facilities for off-site treatment of PDT's wastewater did not exist prior to 1982. Relying on the testimony of PDT's expert, Leroy Sullivan, the district court found that from 1982 until 1987 PDT could have hauled its wastewater to a DuPont facility in South Jersey for treatment. The district court calculated economic benefit by relying on a 1985 letter from Sullivan to Ronald Sprague, corporate secretary of PDT, detailing the possibility of hauling wastewater to DuPont at a cost of $0.11 to $0.12 per gallon. The district court used Sullivan's estimate of the wastewater discharged by PDT to calculate an economic benefit in excess of $4,205,000. PIRG II, 720 F.Supp. at 1162-63. 68 PDT, understandably upset by a penalty based on testimony of its own experts and corporate officers, argues that plaintiffs cannot fairly use [the Sullivan] letter to prove that off-site treatment was possible and therefore the district court's finding of economic benefit is clearly erroneous. To the contrary, we find that the district court properly used the Sullivan letter and the testimony of Sullivan at the bench trial. Indeed, the district court would have been remiss if it failed to consider these highly probative pieces of evidence. The district court's finding that the economic benefit to PDT exceeded the statutory maximum penalty of $4,205,000 is not clearly erroneous. 69
70 The district court reduced the total penalty in this case, stating: 71 With regard to defendant's good faith attempts to comply with the Act, the Court will adjust the statutory maximum downwards by $1,000,000.00 because of the actions and/or non-actions taken on behalf of the United States Environmental Protection Agency and the New Jersey Department of Environmental Protection. The Court finds that had they acted more diligently in making defendant comply, the violations in this case would have ceased long ago. Therefore, these two governmental bodies are partially to blame for the defendant's lack of compliance for the years at issue. 72 PIRG II, 720 F.Supp. at 1166-67 (emphasis supplied). PIRG and Intervenor EPA argue that the district court erred as a matter of law by using the nonfeasance of governmental bodies to support adjusting PDT's penalty. We exercise plenary review over this question of law. 73 PIRG and intervenor EPA claim that the district court erred by even considering the inaction of NJDEP and EPA. They point out that section 1319(d) specifically lists what a district court may consider when setting penalties and that the government's lack of diligence in prosecuting permit violators is not among those factors. PIRG and EPA ignore, however, the fact that the statute allows the district court to consider such other matters as justice may require. 33 U.S.C. Sec. 1319(d). We must consider whether the district court could properly consider the nonfeasance of the EPA and NJDEP under this factor. 74 PIRG contends that, since government inaction is a prerequisite to a citizen suit under the Act, 33 U.S.C. Sec. 1365(b)(1)(B) (No action may be commenced ... if the Administrator or State has commenced and is diligently prosecuting a civil or criminal action), the district court should not reduce the penalty amount because of the EPA's and NJDEP's lack of diligence. We agree with PIRG that mere failure by governmental agencies to prosecute an NPDES permit holder does not allow a court to reduce a penalty. Nevertheless, there may be instances where the district court may consider a government agency's inaction and the permittee's reaction when setting civil penalties in a citizen suit. In a case where a defendant has failed in a good faith attempt to comply with its permit because of technical or economic problems and the EPA has affirmatively recognized and excused noncompliance, justice may require that a court adjust the penalty amount. 75 In this case, we conclude that the district court did not find that justice required a reduction. The court made the penalty reduction [w]ith regard to defendant's 'good faith.'  PIRG II, 720 F.Supp. at 1166. This directly contradicts the district court's earlier conclusion. The district court carefully reviewed the communication between PDT and EPA during the six year period involved in this suit and concluded that PDT's actions did not rise to the level of 'good faith.'  and that defendant, motivated possibly by greed or apathy, chose to procrastinate. PIRG II, 720 F.Supp. at 1165. In light of this finding, the district court's reduction of the penalty cannot be even impliedly based on the as justice may require factor. 31 Since PDT did not make good faith efforts to comply with the Act, the district court erred by reducing the penalty because of the EPA's inaction. We will reverse the district court's order as to the amount of penalty and remand for recalculation of the penalty without the reduction.