MEMORANDUM AND ORDER
VAN SICKLE, District Judge.
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, "[the Act], 86 Stat. 816, 33 U.S.C. § 1251 et seq. (1982 ed. and Supp. III). was enacted in 1972 `to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.' § 1251(a). In order to achieve these goals, § 301(a) of the Act makes unlawful the discharge of any pollutant into navigable waters except as authorized by specified sections of the Act. 33 U.S.C. § 1311(a)." 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
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:
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:
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,
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.
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,
Plaintiff therefore undertook by its evidence to show,
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 the accountant, and with Mrs. Stokkeland, handles the office administration.
Sheyenne empties its industrial waste through the city sewage system into the Cooperstown sewage treatment plant, which in turn, discharges its treated waters into an intermittent, Class III waterway of North Dakota. That waterway eventually drains into the Sheyenne River. Sheyenne is therefore a source of "indirect discharge" within the meaning of Section 306(a) of the Act and 40 C.F.R. § 403.3(g), and also an "industrial user" as defined in 40 C.F.R. § 403.3(h).
Curt Stokkeland was originally a tool and dye maker for Melroe Tractor Company. When Melroe left Cooperstown, Stokkeland began his business in 1978. It was started in an abandoned Ford Garage building; and in about two years the electroplating operation began. Five years after he began, the city gave him the abandoned Melroe building on the condition that he would repair and maintain it, and he moved his business, including the electroplating facility, into that building. In about 1994, he expanded the Melroe building and again moved his electroplating business to a new, outside-walled section. Until the 1994 move, he simply transferred and expanded his old machinery.
In 1986, Sheyenne had one contact from the EPA. It furnished the report demanded and then "forgot about it." The management did not know about the requirements for other reports or for periodic testings to assure an allowable level of pollutants in the waste stream. In fact, on about August 8, 1995, Donna K. Inman, an environmental scientist in the water enforcement group of the EPA, observed, "they didn't know the laws were out there." Sheyenne is now in compliance.
II. The EPA's Position
Plaintiff's first witness, George C. Cushnie, Jr., testified that Sheyenne began electroplating in 1979, and used the same process for execution and waste disposal from 1979 to 1993. From January to December 1993, Sheyenne was attempting to come into compliance with EPA standards, and did so by December 1993.
The witness testified that the waste water volume during the noncompliance period in 1993 was 14,000 to 15,000 gallons per day. The witness explained that the move from the Ford garage to the Melroe building, and the move within the Melroe building, were both transfers of equipment, and that even had there been no changes in the process, nonetheless each transfer amounted to a "new installation." And as a new installation the regulations required a new BMR, which Sheyenne failed to file.
Ms. Inman is an environmental scientist in the water enforcement group. She was assigned to the Sheyenne case as an environmental scientist in February 1993. Upon demand by her, in an order dated April 1993, Sheyenne responded with its declaration to comply with the terms of that order. She testified that while Sheyenne had to request a few extensions as to reports, Sheyenne did cooperate in the EPA's efforts to require compliance. It was in tile period of Sheyenne's attempting compliance, that Ms. Inman observed something to the effect that, "they didn't know the laws were out there." She testified at the time of trial that, "they are now in compliance."
Robert Brobst is an environmental engineer for the EPA. He described at a theoretical level the type of damage to the environment which could develop from a metal crafting and plating operation. Bit he had never even inspected the plant or the drainage system about which he was testifying, and, of course, the EPA had abandoned any claim to actual damage to the environment.
William Willingham is a research biologist with the laboratory group of the E.P.A. It was his opinion that the discharge of zinc by Sheyenne into the Cooperstown lagoon has the potential for causing either acute or chronic toxicity effects to the aquatic life in the Class III stream bed into which Cooperstown drained its POTW and possibly to the aquatic life in the Sheyenne River. Mr. Willingham also had not seen Cooperstown or its environs.
Mr. Fagan is a civil and an environmental engineer and has a Juris Doctor. He is now a lawyer. He is presently associated with the Northbridge Environmental Management Consultants. He has fifteen years of experience of financial analysis for environmental compliance. He offered the following opinions:
The witness also concluded Sheyenne had immediately available to pay the penalty a cash account of $405,000.00.
III. Sheyenne's Position
Ronald A. Berge testified that he is sixty-five years old, has a bachelor's degree in mechanical engineering, fanned from 1972 to 1987, and then was employed by Sheyenne. He first encountered the EPA in December 1992. His first task with them was to fill out "some type of questionnaire." When other reports were required lie filled them out. He spent a total of about 130 hours to get into compliance. It took five to ten hours to prepare the first BMR.
He testified that in three years Sheyenne accumulated about 400 kilograms of sludge and understood that as long as the accumulation of sludge is less than 1000 kilograms it can be kept indefinitely. He also testified that a quarterly report takes about forty-five minutes to complete.
Also, when the order to comply came they decided to fill enough of their principal customer's demands to keep him working about two weeks before they tore their equipment down. Filling that order took about one week.
Mr. Berge explained that until the new equipment was installed, the company could only measure the plating room wastewater flow by using a small pail and counting the number of times it filled in a day. Thus the early reported flow patterns reflected total flow from all units of the plant including, for example, toilets. And the total shop flow averaged about 1600 gallons per day.
Roger Nelson had been a farmer and is a Class A welder. He was employed by Cooperstown in 1977. In about 1983 he became Water Superintendent of the City. Cooperstown has no storm sewer system, only a sanitary sewer system. The Class III stream which drains from Cooperstown to Sheyenne is, in the summer, completely dry.
Dr. Jay Leitch, professor of economics at the University of North Dakota, has a masters of science degree in natural resource management and a doctorate in applied economics, and another doctorate in agricultural economics. He is also a certified wetland scientist. His memberships include the Association for Impact Assessment and the Society of Wetland Scientists. He was the associate director of the North Dakota Water Resources Institute.
He found three sources of potential unjustified benefit arising from a failure to comply with the EPA mandates. They were:
He reviewed the years 1990 through 1995. The period of savings development he used was August 1990 to the time of compliance in late 1993. Thereafter, he carried the savings through December 1996.
He computed the total savings as $12,564.00, including in that sum interest at the rate of 9% from August 1990 through December of 1993. He explained the difference between his figures and Mr. Fagan's as being caused by:
IV. Findings and Order for Judgment
This Court, after a review of the files, records, transcripts, and evidence received in this matter, finds as follows:
This Court also finds that the principle of requiring that persons at fault must be held to a "level playing field" means that the defendant must be held to the conditions of his field, not that of larger or more wealthy players. And the economic experts for the United States used averages and generalizations which were not compatible with the playing field in which the defendant operated. It must be recognized that the defendant's playing field was a small playing field in a sparsely-settled community. For these reasons I find that:
1. the defendant did violate the laws and regulations of the Clean Water Act from-December 1, 1983, through December 1, 1993; and
2. the defendant is assessed as penalty for those violations:
(1) $1.00 per day for every day the defendant was in violation: $ 3650.00; (2) the amount of economic benefit which the defendant improperly received, $4600.00 per year for 10 years: $46,000.00; (3) no amount is assessed for deliberate or malicious violation; (4)(a) a penalty for failure to obey the regulations must be imposed: $10,000.00; (b) a penalty for electroplating for a period of one week after notice to comply with the E.P.A. mandate, $100.00 per day for a period of 5 plating days: $ 500.00; (5) a factor in the mild penalty imposed under "1" is the absence of bad faith on the part of the defendant; and (6) justice requires that the defendant, dependant as it is on a narrow base of only a few customers, should not be overburdened lest it be forced to retrench and reduce its work force — thus injuring innocent people.
A final penalty shall be assessed at: $60,150.00. Let judgment be entered accordingly. Dated this 30th day of December 1996.